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
                  FOR THE FISCAL YEAR ENDED: DECEMBER 31, 2003
                           COMMISSION FILE NO. 0-25658

                       SECURED DIGITAL APPLICATIONS, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

                        DELAWARE                           84-1357927
                  (STATE OR OTHER JURISDICTION            (IRS EMPLOYER
                      OF INCORPORATION)                 IDENTIFICATION NO.)

                     SUITE 11.02, 11TH FLOOR, MENARA MERAIS
                                NO. 1, JALAN 19/3
                               46300 PETALING JAYA
                               SELANGOR, MALAYSIA
               (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)

                               011 (603) 7956-7026
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)

                        DIGITAL BROADBAND NETWORKS, INC.
          (FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)

        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE

              SECURITIES REGISTERED UNDER SECTION 12(g) OF THE ACT:
                   COMMON STOCK, $0.00001 PER SHARE PAR VALUE

Indicate by check mark whether the Company (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 Company was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes:  X      No:

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B contained in this form and no disclosure will be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form
10-KSB. [ X]

     Issuer's revenues for its most recent fiscal year: $15,913,136

     The aggregate market value of the voting stock of the Company held by
non-affiliates as of April 8, 2004 was approximately $17,877,816.

     The number of shares outstanding of the Company's common stock, as of April
8, 2004, was 97,928,899.

         Documents incorporated by reference: None



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                                TABLE OF CONTENTS
PART I

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

PART II

Item 5     Market for Common Equity, Related Stockholder Matters and
           Small Business Issuer Purchases of Equity Securities
Item 6     Management's Discussion and Analysis
Item 7     Financial Statements
Item 8     Changes In and Disagreements with Accountants on Accounting
           and Financial Disclosure
Item 8A    Controls and procedures

PART III

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

SAFE HARBOR STATEMENT

     This Form 10-KSB and other reports filed by the Company from time to time
with the Securities and Exchange Commission, as well as the Company's press
releases, contain or may contain forward-looking statements, within the meaning
of Section 27A of the Securities Act of 1933 and Section 21E of the Securities
Exchange Act of 1934, and information that is based upon beliefs of, and
information currently available to, the Company's management, as well as
estimates and assumptions made by the Company's management. Any statements
contained herein that are not statements of historical fact may be deemed to be
forward-looking statements. Forward-looking statements can be identified by the
use of forward-looking terminology such as "believes", "may", "should",
"anticipates", "estimates", expects", "future", "intends", "hopes", "plans" or
the negative thereof. Such forward-looking statements involve known and unknown
risks, uncertainties and other factors that could cause actual results of
Secured Digital Applications, Inc. to vary materially from historical results or
from any future results expressed or implied in such forward-looking statements.

         Such factors include, among others, the following: the revocation of
the Company's license, the inability to successfully implement its business
plans, the cancellation or postponement of contracts that the Company has
entered into in connection with its business, the inability to obtain services
provided by other communications companies, the inability of the Company to
raise capital on a timely basis, existing and future government regulations, the
failure to retain qualified personnel, competitive pressures and potentially
adverse tax and cash flow consequences resulting from operating in multiple
countries with different laws and regulations, the inability to maintain
profitability in the future and the general economic and business conditions in
Malaysia, the United States and other countries, primarily in Asia, in which the
Company does or seeks to do business. The Company does not undertake to update,
revise or correct any forward-looking statements.


                                       2
<PAGE>



ITEM 1.   DESCRIPTION OF BUSINESS.

HISTORICAL DEVELOPMENT

         Secured Digital Applications, Inc. (formerly Digital Broadband
Networks, Inc.) (the "Company") is a Delaware corporation. The Company was
formed through a reverse merger in April 1999 with the former Kalan Gold
Corporation. On June 5, 2002, the Company reincorporated under Delaware law by
merging the existing Digital Broadband Networks, Inc., organized under Colorado
law, with and into a wholly owned subsidiary organized under Delaware law. On
January 28, 2004, the Company's board of directors unanimously approved the name
change to Secured Digital Applications, Inc. The Company provides broadband
products and applications to its customers, primarily in Malaysia. In December
2003, the Company expanded its business to development, integration and
provision of secured shipping and supply chain management services.

         The principal business address of the Company is Suite 11.02, 11th
Floor, Menara Merais, No. 1, Jalan 19/3, 46300 Petaling Jaya, Selangor,
Malaysia. The United States address of the Company is 10th floor, 230 Park
Avenue, New York, N.Y.

         As of April 8, 2004, the Company had a total of 97,928,899 shares of
common stock issued and outstanding. The Company has not been subject to any
bankruptcy, receivership or similar proceeding.


BUSINESS

         The Company is a system solution provider involved in application
development, broadband network operation, delivery of value added applications
and services; sale of devices that utilize broadband networks and the sale of
biometric security devices. During 2003, the Company expanded its business to
include the development, integration and provision of secured shipping and
supply chain management services. The Company's principal operations during 2003
included the development and operation of a wireless broadband network in
Malaysia, the development of interactive, multimedia content for the Internet
and the development, licensing and/or sale of specific products and applications
that utilize the capacities of a broadband network. These include the EyStar
SmartHome Console, broadband modems, biometric systems and Internet-based
cameras. Beginning in 2004, the Company hopes to generate additional income from
its new business in the development, integration and provision of secured
shipping and supply chain management services.

         The Company, which conducts its operations in Malaysia, has three
principal subsidiaries: Animated Electronic Industries Sdn Bhd ("AEI"), Perwimas
Telecommunications Sdn Bhd ("PTSB") and EyStar Media Inc. ("EMI"). AEI, based in
Malaysia, is involved in the design, development and production of multimedia
content; provision of consulting services for website development, network
engineering and project management in IT related projects. PTSB, an 86%-owned
subsidiary of AEI, provides broadband and application services under licenses
granted by the government of Malaysia. EMI, a wholly owned Delaware corporation,
organized on June 20, 2002, seeks to acquire United States technology companies
and to expand the Company's operations into the United States.




                                       3
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New Business Development

         During 2003, the Company established three new Malaysian subsidiaries:
Temasya Wira Sdn Bhd ("TW"), Secured Shipping Sdn Bhd ("SS") and Asiaco Multi
Corporation Sdn Bhd ("AMC") to spearhead the Company's involvement in the
development, integration and provision of secured shipping and supply chain
management services. In February 2004, the Company established another
wholly-owned subsidiary, Vista Positive Sdn Bhd ("VP"). VP will be used as a
vehicle to acquire the business and assets of Izfahan Enterprise (M) Sdn Bhd
("IE"), a Malaysian freight forwarding company, as the Company seeks to expand
its line of business into third party logistics and secured shipping industries.

         TW, a 60% subsidiary of AEI, was established to undertake the research
and development of biometric security applications in Malaysia. SS, presently a
wholly owned subsidiary of AEI, will be the joint venture vehicle between the
Company and Amove Resources Sdn Bhd ("AR") to provide secured shipping services.
AEI's equity holding in SS will be reduced to 51% upon fulfillment of all
closing conditions stipulated in the joint venture agreement executed between
the Company and AR.

         AMC, presently a wholly owned subsidiary of AEI, was incorporated as a
special vehicle to acquire the businesses and selected net assets of Asiaco
Material Handling Sdn Bhd ("AMH") and its subsidiary, associate and related
companies ("the Asiaco Group"), based in Malaysia. AMH and the Asiaco Group of
Companies are primarily engaged in supply chain management, industrial moving,
packing and unpacking industrial equipment, land transportation and secured
logistics, as well as the sale, rental and servicing of material handling
equipment. AEI's equity holding in AMC will be reduced to 60% upon full
compliance with all closing conditions for the acquisition of the businesses and
net assets of AMH and the Asiaco Group of Companies. At December 31, 2003, AMC
had three subsidiary and two associate companies as follows:

1.     Asiaco Material Handling (East Coast) Sdn Bhd ("AEC"), an 80% subsidiary
       of AMC, is primarily involved in the sale, servicing and rental of
       material handling equipment in the eastern region of Malaysia.

2.     Asiaco Logistic Sdn Bhd ("ALG"), a 67% subsidiary of AMC, is primarily
       involved in industrial moving, packing and unpacking of industrial
       equipment and secured logistics.

3.     Asiaco Services Sdn Bhd ("ASS"), a 60% subsidiary of AMC, is primarily
       involved in providing maintenance, repair and restoration services for
       all material handling equipment.

4.     Asiaco Transport Sdn Bhd ("ATP"), a 46% associate of AMC, is involved in
       providing land transportation services.

5.     Asiaco Engineering Sdn Bhd ("AEG"), a 33% associate of AMC, is involved
       in providing engineering and fabrication services for automobile and
       material handling equipment.

         In February 2004, AMC completed the purchase of a 62% equity interest
in Asiaco Taiping Sdn Bhd ("ATG"). ATG is primarily involved in the sale,
servicing and rental of material handling equipment in the northern region of
Malaysia.



                                       4
<PAGE>



         As of the date of this report, AMC is working towards completing the
transfer of business, customers and selected net assets (selected assets less
selected liabilities) from Asiaco Pack Trade Sdn Bhd ("APT"), Asiaco Heavylift
Sdn Bhd ("AHL"), Asiaco Selangor Sdn Bhd ("ASL"), Asiaco Melaka Sdn Bhd ("AML").
All four companies are primarily involved in the sale, servicing and rental of
material handling equipment. Although the acquisition of these four companies
was closed in December 2003, the full transfer of business and net assets from
these companies to AMC has yet to be completed pending approval by the relevant
Malaysian authorities and third parties. The Company presently expects the
transfer to be completed by the third quarter of 2004.

         In November 2003, the Company incorporated a Thai company, Asiaco Multi
Corporation (Thailand) Co. Ltd ("AMCT"), which will be used as a special vehicle
to acquire the net assets and business of Asiaco Material Handling (Thailand)
Co. Ltd. ("AMHT"). This acquisition has yet to be completed as of the date of
this report.

         At December 31, 2003, the Company, including its newly acquired
subsidiary companies, had a total of 66 employees, all of whom were employed in
Malaysia. EMI, a wholly owned U.S. subsidiary does not have any employees. In an
effort to reduce its operating costs, the Company has outsourced its
labor-intensive content production work to third parties. The Company plans to
recruit additional employees in 2004 to further strengthen its sales and
marketing division.


Interactive Media Development

         The Company is involved in the design, development and production of
interactive multimedia content, websites, programs and applications, which
includes the following activities:

o Designing, producing, hosting and distribution of interactive multimedia
content, websites, programs and applications.

o Developing and producing e-commerce programs and Internet-based security
applications and solutions.

o Providing project consulting services on broadband communication and
networking systems for property development projects.


Supply Chain Management Services

         The Company's supply chain management is a service encompassing
hardware, software and personnel to integrate the flow of goods and information
from initial sourcing to delivery of raw materials and/or finished goods to the
end user. Key services offered to clients within this end-to-end process include
purchasing, production planning, order processing and fulfillment, inventory
management, transportation, distribution, and customer service. The Company's
supply chain management services are flexible and can be modified according to
the needs of companies, from large multinationals to small businesses. The
Company's supply chain management service is intended to provide a
cost-effective way to help companies manage their supply chain process. By using
the service, companies will be able to focus its resources on their businesses
by outsourcing the management of their supply chain to the Company.



                                       5
<PAGE>



Secured Shipping Services

         By combining its supply chain management systems with technology like
Radio Frequency Identification (RFID) and Global Positioning System (GPS)
tracking system and biometric security systems and solutions, the Company has
entered the business of offering secured shipping services to assist exporters
to the United States to comply with the Container Security Initiative (CSI). The
Company's secured shipping services provide for the electronic tagging of
containers using a GPS tracking device that allows consignees to know where the
containers are in real-time and whether the container has been tampered with.
Electronic tags also help importers and exporters to track their shipments, an
essential element of the just-in-time shipping system commonly employed by
manufacturers, importers and exporters. The Company's secured shipping services
is uniquely suited to identification applications that provide a high level of
security, non-line-of-sight reading at long ranges and reliable performance in
harsh environments. The underlying value of the Company's secured shipping
services is a drive toward the end-to-end visibility of parts, materials and
products as they move through the supply chain. The technology offered by the
Company can be applied for interoperability across all transportation modes,
encompassing air, ocean and land.

EyStar SmartHome Console

         The multi-protocol EyStar SmartHome Console is a gateway device that
bridges external data networks such as the Internet to internal home networks
like Ethernet, telephone line, power line and the 802.11b wireless LAN,
eliminating the need for any additional wiring in the home. The Console has the
capacity to enable value-added services to be offered to subscribers. These
services include home healthcare in conjunction with hospitals and health
advisors; interconnection and control of appliances produced by different
manufacturers; and security applications that allow subscribers to check on
their homes remotely. This Console is designed to operate on both the narrow and
broadband fixed line/wireless networks and can be linked to the SmileCAM,
another product marketed by the Company.

         The Company has entered into various agreements to expand the marketing
of the SmartHome Console or to provide enhanced features to purchasers of the
console.

         The Company has entered into an agreement with PointRed Technologies
Inc. ("PointRed") whereby the Company and PointRed agreed to reciprocal
marketing of each other's products and services. The Company agreed to sell
PointRed's products worldwide, excluding the United States. PointRed in return
has agreed to market and sell the Company's EyStar SmartHome Consoles,
value-added applications and services to its existing and future clients. The
Company and PointRed have further agreed that PointRed will service and install
the EyStar SmartHome Console in North and South America, while the Company will
service PointRed's products in Malaysia.

         In January 2002, the Company signed a Sales and Distribution Agreement
with Cirronet Incorporated, to bundle Cirronet's wireless subscriber modem with
the Company's EyStar SmartHome/Office Console for distribution worldwide.
Following performance issues with the product, the Company decided to terminate
the relationships as of May 19, 2003.



                                       6
<PAGE>



Broadband Networks

         The Company, through its subsidiary PTSB, has been granted a license by
the government of Malaysia to develop and operate a countrywide wireless
broadband network, known as VISIONET, with the capacity to provide interactive
voice, video and data services. The Company plans to utilize in the VISIONET
network a combination of the Local Multipoint Distribution Service ("LMDS") and
fixed wireless access technologies in the 24.0 - 29.0 GHz and 2.4 GHz frequency
bands to provide a cost effective and fast deployment of VISIONET. LMDS is a
point-to-multipoint broadband technology utilizing the super-high "millimeter"
portion of the airwaves for integrated communications services. Due to the
relatively large bandwidth of the LMDS signal, LMDS systems have the capacity to
provide interactive voice, video and data services. The Company established its
first VISIONET cell in December 2001. Feasibility studies that were conducted
following the rollout of VISIONET indicated that it would be more profitable to
deploy VISIONET as a backhaul service for other telecommunication and broadband
service providers. A backhaul service provides network infrastructure to other
service providers who provide the direct link or "last mile" service to
consumers. The Company has therefore revised its strategy for the development
and use of VISIONET to serve primarily as a backhaul network.

         In September 2001, the Company entered into a strategic collaboration
with Aptilo Networks, Sweden, to deploy local mobile networks ("LMNs") in
Malaysia and the Asian regional markets. The Company anticipates that the
successful integration of LMNs with VISIONET will enable consumers to receive
live video streams from their handheld devices and laptops, and to access the
Internet and their corporate intranets at near T1 speeds remotely from public
locations in the "travel ribbon" such as hotels, airports, restaurants,
conference centers, shopping malls and coffeehouses. The first integrated
VISIONET-LMN cell was deployed during the fourth quarter of 2001 to connect a
number of access points to Bluetooth and wireless LAN 802.11b standard devices.
This mobile network features Aptilo's latest billing solution that enables the
Company to offer value-added applications and services to users without the need
for any prior registration as a subscriber. The Company is optimistic that this
method of payment from Aptilo will attract more users to VISIONET and reduce
capital expenditures and monthly operating costs. Furthermore, the integrated
network provides the Company with the ability to expand its broadband network
from fixed wireless into the mobile broadband market. The Company has committed
to an initial purchase of software and hardware from Aptilo valued at $50,000.
The Company believes that this strategic relationship with Aptilo may broaden
VISIONET's user base and generate additional revenue in 2004.

         On December 30, 2002, the Company's subsidiary, AEI executed an
Agreement with Telekom Sales and Services Sdn Bhd ("TMSS"), a subsidiary of
Telekom Malaysia Berhad, to sell, distribute and promote broadband access over
standard copper telephone lines using Digital Subscriber Line technology. The
service, brand named TMnet Streamyx, was first launched in August 2002. TMnet
Streamyx is a high speed access service providing an "always-on" connection to
the Internet. This service currently covers 100 urban locations in Malaysia. The
agreement with TMSS is for an initial period of one year and maybe extended for
a further period to be agreed by both parties. Under the terms of the agreement,
AEI was required to achieve a minimum sales of $65,789 (RM250,000) for 2003.
Although AEI generated minimal sales in 2003, it will continue as a reseller for
TMnet Streamyx in 2004.

         In September 2002, the Company signed a Distribution Agreement with
Anova Broadband ("Anova") to distribute Anova's Digital Subscriber Line ("DSL")
equipment in Asia, Australia and New Zealand. During the third quarter of 2003,
the Company suspended the agreement as Anova was not able to resolve the
technical issues that caused the failure to obtain equipment authorization
certifications from the relevant regulatory authorities of the respective
countries. As of December 31, 2003, the Company had decided to discontinue the
Distribution Agreement.


                                       7
<PAGE>



          At year-end 2002, VISIONET was rolled out as a backhaul network in the
Klang Valley linking WiFi hotspots established by third parties to provide
wireless Internet access services. The Company has initiated discussions with
TMSS on using VISIONET to extend TMNet's Streamyx service coverage to locations
currently not served by TMSS.

Biometrics Security Products

         During 2002, the Company entered into agreements in which it obtained
the rights to sell and service certain products that utilize broadband
technologies in the areas of identification and security. In December 2002, the
Company's subsidiary, AEI executed an Agreement with Sintec Corp, South Korea
("Sintec"), to sell, distribute and promote the SmileCAM remote video
surveillance cameras in Malaysia, Thailand, Singapore, Vietnam and Brunei. The
agreement is for an initial period of two years and will thereafter be
automatically renewable for one-year terms on each anniversary. Under the terms
of the agreement, Sintec will grant the Company exclusive distribution rights
for its products in Malaysia if the Company purchases an agreed minimum value of
products from Sintec during 2003 and 2004. SmileCAM cameras are used for
Internet based security and entertainment applications and can be integrated
with the EyStar SmartHome Console to provide a value-added security solution for
corporate and residential users. SmileCAM cameras include features such as
automatic motion detection and tracking, and sending live streaming video to an
Internet browser. Combined with applications and solutions developed by the
Company, the Company believes that the SmileCAM cameras offer to purchasers
useful features such as the ability to record intrusion, owner notification by
ordinary telephone, live video, remote security options and forwarding of images
by use of the Internet. The Company achieved minimal sales of the SmileCAM
cameras in 2003 and expects to achieve higher sales revenue in 2004.

         In January 2003, the Company signed a Reseller Agreement with FaceKey
Corporation ("FaceKey") to sell FaceKey's biometric-based products. The
agreement is for an initial period of one year and will thereafter be
automatically renewable for two-year terms on each anniversary. Under the terms
of the agreement, FaceKey will grant the Company exclusive distribution rights
for its products in Malaysia if the Company purchases an agreed minimum value of
products from FaceKey during 2003. FaceKey develops products to control access,
record time and attendance and restrict use of personal computers by using two
biometric technologies, face recognition and fingerprint matching in a manner
that will be highly competitive with magnetic cards, PIN numbers and passwords.
The combination of both face and fingerprint recognition technologies is
believed by the Company to be extremely reliable, providing a security level
equivalent to a DNA test. The Company expects to commence generating revenue
from FaceKey's products in the second half of 2004.

         In December 2003, the Company was also appointed by Testech Inc.
("Testech") of South Korea to distribute its biometrics security products.
Testech's product range includes fingerprint access control systems, fingerprint
time and attendance, fingerprint door lock and fingerprint authentication
module. These products support both TCP/IP protocol and RS422 serial
communication. Four different combinations of authentication methods are
utilized: fingerprint, pin number with fingerprint, pin number with smart card,
and fingerprint with smart card. Testech holds a U.S. patent for contact light
emitting fingerprint authentication sensor which is used in the above products.
Testech's products are competitively priced for the mass market and enable the
Company to have a wider range of biometric security products that could be
customized to meet clients' requirements. The Company expects to commence
generating revenue from Testech's products in the second half of 2004.


                                       8
<PAGE>


LICENSES/GOVERNMENT REGULATION

         The Company operates its wireless broadband network under a license the
Company has obtained from the Government of Malaysia. The Company believes that
it has the only such license granted by the Government of Malaysia, however, the
Government may issue additional licenses to the Company's competitors.

         Although the Company is unaware of any reason why its license might be
terminated or limited, the Government of Malaysia has the unilateral right to
revoke the Company's license upon thirty days notice. The license granted by the
Government of Malaysia is material to the operations of the Company and any
alteration, limitation or revocation of the license would have a material
adverse effect on the Company.

         The business operations of PTSB are regulated by both the Malaysian
Ministry of Energy Communications & Multimedia (MECM) (formerly known as the
Ministry of Energy Telecommunications & Post) and the Malaysian Communications
and Multimedia Commission ("CMC"). PTSB's WVCN license is governed by the
Malaysian Communications & Multimedia Act 1998 ("Act 588") which became
effective on April 1, 1999. This Act, which has superseded the
Telecommunications Act of 1950 and the Broadcasting Act of 1988, is to provide
for and to regulate the converging communications and multimedia industries in
Malaysia.

         Under Malaysian law, PTSB had the option of registering its existing
wireless broadband license under Act 588 or maintaining the terms of the license
under the repealed Act. The Company believed that it would be more advantageous
to register its license under the new Act, and on March 3, 2000 registered with
the CMC its intention to migrate to the new Act. The license was granted for an
initial period of 10 years commencing May 28, 1997.

         While the Company believes that Act 588 is the most significant
industry-specific governmental regulations that apply to the Company's business,
the Company is subject to a large number of other laws in different countries
and localities.

         In September 2001, PTSB was awarded an Application Service Provider
("ASP") license by the CMC. The ASP license will complement PTSB's wireless
broadband license. As an ASP, PTSB could offer enterprises access over the
Internet to applications and related services that would otherwise have to be
located in their computers.

COMPETITION

      The Company operates in a highly competitive marketplace, in which its
competitors are longer established and financially sound. The markets for
security products and applications and broadband network facility services are
particularly competitive.

      The Company's broadband services encounter competition from domestic
Internet Service Providers, often referred to as ISPs. Many of the competing
ISPs have, or can be expected to have greater financial, marketing and other
resources than the Company. In addition, in marketing or reselling broadband
services provided by third-parties, the Company competes with other similar
providers.



                                       9
<PAGE>


      The devices developed and marketed by the Company that seek to utilize the
capacity of broadband networks typically compete with similar well-known
products. In addition, for security products and applications, the Company
expects competition from companies that offer conventional security products and
solutions like card access system.

      The Company's newly acquired subsidiaries also operate in highly
competitive markets for sales, rental and service of material handling
equipment, provision of land transportation and industrial moving services,
where price competition is intense and customer loyalty is low. The Company will
also face competition from more established third party logistic providers and
freight forwarders that have similar plans to the Company to provide supply
chain management and secured shipping services in Malaysia.

