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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 20549

                                   FORM 10-KSB


                     ANNUAL REPORT UNDER SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                      For Fiscal Year Ended: March 31, 2002
                        COMMISSION FILE NUMBER: 001-15043

                               C-3D DIGITAL, INC.
                    (FORMERLY CHEQUEMATE INTERNATIONAL, INC.)
             (Exact name of registrant as specified in its charter)

                 Utah                                    76-0279816
    --------------------------------                 -------------------
      (State or other jurisdiction                    (I.R.S. Employer
    of incorporation or organization)                Identification No.)

         10 Universal City Plaza, Suites 1100, Universal City, CA 91608
         --------------------------------------------------------------
                    (Address of principal executive offices)

                                  818-509-6262
                                  ------------
                           (Issuer's Telephone Number)

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

State issuer's revenues for its most recent fiscal year: $805,211

Check if there is no disclosure of delinquent filers pursuant to Item 405 of
Regulation S-B contained in this report and no disclosure will be contained to
the best of registrant's knowledge in definitive proxy or information statements
incorporated by reference in Part 111 of this Form 10-KSB or any amendment to
this Form 10-KSB: [ ]

As of July 9, 2001 the aggregate market value of the voting stock held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked price of such common equity as of a specified
date within the past 60 days: $3,500,000.

C-3D Digital, Inc. had 91,253,414 Shares of Common Stock as of March 31, 2002.

Transitional Small Business Format: YES [ ]  NO [X]

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                                TABLE OF CONTENTS
                                -----------------

PART I.........................................................................1

   ITEM 1......................................................................1
      Forward Looking Statements...............................................1
      History of the Company...................................................1
      Other Information........................................................1
      Principal Products and Services..........................................1
      Employees...............................................................12

   ITEM 2.....................................................................12
      Description of Property.................................................12

   ITEM 3.....................................................................12
      Legal Proceedings.......................................................12

   ITEM 4.....................................................................14
      Submission of Matters to a Vote of Security Holders.....................14

PART II.......................................................................15

   ITEM 5.....................................................................15
      Market for Common Equity and Related Stockholder Matters................15

   ITEM 6.....................................................................17
      Management's Discussion and Analysis....................................17

   ITEM 7....................................................................F-1
      Financial Statements...................................................F-1

   ITEM 8.....................................................................24
      Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosure....................................................24

PART III......................................................................24

   ITEM 9.....................................................................24
      Directors, Executive Officers, Promoters and Control Persons; Compliance
      with Section 16 (a) of the Exchange Act.................................24
      Directors...............................................................24
      Business Experience.....................................................25
      Committees of the Board of Directors....................................25
      Executive Officers......................................................27
      Business Experience.....................................................27

   ITEM 10....................................................................27
      Executive Compensation..................................................27

   ITEM 11....................................................................28
      Security Ownership of Certain Beneficial Holders........................28

   ITEM 12....................................................................29
      Certain Related Transactions............................................29

   ITEM 13....................................................................29
      Exhibits and Reports on form 8K.........................................29
         Exhibits Index.......................................................29

   SIGNATURES.................................................................29


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                                     PART I

ITEM 1

FORWARD LOOKING STATEMENTS

This annual filing includes "forward looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995 (the "PSLRA"). The PSLRA
provides a "safe harbor" for such statements to encourage companies to provide
prospective information about themselves so long as such information is
identified as forward-looking and is accompanied by meaningful cautionary
statements identifying important factors that could cause actual results to
differ materially from those projected in the information. All statements other
than statements of historical fact made in this report or incorporated by
reference are forward-looking. In particular, the statements herein regarding
the availability of adequate funding and progress in the development of its
various business segments are forward-looking statements. Forward-looking
statements represent management's current expectations and are inherently
uncertain. Investors are warned that the Company's actual results may differ
significantly from management's expectations and, therefore, from the results
discussed in such forward-looking statements.

DESCRIPTION OF BUSINESS

OUR HISTORY

C-3D Digital, Inc. (the "Company" or "we" or "C-3D") was incorporated in Utah on
September 1, 1994. We merged with our parent, Automated Compliance & Training,
Inc., a Utah corporation, on September 3, 1996, with the wholly owned subsidiary
surviving the merger. As a result of the merger our name was changed to
Chequemate International, Inc. On March 22, 1999 we acquired substantially all
of the assets of Strata, Inc., a Utah corporation. On July 8, 1999, we acquired
substantially all of the assets of King Farms, Inc., an Illinois corporation
doing business as Hotel Movie Express. On December 30, 2000, we acquired all of
the equity interest in VisionComm, Inc., a closely-held Delaware corporation. On
August 9, 2001, we sold a 51% interest in our equity to the shareholders of
Another World, Inc. a corporation organized under the laws of the Republic of
Korea. On January 8, 2002 we changed our name from Chequemate International,
Inc. to C-3D Digital Inc.

OUR BUSINESS

We divide our business activities among four divisions: (1) C-3D Digital, a
division that is developing three-dimensional, or 3D, technology for converting
two-dimensional, or 2D, video programming and similar video entertainment, or
content, to 3D content for film, television and computer applications and will
seek to generate revenue from the sale of these conversion services; (2)
VisionComm, Inc., a wholly owned subsidiary that primarily derives revenue from
the ownership, operation and management of private cable systems in Texas,
California, Michigan, Oklahoma and Missouri and; (3) Hotel Movie Network, a
division that derives revenue from broadcasting entertainment and programming
over hotel networks on a pay-per-view or free-to-guest basis(where the hotel
pays a flat monthly fee); and (4) 3D.com, a wholly owned subsidiary that
discontinued its Strata division in November, 2000.

C-3D DIGITAL

As of March 31, 2002 the Company was headquartered in southern California at
Universal City and was working closely with AnotherWorld, Inc. a Korean based
technology company on the deployment of worldwide sales and marketing of
AnotherWorld's line of 3D products. In addition, the Company finalized relations
with a Korean based graphic card manufacture for certain North and South
American distribution rights. Within these rights the Company intendeds to
establish revenue channels that will later complement the deployment and joint
packaging of 3D related products.

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Since 1997, we have focused on manufacturing and marketing breakthrough 3D
imaging technology that was acquired from Advanced Technology Group, LLC. In
June 1997 an agreement was finalized by which Chequemate Electronics obtained
the exclusive worldwide license to the 3D technology developed by Advanced
Technology, which converted 2D content to stereoscopic 3D for use in consumer
devices such as set-top boxes (devices that adapt to standard television sets).
We are actively pursuing additional acquisition and/or strategic partnership
opportunities to expand its 3D imagery and conversion business.

We believe that a substantial market opportunity exists for providers of 3D
content. We will continue to aggressively develop and market 3D products and
technology for the PC, gaming, cinema, TV, and various non-entertainment related
markets, including industrial, medical and military simulations. 3D graphics and
imagery technology continues to emerge as one of the significant new
developments in the overall media industry, particularly as different forms of
media have converged in recent years. Interactive 3D graphics are integral to
various computing and entertainment platforms such as workstations, consumer and
commercial desktop PCs, Internet appliances and home gaming consoles. 3D
graphics are also a powerful broadband medium that enables the communication and
visualization of information, whether it is in professional applications like
digital content creation and computer assisted design, or simply surfing the
Internet or playing games. The visually engaging and interactive nature of 3D
graphics responds to consumers' demands for a convincing simulation of reality
beyond what is possible with traditional 2D graphics. We expect that the
fundamental interactive capability and distributive nature of 3D graphics will
make it the primary broadband medium for a digitally connected world.

Since our 3D products and services are still in their development stage, we have
no direct customers at this time. However, we expect our customers to be
entertainment consumers, commercial and industrial customers, and any enterprise
or individual that wishes to view 3D content or convert 2D content into 3D.

HOTEL MOVIE NETWORK

Hotel Movie Network provides pay-per-view and free-to-guest direct digital
television services to approximately 11,000 hotel rooms primarily located in
Arizona, California, Idaho, Nevada, New Mexico, Texas, Utah and Washington. We
provide, install, and maintain within a hotel the equipment that allows hotel
guests to access pay-per-view and free-to-guest direct digital television
services. The equipment we provide, install and maintain includes a terminal
unit in the hotel guest room (set top), a hand-held remote television control, a
local-area cable distribution network and a central point equipment rack. Hotel
Movie Network has contracts with many of Hollywood's major studios to provide
first and second window (hotel/airline and video store) movies. Movie
programming originates from the central system and is transmitted to individual
rooms over the hotel's a local-area cable distribution network. The system
computer controls the delivery of the guest pay interactive services and also
automatically records purchase transactions and billing data to the hotel's
accounting system, which automatically posts the charge to the guest's bill.
Hotel Movie Network earns revenue by charging installation and maintenance fees
to client hotels and by collecting a portion of the receipts generated by the
guest fees. Hotel Movie Network's customers are primarily hotel owners and
operators as well as the hotel guests who purchase pay-per-view content.

The hotel video-on-demand industry is effectively dominated by two primary
competitors. On Command Corporation and LodgeNet Entertainment jointly service
over 1,500,000 mid-to-large property hotel rooms out of the approximately
3,600,000 rooms in the domestic U.S. hotel market. High production,
installation, and operation costs are the primary challenges faced by
participants in this industry. Hotel Movie Network has so far successfully
serviced our market. The leading competitor in the small hotel market, which
serves approximately 300,000 rooms, provides primarily scheduled movies, does
not interface with the hotel's PMS system (billing systems at the front desk)
and is currently in bankruptcy. Our proposed solution allows Hotel Movie Network

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to provide services far beyond the capability of this competitor. We currently
service approximately 10,000 rooms with the current capability to add an
additional 10,000 to 15,000 rooms. At 20,000 total rooms would be beyond our
breakeven volume and into profitability.

To meet the changing needs of hotels and hotel guests, Hotel Movie Network has
signed agreements with DirecTV and Dish Network, North America's leading
providers of high-power direct broadcast satellite television, to provide
service via satellite to our customers.

VISIONCOMM, INC.

Located in Detroit, Michigan, VisionComm, Inc. was founded in 1995 for the
purpose of providing telecommunications and cable television services to
residents of multiple dwelling units, hotels and hospitals. We acquired
VisionComm in December 2000. This acquisition gave us additional revenue
opportunities and at the same time advanced our core business of media and
entertainment distribution. VisionComm operates private cable systems in Texas,
Oklahoma, California and Michigan and manages two franchise cable systems in
Missouri with 2,800 residences and/or businesses as subscribers. VisionComm has
installed and operates 600 payphones in various facilities in 9 states.
VisionComm earns revenue through cable subscriber fees and payphone usage
consisting of coin and non-coin calls. VisionComm derives revenue from multiple
dwelling unit contracts, subscriptions for cable service and from fees on owning
and operating pay phones. (For additional discussion regarding our plans with
VisionComm please see note 14 of the March 31, 2002 financial statement,
entitled discontinued operation.)

VisionComm operates through two divisions--the Cable Division and the Payphone
Division. The Cable Division, headquartered in Clinton Township, Michigan, a
suburb of Detroit, manages a nationwide network of contractors, provides
engineering and planning for new installations and customer service for
VisionComm cable subscribers, and oversees all other aspects of our cable
business.

VisionComm delivers its cable services through a combination of both private
cable and franchise feeds. A private cable system servicing a multiple dwelling
unit physically operates in a fashion identical to that of a franchise system,
but on a relatively smaller scale. VisionComm utilizes various design
architectures tailored to each property when determining the method of delivery
of its video product. For our cable business through VisionComm, our customers
are both townships, with which we have and can further secure franchise
agreements, and the owners and/or managers of multiple dwelling units. Of
course, our cable customers are also the end subscribers who actually purchase
our cable content.

VisionComm is currently building out complexes that pass a total of 256 units in
the Tulsa area and have an agreement to build out a total of 620 units in the
New Orleans area for Sevo Miller, Inc.. We presently pass about 6,000 homes with
3,000 subscribers. These numbers change as we continue to build out the systems
we have under contract or franchise.

Discussions have begun with a national private cable company regarding their
multiple dwelling unites in the St. Louis and Detroit regions. The St. Louis
market passes 5,769 doors and services approximately 2,616 subscribers and the
Detroit market passes 6,660 doors and services approximately 3,778 subscribers.
Management of VisionComm anticipates the opportunity to bid for complexes in the
Dallas Metroplex market along with Chicago, Southern Florida, Atlanta and
Indianapolis. We believe it could potentially acquire up to 50,000 doors. These
units have been partially taken by another cable provider. However, several
properties are still available through the Optel bankruptcy. In addition,
numerous opportunities are continuously being brought to VisionComm via personal
contacts in the industry, networking, REITs, brokers and current customers. We
plan to carefully review each opportunity to determine if it should be pursued
to supplement our expansion in our existing geographical markets, and to expand
into new markets across the United States.

VisionComm is currently in the process of establishing a franchise presence in
rural Northern Michigan. It is doing this through a combination of acquisitions
of existing providers and build-outs of recently acquired new franchise
agreements that need to be built. Under these agreements we will begin
construction by Spring 2002 and if we fail to meet this time frame we will have

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to get an extension to keep the franchise in place. VisionComm has recently
negotiated an asset purchase agreement with a small private cable company that
currently provides service to ten townships, passing a total of 1,424 homes and
currently servicing 605 subscribers. VisionComm is currently in the process of
securing new franchise agreements with these townships, providing for 15-year
terms. Seven of the ten agreements with townships have been obtained. It is
presently anticipated that an asset purchase agreement will be finalized when
the remaining three agreements with townships have been obtained. One of the
central cable processing machines that is part of the purchase will then be used
to provide the signal for part of the build out of the seven new franchises.
VisionComm has also recently entered into a letter of intent with another
provider This opportunity is now being held by the bank and they would be
motivated to find a new company. in the same area, providing for the purchase of
its system, which currently provides service to 14 townships, passing a total of
5,110 homes and currently servicing 2,135 subscribers.

The following communities, all in the state of Michigan, are under franchise
agreements with VisionComm: Chester Township, Charlton Township, Vienna
Township, Weber Township, Yates Township, Elk Township, Sauble Township. These
franchise agreements were purchased from Phoenix Communications. All assignments
and transfers were obtained. These cable systems need to be built out within the
next 16 months per the franchise agreements.

In 1995, VisionComm entered into a ten-year contract with Nevada Communications
Corp. to provide payphone services to a large healthcare organization's
hospitals and healthcare facilities throughout the United States on an exclusive
basis. We are currently seeking to sell VisionComm Payphone Division, allowing
us to devote our full energy to growing the Cable Division, which is more
congruent with our current and pending products and services. There can be no
assurance, however, that we will be successful in finding a suitable buyer, or,
if a suitable prospective buyer is found, that we will be able to negotiate
acceptable terms.

At the present time, cable television systems compete with other communications
and entertainment media, including off-air television broadcast signals, which a
viewer is able to receive directly using the viewer's own television set and
antenna. The extent to which a cable system competes with over-the-air
broadcasting depends upon the quality and quantity of the broadcast signals
available by direct antenna reception compared to the quality and quantity of
such signals and alternative services offered by a cable system. In many areas,
television signals which constitute a substantial part of basic service can be
received by viewers who use their own antennas. VCI's private cable television
services compete mostly with incumbent franchise cable television systems
servicing condominiums, apartment complexes and certain other multiple unit
residential developments, as well as wireless cable television operators, other
private cable television operators, DBS operators and stand alone satellite
service providers. The operators of these private systems, known as satellite
master antenna television ("SMATV") systems, often enter into exclusive
agreements with apartment building owners or homeowners' associations which
preclude franchised cable television operators from serving residents of such
private complexes. VCI continues as a matter of course to investigate new
sources of programming and technologies that may increase its range of services.
In the United States the MDU portion of the residential real estate market is
estimated to be 20 million rental units.

The cable television industry as a whole competes with radio, television, the
Internet, and print media for advertising revenues. As the cable television
industry continues to develop programming designed specifically for distribution
by cable, advertising revenues may increase. Premium programming provided by
cable systems is subject to the same competitive factors which exist for other
programming discussed above. The continued profitability of premium services may
depend largely upon the continued availability of attractive programming at
competitive prices.

With respect to our pay phone assets, we compete principally with the services
offered by the incumbent LEC serving that area. Incumbent LECs have
long-standing relationships with their customers, have the potential to
subsidize competitive services from monopoly service revenues, and benefit from
favorable state and federal regulations.

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3D.COM, INC.

Our 3D.COM, Inc. division was formed in June 1999 with the acquisition of the
assets and technology previously owned by Strata, Inc., an early pioneer in 3D
software. Incorporated in the state of Utah, this division is a wholly owned
subsidiary of us. This division is in its development stage and is currently not
generating any revenue. The plan surrounding the acquisition of Strata, Inc. was
to combine the assets and technology of Strata with our existing Web effort to
distribute 3D content and tools both online and through over-the-counter
software. As part of its online strategy, we, through this division, plan to
launch an Internet 3D and virtual reality internet portal (a focused internet
destination).

In November 2000, we elected to discontinue the Strata division of 3D.Com. The
Strata assets were acquired in June of 1999 through a foreclosure proceeding
against Strata, Inc. initiated by its original creditors. Upon discontinuing the
Strata division, we leased the tangible and intangible Strata assets to a new
company controlled by three officers of 3D.Com, who were also the founders of
Strata, Inc. The lease agreement was for minimal consideration and served as a
mechanism for the planned future sale or spin off of the Strata assets as a
separate company. We expect to recover our investment in Strata through the sale
or spin off of the Strata assets.

Since our 3D products and services are still in their development stage, we have
no direct customers at this time. However, we expect our customers to be
entertainment consumers, commercial and industrial customers, and any enterprise
or individual that wishes to view 3D content or convert 2D content into 3D.

PATENTS, TRADEMARKS AND COPYRIGHTS

After our reorganization and appointment of new management in March 2001, we are
conducting a comprehensive review to determine the status of individual patents,
trademarks and copyrights.

LEGISLATION AND REGULATION

Because of the operations of VisionComm, we are subject to the regulation of the
cable television industry. The cable television industry is regulated by the
Federal Communications Commission (FCC), the principal federal regulatory agency
with jurisdiction over cable television, some state governments and most local
governments. In addition, various legislative and regulatory proposals under
consideration from time to time by Congress and various federal agencies may
materially affect the cable television industry. The following is a summary of
federal laws and regulations affecting the growth and operation of the cable
television industry and a description of certain state and local laws.

FEDERAL REGULATION

The FCC has adopted regulations covering such areas as cross-ownership between
cable television systems and other communications businesses, carriage of
television broadcast programming, cable rates, consumer protection and customer
service, leased access, programmer access to cable television systems,
programming agreements, technical standards, consumer electronics equipment
compatibility, ownership of home wiring, program exclusivity, consumer education
and lockbox enforcement, origination cablecasting and sponsorship
identification, children's programming, signal leakage and frequency use,
maintenance of various records, and antenna structure notification, marking and
lighting. The FCC has the authority to enforce these regulations through the
imposition of substantial fines, the issuance of cease and desist orders and/or
the imposition of other administrative sanctions, such as the revocation of FCC
licenses needed to operate certain transmission facilities often used in
connection with cable operations. Following is a brief summary of certain of
these federal regulations.

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RATE REGULATION

The FCC's implementing regulations contain standards for the regulation of basic
service rates. Local franchising authorities and the FCC, respectively, are
empowered to order a reduction of existing rates which exceed the maximum
permitted level for basic services and associated equipment, and refunds can be
required. The FCC adopted a benchmark price cap system for measuring the
reasonableness of existing basic service rates. Alternatively, cable operators
have the opportunity to make cost-of-service showings which, in some cases, may
justify rates above the applicable benchmarks. The rules also require that
charges for cable-related equipment, converter boxes and remote control devices,
for example, and installation services be unbundled from the provision of cable
service and based upon actual costs plus a reasonable profit. The regulations
also provide that future rate increases may not exceed an inflation-indexed
amount, plus increases in certain costs beyond the cable operator's control,
such as taxes, franchise fees and increased programming costs. Cost-based
adjustments to these capped rates can also be made in the event a cable
television operator adds or deletes channels.

