SECURITIES
AND EXCHANGE COMMISSION


WASHINGTON,
D.C. 20549




___________________________




FORM
10-KSB


___________________________




Annual
Report Under Section 13 or 15(d) of the


SECURITIES
EXCHANGE ACT OF 1934




x
            ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF
      1934




For
Fiscal Year Ended


December
31, 2001




Commission
File #0-32029




CONCEPT
DIGITAL, INC.


(Exact
name of registrant as specified in its charter)




Delaware


(State or
other jurisdiction of incorporation or organization)




22-3698370


(IRS
Employer Identification Number)




298
Fifth Avenue


New
York, NY, 10001


(Address
of principal executive offices)(Zip Code)






(212)
564-1600


(Registrant’s
telephone no., including area code




Securities
registered pursuant to Section 12(b) of the Act: None




Title of
each class Name of each exchange on which registered






Securities
registered pursuant to Section 12(g) of the Act:




Common Stock, $0.001 par
value


(Title of
class)




(Former
name, former address and former fiscal year,


if
changed since last report)












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




Yes  £  
No    x




Indicate
by check mark whether the registrant is a shell company as defined in Rule12b-2
of the Exchange Act.




Yes  £   No    x




Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B not contained in this form, and no disclosure will be contained,
to the best of the registrant’s knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB. ( )




Revenues
for year ended December 31, 2001: $3,000




Aggregate
market value of the voting common stock held by non-affiliates of the registrant
as of April 7, 2008, was: $0




Number of
shares of the registrant’s common stock outstanding as of April 7, 2008 is:
39,683,381







Transfer
Agent as of April 7,
2008:                  
Corporate Stock Transfer


3200 Cherry Creek Drive, Suite
430


Denver, CO 80209








Table of Contents





TABLE OF CONTENTS




Part
      I.ITEM
      1.
              DESCRIPTION
      OF BUSINESS
              1ITEM
      2.
              DESCRIPTION
      OF PROPERTY
              6ITEM
      3.
              LEGAL
      PROCEEDINGS
              6ITEM
      4.
              SUBMISSION
      OF MATTERS TO A VOTE OF SECURITY HOLDERS
              6Part
      II.ITEM
      5.
              MARKET
      FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
              6ITEM
      6.
              MANAGEMENT’S
      DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
              8ITEM
      7.
              FINANCIAL
      STATEMENTS AND SUPPLEMENTARY FINANCIAL DATA
              9Part
      III.ITEM
      8.
              CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE
              10ITEM
      9.
              DIRECTORS,
      EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
              10ITEM
      10.
              EXECUTIVE
      COMPENSATION
              11ITEM
      11.
              SECURITY
      OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
              12ITEM
      12.
              CERTAIN
      RELATIONSHIPS AND RELATED TRANSACTIONS.
              12ITEM
      13.
              EXHIBITS
      AND REPORTS ON FORM 8-K
              13SIGNATURES
              
              14






Table of Contents





Forward-Looking
Statements




This Form
10-KSB contains “forward-looking statements” relating to Concept Digital, Inc.
(the “Company”), which
represent the Company’s current expectations or beliefs including, but not
limited to, statements concerning the Company’s operations, performance,
financial condition and growth. For this purpose, any statements contained in
this Form 10-KSB that are not statements of historical fact are forward-looking
statements. Without limiting the generality of the foregoing, words such as
“may”, “anticipation”, “intend”, “could”, “estimate”, or “continue” or the
negative or other comparable terminology are intended to identify
forward-looking statements. These statements by their nature involve substantial
risks and uncertainties, such as losses, dependence on management, variability
of quarterly results, and the ability of the Company to develop a growth
strategy and compete with other companies in its industry, certain of which are
beyond the Company’s control. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual
outcomes and results could differ materially from those indicated in the
forward-looking statements.




Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.







Table of Contents







PART
I




ITEM
1. DESCRIPTION OF BUSINESS





As of
December 31, 2000, i-AntiqueAuction.com, Inc. (the "Company" or "i-Antique") was
a development stage company which was anticipating the completion of a
specialized online person- to-person trading website dedicated to bringing
together antique sellers and buyers. The website would have resided at
WWW.I-ANTIQUEAUCTION.COM, and will attempt to serve as a centralized auction for
buyers and sellers to meet, negotiate sales, and finally consummate transactions
directly, thereby bypassing the time and expense of
intermediaries.  In addition, i-Antique owns the domain names
"i-AntiqueAuction.com" and "i-AntiqueAuction.net". Anticipated sales would have
been conducted by a traditional rising price auction (the highest bid wins), and
will be hosted by the Company. The Company's goal was to create an integrated
antique site for individuals on both sides of the transaction, and thus would
offer additional value added services through links to its strategic partners.
i-Antique anticipated that it will achieve this goal by growing through
acquisitions of companies and businesses in complimentary industries. In
addition to the auction, anticipated products offered through strategic partners
will include: loan services, insurance, antique appraisal, moving and shipping
companies, interior design specialists, content links for researching antiques
and collectibles, and image hosting services for showing an item on
line.





Our
corporate offices are located at 136 West 32nd Street,
New York, NY 10001. Our corporate staff consists of one person experienced in
the online market. The Company's telephone number is (212)
564-1600.





Concurrently
with the share exchange discussed below, the Company changed its business plan
to become a development stage company whose goal is to become a leading provider
of digital imaging services and changed its name to Concept Digital,
Inc.





In
September 2001, the Company completed a share exchange with PhotoAmerica,
Inc.  a New York corporation ("PAI") where the Company would acquire
all the issued and outstanding shares of capital stock of PAI in exchange solely
for shares of Concept Digital common stock. PAI operates the website
photoamerica.com, which enables digital camera users to upload their photographs
via the Internet to our outsourced developing facility for
processing.





DIGITAL
CAMERAS





Today,
consumers can buy a digital camera with mega-pixel resolution, offering all the
features of top-of-the-line 35mm cameras, such as zoom lenses and manual
controls. Most digital cameras also come equipped with a built in monitor that
allows the photographer to review the picture immediately after taking it. The
most commonly quoted benefit of digital cameras is that it allows the
photographer to immediately determine if he is satisfied with the image. If not,
the image is simply deleted and the picture can be re-shot.  Digital
cameras also allow photographers to transfer their images to a computer and
digitally manipulate and enhance the photo before printing it. This is a far
more desirable alternative than film based cameras, where the photographer can
only determine if a picture is to their liking after it has been developed
(industry surveys show that the average consumer typically only likes four out
of every 36 pictures printed).







1
 Table of Contents






COMPUTERS
AND THE INTERNET IN THE PHOTOGRAPHY INDUSTRY





The
continuing evolution of the Internet as an entertainment medium coupled with
rapid advances in technology has had a significant impact on the traditional
chemical film based photo-processing model. Traditionally, photographers finish
a complete roll of film, bring the film to their local photo processor, and then
return for a second visit to retrieve the pictures. The photos are evaluated to
determine the interest in additional prints, at which point the consumer must
place another order and return again to pick up the reprints. Digital
photography, the Internet and advances in printing technology are introducing
attractive alternatives. Photographs can be stored on a PC or uploaded to the
Internet where they can be viewed, edited and reprinted at any time using a
color desk top printer or professional processing techniques.





PRODUCTS
AND SERVICES





THE
WEBSITE





Our
website will be the primary tool through which customers will purchase products
and services and through which we will conduct marketing initiatives for its
Profit Partners. The website is expected to feature related content and
advertising targeted to the Company's customer base, and links to other
appropriate sites. The following is an overview of the site's
features:





CUSTOMER
ACTIVATION





The
website has been planned to be straightforward and minimally intrusive;
customers will review and fully evaluate all services of the site, short of
placing an order, without providing us with any personal
information.  Customers will be able to immediately begin to upload
images upon entering the site.





Specifically,
we have planed to accept customer images in virtually any format compatible with
digital images, including jpegs (.jpg), bitmaps (.bmp), tiffs (.tif),
encapsulated post script (.eps) and more.





GENERAL
CONTENT





In
addition to serving as the primary interface to customers, our website will
provide a community environment, offering visitors advice regarding digital
photography, cameras and related products.





ARTICLES





Additionally,
it is anticipated that our website will feature articles written to inform
digital camera users on a broad variety of topics such as photography
techniques, industry trends, accessory introductions, and "Ask the
Expert".





BUYING
GUIDE





We plan
to engage a professional writer to prepare a buying guide that will be updated
regularly.  This service can attract potential customers to our
planned website and may also induce digital camera manufacturers and retailers
to advertise on the website.