      Although the Company remains optimistic that its products will find
acceptance in a competitive marketplace, there can be no assurance that it will
be able to compete successfully with such entities. To date, the Company has
found a limited market for its products and there can be no assurance that sales
will improve or will not weaken.

SIGNIFICANT RISK FACTORS

      The Company faces a significant number of risks and uncertainties
associated with executing its business plan, only some of which the Company can
currently anticipate.

      These risks and uncertainties may impair the Company's progress and
profitability and must be given careful consideration.

      The risks described below are intended to highlight risks that are
specific to the implementation of its business plan, but are not the only risks
that the Company faces. They are not discussed in a particular order and no
assumption should be made that the most significant or likely risks are
discussed first. In addition, other risks and uncertainties, including those
generally affecting the global economy, the political and economic climate in
Malaysia and the rest of Asia, the United States, the relevant industries in
which the Company operates, the public securities market, and risks that the
Company currently believes are immaterial may ultimately impair its business and
results of operations.

      These risks are discussed in more detail in Management's Discussion and
Analysis, below.



                                       10
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SUMMARY OF SIGNIFICANT RISKS

o    The Company's ability to introduce its products to the anticipated markets
     is unproven.

o    The market for the Company's broadband products and services, including the
     EyStar SmartHome Console, SmileCAM, FaceKey and Testech are unproven, and
     demand may be inadequate.

o    The market for the Company's new business line which includes sales, rental
     and servicing of material handling equipment, land transportation and
     industrial moving, are highly competitive with a large number of
     competitors.

o    The Company's ability to develop the business of providing supply chain
     management and secure shipping services by integrating the business of its
     newly acquired subsidiaries with the relevant technologies is unproven.

o    The Company obtains supplies and services from third parties who may be
     unwilling to continue providing these services in the future.

o    The Company is subject to license requirements and extensive government
     regulation that can be changed at any time.

o    The Company is subject to particular risks due to its international
     operations.

o    The Company has entered into significant contracts with a limited number of
     businesses, the loss of which would be materially detrimental to the
     Company's operations.

ENVIRONMENTAL LAWS

         To date, the Company has not incurred any material costs for compliance
with any prevailing environmental laws of Malaysia or the United States.

PATENTS AND TRADEMARKS

         The Company has no patents. The Company's subsidiary, PTSB, has
registered the name "VISIONET" as its service tradename and trademark with the
Malaysian Registry of Trade Marks and Patents. In June 2002, AEI registered the
name "EyStar" as its service tradename and trademark with the Malaysian Registry
of Trade Marks and Patents. No other intellectual property registration is
pending.



                                       11
<PAGE>



ITEM 2. DESCRIPTION OF PROPERTIES.

           The Company's principal executive offices are located at Suite 11.02,
Menara Merais, No. 1 Jalan 19/3, 46300 Petaling Jaya, Selangor, Malaysia. This
office space is leased from an unaffiliated party. This lease expired in
February 2004 and was renewed on a month-to-month basis. In February 2004, the
Company signed a three-year lease agreement with an unaffiliated party to lease
an office-warehouse complex at Lot 11, Jalan 51A/223, Petaling Jaya, Selangor,
Malaysia. The lease, which commenced on March 15, 2004, expires on March 14,
2007 and provides for a two-year renewal option thereafter. The Company plans to
relocate its principal executive offices to the new premises, which is presently
undergoing renovation, by May 2004. The Company also leases another office in
Petaling Jaya for content production, engineering and warehouse space from an
unaffiliated party. This lease will expire in August 2004.

         The Company terminated the lease agreement for office space in
Flemington, NJ on March 31, 2004. In April 2004, the Company entered into a
one-year lease agreement with an unaffiliated party for office space at 10th
Floor, 230 Park Avenue, New York, N.Y. This lease will expire in March 2005 and
provides for a 1-year renewal option.

         The Company believes that its existing and planned facilities are
adequate for its current requirements and that suitable additional space will be
available as needed to accommodate future expansion of its operations.

ITEM 3. LEGAL PROCEEDINGS.

         On December 22, 2003, the Company commenced a lawsuit in the Chancery
Division, Hunterdon County, New Jersey against seven anonymous Internet posters,
alleging that the posters had made false statements on certain message boards
sponsored by Terra Lycos, Inc. (Ragingbull.com) and Yahoo! The complaint, in
which president and chairman Patrick Lim is also a plaintiff, alleges that the
false statements were intended to manipulate the price of the Company's common
stock and to damage the reputation of the Company and Mr. Lim. Causes of action
are alleged under New Jersey law for stock manipulation, civil conspiracy and
libel. The Company has been granted leave to conduct discovery to obtain the
identities of the anonymous posters. Certain posters who have provided
representations that they are not former employees of the company in breach of
any agreement of separation and were neither purchasers or sellers of the
Company's securities have, or will be, dismissed from the action. Damages at law
and injunctive relief are sought in the action. The Company does not anticipate
that it will recover damages in an amount material to the financial condition of
the Company.

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

         The Company did not submit any matter to a vote of the Company's
security holders during the fourth quarter of the fiscal year covered by this
report.




                                       12
<PAGE>


                                     PART II

ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

         The Company's common stock trades in the Over-the-Counter ("OTC")
market under the symbol "SDGL" and published quotations are available on the OTC
Bulletin Board. Prior to February 3, 2004 and June 6, 2002, the Company's common
stock traded under the symbol "DBBD" and "DBBN", respectively.

         The table below sets forth the range of high and low bid quotations of
the Company's common stock as publicly reported by Marketguide during the
Company's 2003 and 2002 fiscal years. The following bid price market quotations
represent prices between dealers and do not include retail markup, markdown, or
commissions; hence, they may not represent actual transactions.


Year 2003                High          Low
                        ------        -----
First Quarter           $0.06         $0.02
Second Quarter           $0.28        $0.03
Third Quarter           $0.25         $0.12
Fourth Quarter          $0.69         $0.16

Year 2002                High          Low
                        -----         -----
First Quarter           $0.28         $0.07
Second Quarter          $0.18         $0.07
Third Quarter           $0.12         $0.02
Fourth Quarter          $0.08         $0.03

         As of April 8, 2004, 97,928,899 shares of the Company's common stock
were outstanding, 1,055,000 shares of the common stock were held in the treasury
and the number of holders of record of the common stock at that date was
approximately 68. However, the Company estimates that it has a significantly
greater number of shareholders because a substantial number of the Company's
shares are held in "street names" by the Company's market makers. On April 8,
2004, the closing trade price for the Company's common stock was $0.44 per
share.

         Under the Company's Articles of Incorporation, holders of common stock
are entitled to receive such dividends as may be declared by the Company's Board
of Directors. No dividends on the common stock were paid by the Company during
the periods reported herein.

SALES OF UNREGISTERED SECURITIES

         There were no sale of unregistered securities during the fourth quarter
of 2003. All securities that have been issued or sold by the Company during the
past three years, but were not registered under the Securities Act of 1933, as
amended, has been reported in the Company's previous Forms 10-QSB.

PURCHASE OF EQUITY SECURITIES

         There were no repurchases of equity securities during the fourth
quarter of 2003. All repurchases of securities, including those made pursuant to
the stock repurchase program for up to 10 million shares announced by the
Company on December 4, 2002, have been reported in the Company's previous Forms
10-QSB.


                                       13
<PAGE>



ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS

OVERVIEW

         During 2003, the Company achieved substantial growth in its revenues,
to $15,913,136 compared to $12,540,506 in 2002, and achieved positive earnings
for the second consecutive year. These revenues were mainly derived from the
design, development and production of interactive multimedia websites and
content and from the provision of project consulting services.

         Net income for the year ended December 31, 2003 and 2002 was $815,373
and $98,649 respectively. The Company's net income in 2003 included recognition
of a deferred gain of $73,157 and receipt of $50,000 as compensation for
rescission of a share purchase agreement. The Company's net income in 2002
included several non-recurring transactions including recognition of a deferred
gain of $101,238, collection of $232,724 in related party receivables previously
not recognized as revenue due to the uncertainty of collection, collection of
$168,421 in non-related party accounts receivable previously deemed
uncollectible, and extinguishment of $42,548 of accounts payable. Excluding
these, the Company would have incurred a net income of $692,216 for 2003 and a
net loss of $446,282 for 2002. The earnings per share of common stock, was $0.01
and less than $0.01 for the years ended December 31, 2003 and 2002,
respectively.

          At year end 2003, the Company had total current assets of $2,965,638,
property and equipment of $1,454,752 and net tangible assets of $2,847,001. The
Company's shareholders' equity at year end 2003 was $3,318,151.

         In 2003, the Company's revenue was generated primarily from the
following activities:

1.   Designing, producing, hosting and distribution of interactive multimedia
     content, websites, programs and applications.

2.   Developing and producing e-commerce programs and Internet-based security
     applications and solutions.

3.   Providing project consulting services on broadband communications and
     networking systems for property development projects.

         The Company anticipates that these activities will continue to provide
the principal sources of the Company's revenue in 2004. During 2004, revenue is
also expected to be generated from application development, network operation,
delivery of value-added applications and services; sales of biometric security
products and solutions and sales of the EyStar SmartHome Console. The Company
also expects revenue from the sale, rental and servicing of material handling
equipment and the provision of land transportation, industrial moving and
engineering services through its subsidiary, AMC.

         The Company conducts its principal operations in Malaysia. According to
the Malaysian Institute of Economic Research, Malaysia's projected growth in
Gross Domestic Products (GDP) for 2004 and 2005 is projected at 5.7% and 6.2%,
respectively. In view of the expected growth and positive economic outlook, the
Company will continue to focus its business activities in Malaysia for 2004 and
beyond.

         For 2004, the Company is seeking to expand its business to include the
development, integration and provision of secured shipping and supply chain
management services. The Company believes it is able to combine its expertise in
application development with biometric security solutions, Radio Frequency
Identification and Global Positioning System tracking system to provide a total
solution for supply chain management, secured shipping and third party logistic
services. The Company's planned secured shipping and supply chain management
services would include the following offerings:


                                       14
<PAGE>



1.   Technology to identify planned and actual container contents.

2.   Technology to identify planned and actual container routing.

3.   Physical security of the container seal.

4.   Physical security of cargo loading and handling areas, including video
     monitoring, employee screening, access control, and perimeter security.

5.   Technology to scan container contents for weapons of mass destruction
     ("WMD").
6.   Technology to reconcile container contents to manifests without breaking
     the container seal.

The Company's decision to enter into the secured shipping and supply chain
management industries was prompted by the following factors:

1.   Large potential market for secured shipping services as indicated by
     burgeoning exports from Malaysia to the USA, which increased from $24
     billion in 2002 to $25 billion in 2003 (source: US Census Bureau).

2.   Likely increase in demand for secured shipping services following
     implementation of Container Security Initiative ("CSI") by the U.S. Customs
     and Border Protection ("CBP") in January 2002, which consists of four core
     elements:

o    using intelligence and automated information to identify and target
     containers that pose a risk for terrorism;

o    pre-screening of containers before they reach U.S. ports;

o    using detection technology to pre-screen containers; and

o    using smarter, tamper-evident containers.

3.   The implementation of the CSI program in two Malaysian ports, Port Klang
     and Port Tanjung Pelepas, would made it easier for the Company to market
     its new services to ocean carriers, exporters and manufacturers in
     Malaysia.

 Significant Business Developments and Plan of Operation

         During 2004, the Company anticipates that it will continue to provide
its existing multimedia development, consulting and broadband services, market
the EyStar SmartHome Console, introduce and actively market a new line of
biometrics security products capable of integration with the EyStar SmartHome
Console and utilizing the Company's ability to provide applications support.
These products are the SmileCAM, FaceKey and Testech devices. The Company
believes that these devices, when linked with the broadband technology that the
Company seeks to exploit, will provide customers with comprehensive security and
identification systems for which it is believed there will be a significant
market.

         The Company will also seek to expand its business to include the
provision of biometric security identification systems; supply chain management
and secured shipping services. In line with this strategy, the Company has
signed several agreements since the third quarter of 2003 to acquire the equity
or business and assets of companies that it believes will assist its expansion
into the development, integration and provision of secured shipping and supply
chain management services. These agreements are described in more detail below.



                                       15
<PAGE>



         On October 14, 2003, the Company announced that its subsidiary, AEI,
executed a letter agreement with Asiaco Material Handling Sdn Bhd ("AMH"), to
acquire a 51% equity interest in each of three AMH Malaysian subsidiary
companies. AMH and its subsidiaries are primarily engaged in supply chain
management, land transportation, secured logistics as well as sale, rental and
servicing of material handling equipment. On November 17, 2003, the Company
announced that its subsidiary, AEI had signed a definitive agreement with AMH to
purchase, through AMC, the business assets and selected liabilities of AMH and
seven companies in the Asiaco group. The definitive agreement also provides for
AMC, to purchase a majority equity interest in the remaining sixteen companies
in the Asiaco group from AMH's major shareholder. The purchase price for the
above acquisition is approximately $1.8 million. The final purchase price shall
be determined after completion of the financial due diligence. As of December
31, 2003, the Company had completed the purchase of equity in five Asiaco
companies: 80% in AEC, 67% in ALG, 60% in ASS, 46% in ATP and 33% in AEG. On
February 9, 2004, the Company completed the acquisition of a 62% equity interest
in ATG. As of the date of this report, the Company is working towards completing
the transfer of business, customers and selected net assets (selected assets
less selected liabilities) from four Asiaco Companies: APT, AHL, ASL and AML.
The transfer of business and net assets from the above companies will take time
as the transfer of title on some assets require approval from the relevant
authorities. The Company presently expects the transfer to be completed by the
third quarter of 2004. The purchase will be funded by cash from internally
generated funds and an advance from the Company's principal shareholder, as well
as through the issuance of preferred stock.

         As of December 31, 2003, the Company had paid a total of $263,158 to
AMH as advances for the incorporation of AMC and purchase of equity in the
Asiaco group of companies. These advances will be deducted from the final
purchase price to be determined by AEI when it has completed its verification of
the net asset value of AMH and its subsidiaries

         On December 6, 2003, the Company executed a definitive agreement with
AMH's principal shareholder and Asiaco Material Handling (Thailand) Co. Ltd.
("AMHT") to purchase all of the assets and business of AMHT. On December 8,
2003, the Company announced the incorporation of Asiaco Multi Corporation
(Thailand) Co. Ltd ("AMCT"), to be used as a special vehicle to acquire AMHT's
net assets and business including taking over AMHT's headquarters in Bangkok and
branch office in the industrial city of Rayong. Upon completion of the
acquisition, the Company will own 60% of AMCT's equity. The remaining 40% will
be jointly owned by the existing shareholders of AMHT. The Company and the
existing shareholders of AMHT are still negotiating the terms and conditions for
the transfer of AMHT's net assets and business to AMCT.

         On December 3, 2003, the Company entered into a Joint Venture Agreement
with Amove Resources Sdn Bhd ("AR") to jointly implement a secured shipping
service. The Company has incorporated Secured Shipping Sdn Bhd ("SS") to be used
as the joint venture company. Pursuant to the Agreement, the Company was also
granted an option to purchase a 51% equity interest in AR for $550,000. This
option to purchase was exercisable on or before January 31, 2004. On January 30,
2004, the Company's subsidiary, AEI, entered into a definitive agreement to
acquire 51% equity in AR for $526,315 in cash from AR's principal shareholder.
AEI made an initial cash payment of $26,315. The balance of the purchase price
is to be paid at closing, which is to occur by October 31, 2004. The purchase
agreement is subject to customary closing conditions, including the completion
of a financial and legal due diligence audit to the Company's satisfaction and
the renewal of certain contracts with AR's existing customers, which include
multinational companies and Fortune 50 U.S. companies operating in Malaysia. AEI
will fund the balance of the purchase price from internally generated funds.
AR's principal shareholder will retain 49% equity in AR and continue to serve as
the Chief Executive Officer of AR. He will also guarantee a minimum profit after
tax of $137,000 for fiscal years ending December 2004 to 2008. At the date of
this report, the Company had yet to close the purchase agreement as AR's
principal shareholder had yet to fulfill the condition precedent as stated in
the definitive agreement.


                                       16
<PAGE>

         In addition to implementing a secured shipping service, the Company and
AR also agreed to jointly implement a Central Monitoring Service ("CMS"),
through SS, in the northern region of Malaysia where AR is currently providing
armed guard services to clients that include factories, offices and homes. The
central monitoring station will be installed with the latest state-of-the-art
digital surveillance and recording systems. Clients will be provided 24-hour
monitoring of their premises. When an intrusion is detected, AR's armed guards
will be dispatched immediately to the premises and law enforcement agencies and
the client will be notified. The system will permit clients access to the
Company's home and business surveillance portal via the Internet. The Company
will hold a majority equity interest in SS after consummation of the Joint
Venture Agreement. SS had yet to commence operation as the Company is still
negotiating with AR on the operational and administrative arrangements for the
Joint Venture.

         On February 17, 2004, the Company announced that its subsidiary, AEI,
had executed a definitive agreement to acquire the business and assets of
Izfahan Enterprise (M) Sdn Bhd ("IE"). IE is a Malaysian freight forwarding
company licensed by the Malaysian Customs Department to provide freight
forwarding service in the northern and central region of Peninsular Malaysia.
The purchase of IE's business and assets, once completed, would constitute the
third strategic acquisition targeted by the Company to expand its line of
business into the logistics and secured shipping industries. Izfahan's assets
will be transferred to Vista Positive Sdn Bhd ("VP"), a wholly-owned subsidiary
of AEI that was recently incorporated to be used as a vehicle for the
acquisition. Under the terms of the agreement, the purchase consideration is not
expected to exceed $400,000 subject to IE fulfilling certain closing conditions,
which includes an undertaking by IE to secure a new freight forwarding license
for VP. The Chief Executive Officer and key personnel of IE will be retained by
AEI upon completion of the acquisition. AEI intends to integrate VP's operations
with SS to provide third party logistic services. AEI has yet to complete the
acquisition of IE as both parties are still negotiating management issues
relating to VP's operations.

         For its existing operation, the Company anticipates that it will
continue to seek the rights to new products and services through contractual
arrangements and potentially through the acquisition of other business entities
that provide compatible products or services. The Company expects to continue to
market its products and services through a sales force and through its Internet
websites located at www.digitalapps.net and www.eystar.com. As described in more
detail below, the Company anticipates that its primary markets will continue to
be in Malaysia and other Asian countries. However, the Company continues to seek
additional markets in North and South America and has entered into various
strategic agreements to improve the acceptance of its products there.

         The Company has secured several new contracts to provide hardware,
applications or consulting services. The Company believes that it will be able
to begin performance of some of these contracts during 2004 and that it will
recognize revenue from these activities in 2004. Due to uncertainties in
scheduling, however, the Company cannot forecast the specific dates on which it
will begin performance of these contracts. These contracts are described in more
detail below.



                                       17
<PAGE>


         As a result of the Company's experience in rolling out the first
VISIONET cell in December 2001, management has decided that it will be most
advantageous to the Company to revise its strategy for exploiting its broadband
license granted by the Government of Malaysia. The Company believes that the
most effective use of the VISIONET infrastructure is as a point-to-point
backhaul service provider to other broadband and telecommunications providers.
This decision was based on feasibility studies that were conducted after the
VISIONET cell was activated. During 2004, the Company intends to actively market
VISIONET as a backhaul service provider, rather than as a telecommunications
company that provides the "last mile" service. In particular, the Company has
decided to use VISIONET as a backhaul link for local mobile networks that it
plans to attempt to deploy in partnership with Aptilo Networks, Sweden. With
this change in business strategy, VISIONET will no longer provide the last mile
link between a cell based radio station and retail users. The Company will
instead construct a wireless highway or backhaul linking the cell based radio
stations established by existing telecommunication companies and ISPs. The
Company is hopeful that it will conclude contracts with a number of telcos and
ISPs on the use of VISIONET as a backhaul link during 2004.

         In addition, the Company plans to continue its efforts to exploit the
Application Service Provider (ASP) license granted to its subsidiary PTSB in
September 2001, by the Malaysian Communications and Multimedia Commission. The
ASP license will complement the wireless broadband license granted to the
Company in June 1997. As an ASP, PTSB is permitted to offer enterprise access
over the Internet to applications and related services that would otherwise have
to be located in their computers. The Company anticipates that the ASP service
may become an attractive alternative to locally based applications both for
small and medium enterprises with lower budgets for information technology, and
also for larger companies as a form of outsourcing.

Significant Contracts

         For the year 2004, the Company hopes to generate additional revenue
arising from the contracts described below. This description is intended to
provide the reader with a description of the principal activities of the Company
that are anticipated in 2004. Although the Company provides estimates of the
time in which the contracts will be performed, revenues that may be generated
and/or sales that are projected, there can be no assurance that the contracts
will be performed as anticipated or that the revenues or sales projected will be
realized by the Company. The contracts may be terminated, limited, breached or
delayed, may be subject to force majeure clauses or the obligations to pay for
services rendered or products received may not be fulfilled.

a)   In August 2001, the Company was awarded a consulting contract, estimated to
     generate revenue of $2.85 million over a three year period, through August
     2004, to carry out the planning, design, project execution (including
     contract and project management) of all broadband communications and
     networking systems/services for Pulau Indah-Marina Village, a water
     oriented luxury resort, residential, hotel and spa project. Up to December
     31, 2003, the Company has generated $680,000 of revenue on this contract,
     of which $571,000 was generated during the year ended December 31, 2003.
     During 2003, in lieu of cash payment, management directed the customer to
     pay $20,000 of the $571,000 recognized to an affiliated company to whom the
     Company had outstanding accounts payable. The net effect to the Company was
     that revenue was recognized and recorded payables were reduced by equal
     amounts. The Company expects the contract period to be extended to August
     2005 and to receive the balance of the $2.85 million contract sum through
     August 2005.

