U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB

     (Mark  One)
[X]     ANNUAL  REPORT  PURSUANT  SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT  OF  1934.  For  the  fiscal  year  ended  June  30,  2004.

[   ]     TRANSITION  REPORT  PURSUANT  TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE  ACT  OF  1934.  For  the  transition  period  from _______ to ________

                         Commission file number 0-12641

                          DALRADA FINANCIAL CORPORATION
                  (Name of small business issuer in its charter)

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<CAPTION>



<S>                                                             <C>
DELAWARE . . . . . . . . . . . . . . . . . . . . . . . . . . .                            13-0021693
--------------------------------------------------------------  ------------------------------------
(State or other jurisdiction of incorporation or organization)  (I.R.S. Employer Identification No.)
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                          9449 BALBOA AVENUE, SUITE 211
                               SAN DIEGO, CA 92123
                    (Address of principal executive offices)

               Registrant's Telephone number, including area code:
                                 (858) 451-6120

Securities  registered  under  12(b)  of  the  Exchange  Act:     None

Securities  registered  under  Section  12(g)  of  the  Act:     Common  Stock

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding  12  months  (or  for such shorter period that the Registrant was
required  to  file  such  reports),  and  (2)  has  been  subject to such filing
requirements  for  the  past  90  days.
Yes  X   No  ___
     -

Indicate  by  check mark if disclosure of delinquent filers pursuant to Item 405
Regulation  S-B  is not contained herein, and will not be contained, to the best
of  Registrant's  knowledge,  in  definitive  proxy  or  information  statements
incorporated  by  reference  in Part III of this Form 10-KSB or any amendment to
this  Form  10-KSB.
Yes  ___  No   X
               -

The  issuer  had revenues of $13,525,000for the fiscal year ended June 30, 2004.

The  aggregate  market  value of the voting stock held by non-affiliates on June
30,  2004 was approximately $4,943,550 based on the average of the bid and asked
prices  of the issuer's common stock in the over-the-counter market on such date
as  reported  by the OTC Bulletin Board. As of June 30, 2004, 547,358,742 shares
of  the  issuer's  Common  Stock  were  outstanding.   As  of September 30 2004,
596,084,940  shares  of  the  issuer's  Common  Stock  were  outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE
                                      None

         TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT:  YES     NO   X
                                                                    ---

<PAGE>
                                     PART I

ITEM  1.  DESCRIPTION  OF  BUSINESS

     Dalrada  Financial  Corporation  (OTCBB  symbol:  DRDF)  ("DRDF"  or  the
"Company")  was  incorporated  in  March  1982  under  the  laws of the State of
California,  and  reincorporated  in  May  1983  under  the laws of the State of
Delaware.  The  Company's principal executive offices are located at 9949 Balboa
Avenue, Suite 211, San Diego, CA 92123. The Company's main phone number is (858)
451-6120.

     We  provide  a  variety  of  financial  services  to  small and medium-size
businesses. These services allow our customers to outsource many human resources
tasks,  including  payroll  processing,  workers' compensation insurance, health
insurance,  employee  benefits,  401k  investment  services,  personal financial
management,  and  income tax consultation. In November 2001, we began to provide
these  financial  services  that relieve existing and potential customers of the
burdens  associated  with  personnel  management  and  control. To this end, the
Company,  through  strategic  acquisitions,  became  a  professional  employer
organization  ("PEO").

     DRDF  provides  financial  services  principally  through  its wholly-owned
SourceOne  Group,  Inc.  ("SOG")  subsidiary,  which  includes several operating
units,  including  ProSportsHR  ,  MedicalHR  , and, CallCenterHR  . These units
provide  a  broad  range  of financial services, including: benefits and payroll
administration,  health  and workers' compensation insurance programs, personnel
records management, employer liability management, and (in the case of MedicalHR
and  CallCenterHR),  temporary  staffing  services,  to  small  and medium-sized
businesses.

     In  January  2003,  we  completed the acquisition of a controlling interest
approximating  88%  of the shares of Greenland Corporation. Greenland shares are
traded  on  the  NASD  Electronic  Bulletin  Board  under  the  symbol  GRLC.
Subsequently,  in  March  2004,  we  entered into an agreement with Greenland to
return  most of our shares in Greenland in return for Greenland's forgiveness of
certain  DRDF  indebtedness  and  business  opportunities.

     In  January  2003,  we  completed the acquisition of a controlling interest
(approximately  85%)  in  the  shares  of Quik Pix, Inc. ("QPI"). QPI shares are
traded  on the National Quotation Bureau Pink Sheets  under the symbol QPIX. QPI
is  a  visual  marketing  support  firm located in Buena Park, California. QPI's
major  source of revenues is in developing and mounting photographic and digital
images  for  use  in  display  advertising  for tradeshows and customer building
interiors.  QPI also has a proprietary product PhotoMotion , which is a patented
color  medium of multi-image transparencies. The process uses existing originals
to create the illusion of movement, and allows for three to five distinct images
to  be  displayed  with  an  existing  lightbox.

     On  June  28, 2004, DRDF completed its acquisition of certain assets of M&M
Nursing  (M&M").  The  purchase  price was 5,000,000 shares of DRDF common stock
valued  at  $31  plus the assumption of $204 of liabilities.  M&M is a temporary
staffing  agency  primarily  for  nurses.

     In  prior  years,  we  were  principally  involved  in  the development and
distribution  of  imaging  products.  Our  core  technologies are related to the
design  and  development of software products that improve the accuracy of color
reproduction.  Our  ColorBlind software provides color management to improve the
accuracy  of  color  reproduction  -  especially as it relates to matching color
between  different  devices  in  a network, such as monitors and printers. These
products  are  now supported and distributed by QPI. Additionally, we market our
ColorBlind  software  products  on  the  Internet through our color.com website.

MARKET  OVERVIEW  -  FINANCIAL  SERVICES

     Our  entry  into  the  financial  services  business, in November 2001, was
through  the  acquisition of professional employer organizations ("PEO"). We are
expanding  the  services  we  provide  beyond PEO services, which will include a
variety  of  products  and  services  to  employers  and employees, and expanded
employee  benefit  programs  such as payroll advances, life insurance, automated
payroll  credit  cards,  and  branded  healthcare  plans.

     The  PEO  industry  emerged  in the early 1980's largely in response to the
burdens  placed  on  small  and  medium-sized employers by the complex legal and
regulatory  issues  related to human resources management. While various service
providers  were  available  to assist these businesses with specific tasks, PEOs
emerged  as  providers of a more comprehensive range of services relating to the
employer/employee  relationship.  In  a  PEO  arrangement, the PEO assumes broad
aspects  of  the  employer/employee  relationship.  Because  PEOs  provide
employee-related  services  to  a  large  number  of employees, they can achieve
economies  of scale that allow them to perform employment-related functions more
efficiently,  provide  a  greater  variety  of employee benefits and devote more
attention  to  human  resources  management.

     We  believe  that the demand for our services is driven by (1) the trend by
small and medium-sized businesses toward outsourcing management tasks outside of
core  competencies;  (2) the difficulty of providing competitive health care and
related  benefits  to  attract and retain employees; (3) the increasing costs of
health  and  workers'  compensation  insurance  coverage  and  workplace  safety
programs;  and  (4)  complex  regulation  of labor and employment issues and the
related  costs  of  compliance.

MARKET  OVERVIEW  -  IMAGING  PRODUCTS

     ColorBlind  software is a suite of software applications, which allow users
to  build color profiles of images in order to insure accurate output on digital
devices  such  as  printers,  plotters,  scanners,  monitors,  and  cameras.

     Color  integrity  is  an  important  underlying  requirement in the imaging
process.  The  widespread  use  of color applications at the desktop, demand for
higher  quality  color  reproduction,  expanded use of the Internet for document
dissemination  and  e-commerce,  growth  of  office  networks, and the increased
acceptance and use of digital photography are some of the factors that influence
our  markets.

     Photomotion,  a  QPI  technology, is a patented process for adding multiple
images  to backlit static displays that appear to change as the viewer passes by
the  image.  The  Photomotion  process  uses  existing original art to create an
illusion  of  movement;  and allows for separate and distinct image displays. It
allows  for  three  to  five  distinct images to be displayed within an existing
light  box. Images appear to change or "morph" as the viewer passes the display.

     QPI  offers  a  spectrum  of  services  allowing  a client to produce color
visuals  (digital  and  photographic)  according to parameters as specified by a
client.  We  also  offer a full range of color laboratory reproduction services.

     The  market  for  Photomotion  and color reproduction services is vast. The
products  are  especially  useful  in point-of-purchase displays, indoor display
advertising,  and  trade show exhibits and displays. To date, marketing has been
limited  to  targeted  customers  such  as  beverage  companies, casinos, sports
arenas,  and  other  specialty  clients.

BUSINESS  STRATEGY
------------------

FINANCIAL  AND  PEO  SERVICES

     The  PEO  business provides a broad range of services associated with human
resources  management. These include benefits and payroll administration, health
and  workers'  compensation  insurance  programs,  personnel records management,
employer  liability  management,  employee recruiting and selection, performance
management,  and  training  and  development  services.

     Administrative  Functions.  We  perform  a  wide  variety of processing and
record  keeping  tasks,  mostly related to payroll administration and government
compliance.  Specific examples include payroll processing, payroll tax deposits,
quarterly  payroll tax reporting, employee file maintenance, unemployment claims
processing  and  workers'  compensation  claims  reporting.

     Benefit  Plans  Administration.  We  sponsor  benefit plans including group
health  coverage.  We are responsible for the costs and premiums associated with
these  plans,  act as plan sponsor and administrator of the plans, negotiate the
terms  and  costs of the plans, maintain the plans in accordance with applicable
federal  and  state  regulations,  and serve as liaison for the delivery of such
benefits  to  worksite  employees.

     Personnel  Management.  We  provide  a  variety  of  personnel  management
services,  which provide our client companies access to resources normally found
in  the  human  resources  departments of larger companies. Our client companies
will  have  access  to  a  personnel  guide,  which  will set forth a systematic
approach to administering personnel policies and practices and can be customized
to  fit  a  client  company's  particular  work  culture/environment.
     Employer Liability Management. Under our Client Services Agreement ("CSA"),
we  assume  many  employment-related  responsibilities  associated  with
administrative  functions and benefit plans administration. Upon request, we can
also  provide  our  clients  guidance  on avoiding liability for discrimination,
sexual  harassment,  and civil rights violations. We employ counsel specializing
in  employment  law.

     Client Service Agreement. All clients enter into our CSA, which establishes
our  service  fee.  The  CSA  is  subject to periodic adjustments to account for
changes  in the composition of the client's workforce and statutory changes that
affect  our  costs.  The  CSA  also establishes the division of responsibilities
between  our Company and the client as co-employers. Pursuant to the CSA, we are
responsible  for  personnel  administration  and  are  liable  for  certain
employment-related  government  regulation. In addition, we assume liability for
payment  of  salaries, wages (including payroll taxes), and employee benefits of
worksite  employees.  The  client  retains  the  employees' services and remains
liable  for  the  purposes  of  certain  government  regulations.

     Our  PEO business represents a distribution channel for certain value-added
services,  including  a  wide  variety of employer and employee benefit programs
such  as  401(k)  plans,  Section  125  cafeteria  plans,  legal  services,  tax
consulting,  payroll advances, and other insurance programs. Our intention is to
expand  our  business  through  offering  a  variety  of  financial  services.

     The  PEO  business  is  growing  rapidly,  but  profit  margins  are small.
Consequently, profitability depends on (1) economies of scale leading to greater
operating  efficiencies;  and  (2)  value-added  services  such  as  training,
education,  Internet  support,  and other services that may be used by employers
and  employees.

     The  income  model for this business generally revolves around fees charged
per  employee.  While  gross  profit  is  low,  gross  revenues  are  generally
substantial.  To  this  end, the Company intends to pursue acquisitions of small
PEO  firms.  Each  acquisition is expected to include retention of some existing
management  and  staff  in  order  to  assure  continuity  of  operations.

     We  evaluate  our  PEO business as one segment even though our PEO products
are  offered  under  various  brand  names.

COLOR  MANAGEMENT  SOFTWARE

     Accurate  color reproduction is one of the largest single challenges facing
the imaging industry. Customers demand systems that are easy to use, predictable
and  consistent.  A color management system is needed so users can convert files
for  use  with different devices. The varying characteristics of each device are
captured  in  a  device  profile. The International Color Consortium ("ICC") has
established  a  standard  for  the  format  for  these  profiles.

     Our  ColorBlind  color  management  software  is  a  pre-packaged  suite of
applications,  utilities,  and  tools  that  allow users to precisely create ICC
profiles  for  each  device  in the color workflow including scanners, monitors,
digital  cameras, printers, and other specialized digital color input and output
devices.  Once profiled, ColorBlind balances these profiles to produce accurate,
consistent,  and  reliable  color  rendering  from  input  to output. ColorBlind
software is sold as a stand-alone application or licensed to OEM's for resale to
be  bundled  with  peripheral  devices.

     We  operate  an  internet  site, color.com, as a resource center to provide
information  on the highest quality correct color. This site allows consumers to
purchase  our  products,  including  ColorBlind  software;  and  serves  as  an
information  resource for color imaging, including white papers on color imaging
and  management,  links  to  color  consultants  and  experts,  and  products.

QPI  -  PHOTOMOTION

     QPI's Photomotion Images  are based upon patented technology. The resulting
product  is  a  unique color medium that uses existing original images to create
the  illusion  of  movement or multiple static displays that allow three to five
distinct  images  to be displayed in an existing light box. The images appear to
change, or "morph," as a viewer passes the display. This ability to put multiple
images  in  a  single space, without the need for mechanical devices, allows for
the  creation  of  an  active and entertaining display. The product is currently
marketed  in  the  U.S.,  Europe,  Asia  and  Latin  America.

     Visual  marketing,  including  out-of-home  media,  is a large and growing,
multi-billion  dollar  worldwide  industry. An industry survey suggests that the
field of visual marketing will increase at a rate of 50% annual for the next ten
years.  Out-of-home  media  plays a critical role in the media plans of national
and  international  advertisers.

COMPETITION

     The  markets  for  our  products  and  services  are highly competitive and
rapidly  changing.  Our ability to compete in our markets depends on a number of
factors,  including the success and timing of product and services introductions
by  us and our competitors, selling prices, performance, distribution, marketing
ability,  and  customer  support.  A  key  element of our strategy is to provide
competitively-priced,  quality  products  and  services.

     The  PEO  business is also highly competitive, with approximately 800 firms
operating in the U.S. There are several firms that operate on a nationwide basis
with  revenues and resources far greater than ours. Some large PEO companies are
owned  by insurance carriers and some are public companies whose shares trade on
Nasdaq,  including  Administaff,  Inc.,  Team  Staff,  Inc.,  Barrett  Business
Services,  and  Staff  Leasing,  Inc.  Also  see  "Risks  and  Uncertainties."

OPERATIONS

     DRDF's corporate headquarters facility in San Diego, California houses most
of  our  administrative  operations.  PEO  operations  are  conducted  from  the
Company's  headquarters  offices  and small branch offices in Troy, Michigan and
Tustin,  California.  We  have  additional one year leases in Miami, Florida and
Phoenix,  Arizona,  each  with  two  year  renewal  options.

MANUFACTURING,  PRODUCTION,  AND  SOURCES  OF  SUPPLY

     We  manufacture our software products in-house and through selected outside
vendors.  Also  see  "Risks  and  Uncertainties."

RESEARCH  AND  DEVELOPMENT

     Some  of  our  products  are  characterized by rapidly evolving technology,
frequent  new  product  introductions,  and  significant  price  competition.
Accordingly,  we  monitor  new  technology  developments  and  coordinate  with
suppliers,  distributors  and  dealers to enhance existing products and to lower
costs.  Advances  in technology require ongoing investment. We have entered into
no formal projects in research and development for several years; however, we do
make  modifications to existing products on an as-needed basis to maintain their
currency.  Also  see  "Risks  and  Uncertainties."

INTELLECTUAL  PROPERTY

     DRDF's  software  products  are  copyrighted. However, copyright protection
does  not  prevent  other  companies  from  emulating  the features and benefits
provided  by  our software. We protect our software source code as trade secrets
and  make  our  proprietary  source  code  available to OEM customers only under
limited circumstances and specific security and confidentiality constraints. QPI
holds  the  patent  for  Photomotion.  Technology  products  exist  in a rapidly
changing  business  environment.  Consequently,  we believe the effectiveness of
patents,  trade  secrets,  and  copyright  protection  is  less  important  in
influencing  long  term  success  than  the  experience of our employees and our
contractual  relationships.

     We  have  obtained  U.S.  registration  for  several  of our trade names or
trademarks,  including  ColorBlind,  Photomotion,  ExpertHR,  MedicalHR,
CallCenterHR,  and  ProSportsHR.  These  trade names are used to distinguish our
products  and  services  in  the  markets  we  serve.

     If  we  fail to establish that we have not violated the asserted rights, we
could  be  prohibited from marketing the associated product and/or services, and
we  could  be  liable  for  damages.  We  rely on a combination of trade secret,
copyright and trademark protection, and non-disclosure agreements to protect our
proprietary  rights.  Also  see  "Risks  and  Uncertainties."

EMPLOYEES

DRDF  (including  our subsidiaries) employed a total of 68 individuals worldwide
as  of  June  30,  2004.  Of  this number, 54 were involved in sales, marketing,
corporate  administration  and finance, and 14 were in engineering, research and
development,  and technical support. There is no union representation for any of
DRDF's  employees.
..
GOVERNMENT  REGULATION

     While  many  states  do  not  explicitly regulate PEOs, over 20 states have
passed  laws  that  have  licensing  or  registration requirements for PEOs, and
several  other states are considering such regulation. Such laws vary from state
to state, but generally provide for monitoring the fiscal responsibility of PEOs
and,  in  some  cases,  codify  and  clarify  the co-employment relationship for
unemployment,  workers'  compensation, and other purposes under state law.  DRDF
estimates  that  the  annual  costs  of  compliance  with  these  regulations is
approximately  $250,000.

GOING  CONCERN  CONSIDERATIONS

     At June 30, 2004, and for the fiscal year then ended, we had a net loss and
negative  working  capital,  which  raise substantial doubt about our ability to
continue  as  a  going  concern.  Our  losses  have  resulted  primarily from an
inability to achieve sales targets due to insufficient working capital and entry
into  new  business  segments. Our ability to continue operations will depend on
positive cash flow from future operations and on our ability to raise additional
funds through equity or debt financing. We have reduced and/or discontinued some
of  our  operations  and, if we are unable to raise or obtain needed funding, we
may  be  forced  to  discontinue  operations.

     For  the  year ended June 30, 2004, the Company experienced a net loss from
operations  of  $972 and as of June 30, 2004, the Company had a negative working
capital  deficit of $21,936 and had a negative stockholders' deficit of $20,925.
In  addition,  the Company is in default on certain note payable obligations and
is  being  sued  by numerous trade creditors for nonpayment of amounts due.  The
Company  is also delinquent in its payments relating to payroll tax liabilities.
These  conditions  raise  substantial  doubt  about its ability to continue as a
going  concern.

     We  plan  to overcome the circumstances that impact our ability to remain a
going  concern  through  a combination of increased revenues and decreased costs
with  interim  cash  flow deficiencies being addressed through additional equity
financing.  We  have  been  able  to  reduce our costs by reducing our number of
employees  and  suspending  unprofitable operations associated with the computer
printer  business.  We  commenced  a  program  to reduce our debt, which we will
address  more  aggressively  in  our  current  fiscal  year,  partially  through
debt-to-equity  conversions.  Finally,  we continue to pursue the acquisition of
business  units  that  will  be  consistent  with  these  measures.

RISKS  AND  UNCERTAINTIES
-------------------------

     An  investment  in  shares of DRDF's Common Stock involves a high degree of
risk.  You should carefully consider the following information, which summarizes
all  material  risks,  together  with  the  other  information contained in this
prospectus,  before  you  decide  to  buy  DRDF's  common  stock.  If any of the
following  risks actually occur, DRDF's business would likely suffer.   In these
circumstances,  the  market  price of DRDF's common stock could decline, and you
may  lose  all  or  part  of  your  investment.

RISKS  RELATING  TO  OUR  BUSINESS:
-----------------------------------

IF  WE  ARE  UNABLE  TO SECURE FUTURE CAPITAL, WE WILL BE UNABLE TO CONTINUE OUR
OPERATIONS.

     Our  business  has  not  been  profitable  in  the  past  and it may not be
profitable in the future. We may incur losses on a quarterly or annual basis for
a  number  of  reasons,  some within and others outside our control. See "If our
quarterly  performance continues to fluctuate ." The growth of our business will
require  the  commitment  of  substantial  capital  resources.  If funds are not
available  from  operations,  we  will  need  additional funds. We may seek such
additional  funding  through  public  and  private  financing, including debt or
equity  financing.  Adequate funds for these purposes, whether through financial
markets  or  from other sources, may not be available when we need them. Even if
funds are available, the terms under which the funds are available to us may not
be  acceptable  to  us.  Insufficient  funds  may require us to delay, reduce or
eliminate  some  or  all  of  our  planned  activities.

     To  successfully  execute our current strategy, we will need to improve our
working  capital  position.  The report of our independent auditors accompanying
the  Company's  June  30,  2003  financial  statements  includes  an explanatory
paragraph indicating there is a substantial doubt about the Company's ability to
continue  as  a  going  concern,  due  primarily to the decreases in our working
capital  and  net  worth.  The  Company plans to overcome the circumstances that
impact  our ability to remain a going concern through a combination of increased
revenues  and  decreased  costs,  with  interim  cash  flow  deficiencies  being
addressed  through  additional  equity  financing.

IF  OUR  QUARTERLY  PERFORMANCE  CONTINUES  TO FLUCTUATE, IT MAY HAVE A NEGATIVE
IMPACT  ON  OUR  BUSINESS.

     Our  quarterly operating results can fluctuate significantly depending on a
number  of factors, any one of which could have a negative impact on our results
of  operations. We may experience significant quarterly fluctuations in revenues
and  operating  expenses as we introduce new products and services. Accordingly,
any  inaccuracy  in our forecasts could adversely affect our financial condition
and  results  of  operations.  Demand  for  our  products  and services could be
adversely  affected  by  a  slowdown  in the overall demand for imaging products
and/or  financial  and  PEO services. Our failure to complete shipments during a
quarter  could  have  a material adverse effect on our results of operations for
that  quarter.  Quarterly  results  are  not  necessarily  indicative  of future
performance  for  any  particular  period.

SINCE  MANY  OF  OUR  COMPETITORS HAVE GREATER FINANCIAL AND MARKETING RESOURCES
THAN  WE  DO,  WE  MAY  EXPERIENCE  A  REDUCTION  IN  MARKET SHARE AND REVENUES.

     The  markets  for  our  products  and  services  are highly competitive and
rapidly  changing.  Some  of  our  current  and  prospective  competitors  have
significantly  greater financial, technical, and marketing resources than we do.
Our  ability  to  compete  in  our  markets depends on a number of factors, some
within  and others outside our control. These factors include: the frequency and
success  of product and services introductions by us and by our competitors, the
selling prices of our products and services and of our competitors' products and
services,  the  performance  of  our  products and of our competitors' products,
product distribution by us and by our competitors, our marketing ability and the
marketing  ability  of  our  competitors,  and  the  quality of customer support
offered  by  us  and  by  our  competitors.

     The  PEO  industry is highly fragmented. While many of our competitors have
limited  operations,  there  are  several  PEO  companies equal or substantially
greater  in size than ours. We also encounter competition from "fee-for-service"
companies  such  as  payroll  processing  firms,  insurance companies, and human
resources consultants. The large PEO companies have substantially more resources
than  us  and  provide  a  broader  range  of  resources  than  we  do.

IF  WE  ACQUIRE  COMPLEMENTARY  BUSINESSES,  WE  MAY  NOT BE ABLE TO EFFECTIVELY
INTEGRATE  THEM  INTO  OUR  CURRENT OPERATIONS, WHICH WOULD ADVERSELY AFFECT OUR
OVERALL  FINANCIAL  PERFORMANCE.

     In  order  to  grow our business, we may acquire businesses that we believe
are  complementary.  To  successfully  implement this strategy, we must identify
suitable  acquisition  candidates, acquire these candidates on acceptable terms,
integrate  their  operations  and  technology  successfully  with  ours,  retain
existing  customers  and  maintain the goodwill of the acquired business. We may
fail  in  our  efforts  to  implement  one  or more of these tasks. Moreover, in
pursuing  acquisition opportunities, we may compete for acquisition targets with
other companies with similar growth strategies. Some of these competitors may be
larger  and  have  greater financial and other resources than we do. Competition
for  these  acquisition  targets likely could also result in increased prices of
acquisition  targets  and  a  diminished  pool  of  companies  available  for
acquisition.  Our overall financial performance will be materially and adversely
affected  if  we  are  unable  to  manage  internal  or acquisition-based growth
effectively.  Acquisitions  involve  a  number  of risks, including: integrating
acquired  products  and  technologies in a timely manner, integrating businesses
and  employees  with our business, managing geographically-dispersed operations,
reductions  in  our  reported operating results from acquisition-related charges
and  amortization of goodwill, potential increases in stock compensation expense
and  increased  compensation  expense  resulting from newly-hired employees, the
diversion  of  management  attention,  the  assumption  of  unknown liabilities,
potential  disputes  with  the  sellers  of  one  or more acquired entities, our
inability to maintain customers or goodwill of an acquired business, the need to
divest  unwanted  assets  or  products,  and  the possible failure to retain key
acquired  personnel.

     Client  dissatisfaction  or  performance problems with an acquired business
could  also  have  a material adverse effect on our reputation, and any acquired
business  could  significantly  under-perform  relative  to our expectations. We
cannot  be  certain  that  we  will  be  able  to integrate acquired businesses,
products  or  technologies successfully or in a timely manner in accordance with
our  strategic  objectives,  which  could  have a material adverse effect on our
overall  financial  performance.

In  addition,  if  we  issue  equity  securities as consideration for any future
acquisitions, existing stockholders will experience ownership dilution and these
equity  securities  may have rights, preferences or privileges superior to those
of  our  common  stock.

IF  WE  ARE UNABLE TO DEVELOP AND/OR ACQUIRE NEW PRODUCTS IN A TIMELY MANNER, WE
MAY  EXPERIENCE  A SIGNIFICANT DECLINE IN SALES AND REVENUES, WHICH MAY HURT OUR
ABILITY  TO  CONTINUE  OPERATIONS.