CUSTOMER
SERVICE





The
regularly updated FAQ section of the site will assist customer with
issues.  Also, the customer service department will be able to be
contacted via email from the website.





WARRANTY
REGISTRATION





Although
many manufacturers enable customers to do so through their own site, the vast
majority of consumer do not register their electronic purchases, either on-line
or by mail.  We may work with manufacturers to offer incentives, such
as a free reprint, to consumers that use the site to register their electronic
purchases. This information can then be shared with the manufacturer for
additional marketing purposes.







2
 Table of Contents






DIRECTORY
OF PROFIT PARTNERS





As a part
of our planned Profit Partner program, we plan to feature the names, addresses
and phone numbers of all future merchant partners and companies on the
website.





ADVERTISING
AND RESOURCE LINKS





We plan
to sell advertising to a variety of camera and related equipment manufacturers
in addition to other e-tailers seeking to target its customer base on our
site.




Longer
term, we may provide links to resources for our customers to photography
magazines.





PROCESSING
SYSTEMS





Our
primary activity will be the production of images from digital
feeds.  Customers can upload selected images to our server where they
will be stored in a file database, from which they can be retrieved, modified
and printed as often as desired. Using state-of-the-art equipment, outsourced
technicians will apply the silver-halide chemical process used to process
film-based photographic images.





Digital
processing activities will be outsourced to major digital processor
facilities.  The photo finishing process will begin with the entry of
each order into a customer database, primarily using information provided by the
anticipated customer. Each order will receive a bar-coded identification number
that will enable the tracking of the order throughout the production
process.  Once the files have been uploaded, each image will be
computer analyzed and color-corrected as warranted or instructed, then printed
on photographic paper.  Shipping information will then be printed on
labels and forwarded to the traffic department to await completion of the order.
After a visual quality inspection, the orders will be packaged for delivery.
Orders for which recipients will provide e-mail addresses will be digitized and
delivered through the our Internet Service Provider





STANDARD
REPRODUCTIONS





Using the
information gathered during customer registration and order placing, we will
provide a selection of printing alternatives.  We plan to offer a
variety of print packages including the following:





o
Single image prints in a variety of sizes from 4" X 6" to 11" X 14"
o


Pre-printed
frame templates in hundreds of designer patterns o Package


prints
(e.g. 4 copies of the same image on one sheet) o Multi-image


package
prints (e.g., up to 10 different images on a single sheet) o


Passport
photos o Photo business cards





Pricing
for development will be dependant upon the size and complexity of the
process.





ACCESSORIES
AND NOVELTIES





We plan
to offer an extensive array of accessory products and novelties including frames
and photo-personalized gifts ranging from mugs to T-shirts to greeting
cards.  Pricing for these items will be in the $2.35 to $29.95 range
and will be sold on the website.





ELECTRONIC
GREETING CARDS





We plan
to develop an extensive library of electronic cards, designer frame templates
and email backgrounds that can be applied to a customer's printout. Customers
will be able to choose from an array of designs, including birthdays,
anniversaries, holidays and other standard occasions.  Customers will
also be able to create customized cards with a personalized
greeting.







3
 Table of Contents




DISTRIBUTION





It is
anticipated that completed orders will be shipped to the addresses designated by
the customer upon completion of the order. Standard distribution will be United
States Postal Service, First Class, however customers will have the option of
selecting priority or overnight delivery service for an extra cost.





ON-LINE
ADDRESS BOOK





It is
anticipated that customers may provide us with multiple addresses for delivery
of their photographs or other products. For example, a customer might wish to
order multiple copies of a Christmas card to be mailed to list of family and
friends. These names and addresses will then be stored in the customer's file
for future use.





IMAGE
STORAGE AND MANAGEMENT





Current
plans will allow us to offer our customers the ability to store and access their
images (even those that are not printed) on our server at no
charge.





ACCOUNT
MANAGEMENT





Customers
will be offered a database management tool which will enable them to manage all
aspects of the electronic distribution of their library. Using these tools, a
customer will be able to enter addresses, calendar reminders, etc. The site will
also enable the customer to keep track of pending and completed orders with the
our Company.





MARKETING
AND ROLL OUT STRATEGY





We are in
the process of developing a rollout strategy. We anticipate that it will enable
us to penetrate the market and overtime, establish a leadership position in the
online processing of digital images. This strategy comprises the following
steps.





O        INTRODUCE
PRODUCTS AND SERVICES TO INDUSTRY PARTICIPANTS


O        ESTABLISH
PROFIT PARTNER DEALER NETWORK


O        IMPLEMENT
AGGRESSIVE SALES AND MARKETING CAMPAIGNS





INTRODUCE
PRODUCTS AND SERVICES TO INDUSTRY PARTICIPANTS





We
expects to utilize a variety of tools to present the website and services to
potential Profit Partners, however we believe it will have broadest access to
its target audience at industry trade shows.  We anticipate signing up
vendors for the Profit Partner program at these types of shows. Management
believes that trade shows and other industry events provide it with the ideal
environment to feature the product.





ESTABLISH
PROFIT PARTNER DEALER NETWORK





Concept
Digital plans to create an affiliate program designed to attract vendors from
around the country to assist in the marketing of its products and
services.  We anticipate that these retailers and e-tailers, in
exchange for a recurring commission, will hand out or deliver at point of
purchase, a ConceptDigital.com free offer coupon to the digital camera buyer.
The retailer's Profit Partner code will be embedded in the coupon. When the
consumer sets up an account on the site to redeem the free offer coupon, they
will be assigned in the database to the Profit Partner that referred them. From
that point on the Profit Partner will receive a preset commission on any
purchases that consumer makes. We believe that this highly targeted marketing
approach should yield much greater, more cost effective results than an
aggressive advertising campaign.





Profit
Partners are expected to come from the following sectors:





INDEPENDENT
PHOTOGRAPHY SHOPS





There are
more than an estimated 5,000 independent photography shops throughout the
country and they continue to lose market share. This sector is increasingly
faced with competition from three sources; two national photography chains, Ritz
Camera Centers and Wolf Camera; mass merchandisers such as Wal-Mart and K-mart,
as well as Internet vendors. The changing face of the market is forcing
specialty shops to cut their margins or risk losing business.







4
 Table of Contents




EQUIPMENT
MANUFACTURERS





We will
seek to establish affiliations with digital camera manufacturers.  Our
site will not sell any merchandise or services other than its own from the site,
however it will provide links to the sites of Profit Partner manufacturers.
Profit Partner manufacturers will feature our website by including the logo on
packaging, coupon inserts with their products or through mention in users'
manuals or newsletters.





RELATED
VENDORS





We will
seek to establish relationships with appropriate related vendors such as event
photographers and frame manufacturers. Through these relationships, we
anticipate vendors will offer the services of our Company as an added value to
their customers. For example, wedding guests will be able to view the
photographer's proofs in order to select and order their own set of photographs;
frame buyers might get a discounted reproduction with the purchase of multiple
frames.





We
anticipate that our Profit Partner program will provide participants with
significant benefits as discussed below:





COMPETITIVE
EDGE





We
anticipate that our program will enable Profit Partners to provide their
customers with a unique and value-added service which will positively
differentiate them from their competitors.





ADDITIONAL
INCOME





It is
anticipated that Profit Partners will be provided with a recurring commission in
exchange for encouraging their customers to visit our website. This program will
provide Profit Partners with a stream of income that would otherwise not be
generated, and at no cost to them. Vendors will receive a fee on any
transactions conducted by a referral throughout the term of their association
with us. We will track all revenues and will forward Profit Partners checks on a
quarterly basis.





COMPETITION





While
there are few companies that compete directly with us, the Company anticipates
competing indirectly with a variety of sources as described below.





PROCESSING
OF TRADITIONAL FILM TO DIGITAL IMAGES





Kodak
gives consumer the ability to develop non-digital film and receive prints as
well as digital images of the photo via e-mail or on disk for viewing on a
personal computer. Wal-Mart Stores Inc. and Fuji also offer Internet-based photo
centers.





SPECIALTY
RETAIL SHOPS AND MASS MERCHANDISERS





RITZ
CAMERA CENTERS is the United States' largest photo-specialty chain with more
than 1,000 stores in 47 states and the District of Columbia that provide
one-hour photo finishing, digital imaging, and other services.





WOLF
CAMERA operates one-hour photo labs at each of its 750-plus stores. Film
processing and related services make up a third of Wolf Camera's business.
Located in 34 states, its stores sell cameras, camcorders, film and accessories
and feature Kodak do-it-yourself enlargement centers where customers make
digital-quality reprints from photos or computer files. Wolf's also offers
digital imaging services, including alteration, restoration, and transferring
customers' photos to floppy disks.