                                       18
<PAGE>



b)   In December 2001, the Company entered into a marketing agreement with
     Worldlink Dotcom Sdn. Bhd. (Worldlink) to distribute its service gateway
     for home/office automation in Malaysia, Singapore and Australia. In 2002,
     Worldlink promoted the Company's service gateway to potential resellers and
     channel partners in the targeted markets. The Worldlink contract was
     projected by the Company to generate revenues of $4.0 million in 2003.
     Worldlink has not been able to secure any sales during 2003 and indicated
     that additional time is required to promote the Company's service gateway
     and secure orders from its resellers and channel partners. Therefore,
     revenue that will be realized during 2004 cannot be accurately forecast.
     The gateway bridges the Internet with internal home and office networks
     while facilitating the delivery of home and office applications including,
     but not limited to, security surveillance and video conferencing.

c)   In January 2002, the Company appointed Mutual Base Equity Sdn. Bhd. (MBE)
     as one of its distributors in Malaysia and Singapore for sale of the EyStar
     SmartHome Console. Under the terms of the Distributor Agreement, MBE has
     been appointed for an initial duration of 3 years commencing January 4,
     2002. For fiscal years 2002 and 2003, MBE has been attempting to secure
     contracts for the supply of the EyStar SmartHome Console to property
     developers in Malaysia and Singapore. The sales target for MBE is $17.5
     million over the remaining term of the agreement. There can be no
     assurance, however, that MBE will meet its sales target.

d)   The Company will attempt to secure contracts from local mobile networks to
     be jointly deployed with Aptilo Networks in 2004.

e)   In January 2002, the Company's subsidiary, PTSB, was awarded a contract to
     carry out the planning, design, and project execution of all broadband
     communications and networking systems/services for a commercial/housing
     project in Selangor, Malaysia. Under the contract, PTSB will receive a
     total contract sum of $550,000 over 36 months beginning January 2003. The
     project, featuring 312 serviced apartments, 62 units of retail
     shops/offices and 120 units of housing for a government agency, is expected
     to be completed by December 2004. As a total solution provider, PTSB will
     also be responsible for the supply of its EyStar SmartHome Console as well
     as providing value-added broadband applications such as high speed Internet
     access, security surveillance, multimedia conferencing, home automation and
     video-on-demand. Up to December 31, 2003, the Company has generated
     $311,000 of revenue, of which $274,000 was generated in 2003, and expects
     to receive the balance of the contract sum through January 2005. During
     2003, in lieu of cash payment, management directed the customer to pay
     $10,000 of the $274,000 recognized to an affiliated company to whom the
     Company had outstanding accounts payable. The net effect to the Company was
     that revenue was recognized and recorded payables were reduced by equal
     amounts.

f)   In September 2002, the Company signed a Channel Partner Agreement with
     PointRed Technologies, Inc., a wireless broadband equipment manufacturer
     and distributor to distribute the EyStar SmartHome Console. Starting with
     its existing client base and expanding into new markets, PointRed will
     sell, install and service the EyStar SmartHome Console, and in doing so,
     may help to accelerate the distribution of the Console in North and South
     America.

g)   In November 2002, the Company was contracted by MY Architect ("MYA"), a
     related party, to provide consulting services relating to home automation,
     home networking, energy cost saving, security surveillance and monitoring
     for MYA's current projects involving two major commercial and housing
     developments in Malaysia. The Company expects to receive $550,000 in
     consulting fees over 18 months beginning December 1, 2002. Up to December
     31, 2003, the Company has generated $273,00 of revenue on this contract, of
     which $253,000 was generated in 2003, and expects to receive the balance of
     the contract sums through November 2004. The Company also expects to secure
     additional contracts sometime in 2005, estimated at $4.0 million, from
     MYA's clients for the supply and installation of the EyStar SmartHome
     Console and its security system in the two commercial and housing
     developments.


                                       19
<PAGE>

h)   In April 2003, the Company contracted with MYA to carry out the design,
     supply and installation of all broadband communications, access control and
     network security equipment for a mixed property development project in
     Selangor, Malaysia, which features a total of 10 blocks of residential and
     commercial high-rise properties. The 30-month contract, expected to
     generate revenue of $3.2 million, commenced in the third quarter of 2003.
     The Company generated $55,000 of revenue from this contract during year
     ended December 31, 2003.

i)   In April 2003, the Company was awarded a $9 million contract by MBE for the
     supply of biometric security products and EyStar SmartHome consoles over a
     three-year period with the first delivery originally expected to commence
     in the fourth quarter of 2003. In December 2003, the Company was informed
     by MBE to postpone the delivery until further notice. Due to the
     uncertainty, revenue that will be realized from this contract during 2004
     cannot be accurately forecast.

j)   In June 2003, the Company signed a contract to implement a biometric
     security recognition and identification system comprising hardware,
     software and issuance of security identity cards over a ten-year period.
     The contract, which was expected to commence in the fourth quarter of 2003,
     after the finalizing of technical specifications with relevant regulatory
     authorities, is estimated to generate revenue of $15 million through the
     first quarter of 2005. To date, the technical specifications for the
     project have yet to be finalized by the relevant regulatory authorities and
     the Company has not received any indication on when the contract may
     commence. Due to the uncertainty, revenue that will be realized from this
     contract during 2004 may not be accurately forecast.

k)   In June 2003, the Company was awarded a $2.0 million contract to supply and
     install a biometric security system for access control and time attendance
     in Malaysia. The project was estimated to commence during the fourth
     quarter of 2003 and be completed within six months of the commencement
     date. The Company was also awarded a maintenance contract for 5 years
     thereafter. This maintenance contract begins following the completion of
     the project and is expected to generate annual recurring revenue of
     approximately $250,000. The commencement of this contract has been delayed
     as the construction work on the project's property has yet to be completed.
     The developer of the project is unable to provide a definitive date for the
     completion of construction work. Due to the uncertainty, revenue that will
     be realized from this contract during 2004 cannot be accurately forecast.

l)   In August 2003, the Company was awarded an $850,000 contract to supply,
     install and commission a biometric based Building Access Management and
     Monitoring System for a 40-story office complex in Kuala Lumpur, Malaysia.
     The system is designed to enhance security through the management and
     monitoring of visitors within a building complex or restricted area. The
     office complex is currently tenanted by government departments and
     agencies, embassies, corporations and trade missions. Implementation of
     this contract is expected to commence in the first quarter of 2004 and be
     completed by the second quarter of 2004. This project has been delayed as
     the Company was informed by the client to postpone installation work until
     further notice.

m)   In November 2003, the Company's subsidiary, AMC, was awarded a $4.6 million
     contract to provide electronically secured cargo shipping services for
     goods bound for the United States to a shipping agency operating in Port
     Klang, Malaysia. The contract, expected to commence in the second quarter
     of 2004, is for an initial duration of fifteen months. Through AMC, the
     Company will provide technical expertise in the areas of electronic tagging
     and real-time tracking of maritime shipments bound for the United States
     and supply chain management services to its clients. The containers will be
     tracked from the time they leave the client's facility to the time they
     arrive in a United States port. Consignees in the U.S. will also be able to
     monitor the location of the containers in real-time, detect any tampering
     to the container and insure that the cargo is not substituted.


                                       20
<PAGE>

n)   In December 2003, the Company announced that its subsidiary, AMC, has been
     awarded a $4.92 million contract to provide a secured shipping service. The
     fifteen month contract is expected to commence in the first quarter of
     2004. The contract calls for AMC to provide warehousing, transportation and
     monitoring of the cargo from the time the goods leave the client's
     warehouse to the port of destination in the United States. The Company will
     be responsible for providing the technology to identify planned and actual
     container contents; and identify planned and actual container routing. Any
     discrepancies in the contents and/or routing will be reported to the
     shipper. The Company will also provide physical security of the container
     seal and cargo loading area. To date, the contract has yet to commence as
     the client and AMC failed to agree on certain implementation issues. AMC is
     trying to resolve the differences with the client but is unable to provide
     any assurance that AMC will be able to proceed with the contract and
     generate revenue from this contract in 2004.

o)   In March 2004, the Company's subsidiary, AEI, was awarded three contracts
     by a related party, with an aggregate value of $3.81 million, for the
     supply and installation of a biometric security system in three
     developments in Malaysia. The first is a multiple-use real estate
     development project, consisting of 312 apartments and 65 office and retail
     units, located in Shah Alam, Malaysia. Installation is anticipated to begin
     in the third quarter of 2004 and be completed by the third quarter of 2005.
     The second development is located in Templar Park, Malaysia consisting of
     208 apartments and the third development is located in Cheras, Malaysia
     with 240 apartments. Installation for the second and third development is
     anticipated to begin in the third quarter of 2004 and be completed by the
     second quarter of 2006. Under the three contracts, AEI will provide a
     comprehensive biometric security system that will include biometric
     technology for apartment door locks, elevator access control, and will
     control vehicle access into and out of the development and visitor
     registration.

Strategic Contractual Relationships

         In its efforts to exploit broadband technology, the Company seeks to
enter strategic agreements, both formal and informal, with other providers of
goods or services that are compatible with the Company's existing businesses.
Such arrangements include license agreements, requirements contracts and service
agreements. The Company may also seek to acquire business enterprises that offer
goods and services that are of benefit to the Company and its shareholders.

         Beginning in September 2001, the Company entered into a strategic
collaboration with Aptilo Networks, Sweden, to deploy local mobile networks
("LMNs") in Malaysia and the Asian regional markets. The Company anticipates
that the successful integration of LMNs with VISIONET will enable consumers to
receive live video streams from their handheld devices and laptops, and to
access the Internet and their corporate intranets at near T1 speeds remotely
from public locations in the "travel ribbon" such as hotels, airports,
restaurants, conference centers, shopping malls and coffeehouses. The first
integrated VISIONET-LMN cell was deployed during the fourth quarter of 2001 to
connect a number of access points to Bluetooth and wireless LAN 802.11b standard
devices. This mobile network features Aptilo's latest billing solution that
enables the Company to offer value-added applications and services to users
without the need for any prior registration as a subscriber. Any user can now
pay for instant network access to surf the Internet or purchase value-added
applications on the spot by using their credit card. The Company is optimistic
that this method of payment from Aptilo will attract more users to VISIONET and
reduce capital expenditures and monthly operating costs. Furthermore, the
integrated network provides the Company with the ability to expand its broadband
network from fixed wireless into the mobile broadband market. The Company has
committed to an initial purchase of software and hardware from Aptilo valued at
$50,000. The Company believes that this strategic relationship with Aptilo may
broaden VISIONET's user base and generate additional revenue in 2004 that is
expected to contribute positively to the Company's cash flow.



                                       21
<PAGE>


         In July 2002, the Company entered into a letter agreement with PointRed
Technologies Inc. ("PointRed") whereby the Company has agreed to market and sell
PointRed's products worldwide. In return, PointRed has agreed to market and sell
the Company's EyStar SmartHome Consoles, value added applications and services
to its existing and future clients. On August 16, 2002, the Company and
PointRed, pursuant to the original letter agreement dated July 2002, signed an
agreement whereby the Company will utilize existing personnel and facilities to
promote PointRed's products and to service existing PointRed customers in
Malaysia. Also pursuant to the original letter agreement, the Company signed a
channel partner agreement with PointRed, whereby PointRed will distribute the
EyStar SmartHome Console. Under the agreement, PointRed will sell, install and
service the EyStar SmartHome Console in North and South America.

         In December 2002, the Company's subsidiary, AEI executed an Agreement
with Sintec Corp, South Korea ("Sintec"), to sell, distribute and promote their
SmileCAM remote video surveillance cameras in Malaysia, Thailand, Singapore,
Vietnam and Brunei. The agreement is for an initial period of two years and will
thereafter be automatically renewable for one-year terms on each anniversary.
Under the terms of the agreement, Sintec will grant the Company exclusive
distribution rights for its products in Malaysia if the Company purchases an
agreed minimum value of products from Sintec during 2003 and 2004. SmileCAM
cameras are used for Internet based security and entertainment applications and
can be integrated with the EyStar SmartHome Console to provide a value added
security solution for corporate and residential users. SmileCAM cameras include
features such as automatic motion detection and tracking, and sending live
streaming video to an Internet browser. Combined with applications and solutions
developed by the Company, the Company believes that SmileCAM cameras offer to
purchasers useful features such as the ability to record intrusion, owner
notification by ordinary telephone, live video, remote security options and
forwarding of images by use of the Internet.

         In December 2002, the Company's subsidiary, AEI executed an Agreement
with Telekom Sales and Services Sdn Bhd ("TM"), a subsidiary of Telekom Malaysia
Berhad, to sell, distribute and promote broadband access over standard copper
telephone lines using Digital Subscriber Line technology. The service, brand
named TMnet Streamyx, was first launched in August 2002. TMnet Streamyx is a
high speed access service providing "always-on" connection to the Internet. This
service currently covers 100 urban locations in Malaysia. The agreement with TM
is for an initial period of one year and maybe extended for a further period to
be agreed by both parties. Under the terms of the agreement, AEI was required to
achieve a minimum sales of $65,789 (RM250,000) for 2003. Although AEI had
generated minimal sales in 2003, it will continue as a reseller for Tmnet
Streamyx in 2004.

         In January 2003, the Company signed a Reseller Agreement with FaceKey
Corporation ("FaceKey") to sell FaceKey's biometric-based products. The
agreement is for an initial period of one year and will thereafter be
automatically renewable for two-year terms on each anniversary. Under the terms
of the agreement, FaceKey will grant the Company exclusive distribution rights
for its products in Malaysia if the Company purchases an agreed minimum value of
products from FaceKey during 2003. FaceKey develops products to control access,
record time and attendance and restrict use of personal computers by using two
biometric technologies, face recognition and fingerprint matching in a manner
that will be highly competitive with magnetic cards, PIN numbers and passwords.
The combination of both face and fingerprint recognition technologies is
believed by the Company to be extremely reliable, providing a security level
equivalent to a DNA test. The Company did not generate any revenue from the sale
of Facekey products in 2003 but is hopeful that revenue can be generated in
2004.



                                       22
<PAGE>



         On September 10, 2003, the Company's Malaysian subsidiary, AEI entered
into a letter agreement to establish a joint venture company, Temasya Wira Sdn
Bhd ("TWSB"), to undertake the research and development of biometric security
applications. AEI will initially hold 60% of TWSB's equity while two Malaysian
individuals will hold the remaining 40%. AEI's holding will eventually be
diluted to 30% when EMI acquires 30% equity interest in TWSB after the
completion of the joint venture agreement to be executed between the Company and
FaceKey Corporation as described below. TWSB is expected to commence operations
in 2004.

         On September 24, 2003, the Company announced that it had executed a
Letter of Intent to form a joint venture with FaceKey Corporation ("FaceKey") to
develop biometric applications for the MyKad "smart" national identification
card ("MyKad") held by more than 7 million people in Malaysia. EMI will be used
as the joint venture company to develop a system and applications utilizing
FaceKey's face and fingerprint technologies to verify a live fingerprint and
face with data stored in a smartcard, which permits retrieval of information
about the cardholder electronically. Due to some disagreement over
implementation and operational issues, the Company and Facekey are still
negotiating the terms of the definitive agreement. The definitive agreement,
which requires FaceKey to acquire a 49% equity interest in EMI, will be signed
only after both parties have agreed on the terms of the development of
applications for MyKad. EMI will subsequently acquire a 30% equity interest in
TWSB. The Company and FaceKey will be jointly responsible for marketing the
products globally.

         In December 2003, the Company was appointed by Testech Inc. ("Testech")
of South Korea to distribute its biometrics security products. Testech's product
range includes fingerprint access control system, fingerprint time and
attendance, fingerprint door lock and fingerprint authentication module. These
products support both TCP/IP protocol and RS422 serial communication. Four
different combinations of authentication methods are utilized: fingerprint, pin
number with fingerprint, pin number with smart card, and fingerprint with smart
card. Testech holds a U.S. patent for contact light emitting fingerprint
authentication sensor which is used in the above products. Testech's products
are competitively priced for the mass market and enable the Company to have a
wider range of biometrics security products that could be customized to meet
clients' requirements.

         In connection with the development of the Company's products and
services, the Company has from time to time entered into various agreements to
acquire or license new products and technologies, to improve the effectiveness
of its existing products, to expand the scope of the goods and services that it
offers. In some cases during 2003 the Company has experienced difficulties with
such arrangements as a result of product performance or because such an
agreement was determined to be inconsistent with the Company's present business
plan, and as appropriate, the Company has decided not to pursue the arrangement
further.

         In January 2002, the Company signed a Sales and Distribution Agreement
with Cirronet Incorporated, to bundle Cirronet's wireless subscriber modem with
the Company's EyStar SmartHome/Office Console for distribution worldwide. The
agreement was for an initial period of 5 years and will thereafter be
automatically renewable for one-year terms on each anniversary. Under the terms
of the agreement, the Company committed to the purchase of approximately $19
million of equipment over a five-year period. Concurrent with the Sales and
Distribution Agreement, the Company has also entered into a 5-year Technical
Support and Supply of Spares Agreement with Cirronet to insure uninterrupted
supply of Cirronet's product. These equipment purchases were subject to
inspection and acceptance by the Company depending upon certain performance
standards being satisfactorily met. The Company received approximately $5,000 in
equipment from Cirronet, but experienced performance issues that were not
rectified. Following the failure of Cirronet to rectify the problems encountered
during the trial, both agreements were terminated on May 19, 2003 and the trial
equipment has been returned to Cirronet.



                                       23
<PAGE>



         On September 27, 2002, the Company entered into a letter agreement with
the shareholders of Convergent Technologies, Inc. ("CTI"), a privately held
company, to acquire a majority interest in CTI for approximately $5.0 million.
On May 19, 2003, the Company signed a purchase agreement with CTI's shareholders
to acquire the entire outstanding common stock of CTI for $2.6 million. The
purchase price was revised to $2.6 million after the Company had completed its
due diligence and further negotiation with CTI's shareholders. On August 25,
2003, the Company announced that it had completed the acquisition of CTI,
subject to certain conditions being met. During 2003, the Company had paid
$150,000 to CTI's shareholders as an advance deposit on the purchase. On
November 6, 2003, the Company and CTI's shareholders mutually agreed to rescind
the purchase agreement after CTI did not satisfy all of the conditions
subsequent to the Purchase Agreement as a result of its inability to deliver
title to certain real property in a form acceptable to the Company. Pursuant to
the Rescission Agreement, the stockholders of CTI refunded the $150,000 and paid
an additional $50,000 to the Company as a cancellation fee.

         In September 2002, the Company signed a Distribution Agreement with
Anova Broadband ("Anova") to distribute Anova's Digital Subscriber Line ("DSL")
equipment in Asia, Australia and New Zealand. During the third quarter of 2003,
the Company suspended the agreement as Anova was not able to resolve the
technical issues that caused the failure to obtain equipment authorization
certification from relevant regulatory authorities of the respective countries.
As of December 31, 2003, the Company had decided not to continue with the
distribution agreement.

CASH REQUIREMENTS AND RISK FACTORS

         The Company faces a significant number of risks and uncertainties
associated with executing its business plan, only some of which the Company can
currently anticipate. Chief among these risk factors are the needs of the
Company for working capital and the likely need to raise additional funds to
satisfy the Company's cash requirements during 2004.

         These risks and uncertainties, discussed in more detail below, may
impair the Company's progress and profitability. The risks described below are
intended to highlight risks that are specific to the implementation of its
business plan, but are not the only risks that the Company faces. Additional
risks and uncertainties, including those generally affecting the global economy,
the political and economic climate in Malaysia and the rest of Asia, the
industry in which the Company operates, the public securities market, and risks
that the Company currently deems immaterial may ultimately impair its business
and results of operations.



                                       24
<PAGE>



IF THE COMPANY'S LICENSE IS ALTERED OR REVOKED, THE COMPANY WOULD BE UNABLE TO
IMPLEMENT ITS BUSINESS PLAN.

         The Company believes that the wireless broadband license the Company
has obtained from the Government of Malaysia is material to the Company's
business as a facilities-based and network service provider. Any material
alteration or revocation of the license would have a material adverse effect on
the Company and would prevent the Company from implementing its business plan.
As described earlier, the Government of Malaysia has the unilateral right to
revoke the Company's license upon thirty days' notice. In addition, while the
Company currently believes that it has the only license granted by the
Government of Malaysia, the Government may issue additional licenses to the
Company's competitors, which could also have a material adverse effect on the
Company.

IF THE COMPANY IS UNABLE TO SUCCESSFULLY IMPLEMENT ITS BUSINESS PLAN, THE
COMPANY'S FINANCIAL CONDITION WOULD BE IMPAIRED.

         If the Company is unable to successfully implement its business plan,
the Company's financial condition and performance would be impaired. The
Company's business plan and strategy include numerous elements that may be
difficult or costly to execute, and the Company may not be successful in
implementing these elements and can provide no assurance that it will do so. The
Company seeks to exploit technology that often does not have well-established
markets and in which there is great competition. The Company's ability to
develop its new business of providing supply chain management and secure
shipping services by integrating the business of its newly acquired subsidiaries
with the relevant technologies is also unproven. Thus, even if the Company
successfully implements its business plans, there may be insufficient demand for
the Company's products and services, in which event the Company will not
generate sufficient revenues to offset the Company's planned expenditures,
thereby having an adverse effect on the Company's business operations and
financial condition.

THE FAILURE OF THIRD PARTIES WITH WHOM THE COMPANY DOES BUSINESS TO MEET THE
COMPANY'S REQUIREMENTS COULD ADVERSELY AFFECT THE COMPANY'S BUSINESS.

         The Company's business plan and operations rely on the Company's
ability to obtain products and services provided by other third party providers.
For example, the Company relies on a third party provider for Internet
connection and international gateway and procures its products through
agreements with other providers, a number of which are also actual or potential
competitors. The agreements that the Company has entered into may not be
exclusive and are generally terminable according to their terms. The third-party
providers also may not be able to provide products or services in sufficient
amounts or of the necessary quality to meet the needs of the Company. The
failure of one or more of these companies to meet the Company's needs could
adversely affect the Company's business and results of operations. Some of these
companies may also be the Company's competitors and, accordingly, in the future,
they may be unwilling to provide the Company with the products or services it
requires. These companies may also decide to dedicate their resources and
networks to other communications companies or to facilitate their own growth
and, as a result, elect to scale back or terminate the services they provide to
the Company. The failure of any of these third parties to perform could prevent
or delay the implementation of the Company's business plan, limit the types of
services the Company can provide to its customers and potential customers and
adversely impact the Company's relationship with its customers. Any of these
occurrences could have an adverse effect on the Company's business, results of
operations and financial condition.


                                       25
<PAGE>


THE ABILITY TO RAISE CAPITAL IN THE FUTURE ON A TIMELY BASIS MAY ADVERSELY
AFFECT OUR ABILITY TO FUND OUR OPERATIONS.

         The Company will require substantial capital to fund its planned
capital expenditures and operations. The Company does not expect to be able to
generate sufficient cash from operations to provide the necessary capital to
execute the Company's business plan. If the Company is unable to generate
sufficient cash from its operations or raise capital as needed, the Company will
be unable to pursue or execute its current business plan and fund its
operations.

THE COMPANY'S BUSINESS AND INDUSTRY ARE SUBJECT TO EXTENSIVE REGULATIONS THAT
COULD CHANGE AT ANY TIME AND RESTRICT THE COMPANY'S ABILITY TO COMPETE WITH ITS
COMPETITORS.

         The Malaysian communications industry (including spectrum allocation
and usage) is highly regulated by the Malaysian government. Regulations that
govern the Company's business in building a wireless network could change at any
time, which could adversely affect the way the Company conducts its VISIONET
business. The Company may incur substantial costs in complying with these
regulations, and failure to comply with applicable rules and regulations could
result in the Company having to pay penalties or its license being revoked by
the government. Except for the deployment of VISIONET, this risk factor does not
have a significant impact on the Company's other businesses.

FAILURE TO HIRE OR RETAIN QUALIFIED PERSONNEL COULD HURT THE COMPANY'S BUSINESS.

         The Company's future success and performance is dependent on its
ability to identify, hire, train and retain experienced technical and marketing
personnel. The Company faces significant competition for employees with the
skills required for its business. There can be no assurance that the Company
will succeed in attracting and retaining the services of qualified and
experienced technical and marketing personnel.

THE MARKETS IN WHICH THE COMPANY OPERATES ARE VERY COMPETITIVE AND INCREASED
COMPETITION COULD ADVERSELY AFFECT THE COMPANY.

         The markets for security products and applications and broadband
network facility services are highly competitive. For broadband services, the
Company expects to encounter competition from domestic Internet Service
Providers, often referred to as ISPs. Many of the competing ISPs have, or can be
expected to have greater financial, marketing and other resources than the
Company. However, following the repositioning of VISIONET as a backhaul service
network, this risk factor no longer has a material impact on the Company's
future business and operation.