The 1984 Cable Act codified existing FCC preemption of rate regulation for
premium channels and optional non-basic programming. The 1984 Cable Act also
deregulated basic cable rates for cable television systems determined by the FCC
to be subject to effective competition. The 1992 Cable Act substantially changed
the previous statutory and FCC rate regulation standards. The 1992 Cable Act
replaced the FCC's old standard for determining effective competition, under
which most cable television systems were not subject to rate regulation, with a
statutory provision that resulted in nearly all cable television systems
becoming subject to rate regulation of basic service. The landmark, 1996
Telecommunications Act, which effectively governs most cable operations today,
expanded the definition of effective competition to cover situations where a
local telephone company or its affiliate, or any multichannel video provider
using telephone company facilities, offers comparable video service by any means
except direct broadcast satellite television systems. The satisfaction of this
test deregulates all rates.

For cable systems not subject to effective competition, the 1992 Cable Act
required the FCC to adopt a formula for franchising authorities to assure that
basic cable rates are reasonable; allowed the FCC to review rates for cable
programming service tiers, other than per-channel or per-program services, in
response to complaints filed by franchising authorities and/or cable customers;
prohibited cable television systems from requiring basic customers to purchase
service tiers above basic service in order to purchase premium services if the
system is technically capable of compliance; required the FCC to adopt
regulations to establish, on the basis of actual costs, the price for
installation of cable service, remote controls, converter boxes and additional
outlets; and allowed the FCC to impose restrictions on the retiering and
rearrangement of cable services under certain limited circumstances. The 1996
Act ended FCC regulation of cable programming service tier rates on March 31,
1999. The 1996 Act also relaxed existing uniform rate requirements by specifying
that such requirements do not apply where the operator faces effective
competition, and by exempting bulk discounts to multiple dwelling units,
although complaints about predatory pricing may be lodged with the FCC.

Lastly, there are regulations which require cable television systems to permit
customers to purchase video programming on a per channel or a per program basis
without the necessity of subscribing to any tier of service, other than the
basic service tier, unless the cable television system is technically incapable
of doing so. Generally, this exemption from compliance with the statute for
cable television systems that do not have such technical capability is available
until a cable television system obtains the capability, but not later than
December 2002.

CARRIAGE OF BROADCAST TELEVISION SIGNALS

The 1992 Cable Act contains signal carriage requirements which allow commercial
television broadcast stations that are "local" to a cable television system,
that is to say that the system is located in the station's designated market

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area, to elect every three years whether to require the cable television system
to carry the station, subject to certain exceptions, or whether the cable
television system will have to negotiate for "retransmission consent" to carry
the station. The next election between must-carry and retransmission consent
will be October 1, 2002. A cable television system is generally required to
devote up to one-third of its activated channel capacity for the carriage of
local commercial television stations whether pursuant to mandatory carriage
requirements or the retransmission consent requirements of the 1992 Cable Act.

CHANNEL SET-ASIDES

The 1984 Cable Act permits local franchising authorities to require cable
television operators to set aside certain television channels for public,
educational and governmental access programming. The 1984 Cable Act further
requires cable television systems with thirty-six or more activated channels to
designate a portion of their channel capacity for commercial leased access by
unaffiliated third parties to provide programming that may compete with services
offered by the cable television operator. The 1992 Cable Act requires leased
access rates to be set according to a formula determined by the FCC.

OWNERSHIP

The 1996 Act repealed the statutory ban against local exchange carriers
providing video programming directly to customers within their local exchange
telephone service areas. Consequently, the 1996 Act permits telephone companies
to compete directly with operations of cable television systems. Under the 1996
Act and FCC rules adopted to implement the 1996 Act, local exchange carriers may
provide video service as broadcasters, common carriers, or cable operators.

The 1996 Act generally prohibits local exchange carriers from purchasing any
ownership interest in a cable television system exceeding 10% located within the
local exchange carriers telephone service area, prohibits cable operators from
purchasing local exchange carriers whose service areas are located within the
cable operator's franchise area, and prohibits joint ventures between operators
of cable television systems and local exchange carriers operating in overlapping
markets. There are some statutory exceptions, including a rural exemption that
permits buyouts in which the purchased cable television system or local exchange
carrier serves a non-urban area with fewer than 35,000 inhabitants, and
exemptions for the purchase of small cable television systems located in
non-urban areas. Also, the FCC may grant waivers of the buyout provisions in
certain circumstances.

The 1996 Act makes several other changes to relax ownership restrictions and
regulations of cable television systems. The 1996 Act repeals the 1992 Cable
Act's three-year holding requirement pertaining to sales of cable television
systems. The statutory broadcast/cable cross-ownership restrictions imposed
under the 1984 Cable Act have been eliminated, although the FCC's regulations
prohibiting broadcast/cable common-ownership currently remain in effect. The
FCC's rules also generally prohibit cable operators from offering satellite
master antenna service separate from their franchised systems in the same
franchise area, unless the cable operator is subject to "effective competition"
there.

The 1996 Act amends the definition of a "cable system" under the Communications
Act of 1934 (the "Communications Act") so that competitive providers of video
services will be regulated and franchised as "cable systems" only if they use
public rights-of-way. Thus, a broader class of entities providing video
programming may be exempt from regulation as cable television systems under the
Communications Act.

Pursuant to the 1992 Cable Act, the FCC has imposed limits on the number of
cable television systems which a single cable television operator can own. In
general, no cable television operator can have an attributable interest in cable
television systems which serve more than 30% of all multi-channel video
programming distributors nationwide. Attributable interests for these purposes
include voting interests of 5% or more, non-voting interests of 33% or more of
the total assets (debt plus equity), officerships, directorships and general
partnership interests.

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The FCC has also adopted rules which limit the number of channels on a cable
television system which can be occupied by national video programming services
in which the entity which owns the cable television system has an attributable
interest. The limit is 40% of the first 75 activated channels. The U.S. Court of
Appeals for the District of Columbia Circuit recently overturned the 30%
multiple ownership and 40% programming interest rules on the ground that they
are an unsupported intrusion on cable operators' First Amendment rights. The
rulemaking decision was remanded to the FCC for further proceedings. The
constitutionality of the underlying statute had previously been sustained by the
same court. The FCC has yet to announce what action it will take on either of
these limitations.

The 1996 Act provides that registered utility holding companies and subsidiaries
may provide telecommunications services, including cable television,
notwithstanding the Public Utilities Holding Company Act of 1935, as amended.
Electric utilities must establish separate subsidiaries known as "exempt
telecommunications companies" and must apply to the FCC for operating authority.
Due to their resources, electric utilities could be formidable competitors to
traditional cable television systems.

ACCESS TO PROGRAMMING

The 1992 Cable Act imposed restrictions on the dealings between cable operators
and cable programmers. Of special significance from a competitive business
posture, the 1992 Cable Act precludes video programmers affiliated with cable
companies from favoring their affiliated cable operators over competitors and
requires such programmers to sell their programming to other multichannel video
distributors. This provision limits the ability of vertically integrated cable
programmers to offer exclusive programming arrangements to cable companies.
Certain of these restrictions are scheduled to expire in October 2002 unless the
FCC decides that they should be continued.

PRIVACY

The 1984 Cable Act imposes a number of restrictions on the manner in which cable
television operators can collect and disclose data about individual system
customers. The statute also requires that the system operator periodically
provide all customers with written information about its policies regarding the
collection and handling of data about customers, their privacy rights under
federal law and their enforcement rights. In the event that a cable television
operator was found to have violated the customer privacy provisions of the 1984
Cable Act, it could be required to pay damages, attorneys' fees and other costs.
Under the 1992 Cable Act, the privacy requirements were strengthened to require
that cable television operators take such actions as are necessary to prevent
unauthorized access to personally identifiable information.

FRANCHISE TRANSFERS

The 1992 Cable Act requires franchising authorities to act on any franchise
transfer request within 120 days after receipt of all information required by
FCC regulations and by the franchising authority. Approval is deemed to be
granted if the franchising authority fails to act within such period.

TECHNICAL REQUIREMENTS

The FCC has imposed technical standards applicable to all classes of channels
which carry downstream National Television System Committee video programming.
The FCC also has adopted additional standards applicable to cable television
systems using frequencies in the 108 to 137 MHz and 225 to 400 MHz bands in
order to prevent harmful interference with aeronautical navigation and safety
radio services and has also established limits on cable television system signal
leakage. Periodic testing by cable television operators for compliance with the
technical standards and signal leakage limits is required and an annual filing

                                       8
<PAGE>

of the results of these measurements is required. The 1992 Cable Act requires
the FCC to periodically update its technical standards to take into account
changes in technology. Under the 1996 Act, local franchising authorities may not
prohibit, condition or restrict a cable television system's use of any type of
customer equipment or transmission technology.

The FCC has adopted regulations to implement the requirements of the 1992 Cable
Act designed to improve the compatibility of cable television systems and
consumer electronics equipment. These regulations, among other things, generally
prohibit cable television operators from scrambling their basic service tier.
The 1996 Act directs the FCC to set only minimal standards to assure
compatibility between television sets, VCRs and cable television systems, and to
rely on the marketplace. Pursuant to the 1992 Cable Act, the FCC has adopted
rules to assure the competitive availability to consumers of customer premises
equipment, such as converters, used to access the services offered by cable
television systems and other multichannel video programming distributors.
Pursuant to those rules, consumers are given the right to attach compatible
equipment to the facilities of their multichannel video programming distributors
so long as the equipment does not harm the network, does not interfere with the
services purchased by other customers and is not used to receive unauthorized
services. As of July 1, 2000, multichannel video programming distributors, other
than operators of direct broadcast satellite television systems, are required to
separate security from non-security functions in the customer premises equipment
which they sell or lease to their customers and offer their customers the option
of using component security modules obtained from the multichannel video
programming distributors with set-top units purchased or leased from retail
outlets. As of January 1, 2005, multichannel video programming distributors will
be prohibited from distributing new set-top equipment integrating both security
and non-security functions to their customers.

Pursuant to the 1992 Cable Act, the FCC has adopted rules implementing an
emergency alert system. The rules require all cable television systems to
provide an audio and video emergency alert system message on at least one
programmed channel and a video interruption and an audio alert message on all
programmed channels. The audio alert message is required to state which channel
is carrying the full audio and video emergency alert system message. The FCC
rules permit cable television systems either to provide a separate means of
alerting persons with hearing disabilities of emergency alert system messages,
such as a terminal that displays emergency alert system messages and activates
other alerting mechanisms or lights, or to provide audio and video emergency
alert system messages on all channels. Cable television systems with 10,000 or
more basic customers per headend were required to install emergency alert system
equipment capable of providing audio and video emergency alert system messages
on all programmed channels by December 31, 1998. Cable television systems with
5,000 or more but fewer than 10,000 basic customers per headend will have until
October 1, 2002 to comply with that requirement. Cable television systems with
fewer than 5,000 basic customers per headend will have a choice of providing
either a national level emergency alert system message on all programmed
channels or installing emergency alert system equipment capable of providing
audio alert messages on all programmed channels, a video interrupt on all
channels, and an audio and video emergency alert system message on one
programmed channel. This must be accomplished by October 1, 2002.

INSIDE WIRING; CUSTOMER ACCESS

In a 1997 order, the FCC established rules that require an incumbent cable
operator upon expiration of a multiple dwelling unit service contract to sell,
abandon, or remove "home run" wiring that was installed by the cable operator in
a multiple dwelling unit building. These inside wiring rules are expected to
assist building owners in their attempts to replace existing cable operators
with new programming providers who are willing to pay the building owner a
higher fee, where such a fee is permissible. Additionally, the FCC has proposed
to restrict exclusive contracts between building owners and cable operators or
other multichannel video programming distributors. The FCC has also recently
issued an order preempting state, local and private restrictions on over-the-air
reception antennas placed on rental properties in areas where a tenant has
exclusive use of the property, such as balconies or patios. However, tenants may
not install such antennas on the common areas of multiple dwelling units, such
as on roofs. This new order may limit the extent to which multiple dwelling unit

                                       9
<PAGE>

owners may enforce certain aspects of multiple dwelling unit agreements which
otherwise would prohibit, for example, placement of direct broadcast satellite
television systems television receiving antennae in multiple dwelling unit
areas, such as apartment balconies or patios, under the exclusive occupancy of a
renter.

POLE ATTACHMENTS

The FCC currently regulates the rates and conditions imposed by certain public
utilities for use of their poles unless state public service commissions are
able to demonstrate that they adequately regulate the rates, terms and
conditions of cable television pole attachments. A number of states and the
District of Columbia have certified to the FCC that they adequately regulate the
rates, terms and conditions for pole attachments. Several states in which we
operate have made such a certification. In the absence of state regulation, the
FCC administers such pole attachment and conduit use rates through use of a
formula which it has devised. Pursuant to the 1996 Act, the FCC has adopted a
new rate formula for any attaching party, including cable television systems,
which offers telecommunications services. This new formula will result in higher
attachment rates than at present, but they will apply only to cable television
systems which elect to offer telecommunications services. Any increases pursuant
to this new formula begin in 2001, and will be phased in by equal increments
over the five ensuing years.

OTHER FCC MATTERS

FCC regulation pursuant to the Communications Act also includes matters
regarding a cable television system's carriage of local sports programming;
restrictions on origination and cablecasting by cable television operators;
rules governing political broadcasts; equal employment opportunity; deletion of
syndicated programming; registration procedure and reporting requirements;
customer service; closed captioning; obscenity and indecency; program access and
exclusivity arrangements; and limitations on advertising contained in
nonbroadcast children's programming.

The FCC has recently issued a Notice of Inquiry covering a wide range of issues
relating to Interactive Television ("ITV"). Examples of ITV services are
interactive electronic program guides and access to a graphic interface that
provides supplementary information related to the video display. In the near
term, cable systems are likely to be the platform of choice for the distribution
of ITV services. The FCC has posed a series of questions including the
definition of ITV, the potential for discrimination by cable systems in favor of
affiliated ITV providers, enforcement mechanisms, and the proper regulatory
classification of ITV service.

COPYRIGHT LAWS

Cable television systems are subject to federal copyright licensing covering
carriage of broadcast signals. In exchange for making semi-annual payments to a
federal copyright royalty pool and meeting certain other obligations, cable
television operators obtain a statutory license to retransmit broadcast signals.
The amount of this royalty payment varies, depending on the amount of system
revenues from certain sources, the number of distant signals carried, and the
location of the cable television system with respect to over-the-air television
stations. Any future adjustment to the copyright royalty rates will be done
through an arbitration process to be supervised by the U.S. Copyright Office.
Cable television operators are liable for interest on underpaid and unpaid
royalty fees, but are not entitled to collect interest on refunds received for
overpayment of copyright fees.

Various bills have been introduced into Congress over the past several years
that would eliminate or modify the cable television compulsory license. Without
the compulsory license, cable television operators would have to negotiate
rights from the copyright owners for all of the programming on the broadcast
stations carried by cable television systems. Such negotiated agreements would
likely increase the cost to cable television operators of carrying broadcast
signals. The 1992 Cable Act's retransmission consent provisions expressly
provide that retransmission consent agreements between television broadcast
stations and cable television operators do not obviate the need for cable
operators to obtain a copyright license for the programming carried on each
broadcaster's signal.

                                       10
<PAGE>

Copyrighted music performed in programming supplied to cable television systems
by pay cable networks, such as HBO, and basic cable networks, such as USA
Network, is licensed by the networks through private agreements with the
American Society of Composers and Publishers, generally known as ASCAP, and BMI,
Inc., the two major performing rights organizations in the United States. Both
the American Society of Composers and Publishers and BMI offer "through to the
viewer" licenses to the cable networks which cover the retransmission of the
cable networks' programming by cable television systems to their customers.
Licenses to perform copyrighted music by cable television systems themselves,
including on local origination channels, in advertisements inserted locally on
cable television networks, and in cross-promotional announcements, must be
obtained by the cable television operator from the American Society of Composers
and Publishers, BMI and/or SESAC, Inc.

STATE AND LOCAL REGULATION

Cable television systems generally are operated pursuant to nonexclusive
franchises, permits or licenses granted by a municipality or other state or
local government entity. The terms and conditions of franchises vary materially
from jurisdiction to jurisdiction, and even from city to city within the same
state, historically ranging from reasonable to highly restrictive or burdensome.
Franchises generally contain provisions governing fees to be paid to the
franchising authority, length of the franchise term, renewal, sale or transfer
of the franchise, territory of the franchise, design and technical performance
of the system, use and occupancy of public streets and number and types of cable
television services provided. The terms and conditions of each franchise and the
laws and regulations under which it was granted directly affect the
profitability of the cable television system. The 1984 Cable Act places certain
limitations on a franchising authority's ability to control the operation of a
cable television system. The 1992 Cable Act prohibits exclusive franchises, and
allows franchising authorities to exercise greater control over the operation of
franchised cable television systems, especially in the area of customer service
and rate regulation. The 1992 Cable Act also allows franchising authorities to
operate their own multichannel video distribution system without having to
obtain a franchise and permits states or local franchising authorities to adopt
certain restrictions on the ownership of cable television systems. Moreover,
franchising authorities are immunized from monetary damage awards arising from
regulation of cable television systems or decisions made on franchise grants,
renewals, transfers and amendments. The 1996 Act prohibits a franchising
authority from either requiring or limiting a cable television operator's
provision of telecommunications services.

Various proposals have been introduced at the state and local levels with regard
to the regulation of cable television systems, and a number of states have
adopted legislation subjecting cable television systems to the jurisdiction of
centralized state governmental agencies, some of which impose regulation of a
character similar to that of a public utility. The foregoing describes all
material present and proposed federal, state and local regulations and
legislation relating to the cable television industry. Other existing federal
regulations, copyright licensing and, in many jurisdictions, state and local
franchise requirements, currently are the subject of a variety of judicial
proceedings, legislative hearings and administrative and legislative proposals
which could change, in varying degrees, the manner in which cable television
systems operate. Neither the outcome of these proceedings nor their impact upon
the cable television industry or CMI can be predicted at this time.

LOCAL TELECOMMUNICATIONS SERVICES

The 1996 Act provides that no state or local laws or regulations may prohibit or
have the effect of prohibiting any entity from providing any interstate or
intrastate telecommunications service. States are authorized, however, to impose
"competitively neutral" requirements regarding universal service, public
service, public safety and welfare, service quality and consumer protection.
State and local governments also retain their authority to manage the public
rights-of-way and may require reasonable, competitively neutral compensation for

                                       11
<PAGE>

management of the public rights-of-way when cable operators provide
telecommunications service. We may in the future allow our cable infrastructure
to be used for the provision of local telecommunications services to residential
and business consumers. Local telecommunications service is subject to
regulation by state utility commissions. Use of local telecommunications
facilities to originate and terminate long distance services, a service commonly
referred to as "exchange access," is subject to regulation both by the FCC and
by state utility commissions. As a provider of local exchange service, we would
be subject to the requirements imposed upon local exchange carriers by the 1996
Act. These include requirements governing resale, telephone number portability,
dialing parity, access to rights-of-way and reciprocal compensation. Our ability
to successfully offer local telecommunications service will be dependent, in
part, on the opening of local telephone networks by incumbent local telephone
companies as required of them by the 1996 Act. In January 1999, the United
States Supreme Court reversed and vacated in part an earlier decision of a
federal court of appeals striking down portions of the FCC's 1996 rules
governing local telecommunications competition. The Supreme Court held that the
FCC has authority under the Communications Act to establish rules to govern the
pricing of facilities and services provided by incumbent local exchange carriers
("ILECS") to open their local networks to competition. However, in July 2000,
the U.S. Court of Appeals for the Eighth Circuit vacated several FCC rules
concerning interconnection and pricing of ILEC network elements, including a
rule that mandates that ILECs set prices for unbundled network elements at the
lowest cost network configuration, and another rule that would have required the
ILECs to bundle combinations of network elements at the competing carrier's
request. The U.S. Supreme Court decided to review this decision (consolidated
with four other lower court challenges to the FCC's interconnection rules) in
its next session, which commences in October 2001. How these questions are
resolved will impact our ability to provide local telecommunications service in
competition with incumbent local exchange telephone companies.