5
 Table of Contents






PICTUREWORKS
(formerly Seattle FilmWorks) markets 35mm film, photo processing, photofinishing
services and products, and a variety of digital photo services, including
"PhotoMail" (digital-photo delivery to the customer via the Internet) and
"Pictures On Disk" (digitized photos on a disk or CD). It markets primarily on a
mail-order basis and through about 40 retail stores in Oregon and Washington.
Pictureworks has recently added digital imaging technology in order to compete
with faster in-store retail processors.





Most mass
merchandisers and drug store chains provide customers with developing services.
Some offer on-site capabilities, others send the work out to independent
processors. However, these services, like Kodak's Picture Maker and Pictureworks
require the consumer bring their film to a remote facility for processing before
they can take advantage of the services.





Employees





As of
December 31, 2001, the Company employed one person. In addition, depending on
client demand, the Company will utilize manpower agencies to contract between
additional persons on a temporary, part-time basis. None of the Company's
employees are represented by a labor union. The Company believes that its
relations with its employee is good.




ITEM
2.  DESCRIPTION OF
PROPERTY





During
the period ended December 31, 2001, the Company shared office space in a
building located at 136 West 32nd Street,
New York, NY 10001. The Company rented this
office space on a month-to-month basis from an affiliated entity, rent expense
aggregated $48,000 in 2001.





The
company presently shares office space in a building located at 298 Fifth Avenue,
New York, NY 10001 for an indefinite amount of time at no
charge.





ITEM
3. LEGAL
PROCEEDINGS





The
Company is not presently parties to any litigation, nor to the Company’s
knowledge and belief is any litigation threatened or contemplated.





ITEM
4. SUBMISSION OF MATTERS
TO A VOTE OF SECURITY HOLDERS





None.


PART
II




ITEM
5. MARKET FOR COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS





As of
December 31, 2001, there is no public market for our common stock.  As
such, the Company’s common stock is not currently available for
trading.





Holders





As of
December 31, 2001, in accordance with our transfer agent records, there were 133
shareholders of record of the Company’s common stock.





Dividends





The
Company does not intend to issue dividends. However, should we decide to issue
dividends, any payment of cash dividends in the future will be dependent upon:
the amount of funds legally available therefore; the Company's earnings;
financial condition; capital requirements; and other factors which the Board of
Directors deems relevant.







6
 Table of Contents






Recent Sales of Unregistered
Securities





In
September 2001, we issued 1,500,000 shares of our common stock (valued at
$180,000), to 18 Consumer Electronics & Photo Corp., a company controlled by
the Company’s majority stockholder, to fund substantially all current sales,
marketing and administrative expenses for one year.  This was
amortized through September 30, 2002.  Such shares were issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. No commissions were paid for the issuance of such
shares. Such issuance qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance of such shares by us did not involve a
public offering. Mr. Darrow was a sophisticated investor and had access to
information normally provided in a prospectus regarding us. The offering was not
a “public offering” as defined in Section 4(2) due to the insubstantial number
of persons involved in the deal, size of the offering, manner of the offering
and number of shares offered. We did not undertake an offering in which we sold
a high number of shares to a high number of investors. In addition, Mr. Darrow
had the necessary investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend stating that such
shares are restricted pursuant to Rule 144 of the 1933 Securities Act. These
restrictions ensure that these shares would not be immediately redistributed
into the market and therefore not be part of a “public offering.” Based on an
analysis of the above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933 for the above
transaction. .




In
September 2001, 100,000 common shares were issued to Richard Darrow, in exchange
for services rendered at $.12 per share.  Such shares were issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. No commissions were paid for the issuance of such
shares. Such issuance qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance of such shares by us did not involve a
public offering. Mr. Darrow was a sophisticated investor and had access to
information normally provided in a prospectus regarding us. The offering was not
a “public offering” as defined in Section 4(2) due to the insubstantial number
of persons involved in the deal, size of the offering, manner of the offering
and number of shares offered. We did not undertake an offering in which we sold
a high number of shares to a high number of investors. In addition, Mr. Darrow
had the necessary investment intent as required by Section 4(2) since they
agreed to and received a share certificate bearing a legend stating that such
shares are restricted pursuant to Rule 144 of the 1933 Securities Act. These
restrictions ensure that these shares would not be immediately redistributed
into the market and therefore not be part of a “public offering.” Based on an
analysis of the above factors, we have met the requirements to qualify for
exemption under Section 4(2) of the Securities Act of 1933 for the above
transaction.




Stock Options
Grants/Warrants





As of
December 31, 2001, we have stock options outstanding on 1,880,000 shares of our
common stock.





In
connection with a private placement in 2000, the Company granted warrants to
purchase 100,000 shares of the Company's common stock at an exercise price of
$0.10 per share expiring in 2010.  Our securities were issued in
reliance on the exemption from registration provided by Section 4(2) of the
Securities Act of 1933. No commissions were paid for the issuance of such
securities. All of the above issuances of our securities qualified for exemption
under Section 4(2) of the Securities Act of 1933 since the issuance of such
securities by us did not involve a public offering. The above listed parties
were sophisticated investors and had access to information normally provided in
a prospectus regarding us. The offering was not a “public offering” as defined
in Section 4(2) due to the insubstantial number of persons involved in the deal,
size of the offering, manner of the offering and number of securities offered.
We did not undertake an offering in which we sold a high number of securities to
a high number of investors. In addition, the above listed parties had the
necessary investment intent as required by Section 4(2) since they agreed to and
received share certificates bearing a legend stating that such shares are
restricted pursuant to Rule 144 of the 1933 Securities Act. These restrictions
ensure that these shares and the shares underlying the warrants would not be
immediately redistributed into the market and therefore not be part of a “public
offering.” Based on an analysis of the above factors, we have met the
requirements to qualify for exemption under Section 4(2) of the Securities Act
of 1933 for the above transaction







7
 Table of Contents




In 2000,
the Company issued warrants to purchase 750,000 shares with an exercise price of
$.10 per share expiring in 2010 to a consultant and granted, to various
consultants, options under the stock option plan to purchase 135,000 shares of
common stock with an exercise price of $.12 per share and expiring from 2005 to
2010.  These warrants and options were valued using the Black-Scholes
option pricing model with the following assumptions; dividend yield 0%,
volatility 0%, expected life ranging from 5 to 10 years, risk free interest
rates ranging from 5.8% to 6.3%.  The charge to operations aggregated
$41,000.  Our securities were issued in reliance on the exemption from
registration provided by Section 4(2) of the Securities Act of 1933. No
commissions were paid for the issuance of such securities. All of the above
issuances of our securities qualified for exemption under Section 4(2) of the
Securities Act of 1933 since the issuance of such securities by us did not
involve a public offering. The above listed parties were sophisticated investors
and had access to information normally provided in a prospectus regarding us.
The offering was not a “public offering” as defined in Section 4(2) due to the
insubstantial number of persons involved in the deal, size of the offering,
manner of the offering and number of securities offered. We did not undertake an
offering in which we sold a high number of securities to a high number of
investors. In addition, the above listed parties had the necessary investment
intent as required by Section 4(2) since they agreed to and received share
certificates bearing a legend stating that such shares are restricted pursuant
to Rule 144 of the 1933 Securities Act. These restrictions ensure that these
shares and the shares underlying the warrants would not be immediately
redistributed into the market and therefore not be part of a “public offering.”
Based on an analysis of the above factors, we have met the requirements to
qualify for exemption under Section 4(2) of the Securities Act of 1933 for the
above transaction.





In 2001,
the Company issued options to purchase 600,000 shares with an exercise price of
$.10 per share expiring in 2011 to a consultant and a director.  These
options were valued using the Black-Scholes option pricing model with the
following assumptions; dividend yield 0%, volatility 0% (since the options were
granted prior to the reverse acquisition of CDI), expected life 10 years, risk
free interest rates ranging from 4.7% to 5.3%.  The charge to
operations aggregated $28,000.  As of December 31, 2001, 3,795,000
shares were reserved for issuance of common stock under the stock option plan
and for other stock options and warrants outstanding.  Our securities
were issued in reliance on the exemption from registration provided by Section
4(2) of the Securities Act of 1933. No commissions were paid for the issuance of
such securities. All of the above issuances of our securities qualified for
exemption under Section 4(2) of the Securities Act of 1933 since the issuance of
such securities by us did not involve a public offering. The above listed
parties were sophisticated investors and had access to information normally
provided in a prospectus regarding us. The offering was not a “public offering”
as defined in Section 4(2) due to the insubstantial number of persons involved
in the deal, size of the offering, manner of the offering and number of
securities offered. We did not undertake an offering in which we sold a high
number of securities to a high number of investors. In addition, the above
listed parties had the necessary investment intent as required by Section 4(2)
since they agreed to and received share certificates bearing a legend stating
that such shares are restricted pursuant to Rule 144 of the 1933 Securities Act.
These restrictions ensure that these shares and the shares underlying the
warrants would not be immediately redistributed into the market and therefore
not be part of a “public offering.” Based on an analysis of the above factors,
we have met the requirements to qualify for exemption under Section 4(2) of the
Securities Act of 1933 for the above transaction.