     The  markets  for  our  products  are  characterized  by  rapidly  evolving
technology,  frequent  new  product  introductions  and  significant  price
competition.  Consequently,  short product life cycles and reductions in product
selling  prices  due  to  competitive  pressures  over the life of a product are
common. Our future success will depend on our ability to continue to develop new
versions  of  our ColorBlind  software, and to acquire competitive products from
other  manufacturers. We monitor new technology developments and coordinate with
suppliers,  distributors and dealers to enhance our products and to lower costs.
If  we  are  unable to develop and acquire new, competitive products in a timely
manner,  our  financial  condition  and  results of operations will be adversely
affected.

IF  WE ARE FOUND TO BE INFRINGING ON A COMPETITOR'S INTELLECTUAL PROPERTY RIGHTS
OR  IF  WE  ARE  REQUIRED  TO  DEFEND AGAINST A CLAIM OF INFRINGEMENT, WE MAY BE
REQUIRED  TO REDESIGN OUR PRODUCTS OR DEFEND A LEGAL ACTION AT SUBSTANTIAL COSTS
TO  US.

     We  currently  hold  only  one  patent  through  our QPI subsidiary for its
Photomotion  product.  Our software products are copyrighted. However, copyright
protection  does  not  prevent  other  companies from emulating the features and
benefits  provided by our software. We protect our software source code as trade
secrets  and  make  our  proprietary source code available to OEM customers only
under  limited  circumstances  and  specific  security  and  confidentiality
constraints.

IF  OUR  DISTRIBUTORS  REDUCE OR DISCONTINUE SALES OF OUR PRODUCTS, OUR BUSINESS
MAY  BE  MATERIALLY  AND  ADVERSELY  AFFECTED.

     Our  products are marketed and sold through a distribution channel of value
added  resellers,  manufacturers'  representatives,  retail vendors, and systems
integrators.  We  have a small network of dealers and distributors in the United
States  and  internationally.  We support our worldwide distribution network and
end-user  customers  through  operations  headquartered  in  San  Diego.

     Portions  of  our  sales  are  made  through  distributors,  who  may carry
competing product lines. These distributors could reduce or discontinue sales of
our  products,  which  could adversely affect us. These independent distributors
may  not devote the resources necessary to provide effective sales and marketing
support  of  our  products.  In  addition,  we  are dependent upon the continued
viability and financial stability of these distributors, many of which are small
organizations  with  limited  capital.  These  distributors,  in  turn,  are
substantially  dependent on general economic conditions and other unique factors
affecting  our  markets.

INCREASES  IN  HEALTH  INSURANCE  PREMIUMS,  UNEMPLOYMENT  TAXES,  AND  WORKERS'
COMPENSATION  RATES  WILL  HAVE  A  SIGNIFICANT  EFFECT  ON OUR FUTURE FINANCIAL
PERFORMANCE.

     Health  insurance  premiums,  state  unemployment  taxes,  and  workers'
compensation  rates  are,  in  part,  determined  by  our  PEO companies' claims
experience,  and  comprise  a significant portion of our direct costs. We employ
risk  management  procedures  in  an  attempt  to  control  claims incidence and
structure  our benefits contracts to provide as much cost stability as possible.
However,  should  we  experience  a  large  increase  in  claims  activity,  the
unemployment  taxes,  health  insurance  premiums,  or  workers'  compensation
insurance rates we pay could increase. Our ability to incorporate such increases
into  service fees to clients is generally constrained by contractual agreements
with  our  clients.  Consequently,  we  could  experience  a  delay  before such
increases  could  be  reflected in the service fees we charge. As a result, such
increases  could  have  a  material adverse effect on our financial condition or
results  of  operations.

WE CARRY SUBSTANTIAL LIABILITY FOR WORKSITE EMPLOYEE PAYROLL AND BENEFITS COSTS.

     Under  our  client  service agreements, we become a co-employer of worksite
employees  and we assume the obligations to pay the salaries, wages, and related
benefits  costs  and  payroll  taxes  of such worksite employees. We assume such
obligations  as  a  principal, not merely as an agent of the client company. Our
obligations include responsibility for (a) payment of the salaries and wages for
work  performed  by worksite employees, regardless of whether the client company
makes  timely  payment  to  us  of the associated service fee; and (2) providing
benefits  to worksite employees even if the costs incurred by us to provide such
benefits  exceed  the  fees paid by the client company. If a client company does
not  pay  us,  or if the costs of benefits provided to worksite employees exceed
the  fees paid by a client company, our ultimate liability for worksite employee
payroll  and  benefits  costs  could  have  a material adverse effect on the our
financial  condition  or  results  of  operations.

AS A MAJOR EMPLOYER, OUR OPERATIONS ARE AFFECTED BY NUMEROUS FEDERAL, STATE, AND
LOCAL  LAWS  RELATED  TO  LABOR,  TAX,  AND  EMPLOYMENT  MATTERS.

     By entering into a co-employer relationship with employees assigned to work
at  client company locations, we assume certain obligations and responsibilities
of  an  employer  under  these  laws.  However,  many of these laws (such as the
Employee  Retirement  Income  Security  Act  ("ERISA")  and  federal  and  state
employment  tax  laws)  do  not  specifically  address  the  obligations  and
responsibilities  of  non-traditional employers such as PEOs; and the definition
of  "employer" under these laws is not uniform. Additionally, some of the states
in  which  we  operate  have  not addressed the PEO relationship for purposes of
compliance  with  applicable  state  laws  governing  the  employer/employee
relationship. If these other federal or state laws are ultimately applied to our
PEO  relationship with our worksite employees in a manner adverse to us, such an
application  could  have a material adverse effect on our financial condition or
results  of  operations.

     While  many  states  do  not  explicitly regulate PEOs, over 20 states have
passed  laws  that  have  licensing  or  registration requirements for PEOs, and
several  other states are considering such regulation. Such laws vary from state
to state, but generally provide for monitoring the fiscal responsibility of PEOs
and,  in  some  cases,  codify  and  clarify  the co-employment relationship for
unemployment,  workers'  compensation, and other purposes under state law. There
can  be  no  assurance that we will be able to satisfy licensing requirements of
other  applicable  relations  for  all  states.  Additionally,  there  can be no
assurance  that  we  will  be  able  to  renew  our  licenses  in  all  states.

THE  MAINTENANCE  OF HEALTH AND WORKERS' COMPENSATION INSURANCE PLANS THAT COVER
WORKSITE  EMPLOYEES  IS  A  SIGNIFICANT  PART  OF  OUR  BUSINESS.

     The  current  health  and  workers'  compensation contracts are provided by
vendors  with  whom  we  have  an established relationship, and on terms that we
believe  to  be  favorable. While we believe that replacement contracts could be
secured  on  competitive  terms  without  causing  significant disruption to our
business,  there  can  be  no  assurance  in  this  regard.

OUR  STANDARD AGREEMENTS WITH PEO CLIENTS ARE SUBJECT TO CANCELLATION ON 60-DAYS
WRITTEN  NOTICE  BY  EITHER  THE  COMPANY  OR  THE  CLIENT.

     Accordingly, the short-term nature of our client service agreements make us
vulnerable  to  potential  cancellations  by  existing  clients,  which  could
materially  and  adversely  affect  our  financial  condition  and  results  of
operations. Additionally, our results of operations are dependent, in part, upon
our  ability  to  retain  or  replace  client  companies upon the termination or
cancellation  of  our  agreements.

A  NUMBER  OF  PEO  INDUSTRY  LEGAL ISSUES REMAIN UNRESOLVED WITH RESPECT TO THE
CO-EMPLOYMENT  AGREEMENT  BETWEEN  A  PEO  AND ITS WORKSITE EMPLOYEES, INCLUDING
QUESTIONS  CONCERNING  THE  ULTIMATE  LIABILITY FOR VIOLATIONS OF EMPLOYMENT AND
DISCRIMINATION  LAWS.

     Our  client  service  agreement  establishes  a  contractual  division  of
responsibilities  between  our  clients  and us for various personnel management
matters,  including  compliance  with  and  liability  under  various government
regulations.  However,  because  we  act  as a co-employer, we may be subject to
liability  for  violations  of  these  or  other  laws despite these contractual
provisions,  even  if  we  do  not  participate in such violations. Although our
agreement  provides  that  the  client  is  to  indemnify  us  for any liability
attributable to the conduct of the client, we may not be able to collect on such
a  contractual indemnification claim, and thus may be responsible for satisfying
such  liabilities.  Additionally,  worksite  employees  may  be deemed to be our
agents,  subjecting  us to liability for the actions of such worksite employees.

IF THE SUPERIOR SECURITY INTEREST HELD BY IMPERIAL BANK IS REMOVED AND IF ALL OF
THE  LAWSUITS  CURRENTLY  FILED WERE DECIDED AGAINST US AND/OR ALL THE JUDGMENTS
CURRENTLY OBTAINED AGAINST US WERE TO BE IMMEDIATELY COLLECTED, WE WOULD HAVE TO
CEASE  OUR  OPERATIONS.

     Throughout  fiscal  2002,  2003  and  2004,  and  through  the date of this
filing,  approximately  fifty  trade  creditors  have  made  claims and/or filed
actions  alleging  the  failure  of us to pay our obligations to them in a total
amount  exceeding $3 million. These actions are in various stages of litigation,
with  many resulting in judgments being entered against us. Several of those who
have  obtained  judgments  have filed judgment liens on our assets. These claims
range  in  value  from  less  than one thousand dollars to just over one million
dollars,  with  the  great  majority  being  less  than twenty thousand dollars.
Should  we  be  required to pay the full amount demanded in each of these claims
and  lawsuits,  we  may  have  to  cease  our  operations.

IF OUR OPERATIONS CONTINUE TO RESULT IN A NET LOSS, NEGATIVE WORKING CAPITAL AND
A  DECLINE  IN  NET WORTH, AND WE ARE UNABLE TO OBTAIN NEEDED FUNDING, WE MAY BE
FORCED  TO  DISCONTINUE  OPERATIONS.

     For  several  recent periods, up through the present, we had a net loss and
negative  working  capital,  which raises substantial doubt about our ability to
continue  as  a  going  concern.  Our  losses  have  resulted  primarily from an
inability  to  achieve  revenue targets due to insufficient working capital. Our
ability  to  continue operations will depend on positive cash flow, if any, from
future operations and on our ability to raise additional funds through equity or
debt  financing.  Although we have reduced our work force, suspended some of our
operations, and entered into new market segments (financial services), if we are
unable  to  achieve the necessary revenues or raise or obtain needed funding, we
may  be  forced  to  discontinue  operations.

IF  AN  OPERATIONAL RECEIVER IS REINSTATED TO CONTROL OUR OPERATIONS, WE MAY NOT
BE  ABLE  TO  CARRY  OUT  OUR  BUSINESS  PLAN.

     On  August  20,  1999, at the request of Imperial Bank, our primary lender,
the Superior Court, San Diego appointed an operational receiver to us. On August
23, 1999, the operational receiver took control of our day-to-day operations. On
June  21,  2000,  the  Superior  Court, San Diego issued an order dismissing the
operational  receiver as a part of a settlement of litigation with Imperial Bank
pursuant  to  the  Settlement  Agreement  effective  as  of  June 20, 2000.  The
Settlement  Agreement  requires  that  we  make  monthly payments of $150,000 to
Imperial  Bank  until  the indebtedness is paid in full. This agreement does not
require us to pay any interest unless we default on the settlement agreement and
fail  to  cure the default.  Regardless, we have continued to accrue interest on
this  debt until it has been paid and there is no possibility that such interest
will become due and payable.  However, in the future, without additional funding
sufficient  to  satisfy  Imperial  Bank  and  our  other  creditors,  as well as
providing  for  our  working  capital,  there  can  be  no  assurances  that  an
operational  receiver  may  not  be  reinstated.  If  an operational receiver is
reinstated, we will not be able to expand our products nor will we have complete
control  over  sales  policies  or  the  allocation  of  funds.

     The  penalty  for noncompliance of the Settlement Agreement is a stipulated
judgment  that  allows  Imperial  Bank  to immediately reinstate the operational
receiver  and  begin liquidation proceedings against us. Our current arrangement
with Imperial Bank is $50,000 a month.  The remaining balance due is $3,144,750.

WE  HAVE  NOT  REMAINED  CURRENT  IN OUR PAYMENT OF FEDERAL AND STATE INCOME AND
OTHER  PAYROLL-RELATED  TAXES  WITHHELD  IN  OUR  PEO  BUSINESS.

     We  have  not  been  able  to remain current in our payments of federal and
state  tax  obligations  related to our PEO operations. We are currently working
with the Internal Revenue Service and state agencies to resolve these issues and
establish  repayment plans. If we are not able to establish repayment plans that
allow us to continue our operations, we may be forced to cease doing business in
the  financial  services  marketplace.  The  amount  due  as of June 30, 2004 is
$5,237,408.

RISKS  RELATING  TO  OUR  STOCK:
-------------------------------

THE  OVERHANG  AFFECT  FROM  THE RESALE ON THE MARKET OF OUR SECURITIES ACQUIRED
THROUGH  THE  CONVERSION  OF  DEBENTURES COULD RESULT IN LOWER STOCK PRICES WHEN
CONVERTED

Overhang  can  translate  into  a  potential decrease in DRDF's market price per
share.  The  common stock underlying unconverted debentures represents overhang.
These  debentures  are  converted  into common stock at a discount to the market
price  providing the debenture holder the ability to sell his or her stock at or
below  market and still make a profit, which is incentive for the holder to sell
the  shares  as quickly as possible to ensure as much profit as possible in case
the stock price falls.  If the share volume cannot absorb the discounted shares,
DRDF's  market  price  per  share  will  likely  decrease.  As  the market price
decreases,  each subsequent conversion will require a larger quantity of shares.

SHORT  SELLING  COMMON STOCK BY WARRANT AND DEBENTURE HOLDERS MAY DRIVE DOWN THE
MARKET  PRICE  OF  DRDF'S  STOCK.

Warrant  and  debenture  holders  may  sell shares of DRDF's common stock on the
market  before exercising the warrant or converting the debenture.  The stock is
usually  offered  at  or  below  market  since the warrant and debenture holders
receive  stock  at a discount to market.  Once the sale is completed the holders
exercise  or  convert a like dollar amount of shares.  If the stock sale lowered
the  market  price,  upon  exercise  or  conversion, the holders would receive a
greater  number  of  shares  than  they  would  have absent the short sale. This
pattern  may  result  in  the  spiraling  down  of  DRDF's stock's market price.

THE  MARKET PRICE OF OUR COMMON STOCK HISTORICALLY HAS FLUCTUATED SIGNIFICANTLY.

Our  stock  price  could  fluctuate  significantly  in the future based upon any
number  of  factors  such  as:  general  stock  market  trends, announcements of
developments  related  to our business, fluctuations in our operating results, a
shortfall  in  our  revenues or earnings compared to the estimates of securities
analysts,  announcements  of  technological  innovations,  new  products  or
enhancements  by  us  or  our  competitors, general conditions in the markets we
serve,  general  conditions in the worldwide economy, developments in patents or
other  intellectual  property rights, and developments in our relationships with
our  customers  and  suppliers.

In  addition,  in  recent  years the stock market in general, and the market for
shares  of  technology  and  other  stocks  have  experienced  extreme  price
fluctuations,  which  have  often been unrelated to the operating performance of
affected  companies.  Similarly,  the  market  price  of  our  common  stock may
fluctuate  significantly  based  upon  factors  unrelated  to  our  operating
performance.

DRDF'S  COMMON  STOCK  IS  SUBJECT TO THE "PENNY STOCK" RULES OF THE SEC AND THE
TRADING  MARKET  IN  DRDF'S  SECURITIES  IS LIMITED, WHICH MAKES TRANSACTIONS IN
DRDF'S  STOCK  CUMBERSOME  AND  MAY  REDUCE THE VALUE OF AN INVESTMENT IN DRDF'S
STOCK.

DRDF's shares of Common Stock are "penny stocks" as defined in the Exchange Act,
which are quoted in the over-the-counter market on the OTC Bulletin Board.  As a
result,  an investor may find it more difficult to dispose of or obtain accurate
quotations  as  to  the price of the shares of the Common Stock being registered
hereby.  In  addition,  the  "penny stock" rules adopted by the Commission under
the  Exchange  Act subject the sale of the shares of the Common Stock to certain
regulations  which  impose  sales  practice requirements on broker-dealers.  For
example,  broker-dealers  selling  such  securities must, prior to effecting the
transaction, provide their customers with a document that discloses the risks of
investing  in  such  securities.  Included  in  this document are the following:

-     The  bid  and  offer  price  quotes for the penny stock, and the number of
shares  to  which  the  quoted  prices  apply.
-     The  brokerage  firm's  compensation  for  the  trade.
-     The  compensation  received  by  the brokerages firm's salesperson for the
trade.

In  addition,  the  brokerage  firm  must  send  the  investor:

-     Monthly  account  statement  that  gives  an estimate of the value of each
penny  stock  in  your  account.
-     A  written  statement  of  your  financial situation and investment goals.

Legal  remedies,  which  may  be  available  to  you,  are  as  follows:

-     If  penny stocks are sold to you in violation of your rights listed above,
or  other  federal  or  state  securities  laws,  you may be able to cancel your
purchase  and  get  your  money  back.
-     If  the stocks are sold in a fraudulent manner, you may be able to sue the
persons  and  firms  that  caused  the  fraud  for  damages.
-     If  you  have  signed  an  arbitration agreement, however, you may have to
pursue  your  claim  through  arbitration.

     If the person purchasing the securities is someone other than an accredited
investor or an established customer of the broker-dealer, the broker-dealer must
also  approve  the  potential  customer's  account  by  obtaining  information
concerning  the  customer's  financial  situation,  investment  experience  and
investment objectives.  The broker-dealer must also make a determination whether
the  transaction  is  suitable  for  the  customer  and whether the customer has
sufficient  knowledge  and  experience  in  financial  matters  to be reasonably
expected  to  be  capable  of  evaluating  the  risk  of  transactions  in  such
securities.  Accordingly,  the  Commission's  rules  may  limit  the  number  of
potential  purchasers  of  the  shares  of  the  Common  Stock.

     Resale restrictions on transferring "penny stocks" are sometimes imposed by
some  states, which may make transactions in our stock cumbersome and may reduce
the  value  of  an  investment  in  our  stock.

     Various  state  securities  laws impose restrictions on transferring "penny
stocks" and as a result, investors in the Common Stock may have their ability to
sell  their  shares  of  the  Common  Stock  impaired.  For  example,  the  Utah
Securities  Commission  prohibits  brokers  from  soliciting  buyers  for "penny
stocks",  which  makes  selling  them  more  difficult.

DRDF'S  ABSENCE  OF  DIVIDENDS OR THE ABILITY TO PAY THEM PLACES A LIMITATION ON
ANY  INVESTORS'  RETURN.

     DRDF anticipates that for the foreseeable future, earnings will be retained
for  the  development  of  its  business.  Accordingly, DRDF does not anticipate
paying  dividends on the common stock in the foreseeable future.  The payment of
future dividends will be at the sole discretion of DRDF's Board of Directors and
will  depend  on  DRDF's  general  business  condition.

ITEM  2.     DESCRIPTION  OF  PROPERTY

     DRDF  owns  no  real  property.  Dalrada leases the facility at 9449 Balboa
Avenue,  Suite  211,  San  Diego,  California, 92123.  This is a four year lease
entered  into  on  August  26, 2002 by the Christianson Group.   The facility is
approximately  2,848  square  feet  and  will  serve  as  our  new  corporate
headquarters.  Payments  under  the  lease are currently $5,411.20 per month and
increase  to  $5,838.40  in  2005  and  $5,980.80  in  2006.

     Dalrada's,  Employers  Administration  Goup,  Inc.  subsidiary,  leases the
facility  at 180 F. Main Street, Tustin California.   This is a three year lease
entered  into  on  July  15,  2003  by the Christianson Group.   The facility is
approximately  1,700  square  feet.  Payments  under  the  lease  are  currently
$2,380,00  per  month.

     Dalrada's,  Quick  Pix,  Inc subsidiary leases the facility at 7050 Village
Drive,  Suite  E and F, Buena Park, California.   This is three lease entered on
July  1, 2001.  The facility is approximately 8,602 square feet.  Payments under
the  lease  are  currently  $5,798.91  per  month.

ITEM  3.     LEGAL  PROCEEDINGS

     In  October 1999, the law firms of Weiss & Yourman and Stull, Stull & Brody
made a public announcement that they had filed a lawsuit against the Company and
certain  current  and  past  officers  and/or  directors,  alleging violation of
federal securities laws and, in November 1999, the lawsuit, filed in the name of
Nahid  Nazarian Behfarin, on her own behalf and others purported to be similarly
situated,  was served on the Company.  In January 2003, the Company entered into
a  Stipulation  of  Settlement  with  the  plaintiffs.  It  agreed  to  pay  the
plaintiffs  5,000,000 shares of common stock and $200 in cash.  The Parties have
accepted  the settlement.  DRDF has issued the shares, and its insurance carrier
has  paid  the  $200  cash payment.  Pursuant to a hearing in May 2003 the Court
provided  approval  to  the  settlement.

     On  August  22,  2002,  the Company was sued by its former landlord, Carmel
Mountain  #8 Associates, L.P. or past due rent on its former facilities at 15175
Innovation  Drive,  San  Diego,  CA  92127.

     DRDF  was  a party to a lawsuit filed by Symphony Partners, L.P. related to
its  acquisition  of  SourceOne Group, LLC.  As reported on Form 8-K, dated July
22,  2003,  the  plaintiffs  sought  payment of $702.  In June 2003, the Company
entered  into a settlement with the plaintiffs for a cash payment of $274, which
has  been  paid.

     DRDF  is  one of dozens of companies sued by The Massachusetts Institute of
Technology,  et  al.,  related  to  a  patent held by the plaintiffs that may be
related  to part of the Company's ColorBlind software.  Subsequent to the period
reported  in  this  filing,  in June 2003, the Company entered into a settlement
with  the  plaintiffs  who have agreed to dismiss their claims against DRDF with
prejudice  in exchange for a settlement fee payment of $10, which has been paid.

     The  Company has been sued in Illinois state court along with AIA/Mirriman,
its  insurance  brokers by the Arena Football League-2 ("AFS").  Damages payable
to  AF2,  should  they  win the suit, could exceed $700.  The Company expects to
defend  its  position  and  rely  on  representations  of its insurance brokers.

     Throughout fiscal 2003 and 2004, and through the date of this filing, trade
creditors  have  made  claims  and/or  filed actions alleging the failure of the
Company  to  pay  its  obligations  to  them in a total amount exceeding $3,000.
These  actions  are  in  various  stages  of  litigation, with many resulting in
judgments being entered against the Company.  Several of those who have obtained
judgments have filed judgment liens on the Company's assets.  These claims range
in  value  from less than one thousand dollars to just over one million dollars,
with  the  great  majority  being  less  than  twenty  thousand  dollars.

     In  connection  with  the  Company's acquisition of controlling interest of
Quik Pix, Inc., we are unaware of any pending litigation. From time to time, QPI
may  be  involved in litigation relating to claims arising out of its operations
in  the  normal  course  of  business.

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

     We held an annual meeting of our shareholders on May 20, 2003 in San Diego,
California  at our principal offices. The shareholders approved three proposals:
(1)  the  election  of Messrs. Bonar, Dietrich, Fryer, and Gaer and Dr. Green as
directors,  (2)  the  amendment of our Articles of Incorporation to increase the
authorized  amount  of  common  stock  to  1,000,000,000  shares,  and  (3)  the
appointment  of Pohl, McNabola, Berg & Company, LLP of San Francisco, California
as  our  auditors.  All  three  proposals  passed.


<PAGE>
                                     PART II

ITEM  5.     MARKET  FOR  COMMON  EQUITY  AND  RELATED  SHAREHOLDER  MATTERS

     (a)   Our  common  stock  is quoted on the Over-the Counter Bulletin Board,
also called the OTCBB, under the trading symbol "DRDF".  The following table set
forth the quarterly high and low bid prices per share for our common stock.  The
bid  prices  reflect  inter-dealer  prices,  without retail markup, markdown, or
commission  and  may  not  represent  actual  transactions.
<TABLE>
<CAPTION>



<S>                       <C>    <C>
                          High   Low
                          -----  -----
Year ended June 30, 2003
     First quarter . . .  $0.05  $0.01
     Second quarter. . .   0.04   0.01
     Third quarter . . .   0.02   0.01
     Fourth quarter. . .   0.02   0.01
Year ended June 30, 2004
     First quarter . . .  $0.04  $0.01
     Second quarter. . .   0.04   0.02
     Third quarter . . .   0.02   0.01
     Fourth Quarter. . .   0.01   0.01
</TABLE>



     (b)     As  of  June  30,  2004,  there  were  approximately 447 registered
shareholders  of  DRDF's  Common  Stock.

     (c)     To  date,  the  Company  has  not declared or paid dividends on its
Common  Stock.

     (d)     Securities authorized for issuance under equity compensation plans.
None

TRANSFER  AGENT  AND  REGISTRAR
-------------------------------

     DRDF's  transfer  agent  is  Atlas Stock Transfer, 5899 South State Street,
Salt  Lake  City,  Utah  54107,  (801)266-7151.

RECENT  SALES  OF  UNREGISTERED  SECURITIES
-------------------------------------------

     DRDF  made  the  following  sales  of  stock without registration using the
exceptions  available  under  the  Securities Act of 1933, as amended, including
unregistered  sales made pursuant to Section 4(2) of the Securities Act of 1933,
as  follows:

FISCAL  YEAR  2003
------------------

     On  July  8, 2002, 450,000 shares were issued to Technipower, Inc. at $0.16
per  share  in  settlement  of debt valued at $72,000.  These shares were issued
pursuant  to  the exempt provided by Section 4(2) of the Securities Act of 1933,
as  amended.

     On  October 10, 2002, 250,000 shares were issued to Gary Fong at $0.013 per
share for payment of rent, valued at $3,250.   These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On  November 11, 2002, 1,000,000 shares were issued to Michael Belletini at
$0.013 per share for employee compensation valued at $13,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

     On November 11, 2002, 1,000,000 shares were issued to David Stone at $0.013
per share for employee compensation valued at $13,000.  These shares were issued
pursuant  to  the exempt provided by Section 4(2) of the Securities Act of 1933,
as  amended.

     On  November  11,  2002,  1,000,000  shares  were issued to David Valade at
$0.013 per share for employee compensation valued at $13,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

     On  November  14,  2002,  500,000  shares  were issued to Hiichiro Ogawa at
$0.012  per  share  for consulting services valued at $6,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

     On  November  14,  2002,  437,500  shares were issued to Sayakp Torihara at
$0.012  per  share  for consulting services valued at $6,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

     On November 18, 2002, 198,379 shares were issued to Balmore Funds at $0.008
per  share  for  conversion  of a convertible debenture valued at $1,666.  These
shares  were  issued  pursuant  to  the  exempt  provided by Section 4(2) of the
Securities  Act  of  1933,  as  amended.