         For security products and applications, the Company expects competition
from companies that offer conventional security products and solutions like card
access system. No assurance can be given that we will be able to compete
successfully with these entities.

         The markets for sales, rental and service of material handling
equipment, provision of land transportation and industrial moving services are
highly competitive where price competition is intense and customer loyalty is
low. The Company will not be able to provide the assurance that it's newly
acquired subsidiaries and associates will be able to remain competitive in the
respective industries.

         The Company will also face competition from more established third
party logistic providers and freight forwarders that have similar plans like the
Company to provide supply chain management and secured shipping services in
Malaysia.


                                       26
<PAGE>


THE INTERNATIONAL NATURE OF THE COMPANY'S OPERATIONS SUBJECT THE COMPANY TO
SPECIAL RISKS.

         The Company currently intends to operate primarily in Malaysia and
perhaps elsewhere in Asia. The Company therefore faces special risks related to
operating in international markets, which the Company may not be able to
overcome. The following are some of the risks inherent in doing business in
Malaysia and other non-U.S. markets:

-    unanticipated changes in regulatory requirements, tariffs, customs, duties
     and other trade barriers;

-    limitations on the Company's flexibility in structuring foreign investments
     imposed by regulatory authorities;

-    longer payment cycles and problems in collecting accounts receivable;

-    political and economic risks;

-    translation and transaction exposure from fluctuations in exchange rates of
     other currencies; and

-    potentially adverse tax and cash flow consequences resulting from operating
     in multiple countries with different laws and regulations.

REGULATION

         The business operations of PTSB are regulated by both the Malaysian
Ministry of Energy Communications & Multimedia (MECM) (formerly known as the
Ministry of Energy Telecommunications & Post) and the Malaysian Communications
and Multimedia Commission ("CMC"). PTSB's WVCN license is governed by the
Malaysian Communications & Multimedia Act 1998 ("Act 588") which became
effective on April 1, 1999. This new Act, which has superseded the
Telecommunications Act of 1950 and the Broadcasting Act of 1988, is to provide
for and to regulate the converging communications and multimedia industries in
Malaysia.

         Under Malaysian law, PTSB has the option of registering its existing
wireless broadband license under Act 588 or maintaining the terms of the license
under the repealed Act. The Company believes that it would be more advantageous
to register its license under the new Act, and has on March 3, 2000 registered
with the CMC its intention to migrate to the new Act. The license was granted
for an initial period of 10 years commencing May 28, 1997.

         While the Company believes that Act 588 is the most significant
industry-specific governmental regulations that apply to the Company's business,
the Company is subject to a large number of other laws in different countries
and localities.

         In September 2001, PTSB was awarded an Application Service Provider
("ASP") license by the CMC. The ASP license will complement PTSB's wireless
broadband license. As an ASP, PTSB could offer enterprises access over the
Internet to applications and related services that would otherwise have to be
located in their computers.

RELATED PARTY TRANSACTIONS

During 2003, the Company was awarded contracts by My Architect (MYA) in an
amount that is material to the financial results of the Company. The principal
partner of MYA is a director of PTSB, the Company's 86% owned Malaysian
subsidiary.


                                       27
<PAGE>


Results of Operations

         The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the consolidated
financial statements and notes.

         The following table sets forth certain operating data for Secured
Digital Applications and subsidiaries for the periods as indicated below.
<TABLE>
<CAPTION>

                                                                       Year Ended December 31,
                                                                  ----------------------------------
                                                                      2003             2002
                                                                  ------------       ------------

<S>                                                           <C>                 <C>
Revenues                                                      $       15,913,136  $      12,540,506
Gross profit                                                           1,835,201            802,728
Sales and marketing                                                       38,623             60,384
General and administrative                                               899,513            720,882
Gain on disposal of assets - related parties                              73,157            101,238
Other income                                                              50,526             42,703
Net income                                                               815,373             98,649
</TABLE>

Year ended December 31, 2003 compared to year ended December 31, 2002

         Total revenue increased by $3,372,630, or 27%, to $15,913,136 for the
year ended December 31, 2003, as compared to $12,540,506 for the year ended
December 31, 2002. Included in revenue for 2003 was $105,373 of revenue
generated by subsidiaries that the Company acquired or established in 2003's
fourth quarter. Excluding this contribution, revenue increase for 2003 would
have been $3,267,257 or 26%. The increase in 2003 was mainly due to an increase
in fees earned from the production of multimedia programs and revenue received
for project consulting services. The increase in revenue from the production of
multimedia programs was a result of increased sub-contract work from the clients
of the Company's two major customers, Worldlink Dotcom and Mutual Base Equity.
Revenue for project consulting services was generated from four project
consulting contracts that the company secured in 2001, 2002 and 2003. Also
included in revenue for 2002 was collection of $232,724 in related party
receivables previously not recognized as revenue due to the uncertainty of
collection. In the year ended December 31, 2003, two customers, respectively,
accounted for 47% and 46% of total revenue. In the year ended December 31, 2002,
two customers, respectively, accounted for 50% and 46% of total revenue.

Gross Profit

         Gross profit increased to $1,835,201 for the year ended December 31,
2003, compared to $802,728 for the year ended December 31, 2002, an increase of
$1,032,473 or 129%. The gross profit for 2003 included a contribution of $32,383
from subsidiaries that the Company acquired or established in 2003's fourth
quarter. Excluding this contribution, gross profit increase for 2003 would have
been $1,000,090 or 125%. The increase in gross profit was due to higher revenue,
particularly consulting revenue, which has a higher margin than production work,
in 2003. As a result of higher revenue, cost of revenues increased by $2,340,157
or 20%, to $14,077,935 in 2003 from $11,737,778 in 2002. Cost of revenue for
2003 included cost of $72,990 incurred by subsidiaries that the Company acquired
or established in 2003's fourth quarter. Excluding this, cost of revenue
increase for 2003 would have been $2,267,167 or 19%. This increase was a result
of the Company requiring additional external resources in order to fulfill the
higher demand for the Company's services. The outsourcing of content production
work enabled the Company to develop a team of contractors that will assist the
Company in producing multimedia content and applications that are crucial to its
future business operation.


                                       28
<PAGE>



Sales and marketing expenses

         Sales and marketing expenses decreased by $21,761 or 36%, to $38,623
for the year ended December 31, 2003 from $60,384 for the year ended December
31, 2002. The decrease was primarily due to lower marketing expenses incurred to
promote the Company's business of developing and producing multimedia programs
and provision of design and consulting services for interactive website
development. Advertising and promotion costs, which were approximately $12,793
and $25,906 for the years ended December 31, 2003 and 2002, respectively,
accounted for 33% and 43% of sales and marketing expenses in 2003 and 2002.

General and administrative expenses

         General and administrative expenses involving non-related parties
increased by $213,368 or 36% to $814,250 for the year ended December 31, 2003,
as compared to $600,882 for the year ended December 31, 2002. General and
administrative expenses for 2003 included expenses of $59,039 incurred by
subsidiaries that the Company acquired or established in 2003's fourth quarter.
General and administrative expenses for 2002 were reduced by a reversal of
$168,421 for prior year's allowance for doubtful receivables due to recovery of
accounts receivable previously deemed uncollectible. Excluding expenses incurred
by the new subsidiaries and the reversal of allowance for doubtful receivables,
general and administrative expenses would have been $755,211 and $769,303 for
the years ended December 31, 2003 and 2002, respectively. Therefore, normal and
recurring general and administrative expenses decreased by $14,092 or 2% for the
year ended December 31, 2003. The decrease was mainly attributable to lower
depreciation and payments to consultants for professional services in 2003. For
the year ended December 31, 2003, out of the total general and administrative
expenses of $814,250, 30% was for depreciation of tangible assets and 16% was
for employee payroll. Another 11% was for legal expenses, 8% was for fees for
professional and auditing services, 7% was for investor relation expenses and
approximately 28% was for rent, utilities, general office supplies,
communications and corporate insurance expenses. For the year ended December 31,
2002, of the total general and administrative expenses of $769,303, 33% was for
depreciation of tangible assets and 16% was for employee payroll. Another 12%
was for fees for professional and auditing services, 6% was for investor
relation expenses and approximately 33% was for rent, utilities, general office
supplies, communications and corporate insurance expenses.

         General and administrative expenses - related parties for the year
ended December 31, 2003 was $85,263, a decrease of $34,737 or 29%, as compared
to $120,000 for the year ended December 31, 2002. General and administrative
expenses - related parties included management fees and administrative expenses
payable by the Company to a company in which Mr. Patrick Lim, the President and
Chief Executive Officer of the Company, has a financial interest. For the year
ended December 31, 2003, the related company, LSH Assets Holdings Sdn Bhd
("LSH"), billed the Company's Malaysian subsidiary, AEI, administrative expenses
of $25,263 for administration and clerical fees incurred by LSH on behalf of
AEI. The Company also incurred management fees of totaling $60,00 and $120,000
per year, for the years ended December 31, 2003 and 2002, respectively,. The
management fee was charged on the basis of time spent for the administration and
management services provided to the Company. Management fees incurred were
reduced to $5,000 per month for the year ended December 31, 2003 from $10,000
per month for the year ended December 31, 2002, a 50% decrease.



                                       29
<PAGE>



Gain on disposal of assets - related parties

         For the years ended December 31, 2003 and 2002, the Company included
recognition of a previously deferred gain of $73,157 and 101,238, respectively
related to a similar amount the Company received from its long-term receivable,
related party. The receivable balance and total deferred gain was $628,157,
respectively, as of December 31, 2002. These amounts arose in the year ended
December 31, 1998 when the Company sold assets used in the operations of a
subsidiary to a related company. Due to the uncertainty of collection of the
related receivable, a related gain on the sale of the assets was deferred and is
to be recognized only after all costs have been recovered and to the extent the
receivable is collected. During the year ended December 31, 2002, payments
received by the Company exceeded all remaining costs. As a result the Company's
long-term receivable, related party and deferred gain balances were reduced to
$555,000 respectively, as of December 31, 2003.

Other income

         During 2003, other income included $50,000 the Company received from
the shareholders of Convergent Technologies, Inc. ("CTI") as cancellation fee,
pursuant to a Rescission Agreement signed between CTI's shareholders and the
Company in November 2003. During 2002, other income included a gain of $42,548
resulting from the Company's extinguishing accounts payable (related to prior
business operations) at less than recorded amounts.

Liquidity and Capital Resources

         As of December 31, 2003, the Company had cash of $244,919. Operations
were primarily funded from internally generated funds and working capital
advanced from time to time by the principal shareholder, director and officer of
the Company. These advances bear no interest and have no fixed terms of
repayment.

         As of December 31, 2003, the Company owed Mr. Lim, the Chief Executive
Officer, President and a Director of the Company, $56,556 for short-term cash
advances made to subsidiaries of the Company for working capital purposes from
time to time. Additionally, at December 31, 2003, the amount owed to a company
in which Mr. Lim has a financial interest was $148,325. This amount was for
short-term cash advances made to the Company and its subsidiaries for working
capital purposes from time to time and for management and administrative fees.
These amounts are unsecured, bear no interest and have no fixed terms of
repayment.

         For the year ended December 31, 2003, the Company generated net cash of
$665,206 from its operating activities. For the year ended December 31, 2002,
net cash used in operating activities was $302,203. Net cash provided by
operating activities mainly consists of receipt of income generated by
multimedia production work and project consultation. The higher net cash
provided by operating activities in 2003, as compared to 2002, was mainly due to
higher consulting income, which accounted for about 12% of total revenue in 2003
as compared to 3% in 2002. Net cash used in operating activities consists of
cost of revenues, sales and marketing expenses and general and administrative
expenses. The primary reason for the difference between net income of $815,373
and net cash provided by operations of $665,206 was higher accounts receivable,
which increased by $429,189 during 2003.

         Cash used in investing activities of $243,875 in 2003 was mainly
attributable to net cash used in acquiring new subsidiaries and associates. Cash
used in investing activities of $19,622 in 2002 was attributable to the purchase
of furniture and equipment.


                                       30
<PAGE>


         Cash used in financing activities of $186,489 in 2003 was primarily due
to repayment of advances from a director of $169,383. Cash provided by financing
activities of $331,500 in 2002 was primarily from the issuance of shares of
common stock for $204,030, payment to reacquire shares of common stock for
$100,000 and advances of $271,802 from an affiliated company in which the
Company's principal shareholder, CEO and president has a financial interest.

         The Company believes that sufficient cash will be generated from the
following sources to fund its operations for the next twelve months:

o    Intensification of efforts to collect overdue receivables. The Company
     intends to keep close contact with its debtors to keep updated on their
     liquidity status. Legal action will only be taken as a last resort.

o    Advances from a director/officer who is also a major shareholder as
     required to finance the Company's working capital requirements.

o    Additional revenue provided by: (i) a consulting contract, which is
     estimated to generate approximately $800,000 of revenue in 2004, to carry
     out the planning, design, project execution (including contract and project
     management) of all broadband communications and networking systems/services
     for Pulau Indah-Marina Village, (ii) a contract, which is estimated to
     generate approximately $120,000 of revenue in 2004, to carry out the
     planning, design, project execution of all broadband communications and
     networking systems/services for a commercial/housing project in Selangor,
     Malaysia, (iii) a consulting contract entered into on November 5, 2002 with
     a related party, which is expected to generate approximately $297,000 of
     revenue in 2003, to provide consulting services relating to home
     automation, home networking, energy cost saving, security surveillance and
     monitoring for two major commercial and housing developments in Malaysia,
     (iv) a contract entered into in April 2003 with a related party, which is
     estimated to generate approximately $1.0 million of revenue in 2004 to
     carry out the design, supply and installation of all broadband
     communications, access control and network security equipment for a mixed
     property development project in Selangor, Malaysia.

o    The Company may consider a private placement of its shares.

o    The Company may also seek to obtain equipment financing.


     The Company also hopes that additional cash will be generated from:

o    the marketing agreement with Worldlink Dotcom Sdn. Bhd. to distribute its
     service gateway for home/office automation in Malaysia, Singapore and
     Australia;

o    the distribution agreement with Mutual Base Equity Sdn. Bhd. for sale of
     the EyStar SmartHome Console in Malaysia, Singapore and Cambodia;

o    the Channel Partner Agreement with PointRed Technologies, Inc. to
     distribute the EyStar SmartHome Console;

o    the agreement with Sintec to sell, distribute and promote their remote
     video surveillance cameras;


                                       31
<PAGE>



o    the agreement with Telekom Sales and Services to sell, distribute and
     promote broadband access over standard copper telephone lines using Digital
     Subscriber Line technology in Malaysia;

o    the reseller agreements with FaceKey Corporation and Testech Inc to sell
     their biometric-based security products;

o    a $9 million contract from Mutual Base Equity Sdn Bhd for the supply of
     biometric security products and EyStar SmartHome console over a three-year
     period, expected to commence sometime in 2004;

o    a contract, which is expected to commence sometime in 2004 after
     finalization of technical specifications with relevant regulatory
     authorities, to implement a biometric security recognition and
     identification system comprising of hardware, software and the issuance of
     security identity cards over a ten-year period;

o    a $2.0 million contract with a related party to supply and install a
     biometric security system for access control and time attendance in
     Malaysia. The contract is expected to commence sometime in 2004 and be
     completed within six months from the commencement date. In addition to the
     supply contract, the Company was awarded a maintenance contract for 5
     years. This maintenance contract will commence upon completion of the
     project and is expected to generate annual recurring revenue of
     approximately $250,000;

o    a $850,000 contract to supply, install and commission a biometric based
     Building Access Management and Monitoring System for a 40-story office
     complex in Kuala Lumpur, Malaysia. The contract is expected to commence
     sometime in 2004;

o    a $4.6 million contract, with an initial duration of fifteen months, to
     provide electronically secured cargo shipping services for a shipping
     agency in Malaysia, expected to commence in the second quarter of 2004;

o    a fifteen-month $4.92 million contract to provide a secured shipping
     service that includes warehousing, transportation and cargo monitoring,
     expected to commence sometime in 2004; and

o    three contracts, with an aggregate value of $3.81 million, awarded by a
     related party in March 2004, for the supply and installation of biometric
     security systems in three developments in Malaysia.

         In addition to internally generated funds and financial support from a
director and major shareholder, the Company may seek to raise additional funds
from equity or debt financing for its future working capital requirements. As of
December 31, 2003, the Company has furniture and equipment of approximately $1.4
million for the roll out of its portal, build-out of VISIONET and implementation
of its business plan. As of January 1, 2002, the Company had committed to an
initial purchase of hardware valued at $250,000 for the limited commercial
rollout of VISIONET in 2002. The Company received the equipment in 2002 for
trial but subsequently returned it to the vendor as the equipment did not
perform to the standard as specified by the Company. The Company estimates that
it would require additional capital expenditures of up to $2.0 million to
implement its business plan to become a total system solution provider involved
in application development, network operation, delivery of value added
applications and services; and sale of its EyStar SmartHome Console. The Company
has also committed to an initial purchase of software and hardware valued at
$50,000 in conjunction with its announced strategic collaboration with Aptilo
Networks, Sweden.



                                       32
<PAGE>


         The Company will also be expanding into new businesses that include
provision of secured shipping and supply chain management services and
establishing and operating a Central Monitoring Service in the Northern Region
of Malaysia. The Company expects to incur further expenses to acquire companies
and technologies that are synergistic to the new businesses and will help the
Company to rollout the new businesses in the shortest time possible. During
2003, the Company incurred $263,000 in the establishment and acquisition of new
subsidiaries and associates relating to its new businesses. For 2004, the
Company estimates that it will incur an additional $2.1 million to acquire the
business, net assets and equity interest in companies synergistic to its planned
new businesses. In addition, the Company estimates that it will require a
further $2.0 million to finance the set-up cost of its new businesses. The
Company also expects that it will require a further $2.0 million to finance the
working capital of its new businesses and the operation of its newly acquired
and/or established subsidiaries and associates.

         There is, however, no assurance that financing will be available or, if
available, that it would be offered to the Company on acceptable terms. The
Company will continuously evaluate its financing requirements and may decide to
consider alternative modes of financing.

         In November 2001, the Company signed an agreement to purchase office
space in Australia for $1.8 million Australian dollars (approximately $1,017,000
USD at December 31, 2002). The Company intended to lease the space for rental
until it finalized its plan to relocate its Asian headquarters to Australia.
Pursuant to the terms of the agreement, the Company paid a sum of $5,200 as
deposit for the above property. During the third quarter of 2003, the Company
decided not to proceed with the purchase due to the vendor's inability to
deliver vacant possession of the property. Following termination of the
agreement, the Company expensed the $5,200 non-refundable deposit paid to the
vendor.

         In January 2002, the Company signed an agreement to purchase
approximately $19 million of equipment over the next five years. These equipment
purchases are subject to inspection and acceptance by the Company depending upon
certain performance standards being satisfactorily met. As of December 31, 2002,
the Company had suspended the agreement until the vendor has rectified
performance problems discovered by the Company during the trial of this
equipment. Following the failure of the vendor to rectify the problems
encountered during the trial, the agreement was terminated on May 19, 2003 and
the trial equipment has been returned to the vendor.

         On September 27, 2002, the Company announced that it has reached an
agreement with the shareholders of Convergent Technologies, Inc. ("CTI"), a
privately held company, to acquire a majority interest in CTI for approximately
$5.0 million. The acquisition was expected to be funded by a combination of cash
and issuance of the Company's Preferred Stock. The acquisition was subject to
completion of due diligence, execution of a definitive agreement and was
expected to close in the first half of 2003. During 2003, the Company paid
$150,000 to CTI's shareholders as an advance deposit on the purchase. On
November 6, 2003, the Company and CTI's shareholders mutually agreed to rescind
the purchase agreement after CTI did not satisfy all of the conditions to the
Purchase Agreement as a result of its inability to deliver title to certain real
property in a form acceptable to the Company. Pursuant to the Rescission
Agreement, the stockholders of CTI refunded the $150,000 and paid an additional
$50,000 to the Company as cancellation fee.



                                       33
<PAGE>



         On December 4, 2002, the Company announced that its Board of Directors
had approved a stock repurchase program for up to 10 million shares from the
then public float of approximately 42.7 million shares which may be repurchased
from time to time on or before December 2003. Under the program, the Company can
purchase shares of common stock through open market and/or privately negotiated
transactions at prices deemed appropriate by management. The timing and amount
of any repurchase transaction under this program will depend on market
conditions and corporate and regulatory considerations. Through December 31,
2003, the Company repurchased a total of 1,305,000 shares of its common stock,
at an average price of $0.04, for a total cash consideration of $52,298. These
shares were returned to treasury and are available for re-issuance at a future
date. On September 5, 2003, the Company reissued 250,000 shares of common stock
from the treasury to a shareholder at $0.20 per share for a total consideration
of $50,000. The shares, which were issued based on a first-in, first-out basis,
were sold in reliance upon the exemption provided by Regulation S under the
Securities Act of 1933, as amended. As of December 31, 2003, the Company had a
balance of 1,055,000 shares of treasury stock valued at $44,550, based on an
average cost of $0.04 per share.

         No dividends on common stock were paid by the Company for the two years
reported herein.

Critical Accounting Policies

Financial Reporting Release No. 60, which was released by the Securities and
Exchange Commission, requires all companies to include a discussion of critical
accounting policies or methods used in the preparation of financial statements.
Note 2 to the Consolidated Financial Statements includes a summary of the
significant accounting policies and methods used in the preparation of the
Company's Consolidated Financial Statements. The following is a brief discussion
of the more significant accounting policies and methods used by the Company.

Revenue Recognition

Revenue represents the net invoiced value of:

o    goods sold;

o    fees earned from the production of multimedia programs and Intranet and
     management and consulting services; and

o    fees earned from rental and servicing of material handling equipment,
     provision of land transportation, engineering and industrial moving
     services.

The Company recognizes revenue from the sales of goods in the period when
significant risks and rewards of ownership have transferred to its customers.
The Company recognizes revenue from the services provided in the period in which
the services are performed and when there is no significant uncertainty
regarding the consideration to be received and the associated costs to be
incurred.

Accounts Receivable

The Company grants credit, generally without collateral, to its customers. The
Company continuously monitors collections and payments from its customers and
maintains an allowance for estimated uncollectible accounts based upon
historical experience and specific customer collections issues that have been
identified. Such allowances have been within managements expectations.


                                       34
<PAGE>


Stock-Based Compensation

The Company has adopted SFAS No. 123, Accounting for Stock-Based
Compensation. As permitted by SFAS No. 123, the Company measures compensation
cost in accordance with Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees and related interpretations.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. This statement amends SFAS No. 123,
Accounting for Stock-Based Compensation, and establishes two alternative methods
of transition from the intrinsic value method to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
requires prominent disclosure about the effects on reported net income (loss)
and requires disclosure for these effects in interim financial information. The
provisions for the alternative transition methods are effective for fiscal years
ending after December 15, 2002, and the amended disclosure requirements are
effective for interim periods beginning after December 15, 2002. The Company
adopted the disclosure only provisions of SFAS No. 148 in 2003 and plans to
continue accounting for stock-based compensation under APB 25.

