SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB

                   QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        FOR YEAR ENDED DECEMBER 31, 2002

                               ZEROS & ONES, INC.
                             ---------------------
             (Exact Name of Registrant as specified in its Charter)

                        COMMERCIAL LABOR MANAGEMENT, INC.
                       ----------------------------------
                  (Former Name: Change Effective July 1, 1999)

              NEVADA                                          88-0241079
  -------------------------------                         ------------------
  (State or other Jurisdiction of                           I.R.S.Employer
  Incorporation or Organization                           Identification No.)

              1299 Ocean Avenue, Suite 900 - Santa Monica, CA 90401
            --------------------------------------------------------
              (Address of Principal Executive Offices)(Zip Code)

       Registrant's Telephone Number, Including Area Code: (310) 496-3006

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

                     Yes                                        No
                      X
                    -----                                      -----


<PAGE>

                                ARMANDO C. IBARRA
                          CERTIFIED PUBLIC ACCOUNTANTS
                          (A Professional Corporation)

Armando C. Ibarra,C.P.A.                   Members of the California Society of
Armando Ibarra, Jr., C.P.A.                Certified Public Accountants



To the Board of Directors of
Zeros & Ones, Inc.

                          INDEPENDENT AUDITORS' REPORT

We have  audited the  accompanying  balance  sheets of Zeros & Ones,  Inc. as of
December 31, 2002 and 2001 and the related statements of operations,  changes in
stockholders'  equity and cash flows for the years then ended.  These  financial
statements   are  the   responsibility   of  the   Company's   management.   Our
responsibility  is to express an opinion on these financial  statements based on
our audit.

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

In our opinion, the consolidated  financial statements referred to above present
fairly, in all material  respects,  the financial position of Zeros & Ones, Inc.
as of December 31, 2002 and 2001, and the results of their  operations and their
cash flows for the years then ended in  conformity  with  accounting  principles
generally accepted in the United States of America.

/s/Armando C. Ibarra, CPA-APC
----------------------------
Armando C. Ibarra, CPA-APC

April 29, 2003
Chula Vista, California



                                       1
<PAGE>
<TABLE>
<CAPTION>
                                        ZEROS & ONES, INC. AND SUBSIDIARIES
                                            Consolidated Balance Sheets
------------------------------------------------------------------------------------------------------------------------

<S>                                                                   <C>                      <C>
                                                                            As of                    As of
                                                                        December 31,             December 31,
                                                                            2002                     2001
                                                                      ------------------       ------------------
                                     ASSETS

      Current Assets

            Cash                                                    $           281,471     $                  -
            Trade accounts receivable -
                net of allowance for doubtful accounts                          653,861                        -
            Prepaid income taxes                                                 10,000                        -
            Deferred tax benefit                                                122,254                        -
                                                                      ------------------       ------------------
      Total Current Assets                                                    1,067,586                        -

      Property & Equipment - Net of Accumulated Depreciation &
          Amortization                                                          406,890                  381,850

      Other Assets
            Intangible assets - net of accumulated amortization               3,833,684                  117,996
            Other assets                                                        126,120                  126,120
            Workers' comp. premium                                               23,090                        -
            Workers' comp. deposit                                              996,689                        -
            Workers' comp. claims                                               214,174                        -
            Rent deposit                                                          5,625                        -
            Other deposits                                                        1,685                        -

                                                                      ------------------       ------------------
      Total Other Assets                                                      5,201,067                  244,116
                                                                      ------------------       ------------------

            TOTAL ASSETS                                            $         6,675,543     $            625,966
                                                                      ==================       ==================
</TABLE>








       See Auditors' Report and Notes to Consolidated Financial Statements

                                        2
<PAGE>
<TABLE>
<CAPTION>
                                        ZEROS & ONES, INC. AND SUBSIDIARIES
                                            Consolidated Balance Sheets
------------------------------------------------------------------------------------------------------------------------

<S>                                                                   <C>                      <C>
                                                                            As of                    As of
                                                                        December 31,             December 31,
                                                                            2002                     2001
                                                                      ------------------       ------------------


                                  LIABILITIES & STOCKHOLDERS' EQUITY / (DEFICIT)

      Current Liabilities
            Accounts payable and accrued expenses                   $           538,012     $            340,824
            Accrued payroll and vacation                                              -                   40,000
            Payroll taxes payable                                               185,876                        -
            Employee benefits payable                                            33,573                        -
            Security deposits                                                   420,000                        -
            Short term notes for workers' comp. deposits                      1,363,359                        -
            Convertible notes                                                    25,000                        -
            Lines of credit                                                     187,114                        -
            Credit cards payable                                                 36,281                        -
            Deferred stock option compensation                                  400,300                  400,300
            Due to officer                                                      129,145                   93,530
            Current portion of obligations under capitalized leases              44,817                   44,817
                                                                      ------------------       ------------------
      Total Current Liabilities                                               3,363,477                  919,471

      Long-Term Liabilities
            Client workers' comp. deposits                                       78,792                        -
            Obligations under capitalized leases, less current maturities         9,249                    9,249
                                                                      ------------------       ------------------

      Total Long-Term Liabilities                                                88,041                    9,249
                                                                      ------------------       ------------------
      TOTAL LIABILITIES                                                       3,451,518                  928,720

      STOCKHOLDERS' EQUITY / (DEFICIT)
           Preferred stock, ($.001 par value, 2,000,000 shares authorized;
            none issued and outstanding)                                              -                        -
           Common stock, ($.001 par value, 100,000,000 shares authorized;
           48,511,858 and 24,511,858 shares issued and outstanding as  of
            December 31, 2002 and December 31, 2001, respectively)               48,512                   24,512
           Paid-in capital                                                   20,886,872               17,310,872
           Accumulated deficit during development stage                     (17,638,138)             (17,638,138)
           Retained earnings / (deficit)                                        (73,221)                       -
                                                                      ------------------       ------------------
      Total Stockholders' Equity / (Deficit)                                  3,224,025                 (302,754)
                                                                      ------------------       ------------------
             TOTAL LIABILITIES &
                              STOCKHOLDERS' EQUITY / (DEFICIT)      $         6,675,543     $            625,966
                                                                      ==================       ==================
</TABLE>






       See Auditors' Report and Notes to Consolidated Financial Statements

                                        3
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                      Consolidated Statements of Operations

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


                                               Year Ended           Year Ended
                                              December 31,         December 31,
                                                  2002                 2001
                                             ----------------    ---------------



  Revenues                                 $      46,652,291     $      344,253
  Cost of sales                                  (44,533,259)          (235,986)
                                             ----------------    ---------------

  Gross Profit                                     2,119,032            108,267

  Research & development expense                           -             55,101
  General & administrative expenses                2,239,162          3,346,438
                                             ----------------    ---------------

  Total Expenses                                   2,239,162          3,401,539

  Other Income / (Expenses)

  Miscellaneous income                                     -             33,717
  Finance charges                                    (63,028)                 -
  Interest expense                                   (12,317)                 -
                                             ----------------    ---------------

  Total Other Income / (Expenses)                    (75,345)            33,717
                                             ----------------    ---------------

  Net Income / (Loss) Before Taxes                  (195,475)        (3,259,555)

  Income Tax Benefit (Provision)                     122,254                  -
                                             ----------------    ---------------