     On  December  20, 2002, 35,000,000 shares were issued to Guardtec, Inc. for
consulting  services  valued  at $490,000.  These shares were issued pursuant to
the  exempt  provided by Section 4(2) of the Securities Act of 1933, as amended.

     On January 9, 2003 3,125,000 shares were issued to Sid Berman at $0.013 for
the acquisition of QPI, valued at $40,625.  These shares were issued pursuant to
the  exempt  provided by Section 4(2) of the Securities Act of 1933, as amended.

     On January 9, 2003 1,250,000 shares were issued to Lee Finger at $0.013 for
the acquisition of QPI, valued at $16,250.  These shares were issued pursuant to
the  exempt  provided by Section 4(2) of the Securities Act of 1933, as amended.

     On January 9, 2003 1,250,000 shares were issued to Hal Kirsch at $0.013 for
the acquisition of QPI, valued at $16,250.  These shares were issued pursuant to
the  exempt  provided by Section 4(2) of the Securities Act of 1933, as amended.

     On  January  9, 2003, 500,000 shares were issued to Edie Youngman at $0.013
for the acquisition of QPI, valued at $6,500.  These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On  January  14,  2003,  5,000,000  shares  were issued to Eun Hee Chung at
$0.012  for  consulting  services  valued  at $60,000.  These shares were issued
pursuant  to  the exempt provided by Section 4(2) of the Securities Act of 1933,
as  amended.

     On January 14, 2003, 5,000,000 shares were issued to W.Y. Kim at $0.012 for
$60,000  in  cash.  These  shares were issued pursuant to the exempt provided by
Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  March  3, 2003, 300,000 shares were issued to Steven Reid at $0.011 for
consulting services valued at $60,000.  These shares were issued pursuant to the
exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as amended.

     On  April  21, 2003, 1,000,000 shares were issued to Lester Brann at $0.011
per share for employee compensation valued at $11,000.  These shares were issued
pursuant  to  the exempt provided by Section 4(2) of the Securities Act of 1933,
as  amended.

FISCAL  YEAR  2004
------------------

     On  July  18, 2003, 5,945,946 shares were issued to Bristol Investment Fund
at  $0.019  per  share  for  conversion  of  a  convertible  debenture valued at
$112,378.  These  shares  were issued pursuant to the exempt provided by Section
4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On August 1, 2003, 5,000,000 shares were issued to MarketByte LLC at $0.025
for  consulting  services valued at $125,000.  These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On  October  2,  2003,  12,402,597 shares were issued to Bristol Investment
Fund  at  $0.025  per  share for conversion of a convertible debenture valued at
$312,545.  These  shares  were issued pursuant to the exempt provided by Section
4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  October  9, 2003, 175,000 shares were issued to Stull, Stull & Brody at
$0.032  for  legal services valued at $5,600.  These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On  October  9,  2003,  1,075,000  shares were issued to Weiss & Yourman at
$0.032  for legal services valued at $34,400.  These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On October 2, 2003, 5,876,872 shares were issued to Bristol Investment Fund
at  $0.021  per  share  for  conversion  of  a  convertible  debenture valued at
$123,414.  These  shares  were issued pursuant to the exempt provided by Section
4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  December  18,  2003, 2,454,146 shares were issued to Bristol Investment
Fund  at  $0.013  per  share for conversion of a convertible debenture valued at
$32,640.  These  shares  were  issued pursuant to the exempt provided by Section
4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  January  4,  2004, 75,000 shares were issued to Gary Fong at $0.015 for
rent valued at $1,125.  These shares were issued pursuant to the exempt provided
by  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

On January 7, 2004, 75,000 shares were issued to Gary Fong at $0.02 for services
valued  at  $1,500.  These shares were issued pursuant to the exempt provided by
Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  January 7, 2004, 150,000 shares were issued to Karim Alami at $0.02 for
services  valued  at  $3,000.  These  shares  were issued pursuant to the exempt
provided  by  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  January  15,  2004, 7,481,989 shares were issued to Amro at $0.0124 for
the conversion of convertible debentures and accrued interest of $92,777.  These
shares  were  issued  pursuant  to  the  exempt  provided by Section 4(2) of the
Securities  Act  of  1933,  as  amended.

On  February 2, 2004, 4,523,810 shares were issued to Bristol Capital at $0.0084
for  the  conversion  of  convertible  debentures of $38,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

On  February  4,  2004, 12,000,000 shares were issued (Bonar 7,000,000, Dietrich
and  Gaer  both  2,500,000)  pursuant  to  the exercise of stock options with an
exercise  price  of  $0.006.  These  shares  were  issued pursuant to the exempt
provided  by  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  February  19,  2004,  7,500,000 shares were issued (Fryer 5,000,000 and
Green  2,500,000)  pursuant  to  the  exercise of stock options with an exercise
price  of  $0.006.  These  shares were issued pursuant to the exempt provided by
Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  March  1,  2004,  12,852,603  shares  were issued to Bristol Capital at
$0.007  for  the  conversion of convertible debentures of $89,968.  These shares
were  issued  pursuant  to the exempt provided by Section 4(2) of the Securities
Act  of  1933,  as  amended.

     On  March  5,  2004,  10,000,000  shares  were issued (Green and Fryer both
4,875,000  and Dietrich Green 250,000) pursuant to the exercise of stock options
with  an  exercise  price  of  $0.006.  These shares were issued pursuant to the
exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as amended.

     On  March  8,  2004, 2,747,287 shares were issued to Stonestreet at $0.0073
for  the  conversion  of  convertible  debentures of $20,000.  These shares were
issued  pursuant to the exempt provided by Section 4(2) of the Securities Act of
1933,  as  amended.

     On  March  15,  2004,  13,121,275  shares were issued to Bristol Capital at
$0.0049  for  the conversion of convertible debentures of $64,294.  These shares
were  issued  pursuant  to the exempt provided by Section 4(2) of the Securities
Act  of  1933,  as  amended.

     On  March  16, 2004, 6,911,011 shares were issued to Balmore at $0.0088 for
the  conversion  of convertible debentures of $60,817.  These shares were issued
pursuant  to  the exempt provided by Section 4(2) of the Securities Act of 1933,
as  amended.

     On  May  25,  2004,  13,954,855  shares  were issued to Stonestreet Limited
Partnership  at  $0.00475  per  share  for conversion of a convertible debenture
valued at $65,000 plus $1,285.56 in interest.  These shares were issued pursuant
to  the  exempt  provided  by  Section  4(2)  of  the Securities Act of 1933, as
amended.

     On May 25, 2004, 36,771,937 shares were issued to Balmore S.A at $0.0046526
per  share  for  conversion  of  a  convertible debenture valued at $140,000 and
$31,087.79  in  interest.  These  shares  were  issued  pursuant  to  the exempt
provided  by  Section  4(2)  of  the  Securities  Act  of  1933,  as  amended.

     On  May 25, 2004, 27,500,000 shares were issued to Howard Schraub at $0.008
per  share  for conversion of a convertible debenture valued at $220,000.  These
shares  were  issued  pursuant  to  the  exempt  provided by Section 4(2) of the
Securities  Act  of  1933,  as  amended.

     On  May  25,  2004, 7,500,000 shares were issued to Blue Fin Corporation at
$0.008  per  share  for conversion of a convertible debenture valued at $60,000.
These  shares were issued pursuant to the exempt provided by Section 4(2) of the
Securities  Act  of  1933,  as  amended.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF  OPERATIONS

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

     The  following  discussion  and analysis should be read in conjunction with
the  consolidated  financial statements and notes thereto appearing elsewhere in
this  Annual  Report  on Form 10-KSB. The statements contained in this Report on
Form 10-KSB that are not purely historical are forward-looking statements within
the  meaning  of  Section  27A  of  the  Securities Act of 1933, as amended, and
Section  21E  of  the  Securities  Exchange  Act  of 1934, as amended, including
statements regarding our expectations, hopes, intentions or strategies regarding
the  future.  Forward-looking  statements  include  statements regarding: future
product or product development; future research and development spending and our
product development strategies, and are generally identifiable by the use of the
words "may", "should", "expect", "anticipate", "estimates", "believe", "intend",
or  "project"  or the negative thereof or other variations thereon or comparable
terminology.  Forward-looking  statements  involve  known  and  unknown  risks,
uncertainties  and  other factors that may cause our actual results, performance
or  achievements (or industry results, performance or achievements) expressed or
implied  by  these  forward-looking  statements  to be materially different from
those  predicted.  The factors that could affect our actual results include, but
are  not  limited  to,  the following: general economic and business conditions,
both  nationally and in the regions in which we operate; competition; changes in
business  strategy  or development plans; our inability to retain key employees;
our  inability  to obtain sufficient financing to continue to expand operations;
and  changes  in  demand  for  products  by  our  customers.

OVERVIEW

     We  provide  a  variety  of  financial  services  to  small and medium-size
businesses. These services allow our customers to outsource many human resources
tasks,  including  payroll  processing,  workers' compensation insurance, health
insurance,  employee  benefits,  401k  investment  services,  personal financial
management,  and income tax consultation.  In November 2001, we began to provide
these  services to relieve some of the negative impact they have on the business
operations  of  our  existing  and  potential  customers.  To  this end, through
strategic  acquisitions, we became a professional employer organization ("PEO").

     We  provide  financial  services  principally  through  our  wholly-owned
SourceOne  Group,  Inc. ("SOG") subsidiary. These units provide a broad range of
financial  services,  including: benefits and payroll administration, health and
workers'  compensation  insurance  programs,  personnel  records management, and
employer  liability  management.  Through  our  Jackson Staffing subsidiary (and
MedicalHR  and  CallCenterHR  operating  units),  we  provide temporary staffing
services  to  small  and medium-sized businesses - primarily to call centers and
medical  facilities.

     In  January  2003,  we  completed  the  acquisition of controlling interest
(approximately  85%)  in  the  shares  of Greenland Corporation whose shares are
traded  on  the  NASD  Electronic  Bulletin  Board  under  the  symbol  GRLC.
Subsequently,  in  March  2004,  we  entered into an agreement with Greenland to
return  most of our shares in Greenland in return for Greenland's forgiveness of
certain  DRDF  indebtedness  and  business  opportunities.

     In  January  2003,  we  completed the acquisition of a controlling interest
(85%)  in  the  shares  of  Quik Pix, Inc. ("QPI"). QPI shares are traded on the
National  Quotation  Bureau  Pink Sheets  under the symbol QPIX. QPI is a visual
marketing  support firm located in Buena Park, California. Its principal service
is  to  provide photographic and digital images mounted for customer displays in
tradeshow  and other displays .Its principal product, PhotoMotion  is a patented
color  medium of multi-image transparencies. The process uses existing originals
to create the illusion of movement, and allows for three to five distinct images
to  be  displayed  with  an  existing  lightbox.

     In  September 2003, we hired two key persons and acquired the operations of
the  temporary staffing service then owned by Jackson Staffing, LLC. In order to
formalize  this  arrangement,  we  entered  into  an  acquisition agreement with
Jackson  Staffing  effective  September  1,  2003 and accordingly, the financial
statements  of  Jackson  Staffing  from  September  1,  2003 are included in our
financial  statements.

     In  April  2004,  we transferred our ColorBlind software technology to QPI.
ColorBlind  software  provides color management to improve the accuracy of color
reproduction  -  especially  as  it  relates to matching color between different
devices  in  a  network,  such  as  monitors  and  printers. ColorBlind software
products  are  marketed  internationally through direct distribution, resellers,
and  on  the  internet  through  our  color.com  website.

     Our  business continues to experience operational and liquidity challenges.
Accordingly, year-to-year financial comparisons may be of limited usefulness now
and  for  the next several periods due to anticipated changes in our business as
these  changes relate to potential acquisitions of new businesses and changes in
products  and  services.

     Our  current  strategy  is:  to  expand  our financial services businesses,
including  PEO services and temporary staffing, and to continue to commercialize
imaging  technologies,  including  PhotoMotion  Images  and  ColorBlind  color
management  software  through  our  QPI  subsidiary.

     To  successfully  execute our current strategy, we will need to improve our
working  capital  position.  The report of our independent auditors accompanying
our  June 30, 2004 financial statements included elsewhere in this Annual Report
includes  an explanatory paragraph indicating there is a substantial doubt about
our  ability  to  continue  as a going concern, due primarily to our recent loss
from  operations, the decreases in our working capital and net worth. We plan to
overcome  the  circumstances  that  impact our ability to remain a going concern
through  a  combination  of achieving profitability, raising additional debt and
equity  financing,  and  renegotiating  existing  obligations.

     In recent years, we have been working to reduce costs through the reduction
in staff and reorganizing our business activities.  Additionally, we have sought
to reduce our debt through debt to equity conversions. We continue to pursue the
acquisition  of  businesses  that  will  grow  our  business.

     There  can  be no assurance that we will be able to complete any additional
debt  or  equity  financings  on  favorable  terms  or  at all, or that any such
financings, if completed, will be adequate to meet our capital requirements. Any
additional  equity  or  convertible  debt financings could result in substantial
dilution  to  our  shareholders.  If adequate funds are not available, we may be
required  to  delay,  reduce or eliminate some or all of our planned activities,
including  any  potential  mergers  or  acquisitions.  Our inability to fund our
capital  requirements  would  have  a  material  adverse  effect on the Company.

RESTRUCTURING  AND  NEW  BUSINESS  UNITS

     During the year ended June 30, 2003, we suspended our sales efforts related
to the resale of products from other manufacturers, including printers, copiers,
and  other  digital  imaging  products  in  order  to  concentrate  on providing
financial  services  to  small  and  medium-size  businesses.

     Additionally,  in  April  2004,  we  transferred  our  ColorBlind  software
products  and  technologies to our QPI subsidiary in order to focus on financial
services  and  enable  QPI  to  concentrate  on  imaging technology products and
services.

ACQUISITIONS,  DISPOSITIONS  AND  SALE  OF  BUSINESS  UNITS

     In  August  2002,  we  entered  into  an  agreement  to acquire controlling
interest in Greenland Corporation. Greenland shares are traded on the Electronic
Bulletin  Board  under  the  symbol  GRLC. On January 14, 2003, we completed the
acquisition  of  shares,  representing  controlling  interest, of Greenland. The
terms  of  the  acquisitions  were disclosed on Form 8-K filed January 21, 2003.

     Pursuant  to  a  mutual  agreement  between  the Board of Directors of both
Greenland  Corporation  and  us, Greenland has been separated from us, effective
February,  23,  2004. Under the separation agreement, Greenland forgave its note
receivable  from  us of $2,250,000 together with any accrued interest thereon in
consideration  for  our  granting our acquisition rights to acquire ePEO Link to
Greenland.  In  addition,  for  returning  95,949,610 shares of Greenland common
stock  acquired  by  us  pursuant to our acquisition agreement with Greenland in
January  2003,  Greenland  forgave its inter-company account receivable from us,
which  amount  aggregated  approximately  $1,375,000.  Further,  the  agreement
provided  for  us  to effect the resignation of our Directors who also served on
the  Board  of  Directors  of  Greenland,  which  was  completed  in March 2004.

     In September 2003, we hired two key persons, and acquired the operations of
the  temporary staffing service then owned by Jackson Staffing, LLC. In order to
formalize  this  arrangement,  we  entered  into  an  acquisition agreement with
Jackson  Staffing  effective  September  1,  2003 and accordingly, the financial
statements  of  Jackson  Staffing  from  September  1,  2003 are included in our
financial  statements.

SIGNIFICANT  ACCOUNTING  POLICIES  AND  ESTIMATES

     Management's  Discussion and Analysis of Financial Condition and Results of
Operations  discuss  our  consolidated  financial  statements,  which  have been
prepared  in  accordance  with  accounting  principles generally accepted in the
United  States  of  America.  The  preparation  of  these consolidated financial
statements  requires  us  to  make  estimates  and  assumptions  that affect the
reported  amounts  of  assets  and  liabilities  at the date of the consolidated
financial  statements  and  the reported amounts of revenues and expenses during
the  reporting  period.  On  an  on-going  basis,  we evaluate our estimates and
judgments,  including those related to allowance for doubtful accounts, value of
intangible  assets and valuation of non-cash compensation. We base our estimates
and  judgments  on  historical  experiences and on various other factors that we
believe  to be reasonable under the circumstances, the results of which form the
basis  for  making  judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from
these  estimates under different assumptions or conditions. The most significant
accounting  estimates  inherent in the preparation of our consolidated financial
statements  include  estimates  as  to the appropriate carrying value of certain
assets  and  liabilities  which  are  not  readily  apparent from other sources,
primarily  allowance  for  doubtful  accounts,  estimated  fair  value of equity
instruments  used for compensation, estimated tax liabilities fro PEO operations
and  estimated  liabilities  associated  with Worker's Compensation liabilities.
These  accounting policies are described at relevant sections in this discussion
and  analysis and in the notes to the consolidated financial statements included
in  our  Annual  Report  on  Form  l0-K for the fiscal year ended June 30, 2004.

REVENUE  RECOGNITION

PEO  Service  Fees  and  Worksite  Employee  Payroll  Costs
-----------------------------------------------------------

     We recognize our revenues associated with our PEO business pursuant to EITF
99-19  "Reporting  Revenue  Gross  as  a Principal versus Net as an Agent."  Our
revenues  are  reported  net  of  worksite  employee  payroll cost (net method).
Pursuant  to  discussions  with the Securities and Exchange Commission staff, we
changed  our  presentation of revenues from the gross method to an approach that
presents  our  revenues  net  of  worksite  employee  payroll costs (net method)
primarily because we are not generally responsible for the output and quality of
work  performed  by  the  worksite  employees.

     In  determining  the pricing of the markup component of the gross billings,
we  take  into consideration our estimates of the costs directly associated with
our  worksite  employees,  including  payroll  taxes,  benefits  and  workers'
compensation  costs,  plus  an acceptable gross profit margin.  As a result, our
operating  results  are  significantly  impacted  by  our  ability to accurately
estimate,  control  and manage our direct costs relative to the revenues derived
from  the  markup  component  of  our  gross  billings.

     Consistent  with  our  revenue  recognition policy, our direct costs do not
include the payroll cost of our worksite employees.  Our direct costs associated
with  our revenue generating activities are comprised of all other costs related
to  our  worksite  employees,  such  as  the employer portion of payroll-related
taxes,  employee  benefit  plan  premiums  and  workers'  compensation insurance
premiums.

Sales  of  Products
-------------------

     Revenue is recognized when earned.  Our revenue recognition policies are in
compliance  with  all  applicable  accounting  regulations,  including  American
Institute  of  Certified  Public Accountants (AICPA) Statement of Position (SOP)
97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With
Respect  to  Certain  Transactions.  Revenue  from products licensed to original
equipment  manufacturers  is  recorded  when  OEMs  ship licensed products while
revenue  from  certain  license  programs is recorded when the software has been
delivered  and the customer is invoiced.  Revenue from packaged product sales to
and  through  distributors  and  resellers is recorded when related products are
shipped.  Maintenance  and  subscription  revenue is recognized ratably over the
contract period.  When the revenue recognition criteria required for distributor
and  reseller  arrangements  are  not met, revenue is recognized as payments are
received.  Provisions  are  recorded  for  returns  and bad debts.  Our software
arrangements do not contain multiple elements, and we do not offer post contract
support.

Temporary  Staffing
-------------------

     We  record  gross  revenue  for  temporary staffing. We have concluded that
gross  reporting  is appropriate because we (i) have the risk of identifying and
hiring qualified employees, (ii) have the discretion to select the employees and
establish  their  price and duties and (iii) bear the risk for services that are
not fully paid for by customers. Temporary staffing revenues are recognized when
the  services  are  rendered by the our temporary employees. Temporary employees
placed  by  us are our legal employees while they are working on assignments. We
pay  all related costs of employment, including workers' compensation insurance,
state  and  federal  unemployment  taxes,  social  security  and  certain fringe
benefits. We assume the risk of acceptability of our employees to our customers.

RESULTS  OF  OPERATIONS

Revenues
--------

     Total revenues were $13,526,000 and $3,790,000 for the years ended June 30,
2004 and 2003, respectively; an increase of $$9,736,000 (257%). The increase was
due  primarily to the addition of temporary staffing services, which contributed
$10,119,000  of  revenues  for  the  year  ended  June  30,  2004.

PEO  Services

     PEO  revenues  were  $2,607,000 and $2,499,000 for the years ended June 30,
2004  and  2003, respectively; an increase of $108,000 (4%) due primarily to the
small  increase  in  our  PEO  customer  base.

Temporary  Staffing

     In  September  2003,  we  entered into an agreement to purchase a temporary
staffing business through the organization of CallCenterHR and MedicalHR and the
acquisition  of Jackson Staffing. There were no revenues from temporary staffing
in  the  2003  fiscal  year  and  $10,119,000  for the year ended June 30, 2004.

Imaging  Products

     Sales  of  imaging  products  were  generated  principally  from  our  QPI
subsidiary.  Imaging  Products revenues were $764,000 and $924,000 for the years
ended  June  30,  2004  and 2003, respectively; a decrease of $160,000 (17%) due
primarily  to  the  decrease  in  product sales as a result of the suspension of
sales  and marketing activities associated with the resale of office products in
order  to  concentrate  on  color  management  products  and services, including
ColorBlind  software  and  PhotoMotion  Images.

Software

     Software  revenues  were  $36,000 and $367,000 for the years ended June 30,
2004  and  2003,  respectively;  a  decrease of $331,000 (90%). The reduction in
software  revenues  was  due  to  a  delay in completing certain versions of our
software  which  can  be used with multiple computer operating systems. Revenues
from  licenses  and  royalties  for  the  periods  were  insignificant.

     Royalties and licensing fees vary from quarter to quarter and are dependent
on  the  sales  of  products sold by OEM customers using our technologies. These
revenues  continue  to  decline  as  we  have elected to transfer our ColorBlind
software  to  QPI,  which  has  accelerated  product  development  and  begun to
implement  a  more  aggressive  product  sales  program.

Cost  of  Products  Sold
------------------------

     Cost  of  PEO  services for the years ended June 30, 2004 and 2003 $894,000
(34%  of  PEO revenues) and $1,639,000 (66% of PEO revenues), respectively.  The
increase  in  gross  profit  is  due  primarily to us being able to provide more
profitable  services  to  our  PEO  customers.

     Costs  of  temporary  staffing  for  the  years  ended  June  30,  2004 was
$9,209,000  (91%  of  temporary  staffing  revenue).   There was no such cost of
revenues  in  the  prior-year  period.

     Cost  of  products  sold  for  the  year  ended June 30, 2004 and 2003 were
$196,000  (26%  of  product  sales)  and  $396,000  (43%  of  product  sales),
respectively.  Product  sales  continue  to  decline  as we concentrate on other
products  and  services.  The increase in margins is due primarily to changes in
product  mix  and  our  competitive  position  with  customers.

     Cost  of software, licenses and royalties for the years ended June 30, 2004
and  2003 were $3,000 and $90,000, respectively The decrease is due primarily to
decreased  business  activity  while  awaiting the completion of new releases of
ColorBlind  software.  This represented 8% of revenue in 2004 and 25% of revenue
in  2003.

Operating  Expenses
-------------------

     Operating  expenses have consisted primarily of salaries and commissions of
sales  and marketing personnel, salaries and related costs for general corporate
functions,  including  finance,  accounting,  facilities and legal, advertising,
rent,  depreciation  and amortization, and other marketing related expenses, and
fees  for  professional  services.

     Operating  expenses  for  the  years  ended  June  30,  2004  and 2003 were
$4,196,000  and  $5,623,000, respectively; a decrease of $1,427,000 (25%).   The
significant  decrease  is  due to a reduction of payroll and related benefits of
$1,491,000  due to a significant reduction in our personnel.  Also, as disclosed
in  "Significant  Accounting  Policies  and Estimates", we rely on estimates for
such  liabilities  related  to,  among  other  areas,  worker's compensation and
accrued  payroll  taxes.  During  the  year  ended June 30, 2004, we changed our
estimate  of  workers'  compensation  and  accrued  payroll  taxes  aggregating
approximately  $2,500,000,  which  resulted  in  a  negative  general  and
administrative  expenses.  These  reduction in operating expenses were offset by
an  increase  in  consulting  expenses  of  $843,000  due  to  us  using outside
consultants  since  we  have  reduce  the  number  of  full-time  personnel.

Other  Income  and  Expenses
----------------------------

     Other  income  and  expense, net for the years ended June 30, 2004 and 2003
was  $1,923,000  and  $1,028,000  respectively; an increase in other expenses of
$959,000  (99%)  The  increase  is principally due to a decrease in other income
resulting from the gain on the settlement of debt.  For the years ended June 30,
2004 and 2003, the gain on the settlement of debt was $1,145,000 and $2,343,000,
respectively; a decrease of $1,198,000 (51%)  These gains are principally due to
the  write off of old, stale accounts payable that our attorneys have advised us
that  we  have  been  released  from  these obligations.  Pursuant to an opinion
provided by counsel, we elected to record these gains pursuant to the Statute of
Limitations  in  the  State  of California. Interest expense for the years ended
June  30,  2004 and 2003 was $1,930,000 and $1,493,000 respectively; an increase
of  $437,000  (29%).  The  increase  is  principally due to the write off of the
unamortized  debt  discounts  associated  with the conversion of debentures into
common stock.  Penalties and interest for the years ended June 30, 2004 and 2003
was  $795,000  and $2,023,000 respectively; a decrease of $1,228,000 (61%).  The
decrease  is  due  to  the  pay  down  of  the  outstanding  payroll liabilities

Liquidity  and  Capital  Resources
----------------------------------

     Historically,  we  have  financed  our  operations  primarily  through cash
generated  from  operations,  debt financing, and the sale of equity securities.
Additionally,  in  order  to facilitate our growth and future liquidity, we have
made  some  strategic  acquisitions.

     As  a  result  of  some  of  our  financing  activities,  there  has been a
significant  increase in the number of issued and outstanding shares. During the
year  ended  June  30,  2004,  we issued an additional 371,126,679 shares. These
shares  of  common stock were issued primarily for corporate expenses in lieu of
cash,  for  acquisition  of  businesses,  for  the  conversion  of  convertible
debentures  and  other  debt,  and  for  the  exercise  of  warrants.

     As  of  June  30,  2004, we had negative working capital of $21,936,000, an
increase in working capital of $6,510,000 since June 30, 2003. This increase was
due  primarily  to  our  disposition  of  Greenland  Corporation,  gains  on the
disposition  of debt, the conversion of debt to equity and a change in estimates
as  previously  discussed.

     Net  cash used in operating activities was $489,000 for the year ended June
30,  2004  as compared to net cash provided by operating activities of 1,112,000
for  the  prior-year  period;  a  decrease  of  $1,601,000. The decrease was due
primarily  to  a  decrease  in  current  liabilities.

     Cash  provided  by investing activities was $11,000 for the year ended June
30,  2004,  an  increase  of  $56,000  from  the  previous  year.