ITEM
6. MANAGEMENT’S
DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS





The
following plan of operation provides information which management believes is
relevant to an assessment and understanding of our results of operations and
financial condition. The discussion should be read along with our financial
statements and notes thereto. I-Antiqueauction.Com, Inc. is a development stage
company. Because the Company has generated nominal revenue, it reports its plan
of operation below.





The
following discussion and analysis contains forward-looking statements, which
involve risks and uncertainties. The Company's actual results may differ
significantly from the results, expectations and plans discussed in these
forward-looking statements.





The
Company's operations have been devoted primarily to developing a business plan
and raising capital for future operations and administrative functions. The
Company intends to grow through internal development, strategic alliances, and
acquisitions of existing businesses. Because of uncertainties surrounding its
development, the Company anticipates incurring development stage losses in the
foreseeable future. The ability of the Company to achieve its business
objectives is contingent upon its success in raising additional capital until
adequate revenues are realized from operations.







8
 Table of Contents






PERIOD
FROM DECEMBER 23, 1999 (INCEPTION) THROUGH DECEMBER 31, 2001





Our
cumulative net losses since the inception are attributable to the fact that we
have not derived any revenue from operations to offset out business development
expenses.





Operating
expenses since inception have amounted to $1,544,000 primarily consisting of
general and administrative ($1,345,000) and website development costs
($199,000).  Legal costs were incurred in connection with regulatory
filings.





YEAR
ENDED DECEMBER 31, 2001 AND DECEMBER 31, 2000





Development
stage expenses during the year ended December 31, 2001 were $491,000 as compared
to $864,000 for the year ended December 31, 2000.





Expenses
for the year ended December 31, 2001 of $435,000 were primarily general and
administrative.





LIQUIDITY
AND CAPITAL RESOURCES





Despite
capital contributions and both related party and third party loan commitments,
the company from time to time experienced, and continues to experience, cash
flow shortages that have slowed the Company's growth.





The
Company has primarily financed its activities from sales of its capital stock
and from loans from related and third parties. A significant portion of the
funds raised from the sale of capital stock has been used to cover working
capital needs such as office expenses and various consulting fees.





The
Company continues to experience cash flow shortages, and anticipates this
continuing through the foreseeable future. Management believes that additional
funding will be necessary in order for it to continue as a going concern. The
Company is seeking several forms of private debt and/or equity financing,
although there can be no assurances that the Company will be successful in
procuring such financing or that it will be available on terms acceptable to the
Company.





ITEM
7. FINANCIAL STATEMENTS
AND SUPPLEMENTARY FINANCIAL DATA





The
financial statements of the Company, together with the report of auditors, are
included in this report after the signature pages.








9
 Table of Contents




Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Contents
 
 Page
 
 Consolidated
Financial Statements
  
 Report  of
independent registered public accounting
firm                                                                   F-1
 
 Balance
sheet as of December 31,
2001                                                                                                   F-2
 
 Statements
of operations for the years ended December 31, 2001
 and 2000
and for the cumulative period from June 15, 1999
 (inception) to December 31,
2001                                                                                                         F-3
 
 Statements
of stockholders' equity (capital deficiency) for the cumulative
period
 from June
15, 1999 (inception) to December 31,
2001                                                                        F-4
 
 Statements
of cash flows for the years ended December 31, 2001
 and 2000
and for the cumulative period from June 15, 1999
 (inception)
to December 31,
2001                                                                                                          F-5
 
 Notes to
financial
statements                                                                                                                    F-6
 
 See
report of independent registered public accounting firm and the accompanying
notes to financial statements
 
 Table of Contents
 
 Concept
Digital, Inc.
 (a
development stage enterprise)
  REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Board of
Directors and Stockholders
 Concept
Digital, Inc.
 New York,
New York
 
 
 We have
audited the accompanying consolidated balance sheet of Concept Digital, Inc. and
subsidiary (a development stage enterprise) as of December 31, 2001, and the
related consolidated statements of operations, stockholders' equity (capital
deficiency) and cash flows for each of the years in the two-year period ended
December 31, 2001 and for the cumulative period from June 15, 1999 (inception)
to December 31, 2001.  These financial statements are the
responsibility of the Company's management.  Our responsibility is to
express an opinion on these financial statements based on our
audits.
 
 We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
 
 In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Concept Digital, Inc. and
subsidiary as of December 31, 2001, and the results of their operations and cash
flows for each of the years in the two-year period ended December 31, 2001 and
for the cumulative period from June 15, 1999 (inception) to December 31, 2001 in
conformity with accounting principles generally accepted in the United States of
America.
 
 The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern.  As discussed in Note A
to the consolidated financial statements, the Company has suffered recurring
losses from operations and has a working capital deficiency of $254,000 and a
capital deficiency of $279,000 that raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note A. The consolidated financial statements do not include
any adjustments that might result from the outcome of this
uncertainty.
 
 
 Eisner
LLP
 
 
 Florham
Park, New Jersey
 March 25,
2002
  
 See
report of independent registered public accounting firm and the accompanying
notes to financial statements
  
 F-1
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
  Consolidated
Balance Sheet
 December
31, 2001
 
 ASSETSCurrent
      assets:Cash
              
              $
              13,000Accounts
      receivable net of allowance for uncollectible accounts of
      $9,000
              
              
              35,000Prepaid
      expenses
              
              
              4,000Total
      current assets
              
              
              52,000Equipment,
      net of accumulated depreciation of  $157,000
              
              
              77,000Due
      from related parties
              
              
              8,000Other
      assets
              
              
              12,000$
              149,000LIABILITIESAccounts
      payable and accrued expenses
              
              $
              109,000Accounts
      payable – related party
              
              
              79,000Loan
      payable
              
              
              16,000Due
      to related party
              
              
              102,000Total
      current liabilities
              
              
              306,000Deferred
      revenue
              
              
              122,000Total
      liabilities
              
              
              428,000CAPITAL
      DEFICIENCYCommon
      stock, $.0001 par value; authorized 100,000,000 shares,issued
      and outstanding 39,683,381 shares
              
              
              4,000Additional
      paid-in capital
              
              
              1,504,000Deficit
      accumulated during the development stage
              
              
              (1,667,000
              )Less
      common stock issued in exchange for funding obligation
              
              
              (120,000
              )(279,000
              )$
              149,000
  See
report of independent registered public accounting firm and the accompanying
notes to financial statements
  F-2
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
  Consolidated
Statements of Operations
 
 Cumulative
      Periodfrom
      June 15, 1999Year
      Ended
              
              
              (Inception)
      toDecember
      31,
              
              
              December
      31,2001
              
              
              2000
              
              
              2001Revenue
              
              $
              3,000
              
              
              
              
              
              $
              3,000Cost
      of services
              
              
              2,000
              
              
              
              
              
              
              2,0001,000
              
              
              
              
              
              
              1,000Operating
      expenses:Website
      development
              
              
              56,000
              
              
              $
              3,000
              
              
              
              199,000General
      and administrative
              
              
              435,000
              
              
              
              861,000
              
              
              
              1,345,000Loss
      from operations
              
              
              (490,000
              )
              
              
              (864,000
              )
              
              
              (1,543,000
              )Other
      income (expense)Interest
      income
              
              
              
              
              
              
              2,000
              
              
              
              3,000Interest
      expense
              
              
              (4,000
              )
              
              
              
              
              
              
              (4,000
              )(4,000
              )
              
              
              2,000
              
              
              
              (1,000
              )Loss
      before extraordinary item
              
              
              (494,000
              )
              
              
              (862,000
              )
              
              
              (1,544,000
              )Extraordinary
      item – extinguishment of debt
              
              
              (88,000
              )
              
              
              
              
              
              
              (88,000
              )Net
      loss
              
              $
              (582,000
              )
              