  Net Income / (Loss)                                (73,221)        (3,259,555)
                                             ================    ===============

  Basic earnings / (loss) per share        $           (0.00)    $        (0.14)
                                             ================    ===============

  Weighted average number of
    common shares outstanding                     46,539,255         23,948,623
                                             ================    ===============




       See Auditors' Report and Notes to Consolidated Financial Statements

                                        4
<PAGE>
<TABLE>
<CAPTION>

                                                ZEROS & ONES, INC. AND SUBSIDIARIES
                                     Statement of Changes in Stockholders' Equity / (Deficit)
                                          From January 1, 1999 through December 31, 2002
--------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>        <C>       <C>     <C>        <C>        <C>        <C>             <C>     <C>
                                                                                                  Accumulated
                                     Common Stock      Preferred Stock   Additional  Receivable    Deficit      Retained   Total
                                   Shares     Amount   Shares   Amount   Paid - in     from        During       Earnings
                                                                          Capital   Stockholder   Development   (Deficit)
                                                                                                   Stage
---------------------------------------------------------------------------------------------------------------------------------

 Balance at  January 1, 1999      7,038,000  $ 55,000  605,180 $ 6,051,800 $  247,932       $ - $ (6,117,654)      $ -  $ 237,078

 Shares issued to shareholders    2,663,823         -        -           -          -         -            -         -          -
 of CLMI

 Shares issued for cash                   -         -  252,128   2,521,284          -         -            -         -  2,521,284

 Shares issued for assets
 purchased at
 transferor's basis                 660,000         -        -           -    421,957  (292,300)           -         -    129,657

 Exchange of preferred stock
 to common stock at
 exchange ratio                   8,773,878 8,573,084 (857,308) (8,573,084)         -         -            -         -          -

 Shares issued for services         122,724        61        -           -    191,870         -            -         -    191,931

 Shares issued for deferred
 offering cost                      150,000        50        -           -    257,950         -            -         -    258,000

 Shares issued for private
 placement                          122,727        41        -           -    179,959         -            -         -    180,000

 Exercise of warrants                92,883        31        -           -     92,852         -            -         -     92,883

 Cancellation of shares          (2,120,541)        -        -           -          -         -            -         -          -

 Net loss,  December 31, 1999             -         -        -           -          -         -   (3,578,711)        - (3,578,711)
---------------------------------------------------------------------------------------------------------------------------------
 Balance,  December 31, 1999     17,503,494 8,628,267        -           -  1,392,520  (292,300)  (9,696,365)        -     32,122
=================================================================================================================================

 Net proceeds from private
 placement and warrants           5,988,568     5,974        -           -  6,949,555         -            -         -  6,955,529

 Payments on receivable
 from stockholder                         -         -        -           -          -   202,500            -         -    202,500

 Write off of receivable
 from stockholder                         -         -        -           -          -    89,800            -         -     89,800

 Shares issued for offering
 services related
 to private placement               148,128       148        -           -    118,852         -            -         -    119,000

 Shares issued for services
 rendered                            55,000        55        -           -     90,145         -            -         -     90,200

 Allocation of par value to
 additional paid-in capital               -(8,610,749)       -           -  8,610,749         -            -         -          -

 Net loss,  December 31, 2000             -         -        -           -          -         -   (4,682,218)        - (4,682,218)
---------------------------------------------------------------------------------------------------------------------------------
 Balance,  December 31, 2000     23,695,190    23,695        -           - 17,161,821         -  (14,378,583)        -  2,806,933
=================================================================================================================================

 Shares issued for services          33,410        33        -           -     14,093         -           -          -     14,126

 Shares issued for services          90,000        90        -           -     24,173         -           -          -     24,263

 Shares issued for employee
 compensation                         3,000         3        -           -      1,425         -           -          -      1,428

 Exercise of warrants                80,258        81        -           -     24,570         -           -          -     24,651

 Options granted for services             -         -        -           -      2,400         -           -          -      2,400

 Exercise of warrants                10,000        10        -           -        (10)        -           -          -          -

 Shares issued for services         600,000       600        -           -     82,400         -           -          -     83,000

 Net loss,  December 31, 2001             -         -        -           -          -         -  (3,259,555)         - (3,259,555)
---------------------------------------------------------------------------------------------------------------------------------
 Balance,  December 31, 2001     24,511,858    24,512        -           - 17,310,872         - (17,638,138)             (302,754)
=================================================================================================================================

 Shares issued for
 JEG acquisition                 24,000,000    24,000        -           -  3,576,000         -           -          -  3,600,000

 Net loss,  December 31, 2002             -         -        -           -          -         -           -    (73,221)   (73,221)
---------------------------------------------------------------------------------------------------------------------------------
 Balance,  December 31, 2002     48,511,858  $ 48,512        -      $    -$20,886,872       $ - $(17,638,138) $(73,221)$3,224,025
=================================================================================================================================

</TABLE>
      See Auditors' Report and Notes to Consolidated Financial Statements

                                        5
<PAGE>
<TABLE>
<CAPTION>

                                   ZEROS & ONES, INC. AND SUBSIDIARIES
                                  Consolidated Statements of Cash Flows
------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                   <C>
                                                                     Year Ended           Year Ended
                                                                    December 31,         December 31,
                                                                        2002                 2001
                                                                  -----------------    -----------------
  CASH FLOWS FROM OPERATING ACTIVITIES
       Net loss                                                $           (73,221) $        (3,259,555)
       Depreciation expense                                                108,638              233,791
       Stock issued for services                                                 -              149,868
       Loss on abandonment of leasehold                                          -              179,129
       Loss on retirement of property & equipment                                -                6,861
       (Increase)/Decrease in trade accounts receivable                   (653,861)             100,000
       (Increase)/Decrease in employee advances - related party                  -               44,500
       (Increase)/Decrease in prepaid expenses                             (10,000)              85,387
       (Increase)/Decrease in prepaid income taxes                               -                    -
       (Increase)/Decrease in deferred tax benefit                        (122,254)                   -
       (Increase)/Decrease in workers' comp. premium                       (23,090)                   -
       (Increase)/Decrease in workers' comp. deposit                      (996,689)                   -
       (Increase)/Decrease in workers' comp. claims                       (214,174)                   -
       (Increase)/Decrease in rent deposit                                  (5,625)                   -
       (Increase)/Decrease in other deposits                                (1,685)                   -
       Increase/(Decrease) in accounts payable & accrued exp.              197,188              174,967
       Increase/(Decrease) in accrued payroll & vacation                   (40,000)             (36,055)
       Increase/(Decrease) in payroll taxes payable                        185,876                    -
       Increase/(Decrease) in employee benefits payable                     33,573                    -
       Increase/(Decrease) in security deposits                            420,000
       Increase/(Decrease) in short term notes for workers'comp.deposit  1,363,359                    -
       Increase/(Decrease) in convertible notes                             25,000                    -
       Increase/(Decrease) in client workers' comp. deposits                78,792                    -
       Increase/(Decrease) in deferred rent                                      -             (112,692)
       Increase/(Decrease) in deferred stock compensation                        -              325,078
       Increase/(Decrease) in unearned revenue                                   -              (40,000)
                                                                  -----------------    -----------------
       Net cash provided / (used) by operating activities                  271,827           (2,148,721)