Impairment of Long-lived Assets

The Company evaluates long-lived assets whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. In performing the review of recoverability, we estimate future cash
flows expected to result from the use of the asset and its eventual disposition.
The estimates of future cash flows, based on reasonable and supportable
assumptions and projections, require management's subjective judgments. The time
periods for estimating future cash flows is often lengthy, which increases the
sensitivity to assumptions made. Depending on the assumptions and estimates
used, the estimated future cash flows projected in the evaluation of long-lived
assets can vary within a wide range of outcomes. The Company considers the
likelihood of possible outcomes in determining the best estimate of future cash
flows.

Accounting for Goodwill

Since the adoption of SFAS 142 on January 1, 2002, the Company no longer
amortizes goodwill but instead tests annually for impairment. SFAS 142 requires
that goodwill be tested annually. If the carrying value of goodwill exceeds its
fair value, an impairment loss must be recognized. A present value technique is
often the best available technique with which to estimate the fair value of a
group of assets. The use of a present value technique requires the use of
estimates of future cash flows. These cash flow estimates incorporate
assumptions that marketplace participants would use in their estimates of fair
value as well as the Company's own assumptions. These cash flow estimates are
based on reasonable and supportable assumptions and consider all available
evidence. However, there is inherent uncertainty in estimates of future cash
flow. As such, different assumptions were used in the Company's calculations and
the likelihood of possible outcomes was considered.




                                       35
<PAGE>


RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of
Others". FIN 45 elaborates on the disclosures to be made by the guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also requires that a guarantor recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and measurement
provisions of this interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, while the provisions of
the disclosure requirements are effective for financial statements of interim or
annual reports ending after December 15, 2002. The adoption of FIN 45 did not
have a significant immediate impact on the financial condition or results of
operations of the Company, as the Company has made no guarantees.

In January 2003, the FASB issued SFAS Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), which changes the criteria by which one
company includes another entity in its consolidated financial statements. FIN 46
requires a variable interest entity ("VIE") to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the entity's
residual returns or both. In December 2003, the FASB approved a partial deferral
of FIN 46 along with various other amendments. The effective date for this
interpretation has been extended until the first fiscal period ending after
December 15, 2004. However, prior to the required application of this
interpretation, a public entity that is a small business issuer shall apply this
interpretation to those entities that are considered to be special purpose
entities no later than as of the end of the first reporting period after
December 15, 2003. As the Company does not currently have an interest in a VIE,
management does not expect that the adoption of FIN 46 will have a significant
immediate impact on the financial condition or results of operations of the
Company.

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 145, Recission of FASB Statements 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections. SFAS 145 requires companies
to no longer report gains and losses associated with the extinguishment of debt
as a component of extraordinary gains and losses, net of tax. These gains and
losses are required to be presented within the statement of income in
appropriate segregated line items. As required by SFAS 145, the extraordinary
gains recognized in the year ended December 31, 2002 of approximately $42,500 in
connection with the extinguishment of accounts payable has been reclassified to
other income.

In May 2003, the FASB issued SFAS No. 150 ("SFAS 150"), Accounting for Certain
Instruments with Characteristics of Both Liabilities and Equity, which
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. The
provision of SFAS No. 150 are generally effective for all financial instruments
entered into or modified after May 31, 2003, except for those provisions
relating to mandatorily redeemable non-controlling interests, which have been
deferred. The adoption of SFAS No. 150 did not have a material impact on the
financial position or results of operation of the Company. If the deferred
provisions of SFAS No. 150 are finalized in their current form, management does
not expect adoption to have a material effect on the financial position or
results of operation of the Company.




                                       36
<PAGE>


ITEM 7. FINANCIAL STATEMENTS

         The audited financial statements of the Company being furnished in
response to this Item are contained in a separate section of this Report
following the signature page.


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

         There were no disagreements on accounting and financial disclosures
with the Company's present independent accountants, Horwath Gelfond Hochstadt
Pangburn, P.C., during the reporting period.


ITEM 8A. CONTROLS AND PROCEDURES

         Within the 90 days prior to the date of this report, the Company's
management concluded its evaluation of the effectiveness of the design and
operation of the Company's disclosure controls and procedures. As of the
Evaluation Date, the Company's Chairman and Chief Executive Officer and its
Chief Financial Officer concluded that the Company maintains disclosure controls
and procedures that are effective in providing reasonable assurance that
information required to be disclosed in the Company's reports under the
Securities Act of 1934 (Exchange Act) is recorded, processed, summarized and
reported within the time periods specified in the SEC's rules and forms, and
that such information is accumulated and communicated to the Company's
management, including its Chairman and Chief Executive Officer and its Chief
Financial Officer, as appropriate, to allow timely decisions regarding required
disclosure. The Company's management necessarily applied its judgment in
assessing the costs and benefits of such controls and procedures, which, by
their nature, can provide only reasonable assurance regarding management's
control objectives. There have been no significant changes in the Company's
internal controls or in other factors that could significantly affect these
controls subsequent to the Evaluation Date.


                                       37
<PAGE>


                                    PART III

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

         The Directors and Executive Officers of the Company, and their
respective ages and positions held in the Company, as of April 8, 2004 are as
follows:-

<TABLE>
<CAPTION>

     NAME                                   AGE        POSITION HELD
     ----                                   ---        -------------

<S>                                         <C>
     Patrick Soon-Hock Lim                  54         Chairman, Chief Executive Officer and Director

     Valerie Hoi-Fah Looi                   45         Secretary and Director

     Wan Abdul Razak bin Muda               67         Director

     Mark Deschaine                         40         Director

     Chee-Hong Leong                        38         Chief Financial Officer/Treasurer

</TABLE>


(1) The directors of the Company will serve in such capacity until the next
annual meeting of the Company's shareholders or until their successors have been
elected and qualified. The officers serve at the discretion of the Company's
Directors. There are no family relationships among the Company's officers and
directors, nor are there any arrangements or understandings between any of the
directors or officers of the Company or any other person pursuant to which any
officer or director was or is to be selected as an officer or director.


         MR. PATRICK SOON-HOCK LIM, 54, has served as the President, Chief
Executive Officer and director of the Company, positions he has held since April
1999. In June 2002, Mr. Lim was appointed as Chairman, Chief Executive Officer
and director of the Company. Mr. Lim has been the Managing Director at AEI since
1988 and has been involved in the multimedia industry for the past 12 years. Mr.
Lim earned his Masters of Science from Reading University, United Kingdom in
1973.

         MR. WAN ABDUL RAZAK BIN MUDA, 67, has served as a director of the
Company since April 1999. Mr. Muda previously served as Chairman of the Board of
the Company from April 1999 to June 2002. In addition, Mr. Muda has been the
Chairman of the Board of AEI and PTSB since February 1993. Since 1992, he has
been the Chairman and Director of Tiong Nam Transport Holdings Bhd, a Malaysian
public land cargo transportation and warehousing company. Prior to joining Tiong
Nam Transport Holding Bhd, Mr. Muda had served in the Malaysian Police Force for
34 years. He joined the Malaysian Police Force as a police cadet after
completing senior high school. As part of his training, he attended numerous
courses conducted by the Royal Malaysian Police Training College and rose from
the rank and file to his last position as the Chief Police Officer of the state
of Terengganu, Malaysia.



                                       38
<PAGE>


         MS. VALERIE HOI-FAH LOOI, 45, has served as the Corporate Secretary and
director of the Company since April 1999 and, in such position, she is
responsible for corporate affairs and human resources of the Company. Ms. Looi
has also served as the Senior Vice President, Corporate Affairs at AEI, a
position she has held since joining AEI in 1990. She has over 10 years of
experience in corporate affairs. Ms. Looi received her Diploma in Management
from the Malaysian Institute of Management.

         MR. MARK DESCHAINE, 40, has served as the Company's independent
director and Chairman of the Audit Committee since June 27, 2002. Mr. Deschaine
is a principal member with Educational & Technological Consultants LLC, a
Michigan company, specializing in learning, training, educational and
technological issues. Mr. Deschaine holds teaching credentials, as well as two
Masters Degrees, one from Oakland University and the other from Grand Valley
State University in the area of education.

         MR. CHEE-HONG LEONG, 38, has served as the Chief Financial Officer and
Treasurer of the Company since February 2000. He is a Fellow of the Association
of Chartered Certified Accountants, United Kingdom. Mr. Leong is responsible for
the financial and administrative functions of the Company. Prior to joining AEI,
Mr. Leong was the Assistant Accounts Manager at Industrial Concrete Products
from April 1994 to December 1999. Mr. Leong earned his Bachelor of Arts in
Accounting at Ulster University in Northern Ireland in 1989 and qualified as a
Chartered Certified Accountant with the Association of Chartered Certified
Accountants, UK in 1994.

         Except for 25,000 shares of the Company's restricted common stock
granted to Mr. Deschaine on June 26, 2002, as compensation for serving on the
Company's Board of Directors, the Company does not pay fees to members of the
board of directors and presently has no plans to pay directors' fees. Presently,
Mr. Muda and Mr. Deschaine are the only Outside Directors of the Company.


COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934

         Section 16(a) of the Securities Exchange Act of 1934, as amended, (the
"34 Act"), requires the Company's officers and directors and persons who own
beneficially more than ten percent of the Company's Common Stock to file initial
reports of ownership and changes in ownership with the Securities and Exchange
Commission ("SEC"). Based solely on a review of copies of the Section 16(a)
reports furnished to the Company and written representations by certain
reporting persons, the Company believes that all of the Company's officers and
directors, and all persons owning more than ten percent of the Company's Common
Stock have filed the subject reports, if required, on a timely basis during and
with respect to the fiscal year ended December 31, 2003.

Audit Committee Composition

The Company has a separately designated standing audit committee established in
accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Patrick Soon-Hock Lim (Chairman), Mark Deschaine
and Wan Abdul Razak bin Muda are members of the audit committee. The Board has
determined that at least one person on the Audit Committee, Patrick Soon-Hock
Lim, qualifies as a "financial expert" as defined by SEC rules implementing
Section 406 of the Sarbanes-Oxley Act. Mark Deschaine and Wan Abdul Razak bin
Muda meet the SEC definition of an "independent" director.

Code of Ethics

The Company has adopted a Code of Ethics (as defined in Item 406) of Regulation
S-K that applies to its principle executive, financial and accounting officers.
Secured Digital Applications, Inc. will provide a copy of its code of ethics,
without charge, to any investor that requests it. Requests should be addressed
in writing to Ms. Valerie Looi, Suite 11.02, Menara Merais, No. 1 Jalan 19/3,
46300 Petaling Jaya, Selangor, Malaysia.


Code of Conduct for Purchases and Sales of Company Securities

The Company has adopted a Code of Conduct for Purchases and Sales of
Company Securities that applies to its directors and executive officers. Secured
Digital Applications, Inc. will provide a copy of its Code of Conduct for
Purchases and Sales of Company Securities, without charge, to any investor that
requests it. Requests should be addressed in writing to Ms. Valerie Looi, Suite
11.02, Menara Merais, No.1 Jalan 19/3, 46300 Petaling Jaya, Selangor, Malaysia.

ITEM 10. EXECUTIVE COMPENSATION

         The following table sets forth certain information concerning the
compensation earned by the Company's Chief Executive Officer and other executive
officers who were serving as executive officers at the end of the last completed
fiscal year and whose salary and bonus aggregated were in excess of $100,000. No
other compensation not covered in the following table was paid or distributed by
the Company to such persons during the period covered. Employee Directors
receive no additional compensation for service on the Board of Directors of the
Company. Outside Directors received no compensation from the Company as such
during this period, except as indicated below.



                                       39
<PAGE>


         In December 2000, the Company granted stock options to directors and
officers of the Company. Mr. Lim, the current Chairman and Chief Executive
Officer, was granted an option for 500,000 common shares at $0.085 exercisable
until December 5, 2005. Mr. Muda, a Director, was granted an option for 100,000
common shares at $0.085 exercisable until December 5, 2005. Miss Looi, the
current Secretary and Director, was granted an option for 120,000 common shares
at $0.085 exercisable until December 5, 2005. Mr. Leong, the current Chief
Financial Officer and Treasurer, was granted an option for 78,000 common shares
at $0.085 exercisable until December 5, 2005. The closing price of the common
stock on December 6, 2000 was $0.075. Mr. Lim, Mr. Muda and Ms. Looi exercised
their options on March 12, 2002 to purchase a total of 720,000 shares of
restricted common stock at $0.085 per share for total cash consideration of
$61,200. Mr. Leong exercised his total options of 78,000 shares on March 30,
2002 and June 13, 2003 to purchase 45,000 and 33,000 shares, respectively, of
restricted common stock at $0.085 per share for a total cash consideration of
$6,630.

         On June 26, 2002, the Company granted 25,000 shares of restricted
common stock to Mr. Deschaine as compensation for serving on the Company's Board
of Directors.

         The Company has no other retirement, pension, profit sharing, stock
option, insurance or other similar programs. There were no long-term
compensation plans, awards, options or any other compensation offered by the
Company.


<TABLE>
<CAPTION>



                           SUMMARY COMPENSATION TABLE

                                                                        ANNUAL
                                                                     COMPENSATION
                                                                    --------------
NAME AND PRINCIPAL POSITION                      YEAR            SALARY           BONUS
---------------------------------------         ---------        ------           -----
<S>                                                <C>
Patrick Soon-Hock Lim                              2003              -              -
Chairman, Chief Executive                          2002              -              -
Officer and Director                               2001              -              -
</TABLE>

EMPLOYMENT AGREEMENTS

         The Company has no employment agreements with its Chief Executive
Officer and other executive officers. However, its wholly-owned subsidiary, AEI,
and Chee Hong Leong entered into a letter agreement, dated December 8, 1999,
with respect to Mr. Leong's appointment as Corporate Finance Manager of AEI.
Under the letter agreement, Mr. Leong will receive a basic salary of $18,947 per
year and be entitled to unspecified stock option grants to be awarded by Secured
Digital Applications, Inc. in the future. Either party may terminate the letter
agreement by giving the other party one month's prior written notice. Mr. Leong
is presently drawing a basic salary of $24,473 per year.

         AEI and Ms. Valerie Hoi-Fah Looi entered into a letter agreement dated
January 1, 1999 with respect to Ms. Looi's redesignation as Senior Vice
President of Corporate Affairs at AEI. Under the letter agreement, Ms. Looi will
receive a basic salary of $13,578 per year subject to review by the Company from
time to time. Ms. Looi is presently drawing a basic salary of $25,263 per year.


                                       40
<PAGE>



ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

         The following sets forth the number of shares of the Company's common
stock beneficially owned by (i) each person who, as of April 8, 2004, was known
by the Company to own beneficially more than five percent (5%) of its common
stock; (ii) each of the Directors and Executive Officers of the Company and
(iii) the Directors and Executive Officers of the Company as a group. As of
April 8, 2004, there were 97,928,899 common shares issued and outstanding.
<TABLE>
<CAPTION>


NAME AND ADDRESS                          NUMBER OF SHARES OF                              PERCENT OF
OF BENEFICIAL OWNER(1)                    BENEFICIAL OWNER (2)                               CLASS

<S>                                                  <C>        <C>                             <C>
Patrick Soon-Hock Lim                                50,995,000 (3)                             52.09

Valerie Hoi-Fah Looi                                   4,820,000                                 4.92

Mark Deschaine (4)                                     1,004,500                                 1.03

Wan Abdul Razak bin Muda                                 400,000                                    *

Chee-Hong Leong                                           78,000                                    *
                                                  --------------                              -------
All Officers and Directors as
a Group (5 persons)                                   57,297,500                                58.04
                                                        ========                                 ====

</TABLE>

* Less than 1%.


(1)    Except for Mark Deschaine, the address for each beneficial owner is c/o
       Secured Digital Applications, Inc., Suite 11.02, Menara Merais, No. 1
       Jalan 19/3, 46300 Petaling Jaya, Selangor, Malaysia.

(2)    The inclusion herein of any shares of common stock as beneficially owned
       does not constitute an admission of beneficial ownership of those shares.
       Unless otherwise indicated, each person listed above has sole investment
       and voting power with respect to the shares listed.

(3)    Includes (a) 8,000,000 shares directly owned by Mr. Lim's wife, (b)
       8,000,000 shares directly owned by Mr. Lim's son and (c) 25,245,000
       shares owned by LSH Asset Holdings Sdn Bhd, a corporation controlled by
       Mr. Lim and his wife.

(4)    The address for Mark Deschaine is PO Box 72 Frankenmuth, MI 48734.


                                       41
<PAGE>



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

During the year ended December 31, 2003, the Company had related transactions
with the following parties:

LSH ASSET HOLDINGS SDN BHD ("LSH"):

LSH is a company wholly-owned by the Company's Chief Executive Officer and his
wife. During each of the years ended December 31, 2003 and 2002, LSH billed the
Company $60,000 and $120,000, respectively, for management fees. LSH also billed
the Company's Malaysian subsidiary, AEI, $25,263 during the year ended December
31, 2003 for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working capital purposes. These
advances totaled $140,966 and $180,695 in 2003 and 2002, respectively. During
the year ended December 31, 2003, in lieu of actual cash payment of project
consulting fee receivables from two consulting contracts, management directed
two customers to pay a total of $30,000 to LSH. During the year ended December
31, 2002, the Company's management directed other related parties and a customer
to pay a total of $402,632 to LSH in lieu of actual cash payment of receivables.
As of December 31, 2003, the amount due to LSH was $148,325. This amount is
unsecured, bears no interest, has no fixed terms of repayment, and is recorded
in the financial statements as "Amount due to an affiliated company".

VISIONEWS ASIA SDN BHD ("VASB"):

The Company's Chief Executive Officer is a director of VASB and owns a 40%
equity interest in VASB. A director of PTSB is also a director of VASB and owns
a 20% equity interest in VASB. During the year ended December 31, 2002, the
Company recognized revenue from VASB of $7,895, which related to revenue
previously deferred in 1999. In lieu of actual cash payment, the Company's
management directed VASB to pay $7,895 to LSH. The net effect to the Company was
that revenue was recognized and recorded payables were reduced by equal amounts.
As of December 31, 2003, $73,665 of receivables from 1999 was not recognized as
revenue due to the uncertainty of collection. The terms of repayment for the
amount due from VASB is similar to terms accorded to the Company's other
existing customers.

SYNERVEST SDN BHD ("SSB"):

A director of PTSB is a director of SSB and holds a 60% equity interest in SSB.
During the year ended December 31, 2002, the Company recognized revenue from SSB
of $92,105, which related to revenue previously deferred in 1999. In lieu of
actual cash payment, the Company's management directed SSB to pay $92,105 to
LSH. The net effect to the Company was that revenue was recognized and recorded
payables were reduced by equal amounts.

As of December 31, 2003, long-term receivables, related parties, consisted of an
overdue amount of $555,000 from SSB. This amount primarily arose in the year
ended December 31, 1998, when the Company sold to SSB assets used in the
operations of a subsidiary. These assets, comprising analog video hardware and
peripherals and a patent for image display, were sold to SSB for a total sum of
$1,661,175. Due to the uncertainty of collection of the related receivable, the
gain has been deferred and will be recognized only after all costs have been
recovered. The Company received $73,157 and $142,448 of the outstanding
receivable during the years ended December 31, 2003 and 2002, respectively.
During the year ended December 31, 2002, payments received by the Company
exceeded all remaining costs, resulting in a $101,238 realization of gain on
sale of assets, related party. The deferred gain included in the balance sheet
has been reduced accordingly. The deferred gain on sale of assets totaled
$555,000 at December 31, 2003, and will be recognized as a gain as payments on
the long-term receivable balance are received. During 2002, in lieu of actual
cash payment of a portion of the receivable due, the Company's management
directed SSB to pay $101,487 to LSH. The net effect to the Company was that
recorded receivables and payables were reduced equally.


                                       42
<PAGE>


KHIDMAT MAKMUR SDN BHD ("KMSB"):

A director of PTSB is a director of KMSB and holds a 30% equity interest in
KMSB. During the year ended December 31, 2002, the Company recognized revenue
from KMSB of $114,592 which relates to revenue previously deferred in 1999. In
lieu of actual cash payment, the Company's management directed KMSB to pay
$14,592 of $114,592 to LSH. The net effect to the Company was that revenue
was recognized and recorded payables were reduced by equal amounts. As of
December 31, 2003, $40,790 of receivables from 1999 was not recognized as
revenue due to the uncertainty of collection. The terms of repayment for the
amount due from KMSB are similar to terms accorded to the Company's other
existing customers.

MY ARCHITECT ("MYA") AND MY DRAUGHTING SERVICES ("MDS"):

A director of PTSB is a principal partner of MYA and MDS. During the years ended
December 31, 2003 and 2002, the Company received fees of $1,153,578 and
$165,658, respectively, from consulting contracts that it entered into with MDA.
During the year ended December 31, 2002, the Company also recognized revenue
from MYA and MDS of $7,895 and $10,237, respectively, which related to revenue
previously deferred in 1999. In lieu of actual cash payment, the Company's
management directed MYA and MDS to pay $7,895 and $10,237, respectively, to LSH.
The net effect to the Company was that revenue was recognized and recorded
payables were reduced by equal amounts. As of December 31, 2003, $131,579 and
$94,210 of 1999 receivables from MYA and MDS, respectively, were not recognized
as revenue due to the uncertainty of collection. The terms of repayment for the
amount due from MYA and MDS are similar to terms accorded to the Company's other
existing customers.

CHIEF EXECUTIVE OFFICER:

As of December 31, 2003, the Company owed the Chief Executive Officer of the
Company $56,556 for short-term cash advances made to the Company for working
capital purpose from time to time. The amount owing to the Chief Executive
Officer is unsecured, bears no interest, has no fixed terms of repayment and is
recorded in the financial statements as "Amount due to a director".


ITEM 13. EXHIBITS, LIST AND REPORTS ON FORM 8-K.

(a) Exhibits.

3.1  Articles of Incorporation (Incorporated by reference to Exhibit 3A to the
     Company's Form 10-SB filed with the SEC on March 6, 1995.)

3.2  Articles of Amendment (Incorporated by reference to Exhibit 3B to the
     Company's Form 10-SB filed with the SEC on March 6, 1995.)

3.3  Bylaws (Incorporated by reference to Exhibit 3C to the Company's Form 10-SB
     filed with the SEC on March 6, 1995.)

3.4  Articles Of Amendment to change name from Knight Natural Gas to Kalan Gold
     Corporation. (Incorporated by reference to Exhibit 3.4 to the Company's
     Form 10-KSB filed with the SEC on April 14, 2000.)

3.5  Articles of Amendment to change name from Kalan Gold Corporation to Digital
     Broadband Networks, Inc. (Incorporated by reference to Exhibit 3.5 to the
     Company's Form 10-KSB filed with the SEC on March 28, 2002.)


                                       43
<PAGE>

3.6  Amended and Restated Certificate of Incorporation of Digital Broadband
     Networks, Inc. (Incorporated by reference to Exhibit 3.6 to the Company's
     Form 10-KSB filed with the SEC on March 31, 2003)

3.7  State of Delaware Certificate of Merger of Foreign Corporation into a
     Domestic Corporation (Incorporated by reference to Exhibit 3.7 to the
     Company's Form 10-KSB filed with the SEC on March 31, 2003)

3.8  Certificate of Incorporation of Secured Digital Applications, Inc.

3.9  Certificate of Ownership of Digital Broadband Networks, Inc. (a Delaware
     corporation) and Secured Digital Applications, Inc. (a Delaware
     corporation)

10.1 Amended Settlement Memorandum, dated December 14, 1999, as confirmed by
     Judge Jim R. Carrigan of the Judicial Arbiter Group in Denver.
     (Incorporated by reference to Exhibit 10.1 to the Company's Form 10-KSB
     filed with the SEC on April 14, 2000.)