              $
              (862,000
              )
              
              $
              (1,632,000
              )Basic
      and diluted per share data:Loss
      before extraordinary item
              
              $
              (.02
              )
              
              $
              (.03
              )Extraordinary
      item – extinguishment of debt
              
              
              (.00
              )Net
      loss
              
              $
              (.02
              )
              
              $
              (.03
              )
  See
report of independent registered public accounting firm and the accompanying
notes to financial statements
  F-3
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
  Consolidated
Statement of Stockholders' Equity (Capital Deficiency)
 Cumulative
Period from June 15, 1999 (inception) to
December 31, 2001
  CommonAccumulated
              
              
              Stock
      IssuedAdditional
              
              
              During
      the
              
              
              in
      ExchangeCommon Stock
              
              
              Paid-in
              
              
              Development
              
              
              FundingShares
              
              
              Amount
              
              
              Capital
              
              
              Stage
              
              
              Obligation
              
              
              TotalIssuance
      of stock to founder
              
              
              22,000,000
              
              
              $
              2,000
              
              
              $
              (2,000
              )
              
              
              
              
              
              
              
              $
              0Stock
      issued in connection with aprivate
      placement for cash of $0.10per
      share, net of costs duringNovember
      and December 1999
              
              
              8,350,260
              
              
              
              1,000
              
              
              
              785,000
              
              
              
              
              
              
              
              
              
              786,000Issuance
      of stock in exchange forequipment
      in November 1999 ($0.07 per share)
              
              
              1,600,000
              
              
              
              
              
              
              
              113,000
              
              
              
              
              
              
              
              
              
              113,000Issuance
      of stock for services inDecember
      1999 ($0.10 per share)
              
              
              350,000
              
              
              
              
              
              
              
              35,000
              
              
              
              
              
              
              
              
              
              35,000Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              $
              (188,000
              )
              
              
              
              
              
              (188,000
              )Balance,December 31,
      1999
              
              
              32,300,260
              
              
              
              3,000
              
              
              
              931,000
              
              
              
              (188,000
              )
              
              
              
              
              
              746,000Stock
      issued in connection with a private placement forcash
      of $0.10 per share, net of costs in February 2000
              
              
              200,000
              
              
              
              
              
              
              
              20,000
              
              
              
              
              
              
              
              
              
              
              20,000Stock
      issued in connection with a private placement for cashof  $0.12
      per share, net of costs during May throughOctober
    2000
              
              
              850,000
              
              
              
              
              
              
              
              102,000
              
              
              
              
              
              
              
              
              
              
              102,000Stock
      issued as compensation for services ($0.10 per share)
              
              
              505,000
              
              
              
              
              
              
              
              51,000
              
              
              
              
              
              
              
              
              
              
              51,000Options
      exercised
              
              
              200,000
              
              
              
              
              
              
              
              20,000
              
              
              
              
              
              
              
              
              
              
              20,000Warrants
      and options granted to consultants
              
              
              
              
              
              
              
              
              
              
              41,000
              
              
              
              
              
              
              
              
              
              
              41,000Net
      loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (862,000
              )
              
              
              
              
              
              (862,000
              )Balance,
      December 31, 2000
              
              
              34,055,260
              
              
              
              3,000
              
              
              
              1,165,000
              
              
              
              (1,050,000
              )
              
              
              
              
              
              118,000Stock
      issued in exchange for debt
              
              
              995,143
              
              
              
              
              
              
              
              119,000
              
              
              
              
              
              
              
              
              
              
              119,000Stock
      issued to a company controlled by the Company'smajority
      stockholder in September 2001 ($0.12 per share)
              
              
              1,500,000
              
              
              
              
              
              
              
              180,000
              
              
              
              
              
              
              $
              (180,000
              )Stock
      issued as compensation for services rendered($0.12
      per share)
              
              
              100,000
              
              
              
              
              
              
              
              12,000
              
              
              
              
              
              
              
              
              
              
              
              12,000Stock
      options issued as compensation for services rendered
              
              
              
              
              
              
              
              
              
              
              28,000
              
              
              
              
              
              
              
              
              
              
              
              28,000Stock
      issued in reverse acquisition
              
              
              3,032,978
              
              
              
              1,000
              
              
              
              
              
              
              
              (35,000
              )
              
              
              
              
              
              
              (34,000
              )Net
      Loss
              
              
              
              
              
              
              
              
              
              
              
              
              
              
              (582,000
              )
              
              
              60,000
              
              
              
              (522,000
              )Balance,
      December 31, 2001
              
              
              39,683,381
              
              
              $
              4,000
              
              
              $
              1,504,000
              
              
              $
              (1,667,000
              )
              
              $
              (120,000
              )
              
              $
              (279,000
              )
  See
report of independent registered public accounting firm and the accompanying
notes to financial statements
 F-4
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
  Consolidated
Statements of Cash Flows
 Cumulative
      Periodfrom
      June 15, 1999(Inception)
      toYear
      Ended December 31,
              
              
              December
      31,2001
              
              
              2000
              
              
              2001Cash
      flows from operating activities:Loss
      before extraordinary item
              
              $
              (494,000
              )
              
              $
              (862,000
              )
              
              $
              (1,544,000
              )Adjustments
      to reconcile net loss to net cash used inoperating
      activities:Depreciation
      and amortization
              
              
              92,000
              
              
              
              74,000
              
              
              
              171,000Provision
      for uncollectible accounts
              
              
              9,000
              
              
              
              
              
              
              
              9,000Common
      stock and stock options issued inexchange
      for services
              
              
              100,000
              
              
              
              92,000
              
              
              
              227,000Changes
      in:Accounts
      receivable
              
              
              (44,000
              )
              
              
              
              
              
              
              (44,000
              )Prepaid
      expenses
              
              
              (4,000
              )
              
              
              148,000
              
              
              
              (4,000
              )Due
      from related parties
              
              
              10,000
              
              
              
              (6,000
              )
              
              
              (8,000
              )Deferred
      revenue
              
              
              122,000
              
              
              
              
              
              
              
              122,000Accounts
      payable
              
              
              123,000
              
              
              
              35,000
              
              
              
              170,000Net
      cash used in operating activities
              
              
              (86,000
              )
              
              
              (519,000
              )
              
              
              (901,000
              )Cash
      flows from investing activities:Purchase
      of property and equipment
              
              
              
              
              
              
              (41,000
              )
              
              
              (121,000
              )Other
      assets
              
              
              
              
              
              
              
              
              
              
              (26,000
              )Net
      cash used in investing activities
              
              
              
              
              
              
              (41,000
              )
              
              
              (147,000
              )Cash
      flows from financing activities:Increase
      in bank overdraft
              
              
              (3,000
              )
              
              
              3,000Loans
      payable
              
              
              
              
              
              
              31,000
              
              
              
              31,000Issuance
      of common stock
              
              
              
              
              
              
              142,000
              
              
              
              915,000Collection
      on stock subscription receivable
              
              
              
              
              
              
              13,000
              
              
              
              13,000Due
      related party
              
              
              102,000
              
              
              
              
              
              
              
              102,000Net
      cash provided by financing activities
              
              
              99,000
              
              
              
              189,000
              
              
              
              1,061,000Net
      increase (decrease) in cash at end of period
              
              
              13,000
              
              
              
              (371,000
              )
              
              
              13,000Cash
      at beginning of period
              
              
              0
              
              
              
              371,000
              
              
              
              0Cash
      at end of period
              
              $
              13,000
              
              
              $
              0
              
              
              $
              13,000Interest
      paid in cash
              
              $
              4,000
              
              
              
              
              
              
              $
              4000Supplemental
      disclosures of noncash investing andfinancing
      activities:Stock
      subscription receivable for common stock inconnection
      with the private placement offering
              
              
              
              
              
              
              
              
              
              $
              13,000Issuance
      of 1,600,000 shares of common stock to arelated
      party in exchange for equipment recorded atthe
      lower of net book amount and fair value
              
              
              
              
              
              
              
              
              
              
              113,000Issuance
      of stock in exchange for debt
              
              $
              31,000
              
              
              
              
              
              
              
              31,000Net
      noncash liabilities assumed in reverse acquisition
              
              
              (34,000
              )
              
              
              
              
              
              
              (34,000
              )Exchange
      of $31,000 of debt for 995,143 shares of itscommon
      stock, valued at $119,000
              
              
              (88,000
              )
              
              
              
              
              
              
              (88,000
              )
  See report of independent
registered public accounting firm and the accompanying notes to financial
statements
  F-5
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
A – Organization, Basis of Presentation and Summary of Significant Accounting
Policies
 
 [1]
              Organization
      and basis of presentation:
 
 Concept
Digital, Inc. (the "Company") through its wholly owned subsidiary, PhotoAmerica,
Inc. ("PAI") is a development stage enterprise engaged in the marketing and
issuing warranties primarily for digital cameras.  Previously, PAI was
developing an Internet facility for processing digital images.
 