  CASH FLOWS FROM INVESTING ACTIVITIES
       Acquisition of property and equipment                              (137,715)             (12,888)
       Proceeds from disposal of property and equipment                      4,037                5,454
       Intangible assets - net of accumulated amortization              (3,715,688)                   -
       Acquisition of intellectual property                                      -               (5,000)
       Other assets                                                              -               10,069
                                                                  -----------------    -----------------
       Net cash provided / (used) by investing activities               (3,849,366)              (2,365)
</TABLE>


       See Auditors' Report and Notes to Consolidated Financial Statements
                                       6

<PAGE>
<TABLE>
<CAPTION>

                                   ZEROS & ONES, INC. AND SUBSIDIARIES
                                  Consolidated Statements of Cash Flows
------------------------------------------------------------------------------------------------------------
<S>                                                           <C>                   <C>
                                                                     Year Ended           Year Ended
                                                                    December 31,         December 31,
                                                                        2002                 2001
                                                                  -----------------    -----------------


  CASH FLOWS FROM FINANCING ACTIVITIES
       Increase in due to officer                                           35,615               93,530
       Payments on obligations under capitalized leases                          -              (14,139)
       Proceeds from lines of credit                                       187,114                    -
       Proceeds from credit cards payables                                  36,281                    -
       Stock issued for acquisition of subsidiary                        3,600,000                    -
                                                                  -----------------    -----------------

       Net cash provided / (used) by financing activities                3,859,010               79,391
                                                                  -----------------    -----------------

      Net increase / (decrease) in cash                                    281,471           (2,071,695)

      Cash at beginning of year                                                  -            2,071,695
                                                                  -----------------    -----------------

      Cash at end of year                                      $           281,471  $                 -
                                                                  =================    =================

  SUPPLEMENTAL DISCLOSURES OF CASH FLOW
  INFORMATION:

  Interest paid                                                $           (75,345) $             5,894
                                                                  -----------------    -----------------

  Income taxes paid                                            $                 -  $             5,600
                                                                  -----------------    -----------------

  SUPPLEMENTAL SCHEDULE OF NON-CASH
  INVESTING AND FINANCING ACTIVITIES:

  Stock issued for acquisition of subsidiary                   $         3,600,000  $                 -
                                                                  -----------------    -----------------

  Stock issued for services                                    $                 -  $            66,868
                                                                  -----------------    -----------------
</TABLE>




       See Auditors' Report and Notes to Consolidated Financial Statements
                                       7
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002


NOTE 1.   HISTORY AND ORGANIZATION OF THE COMPANY

Zeros & Ones, Inc.  (formerly  Commercial  Labor  Management,  Inc.) is a Nevada
corporation  (the  "Company")  organized  October  19,  1988.  The  Company  was
originally  incorporated  in Nevada under the name Tokyo  Raiders on October 19,
1988. In 1990,  the Company  acquired  certain  rights to a pizza  franchise and
changed its name to Club USPN,  Inc. In June 1993,  the  Company  acquired  Sono
International,  Inc.  ("Sono"),  but those operations were  discontinued and the
shares of Sono were sold to the original  shareholders  of Sono.  In March 1995,
the Board approved the merger with Commercial Labor  Management,  Ltd. which was
handled as a reverse merger, and also approved a name change to Commercial Labor
Management,  Inc.  The name change was made,  but the merger was  rescinded  and
never completed.

Effective July 1, 1999, the Company  entered into a Plan of  Reorganization  and
Asset Purchase Agreement to purchase 100% of the assets of Zeros & Ones, Inc., A
Delaware  corporation  ("ZOI-DE"),  and  Plans of  Reorganization  and  Exchange
Agreements to acquire 100% of the total issued and  outstanding  shares of stock
of (1) Quantum  arts,  Inc.("QA"),  (2) EKO  Corporation("EKO"),  (3)  Polygonal
Research  Corporation  ("PRC"),  (4) KidVision,  Inc. ("KV"), and (5) Wood Ranch
Technology  Group,  Inc.("WRTG"),  in exchange for the issuance of the Company's
common  stock plus the  issuance of a note in the amount of $300,000  payable to
the stockholder of QA for  reimbursement of expenses.  As of part of the overall
reorganization,  the Company also made an exchange offer to the  shareholders of
Pillar West Entertainment,  inc. ("PWE") to acquire 100% of the total issued and
outstanding  capital  stock  of PWE in  consideration  for the  issuance  of the
shareholders of PWE. Under the Plan of  reorganization,  QA, EKO, PRC, KV, WRTG,
PWE, and assets acquired from ZOI-DE,  referred as "the Group",  are merged into
one company and are accounted  for in a manner  similar to a pooling of interest
as if they  under  common  control.  After the  effective  date of the  business
combination of the Group and the Company, the original stockholders of the Group
own a  majority  of the  shares of  common  stock of the  Company.  The Group is
treated  as the  acquirer  in this  business  combination  under the  Accounting
Principal Board Pronouncement No. 16, paragraph 70, reverse to a reverse merger.
The business combination of the Group and the Company is accounted for under the
purchase  method in which the purchase price $207,500 cash paid and  liabilities
assumed of the Company  are  allocated  to the fair  market  value of assets and
liabilities  acquired.  The excess of the purchase price over the fair values of
the net assets acquired has been recorded as goodwill.

During  the first  quarter  of 2002,  the  Company  successfully  completed  the
acquisition of Joint Employers Group (JEG). JEG is now a wholly owned subsidiary
of the Company.  The consolidated  financial  statements include the accounts of
the Company and all of the wholly owned subsidiaries.

                                       8
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002

NOTE 2.   ACCOUNTING POLICIES AND PROCEDURES

a.   Business Activity

The  Company  creates  proprietary  technology  and  content-based  intellectual
property to advance the  convergence of the Internet with  television,  wireless
and  high-speed  networks.  In addition to fees  generated  from  development of
software,  content,  and other technology  products,  the Company may also, from
time to time,  receive  royalty income from sales of certain  software  products
developed for others. With the recent acquisition of Joint Employers Group (JEG)
the  Company now plans to provide  outsource  PEO  solutions  for  handling  all
aspects of human resources.

b.   Development Stage Enterprise

In prior periods the Company was  classified as a development  stage  enterprise
company  as  defined in  Statement  of  Financial  Accounting  Standards  No. 7,
"Accounting  and  Reporting  by  Development   Stage   Enterprises."  All  loses
accumulated  from the inception of Zeros & Ones, Inc.  through December 31, 2001
are  considered as part of the Company's  development  stage  activities.  As of
January  1,  2002 the  Company  is no  longer  considered  a  development  state
enterprise.

c.   Revenue Recognition

The Company  generally  recognizes  sales under  fixed-price-type  contracts  as
deliveries are made or at the completion of contractual  billing milestones that
equate to the completion of a specific component of the contract.

d.  Principles of Consolidation

The consolidated  financial  statements include the accounts of its wholly owned
subsidiaries of Quantum Arts, Inc., EKO Corporation,  Pillar West Entertainment,
Inc.  (PWE),  Polygonal  Research  Corporation,  KidVision,  Inc. and Wood Ranch
Technology Group, Inc., and Joint Employers Group. All significant  intercompany
transactions and balances have been eliminated.