EMPLOYEES

As of July 1, 2002, we and our subsidiaries had 12 full time employees, and 4
consultants.

ITEM 2.

DESCRIPTION OF PROPERTY

The Company occupies leased office space at:
10 Universal City Plaza, Suite 1100 $7,274.37 per month approx. 3,807 sqf. (34
month, 15 days lease started November 15, 2001). Lease 1030 S. Mesa Drive
3,000.00 per month 4,000 sqf. (10 year lease started March 2000). Lease 17000 17
Mile Road, Suite 100 2,500.00 per month approx. 2,175 sqf. (3 year lease started
January 2002).

ITEM 3.

LEGAL PROCEEDINGS

On October 8, 1999, Marshall Industries, Inc., obtained a default judgment
against the Company in Utah, and also recognition of sister state judgment in
California on Mar. 27, 2001. The judgment amount currently stands at $28,201.71
with interests. The Company has begun settlement negotiation with the Plaintiff,
and expects reasonable cooperation in a settlement negotiation.

On November 14, 2000, the Company and its then Chief Executive Officer, J.
Michael Heil ("Heil"), were named as defendants in a complaint filed by Trimark
Pictures, Inc. ("Trimark"), in the Superior Court for the State of California,
County of Los Angeles, Case No. SC063992 ("Trimark complaint"). The Trimark
complaint alleges that the Company and Heil breached the terms of a contract
between the Company and Trimark dated February 8, 2000 (the "Trimark contract"),
by failing to register a total of 100,000 shares of the Company's restricted
common stock issued to Trimark pursuant to the terms of the Trimark contract.

                                       12
<PAGE>

The Trimark complaint also asserts a claim for fraud against the Company and
Heil. Trimark claims substantial damages arising from the alleged breach of
contract and misrepresentations, in the amount of $1,650,000. On May 13, 2002,
pursuant to a settlement agreement and upon the effectiveness of S-3
registration of Trimark shares and payment of $41,000, Trimark dismissed the
lawsuit.

On June 8, 2001, Mr. Grey obtained a default judgment in the Second Judicial
District, State of Utah, Case No. 01-0700186 against the Company in the amount
of $35,155.00 plus accruing interest based on alleged breach of a lease
agreement. The Company has begun settlement negotiation with Mr. Grey, and is
informed that a California action to enforce the Utah judgment is currently
being contemplated. Mr. Grey has tentatively agreed to installment payment plans
for a discounted amount.

On February 13, 2001, the Company was named as a defendant in a complaint filed
by I-O Display Systems, LLC, Ilixco Inc., doing business as Razor Digital Media
(together "IO Plaintiffs"), in the Superior Court for the State of California,
County of San Mateo, Case No. 415826. Although on May 3, 2001, the Company and
IO Plaintiffs entered into a comprehensive settlement agreement in which the
Company agreed to and did issue a certain number of its shares to IO Plaintiffs
and to have the shares registered by December 1, 2001, IO Plaintiffs filed
request for and was granted a default judgment based on the Company's alleged
failure to timely register the shares. The Company then moved to vacate the
default judgment, and on January 8, 2002, it reached a new settlement agreement
with IO Plaintiffs. Pursuant to the new settlement agreement, the Company paid
IO Plaintiffs $200,000 and provided certain guarantees in share valuation in
consideration of IO Plaintiffs' stipulation to vacate the default judgment and
dismissal with prejudice.

On July 3, 2001, Brendan Kinkade brought a wage dispute claim with the
California Labor Board, Case No. 05-21407 NV. Although the Company paid
$18,000.00 in past due salaries, the Labor Commissioned ruled in Mr. Kinkade's
favor and awarded him $49,931,78 on January 31, 2002.

On September 24, 2001, Miller Freeman, Inc. filed a claim in Superior Court of
California, County of Los Angeles, West District, Case No. SC066542 based on
past due account and sought $63,983 in actual damages and related costs. The
Company answered denying most of the liability based on past payments, and after
initial discovery, the Parties agreed to a settlement agreement in which the
Company paid $10,000.00 for settlement of all claims.

On October 22, 2001, Hudson Consulting Group ("Hudson") filed a suit against the
Company in Third District Court of the State of Utah, Case No. 000909325,
contending that the Company breached an Advisory Agreement between the Parties
dated July 1999 and subsequently modified in March 2000. Hudson argued that it
was owed 75,000 shares pursuant to the agreements, and sought damages equal to
the highest intermediate value of the 75,000 shares from July 30, 2000 to the
date of judgment. In exchange for issuance of 514,000 shares of the Company's
common stock, Hudson dismissed the suit with prejudice on March 21, 2002.

On January 15, 2002, certain former employees of the Company's 3d.com division,
and Corastar, Inc., a new corporation formed by them (together "Strata
Plaintiffs") brought a suit in the Fifth Judicial District Court, State of Utah,
Case No. 20500095 seeking an amount in excess of twenty million dollars in
damages based on alleged breaches of several contracts. The former employees
contend that the Company breached its employment contracts with each of them,
while Corastar Inc. alleges breaches of three separate "Corastar Agreements." A
great majority of the Strata Plaintiffs' claims rests on consequential damages
from the Corastar Agreement which has scant factual support in the complaint
itself. The Company has timely responded to the complaint and brought
counterclaims against each individual plaintiff and Corastar. The Company
contends that all of the agreements, whose breaches had been alleged, are
invalid because they were executed without proper corporate authority, and the
Strata plaintiffs, and each of them, breached the agreements prior to any
alleged wrong-doings by the Company. In the counterclaims, the Company seeks
damages against each individual plaintiff for breach of his duty of care, duty
of loyalty and for fraud. The Company contends that Plaintiffs wrongly
appropriated valuable assets of the Company for their own exclusive benefit and
use, and inappropriately induced the Company to enter into these agreements,

                                       13
<PAGE>

while ignoring their legal duty of diligence and loyalty to the Company. The
Company also seeks damages against Corastar for its breach, resulting in the
loss of substantial revenue, its ability to obtain additional financing, among
others.

On May 1, 2002, Collier Organization, LLC filed a damages claim in the Circuit
Court of St. Charles County, State of Missouri, Case No. 02CV126596 against
VisonComm, Inc., a wholly owned subsidiary of the Company, based on alleged
abandonment of certain leasehold interest in St. Charles, Missouri. Collier
seeks to collect on the balance of the alleged lease agreement in the amount of
$125,602.00 along with costs and fees. The Company is informed that VisionComm
has retained counsel in St. Charles, and that it is currently investigating
facts surrounding the lease agreement and that it plans to file responsive
pleadings shortly.

On May 23, 2002, TFL, LLC, a Utah limited liability company, and its principals
("TFL Plaintiffs") filed a complaint in Third Judicial District Court, Salt Lake
County, State of Utah, Case No. 020904439 ("TFL Complaint"). TFL Complaint seeks
$120,000 in liquidated damages, additional actual damages and injunctive relief
against the Company based on alleged breach of certain releases by the Company.
Plaintiffs contend that the Company had agreed that it would not use the name
"Chequemate International" after January 30, 2001, and in case of violation a
$10,000.00 per month in liquidated damages for each and every month that the
name from "Chequemate" is being used. Plaintiffs Marci and Kenneth Redding are
daughter and son-in-law of the Company's former Chairman and CEO Mr. Blaine
Harris, who agreed transfer the name "Chequemate" to his daughter and related
parties for $50,000.00 in past consideration during his tenure. On July 5, 2002,
the Company has filed responsive pleadings and is currently investigating the
validity of TFL Plaintiffs' claims, and is paying particular attention to the
Harris intra-family transactions which gave, rise to this action.

On May 24, 2002, the Company was served with an arbitration proceeding notice by
former principals of Hotel Movie Network ("Petitioners") with American
Arbitration Association Western Service Center (Case Number 76 160 01661 02
AMSC) based on claims of unpaid wages. On June 20, 2002, the Company filed an
answering statement denying liability based on failure of the alleged
conditional contracts. The Company also contends that the resulting relationship
between the Parties, as intended by all, was not employment related because the
Company never paid the Petitioners like employees. The Company is currently
investigating facts and circumstances surrounding the transactions between the
parties to assess the possibilities of counterclaims for damages based on the
employees' misappropriation of the Company's advances, and commingling of the
Company's assets with their own businesses.

On June 4, 2002, the former chairman and CEO of the Company Blaine Harris
brought a declaratory judgment action in Third Judicial District Court, Salt
Lake County, State of Utah, Case No. 020904801, against the Company to determine
his conversion rights under a certain promissory note and attached term sheets.
Mr. Harris claims that the Company has agreed to give him conversion rights at a
certain formula at any time prior to the effectiveness of the registration. Mr.
Harris claims that the number of shares he received was not in accordance with
the proper time or formula. On July 5, 2002, the Company has filed responsive
pleadings in which it contended that the correct number of shares was issued
based on Mr. Harris' desire for conversion communicated to the Company in
November 2001.

ITEM 4.

SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ending March 31, 2001.

                                       14
<PAGE>

                                     PART II

ITEM 5

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

The stock of the Company is traded on the American Stock Exchange under the
symbol DDD. The listing on the American Stock Exchange took place on June 9,
1999. Prior to that date, the Company's stock had been traded on the OTC
Bulletin Board under the symbol CQMT of the NASD Stock Market, Inc. As of July
1, 2002, there are approximately 1800 shareholders of record of the Company. As
of June 25, 2001, the Company had issued and outstanding shares of 89,680,871.
The stock of the Company, as of July 1, 2002, closed at $0.05.

The NASD Stock Market, Inc. provided the fiscal year 1999 quotations for the
Company's stock. The referenced quotations reflect inter-dealer prices without
dealer mark-up, markdown or commissions and may not represent actual
transactions. These prices have been adjusted to reflect the reverse split of
the Company's common stock declared to be effective February 2, 2000.

Yahoo! provided the fiscal year 2001-2002 quotations for the Company's stock.


FISCAL YEAR                        HIGH CLOSING PRICE      LOW CLOSING PRICE
------------------------------     ------------------      -----------------
2001-1st Quarter (4/00-6/00)               8.87                   3.12
2001-2nd Quarter (7/00-9/00)               3.93                   1.00
2001-3rd Quarter (10/00-12/00)             1.19                   0.25
2001-4th Quarter (1/01-3/01)               0.81                   0.15
2002-1st Quarter (4/01-6/01)               0.50                   0.17
2002-2nd Quarter (7/01-9/01)               0.21                   0.01
2002-3rd Quarter (10/01-12/01)             0.33                   0.04
2002-4th Quarter (1/02-3/02)               0.35                   0.01
2002-1st Quarter (4/02-6/02)               0.15                   0.04


The Company has paid no dividends on common stock during its two most recent
fiscal years, and has no present intention to pay dividends in fiscal year 2001.

During the fiscal year ended March 31, 2002, the Company issued shares of
restricted common stock to a number of individuals as previously outlined in the
Company quarterly reports in form 10QSB or otherwise described below. Each of
the following issuances of securities was made pursuant to Section 4(2) of the
Securities Act of 1933, as amended.

<TABLE>
<CAPTION>
<S>                                                          <C>                                         <C>
4TH QUARTER 2001-2002                                                RECIPIENT                           SHARES

On November 21, 2001 the company entered a settlement        United Financial Service                      9,375
agreement to settle a claim for $3,000.  The agreement
provided a cash payment of $1,500 and a stock issuance
valued at $1,500.


On January 17, 2002 the company issued restricted shares        William Brinkmeier                        88,058
of common stock as compensation of Director's & Board              Chung H. Lee                           42,330
member fees                                                         Ingyoo Lee                            65,586
                                                                   Chandos Mahon                          88,058
                                                                 Timothy C. Maher                         21,277

                                       15
<PAGE>

                                                                   Ernest McKay                           88,058
                                                                  Phil Moon Seong                         65,585
                                                                   Thomas A. Nix                          88,058
                                                                  Alexander Shang                         44,309

On January 17, 2002 the Company issued restricted shares       Frank Friedlein, Jr.                       41,980
of common stock as compensation of deferred and accrued           Paul H. LaBarre                        727,222
payroll                                                            Ernest McKay                          583,809
                                                                   Thomas A. Nix                          30,000

On January 23, 2002 the Company entered a settlement         Hudson Consulting Group                     514,000
agreement to settle a claim for $90,000. The Company
issued restricted shares of common stock valued at
$90,000. The Agreement also provided certain
registration rights for the shares issued.


On March 26, 2002 the Company issued restricted shares of             O'Neil                             770,876
common stock as an equity conversion to un-secured notes            Silverbrook
by the parties.  Each party contributed $25,000 to the                Zobrist
Company during the 4th quarter of 2000.  Under the terms               Saul
of the conversion the Parties received shares calculated
by dividing the principle balance by1/2of the current bid
price as satisfaction of the Loan Agreement.



On March 27, 2002 the Company issued restricted               Intuitive PTY Limited                      150,000
shares of common stock as additional payment to a
discounted agreement for investor relations services.


On March 27, 2002 the Company issued restricted shares of         AdScience, LLC                         130,000
common stock as additional payment for marketing services.        AdScience, LLC                          30,000



On March 27, 2002 the Company issued restricted shares of      Crystal Consulting,                       300,000
LLC common stock as additional payment for investor
relations.


On March 27, 2002 the Company issued restricted shares of         Sam Krieger                             66,667
common stock as additional payment for services rendered


On March 27, 2002 the Company issued restricted shares of      Willaim J. Brinkmeier                     125,000
common stock as reimbursement of expenses advanced

</TABLE>

                                       16
<PAGE>

ITEM 6

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS


OVERVIEW

The Company divides its business activities among four divisions: (1) C-3D
Digital, a division that is developing three-dimensional, or 3D, technology for
converting two-dimensional, or 2D, video programming and similar video
entertainment, or content, to 3D content for film, television and computer
applications and will seek to generate revenue from the sale of these conversion
services and sale of hardware such as 3D goggles and VGA cards; (2) VisionComm,
Inc., a wholly owned subsidiary that derives revenue from the ownership,
operation and management of private cable systems in Texas, California,
Michigan, Oklahoma and Missouri; (3) Hotel Movie Network, a division that
derives revenue from broadcasting entertainment and programming over hotel
networks on a pay-per-view or free-to-guest basis(where the hotel pays a flat
monthly fee); and (4) 3D.com, a wholly owned subsidiary that discontinued its
Strata division in November, 2000.

Hotel Movie Network accounted for $805,211, which is 100% of our revenues as
reported on our Consolidated Statement of Operations for the year ended March
31, 2002. Revenues of $1,850,852 from the VisionComm, Inc. were included only in
footnote disclosure under Discontinued Operations for the year ended March 31,
2002, and net loss of $1,463,223 were recorded as part of our net loss from
Discontinued Operations.

The hotel pay-per-view segment currently generates monthly revenue of
approximately $67,100. We intend to use this business as an internal test market
by providing 3D entertainment to hotel guests. We have adapted our 3D technology
to operate through the hotel pay-per-view system and are seeking additional
hotel properties in which to operate our hotel pay-per-view operations and
conduct market testing.

Our auditors have issued a going concern opinion regarding our audited
consolidated financial statements as of March 31, 2002. We continue to be
dependent on investment capital to fund our operations. We hope to significantly
reduce our debt by negotiating stock settlements with our creditors in
satisfaction of outstanding obligations.

DISCONTINUED OPERATIONS

In June 2002, we entered into a Letter of Intent with the secured and principle
note holders of VisionComm to sell the assets of VisionComm's cable operations.
Accordingly the operations of that division are excluded from our operating
results. The VisionComm division was originally purchased in December 2000. The
new transaction contemplates a significant sale of cable assets in return for
the satisfaction of the majority of the VisionComm's long-term liabilities.
Management expects to close the transaction during the month of July 2002. If we
succeed in closing this transaction, the company on a consolidated basis, will
realize a reduction of $ 5,525,364 in liabilities and asset reduction of
$1,767,224 and a goodwill reduction of $3,194,558.

RESULTS OF OPERATIONS

FISCAL YEAR MARCH 31, 2001 COMPARED TO MARCH 31, 2000 (AS RESTATED FOR
DISCONTINUED OPERATIONS).

REVENUES: Total revenues for the year ended March 31, 2002 were $805,211
compared to $905,070 for the year ended March 31, 2001, a decrease of
approximately 11%. Hotel Movie Network accounted for 100% of our revenues as
reported on our Consolidated Statement of Operations for the year ended March
31, 2002.

                                       17
<PAGE>

For the year ended March 31, 2002, VisionComm, Inc., had revenues of $1,850,852,
which we did not include in our March 31, 2002 Consolidated Statement of
Operations.

COST OF SALES: Cost of Goods Sold decreased from $525,841 for the year ended
March 31, 2001, to $347,734 for the year ended March 31, 2002. This decrease is
due primarily to a higher demand of movies that the Company received a higher
margin on.

While revenues decreased, gross margin increased due to the decrease in cost of
goods sold as discussed above. For the year ended March 31, 2002, we realized
gross profit of $457,477 approximately 57% of total revenues, compared to
$379,229 or approximately 42% of total revenues for the year ended March 31,
2001.

EXPENSES: During the year ended March 31, 2002, general and administrative
expenses decreased by $698,950 to a total of $14,567,500. This represents a
decrease of approximately 4.6% over the corresponding expenses of $15,266,450
during the prior year. This decrease resulted primarily from the issuance of
shares and options in consideration for services rendered of $1,133,332, as
compensation of options based on the Black Scholes method of valuation of
$134,467 and in settlement of various liabilities of $2,046,155. The shares and
options were valued at their estimated fair value and resulted in an expense of
$3,313,954.

Amortization and depreciation expenses were $5,039,579 and $419,115,
respectively, for the year ended March 31, 2002, increases of approximately 541%
and 144%, respectively, compared to the corresponding results of $785,622 and
$171,900, respectively, for the year ended March 31, 2001. Amortization expense
increased significantly due to movie production cost and product rights.

OTHER INCOME (EXPENSE): Total other expenses increased by $461,890 from $263,381
for the year ended March 31, 2001 to $725,271 for the year ended March 31, 2002.
This increase was principally attributable to an increase of $391,129 for
interest expenses due to an increase in our interest bearing debt, loss on sale
of equipment of $318,835, and other expenses of $37,732.

NET INCOME (LOSS): Net loss for the year ended March 31, 2002 was $16,324,065, a
decrease of approximately 5.8% over the net loss of $17,335,928 experienced in
the year ended March 31, 2001. Our operations varied widely from fiscal year
ended March 31, 2001 to fiscal year ended March 31, 2002 and therefore there is
no simple answer for the fluctuations in revenues and expenses. Our net loss
decreased by $1,011,863 due to our loss from discontinued operations of
$1,463,223 during the year ended March 31, 2002 compared to $1,901,178 for the
year ended March 31, 2001 and decrease in General and Administrative expense of
$698,950 from the year ended March 31, 2001 to the year ended March 31, 2002. On
a going forward basis, we expect our operations to stabilize over the next
twelve months while we continue to decrease our debt and reorganize our company.
The trend will be for expenses to significantly decrease over the prior year.
However, we believe it will still be at least twelve months from the fiscal year
ended March 31, 2002 before any of our quarterly financial results show a
significant increase in revenue.

                                 CURRENT ASSETS

Current assets decreased from $3,783,456 as of March 31, 2001 to $2,831,150 as
of March 31, 2002, a decrease of $952,306, or approximately 25%. The decrease is
primarily due to the asset write down of our discontinued operation of
VisionComm, Inc. Our cash ending balance as of March 31, 2002 was $205,163.