     We  have  no  material  commitments  for  capital  expenditures.  Our  5%
convertible  preferred  stock  (which  ranks prior to our common stock), carries
cumulative  dividends,  when  and  as  declared, at an annual rate of $50.00 per
share.  The  aggregate amount of such dividends in arrears at June 30, 2004, was
approximately  $420,000.

     Our  capital  requirements  depend  on  numerous  factors, including market
acceptance  of  our  products and services, the resources we devote to marketing
and  selling  our  products  and  services, and other factors. The report of our
independent  auditors  accompanying  our  June  30,  2004  financial  statements
includes  an explanatory paragraph indicating there is a substantial doubt about
our  ability  to  continue as a going concern, due primarily to the decreases in
our  working  capital  and  net  worth.

ITEM  7.     FINANCIAL  STATEMENTS

     The report of our independent auditors and our financial statements are set
forth  in  this  report  beginning  on  Page  F-1.

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

     On  September  3,  2003,  the  Registrant  appointed Pohl, McNabola, Berg &
Company,  LLP  ("PMBC")  as  Imaging  Technologies  Corporation's  ("ITEC,"  the
"Registrant",  or the "Company") independent auditors upon the recommendation of
its  Audit  Committee.

     The  ITEC  Audit  Committee  interviewed  a number of candidates, including
Stonefield  Josephson, Inc., its prior independent auditors. The Audit Committee
determined  that  it  was  in  the best interests of the Company to engage a new
independent  auditor  to  perform services for ITEC and its subsidiaries, two of
whose  shares  are  publicly  traded.

      Stonefield  Josephson's  audit  report  on  the  financial  statements  of
the  Company  as  of  June  30,  2002  expressed  its  uncertainty  as  to  the
Company's  ability  to  continue  as  a  going  concern.  They  cited  recurring
losses  from  operations,  the Company's working capital deficiency, and limited
cash  resources.  These  circumstances  were  also  present  in  the  financial
statements  of  the  Company  as  of  March  31,  2003  and  in  financial
statements for several consecutive  reporting  periods. The Company expects that
this  condition  will  be  reported  in its audited financial statements for the
fiscal  year ended June 30, 2003. PMBC has been engaged to perform the audit for
this  fiscal  year  ended  June  30,  2003.

     The  Registrant  believes  there  were  no  disagreements  with  Stonefield
Josephson  within  the meaning of Instruction 4 to Item 304 of Regulation S-K on
any  matter  of  accounting  principles  or  practices,  financial  statement
disclosure,  or  auditing scope or procedure in connection with the audit of the
Company's  financial  statements  for the period ended June 30, 2002, or for any
subsequent  interim  period,  which  disagreements,  if  not  resolved  to their
satisfaction,  would  have  caused Stonefield Josephson to make reference to the
subject  matter  of  the  disagreements  in  connection  with  its  report.

     During  the  fiscal  years ended June 30, 2000, 2001, 2002, and through the
present,  there  have been no reportable events (as defined in Item 304(a)(1)(v)
of  Regulation  S-K)  of  the type required to be disclosed by that section. The
Company  has  not consulted with any other independent auditors regarding either
(i)  the application of accounting principles to a specified transaction, either
completed  or  proposed;  or the type of audit opinion that might be rendered on
the  Company's  financial  statements;  or  (ii)  any matter that was either the
subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation
S-K  and  the  related  instructions)  or a reportable event (as defined in Item
304(a)(1)(v)  of  Regulation  S-K).

      A  letter of Stonefield Josephson addressed to the Securities and Exchange
Commission  is  included  as Exhibit 16 to the Form 8-K. Such letter states that
such  firm  agrees  with  the  statements  made  by  the Company in this Item 4.

ITEM  8A.     CONTROLS  AND  PROCEDURES.

     (a)  Our Chief Executive Officer and Chief Financial Officer have evaluated
the  effectiveness  of  our  disclosure controls and procedures (as such term is
defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934, as
amended (the "Exchange Act")) as of the end of the period covered by this annual
report  (the  "Evaluation  Date").  Based on such evaluation, such officers have
concluded  that,  as  of  the  Evaluation  Date,  our  disclosure  controls  and
procedures  are  effective  in  alerting  them  on  a  timely  basis to material
information  relating  to  our Company (including our consolidated subsidiaries)
required  to  be  included  in our reports filed or submitted under the Exchange
Act.

     (b)   Changes  in  Internal  Controls  over Financial Reporting. During the
most  recent  fiscal  year,  there  have not been any significant changes in our
internal  controls  over  financial  reporting  or  in  other  factors that have
materially affected, or are reasonably likely to materially affect, our internal
controls  over  financial  reporting.


<PAGE>
                                    PART III

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

     The  directors  and  executive  officers  of  the  Company,  their ages and
positions  with  the  Company  as  of  June  30,  2004  are  as  follows:
<TABLE>
<CAPTION>



<S>                 <C>  <C>    <C>
Name . . . . . . .  Age  Since  Director Title

Brian Bonar. . . .   57   1995  Director and Chief Executive Officer
Richard H. Green .   68   2000  Director
Robert A. Dietrich   59   2000  Director
Eric W. Gaer . . .   56   2000  Director
Stephen J. Fryer .   66   2000  Director
</TABLE>



     Brian  Bonar  has served as a director of the Company since August 1995 and
became  the  Company's Chairman of the Board in December 1999.  From August 1992
through  April  1994,  Mr.  Bonar served as the Company's Director of Technology
Sales  and  from  April  1994  through  September  1994  as  the  Company's Vice
President,  Sales  and  Marketing.  In  September  1994,  Mr.  Bonar  became the
Company's  Executive  Vice  President  and,  in  July 1997, was appointed as the
Company's President and Chief Operating Officer. In April 1998 Mr. Bonar assumed
the  post  of CEO.  From 1991 to 1992, Mr. Bonar was Vice President of Worldwide
Sales  and  Marketing  for  Bezier  Systems,  Inc., a San Jose, California-based
manufacturer and marketer of laser printers. From 1990 to 1991, he was Worldwide
Sales  Manager  for  Adaptec,  Inc.,  a  San Jose-based laser printer controller
developer.  From  1988  to  1990,  Mr.  Bonar  was  Vice  President of Sales and
Marketing  for  Rastek Corporation, a laser printer controller developed located
in  Huntsville,  Alabama. From 1984 to 1988, Mr. Bonar was employed as Executive
Director  of  Engineering  at  QMS,  Inc.,  an  Alabama-based  developer  and
manufacturer  of high-performance color and monochrome printing solutions. Prior
to  these  positions, Mr. Bonar was employed by IBM, U.K. Ltd. for approximately
17  years.

     Dr.  Richard H. Green has served as a director since September 2000.  He is
currently the President of International Power & Environmental Company (IPEC), a
consulting company located in San Diego, California.  From 1993 through 1995, he
served  as  Deputy Secretary of the State of California Environmental Protection
Agency (Cal/EPA).  From 1988 through 1993 Dr. Green served as Manager of Program
Engineering  and  Review  Office in the Office of Technology and Applications at
the  Jet  Propulsion Laboratory (JPL) in Pasadena, California, where he had held
various  management  positions  since  1967.  From  1965 through 1967, Dr. Green
served  as  Senior  Engineer for The Boeing Company,  Space Division.  From 1983
through  1985,  Dr.  Green held the Corwin D. Denny Chair as Professor of Energy
and Director of the Energy Institute at the University of LaVerne, and from 1961
through  1964  served as Assistant Professor of Civil Engineering (Environmental
Sciences)  at  Washington  State University.  Dr. Green currently is a member of
the  Governing  Board  of  Pasadena  City  College.  Dr.  Green  completed  his
bachelor's  degree  at  Whitman  College  in  1958,  his  Master  of  Science at
Washington  State  University  in  1961,  and  his  Ph.D.  at  Washington  State
University,  under  a  United  States  Public Health Services Career Development
Award,  in  1965.

     Robert  A.  Dietrich  has served as a director of the Company since January
2000.  Mr.  Dietrich  is  President  and  CEO of Cyberair Communications Inc., a
privately-held  telecommunications  company with strategic interests in Internet
communications  and  "bandwidth" expansion technologies, as well as domestic and
international  telephone services, in Irvine, California. Recently, Mr. Dietrich
was  named  President  and CEO of Semper Resources Corporation, a public natural
resources holding company in Irvine, California. From 1996 to 2000, Mr. Dietrich
was  Managing  Director  and  CFO  of  Ventana  International,  Ltd.,  Irvine,
California, a venture capital and private investment-banking firm.  From 1990 to
1994,  Mr. Dietrich was Vice President and Chief Financial Officer of CEI, Inc.,
in  Santa  Ana,  California,  a  commercial  furnishings  firm, prior to joining
Ventana.  Mr.  Dietrich  is  a  graduate of the University of Notre Dame, with a
bachelor's  degree in accounting, and the University of Detroit, with a master's
degree in finance. He served as a lieutenant in the U.S. Navy's Atlantic Command
Operations  Control  Center.

Eric  W.  Gaer  has served as a director since March 2000.  Since 1998, Mr. Gaer
has  been  the  President  and  CEO  of  Arroyo  Development  Corporation,  a
privately-held,  San  Diego-based  management  consulting  company. From 1996 to
1998,  he  was  Chairman,  President  and  CEO  of  Greenland  Corporation,  a
publicly-held high technology company in San Diego, California.  In 1995, he was
CEO  of Ariel Systems, Inc., a privately-held engineering development company in
Vista,  California.  Over  the  past  25 years, Mr. Gaer has served in executive
management  positions at a variety of high-technology companies, including ITEC,
Daybreak  Technologies, Inc., Venture Software, Inc., and Merisel, Inc. In 1970,
he  received  a  Bachelor  of Arts degree in mass communications from California
State  University,  Northridge.

Stephen  J.  Fryer has served as a director of the Company since March 2000.  He
is  currently Chairman of the Board and CEO of Pen Interconnect, Inc. ("Pen"), a
                                                                        ---
high  technology company in Irvine, California.  He began his employment service
at  Pen  in  1997  as  Senior Vice President of Sales and Marketing.  At Pen, he
became  a  director  in  1995 and was appointed President and CEO in 1998.  From
1989  to  1996,  Mr.  Fryer  was  a  principal in Ventana International, Ltd., a
venture  capital  and private investment-banking firm in Irvine, California.  He
has over 28 years experience in the computer industry in the United States, Asia
and  Europe.  Mr. Fryer graduated from the University of California in 1960 with
a  bachelor's  degree  in  mechanical  engineering.

EXECUTIVE  OFFICERS

     The  executive officers of the Company as of June 30, 2004, are as follows:
<TABLE>
<CAPTION>



<S>          <C>                                 <C>
 NAME . . .  AGE                                 POSITION
-----------  ----------------------------------  ---------------------------

             Chairman of the Board of Directors
Brian Bonar                                  57  and Chief Executive Officer
</TABLE>


     Brian  Bonar  is also a director of the Company. See above for a discussion
of  Mr.  Bonar's  business  experience.

AUDIT  COMMITTEE  FINANCIAL  EXPERT

     The Audit Committee of the Board of Directors consists of Mr. Dietrich, Dr.
Green  and  Mr.  Fryer,  both  of  whom are independent and qualify as financial
experts  under  SEC  regulations.

COMPLIANCE  WITH  SECTION  16  OF  THE  SECURITIES  EXCHANGE  ACT  OF  1934

     Section  16(a)  of  the  Securities  Exchange  Act  of 1934 requires DRDF's
directors  and  executive  officers,  and  persons  who  own  more than 10% of a
registered  class  of  DRDF's  equity securities to file with the Securities and
Exchange  Commission  initial  reports  of  ownership  and reports of changes in
ownership of Common Stock and other DRDF equity securities.  Officers, directors
and  greater  than  10%  shareholders are required by SEC regulations to furnish
DRDF  with  copies  of  all  Section  16(a)  forms  they  file.

     To  DRDF's  knowledge,  based  solely  on  its review of the copies of such
reports  furnished  to  the  company  and  written representations that no other
reports  were  required  during the fiscal year ended June 30, 2004, all Section
16(a) filing requirements applicable to its officers, directors and greater than
10%  beneficial  owners  were  complied  with.

BUSINESS  ETHICS  CONFLICTS  OF  INTERESTS  POLICY

     The Company has adopted a Policy Statement on Business Ethics and Conflicts
of  Interest,  which  was  approved by the Board of Directors, applicable to all
employees,  which  is  attached  as  exhibit  99.1  to  this  report.

ITEM  10.     EXECUTIVE  COMPENSATION
<TABLE>
<CAPTION>



<S>                                 <C>                  <C>                   <C>         <C>
                                    LONG TERM
                                    ANNUAL COMPENSATION  COMPENSATION AWARDS
                                    -------------------  --------------------

                                    OPTIONS/
NAME AND PRINCIPAL POSITION. . . .  FISCAL YEAR          SALARY                OTHER       SARS (#)
                                    -------------------  --------------------

Brian Bonar. . . . . . . . . . . .                 2004  $            157,500  $  150,000            -
Chairman, Board of Directors,. . .                 2003  $            275,000  $   76,814   15,000,000
President and C.E.O. . . . . . . .                 2002  $            230,000   1,750,000

James R. Downey, Jr.(1). . . . . .                 2004  $            100,000  $   20,000            -
Chief Operating Officer and Chief.                 2003  $             79,000   9,500,000
Accounting Officer
</TABLE>


(1)  Mr.  Downey  joined  the  Company  effective  January  6, 2003 and resigned
effective  January  31,  2004.

     The  following  table  provides  information on Options/SARs granted in the
2004  Fiscal  Year  to  the  Named  Officers.
<TABLE>
<CAPTION>



<S>                       <C>            <C>            <C>                    <C>              <C>               <C>


                          Number of      Percent of     Potential Realizable
                          Securities     Total          Value at Assumed
                          Underlying     Options/SARs   Annual Rates of
                          Options/SARs   Granted to     Exercise or            Stock Price
                          Granted (#)    Employees in   Base Price             Expiration       Appreciation for
Name . . . . . . . . . .  Fiscal Year        ($/share)  Date                   Option Term (4)
------------------------                                                       ---------------
                                 5% ($)        10% ($)
                          -------------
Brian Bonar. . . . . . .      7,000,000          23.7%  $               0.015          12/1/05             5,250  10,500
James R. Downey, Jr. (1)              -
</TABLE>


(1)  Mr.  Downey  resigned  effective  January  30,  2004

AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR VALUES

          The  following  table  provides information on option exercises in the
2004  Fiscal  Year  by  the Named Officers and the value of such Named Officers'
unexercised  options  at  June  30,  2004. Warrants to purchase Common Stock are
included  as  options. No stock appreciation rights were held by them at the end
of  the  2004  Fiscal  Year.
<TABLE>
<CAPTION>



<S>                       <C>           <C>                    <C>                          <C>                          <C>   <C>

                          SHARES        NUMBER OF SECURITIES   VALUE OF UNEXERCISED
                          ACQUIRED ON   VALUE                  UNDERLYING UNEXERCISED       IN-THE-MONEY OPTIONS/SAR
NAME . . . . . . . . . .  EXERCISE (#)  REALIZED ($)           OPTIONS/SAR'S AT FY-END (#)  AT FISCAL YEAR END ($) (2)
------------------------

                          EXERCISABLE   UNEXERCISABLE          EXERCISABLE                  UNEXERCISABLE
                          ------------
Brian Bonar                        ---              8,000,000                          ---  $                         0   ---
James R. Downey, Jr. (1)           ---                     --                    9,500,000                          ---  $  0  ---
</TABLE>


(1)  Mr.  Downey  resigned  effective  January  30,  2004

COMPENSATION  OF  DIRECTORS

     Each member of the Board of Directors of the Company receives a fee of $500
from  the  Company  for  each  meeting  attended.

EMPLOYMENT  CONTRACTS,  TERMINATION  OF  EMPLOYMENT,  AND  CHANGE-IN-CONTROL
ARRANGEMENTS

     None

COMPENSATION  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

     The  Compensation  Committee  currently consists of Messrs. Gaer and Green.
Neither  of  these  individuals was an officer or employee of the Company at any
time  during  the  2004  Fiscal  Year.  Mr.  Gaer  owns  a company that receives
consulting  fees  from  the  Company.

AUDIT  COMMITTEE  INTERLOCKS  AND  INSIDER  PARTICIPATION

     The  Audit  Committee  currently  consists  of  Messrs. Green and Dietrich.
Neither  of  these  individuals was an officer or employee of the Company at any
time  during  the  2004  Fiscal  Year.

ITEM  11.     SECURITY  OWNERSHIP  OF  CERTAIN  BENEFICIAL OWNERS AND MANAGEMENT

     The following table sets forth certain information known to the best of the
Company's  knowledge with respect to the beneficial ownership of Common Stock as
of  June  30, 2004, by (i) all persons who are beneficial owners of five percent
(5  percent)  or  more  of  the Common Stock,  (ii) each director, and (iii) all
current  directors  and  executive  officers individually and as a group. Unless
otherwise  indicated,  each  of  the shareholders has sole voting and investment
power  with  respect  to  the  shares  beneficially  owned, subject to community
property  laws, where applicable.  The address for each person listed is in care
of  DRDF  at  9449  Balboa  Avenue,  Suite  211,  San  Diego,  CA  92123.
<TABLE>
<CAPTION>



<S>                         <C>         <C>
NAME . . . . . . . . . . .  NO. SHARES  PERCENT OF CLASS (1)
--------------------------  ----------  --------------------

Brian Bonar (2). . . . . .  19,007,500                  3.5%
Robert A. Dietrich (3) . .  11,637,500                  2.1%
Stephen J. Fryer (4) . . .   7,453,250                  1.4%
Eric W. Gaer (5) . . . . .   9,936,000                  1.8%
Richard Green (6). . . . .   9,969,500                  1.8%
All current directors and
executive officers
(group of 5) . . . . . . .  58,003,750                 10.6%
</TABLE>



     (1)  Percentage  of ownership is based on 547,358,742shares of Common Stock
outstanding  on  June 30, 2004. Shares of Common Stock subject to stock options,
warrants  and  convertible  securities  which  are  currently  exercisable  or
convertible  or will become exercisable or convertible within 60 days after June
30,  2004  are  deemed outstanding for computing the percentage of the person or
group  holding  such  options,  warrants  or  convertible securities but are not
deemed  outstanding  for  computing the percentage of any other person or group.

     (2)  Includes 12,000,000 shares issuable upon exercise of warrants that are
currently  exercisable  or will become exercisable within 60 days after November
14,  2003.

     (3)  Includes  9,125,000 shares issuable upon exercise of warrants that are
currently  exercisable  or will become exercisable within 60 days after November
14,  2003.

     (4)  Includes  4,875,000 shares issuable upon exercise of warrants that are
currently  exercisable  or will become exercisable within 60 days after November
14,  2003.

     (5)  Includes  7,375,000 shares issuable upon exercise of warrants that are
currently  exercisable  or will become exercisable within 60 days after November
14,  2003.

     (6)  Includes 40,750,000 shares issuable upon exercise of warrants that are
currently  exercisable  or will become exercisable within 60 days after November
14,  2003.

ITEM  12.     CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     During  the  year  ended  June  30,  2004,  the  Company accrued consulting
expenses  of $60,000 due Arroyo Development Corporation, owned by Mr. Eric Gaer,
a  member  of  the  Board  of  Directors.  There  was  no  officer  or  director
indebtedness  to  the  Company.

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

A.   EXHIBITS
3(a)     Certificate  of Incorporation of the Company, as amended, and currently
in  effect.  See  also  below
(Incorporated  by  reference  to  Exhibit  3(a)  to  1988  Form  10-K)
*

3(b)     Certificate  of  Amendment  of  Certificate  of  Incorporation  of  the
Company,  filed  February  8,  1995,
as  amended,  and currently in effect (Incorporated by reference to Exhibit 3(b)
to  1995  Form  10-K)          *

3(c)     Certificate  of  Amendment  of  Certificate  of  Incorporation  of  the
Company,  filed  May  23,  1997,  as
amended,  and  currently in effect (Incorporated by reference to 1997 Form 10-K)
*

3(d)     Certificate of Amendment of Certificate of Incorporation, filed January
12,  1999,  as  amended  and
 currently  in  effect  (Incorporated  by  reference to Form 10-Q for the period
ended  December  31,
 1998)                                                            *

3(e)     Certificate  Eliminating Reference to Certain Series of Shares of Stock
from  the  Certificate  of
 Incorporation,  filed  January  12,  1999,  as  amended and currently in effect
(Incorporated  by
reference  to  Form  10-Q  for  the  period  ended  December  31,  1998)
*

3(f)     By-Laws  of  the  Company,  as  amended,  and  currently  in  effect
(Incorporated  by  reference  to
Exhibit  3(b)  to  1987  Form  10-K)                                        *

3(g)     Certificate of Amendment of Certificate of Incorporation, filed May 12,
2000,  as  amended  and
currently  in  effect  (Incorporated  by  reference to Exhibit 3(g) to 2001 Form
10-K)          *

4(a)     Amended  Certificate of Designation of Imaging Technologies Corporation
with  respect  to  the  5%
 Convertible  Preferred Stock (Incorporated by reference to Exhibit 4(d) to 1987
Form  10-K)     *

4(b)     Amended  Certificate of Designation of Imaging Technologies Corporation
with  respect  to  the  5%
 Series B Convertible Preferred Stock (Incorporated by reference to Exhibit 4(b)
to  1988
Form  10-K)                                                  *

4(c)     Certificate  of  Designations,  Preferences  and  Rights  of  Series  C
Convertible  Preferred  Stock  of
 Imaging  Technologies Corporation (Incorporated by reference to Exhibit 4(c) to
1998  Form  10-K)         *

4(d)     Certificate  of  Designation,  Powers,  Preferences  and  Rights of the
Series  of  Preferred  Stock  to  be
 Designated  Series  D  Convertible  Preferred  Stock,  filed  January  13, 1999
(Incorporated  by
 reference  to  Form  10-Q  for  the  period  ended  December  31,  1998)
*

4(e)     Certificate  of  Designation,  Powers,  Preferences  and  Rights of the
Series  of  Preferred  Stock  to  be
 Designated  Series  E  Convertible  Preferred  Stock,  filed  January  28, 1999
(Incorporated  by
 reference  to  Form  10-Q  for  the  period  ended  December  31,  1998)
*

10(a)     Private Equity Line of Credit Agreement by and among certain Investors
and  the  Company
 (Incorporated  by  reference  to  Form  8-K,  filed  July  26,  2000)
*

10(b)     Convertible  Note  Purchase  Agreement dated December 12, 2000 between
the  Company  and  Amro
 International,  S.A., Balmore Funds, S.A., and Celeste Trust Reg. (Incorporated
by  reference  to
 Form  8-K,  filed  January  19,  2001.                                        *

10(c)     Convertible  Note  Purchase  Agreement dated July 26, 2001 between the
Company  and  Balmore
 Funds,  S.A.  (Incorporated  by  reference  to  Form  8-K filed August 2, 2001.
*

10(d)     Share  Purchase  Agreement,  dated  December 1, 2000, between ITEC and
EduAdvantage.com,  Inc.
 (Incorporated  by  reference  to  Form  10-Q for the period ended September 30,
2000)          *

10(e)     Agreement  to Acquire Shares, dated December 1, 2000, between ITEC and
Quik  Pix,  Inc.
 (Incorporated  by  reference  to  Form  10-Q for the period ended September 30,
2000)  and
 subsequently  cancelled.                                             *

10(f)     Agreement to Acquire Shares, dated December 17, 2000, between ITEC and
Pen  Internconnect,
 Inc. (Incorporated by reference to Form 10-Q for the period ended September 30,
2000)  and
 subsequently  cancelled.                                             *

10(g)     Share  Purchase  Agreement,  dated  December 1, 2000, between ITEC and
EduAdvantage.com,  Inc.
 (Incorporated  by  reference  to  Form  10-Q for the period ended September 30,
2000)          *

10(h)     Convertible  Promissory  Note  dated  September  21,  2001 between the
Company  and  Stonestreet
Limited  Partnership.  (Incorporated  by reference to Exhibit 10(u) of 2001 Form
10-K)          *

10(i)     Convertible  Note  Purchase Agreement dated September 21, 2001 between
the  Company  and
 Stonestreet Limited Partnership. (Incorporated by reference to Exhibit 10(v) of
2001  Form  10-K)     *

10(j)     Registration  Rights  Agreement  dated  September 21, 2001 between the
Company  and  Stonestreet
 Limited  Partnership.  (Incorporated by reference to Exhibit 10(w) of 2001 Form
10-K)          *

10(k)     Form of Warrant to Purchase 11,278,195 Shares of Common Stock of ITEC,
dated  September  21,
 2001,  between  ITEC  and  Stonestreet  Limited  Partnership.  (Incorporated by
reference  to  Exhibit
 10(x)  of  2001  Form  10-K)                                        *

10(l)     Asset  Purchase  Agreement,  dated October 25, 2001, among the Company
and  Lisa  Lavin,  Gary  J.
 Lavin,  and  Roland A. Fernando. (Incorporated by reference to Exhibit 10(a) to
September  2001
 Form  10-Q)                                                  *

10(m)     Audited Financial Statements of SourceOne Group, LLC. (Incorporated by
reference  to  Form  8-K
 filed  on  January  25,  2002)                                             *

10(n)     Secured  Convertible  Debenture  issued  by  the  Company  to  Bristol
Investment  Fund,  Ltd.,  dated
 January  22, 2002. (Incorporated by reference to Exhibit 10(a) of December 2001
Form  10-Q)     *

10(o)     Securities  Purchase  Agreement  between  the  Company  and  Bristol
Investment  Fund,  Ltd.,  dated
 January  22, 2002. (Incorporated by reference to Exhibit 10(b) of December 2001
Form  10-Q)     *

10(p)     Registration  Rights  Agreement  between  the  Company  and  Bristol
Investment  Fund,  Ltd.,  dated
 January  22, 2002. (Incorporated by reference to Exhibit 10(c) of December 2001
Form  10-Q)     *

10(q)     Transaction  Fee  Agreement  between  the Company and Alexander Dunham
Securities,  Inc.,  dated
 January  22, 2002. (Incorporated by reference to Exhibit 10(d) of December 2001
Form  10-Q)     *

10(r)     Stock  Purchase  Warrant  issued to Alexander Dunham Securities, Inc.,
dated  January  22,  2002.
 (Incorporated  by  reference  to  Exhibit  10(e)  of  December  2001 Form 10-Q)
*

10(s)     Stock  Purchase Warrant issued to Bristol Investment Fund, Ltd., dated
January  22,  2002.
 (Incorporated  by  reference  to  Exhibit  10(f)  of  December  2001 Form 10-Q)
*