                                       9
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002


NOTE 2.   ACCOUNTING POLICIES AND PROCEDURES (continued)


e.   Property and Equipment

Property and equipment, recorded at cost, are depreciated or amortized using the
straight-line  method over the estimated  useful lives of the assets,  which are
generally three to five years.  Leasehold  improvements  are amortized using the
straight-line  method over the shorter of their  estimated  lives or lease.  The
Company  has  adopted  Statement  of  Financial  Accounting  Standards  No. 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed of "(SFAS No. 121").  SFAS No. 121 requires that  long-lived  assets
and certain identifiable  intangibles be reviewed for impairment whenever events
or changes in  circumstances  indicate that the carrying  amount of an asset may
not be recoverable. Recoverability of asset to be held and used is measured by a
comparison  of the  carrying  amount of an asset to the  future  net cash  flows
expected  to be  generated  by the asset.  If such assets are  considered  to be
impaired, the impairment to be recognized is measured by the amount by which the
carrying amounts of the assets exceed their fair values of the assets. Assets to
be disposed of are  reported at the lower of the  carrying  amount of fair value
less cost of sell.  Adoption of this  statement  did not  materially  impact the
Company's financial position, results of operations or liquidity.

f.   Comprehensive Income

Comprehensive loss consists of net loss from operations only.

g.   Use of 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 revenue and expenses during the reporting period. Actual
results could differ from those estimates.

h.  Cash Equivalents

The Company  considers  all highly liquid  investments  with a maturity of three
months or less to be cash equivalents.

                                       10
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002

NOTE 2.   ACCOUNTING POLICIES AND PROCEDURES (continued)

i.   Net Loss per Share

All presented data reflects the retroactive  effect of the  three-for-one  stock
split on February 25, 2000.

For the period  ended  September  30,  2002,  the per share data is based on the
weighted  average  number  of  common  equivalents  shares  outstanding  and are
calculated in accordance  with the Financial  Accounting  Standards Board (FASB)
No. 128 and Staff  Accounting  Bulletin of  Securities  and Exchange  Commission
(SAB) No. 98 whereby common stock,  options or warrants to purchase common stock
or other potentially dilutive instruments issued for nominal  consideration must
be  reflected  in basic and  diluted  per share  calculation  for all periods in
manner similar to a stock split, even if anti-dilutive.

NOTE 3.  WORKERS' COMPENSATION DEPOSITS

The  Company's  subsidiary,  JEG,  is  self-insured  for  workers'  compensation
purposes up to $75,000.  The Company  also  carries  third party  insurance  for
claims above this  threshold.  This third party  insurance  policy  requires the
Company to  maintain  $1,400,000  in  deposits.  To help  fulfill  this  deposit
requirement the Company had to borrow funds from third parties,  these loans are
reflected in the balance sheet as short-term notes.

NOTE 4.   PROPERTY & EQUIPMENT

                                                        As of December 31,
                                                               2002
                                                   -----------------------------

   Computer Equipment                                         $  68,221
   Office Furniture & Fixtures                                  503,753
   Time Clocks                                                    9,924
   Software-Internal Use                                         45,391
   Leasehold  Improvements                                      238,227
                                                   -----------------------------
                                                                865,516
   Accumulated Depreciation                                    (458,626)
                                                   -----------------------------
   Property & Equipment - Net                                   406,890
                                                   =============================

                                       11
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002


NOTE 4.   PROPERTY & EQUIPMENT (continued)


     Depreciation expense totaled $108,638 for the year ended December 31, 2002.

NOTE 5.  INTANGIBLES

                                                         As of December 31,
                                                                2002
                                                    ----------------------------


         Goodwill                                                   $ 1,940,911
         Intellectual Property                                           20,000
         Customer List                                                2,000,000
                                                    ----------------------------
                                                                    $ 3,960,911
         Accumulated Amortization                                      (127,227)
                                                    ----------------------------
         Intangible Assets - Net                                    $ 3,833,684
                                                    ============================



NOTE 6.  OBLIGATIONS UNDER CAPITALIZED LEASES

The Company leases computer  equipment from unrelated  parties under capitalized
leases,  which are secured by the related assets. The following is a schedule by
year of future minimum lease payments required under capitalized leases together
with the present value of the minimum lease payments as of December 31, 2002:

         Year ended December 31,
         2002                                                            46,985
         2003                                                            10,074
                                                       -------------------------
         Total minimum lease payments                                    57,509
         Less amounts representing interest                              (2,993)
                                                       -------------------------
         Present value of minimum lease payments                         54,066
         Less current portion                                           (44,817)
                                                       =========================
                                                                    $     9,249
                                                       =========================


                                       12
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002


NOTE 7.   OBLIGATIONS UNDER PROPERTY LEASE

The Company's subsidiary, JEG, entered into a lease agreement with a non-related
party to occupy  office  space on 12070  Telegraph  Road,  Suite  100,  Santa Fe
Springs,  Ca. The  commencement  date was May 1, 1999 with an  original  term of
three years and one three-year option, which JEG exercised. The Company plans to
make  this the  corporate  headquarters  and is in the  process  of  relocating.
Currently  the minimum  monthly rent is  $6,087.60,  and  management  expects to
exercise the option. Minimum rental payments per year are as follows:

         Year:                         2002             2003           2004
                                       ----             ----            ----

         Minimum rental:               $18,262          $73,056         $73,056


NOTE 8.   INCOME TAXES

For federal income tax purposes,  the Company has available a net operating loss
carryforward of approximately $17,711,359.  The net operating loss carryforwards
will expire twenty years from the date the loss was incurred.

Temporary  differences,  which give, rise to deferred tax assets and liabilities
at December 31, 2002 are as follows:

         Net operating loss carryfoward                            $ 17,711,359
         Valuation allowance                                        (17,711,359)
                                                      --------------------------
         Net deferred taxes                                        $         -0-
                                                      ==========================

A full valuation  allowance has been  established for the Company's net deferred
tax assets since the realization of such assets through the generation of future
taxable income is uncertain.

Under the Tax Reform  Act of 1986,  the  amount of  benefit  from net  operating
losses and tax credit carryfowards may be impaired,  or limited to, a cumulative
stock  ownership  change of  greater  than 50%,  as  defined,  over a three year
period.  During 2000 and 2001 the Company experienced stock ownership changes as
described in Note 1, which could limit the utilization of its net operating loss
carryforward in future periods.

                                       13
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002

NOTE 9.  CAPITAL STOCK

a.   Preferred stock

The  authorized  capital  stock of the  Company  includes  2,000,000  shares  of
preferred  stock,  par  value  $0.001  per  share,  none of which is  issued  or
outstanding.

b.  Common stock

During the first quarter of 2000,  pursuant to a Confidential  Private Placement
Memorandum, the Company sold 5,523,204 shares of the Company's common stock at a
purchase  price $1.46 per share and 5,523,204  warrants at an exercise  price of
$1.83  per  share.  The  Confidential  Private  Placement  was  exempt  from the
registration  provisions  of the Act  pursuant  to Section  4(2) of the Act,  as
transactions  by an issuer not involving  any public  offering.  The  securities
issued pursuant to the Confidential Private Placement were restricted securities
as defined in Rule 144. The offering  generated gross proceeds of  approximately
$8,100,000  subject to various offering costs.  Additionally,  150,000 shares of
the Company's common stock were issued for services  rendered in connection with
this confidential private placement.  An additional 180,300 warrants exercisable
until  March  31,  2005 at a price  of  $1.83  per  share  and  77,200  warrants
exercisable  until March 31, 2001 at a price of $5.00 per share, were issued for
services rendered in connection with this confidential  private placement during
2000.