 On
September 26, 2001, PhotoAmerica, Inc. merged with Concept Digital, Inc.,
(“CDI”) a publicly traded development stage enterprise that had 3,032,978 shares
of common stock outstanding prior to the merger.  Pursuant to the
merger agreement, the Company acquired all of the outstanding common stock of
PhotoAmerica, Inc. in exchange for 35,000,283 shares of CDI common
stock.  The merger has been accounted for as a recapitalization by
PhotoAmerica, Inc. The equity accounts of PAI has been restated to give effect
to the CDI shares issued to the PAI shareholders.  No goodwill has
been recorded in connection with the transaction.  The 3,032,978
shares of CDI outstanding were valued at $(34,000), which represents the
estimated fair value of the net liabilities of the Company as of September 26,
2001, resulting in a decrease in PhotoAmerica, Inc.'s stockholders equity. The
historical deficit accumulated during the development stage of PhotoAmerica,
Inc., adjusted for the effect of the net liabilities acquired, is being carried
forward after the acquisition.  The results of CDI has been included
in operations commencing September 26, 2001.
 
 The
accompanying consolidated financial statements include the accounts of the
Company and its subsidiary after elimination of significant intercompany
accounts and transactions.
 
 There is
no assurance that the Company's marketing efforts will be successful, that the
Company will ever have commercially accepted services, or that the Company will
achieve significant sales of any such services.  The Company has
incurred losses from operations since its inception.  If the Company
is unable to successfully market is services it is unlikely that the Company
could continue its business.
 
 The
accompanying consolidated financial statements have been prepared in conformity
with accounting principles generally accepted in the United States of America,
which contemplate continuation of the Company as a going concern and realization
of assets and settlement of liabilities and commitments in the normal course of
business.  The Company has incurred substantial losses since its
inception and has generated nominal revenue.  The Company has a
working capital deficiency of $254,000 and a capital deficiency of $279,000. The
Company will continue to require cash infusions of either debt or equity until
it generates positive cash flow from operations.  Additionally, the
Company has failed to file in a timely manner, its quarterly and annual reports
with the Securities and Exchange Commission subsequent to the quarterly report
as of and for the three months ended June 30, 2001.  Accordingly,
there is substantial doubt about the ability of the Company to continue as a
going concern. These financial statements include no adjustments relating to the
potential inability of the Company to continue as a going
concern.  The Company anticipates that its majority stockholder will
continue advancing funds as required.
 
 [2]
              Equipment:
 
 Equipment
is recorded at cost less accumulated depreciation.  Depreciation is
computed using the straight-line method over the estimated useful lives of the
assets (generally 3 years).  Depreciation expense for the years ended
December 31, 2001 and 2000 and the cumulative period from June 15, 1999
(inception) to December 31, 2001 aggregated $77,000, $74,000 and $156,000,
respectively.
    F-6
 Table of Contents
 Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
A – Organization, Basis of Presentation and Summary of Significant Accounting
Policies (continued)
 
 [3]
              Website
      development costs:
 
 The
Company accounts for its website development costs in a manner consistent with
the Emerging Issues Task Force Issue 00-2, "Accounting for Website Development
Costs" and American Institute of Certified Public Accountants Statements of
Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use".  Accordingly, costs related to the
development of internal use software other than those incurred during the
application development stage are expensed as incurred.  Costs
incurred during the application development stage are required to be capitalized
and amortized over the estimated useful life of the software.
 
 [4]
              Trade
      names:
 
 Purchased
trade names are recorded at cost less accumulated amortization and are included
in other assets. Trade names are being amortized over 2 years from the initial
date of use.  Amortization expense for the year ended December 31,
2001 and accumulated amortization as of December 31, 2001 aggregated $14,000.
There was no amortization expense for the year ended December 31,
2000.
 
 [5]
              Revenue
      recognition:
 
 Revenue
from processing images is recognized upon delivery of the images.  The
Company recognizes revenue from warranties on electronics and cameras (which
range from three to seven years from the purchase by the consumer) over the term
of the warranty subsequent to the expiration of the manufacturer's warranty,
which is generally one year.
 
 [6]  Advertising:
 
 Advertising
costs are expensed as incurred. For the years ended December 31, 2001 and 2000
and for the period from June 15, 1999 (inception) to December 31, 2001,
advertising expense aggregated $17,000, $140,000 and $157,000,
respectively.
 
 [7]
              Income
      taxes:
 
 The
Company recognizes deferred tax liabilities and assets for the expected future
tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax liabilities and assets are
determined on the basis of the differences between the tax bases of assets and
liabilities and their respective financial reporting amounts ("temporary
differences") at enacted tax rates in effect for the years in which the
differences are expected to reverse.
 
 [8]  Stock-Based
Compensation:
 
 Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") allows companies to either expense the estimated fair
value of stock options or to follow the intrinsic value method set forth in APB
Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but to
disclose the pro forma effects on net income had the fair value of the options
been expensed.  The Company has elected to continue to apply APB 25 in
accounting for its stock option incentive plans.
   F-7
 Table of Contents
 Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
A – Organization, Basis of Presentation and Summary of Significant Accounting
Policies (continued)
 
 [9]
              Per
      share information:
 
 Basic
loss per share is computed by dividing net loss by the weighted average number
of common shares outstanding. Diluted loss per share is computed by dividing net
loss by the weighted average shares outstanding, assuming all dilutive potential
common shares were issued using, with respect to the assumed proceeds from the
exercise of dilutive options and warrants, the treasury stock method calculated
based upon average market price for the period.  The weighted average
number of common shares outstanding for the year ended December 31, 2001 and
2000 was 36,198,199 and 33,270,547, respectively; options and warrants
(2,730,000 in 2001 and 2,085,000 in 2000) have been excluded since they are anti
dilutive.
 
 [10]
              Use
      of estimates:
 
 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 amount of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements, and the reported amount of income and expenses during the reporting
period.  Actual results could differ from those
estimates.
 
 [11]
              New
      accounting standards:
 
 In June
2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 141,
“Business Combinations.”  SFAS No. 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001.  This statement specifies that certain acquired intangible
assets in a business combination be recognized as assets separately from
goodwill and that existing intangible assets and goodwill be evaluated for these
new separation requirements.  Management had complied with this
statement.
 
 In June
2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” SFAS
No. 142 changes the accounting for goodwill from an amortization method to an
impairment-only approach.  Amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon adoption of
this statement.   In addition, this statement requires that
goodwill be tested for impairment at least annually at the reporting unit
level.  The Company implemented SFAS No. 142 on January 1,
2002.  Management does not expect this statement to have a material
impact on the Company’s consolidated financial position or results of
operations.
 
 In June
2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement
Obligations.”  This statement addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs.  The Company is
required to implement SFAS No. 143 on January 1, 2003.  Management
does not expect this statement to have a material impact on the Company’s
consolidated financial position or results of operations.
 
 In August
2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal
of Long-Lived Assets.”  This statement supercedes SFAS No. 121,
“Accounting for the Impairment of Long-Lives Assets and for Long-Lived Assets to
Be Disposed Of.”  The statement retains the previously existing
accounting requirements related to the recognition and measurement of the
impairment of long-lived assets to be held and used while expanding the
measurement requirements of long-lived assets to be disposed of by sale to
include discontinued operations.  It also expands the previously
existing reporting requirement for discontinued operations to include a
component of an entity that either has been disposed of or is classified as held
for sale.  The Company implemented SFAS No. 144 on January 1,
2002.  Management does not expect this statement to have a material
impact on the Company’s consolidated financial position or results of
operations.
 
 Note
B – Related Party Transactions
 
 During
2001, the Company sold digital camera warranties to a company controlled by the
Company's majority stockholder.  As of December 31, 2001, due from
related parties represents amounts due from the sale of warranties to this
company.
 
  F-8
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Due to
related party is an amount due to the Company's majority stockholder which bears
interest at 6% and is due on demand.  Interest expense aggregated
$3,000 as of December 31, 2001.
 
 In
September 2001, a company controlled by the Company's majority stockholder, in
exchange for 1,500,000 shares of the Company's common stock (valued at $180,000)
agreed to fund substantially all current sales, marketing and administrative
expenses for one year.  This is being amortized through September 30,
2002; accordingly as of December 31, 2001, the unamortized balance of $120,000
is included as a component of the capital deficiency.
 