                                       18
<PAGE>

                                              March 31, 2002     March 31, 2001
                                              --------------     --------------
Cash                                            $  205,163         $      853
Accounts receivable - net of allowances
of $39,682  and $231,217                            91,449             93,715
in 2002 and 2001, respectively
Assets of discontinued operations                1,767,224          3,054,525
Employee advances                                      161             11,700
Inventory                                          698,744            620,637
Prepaid expenses                                    68,409              2,026
                                                -----------        -----------
Total Current Assets                            $2,831,150         $3,783,456
                                                ===========        ===========

Our accounts receivable are primarily due from small to mid-size hotels in which
our Hotel Movie Network provides its services on either a pay-per view basis,
where the hotel charges and collects fees from guests for content viewed, or on
a free-to-guest basis, where the hotel pays us a fee for the services provided.
The accounts receivable are net of an allowance of $39,682 for doubtful
accounts. We believe the net amount shown is fully collectable.


                                  March 31, 2002   March 31, 2001
                                  --------------   --------------
Accounts Receivable, net
         Hotel Movie Network         $ 91,449         $ 93,715
         VisionComm, Inc.                   -                -
                                     ---------        ---------
Total Account Receivable             $ 91,449         $ 93,715
                                     =========        =========

Hotel Movie Network's inventory consists of (1) equipment for the distribution
of content over television and (2) recorded content that is stored in hotels to
support the pay-per-view and free-to-guest services and on hand inventory that
is kept in our warehouse and is ready for deployment.


                                  March 31, 2002   March 31, 2001
                                  --------------   --------------
Inventory
         Hotel Movie Network         $698,744         $620,637
         VisionComm, Inc.                   -                -
                                     --------         --------
Total Inventory                      $698,744         $620,637
                                     ========         ========

<TABLE>
PROPERTY AND EQUIPMENT
<CAPTION>

                                                Accumulated                            Net Book Value
                                         Cost              Depreciation            2002                 2001
                                      -----------          ------------        -----------         -----------
<S>                                   <C>                  <C>                 <C>                 <C>
Office furniture and fixtures         $    38,485          $   (2,123)         $    36,362         $    91,737
Machinery and equipment                   447,710            (230,631)             217,079             533,263
Vehicles                                   34,837              (5,806)              29,031                   -
Hotel pay-per view equipment              470,313            (305,704)             167,609             258,672
Telephone and fixtures                          -                   -                    -                   -
Leasehold improvements                     76,286              (7,679)              68,607              19,861
Net assets of discontinued
operations                                      -                   -                    -                   -
                                      ------------         ------------        ------------        ------------
Total                                 $ 1,067,631          $ (551,943)         $   515,688         $   903,533
                                      ============         ============        ============        ============
</TABLE>

                                       19
<PAGE>

Our Net Book Value decreased from $903,534 as of March 31, 2001 to $515,688 as
of March 31, 2002, a decrease of approximately 42.9%. This decrease is primarily
due to depreciation associated with Hotel pay-per view equipment and Machinery
at our Hotel Movie Network division.

                                  OTHER ASSETS

Total other assets decreased from $8,032,600 as of March 31, 2001 to $3,608,211
as of March 31, 2002, a decrease of approximately 55%. This decrease is due
primarily to a decrease of $2,141,323 in Goodwill as a result of discontinued
operation of VisionComm, Inc. In addition, our Movie Production costs and
product rights from Hotel Movie Network were completely written-off by
$2,612,719 in March 31, 2002.


                                               March 31, 2002     March 31, 2001
                                               --------------     -------------
Goodwill                                          3,194,558          5,335,881
Notes receivable (Another World)                    300,719                 --
Movie production costs and product rights                --          2,696,719
Refundable Deposits                                  32,934                 --
Receivable-Subsidiary                                80,000                  -
                                                 -----------        -----------
Total Other Assets                               $3,608,211         $8,032,600
                                                 ===========        ===========


In June 2001, the Financial Accounting Standards Board (FASB) adopted Statement
of Financial Accounting Standards SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 generally
applies to any  business combination occurring after June 30, 2001, and certain
transition provisions that affect accounting for business combinations prior to
June 30, 2001 are effective as of the date SFAS No. 142 is applied in its
entirety, which will be April 1, 2001 for us. SFAS No. 142 is effective,
generally, in fiscal years beginning after December 15, 2001, and will be
applied to our fiscal year ending March 31, 2002.

MOVIE PRODUCTION AND PRODUCT RIGHTS

<TABLE>
                                           NET BOOK VALUE
<CAPTION>

                             TERM            COST        AMORTIZATION        2002            2001
                           ---------      ----------     ------------     ----------      ----------
<S>                        <C>            <C>             <C>             <C>             <C>
Product rights             4-5 years      $3,094,045      $3,094,045      $       --      $  961,902
Contract/movie rights      2-5 years         294,537         294,537              --              --
Production cost              5 years       2,725,725       2,725,725              --       1,734,817
                                          -----------     -----------     -----------     -----------
                                          $6,114,307      $6,114,307      $       --      $2,696,719
                                          ===========     ===========     ===========     ===========
</TABLE>

                                       20
<PAGE>

Product Rights consisted of the Company's 3D technologies for activities such as
converting 2D content to 3D content, the ability to film with special 3D cameras
and rights to certain content that can be converted to 3D for distribution
through television broadcasting, videocassette recordings, and digital video
discs, or DVDs. Product rights have been capitalized and amortized over five
years using a straight line method. However, for the year ended March 31, 2002,
total cost of Movie Production and Product Rights were fully amortized.

We amortize intangible assets with determinate lives over their estimated useful
lives, with the useful lives reassessed periodically, and will assess those
intangible assets for impairment in accordance with the provisions of SFAS No.
121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed Of." Goodwill is also assessed for impairment on an
interim basis when events and circumstances warrant. In addition, we will
evaluate the recoverability of our goodwill on at least an annual basis. In
future reporting periods, we will assess whether an impairment loss should be
recognized and measured by comparing the fair value of the "reporting unit" to
the carrying value as reported on our books and records, including goodwill. If
the carrying value exceeds fair value, we will compare the implied fair value of
the goodwill to the carrying value of the goodwill. If the carrying value of the
goodwill exceeds the implied fair value, then we will reduce the goodwill to the
corresponding implied fair value.

CURRENT LIABILITIES

Total current liabilities increased from $9,214,036 as of March 31, 2001 to
$11,171,402 as of March 31, 2002, an increase of $1,957,366, or approximately
21.2%. This increase is due primarily to an increase in accrued expenses by
$2,731,747 as a result of the issuance of common stock to various individuals
and companies in consideration for services rendered during the year ended March
31, 2002 as a liability pending the board of directors' approval of the stock
issuance. We plan on reducing these accruals by issuing stock in lieu of cash in
satisfaction of all or part of each component of our liability, with the
agreement of the respective parties to whom the liabilities are owed.


                                         March 31, 2002     March 31, 2001
                                         --------------     --------------
Accounts payable                          $   668,695         $  982,785
Accounts payable-related party                 75,000                 --
Accrued expenses                            4,144,461          1,412,714
Accrued interest payable                      158,627             85,924
Current portion long-term debt-related party  500,000                 --
Current portion long-term debt                 99,255            888,287
Discontinued liabilities                    5,525,364          5,840,389
Deferred Income                                    --              3,937
                                          ------------        -----------
         Total Current Liabilities        $11,171,402         $9,214,036
                                          ============        ===========

LONG-TERM LIABILITIES

During the year ended March 31, 2002, we decreased the long-term portion of our
debt to $21,346. This decrease was due mainly to the conversion of notes from
our discontinued operation of VisionComm, Inc.

STOCKHOLDERS' EQUITY (DEFICIT)

Our stockholder's equity decreased during the year ended March 31, 2002 by
$4,943,252 due to the asset write down as a result of discontinued operation.
During the year ended March 31, 2002, we incurred a loss of $16,324,065 and we
have incurred losses from our inception through March 31, 2002 of $72,790,260.
We do not have an established source of revenue sufficient to cover operating
costs and, accordingly, there is substantial doubt about our ability to continue
as a going concern.

                                       21
<PAGE>

On March 15, 2001, the Company entered into a Master Agreement, as amended and
restated. This agreement was modified and restated on June 13, 2001. The
agreement contemplates a private placement to raise up to $3,500,000 in return
for the issuance of approximately 38,504,275 shares to Another World, Inc. and
other investors, a number of shares corresponding to an equity interest in the
Company on a fully diluted basis of approximately 51%. The holders of these
newly-issued shares will have registration rights customary in such issuances,
which rights are set forth in the Registration Rights Agreements included as
Schedule 5.13 to the Master Agreement filed by us with the Securities and
Exchange Commission on June 14, 2001 as Exhibit 99(a) to the Proxy Statement
filed on that date. The private placement was successfully closed on August
2002.

Under the Master Agreement, at a later date the Company can acquire control of
Another World and its assets, including stereoscopic technologies, provided our
shareholders and those of Another World approve the transaction. We have not
entered into any formal negotiations with Another World or discussed specific
terms of this potential acquisition but have agreed that the acquisition will be
consummated through the issuance of the Company's common stock in exchange for
the in-kind assets of Another World, based on an independent valuation of
Another World. Another World has engaged Samil-PricewaterhouseCoopers to perform
that independent valuation.

<TABLE>
<CAPTION>
                                                            March 31, 2002        March 31, 2001
                                                            --------------        --------------
<S>                                                          <C>                   <C>
Common stock, $0.0001 par value, 500,000,000 shares
   authorized, authorized, 91,253,414 and 20,686,292
   shares outstanding at 2002 and 2001, respectively         $      9,125          $      2,068
Capital in excess of par                                       68,543,436            57,169,680
Accumulated deficit                                           (72,790,260)          (56,466,195)
                                                             -------------         -------------
         Total Stockholders' Equity (Deficit)                $ (4,237,699)         $    705,553
                                                             =============         =============
</TABLE>

LIQUIDITY AND CAPITAL RESOURCES

We currently have a net negative working capital of $8,340,252 due mainly to
accrued expenses of $4,144,461. As stated previously, accrued expenses increased
as a result of issuance of common stock to various individuals and companies in
consideration for services rendered during the year ended March 31, 2002 as a
liability pending the board of directors' approval of the stock issuance.

From March 31, 2001 to March 31, 2002, we decreased our long-term liabilities by
$2,778,654 due to the conversion of VisionComm's promissory note in to common
stock.

We will need additional funds to fully implement our business plan and to retire
all our outstanding current and long-term debts. We expect to fund our capital
requirements through existing resources, a sale of shares to the shareholders of
Another World, Inc and other investors, credit facilities, vendor financing,
equity lines of funding, and other forms of financing as appropriate. However,
other than as discussed above, we do not have any specific commitments for any
other sources of funds. Our ability to generate cash to meet our future needs
will depend generally on our future results of operations and the continued
availability of external financing.

We have not made any commitments for capital expenditures nor do we expect to
make any commitments for capital expenditures in the next twelve months. We do
expect to make small expenditures for normal acquisitions such as desks,
computers and other office furniture, but have not made any commitments for
those acquisitions at this time.

                                       22
<PAGE>

RECENT ACCOUNTING PRONOUNCEMENTS

In June 2001, the Financial Accounting Standards Board (FASB) adopted Statement
of Financial Accounting Standards SFAS No. 141, "Business Combinations," and
SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 is effective
as to any business combination occurring after June 30, 2001 and certain
transition provisions that affect accounting for business combinations prior to
June 30, 2001 are effective as of the date SFAS No. 142 is applied in its
entirety, which will be April 1, 2001 for the Company. SFAS No. 142 is
effective, generally, in fiscal years beginning after December 15, 2001, and
will be applied to the fiscal year ending March 31, 2003 for the Company.

SFAS No. 141 provides standards for accounting for business combinations. Among
other things, it requires that only the purchase method of accounting be used
and that certain intangible assets acquired in a business combination (i.e.
those that result from contractual or other legal rights or are separable) be
recorded as an asset apart from goodwill. The transition provisions require that
an assessment be made of previous business combinations and, if appropriate,
reclassifications be made to or from goodwill to adjust the recording of
intangible assets such that the criteria for recording intangible assets apart
from goodwill is applied to the previous business combinations.

SFAS No. 142 provides, among other things, that goodwill and intangible assets
with indeterminate lives shall not be amortized. Goodwill shall be assigned to a
reporting unit and annually assessed for impairment. Intangible assets with
determinate lives shall be amortized over their estimated useful lives, with the
useful lives reassessed continuously, and shall be assessed for impairment under
the provisions of SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of." Goodwill is also assessed
for impairment on an interim basis when events and circumstances warrant. Upon
adoption of SFAS No. 142, the Company will assess whether an impairment loss
should be recognized and measured by comparing the fair value of the "reporting
unit" to the carrying value, including goodwill. If the carrying value exceeds
fair value, the Company will compare the implied fair value of the goodwill" (as
defined in SFAS No. 142) to the carrying amount of the goodwill. If the carrying
amount of the goodwill exceeds the implied fair value, then the goodwill will be
adjusted to the implied fair value.

While the Company has not completed the process of determining the effect of
these new accounting pronouncements on its consolidated financial statements,
the Company currently expects that there will be no reclassification in
connection with the transition provisions of SFAS No. 141. Accordingly, the
Company expects that, after implementation of SFAS No. 142, all intangible
assets will be amortizable and the goodwill will not be amortizable.

                                       23
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
                    (FORMERLY CHEQUEMATE INTERNATIONAL, INC.
                                AND SUBSIDIARIES)

                        CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2002 AND 2001

                                      F-1
<PAGE>

                                 C O N T E N T S


Independent Auditors' Report ................................................ 3

Consolidated Balance Sheets ................................................. 5

Consolidated Statements of Operations ....................................... 6

Consolidated Statements of Stockholders' Equity (Deficit).................... 8

Consolidated Statements of Cash Flows ........................................9

Notes to Consolidated Financial Statements ..................................10

                                      F-2
<PAGE>

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


To the Board of Directors and Stockholders
C3D-Digital, Inc. And Subsidiaries
(Formerly Chequemate International, Inc. and Subsidiaries)
Universal City, California

We have audited the accompanying consolidated balance sheets of C3D-Digital,
Inc. and Subsidiaries (Formerly Chequemate International, Inc. and Subsidiaries)
as of March 31, 2002 and 2001 and the related consolidated statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
March 31, 2002, 2001 and 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits. We did
not audit the financial statements of VisionComm, Inc., a consolidated
subsidiary as of March 31, 2001, and for the year then ended, which statements
reflect total assets and revenue constituting 21% and 0%, respectively, of the
related consolidated totals. Those statements were audited by other auditors
whose report has been furnished to us, and our opinion for 2001, insofar as it
relates to the amount included for VisionComm, Inc., is based solely on the
report of the other auditors.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
C3D-Digital, Inc. and Subsidiaries (Formerly Chequemate International, Inc. and
Subsidiaries) as of March 31, 2002 and 2001 and the consolidated results of
their operations and their cash flows for the years ended March 31, 2002, 2001
and 2000 in conformity with accounting principles generally accepted in the
United States.

The accompanying financial statements have been prepared assuming that
C3D-Digital, Inc. and Subsidiaries (Formerly Chequemate International, Inc. and
Subsidiaries) will continue as a going concern. As discussed in Note 12 to the
consolidated financial statements, certain conditions raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
concerning these matters are also discussed in Note 12. The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.



HJ Associates & Consultants, LLP
Salt Lake City, Utah
July 11, 2002

                                      F-3
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                           Consolidated Balance Sheets


                                     ASSETS
                                     ------

                                                               March 31,
                                                      --------------------------
                                                          2002          2001
                                                      ------------  ------------

CURRENT ASSETS

  Cash                                                $   205,163   $       853
  Accounts receivable - net of allowances of $39,682
    and $231,217 in 2002 and 2001, respectively            91,449        93,715
  Assets of discontinued operations (Note 14)           1,767,224     3,054,525
  Employee advances                                           161        11,700
  Inventory (Note 2)                                      698,744       620,637
  Prepaid expenses                                         68,409         2,026
                                                      ------------  ------------

     Total Current Assets                               2,831,150     3,783,456
                                                      ------------  ------------

PROPERTY AND EQUIPMENT, NET (Note 3)                      515,688       903,533
                                                      ------------  ------------

OTHER ASSETS

  Goodwill, net (Note 19)                               3,194,558     5,335,881
  Receivable (Another World)                              300,719            --
  Movie production cost and product rights, net                --     2,696,719
  Refundable deposits                                      32,934            --
  Receivable- Subsidiary                                   80,000            --
                                                      ------------  ------------

     Total Other Assets                                 3,608,211     8,032,600
                                                      ------------  ------------

     TOTAL ASSETS                                     $ 6,955,049   $12,719,589
                                                      ============  ============

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-4
<PAGE>

<TABLE>
                           C3D-DIGITAL, INC. AND SUBSIDIARIES
               (Formerly Chequemate International, Inc. and Subsidiaries)
                        Consolidated Balance Sheets (Continued)
<CAPTION>

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
                 ----------------------------------------------

                                                                    March 31,
                                                          -----------------------------
                                                              2002             2001
                                                          -------------   -------------
<S>                                                       <C>             <C>
CURRENT LIABILITIES

  Accounts payable                                        $    668,695    $    982,785
  Accounts payable-related party                                75,000              --
  Accrued expenses                                           4,144,461       1,412,714
  Accrued interest payable                                     158,627          85,924
  Current portion long term debt-related party (Note 5)        500,000              --
  Current portion long-term debt (Note 6)                       99,255         888,287
  Liabilities of discontinued operations (Note 14)           5,525,364       5,840,389
  Deferred income                                                   --           3,937
                                                          -------------   -------------

     Total Current Liabilities                              11,171,402       9,214,036
                                                          -------------   -------------

LONG-TERM LIABILITIES

  Long-term debt - related party (Note 5)                           --       1,187,919
  Long-term debt (Note 6)                                       21,346       1,612,081
                                                          -------------   -------------

     Total Long-Term Liabilities                                21,346       2,800,000
                                                          -------------   -------------

     Total Liabilities                                      11,192,748      12,014,036
                                                          -------------   -------------

COMMITMENTS AND CONTINGENCIES (Note 10)

STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock, $0.0001 par value, 500,000,000 shares
   authorized, 91,253,414 and 20,686,192 shares
   outstanding at 2001 and 2000, respectively                    9,125           2,068
  Capital in excess of par                                  68,543,436      57,169,680
  Accumulated deficit                                      (72,790,260)    (56,466,195)
                                                          -------------   -------------

     Total Stockholders' Equity (Deficit)                   (4,237,699)        705,553
                                                          -------------   -------------

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY
       (DEFICIT)                                          $  6,955,049    $ 12,719,589
                                                          =============   =============

 The accompanying notes are an integral part of these consolidated financial statements.

                                          F-5
</TABLE>
<PAGE>

<TABLE>
                            C3D-DIGITAL, INC. AND SUBSIDIARIES
                (Formerly Chequemate International, Inc. and Subsidiaries)
                           Consolidated Statements of Operations
<CAPTION>

                                                     For the Years Ended March 31,
                                             ---------------------------------------------
                                                  2002            2001            2000
                                             -------------   -------------   -------------
<S>                                          <C>             <C>             <C>
REVENUES

  Sales - products                           $    805,211    $    905,070    $    491,779
                                             -------------   -------------   -------------

COST OF SALES

  Product, supplies and materials (Note 2)        347,734         525,841         229,315
                                             -------------   -------------   -------------

GROSS MARGIN                                      457,477         379,229         262,464
                                             -------------   -------------   -------------

EXPENSES

  Bad debt expense                                 25,548          58,987          46,180
  Selling expenses                                     --         224,661         416,047
  General and administrative                   14,567,500      15,266,450       4,863,211
                                             -------------   -------------   -------------

     Total Expenses                            14,593,048      15,550,098       5,325,438
                                             -------------   -------------   -------------

OPERATING LOSS                                (14,135,571)    (15,170,869)     (5,062,974)
                                             -------------   -------------   -------------

OTHER INCOME (EXPENSE)

  Gain on forgiveness of debt                          --              --          29,375
  Interest income                                  22,425          14,442          13,470
  Other (expenses)                                (37,732)             --              --
  Interest expense                               (391,129)       (277,823)       (118,058)
  Gain (loss) on sale of equipment               (318,835)             --              --
                                             -------------   -------------   -------------

     Total Other Income (Expense)                (725,271)       (263,381)        (75,213)
                                             -------------   -------------   -------------

LOSS BEFORE INCOME TAXES                      (14,860,842)    (15,434,250)     (5,138,187)

INCOME TAX PROVISION (Note 16)                         --             500             500
                                             -------------   -------------   -------------

NET LOSS FROM OPERATIONS                      (14,860,842)    (15,434,750)     (5,138,687)

DISCONTINUED OPERATIONS (Note 14)              (1,463,223)     (1,901,178)    (14,585,094)
                                             -------------   -------------   -------------

NET LOSS                                     $(16,324,065)   $(17,335,928)   $(19,723,781)
                                             =============   =============   =============

  The accompanying notes are an integral part of these consolidated financial statements.