During  February  2000,  the Company  amended its Articles of  Incorporation  to
provide for an increase in the number of  authorized  shares of common  stock to
100,000,000  par value $.001.  The Company also declared a  three-for-one  stock
split.  The stock  split was  effective  on  February  2000.  In July 2000,  the
Company's Board of Directors  authorized the adoption of the 2000 Employee Stock
Incentive  Plan  (the  "Plan").  Under  the Plan,  the  Company  may grant up to
4,500,000  stock  options to purchase  up to  4,500,000  share of the  Company's
common stock.

The Company  reallocated  $8,610,749 between common stock and paid in capital to
reflect the par value of shares outstanding as of December 31, 2000.

During  2001 a total of 527,420  warrants  were  issued for  services  provided,
300,000 of which were exercised  prior to December 31, 2001. On January 31, 2002
the Company issued  24,000,000 shares of its common stock for 100% of the common
stock of Joint Employers Group.

As of  December  31,  2002 the Company  had  48,511,858  shares of common  stock
outstanding.

                                       14
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002

NOTE 10.  STOCK OPTIONS

In July 2000,  the Company's  Board of directors  authorized the adoption of the
2000 Employee Stock Incentive Plan (the "Plan"). The Company's 2000 nonqualified
stock option plan permits the grant of stock options to any employee or director
of the Company.  Under the terms of the plan 4,500,000 shares are authorized for
issuance upon exercise of options.  Under the  nonqualified  plan,  options have
been  granted  with an  exercise  price  equal to the fair  market  value of the
Company's  stock on the date of the grant and expire  ten years  after the grant
date.  Vesting is over a four-year  period  commencing  with the employees' hire
date,  with  portions  of a grant  becoming  exercisable  at one year  after the
vesting  start date and then  one-thirty-sixth  (1/36) per month to complete the
four year vesting.

The  Company  has  elected to apply APB  Opinion  No. 25 in  accounting  for the
non-qualified  stock option  plan.  Therefore,  the Company  does not  recognize
compensation  expense for the fixed stock options  because the exercise price of
the  option  equals  the fair  value of the stock on the  effective  date of the
grant. Currently outstanding options are accounted for as variable options under
APB Opinion No. 25. Expense is recognized at the end of each fiscal period based
on the  difference  between  market  price at that time and the option  exercise
price over the  vesting  period of the  options.  The Company did not record any
expense for the year ended December 31, 2002. No additional  options were issued
for the year ended December 31, 2002.

NOTE 11.  LITIGATION

Paul  Frank  Industries  ("PFI")  filed  a  legal  action  against  the  Company
requesting that the court advise them and the Company of their respective rights
under the Exclusive Media Rights Agreement between the parties. In addition, PFI
requested the court to prevent the Company from entering into future third party
agreements under the Exclusive Media Rights Agreement without the prior approval
of PFI. The Company  disputes the approval rights the PFI is claming and intends
to  vigorously  and broadly  defends its rights.  PFI's  action has no effect on
existing agreements related to the Company's production of Paul Frank's Julius &
Friends.

In a related  action,  PFI's  requested  for a  temporary  restraining  order to
prevent the Company for  entering  into third  party  agreements  involving  PFI
characters  was denied by the court  because,  among other  things,  PFI did not
demonstrate to the court that PFI was likely to succeed on the merits.

                                       15
<PAGE>
                       ZEROS & ONES, INC. AND SUBSIDIARIES
                          (A Development Stage Company)
                   Notes to Consolidated Financial Statements
                             As of December 31, 2002

NOTE 12.   GOING CONCERN

The Company's  financial  statements are prepared  using the 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.  However,  the Company has minimal current source of revenue.  Without
realization  of  additional  capital,  it would be  unlikely  for the company to
continue as a going concern.  It is management's plan to seek additional capital
through the sale of its securities through private placements.

NOTE 13.  DEVELOPMENT STAGE

In subsequent  years the Company was  classified as a development  stage company
based on accounting  guidelines.  However,  on January 31, 2002 Company acquired
Joint Employers Group,  which has had a history of significant  revenues.  As of
January 1, 2002 the Company will no longer be classified as a development  stage
company.

NOTE 14. SUBSEQUENT EVENT

March 31,  2003 the  merger  with Joint  Employers  Group was  rescinded.  Thus,
subsequent reports will not include the operations of Joint Employers Group.
















                                       16
<PAGE>
MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF RESULTS OF  OPERATIONS  AND  FINANCIAL
CONDITION

CAUTIONARY STATEMENTS

This Form 10-KSB contains  financial  projections,  synergy  estimates and other
"forward-looking  statements"  as that term is used in federal  securities  laws
about Zeros & Ones,  Inc.'s ("ZROS" or the "Company",  or "Division")  financial
condition,  results of operations and business.  These statements include, among
others:

-  statements  concerning  the  benefits  that ZROS expects will result from its
business  activities  and  certain  transactions  ZROS  has  completed,  such as
increased  revenues,  decreased  expenses and avoided expenses and expenditures;
and

- statements  of ZROS's  expectations,  beliefs,  future  plans and  strategies,
anticipated  developments and other matters that are not historical facts. These
statements may be made expressly in this Form 10-KSB. You can find many of these
statements by looking for words such as  "believes,"  "expects,"  "anticipates,"
"estimates,"  "opines," or similar  expressions used in this Form 10-KSB.  These
forward-looking  statements  are  subject  to  numerous  assumptions,  risks and
uncertainties  that may cause ZROS's actual  results to be materially  different
from any future results  expressed or implied by ZROS in those  statements.  The
most  important  facts that could  prevent ZROS from  achieving its stated goals
include, but are not limited to, the following:

(a)  volatility and/or decline of ZROS's stock price;

(b)  potential fluctuation in quarterly results;

(c)  barriers to raising the  additional  capital or to obtaining  the financing
     needed to implement its full business plans;

(d)  changes in demand for ZROS's products and services;

(e)  rapid and significant changes in technology and markets;

(f)  litigation with and/or legal claims/allegations by outside parties;

ZROS is a  development  stage company that has incurred  operating  losses since
inception.  There is no assurance  that the Company's  research and  development
projects will result in commercially successful products or services, or whether
patents will be granted for any of them.  There is no assurance that the Company
will ever be profitable,  the Company may not be able to  successfully  develop,
manage or market its  products  and  services,  the  Company  may not be able to
attract or retain qualified executives and technology  personnel,  the Company's
products and services may become obsolete,  government regulation may hinder the
Company's  business,  additional  dilution in outstanding stock ownership may be
incurred due to the issuance of more shares,  warrants and stock options, or the

                                       17
<PAGE>

exercise of outstanding  warrants and stock options, and other risks inherent in
the Company's businesses.