 The
Company rents office space on a month-to-month basis from an affiliated entity,
rent expense aggregated $48,000 in 2001, $48,000 in 2000 and $96,000 from June
15, 1999 (inception) to December 31, 2001.
 
 A member
of the board of directors is a partner in the Company's principal law
firm.  During the year ended December 31, 2001 and 2000 and for the
period from June 15, 1999 through December 31, 2001, the Company incurred legal
fees to the firm aggregating $79,000, $50,000 and $152,000,
respectively.  Accounts payable – related party of $79,000 is due to
the law firm.
 
 Note
C – Loans Payable
 
 The loan
payable of $16,000 bears interest at 10% per annum and matured in May
2002.
 
 In August
2000, an unaffiliated individual, advanced $6,000 to the Company. In June 2001,
the loan was exchanged for 195,000 shares of the Company's common stock and the
Company recognized an extraordinary loss of $17,000.
 
 In
connection with the initial merger proposal with CDI, an affiliate of CDI,
loaned the Company $25,000. In March 2001, this loan was exchanged for 800,143
shares of the Company's common stock and the Company recognized an extraordinary
loss of $71,000.
 
  F-9
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
D – Stockholders' Equity
 
 [1]
              Stock
      options:
 
 During
the year ended December 31, 1999, the board of directors authorized the issuance
of employee stock options to purchase 1,210,000 shares of common
stock.  The options, which vested immediately, have an exercise price
of $0.10 per share.
 
 In
January 2000, the Company's board of directors authorized an employee stock
option plan under which 1,200,000 shares of common stock are reserved for
issuance upon exercise of either incentive or non-incentive stock options, which
may be granted from time to time by the Board of Directors to
employees.  The Board of Directors determines the option price (not to
be less than estimated fair value for incentive options) vesting period and
expiration date (not to exceed 10 years) at the date of grant.
 
 The
Company applies APB 25 in accounting for its stock option plan and, accordingly,
recognizes compensation expense for the difference between the intrinsic value
of the underlying common stock and the exercise price of the option at the date
of grant.  Had compensation cost for the Company's stock option plan
been determined based upon the fair value of the option at the grant date for
awards under the plan consistent with the methodology prescribed under SFAS
No.123, the Company's pro forma loss and pro forma loss per share for 2001 and
2000 would have been approximately $585,000 and $868,000, and $(0.02) and
$(0.03) per share, respectively.  The weighted average fair value of
the options granted during  2001 and 2000 was $0.04 and $0.05 per
share, respectively, on the dates of grant using the Black-Scholes option
pricing model with the following assumptions; dividend yield 0%, volatility 0%
(since the options were granted prior to the reverse acquisition of CDI),
expected life 10 years, risk free interest rates ranging from 4.7% to
5.6%.
 
 The
following summarizes stock option transactions:
 2001
              
              
              2000Weighted
              
              
              
              
              
              WeightedAverage
              
              
              
              
              
              AverageExercise
              
              
              
              
              
              ExerciseShares
              
              
              Price
              
              
              Shares
              
              
              PriceOutstanding
      options at the beginningof
      year
              
              
              1,235,000
              
              
              $
              0.10
              
              
              
              1,210,000
              
              
              $
              0.10Options
      granted
              
              
              645,000
              
              
              
              0.12
              
              
              
              250,000
              
              
              
              0.12Options
      expired or canceled
              
              
              
              
              
              
              
              
              
              
              (25,000
              )
              
              
              0.12Options
      exercised
              
              
              
              
              
              
              
              
              
              
              (200,000
              )
              
              
              0.10Outstanding
      options at the end ofyear
              
              
              1,880,000
              
              
              $
              0.11
              
              
              
              1,235,000
              
              
              $
              0.10
 
 The
following table summarizes information about the plan's options outstanding as
of December 31, 2001:
 
 Options
      Outstanding
              Options
      ExercisableWeightedAverageRemaining
              Weighted
              
              WeightedRange
      of
              
              Contractual
              Average
              
              AverageExercise
              Number
              Life
              Exercise
              Number
              ExercisePrices
              Outstanding
              (In
      Years)
              Price
              Exercisable
              Price$0.10
      – $0.12
              1,880,000
              8.4
              $0.11
              1,797,500
              $
      0.11
 
 
 
 
 F-10
 Table of Contents
 
 Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
D – Stockholders' Equity (continued)
 
 [2]
              Warrants
      and Non-Employee Options
 
 In
connection with an equity private placement in 2000, the Company granted
warrants to purchase 100,000 shares of the Company's common stock at an exercise
price of $0.10 per share expiring in 2010.
 
 In 2000,
the Company issued warrants to purchase 750,000 shares with an exercise price of
$.10 per share expiring in 2010 to a consultant and granted, to various
consultants, options under the stock option plan to purchase 135,000 shares of
common stock with an exercise price of $.12 per share and expiring from 2005 to
2010.  These warrants and options were valued using the Black-Scholes
option pricing model with the following assumptions; dividend yield 0%,
volatility 0%, expected life ranging from 5 to 10 years, risk free interest
rates ranging from 5.8% to 6.3%.  The charge to operations aggregated
$41,000.
 
 In 2001,
the Company issued options to purchase 600,000 shares with an exercise price of
$.10 per share expiring in 2011 to a consultant and a director.  These
options were valued using the Black-Scholes option pricing model with the
following assumptions; dividend yield 0%, volatility 0% (since the options were
granted prior to the reverse acquisition of CDI), expected life 10 years, risk
free interest rates ranging from 4.7% to 5.3%.  The charge to
operations aggregated $28,000.  As of December 31, 2001, 3,795,000
shares were reserved for issuance of common stock under the stock option plan
and for other stock options and warrants outstanding.
 
 Note
E - Income Taxes
 
 The
significant components of the Company's deferred tax asset as of December 31,
2001 are as follows:
 Deferred
      income tax asset:Net
      operating losses carryforwards
              
              $
              631,000Deferred
revenue
              
              
              51,000Other
              
              
              4,000686,000Valuation
      allowance
              
              
              (686,000
              )Net
      deferred income tax asset
              
              $
              0
 
 The
significant components of the provision for income taxes for the years ended
December 31, 2001 and 2000 are as follows:
 
 2001
              
              
              2000Deferred:Federal
              
              $
              176,000
              
              
              $
              302,000State
              
              
              72,000
              
              
              
              71,000Change
      in valuation allowance
              
              
              (248,000
              )
              
              
              (373,000
              )Total
              
              $
              0
              
              
              $
              0
   F-11
 Table of Contents
  Concept
Digital, Inc.
 (a
development stage enterprise)
 
 Notes
to Consolidated Financial Statements
 December
31, 2001
  Note
E – Income Taxes (continued)
 
 As of
December 31, 2001, the Company has net operating loss carry forwards of
approximately $1,500,000 for federal income tax purposes, which expire through
2021.
 
 The
difference between the statutory federal income tax rate (tax benefit) on the
Company's loss before provision for income taxes and extraordinary item and the
Company's effective income tax rate is summarized as follows:
 
 2001
              
              
              2000Statutory
      federal income tax rate
              
              
              (34.0
              )%
              
              
              (34.0
              )%Other
              
              
              1.0
              
              
              
              (1.0
              )Increase
      in valuation allowance
              
              
              33.0
              
              
              
              35.0Effective
      income tax rate
              
              
              0
              %
              
              
              0
              %
 
 
 F-12
 Table of Contents





ITEM
      8.
            CHANGES
      IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
      DISCLOSURE





The
Company's independent auditor for the fiscal year ended on December 31, 2001 was
Eisner LLP.  The Company’s current independent auditor is Seligson and
Giannattasio, LLP of White Plains, New York. The Company changed auditors for
the fiscal year ended on December 31, 2002 as a cost effective
move.  The Company does not presently intend to change independent
auditors. At no time have there been any disagreements with such independent
auditors regarding any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure.





PART III





ITEM
      9.
            DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:
      COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE
  ACT





The
directors and officers of the Company and its subsidiaries, as of April 7,
2008, are set forth below. The directors hold office for their respective term
and until their successors are duly elected and qualified. Vacancies in the
existing Board are filled by a majority vote of the remaining directors. The
officers serve at the will of the Board of Directors.