10.2 Agreement and Plan of Reorganization, dated April 20, 1999, between Kalan
     Gold Corporation and Animated Electronic Industries Sdn. Bhd. (Incorporated
     by reference to Exhibit 2.1 to the Company's Current Report on Form 8-K/A
     dated April 20, 1999, as filed with the SEC on July 2, 1999.)

10.3 Employment Letter Agreement, dated January 1, 1999, between Valerie Looi
     and Animated Electronic Industries Sdn. Bhd. (Incorporated by reference to
     Exhibit 10.3 to the Company's Form 10-KSB filed with the SEC on April 14,
     2000.)

10.4 Employment Letter Agreement, dated December 8, 1999, between Leong Chee
     Hong and Animated Electronic Industries Sdn. Bhd. (Incorporated by
     reference to Exhibit 10.4 to the Company's Form 10-KSB filed with the SEC
     on April 14, 2000.)

10.5 Agreement dated December 6, 2003 between Yew Sair Lai and Asiaco Multi
     Corporation Sdn Bhd to purchase shares in Asiaco Transport Sdn Bhd (SUBJECT
     TO POST-CLOSING DOCUMENTATION)

10.6 Agreement dated November 15, 2003 between Yew Sair Lai and Asiaco Multi
     Corporation Sdn Bhd to purchase shares in Asiaco Material Handling (East
     Coast) Sdn Bhd (SUBJECT TO POST-CLOSING DOCUMENTATION)

10.7 Agreement dated November 15, 2003 between Yew Sair Lai and Asiaco Multi
     Corporation Sdn Bhd to purchase shares in Asiaco Logistic Sdn Bhd (SUBJECT
     TO POST-CLOSING DOCUMENTATION)

10.8 Agreement dated November 15, 2003 between Yew Sair Lai and Asiaco Multi
     Corporation Sdn Bhd to purchase shares in Asiaco Engineering Sdn Bhd
     (SUBJECT TO POST-CLOSING DOCUMENTATION)

10.9 Agreement dated November 15, 2003 between Yew Sair Lai and Asiaco Multi
     Corporation Sdn Bhd to purchase shares in Asiaco Services Sdn Bhd (SUBJECT
     TO POST-CLOSING DOCUMENTATION)

21.1 List of Subsidiaries

31.1 Certification by Chief Executive Officer pursuant to Rule 13A-14 or 15D-14
     of the Securities Exchange Act of 1934


                                       44
<PAGE>

31.2 Certification by Chief Financial Officer pursuant to Rule 13A-14 or 15D-14
     of the Securities Exchange Act of 1934

32.1 Certification by Chief Executive Officer pursuant to 18 U.S.C. 1350

32.2 Certification by Chief Financial Officer pursuant to 18 U.S.C. 1350

99.1 Letter from Arthur Andersen & Co. dated April 14, 2000 (Incorporated by
     reference to Exhibit 10.1 to the Company's Form 10-KSB filed with the SEC
     on April 14, 2000).

(b) Reports on Form 8-K.

           The Company filed a Current Report on Form 8-K for an event specified
           in Item 5 of such report on October 28, 2003

           The Company filed a Current Report on Form 8-K for an event
           specified in Item 2 of such report on November 7, 2003.

           The Company filed a Current Report on Form 8-K for an event
           specified in Item 12 of such report on November 13, 2003

           The Company filed a Current Report on Form 8-K for an event
           specified in Item 5 of such report on December 5, 2003



ITEM 14. Principal Accountant Fees and Services

Our principal auditor during fiscal 2002 and 2003 is Horwath Gelfond
Hochstadt Pangburn, P. C.. Aggregate fees were billed in the following
categories and amounts:
<TABLE>
<CAPTION>

                                                             Years Ended December 31,
                                                         ---------------------------------
                                                             2003                  2002
                                                            ---------           --------
<S>                                                       <C>              <C>
          Audit Fees                                      $      44,600    $      40,810
          Audit Related                                              --               --
          Tax Related                                             7,500            2,000
          Other Fees                                                 --               --
</TABLE>

Audit related fees included due diligence assistance provided in connection
with potential acquisitions. All of the services described above were approved
by the Company's audit committee and prior to performance. The audit committee
has determined that the payments made to its independent accountants for these
services are compatible with maintaining such auditors' independence.



                                       45
<PAGE>


                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.


                           Secured Digital Applications, Inc.

Dated:  April 12, 2004     By: /s/ Patrick Soon-Hock Lim
                               --------------------------------------
                                 Patrick Soon-Hock Lim
                                 Chairman and Chief Executive 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 Company
and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>

          SIGNATURE                                TITLE                                         DATE
          ---------                                -----                                         ----


<S>                                                                                                 <C> <C>
/s/ Patrick Soon-Hock Lim                          Chairman, Chief Executive                  April 12, 2004
---------------------------------                  Officer and Director
Patrick Soon-Hock Lim                              (Principal Executive Officer)



/s/ Chee-Hong Leong                                Chief Financial Officer                    April 12, 2004
-----------------------------                      (Financial Officer and
Chee Hong Leong                                    Principal Accounting Officer)



/s/ Valerie Hoi-Fah Looi                           Secretary and Director                     April 12, 2004
------------------------------
Valerie Hoi-Fah Looi



/s/ Wan Abdul Razak bin Muda                       Director                                   April 12, 2004
---------------------------------------
Wan Abdul Razak bin Muda



/s/ Mark Deschaine                                 Director                                   April 12, 2004
-----------------------------
Mark Deschaine
</TABLE>


                                       46
<PAGE>














               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                     YEARS ENDED DECEMBER 31, 2003 AND 2002
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<CAPTION>


<S>                                                                                      <C>
Independent auditors' report                                                            F1
Consolidated financial statements:
         Balance sheet                                                                  F2
         Statements of operations                                                       F3
         Statements of changes in shareholders'
           equity and comprehensive income                                              F4
         Statements of cash flows                                                       F5-F6
         Notes to consolidated financial statements                                     F7-F26
</TABLE>




















<PAGE>



                          INDEPENDENT AUDITORS' REPORT
                          ----------------------------

Board of Directors
Secured Digital Applications, Inc.

We have audited the accompanying consolidated balance sheet of Secured
Digital Applications, Inc. (formerly Digital Broadband Networks, Inc.) and
subsidiaries as of December 31, 2003, and the related consolidated statements of
operations, changes in shareholders' equity and comprehensive income and cash
flows for each of the years in the two-year period ended December 31, 2003.
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 auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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 Secured Digital
Applications, Inc. and subsidiaries as of December 31, 2003, and the results of
their operations and their cash flows for each of the years in the two-year
period ended December 31, 2003, in conformity with accounting principles
generally accepted in the United States of America.

As discussed in Note 2 to the consolidated financial statements, effective
January 1, 2003, the Company adopted the provisions of Statement of Financial
Accounting Standards No. 145, Rescission of FASB Statements No. 4, 44, and 64,
Amendment of FASB Statement No. 13 and Technical Corrections.





HORWATH GELFOND HOCHSTADT PANGBURN, P.C.

Denver, Colorado
April 9, 2004






<PAGE>


<TABLE>
<CAPTION>
<S>                                                                                          <C>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET
                                DECEMBER 31, 2003

                                     ASSETS
Current assets:
     Cash                                                                                    $         244,919
     Accounts receivable, less allowance for doubtful
       accounts of $156,000 (Notes 6 and 11)                                                         2,609,726
     Prepaid expenses                                                                                   34,008
     Inventories                                                                                        76,985
                                                                                             -----------------
              Total current assets                                                                   2,965,638
Property and equipment, net (Note 5)                                                                 1,454,752
Goodwill (Note 2)                                                                                      471,150
Investment in associate companies (Note 4)                                                              42,671
Long-term receivables, related parties (Note 6)                                                        555,000
                                                                                             -----------------
                                                                                             $       5,489,211
                                                                                              ================
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
     Current portion of capital lease obligations (Note 8)                                   $          68,818
     Accounts payable                                                                                  610,038
     Accrued expenses                                                                                  145,815
     Amount due to an affiliated company (Note 6)                                                      148,325
     Amount due to a director (Note 6)                                                                  56,556
     Income tax provision (Note 9)                                                                      29,956
                                                                                             -----------------
              Total current liabilities                                                              1,059,508
     Capital lease obligations, net of current portion (Note 8)                                        103,702
     Deferred gain (Note 6)                                                                            555,000
                                                                                             -----------------
              Total liabilities                                                                      1,718,210
                                                                                             -----------------
Minority interest                                                                                      452,850
                                                                                             -----------------
Commitments and contingencies (Notes 14, 15, 16 and 17)

Shareholders' equity (Note 10):
     Preferred stock, $0.10 par value; 1,000,000 shares authorized;
       no shares issued and outstanding
     Common stock, $.00001 par value; 100,000,000 shares authorized;
       98,983,899 shares issued                                                                            989
     Additional paid-in capital                                                                      3,609,298
     Common treasury stock at cost, 1,055,000 shares                                                   (44,550)
     Options                                                                                            14,800
     Accumulated deficit                                                                              (318,955)
     Accumulated other comprehensive income                                                             56,569
                                                                                             -----------------
              Total shareholders' equity                                                             3,318,151
                                                                                             -----------------
                                                                                             $       5,489,211
                                                                                              ================
</TABLE>

                 See notes to consolidated financial statements

                                      F-2
<PAGE>

<TABLE>
<CAPTION>
<S>                        <C>                                           <C>                   <C>



               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                                                2003                  2002
                                                                              --------              ---------
Revenues:
     Related parties (Note 6)                                            $       1,153,578     $         398,382
     Others                                                                     14,759,558            12,142,124
                                                                                ----------            ----------

                                                                                15,913,136            12,540,506
Cost of revenues                                                                14,077,935            11,737,778
                                                                                ----------            ----------
Gross profit                                                                     1,835,201               802,728
                                                                                ----------            ----------

Operating expenses:
     Sales and marketing                                                            38,623                60,384
     General and administrative:
       Related parties (Note 6)                                                     85,263               120,000
       Others                                                                      814,250               600,882
                                                                                ----------            ----------
Total operating expenses                                                           938,136               781,266
                                                                                ----------            ----------

Income from operations                                                             897,065                21,462
                                                                                ----------            ----------
Other income (expense):
     Interest expense                                                              (12,828)              (15,618)
     Gain on disposal of assets: Related parties (Note 6)                           73,157               101,238
     Other income                                                                   50,526                42,703
     Share of associate companies' losses                                           (2,551)                   --
                                                                                ----------            ----------
                                                                                   108,304               128,323
                                                                                ----------            ----------
Income before income tax and minority interest                                   1,005,369               149,785
Income tax (Note 9)                                                                (32,719)                   --
                                                                                ----------            ----------
Income before minority interest                                                    972,650               149,785
Minority interest                                                                 (157,277)              (51,136)
                                                                                ----------            ----------
Net Income                                                               $         815,373     $          98,649
                                                                           ===============       ===============

Basic and diluted net income per common share                            $            0.01     $               *
                                                                           ===============       ===============

Weighted average shares outstanding

Basic                                                                           98,060,143            98,385,183
                                                                           ===============       ===============
Diluted                                                                         98,160,611            98,385,183
                                                                           ===============       ===============

* Less than $0.01 per share

</TABLE>









                 See notes to consolidated financial statements

                                      F-3
<PAGE>

<TABLE>
<CAPTION>


               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
 CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


                                               Common stock
                                       --------------------------------

                                                                       Additional
                                                            Par          paid-in      Treasury
                                            Shares         value         capital        stock
                                       ----------------- --------    -----------      --------
<S>               <C>                    <C>           <C>           <C>           <C>
Balances, January 1, 2002 ...........    97,753,499    $       977   $ 3,457,723   $      --
Issuance of common shares ...........     1,197,400             12       106,518          --
Issuance of
 stock options to consultants .......          --             --            --            --
Cancellation of stock options
 issued to a consultant .............          --             --            --            --
Amortization of deferred compensation
 for the year ended December 31, 2002          --             --            --            --
Comprehensive income:
 Net income for the year ended
  December 31, 2002 .................          --             --            --            --
 Comprehensive income ...............          --
                                        -----------    -----------   -----------   -----------
Balances, December 31, 2002 .........    98,950,899    $       989   $ 3,564,241   $      --
Purchase of common shares ...........    (1,305,000)          --            --         (52,298)
Issuance of common shares ...........       250,000           --          42,252         7,748
Issuance of common shares ...........        33,000           --           2,805          --
Cancellation of stock options
 issued to a consultant .............          --             --            --            --
Amortization of deferred compensation
 for the year ended December 31, 2003          --             --            --            --
Comprehensive income:
 Net income for the year ended
  December 31, 2003 .................          --             --            --            --
 Comprehensive income ...............
                                        -----------    -----------   -----------   -----------
Balances, December 31, 2003 .........    97,928,899    $       989   $ 3,609,298   $   (44,550)
                                        ===========    ===========   ===========   ===========

</TABLE>
<TABLE>
<CAPTION>





                                                                                       Accumulated
                                                        Deferred                         other
                                                        compensation  Accumulated      comprehensive
                                           Options        cost          deficit          income         Total
                                          ----------    -----------   ----------        -------     ----------


<S>               <C>                   <C>            <C>            <C>            <C>           <C>
Balances, January 1, 2002 ...........   $    20,125    $   (15,562)   $(1,232,977)   $    56,569   $ 2,286,855
Issuance of common shares ...........          --             --             --             --         106,530
Issuance of
 stock options to consultants .......        17,620        (17,620)          --             --            --
Cancellation of stock options
 issued to a consultant .............       (20,125)        10,729           --             --          (9,396)
Amortization of deferred compensation
 for the year ended December 31, 2002          --           13,953           --             --          13,953
Comprehensive income:
 Net income for the year ended
  December 31, 2002 .................          --             --           98,649           --          98,649
 Comprehensive income ...............                                                                   98,649
                                        -----------    -----------    -----------    -----------   -----------
Balances, December 31, 2002 .........   $    17,620    $    (8,500)   $(1,134,328)   $    56,569   $ 2,496,591
Purchase of common shares ...........          --             --             --             --         (52,298)
Issuance of common shares ...........          --             --             --             --          50,000
Issuance of common shares ...........          --             --             --             --           2,805
Cancellation of stock options
 issued to a consultant .............        (2,820)          --             --             --          (2,820)
Amortization of deferred compensation
 for the year ended December 31, 2003          --            8,500           --             --           8,500
Comprehensive income:
 Net income for the year ended
  December 31, 2003 .................          --             --          815,373           --         815,373
 Comprehensive income ...............                                                                  815,373
                                        -----------    -----------    -----------    -----------   -----------
Balances, December 31, 2003 .........   $    14,800    $      --      $  (318,955)   $    56,569   $ 3,318,151
                                        ===========    ===========    ===========    ===========   ===========

</TABLE>

                 See notes to consolidated financial statements


                                      F-4
<PAGE>

<TABLE>
<CAPTION>



               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

                                                                                2003                  2002
                                                                              --------              --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                      <C>                   <C>
     Net income                                                          $         815,373     $          98,649
     Adjustments to reconcile net income to net cash provided
       by (used in) operating activities:

     Minority interest                                                             157,277                51,136
     Depreciation and amortization                                                 244,578               254,151
     Deferred compensation amortization                                              8,500                13,953
     Other compensation expense                                                         --                 2,500
     Compensation expense reversed for canceled options                             (2,820)               (9,396)
     Reserve for bad debts                                                              --              (168,423)
     Gain on disposal of assets                                                    (73,157)             (101,238)
     Share of associate companies' losses                                            2,551                    --
     Changes in operating assets and liabilities:
       (Increase) decrease in receivables                                         (429,189)               14,551
       (Incresae) Decrease in prepaid expenses                                      (3,537)               16,874
       (Increase) in inventories                                                    (4,693)                   --
       (Decrease) in payables and accrued expenses                                 (79,633)             (474,960)
       Increase in income tax liability                                             29,956                    --
                                                                                   -------              --------
           Net cash provided by (used in) operating activities                     665,206              (302,203)
                                                                                   -------              --------
CASH FLOWS FROM INVESTING ACTIVITIES
     Proceeds from sale of property and equipment                                      731                    --
     Purchase of property and equipment                                            (28,550)              (19,622)
     Payment for purchase of businesses, net of cash acquired                     (170,834)                   --
     Investment in associate companies                                             (45,222)                   --
                                                                                   -------              --------
           Net cash used in investing activities                                  (243,875)              (19,622)
                                                                                   -------              --------

CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of shares of common stock                               52,805               204,030
     Proceeds from minority investors in subsidiaries                                2,632                    --
     Payment for purchase of common shares for treasury                            (52,298)             (100,000)
     Net proceeds from affiliated company                                            7,593               271,802
     Net payment to a director                                                    (169,383)              (29,410)
     Payment of obligation under capital leases                                    (27,838)              (14,922)
                                                                                   -------              --------

           Net cash (used in) provided by financing activities                    (186,489)              331,500
                                                                                   -------              --------
Net increase in cash                                                               234,842                 9,675
Cash, beginning of year                                                             10,077                   402
                                                                                   -------              --------
Cash, end of year                                                                  244,919                10,077
                                                                           ===============       ===============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid for interest during the year                              $          12,673     $          19,267
                                                                           ===============       ===============
     Cash paid for income taxes during the year                          $           2,763     $              --
                                                                           ===============       ===============
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND
        FINANCING ACTIVITIES:
Payments on accounts receivable made directly by customers to an
     affiliated company for amounts the Company owed it. (Notes 6 and 7) $          30,000     $         402,632
                                                                           ===============       ===============

</TABLE>


                 See notes to consolidated financial statements

                                      F-5
<PAGE>

<TABLE>
<CAPTION>


               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


BUSINESS ACQUISITION (Note 3):

Net assets acquired:
<S>                                                                    <C>
   Property, furniture and equipment                                   $       227,919
   Inventories                                                                  71,044
   Accounts receivable                                                         364,117
   Cash                                                                         23,077
   Accounts payable                                                           (323,108)
   Capital lease obligation                                                    (55,648)
                                                                       ----------------
                                                                               307,401
Less: Minority interests                                                      (113,490)
         Cash acquired                                                         (23,077)
                                                                       ---------------
Net cash used in acquisition of subsidiary                             $       170,834
                                                                        ==============

</TABLE>




                 See notes to consolidated financial statements

                                      F-6
<PAGE>



               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002

NOTE 1: ORGANIZATION AND BASIS OF PRESENTATION

Secured Digital Applications, and subsidiaries (the "Company") provides network
facilities and services for synchronous wireless broadband applications that
include distance learning, live news coverage, remote video surveillance,
emergency field services (including tele-medicine) and on site progress
monitoring. The Company's revenues for 2003 and 2002 were primarily derived from
the design, development and production of interactive multimedia websites and
content.

The Company, formerly known as Digital Broadband Networks, Inc, changed its name
to Secured Digital Applications, Inc., after its board of directors unanimously
approved the change on January 28, 2004.

On April 2, 2002, the Company formed Digital Broadband Networks, Inc., a
wholly-owned Delaware corporation ("DBNI Delaware"). At a Special Meeting of the
Company's shareholders held on June 5, 2002, the shareholders adopted and
approved the Merger Agreement between the Company and DBNI Delaware that
resulted in the Company changing its state of incorporation from Colorado to
Delaware.

On June 20, 2002, the Company formed EyStar Media Inc. ("EMI"), a wholly-owned
Delaware corporation.

On September 10, 2003, the Company formed Temasya Wira Sdn Bhd ("TW"), a 60%
owned Malaysian corporation.

On November 10, 2003, the Company formed Asiaco Multi Corporation Sdn Bhd
("AMC"), a wholly-owned Malaysian corporation.

On December 8, 2003, the Company formed Secured Shipping Sdn Bhd (SS), a
wholly-owned Malaysian corporation.

On December 9, 2003, the Company, through AMC, acquired the following Malaysian
subsidiary companies:
<TABLE>
<CAPTION>

Name of Company                       Interest   Principal Activity
-------------------------            ----------- ------------------------
<S>                                      <C>
Asiaco Material Handling                 80%     Sales, rental and servicing of material handling equipment,
(East Coast) Sdn Bhd                             spare parts and accessories.

Asiaco Logistic Sdn Bhd                  67%     Providing moving, packing and other related services, and
                                                 rental of forklifts, loaders and other related equipment.

Asiaco Services Sdn Bhd                  60%     Sales, rental and servicing of material handling equipment,
                                                 spare parts and accessories.
</TABLE>

The accompanying consolidated financial statements include:

1.   The accounts of Secured Digital Applications, Inc. and its wholly-owned
     subsidiaries: EMI and Animated Electronic Industries Sdn. Bhd. ("AEI"), a
     Malaysian corporation, as well as AEI's 86% owned Malaysian subsidiary,
     Perwimas Telecommunications Sdn Bhd ("PTSB");

2.   The accounts of TW and SS from the effective date of incorporation; and

3.   The accounts of AMC and its subsidiaries from the effective date of
     acquisition.



                                      F-7
<PAGE>


               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002




NOTE 2: SIGNIFICANT ACCOUNTING POLICIES

FINANCIAL STATEMENTS

The consolidated financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America.

The Company's consolidated financial statements include the results of
operations of the subsidiaries' business from the date of acquisition. Net
assets of the subsidiaries are recorded at their fair value at the date of
acquisition. All significant inter-company accounts and transactions have been
eliminated on consolidation.

ACCOUNTS RECEIVABLE AND CREDIT POLICIES

The Company grants credit, generally without collateral, to its customers. The
Company continuously monitors collections and payments from its customers and
maintains an allowance for estimated uncollectible accounts based upon
historical experience and specific customer collections issues that have been
identified. Such allowances have been within management's expectations.

INVENTORIES

Inventories, which are comprised of peripherals for surveillance and wireless
communication; and material handling equipment and related spare parts and
accessories, are stated at the lower of cost or net realizable value. Cost is
determined on a first-in-first-out basis.

PROPERTY AND EQUIPMENT AND DEPRECIATION

Property and equipment are stated at cost less depreciation. Depreciation is
calculated on the straight-line method over the expected useful lives of the
assets. The principal annual rates of depreciation are:
<TABLE>
<CAPTION>
<S>                                                          <C>                         <C>   <C>

                                                                      Business Segments
                                                   Broadband, Multimedia &          Material Handling
Assets Classification                               Biometric Security              Equipment & Others
---------------------------                  ---------------------------------- --------------------------

Office equipment, furniture and fixtures,
  computer software                                          20%                         10% - 25%
Video communication hardware
  and peripherals, office renovation                         10%                            N/A
Tools and equipment                                          10%                         10% - 12%
Material handling equipment                                  N/A                            10%
Motor vehicles                                               N/A                         10% - 20%
</TABLE>

Routine expenses for maintenance and repair are expensed as incurred.
Expenditures that result in enhancement of the value or in extension of the
useful life of fixed assets are capitalized.

Management assesses the carrying values of its long-lived assets for impairment
when circumstances warrant such a review. Generally, long-lived assets are
considered impaired if the estimated fair value is less than the assets'
carrying values. If an impairment is indicated, the loss is measured based on
the amounts by which the carrying values of the assets exceed their fair values.