Because the  statements are subject to risks and  uncertainties,  actual results
may differ  materially  from those  expressed or implied by the  forward-looking
statements.  ZROS  cautions you not to place undue  reliance on the  statements,
which speak only as of the date of this Form 10-KSB.  The cautionary  statements
contained or referred to in this section should be considered in connection with
any subsequent written or oral  forward-looking  statements that ZROS or persons
acting on its behalf may issue. ZROS does not undertake any obligation to review
or confirm  analysts'  expectations  or  estimates  or to release  publicly  any
revisions to any  forward-looking  statements to reflect events or circumstances
after the date of this Form 10-KSB or to reflect the occurrence of unanticipated
events.

CURRENT OVERVIEW

The Convergence Resurgence

As of early 2003,  the Company has been  observing an exciting  re-emergence  of
opportunities  and  synergies in the original  areas of  technology,  broadband,
wireless,  and  electronic  commerce  that gave rise to the formation of Zeros &
Ones, Inc. in the first place.  As a result,  the Company is pleased to announce
its  intent  to  re-activate  several  business  activities  in  these  areas of
development  that  previously  had to be set  aside and to  re-focus  all of its
efforts in this territory.

Throughout  all of 2002, the Company had found it necessary to work with several
limiting factors, including but not limited to, 1) A much slower and pessimistic
post-911  economy;  2)  A  wary  pre-Operation  Iraqi  Freedom  marketplace;  3)
Continued  post dot-com  valuation  fall out and lack of industry  boldness;  4)
Significant   changes  and  costs  associated  with  new  reporting,   corporate
governance,  and accounting procedures;  and 5) Servicing of accumulated debt at
both the parent and  subsidiary  levels with  inadequate  working  capital while
seeking to maintain operations.

As of March of 2003,  although the aforementioned  factors still have an ongoing
ambient effect in general,  it appears that effect is lessening,  and there is a
clear  indication  that the  technology  industry  is  getting  back to work and
renewing  their  economic  confidence.  As a result,  the outlook  appears to be
improving by several orders of magnitude for the Company to actively  pursue its
original business mission:  to become a leading  concentration of expert talent,
proprietary  technology,  and  intellectual  property  focused  on the  powerful
world-expanding opportunities of digital convergence.

Intel CEO,  Craig Barret,  signaled the return to  convergence  confidence in an
address at the Intel  Developer Forum on February 18th of this year. "I want you
to think of convergence as any aspect of technology  coming  together," he said,
"The desire for technology is alive and well.  Perhaps we have to carry over the
hangover of the dot-com bust,  but growth will surely come from  investments  we
make in innovations this year."

                                       18
<PAGE>

NEW BOARD OF DIRECTORS MEMBERS

The  return  to our  technological  focus  begins  with a change to the Board of
Directors.  Effective  immediately,  the Company  welcomes two new board members
with highly-decorated  technological backgrounds:  Mark M. Laisure and George A.
Filippides.

Mark M. Laisure -

Among his early  successes,  Mr.  Laisure was a member of the  founding  team of
Inktomi  Corporation,  a leading  provider of OEM Web search and paid  inclusion
services.  Inktomi's  partners and customers include  Amazon.com,  eBay, HotBot,
MSN, and WalMart.com. Inktomi recently announced a merger with Yahoo!, a leading
provider of comprehensive online products and services.

In 1999, Mr. Laisure joined the team at Milcom  Technologies  and remains on its
board of  directors.  Milcom is a creator of, and  investor  in, new  technology
companies  that  develop  products  for emerging  high-growth  markets,  such as
telecommunications,  digital  video,  software and biotech.  Mr. Laisure is also
co-founder and Chairman of iNetNow,  Inc. a facilitator  of virtually  unlimited
Internet-  and  non-Internet-based  information  via  live  information  agents,
iNetNow has established alliances with Lycos, Telefonica and i3Mobile, making it
the leader in its space.

As  the   principal-founding   shareholder  of  FairFirst   Ventures   Corp.,  a
venture-consulting  firm  focused  on  market-dominant  companies  that  develop
advanced  products,  applications  and services,  Mr. Laisure  manages a dynamic
portfolio of companies that includes:

     MeshNetworks:  a developer of patented peer-to-peer routing technology that
     enables a mobile broadband  solution that supports voice, video and data at
     unparalleled speeds.

     TeraNex:  a developer of ultra high performance image processing  solutions
     for the most demanding pattern recognition and image analysis challenges.

     Theseus Logic: a semiconductor company developing and marketing a family of
     clockless digital signal processors.

     Skycross: a company devoted to the design, development and manufacturing of
     next-generation  RF and antenna  technology for mobile  telecommunications,
     automotive telematics and wireless computing markets.

     Consortio:  a provider of a global commerce  infrastructure and development
     platform.

     National  Lampoon:  a legendary  comedy  franchise with comedy  projects in
     motion pictures,  television programming,  multimedia, books, audio, video,
     and a wide array of merchandise.

     Typhoon  Entertainment:   a  production  company  that  creates,  develops,
     produces,  and  selectively  distributes  content  through  feature  films,
     television, home video and other emerging media.

                                       19
<PAGE>

Mr. Laisure has held senior positions with  UBSPaineWebber and Shields & Company
(member NYSE),  and he currently serves on the Board of Directors for Neosphere,
iNetNow, Milcom Technologies, Skycross and Consortio.

George A. Filippides -

A pioneer  in  systems  integration,  global  data  networking,  and  electronic
commerce.  During his twenty-year  career,  Mr.  Filippides  helped create joint
venture products and services for EDS/AMI, Baxter Travenol/IBM,  and GTI/Primus.
Among his  accomplishments  were the  creation of AMI's  health  care  financial
management  system and the later  merging of this system with EDS's patient care
information  system to form the first,  fully integrated  nationwide  healthcare
system.  This highly successful joint venture between AMI and EDS revolutionized
the field of data management and processing and generated record revenues, while
making Mr. Filippides widely known in the industry for his creative approach and
technical   expertise   in   the   converging   of   hardware,    software   and
telecommunications.  He has held  executive  positions as  President  and CEO of
Telesystems,  Inc., President of Software Artisans, Inc., and Founder, President
and CEO of GlobalNet Technologies.

His experience in developing  innovative  electronic  data solutions for Fortune
500 companies led him to the  co-founding of Neosphere,  a company with the goal
of providing a unique "one stop"  business-to-business (B2B) electronic commerce
capability that significantly reduces costs and increases productivity for small
and medium  size  enterprises  (SMEs) and the  government.  He has an  extensive
background in the management and marketing of technology  companies and has been
successful in completing  mergers and acquisitions in positions he has held both
on telecommunications as well as in information technology.

Correspondingly, Raymond Hotchkiss and James Anderson (each of the company's PEO
business  unit) have  stepped  down from the Board of Directors of Zeros & Ones,
Inc.  William  Burnsed has moved out of the state of California and has amicably
stepped down to pursue other interests.  Robert J. Holtz remains a member of the
Board of Directors.

Robert J. Holtz -

Holtz's  career  accomplishments  span the  fields  of  technology  development,
television production,  capital/public markets, brand positioning, and corporate
management.  Mr.  Holtz  specializes  in creating new  technologies,  developing
corporate  strategies/tactics,  managing corporate  initiatives,  performing M&A
negotiations, and maintaining alliance/co-venture diplomatic relations.