                                           F-6
</TABLE>
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                Consolidated Statements of Operations (Continued)


                                           For the Years Ended March 31,
                                  ---------------------------------------------
                                       2002            2001             2000
                                  --------------   -------------   ------------

BASIC LOSS PER SHARE

   Continued operations           $       (0.24)   $      (1.33)   $     (0.85)
   Discontinued operations                (0.02)          (0.16)         (2.40)
                                  --------------   -------------   ------------

                                  $       (0.26)   $      (1.49)   $     (3.25)
                                  ==============   =============   ============

FULLY DILUTED LOSS PER SHARE

   Continuing operations          $       (0.24)   $      (1.33)   $     (0.85)
   Discontinued operations                (0.02)          (0.16)         (2.40)
                                  --------------   -------------   ------------

                                  $       (0.26)   $      (1.49)   $     (3.25)
                                  ==============   =============   ============

WEIGHTED AVERAGE NUMBER OF
 SHARES OUTSTANDING                  61,883,040      11,659,403      6,064,075
                                  ==============   =============   ============

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                      F-7
<PAGE>

<TABLE>
                                     C3D-DIGITAL, INC. AND SUBSIDIARIES
                         (Formerly Chequemate International, Inc. and Subsidiaries)
                          Consolidated Statements of Stockholders' Equity (Deficit)
                              For the Years Ended March 31, 2002, 2001 and 2000
<CAPTION>

                                                                                                   Total
                                       Total                       Capital                     Stockholders'
                                      Shares        Common        in Excess     Accumulated       Equity
                                      Issued         Stock         of Par         Deficit        (Deficit)
                                  -------------  -------------  -------------  -------------   -------------
<S>                                 <C>          <C>            <C>            <C>             <C>
Balance, March 31, 1999              5,589,662   $        558   $ 24,463,118   $(19,406,486)   $  5,057,190

Conversion of debt to stock            646,113             64      3,768,546             --       3,768,610
Stock for services                     415,846             42      3,678,699             --       3,678,741
Stock for cash                          87,501              9          3,491             --           3,500
Options for services                     6,250              1         59,374             --          59,375
Stock for secured interest               5,000              1         80,357             --          80,358
Stock for assets                        31,250              3        320,310             --         320,313
Issuance of options/warrants
  below market value                        --             --      4,527,087             --       4,527,087
Old certificate/new rounding                47             --             --             --              --
Net loss                                    --             --             --    (19,723,781)    (19,723,781)
                                  -------------  -------------  -------------  -------------   -------------

Balance, March 31, 2000              6,781,669            678     36,900,982    (39,130,267)     (2,228,607)

Shares issued for assets               703,250             70      1,826,055             --       1,826,125
Shares issued for cash                 788,732             79      2,799,921             --       2,800,000
Shares issued for services           6,078,798            608      6,240,780             --       6,241,388
Shares issued for debt
 conversion                          3,833,743            383      4,039,553             --       4,039,936
Issuance of shares / options
 below market value                         --             --      4,580,139             --       4,580,139
Shares issued for subsidiary         2,500,000            250        782,250             --         782,500
Net loss                                    --             --             --    (17,335,928)    (17,335,928)
                                  -------------  -------------  -------------  -------------   -------------

Balance, March 31, 2001             20,686,192          2,068     57,169,680    (56,466,195)        705,553

Stock issued for cash               38,504,275          3,851      3,496,149             --       3,500,000
Stock issued for option
 exercise                              162,500             16          6,484             --           6,500
Stock issued for payroll             2,459,587            246        683,986             --         684,232
Stock issued for accrued
 directors fees                        162,500             16         51,984             --          52,000
Stock issued for directors fees        591,319             59        167,905             --         167,964
Stock issued for accrued
 expenses                            2,666,364            266        592,867             --         593,133
Stock issued for accrued
 salaries                              191,796             19         63,067             --          63,086
Stock issued for debt               13,826,181          1,383      3,637,617             --       3,639,000
Stock issued for settlements
 of contingent liabilities          10,076,131          1,008      2,077,147             --       2,078,155
Stock issued for services            1,926,569            193        462,083             --         462,276
Issuance of warrants at
 market value                               --             --        134,467             --         134,467
Net loss                                    --             --             --    (16,324,065)    (16,324,065)
                                  -------------  -------------  -------------  -------------   -------------

Balance, March 31, 2002             91,253,414   $      9,125   $ 68,543,436   $ 72,790,260    $  4,237,699
                                  =============  =============  =============  =============   =============

           The accompanying notes are an integral part of these consolidated financial statements.

                                                    F-8
</TABLE>
<PAGE>

<TABLE>
                                   C3D-DIGITAL, INC. AND SUBSIDIARIES
                       (Formerly Chequemate International, Inc. and Subsidiaries)
                                  Consolidated Statements of Cash Flows
<CAPTION>

                                                                    For the Years Ended March 31,
                                                           ---------------------------------------------
                                                                2002            2001            2000
                                                           -------------   -------------   -------------
<S>                                                        <C>             <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

   Net loss                                                $(16,324,065)   $(17,335,928)   $(19,723,781)
   Adjustments to reconcile net loss to net cash used by
    operating activities:
   Amortization and impairment                                5,039,579         785,622       1,053,376
   Depreciation                                                 419,115         171,900         295,376
   Loss on sale of assets                                       523,295              --              --
   Bad debt expense                                                  --          58,987         368,276
   Forgiveness of debt                                               --              --         (29,375)
   Impairment (recovery) of discontinued assets                      --        (236,088)        988,312
   Common stock issued on settlements                         2,046,155              --              --
   Common stock and options issued for services               1,133,332       8,967,025       8,345,561
   Increase decrease in:
      Accounts receivable                                       318,221        (461,056)       (383,622)
      Prepaid expenses                                            9,446          53,277         124,179
      Inventory                                                    (365)         29,133       2,388,251
      Note receivable                                          (265,541)         14,822          60,000
      Refundable deposits                                       (38,651)         43,173         (31,455)
      Investment                                                  4,000              --           3,000
      Employee advances                                          11,539         (11,700)             --
      Accounts payable                                         (205,258)        328,567         193,566
      Accrued interest payable                                   25,451           9,571           3,871
      Deferred income                                           (16,236)         93,765              --
      Short-term obligations                                         --              --       1,972,502
      Accrued expenses                                        4,440,686       3,829,351         337,774
                                                           -------------   -------------   -------------

     NET CASH USED BY OPERATING ACTIVITIES                   (2,879,297)     (3,659,579)     (4,034,189)
                                                           -------------   -------------   -------------

CASH FLOWS FROM INVESTING ACTIVITIES

   Funds from sale of assets                                    141,325              --              --
   Purchase or development of intangibles                            --              --        (230,807)
   Equipment purchases                                         (203,070)       (502,268)       (908,440)
                                                           -------------   -------------   -------------

NET CASH USED BY INVESTING ACTIVITIES                           (61,745)       (502,268)     (1,139,247)
                                                           -------------   -------------   -------------

CASH FLOWS FROM FINANCING ACTIVITIES

   Issuance of common stock                                   3,506,500       1,612,081           3,500
   Issuance of notes payable                                     95,000       1,419,360       3,550,000
   Issuance of common stock - related party                          --       1,187,919              --
   Payments made on notes payable                              (466,105)        (87,000)        (62,448)
                                                           -------------   -------------   -------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                     3,135,395       4,132,360       3,491,052
                                                           -------------   -------------   -------------

CHANGE IN CASH - DISCONTINUED OPERATIONS                          9,957         (19,475)             --
                                                           -------------   -------------   -------------

NET INCREASE (DECREASE) IN CASH                                 204,310         (48,962)     (1,682,384)

CASH AT BEGINNING OF YEAR                                           853          49,815       1,732,199
                                                           -------------   -------------   -------------

CASH AT END OF YEAR                                        $    205,163    $        853    $     49,815
                                                           =============   =============   =============

         The accompanying notes are an integral part of these consolidated financial statements.

                                                  F-9
</TABLE>
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              The Company's accounting policies reflect practices of the Centric
              graphical software applications and hotel pay-per-view provides
              hotels customers with visual recreational services, and conforms
              to generally accepted accounting principles. The following
              policies are considered to be significant:

              Principles of Consolidation
              ---------------------------

              The consolidated financial statements include the accounts of the
              Company and its subsidiaries 3D.COM and VisionComm, Inc. All
              significant intercompany accounts and transactions have been
              eliminated. VisionComm, Inc operates under a December year end.
              There were no material intervening events.

              Revenue Recognition
              -------------------

              Revenue is recognized on an accrual basis upon delivery of the
              software or product, or as customers view pay-per-view items.
              Revenue consists of software sales, product sales, license fees,
              and monthly hotel pay-per-view fees.

              Property and Equipment
              ----------------------

              Property and equipment are stated at cost with depreciation and
              amortization computed on the straight line method. Property and
              equipment are depreciated over the following estimated useful
              lives:
                                                                   Years
                                                                -----------
                        Office furniture                            5-7
                        Machinery and equipment                     5-7
                        Leasehold Improvements                      3

              Movie Production Cost and Product Rights
              ----------------------------------------
<TABLE>
<CAPTION>
                                                                                             Net Book Value
                                                                                    -------------------------------
                                           Term           Cost       Amortization         2002            2001
                                      -------------  -------------- --------------- --------------- ---------------
<S>                                       <C>        <C>            <C>             <C>             <C>
              Product rights              4-5 years  $   3,094,045  $    3,094,045  $            -  $      961,902
              Contract/movie
                  rights                  2-5 years        294,537         294,537               -               -
              Production cost               5 years      2,725,725       2,725,725               -       1,734,817
                                                     -------------- --------------- --------------- ---------------

                                                     $   6,114,307  $    6,114,307  $            -  $    2,696,719
                                                     ============== =============== =============== ===============
</TABLE>

              Product rights have been capitalized and amortized over five years
              using a straight line method. The total amortization expense for
              the years ended March 31, 2002, 2001 and 2000 amounted to
              $2,252,745, $785,622 and $1,053,376 respectively.

              Concentration of Risk
              ---------------------

              The Company maintains several accounts with financial
              institutions. These accounts are insured by the Federal Deposit
              Insurance Corporation up to $100,000. The Company's cash balance
              occasionally exceeds this amount.

                                      F-10
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Movie Production Cost and Product Rights (Continued)
              ----------------------------------------------------

              The Company reviews the recoverability of intangibles whenever
              events or changes in circumstances indicate that the carrying
              amount of an asset may not be recoverable. Several factors are
              used to evaluate intangibles. Including, but not limited to,
              management's plans for future operations, recent operating results
              and projected, undiscounted cash flows.

              Cash Flows
              ----------

              For purposes of reporting cash flows, cash includes cash on hand
              and cash on deposit with banks.

              Income Taxes
              ------------

              The Company's tax basis is the same as the Company's financial
              statement basis. The Company has net operating loss carryforwards
              of approximately $32,000,000 available to offset future federal
              and state income tax through 2021. The Company has not recorded a
              tax benefit attributable to the carryforwards because realization
              of such has been offset by a valuation allowance for the same
              amount.

              Production Costs
              ----------------

              The Company classifies the costs of planning, designing and
              establishing the technological feasibility of computer software
              product as software development costs and charges those costs to
              expense when incurred. Costs incurred for duplicating computer
              software from product masters, documentation and training
              materials and packaging costs are capitalized as inventory and
              charged to cost of sales when revenue is recognized. Costs of
              maintenance and customer support are charged to expense when costs
              are incurred.

              Advertising
              -----------

              The Company follows the policy of charging the costs of
              advertising to expense as incurred. Advertising expense was $890,
              $3,696 and $74,125 for the years ended March 31, 2002, 2001, and
              2000, respectively.

              Estimates
              ---------

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

                                      F-11
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Newly Issued Accounting Pronouncements
              --------------------------------------

              SFAS NO.'S 141 AND 142 -- In June 2001, the Financial Accounting
              Standards Board (FASB) adopted Statement of Financial Accounting
              Standards SFAS No. 141, "Business Combinations," and SFAS No. 142,
              "Goodwill and Other Intangible Assets." SFAS No. 141 is effective
              as to any business combination occurring after June 30, 2001 and
              certain transition provisions that affect accounting for business
              combinations prior to June 30, 2001 are effective as of the date
              that SFAS No. 142 is applied in its entirety, which will be
              January 1, 2002 for the Company. SFAS No. 142 is effective,
              generally, in fiscal years beginning after December 15, 2001,
              which will be the fiscal year ending March 31, 2003 for the
              Company.

              SFAS NO. 141 provides standards for accounting for business
              combinations. Among other things, it requires that only the
              purchase method of accounting be used and that certain intangible
              assets acquired in a business combination (i.e. those that result
              from contractual or other legal rights or are separable) be
              recorded as an asset apart from goodwill. The transition
              provisions require that an assessment be made of previous business
              combinations and, if appropriate, reclassifications be made to or
              from goodwill to adjust the recording of intangible assets such
              that the criteria for recording intangible assets apart from
              goodwill is applied to the previous business combinations.

              SFAS NO. 142 provides, among other things, that goodwill and
              intangible assets with indeterminate lives shall not be amortized.
              Goodwill shall be assigned to a reporting unit and annually
              assessed for impairment. Intangible assets with determinate lives
              shall be amortized over their estimated useful lives, with the
              useful lives reassessed continuously, and shall be assessed for
              impairment under the provisions of SFAS No. 121, "Accounting for
              the Impairment of Long-Lived Assets and for Long-Lived Assets to
              be Disposed Of." Goodwill is also assessed for impairment on an
              interim basis when events and circumstances warrant. Upon adoption
              of SFAS No. 142, the Company will assess whether an impairment
              loss should be recognized and measured by comparing the fair value
              of the "reporting unit" to the carrying value, including goodwill.
              If the carrying value exceeds fair value, then the Company will
              compare the implied fair value of the goodwill" (as defined in
              SFAS No. 142) to the carrying amount of the goodwill. If the
              carrying amount of the goodwill exceeds the implied fair value,
              then the goodwill will be adjusted to the implied fair value.

                                      F-12
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Newly Issued Accounting Pronouncements (Continued)
              --------------------------------------------------

              While the Company has not completed the process of determining the
              effect of these new accounting pronouncements on its consolidated
              financial statements, the Company currently expects that there
              will be no reclassification in connection with the transition
              provisions of SFAS No. 141 based on clarifications of the
              transition provisions issued by the FASB in October 2001.
              Accordingly, the Company expects that, after implementation of
              SFAS No. 142, all intangible assets will be amortizable and the
              goodwill will not be amortizable.

              SFAS NO. 143 -- On August 16, 2001, the FASB issued SFAS No. 143,
              "Accounting for Asset Retirement Obligations," which is effective
              for fiscal years beginning after June 15, 2002. It requires that
              obligations associated with the retirement of a tangible
              long-lived asset be recorded as a liability when those obligations
              are incurred, with the amount of the liability initially measured
              at fair value. Upon initially recognizing a liability for an
              accrued retirement obligation, an entity must capitalize the cost
              by recognizing an increase in the carrying amount of the related
              long-lived asset. Over time, the liability is accreted to its
              present value each period, and the capitalized cost is depreciated
              over the useful life of the related asset. Upon settlement of the
              liability, an entity either settles the obligation for its
              recorded amount or incurs a gain or loss upon settlement. While
              the Company has not completed the process of determining the
              effect of this new accounting pronouncement on its consolidated
              financial statements, the Company currently expects that the
              effect of SFAS No. 143 on the Company's consolidated financial
              statements, when it becomes effective, will not be significant.

              SFAS NO. 144 - On October 3, 2001, the Financial Accounting
              Standards Board issued SFAS No. 144, "Accounting for the
              Impairment or Disposal of Long-Lived Assets" which is effective
              for financial statements issued for fiscal years beginning after
              December 15, 2001 and, generally, its provisions are to be applied
              prospectively. SFAS 144 supercedes SFAS Statement No. 121 (FAS
              121), "Accounting for the Impairment of Long-Lived Assets and for
              Long-Lived Assets to Be Disposed Of." SFAS 144 applies to all
              long-lived assets (including discontinued operations) and
              consequently amends Accounting Principles Board Opinion No. 30
              (APB 30), "Reporting Results of Operations Reporting the Effects
              of Disposal of a Segment of a Business."

              SFAS 144 develops one accounting model (based on the model in SFAS
              121) for long-lived assets that are to be disposed of by sale, as
              well as addresses the principal implementation issues. SFAS 144
              requires that long-lived assets that are to be disposed of by sale
              be measured at the lower of book value or fair value less cost to
              sell. That requirement eliminates the requirement of APB 30 that
              discontinued operations be measured at net realizable value or
              that entities include under "discontinued operations" in the
              financial statements amounts for operating losses that have not
              yet occurred.

                                      F-13
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Newly Issued Accounting Pronouncements (Continued)
              --------------------------------------------------

              Additionally, FAS 144 expands the scope of discontinued operations
              to include all components of an entity with operations that (1)
              can be distinguished from the rest of the entity and (2) will be
              eliminated from the ongoing operations of the entity in a disposal
              transaction.

              While the Company has not completed the process of determining the
              effect of this new accounting pronouncement on its consolidated
              financial statements, the Company currently expects that the
              effect of SFAS No. 144 on the Company's consolidated financial
              statements, when it becomes effective, will not be significant.

              Prior Period Reclassification
              -----------------------------

              Certain 2001 and 2000 balances have been reclassified to conform
              to the presentation of the 2002 consolidated financial statements.

              Long-lived Assets
              -----------------

              In accordance with SFAS No. 121 "Accounting for the Impairment of
              Long-Lived Assets and for Long-Lived Assets to Be Disposed Of",
              long-lived assets, including goodwill associated with other
              long-lived assets, are evaluated for impairment whenever events or
              changes in circumstances indicate that the carrying amount of an
              asset may not be recoverable. Goodwill acquired as part of
              business combinations is also evaluated continuously per ABP No.
              17, "Intangible Assets", for the need for adjustments to useful
              life and reductions in unamortized costs. Any changes in estimated
              useful life are recorded prospectively and any impairment
              adjustments are recorded as expense in the period the impairment
              occurs. The amount of any impairment considered necessary would be
              determined by comparing the book value of the net assets in the
              applicable line of business to fair value using methods such as
              the present-value of estimated future cash flows, sale value or
              other valuation methodologies available at the time, depending on
              the stage of development of the line of business and the Company's
              intentions at the time an impairment adjustment were considered
              necessary.

              Goodwill is assigned to specific reporting units and is reviewed
              for possible impairment at least annually or more frequently upon
              the occurrence of an event or when circumstances indicate that a
              reporting unit's carrying amount is greater that its fair value.
              During 2002, the Company determined that the carrying amount of
              the VisionComm, Inc. goodwill exceeded its fair value, which was
              estimated based on the present value of expected future cash
              inflows. Accordingly, a goodwill impairment loss of 2,786,834 was
              recognized in that reporting unit.

              Stock Options and Warrants
              --------------------------

              The Company accounts for all stock based compensation plans and
              warrants in accordance with FASB Statement 123 "Accounting for
              Stock Based Compensation" (SFAS 123). SFAS 123 establishes
              financial accounting and reporting standards for stock-based
              employee compensation plans. As such, compensation cost is
              measured at the grant date based on the value of the award using
              the Black-Scholes pricing model and is recognized over the service
              period, usually the vesting period.