                                      F-8
<PAGE>
               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002



NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

GOODWILL

Goodwill consists of the excess of cost over net assets acquired of PTSB.
Effective with the adoption of Statement of Financial Accounting Standards
("SFAS") No. 142, Goodwill and Other Intangible Assets ("SFAS No. 142"),
management of the Company evaluates the carrying value of goodwill annually or
whenever a possible impairment is indicated. The Company performs its impairment
test annually during the fourth quarter of the fiscal year.

ASSOCIATE COMPANIES - EQUITY ACCOUNTING METHOD

The Company considers associate companies as its investment in common stock of
companies in which it has a long-term equity interest and where it has the
ability to exercise significant influence, but not control, over operating and
financial policies. Such investments are accounted for in the Company's
consolidated financial statements based on the equity method. The equity method
is a method of accounting under which the Company initially records an
investment in the stock of an associate company ("investee") at cost and adjusts
the carrying amount of the investment to recognize the Company's share of the
earnings and losses of the investee after the date of acquisition. The amount of
the adjustment is included in the determination of the Company's net income and
such amount reflects adjustments similar to those made in preparing consolidated
financial statements including adjustments to eliminate intercompany gains and
losses, and to amortize, if appropriate, any difference between the cost and the
underlying equity in net assets of the investee at the date of investment. The
carrying amount of the investment is also adjusted to reflect the Company's
share of changes in the investee's capital and will be reduced by dividends
received from the investee. Under the equity method, an investment in common
stock of associate companies is shown in the consolidated balance sheet as a
single amount and the Company's share of earnings or losses of the associate
companies is shown in the consolidated statement of operations as a single
amount.

ASSETS UNDER CAPITAL LEASES

The Company records assets acquired under capital leases as fixed assets and the
corresponding obligation under capital leases as a liability. The initial
recording value of assets under a capital lease is the lesser of the fair value
of the leased assets or the present value of the minimum lease payments,
excluding any portion representing executory costs and profit thereon. The
assets recorded under capital leases are depreciated over the shorter of the
lease term or estimated useful life of the assets.

INCOME TAXES

Income taxes are provided for the tax effects of transactions reported in the
financial statements and consist of taxes currently due plus deferred taxes
related primarily to differences between the recorded book basis and tax basis
of assets and liabilities for financial and income tax reporting. The deferred
tax assets and liabilities represent the future tax return consequences of those
differences, which will either be taxable or deductible when the assets and
liabilities are recovered or settled. Deferred taxes are also recognized for
operating losses that are available to offset future taxable income and tax
credits that are available to offset future federal income taxes.


                                      F-9
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

COMPREHENSIVE INCOME

The Company has adopted SFAS 130, "Reporting Comprehensive Income", which
establishes requirements for disclosure of comprehensive income including
certain items previously not included in the statements of operations, including
minimum pension liability adjustments and foreign currency translation
adjustments, among others. The Company's only components of comprehensive income
are foreign currency translation adjustments.

The functional currency of the Company's subsidiaries is the Malaysian Ringgit.
The financial statements of these subsidiaries are translated into United States
dollars ("USD") using year-end rates of exchange for assets and liabilities, and
average rates of exchange for the year for revenues, costs, and expenses.
Translation gains and losses are treated as a component of shareholders' equity.
The reporting currency used in the financial statements is USD unless otherwise
stated.

REVENUE RECOGNITION

Revenue represents the net invoiced value of:

o    goods sold;

o    fees earned from the production of multimedia programs and Intranet and
     management and consulting services; and

o    fees earned from rental and servicing of material handling equipment,
     provision of land transportation, engineering and industrial moving
     services.

The Company recognizes revenue from the sales of goods in the period when
significant risks and rewards of ownership have transferred to its customers.
The Company recognizes revenue from the services provided in the period in which
the services are performed and when there is no significant uncertainty
regarding the consideration to be received and the associated costs to be
incurred.

ADVERTISING

Costs related to advertising and promotion of products and services are charged
to sales and marketing expense as incurred. Advertising and promotion costs were
$12,793 and $25,906 in 2003 and 2002, respectively.

NET INCOME PER COMMON SHARE

Income per common share is determined in accordance with SFAS No. 128, "Earnings
Per Share" (EPS). SFAS No. 128 requires the presentation of two EPS amounts,
basic and diluted. Basic net income per common share is calculated by dividing
net income by the weighted average number of common shares outstanding for the
year ended December 31, 2003 and 2002. Diluted income per common share reflects
additional common shares that would have been outstanding if dilutive potential
common shares had been issued, as well as any adjustment to income that would
result from the assumed issuance. Potential common shares that may be issued by
the Company relate to outstanding stock options and are determined using the
treasury stock method. Diluted EPS for the year ended December 31, 2003 includes
the conversion of the Company's Stock Options (Note 10). The conversion
increases the number of common shares (the denominator) to 98,160,611 and has no
effect on the numerator. The options are not considered in the calculation of
EPS for the year ended December 31, 2002 as they would have been anti-dilutive.


                                      F-10
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash, accounts receivable,
capital lease obligations, and accounts payable. The carrying amounts of such
financial instruments approximate fair value due to their short maturities. The
fair values of amounts due to and from related parties are not practicable to
estimate, due to the related party nature of the underlying transactions. The
Company has no material off-balance sheet financial instruments.

STOCK-BASED COMPENSATION

The Company has adopted SFAS No. 123, Accounting for Stock-Based
Compensation. As permitted by SFAS No. 123, the Company measures compensation
cost in accordance with Accounting Principles Board Opinion No. 25, Accounting
for Stock Issued to Employees and related interpretations.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation Transition and Disclosure. This statement amends SFAS No. 123,
Accounting for Stock-Based Compensation, and establishes two alternative methods
of transition from the intrinsic value method to the fair value method of
accounting for stock-based employee compensation. In addition, SFAS No. 148
requires prominent disclosure about the effects on reported net income (loss)
and requires disclosure for these effects in interim financial information. The
provisions for the alternative transition methods are effective for fiscal years
ending after December 15, 2002, and the amended disclosure requirements are
effective for interim periods beginning after December 15, 2002. The Company
adopted the disclosure only provisions of SFAS No. 148 in 2003 and plans to
continue accounting for stock-based compensation under APB 25. During 2003 and
2002, the Company issued no options to employees.

BUSINESS RISK

The Company is subject to risks and uncertainties common to technology-based
companies, including rapid technological change, dependence on principal
products and third-party technology, new product introductions and other
activities of competitors, dependence on key personnel, and limited operating
history.

TREASURY STOCK

The Company records treasury stock purchases at cost. The excess of cost over
par value is allocated to additional paid-in capital. The Company reissues stock
from the treasury on a first-in, first-out basis.

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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the balance sheet and the reported amounts of revenues and expenses during the
reporting periods. Actual results could differ from those estimates.






                                      F-11
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 2: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In November 2002, the Financial Accounting Standards Board ("FASB") issued SFAS
Interpretation No. 45 ("FIN 45"), "Guarantor's Accounting and Disclosure
Requirements for Guarantees, Including Indirect Guarantees and Indebtedness of
Others". FIN 45 elaborates on the disclosures to be made by the guarantor in its
interim and annual financial statements about its obligations under certain
guarantees that it has issued. It also requires that a guarantor recognize, at
the inception of a guarantee, a liability for the fair value of the obligation
undertaken in issuing the guarantee. The initial recognition and measurement
provisions of this interpretation are applicable on a prospective basis to
guarantees issued or modified after December 31, 2002, while the provisions of
the disclosure requirements are effective for financial statements of interim or
annual reports ending after December 15, 2002. The adoption of FIN 45 did not
have a significant immediate impact on the financial condition or results of
operations of the Company, as the Company has made no guarantees.

In January 2003, the FASB issued SFAS Interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN 46"), which changes the criteria by which one
company includes another entity in its consolidated financial statements. FIN 46
requires a variable interest entity ("VIE") to be consolidated by a company if
that company is subject to a majority of the risk of loss from the variable
interest entity's activities or entitled to receive a majority of the entity's
residual returns or both. In December 2003, the FASB approved a partial deferral
of FIN 46 along with various other amendments. The effective date for this
interpretation has been extended until the first fiscal period ending after
December 15, 2004. However, prior to the required application of this
interpretation, a public entity that is a small business issuer shall apply this
interpretation to those entities that are considered to be special purpose
entities no later than as of the end of the first reporting period after
December 15, 2003. As the Company does not currently have an interest in a VIE,
management does not expect that the adoption of FIN 46 will have a significant
immediate impact on the financial condition or results of operations of the
Company.

On January 1, 2003, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 145, Recission of FASB Statements 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections. SFAS 145 requires companies
to no longer report gains and losses associated with the extinguishment of debt
as a component of extraordinary gains and losses, net of tax. These gains and
losses are required to be presented within the statement of income in
appropriate segregated line items. As required by SFAS 145, the extraordinary
gains recognized in the year ended December 31, 2002 of approximately $42,500 in
connection with the extinguishment of accounts payable has been reclassified to
other income.

In May 2003, the FASB issued SFAS No. 150 ("SFAS 150"), Accounting for Certain
Instruments with Characteristics of Both Liabilities and Equity, which
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity. The
provision of SFAS No. 150 are generally effective for all financial instruments
entered into or modified after May 31, 2003, except for those provisions
relating to mandatorily redeemable non-controlling interests, which have been
deferred. The adoption of SFAS No. 150 did not have a material impact on the
financial position or results of operation of the Company. If the deferred
provisions of SFAS No. 150 are finalized in their current form, management does
not expect adoption to have a material effect on the financial position or
results of operation of the Company.

RECLASSIFICATIONS

Certain 2002 balances have been reclassified to conform to the current
presentation.

                                      F-12
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 3: ACQUISITION OF SUBSIDIARIES

On November 17, 2003, AEI signed an asset purchase agreement with Asiaco
Material Handling Sdn Bhd ("AMH"), a Malaysian company, to purchase, through
AMC, the business assets and selected liabilities of AMH and seven companies in
the Asiaco group. The definitive agreement also provides for AMC to purchase a
majority equity interest in the remaining sixteen companies in the Asiaco group
from AMH's majority shareholder. Pursuant to this agreement, the Company
acquired a majority equity interest in three Malaysian companies on December 9,
2003: 80% in Asiaco Material Handling (East Coast) ("AEC"), 67% in Asiaco
Logistic ("ALG") and 60% in Asiaco Services ("ASS") for a total consideration of
$193,911. These aquisitions have been accounted for as purchases.The total
consideration is to be satisfied by issuance of AMC's common stock to the owner
upon full completion of the asset purchase agreements between the Company and
AMH. As of December 31, 2003, the Company had paid a total of $263,158 to AMH as
advances for the incorporation of AMC and for the purchase of equity in the
above companies as well as two associate companies (see Note 4). These advances
will be deducted from the final purchase price to be determined by AEI when it
has completed its verification of the net asset value of AMH and its
subsidiaries. The purchase price for the entire acquisition is expected to be
approximately $1.8 million and shall be determined after completion of the
financial due diligence. As a result of these acquisitions the Company has
entered into the equipment material handling business.

The following table summarizes the estimated aggregated fair values of the
assets acquired and the liabilities assumed from the three companies at the date
of the acquisition. The allocation of the purchase prices is subject to
refinement.
<TABLE>
<CAPTION>

<S>                                                                    <C>
Property, furniture and equipment                                      $       227,919
Inventories                                                                     71,044
Accounts receivable                                                            364,117
Cash                                                                            23,077
Accounts payable                                                              (323,108)
Capital lease obligation                                                       (55,648)
Minority interests                                                            (113,490)
                                                                       ---------------
                                                                               193,911
                                                                       ===============
</TABLE>

The following unaudited proforma financial information presents results of
operations as if the acquisition of the above three subsidiaries had occurred at
the beginning of the respective years ended December 31, 2003 and 2002:
<TABLE>
<CAPTION>

                                                                            2003                2002

<S>                                                                    <C>                <C>
Revenue                                                                $    16,958,132    $     12,718,298
                                                                       ===============    ================
Net income                                                             $       827,986    $         98,781
                                                                       ===============    ================
Basic and diluted net income per common share                          $          0.01    $              *
                                                                       ===============    ================
</TABLE>

* Less than $0.01 per share

                                      F-13
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 4: INVESTMENT IN ASSOCIATE COMPANIES

On December 9, 2003, the Company, through its wholly owned subsidiary, AMC,
acquired equity interest that allows it to exercise significant influence over
operating and financial policies of the following Malaysian private companies
for a total consideration of $45,222. The Company accounts for these investments
using the equity method:
<TABLE>
<CAPTION>

Name of Company                       Interest   Principal Activity
-------------------------            ----------- ------------------------

<S>                                      <C>
Asiaco Transport Sdn Bhd                 46%     Providing transportation and related services.

Asiaco Engineering Sdn Bhd               33%     Providing steel fabrication and modification work and
                                                 servicing/repair of engines, engine blocks and hydraulic
                                                 equipment.
</TABLE>

The acquisition forms part of the asset purchase agreement between the Company
and AMH (See Note 3). The total consideration is to be satisfied by issuance of
AMC's common stock to the owner upon full completion of the asset purchase
agreement between the Company and AMH. As of December 31, 2003, the carrying
amount of investment in associate companies is as follows:
<TABLE>
<CAPTION>

<S>                                                                             <C>
Unquoted share of common stocks at cost                                         $        45,222
Less: Share of post acquisition losses                                                   (2,551)
                                                                                         ------
                                                                                $        42,671
                                                                                         ======
</TABLE>

NOTE 5: PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31, 2003:
<TABLE>
<CAPTION>

<S>                                                                                     <C>
     Office equipment                                                                   $          104,340
     Furniture and fixtures                                                                         31,152
     Tools and equipment                                                                           157,472
     Video communication hardware and peripherals                                                2,202,245
     Computer software                                                                             170,639
     Office renovation                                                                              11,010
     Motor vehicles                                                                                 85,211
     Material handling equipment                                                                   156,930
                                                                                                   -------
                                                                                                 2,918,999
      Less accumulated depreciation                                                             (1,464,247)
                                                                                              ------------
                                                                                        $        1,454,752
                                                                                              ============
</TABLE>

Depreciation expense for the years ended December 31, 2003 and 2002 was $244,578
and $254,151, respectively.


                                      F-14
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 6: RELATED PARTY TRANSACTIONS

During the years ended December 31, 2003 and 2002, the Company had related party
transactions with the following entities:

LSH ASSET HOLDINGS SDN BHD ("LSH"):

LSH is a company wholly-owned by the Company's Chief Executive Officer and his
wife. During each of the years ended December 31, 2003 and 2002, LSH billed the
Company $60,000 and $120,000, respectively, for management fees. LSH also billed
the Company's Malaysian subsidiary, AEI, $25,263 during the year ended December
31, 2003 for administrative and clerical charges. LSH also made short term
advances to the Company from time to time for working capital purposes. These
advances totaled $140,966 and $180,695 in 2003 and 2002, respectively. As of
December 31, 2003, the amount due to LSH was $148,325. This amount is unsecured,
bears no interest, has no fixed terms of repayment, and is recorded in the
financial statements as "Amount due to an affiliated company". During the year
ended December 31, 2003, in lieu of actual cash payment of project consulting
fee receivables from two consulting contracts, management directed two customers
to pay a total of $30,000 to LSH. During the year ended December 31, 2002, the
Company's management directed other related parties and a customer to pay a
total of $402,632 to LSH in lieu of actual cash payment of receivables, as
follows:


VISIONEWS ASIA SDN BHD ("VASB"):

The Company's Chief Executive Officer is a director of VASB and owns a 40%
equity interest in VASB. A director of PTSB is also a director of VASB and owns
a 20% equity interest in VASB. During the year ended December 31, 2002, the
Company recognized revenue from VASB of $7,895, which related to revenue
previously deferred in 1999. In lieu of actual cash payment, the Company's
management directed VASB to pay $7,895 to LSH. The net effect to the Company was
that revenue was recognized and recorded payables were reduced by equal amounts.
As of December 31, 2003, $73,665 of receivables from 1999 was not recognized as
revenue due to the uncertainty of collection. The terms of repayment for the
amount due from VASB is similar to terms accorded to the Company's other
existing customers.

SYNERVEST SDN BHD ("SSB")

A director of PTSB is a director of SSB and holds a 60% equity interest in SSB.
During the year ended December 31, 2002, the Company recognized revenue from SSB
of $92,105, which related to revenue previously deferred in 1999. In lieu of
actual cash payment, the Company's management directed SSB to pay $92,105 to
LSH. The net effect to the Company was that revenue was recognized and recorded
payables were reduced by equal amounts.

As of December 31, 2003, long-term receivables, related parties, consisted of an
overdue amount of $555,000 from SSB. This amount primarily arose in the year
ended December 31, 1998, when the Company sold to SSB assets used in the
operations of a subsidiary. These assets, comprising analog video hardware and
peripherals and a patent for image display, were sold to SSB for a total sum of
$1,661,175. Due to the uncertainty of collection of the related receivable, the
gain has been deferred and will be recognized only after all costs have been
recovered. The Company received $73,157 and $142,448 of the outstanding
receivable during the years ended December 31, 2003 and 2002, respectively.
During the year ended December 31, 2002, payments received by the Company
exceeded all remaining costs, resulting in a $101,238 realization of gain on
sale of assets, related party. The deferred gain included in the balance sheet
has been reduced accordingly. The deferred gain on sale of assets totaled
$555,000 at December 31, 2003, and will be recognized as a gain as payments on
the long-term receivable balance are received.

                                      F-15
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 6: RELATED PARTY TRANSACTIONS (CONTINUED)

SYNERVEST SDN BHD ("SSB") (CONTINUED)

During 2002, in lieu of actual cash payment of a portion of the receivable due,
the Company's management directed SSB to pay $101,487 to LSH. The net effect to
the Company was that recorded receivables and payables were reduced equally.

KHIDMAT MAKMUR SDN BHD ("KMSB")


A director of PTSB is a director of KMSB and holds a 30% equity interest in
KMSB. During the year ended December 31, 2002, the Company recognized revenue
from KMSB of $114,592 which relates to revenue previously deferred in 1999. In
lieu of actual cash payment, the Company's management directed KMSB to pay
$14,592 of the $114,592 to LSH. The net effect to the Company was that revenue
was recognized and recorded payables were reduced by equal amounts. As of
December 31, 2003, $40,790 of receivables from 1999 was not recognized as
revenue due to the uncertainty of collection. The terms of repayment for the
amount due from KMSB are similar to terms accorded to the Company's other
existing customers.

MY ARCHITECT ("MYA") AND MY DRAUGHTING SERVICES ("MDS"):

A director of PTSB is a principal partner of MYA and MDS. During the years ended
December 31, 2003 and 2002, the Company received fees of $1,153,578 and
$165,658, respectively, from consulting contracts that it entered into with MDA.
During the year ended December 31, 2002, the Company also recognized revenue
from MYA and MDS of $7,895 and $10,237, respectively, which related to revenue
previously deferred in 1999. In lieu of actual cash payment, the Company's
management directed MYA and MDS to pay $7,895 and $10,237, respectively, to LSH.
The net effect to the Company was that revenue was recognized and recorded
payables were reduced by equal amounts. As of December 31, 2003, $131,579 and
$94,210 of 1999 receivables from MYA and MDS, respectively, were not recognized
as revenue due to the uncertainty of collection. The terms of repayment for the
amount due from MYA and MDS are similar to terms accorded to the Company's other
existing customers.

CHIEF EXECUTIVE OFFICER

As of December 31, 2003, the Company owed the Chief Executive Officer of the
Company $56,556 for short-term cash advances made to the Company for working
capital purpose from time to time. The amount owing to the Chief Executive
Officer is unsecured, bears no interest, has no fixed terms of repayment and is
recorded in the financial statements as "Amount due to a director".

Note 7: GENERAL AND ADMINISTRATIVE EXPENSES - OTHER

General and administrative expenses from non-related parties for the year ended
December 31, 2002, included a $168,421 recovery of accounts receivable
previously deemed uncollectible. In connection with certain accounts receivable
overdue since 1999, the Company had previously recorded a bad debt allowance of
$168,421. During the year-ended December 31, 2002, the Company received payment
and reduced the allowance that had been previously recorded. Bad debt expense,
which is included in general and administrative expense, was reduced
accordingly. In 2002, in lieu of actual cash payment of these Company
receivables, the Company's management directed the customers to pay the $168,421
to LSH.


                                      F-16
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 8: CAPITAL LEASE OBLIGATIONS

Certain telecommunications and other assets are leased from a lessor under
various equipment lease financing facilities. Such leases have been accounted
for as capital leases. At the Company's request, a lessor agreed to an extension
on the repayment period in 1998 to enable the Company to secure additional
working capital financing. The rescheduled lease terms for all capital leases
commenced on December 1998 and are payable on a monthly basis with the final
payment due November 2006. The Company will acquire title to all assets under
capital leases, upon payment of the final lease payment in November 2006.

Certain material handling equipment and other assets of the subsidiaries
acquired by the Company in 2003 are also subject to various lease financing
facilities from various lessors. The Company also accounts for such leases as
capital leases. The Company will acquire title to all assets under such capital
leases, upon payment of the final lease payments in 2006 and 2009.

As of December 31, 2003 the future minimum lease payments on capital leases are
as follows:
<TABLE>
<CAPTION>

           Year ending
           December 31:
           -----------
<S>        <C>                                                                          <C>
           2004                                                                         $           80,757
           2005                                                                                     54,169
           2006                                                                                     45,583
           2007                                                                                      7,643
           2008                                                                                      7,643
           2009                                                                                      2,317
                                                                                        ------------------
           Total payments                                                                          198,112
           Less:  amount representing interest                                                     (25,592)
                                                                                        ------------------
           Present value of minimum capital lease payments                                         172,520
           Less:  current maturities of capital lease
             obligations                                                                           (68,818)
                                                                                        ------------------
                                                                                        $          103,702
                                                                                        ==================
</TABLE>

Assets under these capital leases, which are included in property and equipment
at December 31, 2003, are as follows:
<TABLE>
<CAPTION>

                                                                       Original       Accumulated      Net
                                                                         Cost         Depreciation     Value
                                                                     ----------     --------------  -----------
<S>                                                                  <C>            <C>            <C>
     Video communication hardware and peripherals                    $     408,896  $    (320,067) $      88,829
     Material handling equipment and motor vehicles                         85,042        (30,058)        54,984
                                                                     -------------  -------------  -------------
     Total                                                           $     493,938  $    (350,125) $     143,813
                                                                     =============  =============  =============
</TABLE>


                                      F-17
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 8: CAPITAL LEASE OBLIGATIONS (CONTINUED)

The Company has not made regular principal and interest payments due under three
capital lease agreements since July 2000. During the year ended December 31,
2003, the Company made payments to the lessor totaling $47,408. The total
overdue amount as of December 31, 2003 is $47,310, which includes unpaid
principal of $27,530 and unpaid interest of $19,780. Unpaid principal is
included in current portion of capital lease obligations on the balance sheet.
Unpaid interest is included in accrued expenses on the balance sheet. The
Company's Chief Executive Officer (CEO), who is also a shareholder, has
personally guaranteed payment under these capital lease agreements. Pursuant to
the terms of the guarantee agreement dated December 3, 1998, the CEO has
guaranteed to pay all amounts which become due under the terms of the capital
lease agreements. Subsequent to December 31, 2003 and through the date of this
report, the Company has made payments to the lessor totaling $15,789.