10(t)     Security  Agreement  between  the Company and Bristol Investment Fund,
Ltd.,  dated  January  22,
 2002.  (Incorporated  by reference to Exhibit 10(g) of December 2001 Form 10-Q)
*

10(u)     Convertible  Promissory  Note  between  the  Company  and  Stonestreet
Limited  Partnership,  dated
 November  7, 2001. (Incorporated by reference to Exhibit 10(h) of December 2001
Form  10-Q)     *

10(v)     Convertible  Note  Purchase  Agreement  between  the  Company  and
Stonestreet  Partnership,  dated
 November  7, 2001. (Incorporated by reference to Exhibit 10(i) of December 2001
Form  10-Q)     *

10(w)     Registration  Rights  Agreement  between  the  Company and Stonestreet
Limited  Partnership,  dated
 November  7, 2001. (Incorporated by reference to Exhibit 10(j) of December 2001
Form  10-Q)     *

10(x)     Stock  Purchase  Warrant  issued  to  Stonestreet Limited Partnership,
dated  November  7,  2001
..  (Incorporated  by  reference  to  Exhibit  10(k)  of  December 2001 Form 10-Q
*

10(y)     Acquisition  Agreement  between  the  Company  and Dream Canvas, Inc.,
dated  May  17,  2002;
 subject to completion of its terms. (Incorporated by reference to Exhibit 10(y)
of  Form  10-K  filed
November  18,  2002.)                                             *

10(z)     Closing  Agreement  between the Company and Quik Pix, Inc., dated July
23,  2002,  subject  to
 completion  of  its  terms. (Incorporated by reference to Exhibit 10(z) of Form
10-K  filed  November
 18,  2002.)                                                  *

10(aa)     Agreement  to  Acquire  Shares  between  the  Company  and  Greenland
Corporation,  dated  August  5,
 2002,  subject to completion of its terms.(Incorporated by reference to Exhibit
10(aa)  to  Form  10-K  filed
November  18,  2002.)                                             *

10(ab)     Acquisition  Agreement,  dated December 13, 2002, between the Company
and  Baseline  Worldwide,
 Limited.  (Incorporated by reference to Exhibit 99.3 of Form 8-K filed December
19,  2002.)     *

10(ac)     Secured  Promissory  Note  in  the amount of $2,250,000 issued by the
Company  to  Greenland
Corporation,  dated  January 7, 2003. (Incorporated by reference to Exhibit 99.1
of  Form  8-K  filed
 January  21,  2003.)                                             *

10(ad)     Security  Agreement,  dated  January 7, 2003, between the Company and
Greenland  Corporation.
(Incorporated by reference to Exhibit 99.2 of Form 8-K filed  January 21, 2003.)
*

10(ae)     Agreement to Acquire Shares, dated August 9, 2002 between the Company
and  Greenland
Corporation.  (Incorporated  by  reference  to  Exhibit  99.3  of Form 8-K filed
January  21,  2003.)     *

10(af)     Closing  Agreement,  dated  January  7, 2003, between the Company and
Greenland
Corporation.  (Incorporated  by  reference  to  Exhibit  99.4  of Form 8-K filed
January  21,  2003.)     *

10(ag)     Share Acquisition Agreement, dated June 12, 2002, between the Company
and  Quik  Pix,
Inc.  (Incorporated  by  reference to Exhibit 99.5 of Form 8-K filed January 21,
2003.)          *

10(ah)     Closing  Agreement, dated July 23, 2002, between the Company and Quik
Pix,
Inc.  (Incorporated  by  reference to Exhibit 99.6 of Form 8-K filed January 21,
2003.)          *

10(ai)     Stock  Purchase  Agreement  among the Company, Greenland Corporation,
and  ExpertHR-
Oklahoma,  dated  March 18, 2003. (Incorporated by reference to Exhibit 10(j) to
Form  10-Q  filed
May  20,  3003).                                                  *

10(aj)     Assignment  of Patent between John Capezzuto and Quik Pix, Inc. dated
January  14,  2003.  *

10(ak)     Promissory  Note between the Company and John Capezzuto dated June 1,
2003
(signed  June  9,  2003)                                             *

10(al)     Promissory  Note between the Company and John Capezzuto dated June 9,
2003          *

10(am)     Agreement  and  Assignment of Rights, dated February 1, 2003, between
Accord  Human  Resources,
 Inc.  and  Greenland  Corporation,  and  Imaging Technologies. (Incorporated by
reference  to  Exhibit
 10(k)  of  Form  10-KSB  filed  April  7,  2003  by  Greenland  Corporation.)
*

10(an)     Agreement  and  Assignment  of  Rights,  dated March 1, 2003, between
StaffPro  Leasing  2,  Greenland
 Corporation,  and ExpertHR. (Incorporated by reference to Exhibit 10(l) of Form
10-KSB  filed
 April  7,  2003  by Greenland Corporation.)                                   *

10(ao)     Promissory  Note,  dated March 1, 2003, payable to StaffPro Leasing 2
by  Greenland  Corporation
.. (Incorporated by reference to Exhibit 10(k) of Form 10-KSB filed April 7, 2003
by  Greenland
 Corporation.)                                                  *

10(op)     Agreement  to  Acquire Shares between the Company and The Christensen
Group,  et  al,
dated  April  1,  2003.                                             *

21     List  of  Subsidiaries  of  the  Company                              **

23.1     Consent  of  Independent  Accountants  -  Boros  &  Farrington **

23.2     Consent  of  Independent  Accountants  -  Stonefield  Josephson,  Inc.
**

23.3

31.1     Consent  of  Independent Accountants - Pohl, McNabola, Berg and Company

Certification  of  the  Chief  Executive  Officer  pursuant  to  Rule  13a-14(a)
(Section  302 of the Sarbanes-Oxley Act of 2002)                              **
31.2     Certification of the Chief Financial Officer pursuant to Rule 13a-14(a)
(Section  302  of  the  Sarbanes-Oxley  Act  of  2002)

32.1     Certification  of  the  Chief  Executive  Officer  pursuant  to  18
U.S.C.ss.1350
(Section  906  of  the  Sarbanes-Oxley  Act  of  2002)

32.2     Certification  of  the  Chief  Financial  Officer  pursuant  to  18
U.S.C.ss.1350
(Section  906  of  the  Sarbanes-Oxley  Act  of  2002

33.1
Certification  of  the  Chief  Financial  Officer  pursuant  to 18 U.S.C.ss.1350
(Section  906  of  the  Sarbanes-Oxley  Act  of  2002

          All exhibits except those followed by an asterisk (*) are incorporated
by  reference  only  and  a copy is not included in this Form 10-K filing. Those
exhibits followed by a double asterisk (**) are included as part of this filing.

     The  Company will furnish a copy of any exhibit to a requesting shareholder
upon  payment  of  the Company's reasonable expenses in furnishing such exhibit.

(B)   REPORTS  ON  FORM  8-K
<TABLE>
<CAPTION>



<S>         <C>
Date . . .  Subject
----------  --------------------------------------------------------------------------------

10/14/2003  Late filing of Form 10-KSB for fiscal year 2003, ended June 30, 2003
01/13/2004  Resignation of Thomas Brown as Senior Vice President and Chief Financial Officer
03/04/2004  Disposition of Greenland Financial Corporation
</TABLE>



ITEM  14.     PRINCIPAL  ACCOUNTANT  FEES  AND  SERVICES

     The  Company  paid  or  accrued the following fees in each of the prior two
fiscal  years  to  its  independent certified public accountants, Pohl, McNabola
Berg  &  Company,  LLP
<TABLE>
<CAPTION>



<S>                 <C>                           <C>
                    For the Year Ended June 30,
                                            2004     2003
                    ----------------------------  -------
Audit Fees . . . .  $                     65,000  $73,000
Audit-Related Fees  $                     22,085  $     -
Tax Fees . . . . .  $                          -  $     -
All Other Fees . .  $                      7,848  $     -
Total Fees . . . .  $                     94,933  $73,000
</TABLE>


     "Audit  Fees"  consisted of fees billed for services rendered for the audit
of  the Company's  annual  financial  statements  and audit related fees are for
review  of the  financial statements included in the Company's quarterly reports
on  Form  10-QSB.

     During  the  year  ended  June  30,  2003, the Company paid its predecessor
auditiors,  Stonefield  and  Josephson,  Inc., $35,000. The predecessor auditors
completed  the  review  of  the  quarterly  reports  filed  on  Form  10Q.

AUDIT  COMMITTEE'S  PRE-APPROVAL  POLICIES  AND  PROCEDURES
-----------------------------------------------------------

     The Audit committee is in the process of establishing a pre-approval policy
and  procedure.

PERCENTAGE  OF  HOURS  EXPENDED
-------------------------------

     The  amount  of  hours expended on the principal accountant's engagement to
audit the registrant's financial statements for the most recent fiscal year that
were  attributed  to  work  performed  by  persons  other  than  the  principal
accountant's  full-time,  permanent  employees  was  less  than  50%.

<PAGE>
SIGNATURES

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

                         DALRADA  FINANCIAL  CORPORATION

     By:     /s/Brian  Bonar_______________________
             --------------------------------------
                              Brian  Bonar,  Chief  Executive  Officer

     Dated:   October  13,  2004

                         By:     /s/Brian  Bonar________________________
                                 ---------------
                              Brian  Bonar,  Acting  Chief  Accounting  Officer

                                POWER OF ATTORNEY

KNOW  ALL  PERSONS  BY  THESE PRESENTS, that each person whose signature appears
below hereby constitutes and appoints, Brian Bonar as his attorney-in-fact, each
with  full  power  of substitution and resubstitution, for him or her in any and
all  capacities,  to  sign  any and all amendments to this Annual Report on Form
10-K  (including post-effective amendments), and to file the same, with exhibits
thereto  and  other  documents  in connection therewith, with the Securities and
Exchange  Commission,  granting  unto  said  attorney-in-fact  full  power  and
authority to do and perform each and every act and thing requisite and necessary
to  be  done  in connection therewith as fully to all intents and purposes as he
might  or  could  do  in  person,  hereby  ratifying  and  confirming  that said
attorney-in-fact,  or his substitute or substitutes, may lawfully do or cause to
be  done  by  virtue  hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this Annual
Report  on  Form  10-K  has  been  signed  below by the following persons in the
capacities  and  on  the  dates  indicated.
<TABLE>
<CAPTION>



<S>                                     <C>                             <C>
SIGNATURE. . . . . . . . . . . . . . .  TITLE                           DATE
--------------------------------------  ------------------------------  ----

  Chairman of the Board of Directors,.  October 13, 2004
/s/ Brian Bonar. . . . . . . . . . . .  Chief Executive Officer, and
--------------------------------------
Brian Bonar. . . . . . . . . . . . . .  Acting Chief Financial Officer
  (Principal Executive Officer)
/s/ Robert A. Dietrich . . . . . . . .  October 13, 2004
--------------------------------------
Robert A. Dietrich
  Director
/s/ Eric W. Gaer . . . . . . . . . . .  October 13, 2004
--------------------------------------
Eric W. Gaer
  Director
/s/ Stephen J. Fryer . . . . . . . . .  October 13, 2004
--------------------------------------
Stephen J. Fryer
  Director
/s/ Richard H. Green . . . . . . . . .  October 13, 2004
--------------------------------------
Richard H. Green
  Director
</TABLE>




<PAGE>
                                  EXHIBIT 31.1

                                 CERTIFICATIONS

I,  Brain  Bonar,  certify  that:

     1.  I  have reviewed this annual report on Form 10-KSB of Dalrada Financial
Corporation  (the  "Company");

     2. Based on my knowledge, this 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  circumstances under which such statements were
made,  not  misleading  with  respect  to the period covered by this report; and

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

     4.  The  Company'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  Company  and  have:

          a)  designed  such  disclosure controls and procedures, or caused such
disclosure  controls  and  procedures  to  be designed under our supervision, to
ensure  that  material  information  relating  to  the  Company,  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 Company's disclosure controls
and  procedures  and  presented  in  this  report  our  conclusions  about  the
effectiveness  of  the  disclosure controls and procedures, as of the end of the
period  covered  by  this  report  based  on  such  evaluation;  and

          c)  disclosed  in  this  report  any  change in the Company's internal
control  over financial reporting that occurred during the Company's most recent
fiscal  quarter  that  has  materially  affected,  or  is  reasonably  likely
to  materially  affect, the Company's internal control over financial reporting;

     5.  The  Company's other certifying officers and I have disclosed, based on
our  most recent evaluation of internal control over financial reporting, to the
Company's  auditors  and the audit committee of Company'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 Company's ability to record, process,
summarize  and  report  financial  data  and  have  identified  for  the
Company's  auditors  any  material  weaknesses  in  internal  controls;  and

          b)  any  fraud,  whether  or not material, that involves management or
other  employees  who have a significant role in the Company's internal controls
over  financial  reporting.

Date:  October  13,  2004

/s/  Brian  Bonar

Brian  Bonar
Chief  Executive  Officer



<PAGE>
                  DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                        CONSOLIDATED FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003

                                    CONTENTS

     Page
     ----

REPORT  OF  INDEPENDENT  REGISTERED  PUBLIC  ACCOUNTING  FIRM
     Report  on  Audited  Consolidated  Financial  Statements     F-1

CONSOLIDATED  FINANCIAL  STATEMENTS:
     Consolidated  Balance  Sheet  as  of  June  30,  2004     F-2
     Consolidated Statements of Operations for the years ended June 30, 2004 and
2003     F-3
     Consolidated  Statements  of Stockholders' Deficit for the years ended June
30,
       2004  and  2003     F-5
     Consolidated Statements of Cash Flows for the years ended June 30, 2004 and
2003     F-6
     Notes  to  Consolidated  Financial  Statements     F-7


<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
             -------------------------------------------------------


To  the  Stockholders
Dalrada  Financial  Corporation
San  Diego,  California

We have audited the accompanying consolidated balance sheet of Dalrada Financial
Corporation  and  Subsidiaries as of June 30, 2004, and the related consolidated
statements  of  operations, stockholders' deficit and cash flows for years ended
June  30,  2004  and  2003.  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  conducted  our  audits  in  accordance  with standards of the Public Company
Oversight  Board  (United  States).  Those  standards  require  that we plan and
perform  the  audits  to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test  basis,  evidence  supporting  the amounts and disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made  by  management,  as well as evaluating the overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable  basis  for  our  opinion.

In  our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of Dalrada
Financial  Corporation and Subsidiaries as of June 30, 2004 and the consolidated
results  of  their  operations and their consolidated cash flows for each of the
years  ended  June  30,  2004 and 2003, in conformity with accounting principles
generally  accepted  in  the  United  States  of  America.

The  accompanying  consolidated financial statements have been prepared assuming
that  the  Company  will continue as a going concern.  As discussed in Note 1 to
the  accompanying consolidated financial statements, for the year ended June 30,
2004  the Company experienced a net loss from operations of $4,355,000 and as of
June 30, 2004, the Company had a negative working capital deficit of $21,760,000
and  had  a  negative  stockholders'  deficit  of $20,844,000.  In addition, the
Company  is  in default on certain note payable obligations and is being sued by
numerous  trade  creditors  for  nonpayment of amounts due.  The Company is also
deficient in its payments relating to payroll tax liabilities.  These conditions
raise  substantial  doubt  about  its  ability  to  continue as a going concern.
Management's plan in regard to these matters is also discussed in Note 1.  These
consolidated  financial  statements  do  not  include any adjustments that might
result  from  the  outcome  of  this  uncertainty.

/s/  POHL,  McNABOLA,  BERG  &  COMPANY,  LLP
POHL,  McNABOLA,  BERG  &  COMPANY,  LLP
CERTIFIED  PUBLIC  ACCOUNTANTS

San  Francisco,  California
October  1,  2004















                                       F-1

<PAGE>
                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                    (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                           CONSOLIDATED BALANCE SHEET
                               AS OF JUNE 30, 2004
<TABLE>
<CAPTION>



<S>                                                                                <C>
                                                                                      (in thousands)
                                                                                               2004
                                                                                   -----------------
ASSETSS
Current assets:
   Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $            228
   Accounts receivable (net of reserve for bad debt of $66) . . . . . . . . . . .               582
   Inventories, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
   Prepaid expenses and other current assets. . . . . . . . . . . . . . . . . . .               444
                                                                                   -----------------
          Total Current Assets. . . . . . . . . . . . . . . . . . . . . . . . . .             1,254

Property and equipment, net of accumulated depreciation of $1994 and
2,607, respectively. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .               160
Goodwill, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
Patent, net of accumulated amortization of $180 . . . . . . . . . . . . . . . . .             1,438
Investment - PEO contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
Investment - PEO contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
                                                                                   -----------------
                                                                                              1,598
                                                                                   -----------------
          Total Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $          2,852
                                                                                   =================

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current Liabilities:
   Borrowings under bank notes payable. . . . . . . . . . . . . . . . . . . . . .  $          3,220
   Cash overdraft . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
   Short-term notes payable, including amounts due to related parties of $1,525 .             1,847
   Convertible debentures, net of discounts of $55 and $473, respectively . . . .               759
   Shareholder advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -
   Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             1,350
   PEO payroll taxes and other payroll deductions . . . . . . . . . . . . . . . .             5,151
   PEO accrued worksite employee. . . . . . . . . . . . . . . . . . . . . . . . .                 -
   Capital lease - current. . . . . . . . . . . . . . . . . . . . . . . . . . . .                10
   Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . .            10,853
                                                                                   -----------------
          Total Current Liabilities . . . . . . . . . . . . . . . . . . . . . . .            23,190
                                                                                   -----------------

Long Term Liabilities:
   Capital lease - long term portion. . . . . . . . . . . . . . . . . . . . . . .                63
   Convertible debentures - long term portion . . . . . . . . . . . . . . . . . .               112
   Long-term notes payable, including amounts due to related parties. . . . . . .               412
                                                                                   -----------------
          Total Long Term Liabilities . . . . . . . . . . . . . . . . . . . . . .               587

          Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . .            23,777
                                                                                   -----------------

Preferred stock minority interest in subsidiary . . . . . . . . . . . . . . . . .                 -

Shareholders' Deficit
   Series A convertible, redeemable preferred stock, $1 par value,
      7,500 shares authorized; 4205 shares issued and outstanding . . . . . . . .               420
   Common stock, $0.005 par value, 1,000,000,000 shares authorized;
      552,358,742 shares issued and outstanding . . . . . . . . . . . . . . . . .             2,762
   Common stock warrants. . . . . . . . . . . . . . . . . . . . . . . . . . . . .               475
   Paid-in capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .            83,095
   Accumulated deficit. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .          (107,677)
                                                                                   -----------------
          Total Shareholders' Deficit . . . . . . . . . . . . . . . . . . . . . .           (20,925)
                                                                                   -----------------

          Total Liabilities and Shareholders' Deficit . . . . . . . . . . . . . .  $          2,852
                                                                                   =================
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-2

<PAGE>
                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003
<TABLE>
<CAPTION>



<S>                                                             <C>                  <C>
                                                                     (in thousands)
                                                                              2004             2003
                                                                -------------------  ---------------
Revenues:
   Sales of products . . . . . . . . . . . . . . . . . . . . .  $              764   $          924
   Software sales, licenses and royalties. . . . . . . . . . .                  36              367
   Temporary staffing services . . . . . . . . . . . . . . . .              10,119                -
   PEO services. . . . . . . . . . . . . . . . . . . . . . . .               2,607            2,499
                                                                -------------------  ---------------
      Total revenues . . . . . . . . . . . . . . . . . . . . .              13,526            3,790
                                                                -------------------  ---------------

Cost of Sales:
   Cost of products sold . . . . . . . . . . . . . . . . . . .                (196)            (396)
   Cost of software sales, licenses and royalties. . . . . . .                  (3)             (90)
   Cost of temporary staffing. . . . . . . . . . . . . . . . .              (9,209)               -
   Cost of PEO services. . . . . . . . . . . . . . . . . . . .                (894)          (1,639)
   Freight . . . . . . . . . . . . . . . . . . . . . . . . . .                   -                -
                                                                -------------------  ---------------
      Total cost of sales. . . . . . . . . . . . . . . . . . .               3,224            1,665

Operating expenses:
   Selling, general and administrative . . . . . . . . . . . .               4,196            5,623
                                                                -------------------  ---------------
      Total operating expenses . . . . . . . . . . . . . . . .               4,196            5,623
                                                                -------------------  ---------------

          Income (loss) from operations. . . . . . . . . . . .                (972)          (3,958)
                                                                -------------------  ---------------

Other Income/(Expense):
   Other . . . . . . . . . . . . . . . . . . . . . . . . . . .                  19               (2)
   Interest income . . . . . . . . . . . . . . . . . . . . . .                   -                -
   Gain (Loss) on sale of assets . . . . . . . . . . . . . . .                (341)              27
   Gain on settlement of debt. . . . . . . . . . . . . . . . .               1,145            2,343
   Gain on sale of securities. . . . . . . . . . . . . . . . .                   -                -
   Other expenses. . . . . . . . . . . . . . . . . . . . . . .                 (11)             (12)
   Interest expense. . . . . . . . . . . . . . . . . . . . . .              (1,930)            (971)
   Bad debt. . . . . . . . . . . . . . . . . . . . . . . . . .                 (10)            (285)
   Penalties and interest. . . . . . . . . . . . . . . . . . .                (795)          (2,023)
   Income tax levy . . . . . . . . . . . . . . . . . . . . . .                   -             (105)
                                                                -------------------  ---------------
                                                                            (1,923)          (1,028)
                                                                -------------------  ---------------

          Loss before income taxes and discontinued operations              (2,895)          (4,986)
                                                                -------------------  ---------------

Income tax expense . . . . . . . . . . . . . . . . . . . . . .                   -                -
                                                                -------------------  ---------------

          Net loss from continuing operations. . . . . . . . .              (2,895)          (4,986)
                                                                -------------------  ---------------

Discontinued Operations:
   Loss from operations of discontinued operation. . . . . . .              (2,052)          (1,869)
   Gain on disposition of discontinued operations. . . . . . .               5,049                -
                                                                -------------------  ---------------

Net income (loss)s . . . . . . . . . . . . . . . . . . . . . .                 102           (6,855)

Preferred stock dividends. . . . . . . . . . . . . . . . . . .                 (21)             (21)
                                                                -------------------  ---------------

Net income (loss) attributed to common stockholders. . . . . .  $               81   $       (6,876)
                                                                ===================  ===============

Earnings (loss) per common share . . . . . . . . . . . . . . .  $            (0.01)  $        (0.05)
   Continuing operations . . . . . . . . . . . . . . . . . . .                0.01            (0.02)
                                                                ===================  ===============
   Discontinued operations . . . . . . . . . . . . . . . . . .  $             0.00   $        (0.07)
                                                                ===================  ===============

Weighted average common shares, basic and diluted. . . . . . .             331,004           97,153
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-3

<PAGE>

                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003
<TABLE>
<CAPTION>



<S>                                         <C>                        <C>             <C>           <C>           <C>
                                            COMMON                     ADDITIONAL
                                            SERIES A PREFERRED STOCK   COMMON STOCK    STOCK         PAID-IN       ACCUMULATED
                                            SHARES                     AMOUNT          SHARES        AMOUNT        WARRANTS
                                            -------------------------  --------------  ------------  ------------  -------------
                                                          (thousands)     (thousands)   (thousands)   (thousands)    (thousands)

BALANCE, JUNE 30, 2002 . . . . . . . . . .                     4,205   $         420     21,929,365  $        110  $         475

Issuance of common stock for:. . . . . . .                         -
   Cash - exercise of options and warrants                   750,000               4             29            33
   Business acquisition. . . . . . . . . .                12,500,000              62             63           125
   Compensation. . . . . . . . . . . . . .                 4,190,000              21             21            42
   Services. . . . . . . . . . . . . . . .                92,733,499             464            783         1,247
   Conversion of liabilities . . . . . . .                46,549,199             233             46           279
   Exercise of warrants for services . . .                 2,580,000              12            121           133
Beneficial conversion on notes . . . . . .                       273             273
Value of warrants issued for services. . .                        70              70
Net loss . . . . . . . . . . . . . . . . .                    (6,855)         (6,855)

BALANCE, JUNE 30, 2003 . . . . . . . . . .                     4,205             420    181,232,063           906            475

Issuance of common stock for:. . . . . . .                         -
   Cash - exercise of options. . . . . . .                29,500,000             148             29           177
   Business acquisition. . . . . . . . . .                 6,329,478              31             30            61
   Compensation. . . . . . . . . . . . . .                10,272,110              51             89           140
   Services. . . . . . . . . . . . . . . .                 7,745,000              39            123           162
   Conversion of liabilities . . . . . . .               317,280,091           1,587          1,014         2,601
Beneficial conversion on notes . . . . . .                       557             557
Value of warrants issued with notes. . . .                       214             214
Value of repriced options/warrants . . . .                       141             141

                                                                   -
Net income . . . . . . . . . . . . . . . .                       102             102

BALANCE, JUNE 30, 2004 . . . . . . . . . .                     4,205   $         420    552,358,742         2,762  $         475


<S>                                         <C>           <C>         <C>


                                            CAPITAL       DEFICIT     TOTAL
                                            ------------  ----------  ---------
                                             (thousands)

BALANCE, JUNE 30, 2002 . . . . . . . . . .  $     79,492  $(100,924)  $(20,427)

Issuance of common stock for:
   Cash - exercise of options and warrants
   Business acquisition
   Compensation
   Services
   Conversion of liabilities
   Exercise of warrants for services
Beneficial conversion on notes
Value of warrants issued for services
Net loss

BALANCE, JUNE 30, 2003 . . . . . . . . . .        80,898   (107,779)   (25,080)

Issuance of common stock for:
   Cash - exercise of options
   Business acquisition
   Compensation
   Services
   Conversion of liabilities
Beneficial conversion on notes
Value of warrants issued with notes
Value of repriced options/warrants


Net income

BALANCE, JUNE 30, 2004 . . . . . . . . . .  $     83,095  $(107,677)  $(20,925)
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-4

<PAGE>
                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003
<TABLE>
<CAPTION>