                                      F-14
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000

NOTE 1 -      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

              Valuation of Options and Warrants
              ---------------------------------

              The valuation of options and warrants granted to unrelated parties
              for services are measured as of the earlier (1) the date at which
              a commitment for performance by the counterparty to earn the
              equity instrument is reached or (2) the date the counterparty's
              performance is complete. Pursuant to the requirements of EITF
              96-18, the options and warrants will continue to be revalued in
              situations where they are granted prior to the completion of the
              performance. All outstanding options and warrants as of March 31,
              2001 were measured at the date at which a commitment for
              performance was reached.

NOTE 2 -      INVENTORY
                                                          March 31,
                                                -----------------------------
                                                     2002            2001
                                                --------------  --------------

                          Finished goods        $     698,379   $     698,379
                          WIP                               -               -
                          Raw materials                     -               -
                                                --------------  --------------

                                                $     698,743   $     698,379
                                                ==============  ==============

              The Company inventories are stated at the lower of cost or market,
              using the first-in, first-out (FIFO) method. Inventories consist
              mainly of components related to the 3-D electronic devices product
              and pay-per-view operations.

NOTE 3 -      PROPERTY AND EQUIPMENT

              Property and equipment as of March 31, 2002 and 2001 are detailed
              in the following summary:

<TABLE>
<CAPTION>
                                                                                            Net Book Value
                                                                      Accumulated    -----------------------------
                                                        Cost          Depreciation        2002           2001
                                                   ---------------  ---------------  -------------  --------------
<S>                                                <C>              <C>             <C>            <C>
              Office furniture & fixtures          $       38,485   $       (2,123) $      36,362  $       91,736
              Machinery & equipment                       447,710         (230,631)       217,079         533,264
              Vehicles                                     34,837           (5,806)        29,031               -
              Hotel pay-per-view equip.                   470,313         (305,704)       164,609         258,672
              Telephone & fixtures                              -                -              -               -
              Leasehold improvements                       76,286           (7,679)        68,607          19,861
              Net assets of discontinued
               operations                                       -                -              -               -
                                                   ---------------  ---------------  -------------  --------------

                  Total                            $    1,067,631   $     (551,943)  $    515,688   $     903,533
                                                   ===============  ===============  =============  ==============
</TABLE>

              Depreciation expense is computed principally on the straight line
              method in amounts sufficient to write off the cost of depreciable
              assets over their estimated useful lives. Depreciation expense
              from continuing operations for the years ended March 31, 2002,
              2001 and 2000 amounted to $419,115 $171,900 and $295,376,
              respectively.

                                      F-15
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 4 -      STOCKHOLDERS' EQUITY

              The Company is authorized to issue 500,000,000 shares of common
              stock, par value $.0001. As of March 31, 2002, the Company has
              issued 91,253,414 shares of common stock. On February 2, 2000, the
              Company authorized a 1:4 reverse stock split. The consolidated
              financial statements have been retroactively restated to reflect
              the reverse stock split.

              During the year ended March 31, 2002, the Company issued
              38,504,275 shares of common stock for cash of $3,500,000, or $0.09
              per share.

              During the year ended March 31, 2002, the Company issued 162,500
              shares of common stock for the exercise of options in the prior
              year at an exercise price of $0.04 per share.

              During the year ended March 31, 2002, the Company issued 2,459,587
              shares of common stock at the market price on the dates of issue
              in lieu of payroll in the amount of $684,232.

              During the year ended March 31, 2002, the Company issued 162,500
              shares of common stock for accrued directors fees in the amount of
              $52,000, or $0.20 per share.

              During the year ended March 31, 2002, the Company issued 591,319
              shares of common stock at the market price on the dates of issue
              for directors fees in the amount of $167,964.

              During the year ended March 31, 2002, the Company issued 2,666,364
              shares of common stock for accrued expenses in the amount of
              $593,133.

              During the year ended March 31, 2002, the Company issued 191,796
              shares of common stock for accrued salaries in the amount of
              $63,086.

              During the year ended March 31, 2002, the Company issued
              13,826,181 shares of common stock for notes payable in the amount
              of $3,639,000.

              During the year ended March 31, 2002, the Company issued
              10,076,131 shares of common stock for contingent liabilities in
              the amount of $2,078,155.

              During the year ended March 31, 2002, the Company issued 1,926,569
              shares of common stock for services in the amount of $462,276.

NOTE 5 -      LONG-TERM DEBT-RELATED PARTIES

              Notes payable to related parties as of March 31, 2002 and 2001 are
              detailed in the following summary:

<TABLE>
<CAPTION>
                                                                                         2002             2001
                                                                                  ----------------  ---------------
<S>           <C>                                                                 <C>               <C>

              Note payable to a Company owned by officers and former directors
                of the Company for damages related to the failure to timely
                register previously issued shares , secured by the inventory,
                equipment, furniture, and fixtures. Note was non-interest
                bearing and due May 1, 2001. The Company is currently in default
                on this note and is accruing interest at 1.5%
                per month per the terms of the note.                              $       500,000   $            -
                                                                                  ----------------  ---------------

              Balance Forward                                                     $       500,000   $            -
                                                                                  ----------------  ---------------
</TABLE>

                                      F-16
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000

NOTE 5 -      LONG-TERM DEBT-RELATED PARTIES (Continued)

<TABLE>
<CAPTION>
                                                                                         2002             2001
                                                                                  ----------------  ---------------
<S>           <C>                                                                 <C>               <C>

              Balance Forward                                                     $       500,000   $            -

              Convertible notes payable to officers and directors in connection
                with the acquisition of VisionComm, with an interest rate of 8%
                convertible at anytime prior to April 30, 2002 at the option of
                the note holder at a price of $3.50 per share or at the option
                of the Company if shares of the Company's common stock are
                trading at a price greater than $7.00 per share for a period of
                sixty (60) trading days, accrued interest of $24,022,
                due April 30, 2002, unsecured                                                   -        1,187,919
                                                                                  ----------------  ---------------

                   Total related party notes payable                                      500,000        1,187,919

                   Less: current portion                                                  500,000                -
                                                                                  ----------------  ---------------

                   Long-term portion                                              $             -   $    1,187,919
                                                                                  ================  ===============

              Maturities of the related party notes payable are as follows:

                    Period ending March 31,                                       2003              $      500,000
                                                                                  2004                           -
                                                                                                    ---------------

                                                                                  Total             $      500,000
                                                                                                    ===============

NOTE 6 -      LONG-TERM DEBT

              Notes payable as of March 31, 2002 and 2001 are detailed in the
              following summary:

                                                                                         2002             2001
                                                                                  ----------------  ---------------

              Note payable to a company; due in monthly installments of $3,244
              which includes interest at 8%; due on demand, unsecured. Company
              is in default and demand has been
              made by the creditor                                                $        49,287   $       49,287
                                                                                  ----------------  ---------------

              Balance Forward                                                     $        49,287   $       49,287
                                                                                  ----------------  ---------------
</TABLE>

                                      F-17
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 6 -      LONG-TERM DEBT (Continued)

<TABLE>
<CAPTION>
                                                                                         2002             2001
                                                                                  ----------------  ---------------
<S>           <C>                                                                 <C>               <C>

              Balance Forward                                                     $        49,287   $       49,287

              Convertible notes payable to various individuals in connection
                with the acquisition of VisionComm with an interest rate of 8%
                convertible at anytime prior to April 30, 2002 at the option of
                the note holder at a price of $3.50 per share or at the option
                of the Company if shares of the Company's common stock are
                trading at a price greater than $7.00 per share for a period of
                sixty (60) trading days, accrued interest of $32,600 due April
                30, 2002,
                unsecured                                                                       -        1,612,081

              Note payable to a individual for services rendered,
                unsecured, due on demand accruing interest at
                at 8% per annual                                                           44,000                -

              Note payable to a Company, for a vehicle
                payable in monthly installments of $497,
                non-interest bearing, secured by vehicle                                   27,314                -

              Note payable to an individual, due December
                20, 2001, with interest at 8%, unsecured                                        -          300,000

              Notes payable to various entities, due on
                demand, interest at 8%, unsecured                                               -          139,000


              Note payable to a Company; due on demand,
                interest at 10% due monthly, secured by
                equipment and inventory                                                         -          400,000

              Note payable to a Company; unsecured, due on
                demand, includes interest at 10%                                                -                -
                                                                                  ----------------  ---------------

                   Total long-term debt                                                   120,601        2,500,368

                    Less: current portion                                                  99,255         (888,287)
                                                                                  ----------------  ---------------

                    Long-term portion                                             $        21,346   $    1,612,081
                                                                                  ================  ===============
</TABLE>

                                      F-18
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 6 -      LONG-TERM DEBT (Continued)

                Maturities of long-term debt are summarized below:
<TABLE>
<CAPTION>
<S>                                      <C>                                    <C>
                Period ending March 31,  2003                                   $        99,255
                                         2004                                             5,967
                                         2005                                             5,967
                                         2006                                             5,967
                                         2007 and thereafter                              3,445
                                                                                 ---------------

                                                                       Total     $      120,601
                                                                                 ===============
</TABLE>

              As part of the consideration for the acquisition of VisionComm,
              Inc. (see Note 20), the Company issued $1,612,081 notes payable
              and $1,187,919 notes payable to related parties (the Notes). The
              Notes bear interest at a rate of 8% per annum and are due and
              payable in full on or before April 30, 2002.

              During August 2001, the principle and interest amount of
              $2,800,000 and $231,788, respectively, were converted into
              10,300,000 shares of the Company's common stock.

NOTE 7 -      LEASES

              During April 2000, the Company's wholly-owned subsidiary, Hotel
              Movie Network, Inc., signed a 120 month lease agreement which
              expires on March 31, 2010. The monthly rent amount is $3,200 with
              yearly increases of approximately 6% per year.

              During September 2001, the Company signed an 8 1/2 month lease
              agreement which expires on May 31, 2002. The monthly ret amount is
              approximately $1,700. As part of the lease agreement, a $200
              refundable deposit was required.

              During November 2001, the Company signed a 34 1/2 month lease
              agreement which expires on September 30, 2004. The monthly rent
              amount is $7,271. As part of the lease agreement, a $21,814
              security deposit was required.

              At March 31, 2002, the Company is liable under the terms of
              non-cancelable leases for the following minimum lease commitments:

                     Period ended                             Operating
                       March 31,                                Leases
                  ------------------                     --------------------
                     2003                                $           127,360
                     2004                                            125,657
                     2005                                             84,428
                     2006                                             40,800
                     2007                                             43,200
                     Later years                                     129,600
                                                         --------------------

                     Total Minimum Lease Payments        $           551,045
                                                         ====================

              Rental expense for the years ended March 31, 2002, 2001 and 2000
              amounted to $84,871, $421,098 and $135,860, respectively.

                                      F-19
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 8 -      CASH FLOW AND NON CASH INVESTING AND FINANCING ACTIVITIES

              Cash Flow Information
              ---------------------
<TABLE>
<CAPTION>
                                                                               March 31,
                                                          --------------------------------------------------
                                                                2002            2001               2000
                                                          ---------------  ---------------   ---------------
<S>                                                       <C>              <C>               <C>
              Interest paid                               $             -  $       268,352   $         2,134

              Income taxes paid                           $             -  $           500   $           500
</TABLE>

              Non-Cash Investing and Financing Activities
              -------------------------------------------

              For the years ending March 31, 2002, 2001 and 2000, the Company
              incurred the following non-cash investing and financing
              activities.

<TABLE>
<CAPTION>
                                                                               March 31,
                                                          -------------------------------------------------
                                                               2002              2001             2000
                                                          ---------------  ---------------   --------------
<S>                                                       <C>              <C>               <C>
              Issuance of stock and options for
               services rendered                          $     1,133,332  $     8,967,025   $    8,345,561
              Issuance of stock for assets                $             -  $     1,826,125   $      510,313
              Issuance of stock for settlement            $     2,046,155  $             -   $            -
              Issuance of stock for debt                  $     4,368,219  $     4,039,936   $    3,768,610
              Issuance of stock for subsidiary            $             -  $       782,500   $            -

              Acquisition of subsidiary:
                 Assets acquired                          $             -        3,054,524                -
                 Liabilities assumed                                    -       (4,807,905)               -
                 Goodwill                                               -        5,335,881                -
                                                          ---------------- ----------------  ---------------
                 Purchase price                                         -        3,582,500                -
                 Payment with 2,500,000 shares
                   of common stock                                      -          782,500                -
                 Note payable                                           -        2,800,000                -
                                                          ---------------- ----------------  ---------------
                 Cash used for acquisition                $             -  $             -                -
                                                          ================ ================  ===============
</TABLE>

NOTE 9 -      FINANCIAL INSTRUMENTS

              Concentrations of Credit Risk

              Financial instruments which potentially subject the Company to
              concentrations of credit risk consist principally of trade
              receivables. The Company provides credit to its customers in the
              normal course of business. However, the Company performs ongoing
              credit evaluations of its customers and maintains allowances for
              potential credit losses. The Company places its temporary cash
              with high quality financial institutions. At times such cash
              accounts may be in excess of the FDIC insurance limit.

                                      F-20
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 10 -     COMMITMENTS AND CONTINGENCIES

              LITIGATION

              On November 14, 2000, the Company and its then Chief Executive
              Officer, J. Michael Heil (Heil), were named as defendants in a
              complaint filed by Trimark Pictures, Inc. (Trimark). The Trimark
              complaint alleges that the Company and Heil breached the terms of
              a contract between the Company and Trimark dated February 8, 2000,
              by failing to register a total of 120,000 shares of the Company's
              restricted common stock issued to Trimark. Trimark claims
              substantial damages arising from the alleged breach of contract
              and misrepresentations, in the amount of $1,650,000. The Company
              settled this issue in the current year for 100,000 additional
              shares, totaling 200,000 shares and $40,000 cash.

              The Company is a defendant in a lawsuit filed by former associates
              for alleged breach of contract. The suit asks for damages totaling
              approximately $100,000. The Company intends to vigorously defend
              its position. A former chairman has brought a declaratory judgment
              action against the Company to determine conversion rights on a
              certain promissory note. The Company believes the conversion issue
              has been resolved and intends to vigorously defend its position.
              The Company is involved in an arbitration proceeding filed by two
              employees of its pay-for-view division for unpaid wages. The
              unpaid wages have been charged to operations in the accompanying
              financial statements for 2002. The Company is currently
              investigating this issues and contends that the amounts do are not
              considered wages.

              The Company is a defendant in a lawsuit filed by a former landlord
              of it Missouri operations. The Company has retained counsel in
              Missouri and is currently investigating the issue. Outside counsel
              for the company has advised that at this stage in the proceedings
              he cannot offer an opinion as to the probable outcome.
              The Company is a defendant in other lawsuits filed by certain
              customers for alleged breach of contract. The Company has proposed
              a settlement in the amount of $63,357, which has been charged to
              operations in the accompanying financial statements for 2002. If
              the settlement offer is not adhered to by the Company the amount
              of the ultimate loss to the Company, if any, may exceed the amount
              settled upon.

              The Company is a defendant in a lawsuit filed by one of its
              vendors for alleged breach of contract. The suit asks for actual
              and punitive damages totaling $63,983. The Company has proposed a
              settlement in the amount of $10,000, which has been charged to
              operations in the accompanying financial statements for 2002. The
              Company is awaiting formal dismissal by the plaintiff. The Company
              is a defendant in a lawsuit filed by former officers (Bringhurst
              et. al v C3D (aka Strata litigation)) for alleged breach of
              contract. The suit asks for actual and punitive damages totaling
              approximately $26,900,783. The Company believes the suit is
              completely without merit and intends to vigorously defend its
              position. The Company has filed a counter-claim against the
              individuals for unspecified damages.

                                      F-21
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 10 -     COMMITMENTS AND CONTINGENCIES (Continued)

              COMMITMENTS

              In June 2001, the Company entered into a two part (or closing)
              agreement with Another World, Inc. (AWI) (a Korean Corporation).
              The terms of the first closing were the issuance of common stock
              consisting of 51% of the Company's stock for approximately $3.5
              million. The terms of the second closing provide the Company with
              the options to acquire approximately 18% of the current
              outstanding shares of common stock of AWI for an equivalent number
              of shares of the Company's stock. The first closing has been
              executed and the Company is currently negotiating the terms of the
              second closing with the shareholders of AWI. The agreement
              contains an anti-dilative clause which protects AWI's ownership
              interest at 51% on any shares issued subsequent to August 9, 2001
              which are derived from settlement discussion initiated before that
              date. As of March 31, 2002 the Company has accrued $2,700,578
              payable for approximately 13,427,700 shares pertaining to the
              anti-dilution clause of the contract. The Company anticipates that
              these shares will be issued during the second quarter of 2003.
              Also, during the current year the Company acquired 100% of its
              inventory from Another World, Inc. and is considered a major
              supplier. In 2000 the Company had entered into a common stock
              purchase agreement with Crooks Hollow Road, LLC.(Crooks) In
              November of 2001 the Company and Crooks modified the agreement. In
              the modification Crooks stock re-pricing agreement was modified.
              The modification protected Crooks ownership interest to 8% on
              issuance of shares associated with Another World, Inc. As of March
              31, 2002 the Company has accrued $216,046 payable for
              approximately 1,074,216 shares pertaining to the re-pricing clause
              of the contract.

              In July 2001, the Company entered into a settlement agreement with
              Lions Gate Entertainment, Inc where by the Company would issue
              100,000 shares of common stock to settle the disagreement between
              the parties. The agreement carries a price fluctuation clause
              which may result in additional share being issued if the
              fluctuation is greater than 12.5%. The Company has accrued a
              related liability of $46,000 due to the fact that the Company's
              stock has fluctuated more than the 12.5%. In January 2002, the
              Company entered into a settlement agreement with I-O Display
              Systems. Associated with the settlement was a conditional
              liquidation guarantee clause which may require the Company to
              issue additional shares of stock in the future if the trading
              value of the shares received in the settlement should decrease
              significantly. In June 2001, the Company entered into a settlement
              agreement with National Financial Communications Corp.(NFC). The
              settlement required the Company to issue 250,000 shares of common
              stock to settle an outstanding debt. The shares were to be
              included in the registration statement of the Company's S-3
              filing. Once the registered shares are effective NFC will attempt
              to sell the shares. If NFC is unable to satisfy the amount of the
              debt settled it reserves the right to pursue collection of the
              balance.

NOTE 11 - ACQUISITIONS

              In August 2000, the Company purchased several film libraries to
              supplement the 3-D TV operations. The film libraries were
              purchased to be converted to a 3-D format. The Company issued
              703,250 shares of its common stock valued at $1,826,125 for the
              film libraries which are included in its movie production costs.

                                      F-22
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 12 - GOING CONCERN

              The Company's consolidated financial statements are prepared using
              generally accepted accounting principles applicable to a going
              concern which contemplates the realization of assets and
              liquidation of liabilities in the normal course of business. The
              Company has incurred losses from its inception through March 31,
              2002. The Company does not have an established source of revenues
              sufficient to cover its operating costs and, accordingly, there is
              substantial doubt about its ability to continue as a going
              concern.

              In order to develop an established source of revenues, and achieve
              a profitable level of operations, the Company will need additional
              capital resources. Management has formulated a plan to; i) reduce
              the current debt of the company through divesting or sale of
              unprofitable operations. ii) raise additional equity funding
              though stock issuances iii) increase in debt for expansion
              capital. iv) and the Company's projected revenues from the
              establishment of its new graphics card and distribution business
              would provide sufficient capital for minimal operations. However,
              management cannot provide any assurances that the Company will be
              successful in accomplishing any or all of its plans.

              The ability of the Company to continue as a going concern is
              dependent upon its ability to successfully accomplish the plan
              described in the preceding paragraph and eventually attain
              profitable operations. The accompanying consolidated inancial
              statements do not include any adjustments that might be necessary
              if the Company is unable to continue as a going concern.

NOTE 13 -STOCK OPTIONS AND WARRANTS

              Prior to fiscal year 2000, the Company accounted for stock options
              in accordance with APB 25 "Accounting for Stock Issued to
              Employees". During fiscal year 2000, the Company adopted FASB
              Statement 123 "Accounting for Stock Based Compensation". The fair
              value of each grant is estimated at the grant date using the
              Black-Scholes option-pricing model.