NOTE 9: INCOME TAXES

For 2003 and 2002, all income of the Company was derived from its activities in
Malaysia and the United States. Provision for income tax liability for the year
ended December 31, 2003 is as follows:
<TABLE>
<CAPTION>
<S>                                                                                     <C>
Current year provision of Malaysian income tax
     on the Company and its subsidiaries' income                                        $          32,719
                                                                                        =================
</TABLE>

The difference between actual income tax expense and expected income tax expense
computed applying the United States Federal income tax rate of 34% to income
before income tax and minority interest is explained as follows:
<TABLE>
<CAPTION>

                                                                                       Year ended December 31,
                                                                                        2003            2002
                                                                                    ------------- -----------------
<S>                                                                                 <C>            <C>
     Expected income tax expense                                                    $     342,000  $      51,000
     Benefit of operating loss carryforwards                                             (284,680)       (51,000)
     other                                                                                (24,601)
                                                                                         --------        -------
     Income tax                                                                     $      32,719  $          --
                                                                                    =============    ===========
</TABLE>

Temporary differences and carry forwards that give rise to deferred tax assets
and liabilities as of December 31, 2003 are as follows:
<TABLE>
<CAPTION>

DEFERRED TAX ASSETS
<S>                                                                                     <C>
       Net operating loss carry forward                                                 $          881,697
       Less: Valuation allowance                                                                  (760,381)
                                                                                                  --------
       Deferred tax asset net of allowance                                                         121,316

DEFERRED TAX LIABILITIES
       Depreciation                                                                     $         (121,316)
                                                                                                  --------
NET DEFERRED TAX LIABILITY                                                                              --
                                                                                                  ========

</TABLE>

                                      F-18
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 9: INCOME TAXES (CONTINUED)

The valuation allowance offsets the net deferred tax assets for which there is
no assurance of recovery. The valuation allowance is evaluated considering
positive and negative evidence about whether the deferred tax assets will be
realized. At that time of evaluation, the allowance is either increased or
reduced; reduction could result in the complete elimination of the allowance if
positive evidence indicates that the value of the deferred tax assets is no
longer impaired and the allowance is no longer required. The Company's total net
operating loss carry forward at December 31, 2003 is approximately $2,565,000,
of which $1,043,000 relates to the Company's activities in Malaysia and
$1,522,000 relates to the Company's activities in the United States. The net
operating loss carry forward that relates to activities in Malaysia can be
carried forward indefinitely while the net operating loss carry forward that
relates to the Company's activities in the United States expires through the
year 2023. The United States net operating loss carry forward may be subject to
annual limitations based on ownership changes in the Company's common stock as
provided by in section 382 of the Internal Revenue Code.


NOTE 10: SHAREHOLDERS' EQUITY

PREFERRED STOCK

The Company is authorized to issue one million shares of preferred stock, par
value $0.10 per share, which may be issued in series with such designations,
preferences, stated values, rights, qualifications or limitations as determined
by the Board of Directors. As of December 31, 2003, no preferred stock has been
issued.

COMMON STOCK

On March 12, 2002, three officers and directors of the Company exercised options
to purchase 720,000 shares of the Company's restricted common stock at an
exercise price of $0.085 per share, for a total cash consideration of $61,200.

On March 14, 2002, the Company sold 250,000 shares of restricted common stock at
$0.085 per share to a shareholder in a private placement for cash consideration
of $21,250.

On March 30, 2002, an officer and an employee of the Company exercised options
to purchase 77,400 shares of the Company's restricted common stock at an
exercise price of $0.085 per share, for a total cash consideration of $6,579.

On June 26, 2002, the Company granted 25,000 shares of restricted common stock
to an independent director as compensation for serving on the Company's Board of
Directors. The fair value of these shares on the date of grant was estimated by
management to be $0.10 per share, resulting in recognition of compensation
expense of $2,500 for the year ended December 31, 2002.

On June 28, 2002, the Company repurchased 1,000,000 shares of its common stock
from a shareholder at $0.10 per share, for a total consideration of $100,000.
The repurchased shares were recorded as treasury stock and were available for
re-issuance at a future date. On September 30, 2002, the Company reissued the
1,000,000 shares of treasury stock to a shareholder at $0.10 per share for a
total consideration of $100,000. The shares were sold in reliance upon the
exemption provided by Regulation S under the Securities Act of 1933, as amended.

                                      F-19
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002



NOTE 10: SHAREHOLDERS' EQUITY (CONTINUED)

COMMON STOCK (CONTINUED)

On December 4, 2002, the Company announced that its Board of Directors had
approved a stock repurchase program for up to 10 million shares from the then
public float of approximately 42.7 million shares which may be repurchased from
time to time. The Company had until December 2003 to execute this stock
repurchase program. Under the program, the Company can purchase shares of common
stock through open market and/or privately negotiated transactions at prices
deemed appropriate by management. The timing and amount of any repurchase
transaction under this program will depend on market conditions and corporate
and regulatory considerations. Through December 31, 2003, the Company
repurchased a total of 1,305,000 shares of its common stock, at an average price
of $0.04, for a total cash consideration of $52,298. These shares were returned
to treasury and are available for re-issuance at a future date. On September 5,
2003, the Company reissued 250,000 shares of common stock from the treasury to a
shareholder at $0.20 per share for a total consideration of $50,000. The shares,
which were issued based on a first-in, first-out basis, were sold in reliance
upon the exemption provided by Regulation S under the Securities Act of 1933, as
amended. As of December 31, 2003, the Company had a balance of 1,055,000 shares
of treasury stocks valued at $44,550 based on an average cost of $0.04 per
share.

STOCK OPTIONS

In December 2000, the Company granted certain officers and employees of the
Company options to purchase up to 912,000 shares of the Company's common stock
at $0.085 per share (which was greater than the market price of the Company's
common stock at the date of grant). The options are exercisable through December
2005, contingent upon continuous service by the officers/employees through
specified dates. 31,200 and 50,400 options were cancelled during 2002 and 2001,
respectively, due to termination of services of employees. 797,400 options were
exercised in 2002, and 33,000 options were exercised on June 13, 2003 by an
officer of the Company for a total cash consideration of $2,805.

On November 1, 2001, the Company granted options to purchase 250,000 shares of
the Company's common stock at $0.12 per share to a consultant for services to be
provided to the Company. These options were originally exercisable through
October 2006, contingent upon continuous service by the consultant through
specified dates. On May 31, 2002, the Option Agreement between the Company and
the consultant was terminated. The consultant exercised 125,000 of the options,
which vested April 30, 2002, on August 28, 2002, for a total cash consideration
of $15,000. These options were valued at $0.06 per share based upon the
Black-Scholes option-pricing model, resulting in recognition of compensation
expense of $4,833 during the year ended December 31, 2002. The remaining 125,000
options, which were scheduled to vest October 31, 2002, were canceled following
termination of the agreement.

On February 16, 2002, the Company granted options to purchase 60,000 shares of
the Company's common stock at $0.12 per share to a consultant for services to be
provided to the Company. These options were originally exercisable in August
2002 through February 2007, contingent upon continuous service by the consultant
through specified dates. Following the termination of the consultant's service
in December 2002, these options, which vested August 16, 2002, are exercisable
through March 2003. The options were valued at $0.05 per share, based upon the
Black-Scholes option-pricing model, resulting in recognition of compensation
expense of $2,820 during the year ended December 31, 2002. These options were
not exercised and have been canceled in 2003.

                                      F-20
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 10: SHAREHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

On September 16, 2002, the Company granted options to purchase 300,000 shares of
the Company's common stock at $0.12 per share to a consultant for services to be
provided to the Company. These options are exercisable through September 2007,
contingent upon continuous service by the consultant through specified dates.
100,000 of the options, which vest March 15, 2003, were valued at $0.044 per
share, 100,000 of the options, which vest May 15, 2003, were valued at $0.048
per share, and the remaining 100,000 options, which vest September 15, 2003,
were valued at $0.056 per share, based upon the Black-Scholes option-pricing
model, resulting in recognition of compensation expense of $8,500 amd $6,300
during the years ended December 31, 2003 and 2002, respectively.

A summary of the status of the Company's stock options as of December 31, 2003
and 2002, and changes during 2003 and 2002, is presented below:
<TABLE>
<CAPTION>

              Options Outstanding                             2003                               2002
            ------------------------            --------------------------------   ---------------------------------
                                                   Shares        Exercise Price       Shares       Exercise Price
                                                  --------      ----------------     --------     ----------------
   For officers and employees:
<S>                                                     <C>                <C>          <C>                 <C>
    Beginning of the year                               33,000             $0.085       861,600              $0.085
    Exercised                                         (33,000)             $0.085      (797,400)             $0.085
    Forfeited                                                -                          (31,200)             $0.085
                                                       -------                           -------
    End of the year                                          -                  -         33,000             $0.085
                                                       =======                           =======
    Options exercisable at year end                          -                  -         33,000             $0.085
   For consultants:
    Beginning of the year                              360,000             $0.120        250,000             $0.120
    Granted
     In February 2002                                        -                  -         60,000             $0.120
     In September 2002                                       -                  -        300,000             $0.120
    Exercised                                                -                  -      (125,000)             $0.120
    Forfeited                                         (60,000)             $0.120      (125,000)             $0.120
                                                       -------                           -------
    End of the year                                    300,000             $0.120        360,000             $0.120
                                                       =======                           =======
    Options exercisable at year end                    300,000             $0.120         60,000             $0.120
                                                       =======                           =======

</TABLE>

                                      F-21
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 10: SHAREHOLDERS' EQUITY (CONTINUED)

STOCK OPTIONS (CONTINUED)

The following table summarizes information about options outstanding at December
31, 2003 and 2002.
<TABLE>
<CAPTION>

                                                                    Options Outstanding
                                                 ---------------------------------------------------------
                                             Number         Weighted Average Remaining         Weighted Average
                                           Outstanding           Contractual Life               Exercise Price
                                         ---------------  --------------------------------------------------------
   As of December 31, 2003:
<S>                                              <C>                   <C>                          <C>
    For officers and employees                        --                --                            --
    For consultants                              300,000               3.71                         $0.120
                                                 -------                                            ------
   Total                                         300,000               3.71                         $0.120
                                                 =======                                            ======
   As of December 31, 2002:
    For officers and employees                    33,000               2.93                         $0.085
    For consultants                              360,000               3.97                         $0.120
                                                 -------                                            ------
                                                 393,000               3.88                         $0.117
                                                 =======                                            ======
</TABLE>


NOTE 11: SIGNIFICANT CONCENTRATIONS OF CREDIT RISK

Two customers accounted for approximately 93% and 96% of revenues earned during
the years ended December 31, 2003 and 2002, respectively. In 2003, one customer
accounted for approximately $7,868,000 of revenue and another customer accounted
for approximately $6,781,000 of revenue. During the year ended December 31,
2002, one customer accounted for approximately $5,797,000 of revenue, and
another customer accounted for approximately $5,817,000 of revenue. Allowance
for doubtful accounts receivable was $155,744 at December 31, 2003 and 2002,
respectively. The Company will continue to pursue vigorously the collection of
all its outstanding accounts receivable.

Three suppliers accounted for substantially all cost of revenues during the year
ended December 31, 2003. In 2003, three suppliers accounted for approximately
$3,994,000, $4,832,000 and $5,157,000, respectively of total cost of revenue.
One supplier accounted for substantially all cost of revenues during the year
ended December 31, 2002. The Company is not dependent upon one supplier to
provide the services that it requires but made a strategic decision to engage
the services of only a small number of suppliers after taking into consideration
the quality of service and competitive pricing being offered. Should the need
arise, the Company could utilize alternative suppliers for the services that it
requires.


                                      F-22
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 12: OTHER INCOME

During 2003, the Company received $50,000 from the shareholders of Convergent
Technologies, Inc. ("CTI") as cancellation fee, pursuant to a Rescission
Agreement signed between CTI's shareholders and the Company in November 2003. On
September 27, 2002, the Company entered into a letter agreement with the
shareholders of CTI, a privately held company, to acquire a majority interest in
CTI for approximately $5.0 million. The purchase price was subsequently revised
to $2.6 million after the Company had completed its due diligence and further
negotiation with CTI's shareholders. The closing of the agreement was subject to
specific performance by the Company and CTI's shareholders and could be
terminated any time prior to closing by mutual agreement of both parties. During
2003, the Company had paid $150,000 to CTI's shareholders as an advance deposit
on the purchase. On November 6, 2003, the Company and CTI's shareholders
mutually agreed to rescind the purchase agreement after CTI did not satisfy all
of the conditions subsequent to the Purchase Agreement as a result of its
inability to deliver title to certain real property in a form acceptable to the
Company. Pursuant to the Rescission Agreement, the stockholders of CTI refunded
the $150,000 and paid an additional $50,000 to the Company as cancellation fee.


NOTE 13: SEGMENT INFORMATION

SEGMENT REPORTING

The Company has two reportable segments as a result of the establishment and
acquisition of new subsidiaries during the fourth quarter of 2003. The Company
classifies its business into two operating segments, which are defined by the
products and services offered as follows:

1. Broadband, multimedia and biometric security division (Applications)

   Activities under this segment include application development, broadband
   network operation, delivery of value added applications and services; sale
   of devices that utilize broadband networks and the sale of biometric
   security devices.

2. Material handling equipment division (Material Handling)

   Activities under this segment include industrial moving, packing and
   unpacking industrial equipment, land transportation and secured logistics,
   as well as the sale, rental and servicing of material handling equipment.

The accounting policies of the segments are the same as those described under
Note 2: Significant Accounting Policies. The Company's reportable segments are
strategic business units that offer different products and services. They are
managed separately because each division requires different product knowledge
and marketing strategies. The new businesses were acquired as a unit and the
management at the time of acquisition was retained. Inter-segment sales and
transfers between reportable segments are not material to the period presented.
The Company did not include segment reporting in the financial statements in
2002 as the Company functioned as a single operating unit. The Company's revenue
is derived primarily from operations in Malaysia and substantially all of the
Company's assets are located in Malaysia.


                                      F-23
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 13: SEGMENT INFORMATION (CONTINUED)

OPERATING SEGMENT INFORMATION
<TABLE>
<CAPTION>

                                                                        Year ended December 31, 2003
                                                               Applications       Material            Total
                                                                                  Handling
                                                              ----------------- ---------------- -----------------
Revenue:
<S>                                                         <C>              <C>               <C>
   Related parties                                          $       308,289  $             --  $       308,289
   Others                                                        15,499,474           105,373       15,604,847
                                                                 ----------           -------       ----------
                                                            $    15,807,763  $        105,373  $    15,913,136
                                                            ===============  ================  ===============
Net income (loss)
   from operating segments                                  $       851,743  $        (36,370) $       815,373
                                                            ===============  ================  ===============
Depreciation expense                                        $       239,830  $          4,748
                                                            ===============  ================
Interest expense                                            $        12,115  $            713
                                                            ===============  ================
Income tax expense                                          $        32,719  $             --
                                                            ===============  ================
Share of associate
   companies results                                        $            --  $          2,551
                                                            ===============  ================


Expenditures for additions
   to long-lived assets                                     $         4,866  $         23,684
                                                            ===============  ================

Consolidated total assets as of December 31, 2003 are as follows:

   Applications                                                                                $     4,765,219
   Material handling                                                                                   681,321
   Investments in associate companies                                                                   42,671
                                                                                               ---------------
   Total consolidated assets                                                                   $     5,489,211
                                                                                               ===============

</TABLE>


NOTE 14: COMMITMENTS AND CONTINGENCIES

On November 28, 2001, the Company signed an agreement to purchase office space
in Australia for $1.8 million Australian dollars (approximately $1,017,000 USD
at December 31, 2002). The Company intended to lease the space for rental until
it finalized its plan to relocate its Asian headquarters to Australia. Pursuant
to the terms of the agreement, the Company paid $5,200 as a deposit for the
above property. During the third quarter of 2003, the Company decided not to
proceed with the purchase due to the vendor's inability to deliver vacant
possession of the property. Following termination of the agreement, the Company
expensed the $5,200 non-refundable deposit paid to the vendor.

In January 2002, the Company signed an agreement to purchase approximately $19
million of equipment over the next five years. These equipment purchases are
subject to inspection and acceptance by the Company depending upon certain
performance standards being satisfactorily met. As of December 31, 2002, the
Company suspended the agreement until the vendor rectified performance problems
discovered by the Company during the trial of this equipment. Following the
failure of the vendor to rectify the problems encountered during the trial, the
agreement was terminated on May 19, 2003 and the trial equipment was returned to
the vendor.


                                      F-24
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 14: COMMITMENTS AND CONTINGENCIES (CONTINUED)

On November 17, 2003, the Company announced that its subsidiary, AEI had signed
a definitive agreement with Asiaco Material Handling Sdn Bhd ("AMH") to
purchase, through AMC, the business assets and selected liabilities of AMH and
seven companies in the Asiaco group. The definitive agreement also provides for
AMC, to purchase a majority equity interest in the remaining sixteen companies
in the Asiaco group from AMH's major shareholder. AMH and its subsidiaries are
primarily engaged in supply chain management, land transportation, secured
logistics as well as sale, rental and servicing of material handling equipment.
The purchase price for the above acquisition is approximately $1.8 million. The
final purchase price shall be determined after completion of the financial due
diligence. As of December 31, 2003, the Company had paid a total of $263,158 to
AMH as advances for the incorporation of AMC and purchase of equity in the
Asiaco group of companies. These advances will be deducted from the final
purchase price to be determined by AEI when it has completed its verification of
the net asset value of AMH and its subsidiaries.

Operating Leases

The Company leases its principal executive offices in Malaysia under an
operating lease from an unaffiliated party, which expired in February 2004. The
Company has reached an agreement to renew the lease on a month-to-month basis
until May 2004 when it will relocate its principal executive offices to its new
premises. In February 2004, the Company signed a three-year operating lease with
an unaffiliated party to lease an office-warehouse complex in Petaling Jaya,
Malaysia. The lease, which commenced on March 15, 2004, will expire on March 14,
2007 and provides for a two-year renewal option thereafter. The Company also
leases another office in Petaling Jaya for content production, engineering and
warehouse space from an unaffiliated party under a lease that will expire in
August 2004. In January 2003, the Company entered into a one-year non-cancelable
lease for office space and relocated its US office from Charlotte, NC to
Flemington, NJ. The Company terminated this lease in March 2004. In April 2004,
the Company entered into a one-year lease agreement with an unaffiliated party
for office space in New York, N.Y. This lease will expire in March 2005 and
provides for a 1-year renewal option. These leases require the Company to pay
rent of $2,500 per month in January through March 2004, $5,400 per month for
April and May 2004, $3,700 per month in June 2004 through August 2004 and $3,400
per month thereafter, as well as taxes, maintenance, insurance and certain other
operating costs of the leased properties.

The Company also leases an Internet line and related Internet access gateway.
This lease can be terminated at anytime by serving a 30 days notice to the
service provider. The lease rental that the Company is required to pay was
$2,763 per month up to October 2003 and revised to $332 per month thereafter.

Future minimum lease payments under the non-cancelable lease agreements are
as follows:
<TABLE>
<CAPTION>

           Year ending
           December 31:
           ------------
<S>        <C>                                                                          <C>
           2004                                                                         $           43,000
           2005                                                                                     41,000
           2006                                                                                     41,000
           2007                                                                                      8,500
                                                                                        ------------------
                                                                                        $          133,500
                                                                                        ==================
</TABLE>

                                      F-25
<PAGE>

               SECURED DIGITAL APPLICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                     YEARS ENDED DECEMBER 31, 2003 AND 2002


NOTE 15:  PROPOSED BUSINESS TRANSACTIONS

On December 3, 2003, the Company entered into a Joint Venture Agreement with
Amove Resources Sdn Bhd ("AR") to jointly implement a secured shipping service.
In addition to implementing a secured shipping service, the Company and AR also
agreed to jointly implement a Central Monitoring Service ("CMS") in the northern
region of Malaysia where AR is currently providing armed guard services to
clients that include factories, offices and homes. Pursuant to the Agreement,
the Company was also granted an option to purchase a 51% equity interest in AR
for $550,000. On January 30, 2004, the Company's subsidiary, AEI, entered into a
definitive agreement to acquire 51% equity in AR for $526,315 in cash from AR's
principal shareholder. AEI made an initial cash payment of $26,315. The balance
of the purchase price is to be paid at closing, which is to occur by October 31,
2004. The purchase agreement is subject to customary closing conditions,
including the completion of a financial and legal due diligence audit to the
Company's satisfaction and the renewal of certain contracts with AR's existing
customers. At the date of this report, the Company had yet to close the purchase
agreement as AR's principal shareholder had yet to fulfill the condition
precedent as stated in the definitive agreement.

On December 6, 2003, the Company executed a definitive agreement with AMH's
principal shareholder and Asiaco Material Handling (Thailand) Co. Ltd. ("AMHT")
to purchase the assets and business of AMHT. On December 8, 2003, the Company
announced the incorporation of Asiaco Multi Corporation (Thailand) Co. Ltd
("AMCT"), to be used as a special vehicle to acquire AMHT's net assets and
business, including taking over AMHT's headquarters in Bangkok and branch office
in the industrial city of Rayong. Upon completion of the acquisition, the
Company will own 60% of AMCT's equity. The remaining 40% will be jointly owned
by the existing shareholders of AMHT. The Company and the existing shareholders
of AMHT are still negotiating the terms and conditions for the transfer of
AMHT's net assets and business to AMCT.

NOTE 16: PENDING LITIGATION

No legal proceedings of a material nature to which the Company is a party are
pending as of December 31, 2003, and the Company knows of no legal proceedings
of a material nature pending or threatened or judgments entered against any
director or officer of the Company in his/her capacity as such.

NOTE 17: SUBSEQUENT EVENTS

On February 17, 2004, the Company announced that its subsidiary, AEI, had
executed a definitive agreement to acquire the business and assets of Izfahan
Enterprise (M) Sdn Bhd ("IE"). IE is a Malaysian freight forwarding company
licensed by the Malaysian Customs Department to provide freight forwarding
service in the northern and central region of Peninsular Malaysia. The purchase
of IE's business and assets, once completed, would constitute the third
strategic acquisition targeted by the Company to expand its line of business
into the logistics and secured shipping industries. IE's assets will be
transferred to Vista Positive Sdn Bhd ("VP"), a wholly-owned subsidiary of AEI
that was recently incorporated to be used as a vehicle for the acquisition.
Under the terms of the agreement, the purchase consideration is not expected to
exceed $400,000 subject to IE fulfilling certain closing conditions, which
includes an undertaking by IE to secure a new freight forwarding license for VP.
AEI intends to integrate VP's operations with SS to provide third party logistic
services. AEI has yet to complete the acquisition of IE as both parties are
still negotiating management issues relating to VP's operations.

In February 2004, the Company's Malaysian subsidiary, AMC, completed the
purchase of a 62% equity interest in Asiaco Taiping Sdn Bhd ("ATG"), pursuant to
the asset purchase agreement between AMH and the Company. ATG is primarily
involved in the sale, servicing and rental of material handling equipment in the
northern region of Malaysia.

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