Prior to founding  Zeros & Ones in 1994, Mr. Holtz served as Director of Special
Projects at the renowned Hollywood television  post-production  facility, Action
Video. He developed key techniques and  technologies  for Avid,  Accom,  Abekas,
Quantel, Getris Images,  Discreet, and other major forces in the post-production
field.  Television  campaigns that made use of these  advancements  with Holtz's
direct involvement include Coca-Cola,  Midas,  Sprint, Visa, American Honda, and
Tabasco. During his tenure, Holtz also directed visual effects, presiding over a
200-person  crew, for a children's  sci-fi series that was syndicated in over 74
countries.  He also owned 50% of an Emmy-award  winning  animation  company with

                                       20
<PAGE>

national  campaigns  for Jeep,  Buick,  CBS  Television,  Dole  Foods and others
working with the world's top  advertising  agencies  under  exclusive  contracts
Holtz negotiated.

From 1991 to 1993, Mr. Holtz was a member of Microsoft's  Win32 Advisory  Group,
which  architected the Win32 kernel -- the core of the modern Windows  operating
system from Windows 95 through to the new .NET infrastructure  inclusively.  His
focus was on distributed business  applications,  collaboration  protocols,  and
network interoperability.

Prior to that, Holtz became established as an expert in business automation.  He
automated  the  largest  independent  processor  of credit  cards in the nation,
Cardservice  International  (now owned by First Data  Corporation) and worked on
the construction of 777-FILM / MovieFone (now part of the AOL Time Warner family
and the  largest  outlet of movie  theater  tickets  in the  world).  He led the
development of ERL (Emergency Response Locator) for UniHealth  Corporation.  ERL
coordinates  air/ground  paramedic  units with an AI decision matrix to pinpoint
the most  geographically-proximate  medical facility with physicians equipped to
treat emergency victims on a case-by-case basis. ERL has saved tens of thousands
of lives.

KEY INITIATIVES

The new Board of  Directors  of Zeros & Ones have  formulated a new project plan
for 2003 and 2004 which includes new strategic acquisitions,  specific products,
and  specific  deployment  partners.  Zeros &  Ones'  2003  Phase I  acquisition
strategy includes the purchase of specific target companies,  each of which owns
the rights to high-technology  assets and/or intellectual property that map well
to  Zeros  &  Ones'  unified  vision  of  3T  -  Technologies,  Transports,  and
Transactions.  Phase II is  defined  by a focus on  customer  sales and  service
channel  acquisition.   Value  added  resellers,   online  reseller  groups  and
integrators shall provide a fast track to market for Zeros & Ones products.

The targets have already been identified,  undergone  initial  financial review,
had  preliminary   planning/exploratory  sessions,  and  are  in  the  midst  of
negotiation.

The company will begin a new office of corporate communications to provide ready
access to news, information,  and shareholder support. The new office will begin
operations in June of 2003.  Other new executive roles will be filled  according
to the Company's ongoing plan of reorganization.

Joint  Employers  Group (JEG)  recently  informed Zeros & Ones that its worker's
compensation insurance policy coverage was terminating and that it was unsure of
its ability to maintain  coverage with the California  State Fund because of new
requirements being imposed on its insurance application with the State. In light
of that circumstance and in order to carry out the new plan of action, the Board
determined the necessity to remove its focus from the PEO space and fully direct
its efforts and energies into the technology space.

Effective  March 31, 2003 (with term  negotiations  completed on May 16,  2003),
Zeros & Ones and Joint Employers Group (JEG)  negotiated a repurchase  agreement
with JEG whereas all shares  issued to JEG in it's  acquisition  by Zeros & Ones
are being returned so that the parent company may have the equity base to pursue

                                       21
<PAGE>

other  already-identified  acquisition  targets  that are more  in-line with the
Company's  renewed focus on technology and short term revenue.  The negotiations
were conducted in an orderly fashion through mutual counsel and the parties have
reached a full agreement amicably.

LITIGATION

JEG  and  Zeros  &  Ones  continue  in   communications   with  one  another  as
co-plaintiffs  against defendant Allied Boston Group, First Global, Inc., Allied
Boston International,  and their affiliates,  which failed to release $2 million
dollars on a  fully-executed  Letter of Credit (ID#  031402/1273)  delivered  by
Zeros & Ones  and JEG  jointly.  Zeros & Ones and JEG  have  substantial  claims
against  the  referenced  parties  and expect to share a legal  victory  against
Allied Boston Group.

The Company was engaged in a strategy to release  working capital in the form of
cash and existing  letters of credit by replacing an existing reserve already in
place  between Joint  Employers  Group and one of its  insurance  carriers.  The
insurance carrier agreed to complete this transaction,  provided the replacement
is secured  through SWIFT by an  institution  that has been approved by the NAIC
(National  Association of Insurance Carriers).  Lloyd Morgan Securities provided
Zeros & Ones with a new  Standby  Letter of Credit in the amount of $2  million.
Zeros & Ones  provided  instructions  to directly  draw funds on that $2 million
instrument.

In May 2002, the longstanding  litigation  between Paul Frank  Industries,  Inc.
("PFI") and Zeros & Ones, Inc. ("Z&O") came to a conclusion. Both parties agreed
to resolve their claims against each other on mutually  agreeable  terms.  Under
the terms of the settlement, which is confidential,  PFI has been making certain
agreed payments over the course of 18 months, and after those payments have been
completed, the parties have agreed that the entire lawsuit will be dismissed.

The  remaining  legal  matter  between  Steve  Schklair  and Zeros & Ones,  Inc.
concerning equipment leases is scheduled to be continued in October of 2003.

ZEROS & ONES TECHNOLOGIES, INC.

The  Company  believes  its  technological   developments   represent  the  most
significant  aspect of current and future  shareholder  value. To focus on those
opportunities,  Zeros & Ones  Technologies,  Inc. was formed as a privately held
subsidiary. On November 30, 2001, a dividend transaction representing 10% direct
ownership by the public  shareholders  of record on September  24, 2001 of ZROS.
Zeros & Ones,  Inc., the publicly held parent  company,  owns the remaining 90%.
Additional  dividend(s)  will be issued  directly to public  shareholders in the
future.

LOOKING FORWARD

Zeros & Ones is a company  dedicated  to advancing  the  profound  impact of all
things  going  digital.  It  doesn't  matter  what  you  call it -  convergence,
ubiquity,  global  connectivity  - the  result  is the  same:  It is  all  about
compatibility  and access.  New economy or old, these are the cornerstones  that
grease the wheels of commerce.

                                       22
<PAGE>

As the worlds of the Internet, telephone, wireless handheld devices, television,
and high-speed  networking continue to all go digital,  they continue to combine
into a single unified platform that makes new things possible.  The barriers for
the rapid flow of digital information, in all its forms - from sights and sounds
to  transactional  data have collapsed under the tidal wave of new  capabilities
ushered in entirely by the digital revolution.