NAME
            AGE
            WITH COMPANY SINCE
            DIRECTOR/POSITIONJoseph
      Douek
            33
            2001
            Chairman
      of the Board of Directors, Chief Executive Officer and Chief Financial
      OfficerRichard
      Darrow,
            53
            2001
            Director








JOSEPH DOUEK, 33.CHAIRMAN OF THE BOARD OF DIRECTORS,
CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER.




Mr.
Joseph Douek was born, raised and currently resides in Brooklyn,
NY.  He is the Chief Executive Officer and owner of Willoughby’s since
1994.  Established in 1898, Willoughby’s is NYC’s oldest photographic
retailer.  Mr. Douek’s responsibilities include overseeing the day to
day activities of Willoughby’s and its long term strategic
planning.





In
December 2001, Mr. Douek was appointed by The Honorable Mayor Rudolph Giuliani
as Brooklyn’s representative to the NYC Economic Development Corporation Board
of Directors.  Since 2001 Mr. Douek has continued to serve as an EDC
Board Member and has been reappointed by NYC Mayor, The Honorable Michael
Bloomberg.





In
addition to serving as an appointed official in the capacity of a NYC Economic
Development Corporation Board Member, in February 2002 Mr. Douek was appointed
by The Honorable Mayor Mike Bloomberg to serve as the Brooklyn representative to
the NYC Industrial Development Agency Board of Directors Mr. Douek continues to
serve as an IDA Board Member and has initiated efforts to promote economic
development in Brooklyn and all the five Boroughs of NYC.





RICHARD
DARROW, 53.DIRECTOR.





All
officers and directors listed above will remain in office until the next annual
meeting of our stockholders, and until their successors have been duly elected
and qualified. There are no agreements with respect to the election of
Directors. We have not compensated our Directors for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of
Directors.  We do not have any standing committees. Our Board of
Directors may in the future determine to pay Directors' fees and reimburse
Directors for expenses related to their activities.







10
 Table of Contents






None of
our Officers and/or Directors have filed any bankruptcy petition, been convicted
of or been the subject of any criminal proceedings or the subject of any order,
judgment or decree involving the violation of any state or federal securities
laws within the past five (5) years.




All
officers and directors listed above will remain in office until the next annual
meeting of our stockholders, and until their successors have been duly elected
and qualified. There are no agreements with respect to the election of
Directors. We have not compensated our Directors for service on our Board of
Directors, any committee thereof, or reimbursed for expenses incurred for
attendance at meetings of our Board of Directors and/or any committee of our
Board of Directors. Officers are appointed annually by our Board of Directors
and each Executive Officer serves at the discretion of our Board of
Directors.  We do not have any standing committees. Our Board of
Directors may in the future determine to pay Directors' fees and reimburse
Directors for expenses related to their activities.





None of
our Officers and/or Directors have filed any bankruptcy petition, been convicted
of or been the subject of any criminal proceedings or the subject of any order,
judgment or decree involving the violation of any state or federal securities
laws within the past five (5) years.





CERTAIN
LEGAL PROCEEDINGS





No
director, nominee for director, or executive officer of the Company has appeared
as a party in any legal proceeding material to an evaluation of his ability or
integrity during the past five years.





Compliance with Section
16(a) of the Exchange Act





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





To the
Company's knowledge, based solely on a review of the copies of such reports
furnished to the Company, all reports under Section 16(a) required to be filed
by its officers and directors and greater than ten percent beneficial owners
were not filed as of the date of this filing.





Code of
Ethics





We have
not adopted a Code of Ethics.




ITEM
10. EXECUTIVE
COMPENSATION





The
following information relates to compensation received by the Chief Executive
Officer of the Company in fiscal year ending December 31, 2001 for the executive
officers who were serving as of fiscal year ending December 31, 2001, whose
salary and bonus during fiscal year ending December 31, 2001 exceeded $100,000.
In 2001, no officer received compensation in excess of $100,000.





Summary
Compensation Table





NAME AND PRINCIPAL POSITION
            YEAR
            SALARY
              ($)
            BONUS
              ($)
            RESTRICTED STOCK AWARD ($)
            TOTAL ($)Joseph
      Douek,
              Chief
      Executive Officer (1)
            2001
            0
            0
            0
            0





(1)
            Pursuant
      to a Merger Agreement executed on September 14, 2001 between Concept
      Digital, Inc., Concept Digital Acquisition Corporation and Photo America,
      Inc., Joseph Douek was appointed Chief Executive Officer of the
      Company.







11
 Table of Contents






Employment
Agreements




No
officer or director has been granted an employment contract or been provided a
future benefit to be received upon separation from service with the
Company.





ITEM
11. SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT





The
following table sets forth as of December 31, 2001 information with respect to
the beneficial ownership of the Company's Common Stock by (i) each person known
by the Company to own beneficially 5% or more of such stock, (ii) each Director
of the Company who owns any Common Stock, and (iii) all Directors and Officers
as a group, together with their percentage of beneficial holdings of the
outstanding shares.





Security
Ownership of Beneficial Owners (1):




TITLE OF CLASS
            NAME & ADDRESS
            AMOUNT
            PERCENT (2)Common
      Stock
            Joseph
      Douek
              Chief
      Executive Officer
            18,616,120
            46.91%Common
      Stock
            Richard
      Darrow
              Director
            100,000
            0.25%All
      directors and executive officers as a group (2 persons)
            
            19,616,120
            47.163%





(1)
            The
      persons named in this table have sole voting and investment power with
      respect to all shares of common stock reflected as beneficially owned by
      each.





(2)
            For
      purposes of this table only, this percentage is based on 39,683,381 shares
      outstanding as of December 31,
2001.




ITEM
12. CERTAIN RELATIONSHIPS
AND RELATED TRANSACTIONS.





During
2001, the Company sold digital camera warranties to a company controlled by the
Company's majority stockholder.  As of December 31, 2001, due from
related parties represents amounts due from the sale of warranties to this
company.





Due to
related party is an amount due to the Company's majority stockholder which bears
interest at 6% and is due on demand.  Interest expense aggregated
$3,000 as of December 31, 2001.





In
September 2001, a company controlled by the Company's majority stockholder, in
exchange for 1,500,000 shares of the Company's common stock (valued at $180,000)
agreed to fund substantially all current sales, marketing and administrative
expenses for one year.  This is being amortized through September 30,
2002; accordingly as of December 31, 2001, the unamortized balance of $120,000
is included as a component of the capital deficiency.





The
Company rents office space on a month-to-month basis from an affiliated entity,
rent expense aggregated $48,000 in 2001, $48,000 in 2000 and $96,000 from June
15, 1999 (inception) to December 31, 2001.





A member
of the board of directors is a partner in the Company's principal law
firm.  During the year ended December 31, 2001 and 2000 and for the
period from June 15, 1999 through December 31, 2001, the Company incurred legal
fees to the firm aggregating $79,000, $50,000 and $152,000,
respectively.  Accounts payable – related party of $79,000 is due to
the law firm.






12
 Table of Contents





PART
IV





ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K





(a)   The
following documents are filed as part of this report:





1.   Financial
statements; see index to financial statement and schedules under Item 7
herein.





2.   Financial
statement schedules; see index to financial statements and schedules under Item
7 herein.





3.  Exhibits:





The
following exhibits are filed with this Form 10-KSB and are identified by the
numbers indicated: see index to exhibits immediately following financial
statements and schedules of this report.





3(i)      
Certificate of Incorporation, as amended (1)





3.2       Bylaws,
as amended




31.1
              Certification
      of Certifying Officer Pursuant To 18 U.S.C. Section 1350, As Adopted
      Pursuant To Section 302 Of The Sarbanes-Oxley Act Of
  2002
  32.1
              Certification
      of Certifying Officer Pursuant To 18 U.S.C. Section 1350 As Adopted
      Pursuant To Section 906 Of The Sarbanes-Oxley Act Of
  2002


(b)  Reports
on Form 8-K





2.1      
Agreement and Plan of Merger dated as of September 14, 2001 by and among the
Company, Acquisition Corporation and PAI.Incorporated by reference to the
Amended Form 8-K filed September 26, 2001.






13
 Table of Contents







SIGNATURES





Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, there unto duly authorized.





CONCEPT
      DIGITAL, INC.






Dated:
            April 7,
      2008
            By:
      /s/
      Joseph DouekChief
      Executive Officer,
              Principal
      Financial Officer,
              Principal
      Accounting Officer




Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.





Dated:
            April 7,
      2008
            By:
      /s/
      Joseph DouekChief
      Executive Officer,
              Principal
      Financial Officer,
              Principal
      Accounting Officer and Director





Dated:
            April 7,
      2008
            By:
      /s/
      Richard DarrowDirector





14