<S>                                                                   <C>                <C>
                                                                         (in thousands)
                                                                                  2004                2003
                                                                      -----------------  ------------------
CASH FLOW FROM OPERATING ACTIVITIES:
   Net loss from continuing operations . . . . . . . . . . . . . . .  $         (2,895)  $          (4,986)
   Net income (loss) from discontinued operations. . . . . . . . . .             2,997              (1,869)
   Adjustment to reconcile net loss to net cash
    used in operating activities
      Depreciation and amortization. . . . . . . . . . . . . . . . .               164                 142
      Write-down of fixed assets . . . . . . . . . . . . . . . . . .                 -                  54
      Stock issued for services. . . . . . . . . . . . . . . . . . .               302               1,318
      Amortization of debt discounts . . . . . . . . . . . . . . . .             1,011                 857
      Value of services for exercise of warrants . . . . . . . . . .                 -                 133
      Value of warrants issued for services. . . . . . . . . . . . .                 -                  41
      Value of repriced options/warrants . . . . . . . . . . . . . .               141                   -
      Gain on extinguishment of debt . . . . . . . . . . . . . . . .            (1,145)             (2,343)
      Other. . . . . . . . . . . . . . . . . . . . . . . . . . . . .                 -                 (37)
   Changes in operating assets and liabilities:
    (Increase) decrease in:
      Accounts receivable. . . . . . . . . . . . . . . . . . . . . .              (180)              1,149
      Inventories. . . . . . . . . . . . . . . . . . . . . . . . . .                15                 136
      Prepaid expenses and other current assets. . . . . . . . . . .              (424)                 (6)
      Other assets . . . . . . . . . . . . . . . . . . . . . . . . .                21                 (25)
    Increase (decrease) in:
      Accounts payable and accrued expenses. . . . . . . . . . . . .               585                 593
      PEO liabilities. . . . . . . . . . . . . . . . . . . . . . . .               787               3,030
                                                                      -----------------  ------------------
Net cash used in operating activities from continuing operations . .             1,379              (1,803)
Net cash provided by (used in) operations of discontinued operations            (1,868)              2,915
                                                                      -----------------  ------------------
Net cash used in operating activities. . . . . . . . . . . . . . . .              (489)              1,112
                                                                      -----------------  ------------------

CASH FLOW FROM INVESTING ACTIVITIES:
   Cash paid for acquisition . . . . . . . . . . . . . . . . . . . .                 -                 (45)
   Cash acquired with acquisition. . . . . . . . . . . . . . . . . .               104                   -
   Purchase of furniture and equipment . . . . . . . . . . . . . . .               (93)                  -
                                                                      -----------------  ------------------
Net cash used in investing activities from continuing operations . .                11                 (45)
Net cash used in investing activities of discontinued operations . .                 -                   -
                                                                      -----------------  ------------------
Net cash provided by (used in) investing activities. . . . . . . . .                11                 (45)
                                                                      -----------------  ------------------

CASH FLOW FROM FINANCING ACTIVITIES:
   Change in cash overdraft, net . . . . . . . . . . . . . . . . . .               (87)                 87
   Net borrowings under bank notes payable . . . . . . . . . . . . .               (25)                  -
   Proceeds from sale of common stock. . . . . . . . . . . . . . . .               177                  58
   Proceeds from convertible debentures. . . . . . . . . . . . . . .               800                 100
   Repayments of notes payable . . . . . . . . . . . . . . . . . . .               (72)               (125)
   Repayments of capital lease obligations . . . . . . . . . . . . .              (267)                  -
                                                                      -----------------  ------------------
Net cash provided by financing activities from continuing operations               526                 120
Net cash used in financing activities of discontinued operations . .                 -                   -
                                                                      -----------------  ------------------
Net cash provided by financing activities. . . . . . . . . . . . . .               526                 113
                                                                      -----------------  ------------------

CASH OF DISCONTINUED OPERATION . . . . . . . . . . . . . . . . . . .                 -              (1,043)

NET INCREASE (DECREASE) IN CASH AND
   CASH EQUIVALENTS. . . . . . . . . . . . . . . . . . . . . . . . .                48                 137

CASH AND CASH EQUIVALENTS, Beginning of period . . . . . . . . . . .               180                  43
                                                                      -----------------  ------------------

CASH AND CASH EQUIVALENTS, End of period . . . . . . . . . . . . . .  $            228   $             180
                                                                      =================  ==================
</TABLE>


                                   (continued)
   The accompanying notes are an integral part of these financial statements.
                                       F-5

<PAGE>
                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003
<TABLE>
<CAPTION>



<S>                                                                          <C>              <C>
                                                                              (in thousands)
                                                                                       2004           2003
                                                                             ---------------  -------------


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
   Interest Paid. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $            -   $          -
                                                                             ===============  =============
   Income taxes paid. . . . . . . . . . . . . . . . . . . . . . . . . . . .  $            -   $          -
                                                                             ===============  =============


SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITIES:
   Conversion of convertible debentures into common stock . . . . . . . . .  $        2,026   $        164
                                                                             ===============  =============
   Conversion of accounts payable and accrued liabilities into common stock  $          575   $        115
                                                                             ===============  =============
   Net assets acquired in business combinations:
      Cash. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  $          104   $          -
      Receivables . . . . . . . . . . . . . . . . . . . . . . . . . . . . .             261            268
      Other current assets. . . . . . . . . . . . . . . . . . . . . . . . .               -             34
      Property and equipment. . . . . . . . . . . . . . . . . . . . . . . .              25            101
      Goodwill and other intangible assets. . . . . . . . . . . . . . . . .               -          4,736
      Accounts payable and accrued liabilities. . . . . . . . . . . . . . .            (102)        (4,186)
      Notes payable and capital lease . . . . . . . . . . . . . . . . . . .            (227)          (846)
</TABLE>


   The accompanying notes are an integral part of these financial statements.
                                       F-6


<PAGE>
                 DALRADA FINANCIAL CORPORATION AND SUBSIDIARIES
                     (F/K/A IMAGING TECHNOLOGIES CORPORATION)
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2004 AND 2003

NOTE  1  -  ORGANIZATION  AND  SIGNIFICANT  ACCOUNTING  POLICIES

Basis  of  Presentation
-----------------------

The  accompanying  consolidated  financial  statements  include  the accounts of
Dalrada  Financial  Corporation  ("DRDF"  or  the  "Company"),  f/k/a  Imaging
Technologies Corporation, incorporated under the laws of the state of California
during March 1982 and subsequently reincorporated under the laws of the state of
Delaware  during  May  1983,  and its following active wholly-owned subsidiaries
(there  are  ten  inactive  subsidiaries  not  listed):

a)     SourceOne  Group,  Inc.,  ("SourceOne");

b)     Jackson  Staffing,  Inc.  ("Jackson");  and

c)     The  Christianson  Group  ("TCG");

Additionally, the Company operates one majority-owned subsidiary, Quik Pix, Inc.
("QPI",  owned  85%  by  the  Company).

All  significant  intercompany  accounts  and transactions have been eliminated.

The  accompanying  consolidated financial statements have been prepared assuming
that  the Company will continue as a going concern.  For the year ended June 30,
2004,  the Company experienced a net loss from operations of $972 and as of June
30,  2004, the Company had a negative working capital deficit of $21,936 and had
a  negative  stockholders'  deficit  of $20,925.  In addition, the Company is in
default  on certain note payable obligations and is being sued by numerous trade
creditors  for nonpayment of amounts due.  The Company is also delinquent in its
payments  relating  to  payroll  tax  liabilities.  These  conditions  raise
substantial  doubt  about  its  ability  to  continue  as  a  going  concern.

Nature  of  Business
--------------------

The  Company  business  operations  are  as  follows:

a)     The  Company is a financial services provider and a professional employer
organization  (PEO)  that  provides  comprehensive personnel management services
including benefits and payroll administration, medical and workers' compensation
insurance  programs,  personnel  records  management,  and  employer  liability
management;

b)     The  Company also develops and mounts photographic and digital images for
use  in  display  advertising  for  tradeshows,  building  interiors,  and other
point-of-sale  locations;  and

c)     The  Company  is  a  provider  of  temporary  staffing  services.








Use  of  Estimates
------------------

The preparation of financial statements in conformity with accounting principles
generally  accepted  in the United States of America requires management to make
estimates  and  assumptions  that  affect  the  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  reported  periods.  Significant  estimates  made  by  the Company's
management  include  but  are  not  limited  to  recoverability  of property and
equipment,  payroll  tax  liabilities  and  proprietary  products through future
operating profits.  Actual results could materially differ from those estimates.

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

PEO  Service  Fees  and  Worksite  Employee  Payroll  Costs

The Company recognizes its revenues associated with its PEO business pursuant to
EITF 99-19 "Reporting Revenue Gross as a Principal versus Net as an Agent."  The
Company's  revenues  are  reported  net  of  worksite employee payroll cost (net
method).  Pursuant  to  discussions  with the Securities and Exchange Commission
staff, the Company changed its presentation of revenues from the gross method to
an  approach  that  presents its revenues net of worksite employee payroll costs
(net  method) primarily because the Company is not generally responsible for the
output  and  quality  of  work  performed  by  the  worksite  employees.

In  determining  the  pricing of the markup component of the gross billings, the
Company  takes into consideration its estimates of the costs directly associated
with  its  worksite  employees,  including  payroll taxes, benefits and workers'
compensation  costs,  plus  an acceptable gross profit margin.  As a result, the
Company's  operating results are significantly impacted by the Company's ability
to  accurately  estimate,  control  and  manage its direct costs relative to the
revenues  derived  from  the  markup  component of the Company's gross billings.

Consistent  with  its  revenue recognition policy, the Company's direct costs do
not  include  the  payroll cost of its worksite employees.  The Company's direct
costs  associated  with  its  revenue generating activities are comprised of all
other  costs  related to its worksite employees, such as the employer portion of
payroll-related  taxes, employee benefit plan premiums and workers' compensation
insurance  premiums.

Sales  of  Products

Revenue  is  recognized when earned.  The Company's revenue recognition policies
are in compliance with all applicable accounting regulations, including American
Institute  of  Certified  Public Accountants (AICPA) Statement of Position (SOP)
97-2, Software Revenue Recognition, and SOP 98-9, Modification of SOP 97-2, With
Respect  to  Certain  Transactions.  Revenue  from products licensed to original
equipment  manufacturers  is  recorded  when  OEMs  ship licensed products while
revenue  from  certain  license  programs is recorded when the software has been
delivered  and the customer is invoiced.  Revenue from packaged product sales to
and  through  distributors  and  resellers is recorded when related products are
shipped.  Maintenance  and  subscription  revenue is recognized ratably over the
contract period.  When the revenue recognition criteria required for distributor
and  reseller  arrangements  are  not met, revenue is recognized as payments are
received.  Provisions  are  recorded  for  returns and bad debts.  The Company's
software arrangements do not contain multiple elements, and the Company does not
offer  post  contract  support.










                                       F-8
Temporary  Staffing

The  Company  records  gross  revenue  for  temporary staffing.  The Company has
concluded  that  gross  reporting is appropriate because the Company (i) has the
risk  of  identifying and hiring qualified employees, (ii) has the discretion to
select  the  employees  and establish their price and duties and (iii) bears the
risk  for services that are not fully paid for by customers.  Temporary staffing
revenues  are  recognized  when  the  services  are  rendered  by  the Company's
temporary  employees.  Temporary  employees  placed  by  the  Company  are  the
Company's  legal  employees  while they are working on assignments.  The Company
pays all related costs of employment, including workers' compensation insurance,
state  and  federal  unemployment  taxes,  social  security  and  certain fringe
benefits.  The Company assumes the risk of acceptability of its employees to its
customers.

CONTINGENT  LIABILITIES

The  Company  accrues  and  discloses contingent liabilities in its consolidated
financial  statements  in  accordance  with  Statement  of  Financial Accounting
Standards  ("SFAS")  No.  5,  Accounting for Contingencies.  SFAS No. 5 requires
accrual of contingent liabilities that are considered probable to occur and that
can  be  reasonably  estimated.  For  contingent liabilities that are considered
reasonably  possible  to  occur,  financial  statement  disclosure  is required,
including  the  range  of possible loss if it can be reasonably determined.  The
Company has disclosed in its audited financial statements several issues that it
believes  are  reasonably  possible  to  occur, although it cannot determine the
range  of possible loss in all cases.  As these issues develop, the Company will
continue  to  evaluate the probability of future loss and the potential range of
such  losses.  If such evaluation were to determine that a loss was probable and
the  loss could be reasonably estimated, the Company would be required to accrue
its  estimated  loss,  which  would  reduce  net  income in the period that such
determination  was  made.

RECLASSIFICATIONS

Certain  reclassifications  have  been  made  to  the  prior  year  consolidated
financial  statements  to  conform  to  the  current year's presentation.  These
reclassifications  had no effect on previously reported results of operations or
retained  earnings.

Cash  and  Cash  Equivalents
----------------------------

The  Company  considers  all  highly  liquid investments purchased with original
maturities  of  three  months  or  less  to  be  cash  equivalents.

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

The  Company  places  its cash in what it believes to be credit-worthy financial
institutions.  However, cash balances may exceed FDIC and SPIC insured levels at
various  times  during  the  year.

Financial  instruments  that  could  potentially  subject  the  Company  to
concentration of credit risk include accounts receivable.  The Company generally
requires clients to pay invoices for service fees no later than one day prior to
the  applicable  payroll  date.  As such, the Company generally does not require
collateral.

Additionally,  during 2004, all revenue derived from temporary staffing was from
one  client.

Allowance  Method  Used  to  Record  Bad  Debts
-----------------------------------------------

The  Company  provides an allowance for doubtful accounts equal to the estimated
uncollectible amounts.  The Company's estimate is based on historical collection
experience  and a review of the current status of trade accounts receivable.  It
is reasonably possible that the Company's estimate of the allowance for doubtful
accounts will change.  Accounts receivable are presented net of an allowance for
doubtful  accounts  of  $66  at  June  30,  2004.


                                       F-9
INVENTORY

Inventory  are  valued  at the lower of cost or market; cost being determined by
the  first-in,  first-out  method.

LONG-LIVED  ASSETS

PROPERTY  AND  EQUIPMENT

Property  and  equipment  are  recorded  at  cost.  Depreciation,  including
amortization  of assets recorded under capitalized leases, is generally computed
on  a straight-line basis over the estimated useful lives of assets ranging from
three  to  seven years.  Amortization of leasehold improvements is provided over
the  initial term of the lease, on a straight-line basis.  Maintenance, repairs,
and  minor  renewals  and  betterments  are  charged  to  expense.

The  Company reviews the carrying value of property and equipment for impairment
whenever  events  and circumstances indicate that the carrying value of an asset
may  not  be recoverable from the estimated future cash flows expected to result
from  its  use  and  eventual disposition.  In cases where undiscounted expected
future  cash  flows  are  less  than  the  carrying value, an impairment loss is
recognized equal to an amount by which the carrying value exceeds the fair value
of  assets.  The  factors considered by management in performing this assessment
include  current  operating  results,  trends  and prospects, and the effects of
obsolescence,  demand,  competition,  and other economic factors.  Based on this
assessment,  there  was  an impairment charge recorded of $64 for the year ended
June  30,  2003.

Goodwill  and  Intangible  Assets
---------------------------------

Long-lived assets are reviewed whenever indicators of impairment are present and
the  undiscounted  cash  flows  are  not sufficient to recover the related asset
carrying amount.  At June 30, 2003, intangible assets included the excess of the
investment  in  Greenland  Corporation  over  the  fair market of the net assets
acquired  of  approximately  $2,822.  The intangible assets were reviewed during
2003, in light of the Company's acquisition of Greenland Corp. and the resultant
decline  in  the  market value of Greenland's stock.  This review indicated that
the  goodwill  recorded  as  a result of the Greenland acquisition was impaired.
Consequently,  the  carrying  value  of the Greenland goodwill totaling $296 was
written  off.

Patent  Costs
-------------

Patent  costs  include  direct  costs  of  obtaining  the patent.  Costs for new
patents  are  capitalized  and  amortized  over the estimated useful life of the
patent,  generally  over  the life of the patent on a straight-line method.  The
cost  of  patents in process is not amortized until issuance.  In the event of a
patent  being  superseded,  the  unamortized  costs are written off immediately.
Accumulated  amortization  relating to the patent was approximately $180 and $60
for  the  years  ended  June  30,  2004  and  2003,  respectively.

ADVERTISING  COSTS

The Company expenses advertising and promotion costs as incurred.  During fiscal
2004  and  2003,  the  Company  incurred  advertising  and  promotion  costs  of
approximately  $76  and  $22,  respectively.

RESEARCH  AND  DEVELOPMENT

Research  and  development  costs  are  charged  to  expense  as  incurred.





                                      F-10

LOSS  PER  COMMON  SHARE

The  Company  reports earnings (loss) per share in accordance with SFAS No. 128,
"Earnings  per Share."  Basic earnings (loss) per share are computed by dividing
income (loss) available to common shareholders by the weighted average number of
common  shares available.  Diluted earnings (loss) per share is computed similar
to  basic  earnings (loss) per share except that the denominator is increased to
include  the number of additional common shares that would have been outstanding
if  the  potential  common  shares  had been issued and if the additional common
shares were dilutive.  Diluted earnings (loss) per share have not been presented
since  the  effect  of  the  assumed  conversion  of  options  and  warrants and
convertible  debt  securities  to  purchase  common  shares  would  have  an
anti-dilutive  effect.  The following potential common shares have been excluded
from  the computation of diluted net loss per share for the years ended June 30,
2004  and 2003, respectively: warrants - 21,563,430 and 6,002,350; stock options
-  39,150,000  and  34,158,100;  and  convertible  securities of 210,896,000 and
174,530,000.  The  Company  has  no  dilutive  shares  due to having a loss from
operations.

Below  is  a  computation  of  earning  (loss)  per  share:
<TABLE>
<CAPTION>



<S>                                                   <C>                  <C>      <C>     <C>     <C>            <C>
                                                      YEAR ENDED JUNE 30,
                                                                                                                          2004
                                                                                                                   ------------
  INCOME/. . . . . . . . . . . . . . . . . . . . . .  PER                  INCOME/  PER
  (LOSS) . . . . . . . . . . . . . . . . . . . . . .  SHARES               SHARE    (LOSS)  SHARES  SHARE

BASIC EARNINGS (LOSS) PER SHARE

Net income (loss) from continuing operations                                                        $     (2,895)  $    (4,986)
Preferred stock dividends                                                                                    (21)          (21)
                                                                                                    -------------  ------------
                                                                                                                        (2,916)
Discontinued operations                                                                                    2,997        (1,869)
Net income (loss) attributed to common stockholders                                                 $         81   $    (6,876)
                                                                                                    =============  ============

Weighed shares outstanding                                                                           331,004,306    97,153,849


  Continuing operations                                                                             $      (0.01)  $     (0.05)
  Discontinued operations                                                                           $       0.01   $     (0.02)
                                                                                                    -------------  ------------
                                                                                                                   $      0.00
                                                                                                                   ============


<S>                                                   <C>

                                                         2003
                                                      --------
  INCOME/
  (LOSS)

BASIC EARNINGS (LOSS) PER SHARE

Net income (loss) from continuing operations
Preferred stock dividends

                                                       (5,007)
Discontinued operations
Net income (loss) attributed to common stockholders


Weighed shares outstanding


  Continuing operations
  Discontinued operations

                                                      $ (0.07)
                                                      ========
</TABLE>



DEBT  DISCOUNTS

Debt  discounts  costs  are  principally the values attributed to the detachable
warrants  issued  in connection with the convertible debentures and the value of
the  preferential conversion feature associated with the convertible debentures.
These  debt  issuance costs are accounted for in accordance with Emerging Issues
Task  Force  ("EITF")  00-27  issued by the Financial Accounting Standards Board
("FASB").






                                      F-11
INCOME  TAXES

     The  Company  utilizes  SFAS  No. 109, "Accounting for Income Taxes," which
requires the recognition of deferred tax assets and liabilities for the expected
future  tax  consequences  of  events  that  have been included in the financial
statements  or  tax  returns.  Under  this  method,  deferred  income  taxes are
recognized  for  the tax consequences in future years of differences between the
tax  bases  of  assets  and liabilities and their financial reporting amounts at
each  period end based on enacted tax laws and statutory tax rates applicable to
the  periods  in  which  the  differences are expected to affect taxable income.
Valuation  allowances  are  established,  when necessary, to reduce deferred tax
assets  to  the  amount  expected  to  be  realized.

The Company recognizes the amount of taxes payable or refundable for the current
year  and recognizes deferred tax liabilities and assets for the expected future
tax  consequences  of  events  and transactions that have been recognized in the
Company's  financial  statements  or  tax  returns.  The  Company  currently has
substantial  net  operating loss carryforwards.  The Company has recorded a 100%
valuation  allowance against net deferred tax assets due to uncertainty of their
ultimate  realization.

Stock  Based  Compensation
--------------------------

SFAS  No.  123,  "Accounting  for  Stock-Based  Compensation,"  establishes  and
encourages  the use of the fair value based method of accounting for stock-based
compensation  arrangements under which compensation cost is determined using the
fair value of stock-based compensation determined as of the date of grant and is
recognized  over  the  periods  in which the related services are rendered.  The
statement  also  permits  companies  to  elect  to  continue  using  the current
intrinsic  value  accounting  method  specified  in  Accounting Principles Board
("APB")  Opinion  No. 25, "Accounting for Stock Issued to Employees," to account
for  stock-based  compensation.  The  Company  has  elected to use the intrinsic
value  based  method  and  has  disclosed the pro forma effect of using the fair
value  based  method  to  account  for  its  stock-based  compensation issued to
employees.  For  options  granted  to employees where the exercise price is less
than the fair value of the stock at the date of grant, the Company recognizes an
expense  in  accordance  with APB 25.  For non-employee stock based compensation
the Company recognizes an expense in accordance with SFAS No. 123 and values the
equity  securities based on the fair value of the security on the date of grant.
For  stock-based  awards the value is based on the market value for the stock on
the  date  of  grant  and  if the stock has restrictions as to transferability a
discount  is  provided  for lack of tradability.  Stock option awards are valued
using  the  Black-Scholes  option-pricing  model.

If the Company had elected to recognize compensation expense based upon the fair
value  at  the grant date for awards under the Stock Option Plan consistent with
the  methodology prescribed by SFAS No. 123, the Company's net loss and loss per
share  would  be  reduced to the pro forma amounts indicated below for the years
ended  June  30,  2004  and  2003:
<TABLE>
<CAPTION>



<S>                                                   <C>              <C>
                                                                2004             2003
                                                      ---------------  ---------------
Net income (loss) attributed to common stockholders:
   As reported . . . . . . . . . . . . . . . . . . .  $           81   $       (6,876)
   Compensation recognized under APB 25. . . . . . .               -                -
   Compensation recognized under SFAS 123. . . . . .            (825)            (425)
                                                      ---------------  ---------------
          Pro forma. . . . . . . . . . . . . . . . .  $         (744)  $       (7,301)
                                                      ===============  ===============

Basic loss per common share:
   As reported . . . . . . . . . . . . . . . . . . .  $         0.00   $        (0.07)
   Pro forma . . . . . . . . . . . . . . . . . . . .  $        (0.00)  $        (0.08)
</TABLE>





                                      F-12
This  option  valuation  model  requires input of highly subjective assumptions.
Because  the Company's employee stock options have characteristics significantly
different  from  those  of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion,  the  existing  model  does  not  necessarily provide a reliable single
measure  of  fair  value  of  its  employee  stock  options.

The  weighted average fair value of the options granted during fiscal years 2004
and  2003  is  estimated  on  the  date  of  grant  using  the  Black-Scholes
option-pricing  model.  The  weighted  average  fair values and weighted average
assumptions  used  in  calculating the fair values were as follows for the years
ended  June  30:
<TABLE>
<CAPTION>



<S>                             <C>      <C>
                                  2004     2003
                                -------  -------

Fair Value of options granted.  $0.025   $0.015
Risk free interest rate. . . .     3.5%     3.5%
Expected life (years). . . . .       3        3
Expected volatility. . . . . .     426%     421%
Expected dividends . . . . . .       -        -
</TABLE>


FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS

For  certain  of  the  Company's  financial  instruments,  including  accounts
receivable,  inventories,  accounts  payable, and accrued expenses, the carrying
amounts  approximate  fair value, due to their relatively short maturities.  The
amounts  owed  for  long-term  debt  also approximate fair value because current
interest  rates  and  terms  offered to the Company are at current market rates.

COMPREHENSIVE  LOSS

The  Company  adopted  SFAS  No.  130,  "Reporting  Comprehensive Income."  This
statement establishes standards for reporting other comprehensive income and its
components in a financial statement.  Comprehensive income, as defined, includes
all  changes  in  equity  (net  assets)  during a period from non-owner sources.
Examples  of  items  to  be included in comprehensive income, which are excluded
from net income, include foreign currency translation adjustments and unrealized
gains  and losses on available-for-sale securities.  Comprehensive income is not
presented  in  the Company's financial statements since the Company did not have
any  of  the  items  of  other  comprehensive  income  in  any period presented.

SEGMENT  DISCLOSURE

SFAS  No.  131,  "Disclosure  about  Segments  of  an  Enterprise  and  Related
Information,"  was  issued,  which  changes  the  way  public  companies  report
information  about  segments.  SFAS  No.  131,  which  is  based on the selected
segment  information,  requires  quarterly  and  entity-wide  disclosures  about
products  and services, major customers, and the material countries in which the
entity  holds  assets  and  reports  revenues.












                                      F-13
Recent  Accounting  Pronouncements
----------------------------------

In  January  2003,  the  FASB  issued  Interpretation  No. 46, "Consolidation of
Variable  Interest  Entities" (an interpretation of Accounting Research Bulletin
(ARB)  No.  51, Consolidated Financial Statements).  Interpretation 46 addresses
consolidation  by  business enterprises of entities to which the usual condition
of consolidation described in ARB-51 does not apply.  The Interpretation changes
the  criteria  by  which one company includes another entity in its consolidated
financial  statements.  The  general  requirement to consolidate under ARB-51 is
based on the presumption that an enterprise's financial statement should include
all  of  the  entities  in  which it has a controlling financial interest (i.e.,
majority  voting  interest).  Interpretation  46  requires  a  variable interest
entity  to  be  consolidated  by  a company that does not have a majority voting
interest,  but  nevertheless,  is subject to a majority of the risk of loss from
the  variable  interest entity's activities or entitled to receive a majority of
the  entity's  residual returns or both.  A company that consolidates a variable
interest  entity  is called the primary beneficiary of that entity.  In December
2003,  the  FASB  concluded  to  revise certain elements of FIN 46, primarily to
clarify  the  required  accounting  for interests in variable interest entities.
FIN-46R  replaces  FIN-46  that  was  issued  in  January 2003.  FIN-46R exempts
certain  entities from its requirements and provides for special effective dates
for  entities  that  have  fully  or partially applied FIN-46 as of December 24,
2003.  In certain situations, entities have the option of applying or continuing
to apply FIN-46 for a short period of time before applying FIN-46R.  In general,
for  all  entities that were previously considered special purpose entities, FIN
46  should  be  applied  for registrants who file under Regulation SX in periods
ending  after  March 31, 2004, and for registrants who file under Regulation SB,
in  periods  ending  after  December  15, 2004.  The Company does not expect the
adoption  to  have  a  material  impact  on  the Company's financial position or
results  of  operations.