              Stock Options
              -------------

              Effective May 17, 1995, the stockholders approved a 1994 Incentive
              Stock Option Plan granting to key employees options to purchase
              Company common stock over a ten year period, at the fair market
              value at time of grant. The aggregate number of common shares of
              the Company which may be granted under the plan is 800,000 shares.
              The plan expires on March 23, 2004.

              To retain, attract and compensate key individuals, the Company
              during the fiscal year granted several stock options to various
              individuals. These options are convertible into approximately
              2,233,000 shares and range from $0.04 to $28.00 per post-split
              share. In addition, the Company granted options for services
              performed at $8.00 per post-split share.

              In December 2000, the Company granted an officer and director
              options to acquire 600,000 shares of common stock from $0.04 to
              $2.00. In May 2000, the Company granted options to former
              employees to acquire 184,500 shares of common stock at $0.04 per
              share.

                                      F-23
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 13 -STOCK OPTIONS AND WARRANTS (Continued)

              A summary of the status of options at March 31, 2002, 2001 and
              2000 and changes during the years ended on those dates is as
              follows:

<TABLE>
<CAPTION>
                                                     2002                         2001                         2000
                                         ---------------------------- ---------------------------- ----------------------------
                                                         Weighted                     Weighted                     Weighted
                                                          Average                      Average                      Average
                                                         Exercise                     Exercise                     Exercise
                                             Shares        Price         Shares         Price         Shares         Price
                                         ---------------------------- ---------------------------- ----------------------------
<S>                                           <C>            <C>          <C>            <C>             <C>            <C>
              Outstanding at
                 March 31, 2001               1,814,688      $  8.21      2,429,203      $  11.04        201,987        $ 0.04
                   Granted                      900,000         0.36        784,522          0.71      2,314,717         12.85

                   Cancelled                    (18,750)       (8.00)      (799,037)       (19.00)             -             -

                   Exercised                          -            -       (600,000)        (0.04)       (87,501)         0.04
                                         ---------------------------- ---------------------------- ----------------------------
              Outstanding at
                 March 31, 2002               2,695,938      $  5.64      1,814,688      $   8.21      2,429,203       $ 11.04
                                         ---------------------------- ---------------------------- ----------------------------
              Exercisable at
                 March 31, 2002               1,137,500      $  0.77        237,500      $   1.27      2,429,203       $ 11.04
                                         ---------------------------- ---------------------------- ----------------------------
              Weighted average
                 fair value of
                 options
                 and warrants granted
                 during the year                             $  0.36                     $   0.71                     $  12.85
                                                       ==============               ==============               ==============
</TABLE>

<TABLE>
<CAPTION>
                                    Outstanding                           Exercisable
                     ------------------------------------------- ------------------------------
                                       Weighted
                                       Average       Weighted                     Weighted
                         Number       Remaining      Average         Number        Average
     Range of          Outstanding   Contractual     Exercise     Exercisable     Exercise
  Exercise Prices      at 3/31/02        Life         Price        at 3/31/02       Price
-------------------- ------------------------------------------- ------------------------------
<S>                        <C>                <C>       <C>           <C>              <C>
$       0.04 - 0.04          495,938          4.04      $  0.04          37,500        $  0.04

        0.25 - 0.43          900,000          5.00         0.36         900,000           0.36

        0.50 - 2.00          500,000          8.75         1.07         200,000           1.50

        6.00 - 8.00          240,000          2.50         7.66               -              -

      12.00 - 16.00          205,000          2.73        13.20               -              -

      24.00 - 28.00          355,000          2.75        26.28               -              -
-------------------- ------------------------------------------- ------------------------------
$      0.04 - 28.00        2,695,938          4.15      $  9.65       1,137,500        $  0.54
==================== =========================================== ==============================
</TABLE>

                                      F-24
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 13 -     STOCK OPTIONS AND WARRANTS (Continued)

              The following are weighted-average assumptions for grants in
              fiscal years 2000 and 2001, respectively: dividend rate of 0% for
              all years; price volatility of 111.69% and 116.40%; risk free
              interest rates of 4.9% and 6.0%; and, expected lives of 2.5 years
              in 2000 and 3, 3.6, 5 and 10 years in 2001.

              Warrants
              --------

              As part of the VisionComm, Inc. acquisition, the Company issued
              warrants to the sellers to purchase 2,800,000 shares of common
              stock at $1.00 per share. The warrants are immediately exercisable
              and expire in April 2002. The following assumptions were used:
              risk-free interest rate of 5%, 16 month expected life, 114%
              expected volatility, and no expected dividends. The valuation of
              warrants granted to unrelated parties for services were measured
              as of the date of the completion of the business combination, or
              December 30, 2000. In fiscal year 2002, the warrants were
              cancelled in a settlement with VisionComm, Inc. shareholders.

              The Company recognized compensation cost of $0, $3,974,631 and $ 0
              associated with the issuance of options and warrants for the years
              ended March 31, 2002, 2001 and 2000, respectively.

              On December 6, 2001 the Company issued warrants to a consulting
              group to acquire 900,000 shares of the Company's common stock. The
              warrants are exercisable at any time and the exercise price is
              from 150% to 350% of the trading value of the stock at December 7,
              2001.

NOTE 14 -     DISCONTINUED OPERATIONS

              The Company purchased from a financing institution the secured
              interest on a line of credit against Strata, Inc. (Strata). The
              Company continued to advance credit to Strata and as of March 31,
              1999 have recorded a note receivable of $465,530. Also, on March
              31, 1999, the Company obtained the secure interests of several
              other promissory notes held by several investors against Strata by
              exchanging stock for the notes. The Company exchanged 333,333
              shares, at $3.00 per share, of common stock for the notes. The
              above notes hold a secured interest in the tangible assets,
              accounts receivable, intellectual property and other assets of
              Strata. These assets are associated with centric graphical
              software applications. In June 1999, the Company foreclosed upon
              Strata and acquired the collateralized assets of Strata. The
              Company recorded these assets under APB 16 and recognized fixed
              assets of approximately $364,000 and an intangible of
              approximately $834,000.

              In November of 2000, the Company entered into several agreements
              with a Utah corporation to allow the corporation to use the Strata
              assets until an agreement could be reached regarding selling the
              assets or combining them with the corporation's assets and merging
              them into a separate entity with the Company obtaining an
              ownership in the new entity. Subsequent to year-end, the Company
              is still pursuing resolving this issue with the Utah corporation.

              During the fiscal year 2001, the Company ceased operation of its
              cable channel and 3-D unit segments. The following is a summary of
              the loss from discontinued operations resulting from the
              elimination of these operations. The financial statements have
              been retroactively restated to reflect this event. No tax benefit
              has been attributed to the discontinued operations.

                                      F-25
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 14 -     DISCONTINUED OPERATIONS (Continued)

<TABLE>
<CAPTION>
                                                                                3-D (STRATA)
                                                              --------------------------------------------------
                                                                                  March 31,
                                                              --------------------------------------------------
                                                                    2002             2001             2000
                                                              ----------------  --------------- ----------------
<S>                                                           <C>               <C>             <C>
              NET SALES                                       $             -   $      362,446  $       268,478
                                                              ----------------  --------------- ----------------

              OPERATING EXPENSES
                Operating cost                                              -        1,598,640        2,775,907
                Impairment / Recovery of assets                             -         (236,088)         988,312
                Depreciation and amortization                               -          236,821           46,469
                                                              ----------------  --------------- ----------------
                  Total Operating Expenses                                  -        1,599,373        3,810,688
                                                              ----------------  --------------- ----------------

              LOSS BEFORE INCOME TAXES                                      -       (1,236,927)      (3,542,210)
                                                              ----------------  --------------- ----------------

              INCOME TAXES                                                  -                -               -
                                                              ----------------  --------------- ----------------

              LOSS FROM DISCONTINUED
              OPERATIONS                                       $            -   $   (1,236,927) $    (3,542,210)
                                                              ================  =============== ================

                                                                                Cable Channel
                                                              --------------------------------------------------
                                                                                  March 31,
                                                              --------------------------------------------------
                                                                    2002             2001             2000
                                                              ----------------  --------------- ----------------
              NET SALES                                       $             -   $            -  $             -
                                                              ----------------  --------------- ----------------

              OPERATING EXPENSES
                Operating cost                                              -          664,251       10,608,647
                Depreciation and amortization                               -                -          434,237
                                                              ----------------  --------------- ----------------

                  Total Operating Expenses                                  -          664,251       11,042,884
                                                              ----------------  --------------- ----------------

              LOSS BEFORE INCOME TAXES                                      -         (664,251)     (11,042,884)
                                                              ----------------  --------------- ----------------

              INCOME TAXES                                                  -                -               -
                                                              ----------------  --------------- ----------------

              LOSS FROM DISCONTINUED
              OPERATIONS                                      $             -  $      (664,251) $   (11,042,884)
                                                              ================  =============== ================


              During June 2002, the Company decided to discontinue the
              operations of the VisionComm, Inc. subsidiary expects to sell that
              business during mid 2002. The decision to dispose of the
              operations of VisionComm, Inc., was based upon the Company's plan
              to reduce debt by divesting of unprofitable operations. The
              estimated loss on disposal is as follows:

                                                                Before Income     Income Tax
                                                                    Taxes           Effect             Net
                                                              ----------------  --------------- ----------------
              Estimated loss on sale of assets                $             -   $            -  $             -
              Operating losses from measurement
               date to March 31, 2002                                       -                -                -
              Estimated operating losses from April 1,
               2002 to anticipated disposal date                            -                -                -
                                                              ----------------  --------------- ----------------
                                                              $             -   $            -  $             -
                                                              ================  =============== ================
</TABLE>

                                                       F-26
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 14 -     DISCONTINUED OPERATIONS (Continued)

<TABLE>
<CAPTION>
                                                                              VisionComm, Inc.
                                                              --------------------------------------------------
                                                                                  March 31,
                                                              --------------------------------------------------
                                                                    2002             2001             2000
                                                              ----------------  --------------- ----------------
<S>                                                           <C>               <C>             <C>
              NET SALES                                       $     1,850,852   $            -  $             -
                                                              ----------------  --------------- ----------------

              OPERATING EXPENSES
                Operating cost                                      2,954,169                -                -
                Depreciation and amortization                         359,906                -                -
                                                              ----------------  --------------- ----------------

                  Total Operating Expenses                          3,314,075                -                -
                                                              ----------------  --------------- ----------------

              LOSS BEFORE INCOME TAXES                             (1,463,223)               -                -
                                                              ----------------  --------------- ----------------

              INCOME TAXES                                                  -                -               -
                                                              ----------------  --------------- ----------------

              LOSS FROM DISCONTINUED
              OPERATIONS                                      $    (1,463,223)  $            -  $             -
                                                              ================  =============== ================
</TABLE>

              Sales of VisionComm, Inc. were $1,850,852, $-0-, and $-0- for
              2002, 2001, and 2000, respectively. No operating results are
              presented since the entity was not acquired until March 31, 2001.

              At March 31, 2002 and 2001, the assets and liabilities of the
              discontinued division consisted of the following:

<TABLE>
<CAPTION>
                                                                                           March 31,
                                                                            -------------------------------------
                                                                                    2002               2001
                                                                            -----------------   -----------------
<S>                                                                         <C>                 <C>
              ASSETS
                Cash                                                        $          9,518    $         19,475
                Inventory                                                                  -              77,742
                Accounts receivable, net                                             205,667             521,622
                Prepaid expenses                                                       6,729              18,867
                Property and equipment, net                                          779,029           1,325,788
                Note receivable                                                            -              35,178
                Movie production costs and product rights, net                       757,100           1,051,867
                Refundable deposits                                                    9,181               3,986
                                                                            -----------------   -----------------
                                                                            $      1,727,224    $      3,054,525
                                                                            =================   =================

              LIABILITIES
                Accounts payable                                            $        470,088    $        435,756
                Accrued expenses                                                      85,407             281,477
                Accrued interest payable                                             260,218              47,252
                Current portion of long-term debt                                  1,882,838           1,903,841
                Long-term debt                                                     2,749,283           3,082,235
                Deferred income                                                       77,530              89,828
                                                                            -----------------   -----------------
                                                                            $      5,525,364    $      5,840,389
                                                                            =================   =================
</TABLE>

              The foregoing assets and liabilities have been classified as
              current at March 31, 2002 since sale of the discontinued division
              is expected to be completed during mid-2002.

                                                       F-27
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 15 -     RELATED PARTY TRANSACTIONS

              The Chairman of the Board also is affiliated with other companies
              whose operations are similar to those of the Company. Transactions
              with these other companies were not material during 2002. The
              Chairman, however, is in a position to, and in the future may,
              influence the sales volume of the Company for the benefit of the
              other companies.

              The Company acquires a substantial portion of its current product
              from one supplier. At March 31, 2002 amounts due to that supplier
              included in accounts payable was $75,000.

              In the prior year the Company acquired through as Asset Purchase
              Agreement certain assets and properties associated with the
              pay-per-view division. The agreement noted a promissory note for
              $500,000 to a company associated with employees of the
              pay-per-view division. The Company is currently disputing this
              note.

NOTE 16 -     PROVISION FOR INCOME TAXES

              The provision for income taxes for the years ended March 31, 2002
              and 2001 consists of the following:

<TABLE>
<CAPTION>
                                                         Current              Deferred                 Total
                                                   -------------------   ------------------    ------------------
<S>                                                <C>                   <C>                   <C>
              Year ended March 31, 2002
                   U.S. Federal                    $                -    $               -     $               -
                   State and local                                  -                    -                     -
                                                   -------------------   ------------------    ------------------

                                                   $                -    $               -     $               -
                                                   ===================   ==================    ==================

              Year ended March 31, 2001
                   U.S. Federal                    $                -    $               -     $               -
                   State and local                                500                    -                   500
                                                   -------------------   ------------------    ------------------

                                                   $              500    $               -     $             500
                                                   ===================   ==================    ==================
</TABLE>

              Income tax expense was $500 for each of the years ended March 31,
              2002, 2001 and 2000 respectively, and differed from the amounts
              computed by applying the combined U.S. Federal and Utah State
              income tax rate of 38 percent to loss from operations before
              provision for income taxes and extraordinary item as a result of
              the following:

<TABLE>
<CAPTION>
                                                           2002                 2001                   2000
                                                   -------------------   ------------------    ------------------

<S>                                                <C>                   <C>                   <C>
              Computed expected benefit            $       (6,203,145)   $      (6,624,000)    $      (7,215,000)
              State tax payable                                     -                  500                   500
              Increase (reduction) in income
                 taxes resulting from:
                   Change in valuation allowance
                      for deferred tax assets               3,723,102            3,745,274             4,778,892
                   Non-deductible expenses                  2,480,043            2,878,726             2,436,108
                                                   -------------------   ------------------    ------------------

                        Income Tax Provision       $                -    $             500     $             500
                                                   ===================   ==================    ==================
</TABLE>

                                                      F-28
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 16 -     PROVISION FOR INCOME TAXES (Continued)

              The tax effects of temporary differences that give rise to
              significant portions of the deferred tax assets at March 31, 2001
              and 2000 are presented below:

<TABLE>
<CAPTION>
<S>                                                          <C>                   <C>
              Deferred tax assets:
                   Net operating loss carryforwards
                        Total deferred tax assets            $      16,617,048     $      12,871,774
                        Less valuation allowance                   (16,617,048)          (12,871,774)
                                                             ------------------    ------------------

                        Net Deferred Tax Assets              $               -     $               -
                                                             ==================    ==================
</TABLE>

NOTE 17-      SUBSEQUENT EVENTS

              On April 1, 2002, the Company entered into a one-year consulting
              agreement with National Financial Communications Corp., whereby
              the Company agreed to pay $5,000 per month in exchange for public
              relations consulting services. The Company has the option of
              making its monthly payments via common stock at a 20% discount.
              The Company also granted options to purchase an aggregate of
              250,000 shares of common stock in consideration for the agreement.
              The options have an exercise price of $0.20 per share and will
              expire on April 1, 2006.

              In June 2001, the Company entered into a Master agreement as
              amended and restated, which contemplates a private placement to
              raise up to $3.5 million in return for the issuance of
              approximately 38,254,038 shares to the new investors, constituting
              a 51% equity interest in the Company on a fully diluted basis.
              These newly-issued shares will have registration rights customary
              in such issuances as set forth in the Registration Rights
              Agreements attached to the Proxy Statement filed on June 14, 2001
              in Exhibit 99(a) as Schedule 1.3 to the Master Agreement. Under
              the Master Agreement, the Company can acquire control of Another
              World and its assets at a later date (the "Acquisition") so that
              the Company can benefit from its stereoscopic technologies
              provided the shareholders of the Company and Another World approve
              the transaction. The Company has entered into formal negotiations
              or discussed regarding terms of this potential acquisition and
              have agreed that the acquisition will be consummated through the
              issuance of the Company's common stock in exchange for the in-kind
              assets of Another World. The Acquisition will be based on an
              independent valuation of Another World. Another World has engaged
              Samil-PricewaterhouseCoopers to perform such independent
              valuation.

                                      F-29
<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 18-      SEGMENT INFORMATION

              The Company's reportable segments are strategic business units
              that offer different products and services. They are managed
              separately because each business requires different technology and
              marketing strategies.

              The accounting policies applied to determine the segment
              information are the same as those described in the summary of
              significant accounting policies.

              Financial information with respect to the reportable segments
              follows:

<TABLE>
<CAPTION>
                                                                  2002
                           -----------------------------------------------------------------------------------
                              Centric           Hotel           Cable
                              Graphical      Pay-Per-View       Channel           3-D Units          Total
                           ---------------  ---------------  ---------------   --------------   --------------
<S>                            <C>               <C>                    <C>              <C>       <C>
Revenue from external customer    $ 7,737         $797,474              $ -              $ -         $805,211
Depreciation and amortization   1,432,401          792,372                -                -        2,224,773
Operating cost                 13,381,581        1,522,845                -                -       14,904,426
Segment loss                   14,806,245        1,517,743                -                -       16,323,988

                                                                  2001
                           -----------------------------------------------------------------------------------
                              Centric           Hotel           Cable
                              Graphical      Pay-Per-View       Channel           3-D Units          Total
                           ---------------  ---------------  ---------------   --------------   --------------
Revenue from external customer   $129,805         $775,265              $ -              $ -         $905,070
Depreciation and amortization      34,421          923,101                -                -          957,522
Operating cost                 16,193,265        1,090,211                -                -       17,283,476
Segment loss                   15,991,262        1,344,666                -                -       17,335,928

                                                                  2000
                           -----------------------------------------------------------------------------------
                              Centric           Hotel           Cable
                              Graphical      Pay-Per-View       Channel           3-D Units          Total
                           ---------------  ---------------  ---------------   --------------   --------------
Revenue from external customer   $ 80,412         $411,367              $ -              $ -         $491,779
Depreciation and amortization     916,216          432,591                -                -        1,348,807
Operating cost                 15,748,950        3,117,803                -                -       18,866,753
Segment loss                   16,584,754        3,139,027                -                -       19,723,781
</TABLE>

                                                     F-30
<PAGE>

<PAGE>

                       C3D-DIGITAL, INC. AND SUBSIDIARIES
           (Formerly Chequemate International, Inc. and Subsidiaries)
                 Notes to the Consolidated Financial Statements
                          March 31, 2002, 2001 and 2000


NOTE 19 -      BUSINESS COMBINATION

               On December 30, 2000, the Company acquired all of the outstanding
               shares of VisionComm, Inc. (VCI), a telecommunication and cable
               television provider to multiple dwelling units. The total
               acquisition cost was $7,800,000 which consisted of the issuance
               of 2,500,000 shares of common stock and a note for $2,800,000.
               The excess of the total acquisition cost over the fair value of
               the net assets acquired of $5,335,881 is being amortized over 5
               years by the straight-line method.

               The acquisition was accounted for as a purchase. VCI reports on a
               December 31 year end and their results of operations at December
               31, 2001 are included in the consolidated financial statements as
               of March 31, 2002.