The advent of the commercial  Internet was the starting bell for the revolution,
and Zeros & Ones was there.  It was involved  with the movers and the shakers at
the very beginning  working on the very building  blocks of The Internet  itself
like Netscape,  Sun, Pipeline,  and Microsoft.  During the dot-com boom, Zeros &
Ones was there  with  technologies,  expertise,  and  applications  that  showed
companies  like  Amazon.com  and  MovieFone  what the Internet  could do to make
entirely  new  kinds of  companies  possible.  When  commerce  began to  include
entertainment, Zeros & Ones was there with companies like Electronic Arts, ICTV,
Pearson  Television,  and  SONY  ScreenBlast  enabling  entirely  new  forms  of
multimedia through the global network.

Zeros & Ones was  there -  through  the  entire  rise  and  fall of the  dot-com
experience.  And now, as the world begins to pick up the pieces and realize that
the dream of connectivity  lies in the artful fusion of both new economy and old
economy thinking, the world has never needed Zeros & Ones more.

At several key inflection points in the company's almost 10 year history,  Zeros
& Ones has made strategic  acquisitions  to accelerate its position as a pioneer
that helps define the industry's true north. Today, that means planting our flag
in  wireless  and in tiny  chip  logic.  It means  biometrics  applications  for
homeland security and new forms of identity-oriented  commerce.  It means taking
advantage of the amazing  improvements  in  broadband  to take  screen-to-screen
computing to the next level.





                                       23
<PAGE>
                           PART II. OTHER INFORMATION


Item 1. LEGAL PROCEEDINGS

JEG  and  Zeros  &  Ones  continue  in   communications   with  one  another  as
co-plaintiffs  against defendant Allied Boston Group, First Global, Inc., Allied
Boston International,  and their affiliates,  which failed to release $2 million
dollars on a  fully-executed  Letter of Credit (ID#  031402/1273)  delivered  by
Zeros & Ones  and JEG  jointly.  Zeros & Ones and JEG  have  substantial  claims
against  the  referenced  parties  and expect to share a legal  victory  against
Allied Boston Group.

The Company was engaged in a strategy to release  working capital in the form of
cash and existing  letters of credit by replacing an existing reserve already in
place  between Joint  Employers  Group and one of its  insurance  carriers.  The
insurance carrier agreed to complete this transaction,  provided the replacement
is secured  through SWIFT by an  institution  that has been approved by the NAIC
(National  Association of Insurance Carriers).  Lloyd Morgan Securities provided
Zeros & Ones with a new  Standby  Letter of Credit in the amount of $2  million.
Zeros & Ones  provided  instructions  to directly  draw funds on that $2 million
instrument.

In May 2002, the longstanding  litigation  between Paul Frank  Industries,  Inc.
("PFI") and Zeros & Ones, Inc. ("Z&O") came to a conclusion. Both parties agreed
to resolve their claims against each other on mutually  agreeable  terms.  Under
the terms of the settlement, which is confidential,  PFI has been making certain
agreed payments over the course of 18 months, and after those payments have been
completed, the parties have agreed that the entire lawsuit will be dismissed.

The  remaining  legal  matter  between  Steve  Schklair  and Zeros & Ones,  Inc.
concerning equipment leases is scheduled to be continued in October of 2003.

Item 2. CHANGES IN SECURITIES

During  the first  quarter  of 2002,  the  Company  successfully  completed  the
acquisition of Joint Employers Group (JEG). JEG became a wholly owned subsidiary
of the Company.  The consolidated  financial  statements include the accounts of
the Company and all of the wholly owned subsidiaries. The agreement provides for
24,000,000 shares of restricted stock to be issued for this  transaction.  As of
March 31, 2003, JEG will no longer be a wholly-owned  subsidiary of the Company.
The aforementioned 24,000,000 shares, therefore, are not to be issued, under the
terms of a repurchase agreement made between the parties.

                                       24
<PAGE>

Item 3. DEFAULTS UPON SENIOR SECURITIES

None.


Item 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS

None.


Item 5. OTHER INFORMATION

None.


Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a)      Exhibits:                       None.

(b)      Reports on Form 8-K:            None.


Item 10. EXECUTIVE COMPENSATION

During the year  2002,  no  executives  of the parent  company  received  direct
compensation.  Robert J.  Holtz,  Allen  Crawford,  and  Austin  Ferdinand  each
performed services for the Company for which deferred  compensation will be due.
Additionally,  Robert J. Holtz  provided  paid-in  capital during 2001 and 2002,
which has been itemized and, aside from periodic reimbursements,  is expected to
be submitted for reimbursement when the Company is deemed to be in the financial
position to reimburse Mr. Holtz for such paid-in capital.








                                       25
<PAGE>

SIGNATURES

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


                  Date: May 27, 2003             By:  /s/ Robert J. Holtz
                                                 ---------------------------
                                                 Robert J. Holtz
                                                 Chairman of the Board,
                                                 Chief Executive Officer, Chief
                                                 Financial Officer and President


























                                       26
<PAGE>
                       CERTIFICATION PURSUANT TO SECTION
                         302 OF THE SARBANES OXLEY ACT


I, Robert J. Holtz, CEO, certify that:

1. I have  reviewed  this  annual  report on Form 10-KSB of  Zeros & Ones, Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

                                       27
<PAGE>

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date:  May 27, 2003



/s/Robert J. Holtz
-----------------------
Robert J. Holtz, CEO





















                                       28
<PAGE>
                       CERTIFICATION PURSUANT TO SECTION
                         302 OF THE SARBANES OXLEY ACT


I, Robert J. Holtz, CFO, certify that:

1. I have  reviewed  this  annual  report on Form 10-KSB of  Zeros & Ones, Inc.;

2.  Based on my  knowledge,  this  annual  report  does not  contain  any untrue
statement of a material fact or omit to state a material fact  necessary to make
the statements made, in light of the  circumstances  under which such statements
were made,  not  misleading  with  respect to the period  covered by this annual
report;

3.  Based  on my  knowledge,  the  financial  statements,  and  other  financial
information  included  in this annual  report,  fairly  present in all  material
respects the financial  condition,  results of operations  and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4.  The  registrant's  other  certifying  officers  and  I are  responsible  for
establishing and maintaining  disclosure  controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

     a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated subsidiaries,
is made known to us by others  within those  entities,  particularly  during the
period in which this annual report is being prepared;

     b) evaluated the effectiveness of the registrant's  disclosure controls and
procedures  as of a date  within 90 days prior to the filing date of this annual
report (the "Evaluation Date"); and

     c) presented in this annual report our conclusions  about the effectiveness
of the  disclosure  controls and  procedures  based on our  evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our
most recent evaluation,  to the registrant's auditors and the audit committee of
registrant's   board  of  directors  (or  persons   performing   the  equivalent
functions):

     a) all  significant  deficiencies  in the design or  operation  of internal
controls  which  could  adversely  affect  the  registrant's  ability to record,
process,  summarize  and  report  financial  data  and have  identified  for the
registrant's auditors any material weaknesses in internal controls; and

                                       29
<PAGE>

     b) any fraud,  whether or not material,  that involves  management or other
employees who have a significant role in the registrant's internal controls; and

6. The  registrant's  other  certifying  officers  and I have  indicated in this
annual report whether there were significant  changes in internal controls or in
other factors that could  significantly  affect internal controls  subsequent to
the date of our most recent  evaluation,  including any corrective  actions with
regard to significant deficiencies and material weaknesses.

Date:  May 27, 2003



/s/Robert J. Holtz
-----------------------
Robert J. Holtz, CFO



















                                       30