During  April  2003,  the  FASB issued SFAS 149 - "Amendment of Statement 133 on
Derivative  Instruments and Hedging Activities", effective for contracts entered
into  or  modified  after  September  30,  2003,  except as stated below and for
hedging  relationships designated after September 30, 2003.  In addition, except
as  stated  below,  all  provisions  of  this  Statement  should  be  applied
prospectively.  The  provisions  of  this Statement that relate to Statement 133
Implementation  Issues  that  have been effective for fiscal quarters that began
prior  to  June 15, 2003, should continue to be applied in accordance with their
respective  effective  dates.  In  addition,  paragraphs  7(a)  and 23(a), which
relate  to  forward  purchases  or  sales  of  when-issued  securities  or other
securities  that  do not yet exist, should be applied to both existing contracts
and  new  contracts entered into after September 30, 2003.  The adoption of this
statement  had  no  impact  on  the Company's consolidated financial statements.

During  May  2003,  the FASB issued SFAS 150 - "Accounting for Certain Financial
Instruments  with Characteristics of both Liabilities and Equity", effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is  effective  for  public entities at the beginning of the first interim period
beginning  after June 15, 2003.  This Statement establishes standards for how an
issuer  classifies  and  measures  certain  financial  instruments  with
characteristics  of  both  liabilities  and  equity.  It requires that an issuer
classify  a  freestanding  financial  instrument  that  is within its scope as a
liability  (or  an asset in some circumstances).  Many of those instruments were
previously  classified  as equity.  Some of the provisions of this Statement are
consistent with the current definition of liabilities in FASB Concepts Statement
No.  6,  Elements  of  Consolidated  Financial Statements.  The adoption of this
statement  had  no  impact  on  the Company's consolidated financial statements.

In  December  2003,  the  FASB  issued  a  revised  SFAS  No.  132,  "Employers'
Disclosures about Pensions and Other Postretirement Benefits" which replaces the
previously  issued  Statement.  The  revised  Statement  increases  the existing
disclosures  for  defined  benefit  pension  plans  and  other  defined  benefit
postretirement  plans.  However,  it  does  not  change  the  measurement  or
recognition of those plans as required under SFAS No. 87, "Employers' Accounting
for  Pensions,"  SFAS  No.  88,  "Employers'  Accounting  for  Settlements  and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits," and
SFAS  No.  106,  "Employers'  Accounting  for Postretirement Benefits Other Than
Pensions."  Specifically,  the  revised  Statement requires companies to provide
additional  disclosures  about  pension  plan  assets, benefit obligations, cash
flows,  and  benefit  costs  of  defined benefit pension plans and other defined
benefit  postretirement  plans.  Also,  companies  are  required  to  provide  a
breakdown  of plan assets by category, such as debt, equity and real estate, and
to  provide  certain  expected rates of return and target allocation percentages
for  these asset categories.  The Company has implemented this pronouncement and
has  concluded  that  the  adoption  has  no material impact to the consolidated
financial  statements.
                                      F-14
In  December  2003,  the Securities and Exchange Commission ("SEC") issued Staff
Accounting  Bulletin ("SAB") No. 104, "Revenue Recognition."  SAB 104 supersedes
SAB  101, "Revenue Recognition in Consolidated Financial Statements."  SAB 104's
primary  purpose  is to rescind accounting guidance contained in SAB 101 related
to multiple element revenue arrangements, superseded as a result of the issuance
of EITF 00-21, "Accounting for Revenue Arrangements with Multiple Deliverables."
Additionally,  SAB  104  rescinds  the SEC's Revenue Recognition in Consolidated
Financial  Statements  Frequently Asked Questions and Answers ("the FAQ") issued
with  SAB  101  that  had  been  codified  in SEC Topic 13, Revenue Recognition.
Selected  portions  of  the  FAQ have been incorporated into SAB 104.  While the
wording  of  SAB  104  has  changed  to  reflect the issuance of EITF 00-21, the
revenue  recognition  principles  of  SAB  101  remain  largely unchanged by the
issuance of SAB 104, which was effective upon issuance.  The adoption of SAB 104
did  not  impact  the  consolidated  financial  statements.

NOTE  2  -  PROPERTY  AND  EQUIPMENT

The  cost of property and equipment at June 30, 2004 consisted of the following:

     Computer  and  other  equipment     $     1,932
     Office  furniture  and  fixtures          151
     Leasehold  improvements          71
                                      --
               2,154
     Less  accumulated  depreciation  and  amortization          (1,994)
                                                                 -------

          $     160
          =     ===

Depreciation expense for the years ended June 30, 2004 and 2003 was $44 and $82,
respectively.

NOTE  3  -  RELATED  PARTY  TRANSACTIONS

Transactions  with  a  Director  of  the  Company
-------------------------------------------------

A  director  of  the Company is a majority shareholder in a consulting firm that
provides  management  and public relations services to the Company.  The Company
accrued  consulting  fees  and expenses to this consulting firm in the amount of
approximately  $70  and  $120  for  the  years  ended  June  30,  2004 and 2003,
respectively.

Transactions  with  Officers  and  Key  Executives
--------------------------------------------------

During  the  years  ended June 30, 2004 and 2003, common stock with an aggregate
fair  market value of $8 and $60, respectively, was awarded to key executives as
compensation  and  advances.

During  the  year  ended  June  30, 2004, the Company issued 7,272,110 shares of
common  stock  to  the  Company's CEO as payment for accrued expenses and a note
payable  in  the  aggregate  amount  of  $109.

Transactions  with  a  Related  Party
-------------------------------------

In April 2004, the Company had a PEO services client whose Chairman of the Board
is  the  Company's  current  CEO  and Chairman.  The Company received fees of $7
during  2004.  The  transaction  is  at  fair  value.

NOTE  4  -  ACQUISITIONS  AND  DISPOSITIONS

Jackson  Staffing,  Inc.
------------------------

On  September  1, 2003, DRDF completed its acquisition of 100% of the issued and
outstanding  shares  of common stock of Jackson Staffing, Inc. ("Jackson").  The
purchase  price  was  1,329,478  shares  of  DRDF  common  stock  valued at $30.
Established  in  2003,  Jackson  is  a  temporary  staffing  agency.

                                      F-15
The operating results of Jackson beginning September 1, 2003 are included in the
accompanying  consolidated  statements  of  operations.

The  total  purchase  price was valued at approximately $30 and is summarized as
follows  in  accordance  with  SFAS  No.  141  and  142:
<TABLE>
<CAPTION>



<S>                     <C>
Cash . . . . . . . . .  $104
Receivables. . . . . .    28
Property and equipment    23
Accounts payable . . .   (19)
Accrued expenses . . .   (83)
Notes payable. . . . .   (23)
                        -----
Purchase price . . . .  $ 30
                        -----
</TABLE>


M&M  Nursing
------------

On  June  28,  2004,  DRDF  completed  its  acquisition of certain assets of M&M
Nursing  (M&M").  The  purchase  price was 5,000,000 shares of DRDF common stock
valued  at  $31  plus the assumption of $204 of liabilities.  M&M is a temporary
staffing  agency  primarily  for  nurses.

The  operating  results  of  M&M  beginning  July  1,  2004 will included in the
accompanying  consolidated  statements  of  operations.

The  total  purchase price was valued at approximately $235 and is summarized as
follows  in  accordance  with  SFAS  No.  141  and  142:
<TABLE>
<CAPTION>



<S>                     <C>
Receivables. . . . . .  $233
Property and equipment     2
                        ----
Purchase price . . . .  $235
                        ----
</TABLE>



The  pro  forma  financial  information  that the consolidated operations of the
Company  as if the Jackson and M&M acquisitions had occurred as of the beginning
of  the  periods  presented is not presented since the operations of Jackson and
M&M  prior  to  the  acquisition  by  DRDF  as  immaterial.


Greenland  Corporation
----------------------

Acquisition

On  January  14,  2003,  the  Company  completed  the  acquisition  of  shares,
representing  controlling  interest,  of  Greenland  Corporation  ("Greenland").
Under the terms of the Greenland acquisition, DRDF acquired 19,183,390 shares of
common  stock  of  Greenland  and  received  warrants  to purchase an additional
95,319,510  shares of Greenland common stock contingent upon the contribution of
certain  PEO  contracts  to Greenland.  The payment of the exercise price of the
warrants  was  made  via  the  contribution  of the required PEO contracts.  The
purchase  price was $2,225 in the form of a promissory note payable to Greenland
and  is  convertible  into shares of DRDF common stock at the maturity date, the
number  of  which will be determined by a formula applied to the market price of
the  shares  at  the time that the promissory note is converted.  The promissory
note  of  $2,225  is  payable  to  Greenland  and  is  eliminated  during  the
consolidation.
                                      F-16
The Company contributed the required PEO contracts to Greenland resulting in the
warrants  being exercised.  115.1 million Greenland common shares were issued to
DRDF  and  delivered  pursuant  to  the  terms  of  the  Closing Agreement.  The
conditions  of  the  exercise of warrants pursuant to the Closing Agreement were
met.  Accordingly,  DRDF held voting rights to 115.1 million shares of Greenland
common  stock, representing approximately 85% of the total outstanding Greenland
common  shares.

On  January  14,  2003,  four new directors were elected to serve on Greenland's
Board  of  Directors  as  nominees  of  DRDF

The  purchase  price  was  determined  through analysis of Greenland's financial
reports  as  filed with the Securities and Exchange Commission and the potential
future performance of Greenland's ExpertHR subsidiary.  The total purchase price
was  arrived  at  through  negotiations.

Greenland's ExpertHR subsidiary provides professional employer services (PEO) to
niche  markets.  Greenland's  Check  Central  subsidiary  is  an  information
technology  company  that has developed the Check Central Solutions' transaction
processing  system software and related MAXcash  Automated Banking Machine  (ABM
kiosk  designed  to  provide  self-service  check  cashing  and  ATM-banking
functionality.  Greenland's  common stock trades on the OTC Bulletin Board under
the  symbol  GRLC.

Pursuant  to the terms of the Agreement, the actual purchase price was $0, based
on  the  stated  purchase price of $2,225 per the agreement less promissory note
payable  to  $2,225  to  Greenland,  which  was eliminated in the consolidation.

The  operating  results  of Greenland beginning January 14, 2003 are included in
the  accompanying  consolidated  statements  of  operations.

The  total  purchase  price was valued at approximately $0 and is summarized and
allocated  as  follows  in  accordance  with  SFAS  No.  141  and  142:
<TABLE>
<CAPTION>



<S>                                          <C>
Other current assets. . . . . . . . . . . .  $     4
Property and equipment. . . . . . . . . . .       90
Other non-current assets. . . . . . . . . .       18
Accounts payable and accrued
    expenses, and other current liabilities   (3,202)
Other long-term liabilities . . . . . . . .      (28)
Goodwill. . . . . . . . . . . . . . . . . .    3,118
                                             --------
Purchase price. . . . . . . . . . . . . . .  $     -
                                             --------
</TABLE>


The  excess  purchase  price  was  allocated to goodwill, as there were no other
identifiable  intangible  assets  of  Greenland in which to allocate part of the
purchase  price.

The  pro  forma consolidated results of operations have not been presented as if
the acquisition of Greenland, Inc. had occurred at July 1, 2002, due to the sale
of  Greenland  stock  back  to Greenland effective March 1, 2004.  The pro forma
information  is  not  meaningful  due  to  sale  of  Greenland.








                                      F-17
ExpertHR  of  Oklahoma
----------------------

Effective  April  1,  2003,  the  Company  formed  a  wholly-owned subsidiary of
Greenland  Corporation, ExpertHR Oklahoma.  Subsequent to its formation, the new
Company purchased a group of PEO clients for $921 of convertible preferred stock
of Greenland Corporation.  ExpertHR of Oklahoma, Inc., at that time, was a newly
formed  corporation  whose  only  asset  was  the  PEO  contracts  purchased  by
Greenland.  The  entire  purchase  price  of the purchased contracts of $921 was
allocated to contracts and was amortized over the expected life of the contracts
of  5  years.

Disposition

In  January 2004, the Company determined to discontinue operations of Greenland,
Inc.,  its  professional  employment  business  division, and sold its shares in
Greenland,  Inc.,  back  to  Greenland.  Effective  March  1,  2004, the Company
completed  the  sale  of Greenland.  Effective March 1, 2004, four new directors
were  elected  to serve on Greenland's Board of Directors due to the resignation
of  the  four  directors  nominated  by  DRDF

The  terms of the sale are as follows: the Company returned all common shares of
Greenland  except  for  19,183,390 restricted common shares; assign or grant all
rights,  title  and interest the Company had in acquiring any or all interest in
ePEO  Link,  Inc. to Greenland; Greenland canceled a convertible promissory note
in the amount of $2.225 issued by the Company to Greenland; and Greenland agreed
to  forgive  and  cancel  the  inter-company  transfer  debt  of  the Company to
Greenland  of  approximately  $1,300.

Greenland's  revenues  were  $5,211  for  the  period  starting  July 1, 2003 to
February  29,  2004,  and  were $400 for the period January 14, 2003 to June 30,
2003.  The  results  of operations of Greenland have been reported separately as
discontinued  operations.

The  assets  sold consisted primarily of accounts receivable, deposits, property
and  equipment,  and  other  assets.  The  Greenland  also  assumed all accounts
payable  and  accrued  liabilities.

The  following  is  a  summary  of  the  net  assets  sold at February 29, 2004:
<TABLE>
<CAPTION>



<S>                                         <C>                 <C>
                                            February 29, 2004
                                            ------------------
Assets:
                                            Cash                $-
  Accounts receivable. . . . . . . . . . .                 406
  Other current assets . . . . . . . . . .                 135
  Property and equipment, net. . . . . . .                  77
  Other assets . . . . . . . . . . . . . .               3,830
                                            ------------------
Total assets . . . . . . . . . . . . . . .  $            4,448

Liabilities:
  Accounts payable . . . . . . . . . . . .  $            1,237
  Notes payable. . . . . . . . . . . . . .                 830
  PEO payroll taxes and payroll deduction.               3,993
  Accrued liabilities. . . . . . . . . . .               1,265
  Other non-current liabilities. . . . . .                 798
                                            ------------------
Total liabilities. . . . . . . . . . . . .  $            8,123
                                            ------------------

Net liabilities of discontinued operations  $            3,675
                                            ==================
</TABLE>




                                      F-18
Quik  Pix,  Inc.
----------------

On  January 14, 2003, DRDF completed its acquisition of approximately 85% of the
issued  and  outstanding  shares of common stock of Quik Pix, Inc. ("QPI").  The
purchase  price  was 12,500,000 shares of DRDF restricted common stock valued at
$125.  In  addition,  DRDF  agreed  to  pay  $45  to  a  shareholder  of  QPI.

Established  in  1982,  QPI  is  a visual marketing support firm.  Its principal
product,  PhotoMotion,  is  patented.  PhotoMotion is a unique color medium that
uses  existing originals to create the illusion of movement and allows for three
to  five distinct images to be displayed with an existing light box.  QPI visual
marketing  products  are  sold to a range of clientele including advertisers and
their  agencies.

The  purchase price was determined through analysis of QPI's financial condition
and  the  potential  future  performance  of its business operations.  The total
purchase  price  was  arrived  at  through  negotiations.

Pursuant to the terms of the Agreement, the actual purchase price was $170 based
on the fair value of the common stock issued of $125 and the payable of $45 to a
shareholder  of  QPI.

The  operating  results  of  QPI  beginning January 14, 2003 are included in the
accompanying  consolidated  statements  of  operations.

The  total  purchase price was valued at approximately $170 and is summarized as
follows  in  accordance  with  SFAS  No.  141  and  142:
<TABLE>
<CAPTION>



<S>                                        <C>
Other current assets. . . . . . . . . . .  $  280
Property and equipment. . . . . . . . . .      11
Other non-current assets. . . . . . . . .      18
Accounts payable and accrued
  expenses, and other current liabilities    (865)
Other long-term liabilities . . . . . . .    (892)
Patent. . . . . . . . . . . . . . . . . .   1,618
                                           -------
Purchase price. . . . . . . . . . . . . .  $  170
                                           =======
</TABLE>


The  excess  purchase  price of $1,618 was allocated to QPI's patent.  QPI has a
patent  related  to  PhotoMotion  images,  which  expires  in  July  2020.  This
intangible  asset  is  being  amortized  over  the remaining life of the patent.

Dream  Canvas  Technology,  Inc.
--------------------------------

The  Company completed the acquisition of Dream Canvas Technology, Inc. (DCT) in
October  2002 and paid the sum of $40 with the issuance of 100,000 shares of its
common  stock.  In  December  2002  the  Company  sold DCT to Baseline Worldwide
Limited  for  $75  in  cash.












                                      F-19
NOTE  5  -  OTHER  ACCRUED  EXPENSES

Other  accrued  expenses  at  June  30,  2004  consisted of the following as of:
<TABLE>
<CAPTION>



<S>                                                 <C>
          Interest . . . . . . . . . . . . . . . .  $    3,220
          Payroll and sales tax payable. . . . . .         591
          IRS levy penalties and interest. . . . .         387
          Accrued judgments. . . . . . . . . . . .       3,674
          Other taxes. . . . . . . . . . . . . . .         948
          Accrued salaries and related liabilities         923
          Other. . . . . . . . . . . . . . . . . .       1,130
                                                    ----------
                                                    $   10,873
                                                    ==========
</TABLE>


NOTE  6  -  DEBT

BORROWINGS  UNDER  BANKS  NOTES  PAYABLE

On  June  6, 2000, the Company entered into a settlement agreement with Imperial
Bank  ("Imperial").  Under  this agreement, the Company would pay $150 per month
until  the  balance  was  paid  in full.  Payments have been reduced to $100 per
month  through  January  2002  and  further reduced to $50 subsequent to January
2002.  During  the year ended June 30, 2002, the Company paid $1,023 toward this
obligation.  Due  to the uncertainty regarding the Company's ability to meet its
obligations  and  certain  defaults  under  this  agreement,  the  debt has been
classified  as current.  The debt is accruing interest at 5.75% per annum, which
will  be  waived  if  all  principal  payments  are  made  timely.  The  debt is
collateralized  by  substantially  all  assets  of  the  Company.

As  of  June  30, 2004, the Company owed Export-Import Bank ("ExIm") $1,730 plus
interest  under  a  Working  Capital  Guarantee Facility whereby Imperial made a
demand  upon ExIm who responded by making a claim payment to Imperial.  The note
bears  interest  at 10% per annum.  ExIm has made a demand for immediate payment
and  note  is  currently  in  default.

The  following  is  a summary of the borrowings under bank notes payable at June
30,  2004:
<TABLE>
<CAPTION>



<S>                 <C>
Imperial . . . . .  $1,490
Export-Import Bank   1,730
                    ------
    Total. . . . .  $3,220
                    ======
</TABLE>


NOTES  PAYABLE,  INCLUDING  AMOUNTS  DUE  TO  RELATED  PARTIES

The  following  summarizes  notes  payable  at  June  30,  2004:
<TABLE>
<CAPTION>



<S>                                          <C>
Payable to investor, 8% . . . . . . . . . .  $    76
Payable in connection with QPI acquisition.      376
Payable to individual, 10%. . . . . . . . .       14
Payable to related party. . . . . . . . . .      293
Payable to a former director, 16% . . . . .    1,500
                                               2,259
                                             --------
Less current portion. . . . . . . . . . . .   (1,847)
Long-term portion . . . . . . . . . . . . .  $   412
                                             --------
</TABLE>


                                      F-20
Notes  payable  mature  as  follows:
<TABLE>
<CAPTION>



<S>                               <C>
During the years ended June 30,
 2005. . . . . . . . . . . . . .  $1,847
                                  ------
 2006. . . . . . . . . . . . . .     412
 2007. . . . . . . . . . . . . .       -
2,259
================================
</TABLE>


Convertible  Debentures
-----------------------

On  December  12,  2000,  the  Company  entered into a Convertible Note Purchase
Agreement  with  Amro International, S.A., Balmore Funds, S.A. and Celeste Trust
Reg.  Pursuant  to  this  agreement,  the Company sold to each of the purchasers
convertible  promissory  notes in the aggregate principal amount of $850 bearing
interest  at  the  rate  of eight percent (8%) per annum, due December 12, 2003,
each  convertible  into shares of the Company's common stock.  Interest shall be
payable, at the option of the purchasers, in cash or shares of common stock.  At
any  time  after  the  issuance of the notes, each note is convertible into such
number  of  shares of common stock as is determined by dividing (a) that portion
of the outstanding principal balance of the note as of the date of conversion by
(b)  the  lesser  of (x) an amount equal to seventy percent (70%) of the average
closing bid prices for the three (3) trading days prior to December 12, 2000 and
(y)  an  amount equal to seventy percent (70%) of the average closing bid prices
for  the  three (3) trading days having the lowest closing bid prices during the
thirty  (30)  trading  days  prior  to  the  conversion  date.  The  Company has
recognized  interest  expense  of  $364  relating  to  the beneficial conversion
feature  of the above notes.  Additionally, the Company issued a warrant to each
of the purchasers to purchase 502,008 shares of the Company's common stock at an
exercise  price  equal  to  $1.50  per  share.

On July 26, 2001, the Company entered into a convertible note purchase agreement
with  certain  investors whereby the Company sold to the investors a convertible
debenture  in  the  aggregate principal amount of $1,000 bearing interest at the
rate of eight percent (8%) per annum, due July 26, 2004, convertible into shares
of  the  Company's  common  stock.  Interest  is  payable,  at the option of the
investor,  in  cash  or  shares  of  the  Company's  common  stock.  The note is
convertible  into  such  number  of  shares  of the Company's common stock as is
determined  by dividing (a) that portion of the outstanding principal balance of
the note by (b) the conversion price.  The conversion price equals the lesser of
(x)  $1.30  and (y) 70% of the average of the 3 lowest closing bid prices during
the  30  trading  days  prior to the conversion date.  Additionally, the Company
issued  a  warrant  to  the investor to purchase 769,231 shares of the Company's
common  stock  at  an exercise price equal to $1.30 per share.  The investor may
exercise  the warrant through July 26, 2006.  In accordance with EITF 00-27, the
Company  first  determined  the  value  of  the  note  and the fair value of the
detachable  warrants  issued in connection with this convertible debenture.  The
proportionate value of the note and the warrants is $492 and $508, respectively.
The  value  of the note was then allocated between the note and the preferential
conversion  feature,  which  amounted  to  $0  and  $492,  respectively.

On  September  21,  2001,  the  Company entered into a convertible note purchase
agreement  with  an  investor  whereby  the  Company  sold  to  the  investor  a
convertible  promissory  note  in the aggregate principal amount of $300 bearing
interest  at  the  rate of eight percent (8%) per annum, due September 21, 2004,
convertible  into shares of the Company's common stock.  Interest is payable, at
the  option  of  the  investor, in cash or shares of the Company's common stock.
The note is convertible into such number of shares of the Company's common stock
as  is  determined  by  dividing  (a)  that portion of the outstanding principal
balance  of  the  note by (b) the conversion price.  The conversion price equals
the  lesser of (x) $0.532 and (y) 70% of the average of the 3 lowest closing bid
prices  during  the 30 trading days prior to the conversion date.  Additionally,
the  Company  issued a warrant to the investor to purchase 565,410 shares of the
Company's  common  stock  at  an  exercise  price  equal  to  $0.76  per  share.
The  investor  may exercise the warrant through September 21, 2006.  In December
2001,  $70  of  this note was converted into 209,039 shares of common stock.  In
accordance  with  EITF 00-27, the Company first determined the value of the note
and  the  fair  value  of the detachable warrants issued in connection with this
convertible  debenture.

                                      F-21
The  proportionate  value  of  the  note  and  the  warrants  is  $106 and $194,
respectively.  The value of the note was then allocated between the note and the
preferential  conversion  feature,  which amounted to $0 and $106, respectively.

On  November  7,  2001,  the  Company  entered  into a convertible note purchase
agreement  with  an  investor  whereby  the  Company  sold  to  the  investor  a
convertible  promissory  note  in the aggregate principal amount of $200 bearing
interest  at  the  rate  of  eight percent (8%) per annum, due November 7, 2004,
convertible  into shares of the Company's common stock.  Interest is payable, at
the  option  of  the  investor, in cash or shares of the Company's common stock.
The note is convertible into such number of shares of the Company's common stock
as  is  determined  by  dividing  (a)  that portion of the outstanding principal
balance  of  the  note by (b) the conversion price.  The conversion price equals
the  lesser of (x) $0.532 and (y) 70% of the average of the 3 lowest closing bid
prices  during  the 30 trading days prior to the conversion date.  Additionally,
the  Company  issued a warrant to the investor to purchase 413,534 shares of the
Company's  common  stock  at  an  exercise  price equal to $0.76 per share.  The
investor  may exercise the warrant through November 7, 2006.  In accordance with
EITF  00-27,  the  Company  first  determined the value of the note and the fair
value  of  the  detachable  warrants  issued in connection with this convertible
debenture.  The  proportionate  value  of  the  note and the warrants is $92 and
$108,  respectively.  The  value of the note was then allocated between the note
and  the  preferential  conversion  feature,  which  amounted  to  $0  and  $92,
respectively.

On  January  22,  2002,  the  Company  entered  into a convertible note purchase
agreement  with  an  investor  whereby  the  Company  sold  to  the  investor  a
convertible  promissory  note  in the aggregate principal amount of $500 bearing
interest  at  the  rate  of  eight percent (8%) per annum, due January 22, 2003,
convertible  into shares of the Company's common stock.  Interest is payable, at
the  option  of  the  investor, in cash or shares of the Company's common stock.
The note is convertible into such number of shares of the Company's common stock
as  is  determined  by  dividing  (a)  that portion of the outstanding principal
balance  of  the  note by (b) the conversion price.  The conversion price equals
the  lesser of (x) $0.332 and (y) 70% of the average of the 3 lowest closing bid
prices  during  the 30 trading days prior to the conversion date.  Additionally,
the Company issued a warrant to the investor to purchase 3,313,253 shares of the
Company's  common  stock  at  an  exercise price equal to $0.332 per share.  The
investor  may exercise the warrant through January 22, 2009.  In accordance with
EITF  00-27,  the  Company  first  determined the value of the note and the fair
value  of  the  detachable  warrants  issued in connection with this convertible
debenture.  The  proportionate  value  of  the note and the warrants is $101 and
$399,  respectively.  The  value of the note was then allocated between the note
and  the  preferential  conversion  feature,  which  amounted  to  $0  and $101,
respectively.

On  August  5,  2002,  the  Company  entered  into  a  convertible note purchase
agreement  with  an  investor  in the aggregate principal amount of $100 bearing
interest  at  the  rate  of  eight  percent  (8%) per annum, due August 5, 2005,
convertible  into shares of the Company's common stock.  Interest is payable, at
the  option  of  the  investor, in cash or shares of the Company's common stock.
The note is convertible into such number of shares of the Company's common stock
as  is  determined  by  dividing  (a)  that portion of the outstanding principal
balance  of  the  note by (b) the conversion price.  The conversion price equals
the  lesser  of (x) $0.03 and (y) 70% of the average of the 3 lowest closing bid
prices  during  the 30 trading days prior to the conversion date.  In accordance
with  EITF  00-27,  the value of the note was allocated between the note and the
preferential  conversion  feature,  which amounted to $57 and $43, respectively.