               Subsequent to year end the Company initiated plans to sell the
               VCI operations. The Company expects to complete the transaction
               in the second quarter of fiscal year 2003. The Company has not
               received any proceeds since initiating the plan and cannot
               reasonably estimate the loss, if any, at this time. The financial
               statements have been retroactively restated to reflect this
               event.

               Also, the Company will consolidate all future results of
               operations based on the entities fiscal year ends as follows:
               consolidating quarterly results of operations of the Company for
               the period ending June 30, with those of VCI for the period
               ending March 31; September 30, with those of VCI for the period
               ending June 30; and, December 31, with those of VCI for the
               period ending September 30.

               Unaudited pro forma consolidated results of operations for the
               years ended March 31, 2001 and 2000 as though Vision.Comm had
               been acquired as of April 1, 1999 follow:

                                             2001                 2000
                                      ------------------   -----------------

               Sales                  $       3,580,705    $      5,764,558)
               Net loss                     (18,471,947)        (19,730,923)
               Loss per share                     (1.58)              (3.25)

                                      F-31
<PAGE>

ITEM 8

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE

In fiscal year ending March 31, 2002there were no changes in or disagreements
with accountant and financial disclosure.

                                    PART III

ITEM 9

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

Based solely upon our review of forms 3, 4 and 5, and amendments thereto
furnished to us during fiscal year ending March 31, 2002, the following
individual were found to be delinquent in complying with Section 16(a) of the
exchange act.

Thomas Nix
In-Q Lee
Alexander T. Shang

For each of these persons, we have been unable to determine the exact number of
late reports, the exact number of transactions that were not reported on a
timely basis and the exact number of failures to file the required item per
Section 16(a) of the exchange act.

DIRECTORS

<TABLE>
<CAPTION>
                                                 FIRST        SHARES OF COMMON       PERCENTAGE OF
NAME AND PRINCIPAL OCCUPATION                    BECAME A     STOCK                  COMMON STOCK
OR EMPLOYMENT                            AGE     DIRECTOR     BENEFICIALLY OWNED     OUTSTANDING
-----------------------------            ---     ----------   ------------------     -------------
<S>                                       <C>    <C>             <C>                   <C>
Philmoon Seong                            38     2002            5,252,138             5.76%
Chairman, C3D Digital Inc.

Chandos Mahon                             44     2002              344,610             0.38%
President/CEO, C3D Digital Inc.

In-Q Lee                                  59     2002               65,586             0.07%
President, TeraSource Ventura
Capital Company

William J. Brinkmeier                     51     Feb., 2001      4,291,932              4.70%
Vice-President, Chequemate
International, Inc.

Thomas Nix                                53     Feb., 2001      1,050,333              1.15%
Vice-President, Chequemate,
International, Inc.

Chung H. Lee                              39     2002               42,330              0.05%
Founder and CEO, Oegasus
International

Aleander T. Shang                         44     2002               44,309              0.05%
</TABLE>

                                       24
<PAGE>

BUSINESS EXPERIENCE

Philmoon Seong, Chairman. With over 10 years experience in the virtual reality
field, Dr. Seong is the founder and current President & CEO of Another World,
Inc. and VRMania.com. From 1990 to 1998, Dr. Seong has been involved in the
computer industry related to virtual reality in various capacities. In 1993, Dr.
Seong developed a software technology to convert 2D images to stereoscopic 3D
images, and the world's first real time 3D conversion tools. In addition, by
1994, Dr. Seong had developed 13 different virtual reality CD titles. In 1995,
Dr. Seong developed virtual reality LCD goggles and related equipment. In 1998,
Dr. Seong was appointed as a 3D image examiner for the prestigious Korea
Institute of Science & Technology. In 1998, Dr. Seong established Another World
to create his stereoscopic 3D vision in various virtual reality applications. As
President and CEO, Dr. Seong is responsible for developing new technologies and
management strategies, as well as deploying new technologies both domestically
and internationally. Dr. Seong earned his bachelor and masters degrees from
Myung Ji University in Industrial Engineering, in 1998 and 1990, respectively.
He also received his doctorate degree from the same university in Industrial
Engineering. From 1994 to 1998, Dr. Seong has held various teaching positions at
the university.

Chandos Mahon, President/CEO. Mr. Mahon, son of successful film producer and
director Barry Mahon, has more than 20 years of experience in the television
broadcast, film and telecommunications industries. Mr. Mahon is currently the
President and CEO of C-3D. Prior to joining C-3D Mr. Mahon was the founding
partner and President of Programming Services, Inc. (PSI), a successful
satellite programming and telecommunications company. PSI's primary business is
the development and resource support of emerging programming networks and
technologies. Mr. Mahon was instrumental in finalizing a significant
relationship with Loral Spacenet, one of the satellite industries recognized
leaders, to develop and facilitate the launch of PSI's clients on the Loral
Spacenet direct-to-home satellite platform. Many of PSI's clients specialize in
the digital delivery of programming content via satellite, including distant
learning applications, pay-per-view programming, and general broadband
applications. Prior to PSI, Mr. Mahon was the Executive Vice President and
General Manager of Network One (N1), a 24-hour cable & broadcast network. As
Executive VP at N1, Mr. Mahon was responsible for all aspects of the operation.
In 1993 he was brought on to create a production and operations plan. After the
launch and through the final phase of distribution, Mr. Mahon was responsible
for creation, implementation and management of the entire business plan. Prior
to joining N1, Mr. Mahon held various executive positions with CBS Productions,
Columbia Pictures Television and Imagine Films, where he supervised features and
television production, both nationally and internationally. Mr. Mahon has over
20 major production credits to his name. Mr. Mahon provides his management
expertise to all areas of this business plan, including production, programming,
operations, finance, and sales and marketing.

In-Q Lee. Mr. Lee is the co-founder, CEO and President of TeraSource Venture
Capital Co. TeraSource is a leading figure in the Korean venture industry that
is engaged in providing financing services through direct investments to small
and medium sized companies and management services for venture investment
partnerships. Since establishment in 1996, TeraSource has emerged as one of the
leading early stage venture capital firms. For the last three years, the Small
Business Administration of Korea has selected TeraSource as the best venture
capital firm. By 1997, it was designated the best venture capital firm by Korea
Productivity Center and was also selected as the best venture capital firm by
SMBA. By adopting the investment tools and models, processes and skills of
advanced markets like the U.S., TeraSource has actively invested in high growth
companies. It is currently managing 19 venture funds totaling $130 million at
inception, and shareholders' equity of $50 million in over 200 invested
companies. Previously, Mr. Lee was head of Corporate Financing at KDB
Securities, a large government-owned securities company affiliated with the
Korea Development Bank and specializing in underwriting of stocks and bonds.
Prior to that Mr. Lee worked as a research analyst in the Electronic and
Communication Industries division at KDB Securities. Mr. Lee graduated from
Myung Ji University in Seoul majoring in business management and received his
MBA from Yonsei Graduate Business School in 1983.

                                       25
<PAGE>

William J. Brinkmeier. Director. Mr. Brinkmeier is one of the Founders,
President and the Chairman of the Board of VisionComm, Inc. VisionComm, Inc. was
formed by Mr. Brinkmeier, Mr. Rojeski, Mr. Nix and Mr. Wilk in 1995 with the
mission of becoming a leading provider of cable and telecommunication services
to multi-family developments hospitals and hotels. Mr. Brinkmeier is the former
President of Payphones of America, Inc., a nationwide provider of pay telephone
service. Mr. Brinkmeier and Mr. Rojeski founded Payphones of America, Inc. in
1989. From 1989 to 1996, Payphones of America, Inc. increased its' installed
base to over 3300 payphones. In 1996, Mr. Brinkmeier and his partner sold
Payphones of America, Inc. to the largest private provider of pay telephones in
the United States.

Thomas A. Nix. Director and Chairman of the Board. Mr. Nix is the Executive Vice
President - Cable Division. In this capacity, Mr. Nix is responsible for all of
the Cable Division's sales and marketing activities. Mr. Nix has involved in the
private cable industry for over sixteen years. Mr. Nix was a co-founder of
Datavision in 1982. Datavision was one of the first publicly held companies to
provide security systems for multi-dwelling units. Mr.Nix and his sales team
secured contracts for over 150,000 units. In 1985, Mr. Nix founded Data
Cablevision, which was one of the first providers of private cable television
equipment and services in the United States. As President of Data Cablevision,
Mr. Nix secured private cable contracts for in excess of 22,000 passings. In
addition, he secured contracts to provide pay-per-view and free to guest cable
services to over 16,000 hotel rooms. From 1988 to 1995, Mr. Nix provided
consulting, advisory and brokerage services to the private cable industry. In
addition, Mr. Nix has acquired and operated private cable systems throughout the
United States.

Chung H. Lee. Mr. Lee is the founder and Chief Executive Officer of Pegasus
International, a New Jersey based consulting and international trading company
founded in 1996. At Pegasus, Mr. Lee has been involved in a number of
transactions ranging from strategic consulting, to product development, to
technology transfers, involving mostly Korean and Chinese companies.
Concurrently, Mr. Lee founded a regional logistics company, Integrated Freight
Systems, in New Jersey and is its Chief Executive Officer since 1996. Prior to
IFS, Mr. Lee was involved with Tower Insurance Group, a property and casualty
underwriter based in New York, as its Executive Vice President from 1992 to
1996, and remains as its board member. At Tower, Mr. Lee was responsible for
financial management and other related executive duties. Prior to Tower, Mr. Lee
was in corporate banking specializing in merger and acquisition transactions and
providing financing to Fortune 500 companies from 1985 to 1992. In 1985, Mr. Lee
graduated from The School of Management, Boston College with a Bachelor of
Science in Finance.

Alexander T. Shang. Mr. Shang has over 20 year in the financial field. He was
the chief financial officer for NewState Holdings, a Korean mortgage finance
company listed on the U.S. OTC exchange. Mr. Shang also has handled Asian
transactions (Taiwan, Hong Kong, Singapore, Korea, Japan and the Philippines)
for the Global Emerging Markets Group in New York. Prior to that, he was a vice
president at Furman Selz (now ING Baring Securities) in the Fixed Income Group,
specializing in high-yield securities and in the Emerging Markets Group,
specializing in Asian transactions. Prior to that, Mr. Shang was a vice
president at Financial Security Assurance, a triple-A mono-line insurer
specializing in insuring mortgage and asset backed securities and municipal
bonds. Mr. Shang graduated from Columbia University with a BA in Economics and a
BS in Computer Science. He also received his MS in Finance from the Sloan School
of Management. Shang is also a holder of the Chartered Financial Analyst (CFA)
designation.

                                       26
<PAGE>

EXECUTIVE OFFICERS

The following table outlines the executive officers of the Company.

<TABLE>
<CAPTION>
NAME                          AGE     POSITION HELD      CURRENT TERM OF OFFICE AND PERIOD OF SERVICE
----                          ---     -------------      --------------------------------------------
<S>                            <C>    <C>                <C>
Chandos Mahon                  43     President/CEO      March 2001 to present

David Wang                     29     Secretary          May 2002 to present

William J. Brinkmeier          51     Vice-President     December 2000 to present

Thomas A. Nix                  53     Vice-President     December 2000 to present

Paul D.H. LaBarre              57     President/HMN      November 1994 to present

</TABLE>

ITEM 10

EXECUTIVE COMPENSATION

The table set forth below contains information about the remuneration received
and accrued during fiscal years 2000 and 2001 from the Company and its
subsidiaries by the Chief Executive Officer and each of the most highly
compensated executive officers of the Company.

<TABLE>
<CAPTION>
                                                                                          SECURITIES
NAME AND PRINCIPAL                                                   RESTRICTED STOCK     UNDERLYING
POSITION              FISCAL YEAR     SALARY ($)       BONUS ($)         AWARD(S)          OPTIONS
------------------    -----------     ----------       ---------     ----------------     ----------
<S>                      <C>          <C>              <C>               <C>               <C>
Chandos Mahon            2002         $150,000         $      0          $      0          $600,000
CEO & President          2001         $      0         $      0          $125,000          $600,000
                         2000         $      0         $      0          $      0          $      0

William J Brinkmeier     2002         $100,000         $      0          $      0          $125,000
Vice-President           2001         $      0         $      0          $ 33,336          $      0
                         2000         $      0         $      0          $      0          $      0

Thomas A. Nix            2002         $100,000         $      0          $      0          $125,000
Vice-President           2001         $      0         $      0          $ 33,336          $      0
                         2000         $      0         $      0          $      0          $      0

Paul D.H. LaBarre        2002         $120,000         $      0          $      0          $  2,500

</TABLE>


The following chart shows the stock options that were granted to executive
officers of the Company during the last completed fiscal year.

<TABLE>
<CAPTION>
                          TOTAL       PERCENTAGE OF TOTAL       TOTAL      EXERCISE
NAME/POSITION            OPTIONS     GRANTED TO EMPLOYEES      OPTIONS       PRICE       EXPIRATION
POSITION                 GRANTED       IN FISCAL YEAR           VESTED     ($/SHARE)        DATE
-------------            -------     --------------------      -------     ---------     ----------
<S>                      <C>                  <C>               <C>          <C>         <C>
NA                       0                    0                 0            0           0

</TABLE>

                                       27
<PAGE>

The following table reflects the number of unexercised options that are
exercisable and unexercisable at the end of fiscal year 2001.

<TABLE>
<CAPTION>
                                                          NO. OF SECURITIES
                           SHARES                            UNDERLYING               VALUE OF UNEXERCISED IN-
                          ACQUIRED        VALUE          UNEXERCISED OPTIONS          THE-MONEY OPTIONS AT
                         ON EXERCISE    REALIZED            AT FY-END (#)                 FY-END ($)
NAME                         (#)           ($)         EXERCISABLE/UNEXERCISABLE    EXERCISABLE/UNEXERCISABLE
---------------          -----------    --------       -----------------------      --------------------------
<S>                         <C>         <C>                <C>                          <C>
Chandos Mahon               0           $  0               600,000 / 600,000            $0 / $0
William J. Brinkmeier       0           $  0               125,000 / 125,000            $0 / $0
Thomas A. Nix               0           $  0               125,000 / 125,000            $0 / $0
Paul D. H. LaBarre          0           $  0                 2,500 /   2,500            $0 / $0
</TABLE>


ITEM 11

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL HOLDERS

The following table sets forth as of June 8, 2002certain information regarding
the beneficial ownership of the Common Stock of the Company by (a) each person
who is known to the Company to be the beneficial owner of more than 5% of the
outstanding shares of Common Stock, (b) each director of the Company and the
executive officers of the Company and (c) all directors and executive officers
of the Company as a group. Unless otherwise indicated, each beneficial owner
possesses sole voting and dispositive power with respect to the shares listed in
this table.


                                    AMOUNT AND NATURE OF    PERCENTAGE OF
NAME                                BENEFICIAL OWNERSHIP        CLASS
---------------------------         --------------------    -------------
Philmoon Seong                            5,252,138             5.76%
Chandos Mahon(3)                            344,610             0.38%
In-Q Lee                                     65,586             0.07%
William J. Brinkmeier II(1)               4,291,932             4.70%
Thomas A. Nix(4)                          1,050,333             1.15%
Chung H. Lee                                 42,330             0.05%
Aleander T. Shang                            44,309             0.05%
Paul D.H. LaBarre                           857,114             0.94%


(1) Mr. Brinkmeier is a director of the Company. His address is 124 Point West
Blvd., St. Charles, MO 63301.

(3) Mr. Mahon is CEO and President of the Company. His beneficial ownership
interest includes 100,000 shares underlying options. His address is: 10336
Variel Ave., Chatsworth, CA 91311.

(4) Mr. Nix, is a director of the Company and is Chairman of the Board of
Directors. His address is 36380 Garfield Rd So. 7, Clinton Twp, MI, 48035

(5) Mr. Wilk is an officer of the Company. His address is 36380 Garfield Rd So.
7, Clinton Twp, MI, 48035.

                                       28
<PAGE>

ITEM 12

CERTAIN RELATED TRANSACTIONS

In a Definitive Proxy Statement filed on July 9, 2001 and at a meeting of the
Shareholders held at the Holiday Inn Select St. Peters, 4221 South Outer Road,
St. Peters, MO on July 31, 2001, the Company put to a vote and the shareholders
voted to accept the second item of the proxy, where each VisionComm Shareholder,
pursuant to a Waiver and Release has agreed to waive all of his or her rights
under the Stock Purchase Agreement dated December, 2000, and to cancel all notes
resulting therefrom, in return for receiving in the aggregate, 12,800,000 shares
of the Company's Common Stock. In the VisionComm Transaction, certain of our
directors received shares of our Common Stock: Mr. Brinkmeier was issued
3,581,952 shares; Mr. Wilk, 614,931 shares, Mr. Nix, 614,931 shares, and Mr.
Friedlein, 172,958 shares.

In a Definitive Proxy Statement filed on July 9, 2001 and at a meeting of the
Shareholders held at the Holiday Inn Select St. Peters, 4221 South Outer Road,
St. Peters, MO on July 31, 2001, the Company put to a vote and the shareholders
voted to accept the first item of the proxy, where the Company issued
approximately 43,125,565 shares, or 51% equity interest in the Company on a
fully diluted basis, to approximately 100 new non-U.S. investors in return for
cash of $3.5 million pursuant to a Master Agreement as amended and re-stated.
Most of the new investors are shareholders of Another World, a corporation
organized and existing under the laws of the Republic of Korea. In this
transaction, certain of our directors received shares of our Common Stock: Mr.
Seong, 5,252,138 shares.

In June 2002, we entered into a Letter of Intent with the majority of
VisionComm's secured and unsecured creditors to sell the assets of VisionComm's
cable operations. The enw transaction contemplates a significant sale of cable
assets in return for the satisfaction of the majority of the VisionComm's
long-term liabilities. Management expects to close the transaction during the
month of July 2002. If we succeed in closing this transaction, the Company on a
consolidated basis, will realize a reduction of $5,525,364 in liabilities and
asset reduction of $1,767,224 and a goodwill reduction of $3,194,558.

The Company has no other related transactions to report for the year ending
March 31, 2002.


ITEM 13

EXHIBITS AND REPORTS ON FORM 8K

EXHIBITS INDEX

EXHIBIT NO.                   DESCRIPTION
-----------                   -----------
   3.1         Restated Articles of Incorporation. Incorporated by reference
               from Form 8-A (Film No. 99636119) filed by the Company with the
               Commission on May 27, 1999.

   3.2         By-Laws. Incorporated by reference from Form 8-A (Film No.
               99636119) filed by the Company with the Commission on May 27,
               1999.

   4           Specimen Common Stock Certificate. Incorporated by reference from
               Form 8-A (Film No. 99636119) filed by the Company with the
               Commission on May 27, 1999.


                                   SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                               C-3D DIGITAL, INC.





JULY 16, 2002                            /S/ CHANDOS MAHON
                                       ----------------------------------
                                       CHANDOS MAHON
                                       PRESIDENT, CEO AND CFO


                                       29
<PAGE>

Date: July 16, 2002



BY /S/ PHILMOON SEONG
------------------------------------
PHILMOON SEONG, CHAIRMAN/DIRECTOR DATE JULY 16, 2002


BY /S/ CHANDOS MAHON
-------------------------------------
CHANDOS MAHON, DIRECTOR, PRESIDENT, CEO, CFO DATE: JULY 16, 2002


BY /S/ IN Q LEE
------------------------------------
IN Q LEE, DIRECTOR DATE: JULY 16, 2002


BY /S/ WILLIAM BRINKMEIER
------------------------------------
WILLIAM BRINKMEIER, DIRECTOR DATE: JULY 16, 2002


BY /S/ THOMAS NIX
------------------------------------
THOMAS NIX, DIRECTOR DATE: JULY 16, 2002


BY /S/ CHUNG LEE
------------------------------------
CHUNG LEE, DIRECTOR DATE JULY 16, 2002


BY /S/ ALEX SHANG
------------------------------------
ALEX SHANG, DIRECTOR DATE JULY 16, 2002


                                  END OF FILING


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