On  January  31,  2003,  the  Company  entered  into a convertible note purchase
agreement with an investor whereby the Company converted a previous advance from
the  investor  into  a  convertible  promissory  note in the aggregate principal
amount of $150 bearing interest at the rate of eight percent (8%) per annum, due
January  31,  2005,  convertible  into  shares  of  the  Company's common stock.
Interest  is  payable,  at  the option of the investor, in cash or shares of the
Company's  common  stock.  The note is convertible into such number of shares of
the  Company's common stock as is determined by dividing (a) that portion of the
outstanding  principal  balance  of  the  note by (b) the conversion price.  The
conversion  price equals the lesser of (x) $0.0226 and (y) 70% of the average of
the  3  lowest  closing  bid  prices  during  the  30  trading days prior to the
conversion  date.  In  accordance  with  EITF  00-27,  the value of the note was
allocated  between  the  note  and  the  preferential  conversion feature, which
amounted  to  $86  and  $64,  respectively.


                                      F-22
On  April  1,  2003,  the  Company  entered  into  a  convertible  note purchase
agreements  with  three  investors  whereby  the  Company  converted  a previous
advances from the investors into a convertible promissory notes in the aggregate
principal  amount of $390 bearing interest at the rate of eight percent (8%) per
annum, due April 1, 2005, convertible into shares of the Company's common stock.
Interest  is  payable,  at  the option of the investor, in cash or shares of the
Company's  common  stock.  The note is convertible into such number of shares of
the  Company's common stock as is determined by dividing (a) that portion of the
outstanding  principal  balance  of  the  note by (b) the conversion price.  The
conversion  price equals the lesser of (x) $0.0226 and (y) 70% of the average of
the  3  lowest  closing  bid  prices  during  the  30  trading days prior to the
conversion  date.  In  accordance  with  EITF  00-27,  the value of the note was
allocated  between  the  note  and  the  preferential  conversion feature, which
amounted  to  $223  and  $167,  respectively.

On  December  17,  2003,  the  Company  entered  into  convertible note purchase
agreements  with  four  investor,  whereby  the  Company  sold  to the investors
convertible  promissory  notes in the aggregate principal amount of $800 bearing
interest  at  the  rate  of eight percent (8%) per annum, due December 17, 2006,
convertible  into shares of the Company's common stock.  Interest is payable, at
the  option  of  the  investor, in cash or shares of the Company's common stock.
The note is convertible into such number of shares of the Company's common stock
as  is  determined  by  dividing  (a)  that portion of the outstanding principal
balance  of  the  note by (b) the conversion price.  The conversion price equals
the  lesser  of (x) $0.02 and (y) 70% of the average of the 3 lowest closing bid
prices  during  the 30 trading days prior to the conversion date.  Additionally,
the  Company  issued  a warrant to the investor to purchase 16,000 shares of the
Company's  common  stock  at  an  exercise  price equal to $0.02 per share.  The
investor may exercise the warrant through December 17, 2008.  In accordance with
EITF  00-27,  the  Company  first determined the value of the notes and the fair
value  of  the  detachable  warrants issued in connection with these convertible
debentures.  The  proportionate  value of the notes and the warrants is $586 and
$214, respectively.  The value of the notes was then allocated between the notes
and  the  preferential  conversion  feature,  which  amounted  to  $30 and $556,
respectively.

Below  is  a  roll-forward  schedule  of  the  convertible  debentures:
<TABLE>
<CAPTION>



<S>                                                       <C>
Balance at June 30, 2002 . . . . . . . . . . . . . . . .  $   803
Issuance of convertible debentures during the year . . .      640
Converted into common stock. . . . . . . . . . . . . . .     (164)
Value of preferential conversion feature . . . . . . . .     (274)
Amortization of value of warrants. . . . . . . . . . . .      477
Amortization of value of preferential conversion feature      375
                                                          --------
Balance at June 30, 2003 . . . . . . . . . . . . . . . .    1,857
Issuance of convertible debentures during the year . . .      800
Converted into common stock. . . . . . . . . . . . . . .   (2,026)
Value of preferential conversion feature . . . . . . . .     (557)
Value of warrants issued with convertible debentures . .     (214)
Amortization of value of warrants. . . . . . . . . . . .      388
Amortization of value of preferential conversion feature      623
                                                          --------
Balance at June 30, 2004 . . . . . . . . . . . . . . . .  $   871
                                                          ========
</TABLE>



The weighted average interest rate on notes payable outstanding at June 30, 2004
and  2003,  was  8.7%  and  8.7%,  respectively.






                                      F-23
NOTE  7  -  STOCKHOLDERS'  DEFICIT

Amendment  to  the  Certificate  of  Incorporation.
---------------------------------------------------

On September 28, 2001, the Company's shareholders authorized an amendment to the
Certificate  of Incorporation to: (i) effect a stock combination (reverse split)
of  the Company's common stock in an exchange ratio to be approved by the Board,
ranging  from one (1) newly issued share for each ten (10) outstanding shares of
common  stock  to  one  (1)  newly issued share for each twenty (20) outstanding
shares  of  common  stock  (the  "Reverse  Split");  and  (ii)  provide  that no
fractional  shares  or  scrip representing fractions of a share shall be issued,
but  in  lieu  thereof,  each  fraction  of  a  share that any shareholder would
otherwise be entitled to receive shall be rounded up to the nearest whole share.
There  will  be  no  change  in the number of the Company's authorized shares of
common  stock  and  no  change  in  the  par  value  of a share of Common Stock.

On  September  28, 2001, the Company's shareholders approved a Board proposal to
amend  the  Certificate  of  Incorporation  to  increase the number of shares of
common  stock  that  the  Company  is  authorized  to  issue from 200,000,000 to
500,000,000  shares.

On  August  9,  2002, the Company's board of directors approved and affected a 1
for  20  reverse  stock  split.  All  share  and  per  share  data  have  been
retroactively  restated  to  reflect  this  stock  split.

On  May  14, 2004, the Company's shareholders approved a Board proposal to amend
the  Certificate  of  Incorporation  to  increase the number of shares of common
stock  that the Company is authorized to issue from 500,000,000 to 1,000,000,000
shares.


5%  SERIES  A  CONVERTIBLE,  REDEEMABLE  PREFERRED  STOCK

Holders  of  the  5%  convertible  preferred  stock ("Series A") are entitled to
receive, when and as declared by the Board of Directors, but only out of amounts
legally  available  for  the  payment  thereof, cumulative cash dividends at the
annual  rate  of  $50.00  per  share,  payable  semi-annually.

The  5%  convertible preferred stock is convertible, at any time, into shares of
the  Company's  common  stock,  at  a  price  of  $17.50 per common share.  This
conversion  price  is subject to certain anti-dilution adjustments, in the event
of  certain  future  stock splits or dividends, mergers, consolidations or other
similar  events.  In addition, the Company shall reserve, and keep reserved, out
of  its  authorized  but  un-issued shares of common stock, sufficient shares to
effect  the  conversion  of  all  shares  of the 5% convertible preferred stock.

In the event of any involuntary or voluntary liquidation, dissolution or winding
up  of  the  affairs  of  the Company, the 5% convertible preferred shareholders
shall  be  entitled to receive $1 per share, together with accrued dividends, to
the  date  of  distribution  or  payment,  whether  or  not  earned or declared.

The 5% convertible preferred stock is callable, at the Company's option, at call
prices  ranging  from $1,050 to $1,100 per share.  No call on the 5% convertible
preferred  stock was made during fiscal 2004 and 2003.  As of June 30, 2004, the
accumulated  dividend  in  arrears  was  approximately  $432  on  the  Series A.

COMMON  STOCK  WARRANTS

In  fiscal  2003,  the  Company  also  issued  2,830,300  warrants  to  certain
consultants.  The  exercise  prices  of  the warrants range from $0.05 to $0.10.
All  these  warrants  were  exercised  during  fiscal  2003.  The value of these
warrants was estimated at $70 using the Black-Scholes option-pricing model.  The
following  assumptions  were  used:  average  risk-free  interest  rate of 3.5%;
expected  life  of  0.25 years; dividend yield of 0%; and expected volatility of
179%.


                                      F-24
In connection with certain convertible debentures issued during fiscal 2004, the
Company  issued  to  the debenture holders warrants to purchase up to 16,000,000
shares  of  its common stock at an exercise price of $0.02.  The warrants expire
on  December  17, 2008.  The value of these warrants was estimated at $305.  The
Black-Scholes  option-pricing  model  was  used  to determine the value of these
warrants.  The  following assumptions were used: average risk-free interest rate
of 3.5%; expected life of 5 years; dividend yield of 0%; and expected volatility
of 426%.  The value was then compared to the value of the underlying convertible
debenture  and  the  proportionate value was assigned to the detachable warrants
and  the  underlying  convertible  debenture.

The  following  is  a  summary  of  the  warrant  activity:
<TABLE>
<CAPTION>



<S>                           <C>                <C>

                              PRICE PER SHARE    UNDERLYING COMMON SHARES
                              -----------------  -------------------------


JUNE 30, 2002. . . . . . . .  $  0.20 - $11.40                  6,102,350
  Granted. . . . . . . . . .  $   0.05 - $0.10                  2,830,000
  Exercised. . . . . . . . .  $   0.05 - $0.10                 (2,830,000)
  Canceled . . . . . . . . .  $          11.40                   (100,000)

JUNE 30, 2003. . . . . . . .  $  0.20 - $10.00                  6,002,350
     Granted . . . . . . . .  $           0.02                 16,000,000
     Exercised . . . . . . .                (0)
     Canceled. . . . . . . .  $  0.20 - $10.00                   (438,920)
EXERCISABLE AT JUNE 30, 2004  $   0.02 - $1.50                 21,563,430
                                                 =========================
</TABLE>


The  weighted average remaining contractual life of warrants outstanding at June
30,  2004  is  4.24  years.  Of  the  warrants  exercisable  at  June  30, 2004,
16,000,000  have  an exercise price of $0.02 and the remaining 5,563,430 have an
exercise  price  ranging  from  $0.33  to  $1.50.

For  warrants  granted  during  the  year ended June 30, 2003 where the exercise
price  was  less  than  the  stock  price  at  the  date  of  the  grant,  the
weighted-average  fair value of such options was $0.025 and the weighted-average
exercise  price of such options was $0.0558.  In connection with the issuance of
these  warrants,  the  Company  recognized an expense of $70.  The fair value of
these  warrants  was  determined  using  the  Black-Scholes  pricing  model.

COMMON  STOCK  OPTION  PLANS

In  July  1984  ("1984  Plan"),  November 1987 ("1988 Plan") and September, 1996
("1997  Plan"),  the  Company  adopted stock option plans, under which incentive
stock  options  and  non-qualified  stock  options  may be granted to employees,
directors,  and  other  key  persons, to purchase shares of the Company's common
stock,  at an exercise price equal to no less than the fair market value of such
stock  on  the  date  of grant, with such options exercisable in installments at
dates  typically  ranging  from one to not more than ten years after the date of
grant.

Under the terms of the 1988 and 1997 Plans, loans may be made to option holders,
which  permit  the  option  holders  to  pay the option price, upon exercise, in
installments.  A  total  of  10,600  and  50,000  shares  of  common  stock  are
authorized  for  issuance  under  the  1988  and  1997  Plans,  respectively.

No  shares  are  available  for  future  issuance under the 1984 Plan due to the
expiration of the plan during 1994.  As of June 30, 1999, options to acquire 100
shares were outstanding under the 1984 Plan and options to acquire 33,500 shares
remained  available  for  grant  under  the  1988  and  1997  Plans.


                                      F-25
In  addition,  the  Board  of  Directors,  outside the 1984, 1988 and 1997 Plans
("Outside  Plan"), granted to employees, directors and other key persons of DRDF
or its subsidiaries options to purchase shares of the Company's common stock, at
an  exercise  price equal to no less than the fair market value of such stock on
the  date  of grant.  Options are exercisable in installments at dates typically
ranging  from  one  to  not  more  than  ten  years  after  the  date  of grant.

In  October  1995,  the  Board  of  Directors  authorized the exercise price for
employee  options  and  warrants  to  be  reduced  to  the current market value.
Accordingly,  the exercise price on an aggregate of 911 and 13,750 options under
the  1988  and  Outside  Plans,  respectively,  were canceled and reissued at an
exercise  price  of  $20.00  per  share.

The  1997  Employee  Stock  Purchase  Plan ("Purchase Plan") was approved by the
Company's  shareholders  in September 1996.  The Purchase Plan permits employees
to  purchase the Company's common stock at a 15% discounted price.  The Purchase
Plan  is  designed  to encourage and assist a broad spectrum of employees of the
Company to acquire an equity interest in the Company through the purchase of its
common  stock.  It  is  also intended to provide participating employees the tax
benefits  under  Section 421 of the Code.  The Purchase Plan covers an aggregate
of  25,000  shares  of  the  Company's  common  stock.

All  employees,  including  executive  officers and directors who are employees,
customarily  employed  more than 20 hours per week and more than five months per
year  by  the  Company  are  eligible to participate in the Purchase Plan on the
first  enrollment  date  following  employment.  However,  employees  who  hold,
directly  or  through  options, five percent or more of the stock of the Company
are  not  eligible  to  participate.

Participants may elect to participate in the Purchase Plan by contributing up to
a  maximum of 15 percent of their compensation, or such lesser percentage as the
Board  may  establish from time to time.  Enrollment dates are the first trading
day  of  January,  April,  July  and  October  or  such  other  dates  as may be
established  by  the  Board  from time to time.  On the last trading day of each
December,  March,  June and September, or such other dates as may be established
by  the  Board  from time to time, the Company will apply the funds then in each
participant's  account  to  the  purchase  of  shares.  The  cost  of each share
purchased is 85 percent of the lower of the fair market value of common stock on
(i) the enrollment date or (ii) the purchase date.  The length of the enrollment
period may not exceed a maximum of 24 months.  No participant's right to acquire
shares  may  accrue at a rate exceeding $25 of fair market value of common stock
(determined as of the first trading day in an enrollment period) in any calendar
year.  No  shares  have  been  issued  under  the  Purchase  Plan.

2001  Stock  Option  and  Stock  Purchase  Plans.
-------------------------------------------------

The  Company's  shareholders  approved  the  2001 Stock Option Plan, pursuant to
which  5,000,000  shares  of  common stock are reserved for issuance to eligible
employees  and  directors  of,  and  consultants  to,  the Company or any of its
subsidiaries.  Upon  expiration,  cancellation  or  termination  of  unexercised
options,  the  shares of the Company's Common Stock subject to such options will
again  be  available  for the grant of options under the 2001 Stock Option Plan.
Options  granted  under  the  2001  Stock Option Plan may either be incentive or
nonqualified  stock  options.

The  Company's  shareholders  approved the 2001 Stock Purchase Plan, as amended,
which  enables  eligible  employees to purchase in the aggregate up to 2,500,000
shares  of  common  stock.









                                      F-26

STOCK  OPTION  ACTIVITY

The  following  is  a  summary  of  the  stock  option  activity:
<TABLE>
<CAPTION>



<S>                           <C>                   <C>
                              STOCK OPTION PLANS
                              PRICE PER
                              SHARE                 UNDERLYING COMMON SHARES
                                                    -------------------------

JUNE 30, 2000. . . . . . . .  $   18.20 - $169.00                     11,750
     Granted . . . . . . . .  $      2.80 - $6.80                          -
     Exercised . . . . . . .  $     2.80 - $23.80                          -
     Canceled. . . . . . . .  $   18.20 - $169.00                     (3,650)

JUNE 30, 2001. . . . . . . .  $    6.80 - $150.00                      8,100
     Granted . . . . . . . .  $      0.60 - $0.60                  2,750,000
     Exercised . . . . . . .  $      0.20 - $2.00                 (2,744,500)
     Canceled. . . . . . . .                    -

JUNE 30, 2002. . . . . . . .  $    0.60 - $150.00                     13,600
Granted. . . . . . . . . . .  $     0.01 - $0.015                 34,150,000
Exercised. . . . . . . . . .                    -
Canceled . . . . . . . . . .               (5,500)

JUNE 30, 2003. . . . . . . .  $     0.01 - $28.20                 34,158,100
     Granted . . . . . . . .  $      .01 - $0.025                 34,500,000
     Exercised . . . . . . .  $     0.01 - $0.025                (29,500,000)
     Canceled. . . . . . . .  $             28.20                     (8,100)
EXERCISABLE AT JUNE 30, 2004  $       0.01 -0.025                 39,150,000
                                                    -------------------------
</TABLE>


The  weighted  average  remaining contractual life of options outstanding issued
under  the  Stock  Option  Plans  is  1.98  years  at  June  30,  2004.

For options granted during the year ended June 30, 2004 where the exercise price
was equal to the stock price at the date of the grant, the weighted-average fair
value of such options was $0.025 and the weighted-average exercise price of such
options  was  $0.025.  In  connection  with  the  issuance of these options, the
Company  recognized  an expense of $0 related since the exercise price was equal
to  the  value  of the Company's stock at the date of issuance.  During the year
ended  June  30, 2004, the Company repriced certain options that were previously
issued  and  recorded  a  charge  to  earnings  in  the  amount  of  $141.

For options granted during the year ended June 30, 2003 where the exercise price
was  less  than  the  stock price at the date of the grant, the weighted-average
fair value of such options was $0.012 and the weighted-average exercise price of
such options was $0.0124.  In connection with the issuance of these options, the
Company  recognized  an expense of $0 related since the exercise price was equal
to  the  value  of  the  Company's  stock  at  the  date  of  issuance.

COMMON  STOCK  ISSUED  FOR  SERVICES  AND  COMPENSATION

The  table below shows all the issuances of common stock for services during the
year  ended  June  30,  2004 and 2003.  The value of the services was derived by
multiplying  the  market  value  of  the  Company's  common  stock at the date a
transaction  for  services  was  entered  into  by  the number of shares issued.

                                      F-27

<TABLE>
<CAPTION>



<S>                <C>                            <C>        <C>
                   FISCAL 2004
                   -----------------------------
ISSUE . . . . . .  SHARES
DATE. . . . . . .  DESCRIPTION                    ISSUED     VALUE

1/7/2004. . . . .  Strategic planning/marketing      75,000  $  1,500
6/1/2004. . . . .  Strategic planning/marketing     300,000     1,500
7/31/2003 . . . .  Strategic planning/marketing     100,000     2,000
9/17/2003 . . . .  Strategic planning/marketing     120,000     2,400
12/29/2003. . . .  Strategic planning/marketing     250,000     2,500
12/10/2003. . . .  Professional services            175,000     2,625
1/7/2004. . . . .  Strategic planning/marketing     150,000     3,000
12/31/2003. . . .  Strategic planning/marketing     500,000     5,000
12/10/2003. . . .  Professional services          1,075,000    16,125
8/1/2003. . . . .  Strategic planning/marketing   5,000,000   125,000
        7,745,000  $                     161,650
</TABLE>


<TABLE>
<CAPTION>



<S>               <C>                            <C>         <C>
                  FISCAL 2003
ISSUE. . . . . .  SHARES
DATE . . . . . .  DESCRIPTION                    ISSUED      VALUE

07/01/02 . . . .  Strategic planning/marketing      450,000  $ 72,000
07/08/02 . . . .  Strategic planning/marketing       79,688    12,431
08/15/02 . . . .  Strategic planning/marketing      500,000    25,000
08/19/02 . . . .  Strategic planning/marketing      150,000     7,500
09/09/02 . . . .  Strategic planning/marketing    1,500,000    79,500
09/18/02 . . . .  Strategic planning/marketing    3,000,000    93,000
09/23/02 . . . .  Strategic planning/marketing      100,000     2,200
09/24/02 . . . .  Strategic planning/marketing      250,000     4,750
10/10/02 . . . .  Strategic planning/marketing    2,310,900    23,109
10/10/02 . . . .  Strategic planning/marketing    3,000,000    30,000
10/29/02 . . . .  Strategic planning/marketing   15,000,000   150,000
11/12/02 . . . .  Strategic planning/marketing      937,500    18,750
12/13/02 . . . .  Strategic planning/marketing      400,000    12,000
12/17/02 . . . .  Professional services           1,000,000    10,000
12/17/02 . . . .  Strategic planning/marketing    4,000,000    40,000
12/17/02 . . . .  Strategic planning/marketing   45,000,000   450,000
01/03/03 . . . .  Strategic planning/marketing      500,000     5,000
01/07/03 . . . .  Strategic planning/marketing      686,667    10,300
01/08/03 . . . .  Strategic planning/marketing    2,000,000    30,000
02/10/03 . . . .  Professional services             533,333     8,000
03/03/03 . . . .  Strategic planning/marketing      300,000     3,000
04/10/03 . . . .  Strategic planning/marketing    1,000,000    10,000
06/10/03 . . . .  Strategic planning/marketing    4,333,333    65,000
06/23/03 . . . .  Strategic planning/marketing    5,702,079    85,531
      92,733,500  $                   1,247,071
</TABLE>



                                      F-28
NOTE  8  -  SEGMENT  AND  GEOGRAPHIC  INFORMATION

During  fiscal  2004  and  2003, the Company managed and internally reported the
Company's  business  as  four  (4)  reportable  segments  as  follows:

(1)     professional  employer  organization
(2)     temporary  staffing
(3)     imaging  products;
(4)     imaging  software;

Segment  information  for  the  fiscal year ended June 30, 2004 and 2003, was as
follows:
<TABLE>
<CAPTION>



<S>                                         <C>         <C>          <C>         <C>         <C>
                                            PEO         TEMPORARY    IMAGING     IMAGING
                                            BUSINESS    STAFFING     PRODUCTS    SOFTWARE    TOTAL
SELECTED STATEMENT OF OPERATIONS ACTIVITY:

Fiscal year ended June 30, 2004
  Revenues . . . . . . . . . . . . . . . .  $   2,607   $   10,119   $     764   $      36   $ 13,526
  Cost of revenues . . . . . . . . . . . .       (894)      (9,209)       (196)         (3)   (10,302)
Gross profit . . . . . . . . . . . . . . .      1,713          910         568          33      3,224

Fiscal year ended June 30, 2003
  Revenues . . . . . . . . . . . . . . . .  $   2,499   $        -   $     924   $     367   $  3,790
  Cost of revenues . . . . . . . . . . . .     (1,639)           -        (396)        (90)    (2,125)
Gross profit . . . . . . . . . . . . . . .        860            -         528         277      1,665
</TABLE>


As  of  and during the years ended June 30, 2004 and 2003, no customer accounted
for  more  than  10%  of  consolidated accounts receivable or total consolidated
revenues.  During 2004, all revenue derived from temporary staffing was from one
client.

Net  sales  from  principal  geographic  areas  were  as  follows:
<TABLE>
<CAPTION>



<S>             <C>      <C>
                   2004    2003
                -------  ------
Europe . . . .  $     -  $  367
                -------  ------
Domestic sales   13,526   3,423
 Total sales .  $13,526  $3,790
                -------  ------
</TABLE>


NOTE  9  -  INCOME  TAXES

The  Company's  provision  for  income taxes is accounted for in accordance with
SFAS  109.  SFAS 109 requires recognition of deferred tax assets and liabilities
for  the  expected  future tax consequences of events that have been included in
the financial statements or tax returns.  Under the SFAS 109 asset and liability
method,  deferred  tax  assets  and  liabilities  are  determined based upon the
difference  between  the  financial  statement  and  tax  bases  of  assets  and
liabilities  using  the  enacted  tax  rates in effect for the year in which the
differences are expected to reverse.  A valuation allowance is then provided for
deferred  tax  assets  that  are  more  likely  than  not  to  not  be realized.



                                      F-29
The  provision (benefit) for income taxes is as follows for the years ended June
30:
<TABLE>
<CAPTION>



<S>               <C>    <C>

                   2004   2003
                  -----  -----

Current - State.  $   -  $   -
Deferred benefit      -      -
                  $   -  $   -
                  -----  -----

</TABLE>



The  components  of  deferred  income  taxes  are  as  follows  at  June  30:
<TABLE>
<CAPTION>



<S>                                 <C>        <C>
                                        2004       2003
                                    ---------  ---------
Deferred tax assets
  Net operating loss carryforwards  $ 37,600   $ 37,100
  Other. . . . . . . . . . . . . .       500        500
                                      38,100     37,600
Valuation allowance. . . . . . . .   (38,100)   (37,600)
                                    $      -   $      -
                                    ---------  ---------
</TABLE>


The  Company's  federal  and  state  net  operating loss carryforwards expire in
various years through 2017.  The Company has made numerous equity issuances that
could  result  in  limitations  on  the  annual utilization of the Company's net
operating  loss  carryforwards.  The  Company  has  not performed an analysis to
determine  the  effect  of  such  changes.

The  provision  for  income taxes results in an effective rate that differs from
the federal statutory rate.  Reconciliation between the actual tax provision and
taxes  computed at the statutory rate is as follows for the years ended June 30,
2004:
<TABLE>
<CAPTION>



<S>                      <C>         <C>
                         Tax         Percentage
                         ----------  -----------

Federal Tax . . . . . .  $  35,360         34.0%
State tax . . . . . . .      6,240          6.0%
Penalties . . . . . . .    304,300        292.6%
Reserves. . . . . . . .      5,100          4.9%
Discontinued operations   (551,480)     (530.3%)
Repriced options. . . .     47,940         46.1%
Net operating loss. . .    152,540       1.46.7%
                                 -            0%
                         ----------  -----------
</TABLE>


Reconciliation  between  the  actual  tax  provision  and  taxes computed at the
statutory  rate  is  as  follows  for  the  years  ended  June  30,  2003:





                                      F-30
<TABLE>
<CAPTION>



<S>                      <C>       <C>
                         Tax       Percentage
                         --------  -----------

Federal Tax . . . . . .  $(2,331)      (34.0%)
State tax . . . . . . .     (411)       (6.0%)
Penalties . . . . . . .      688         10.0%
Reserves. . . . . . . .      157          2.4%
Discontinued operations      552          8.0%
Repriced options. . . .       65          0.9%
Net operating loss. . .    1,280         18.7%
                         $     -            0%
                         --------  -----------
</TABLE>



NOTE  10  -  COMMITMENTS  AND  CONTINGENCIES

LEASE  COMMITMENT

The Company leases its operating facilities under a lease agreement that expires
in  March  2007.  In addition, the Company leases other facilities and equipment
under  operating  and  capital  short-term  leases.

Total  rental  expense  was approximately $242 and $306 for the years ended June
30,  2004  and  2003,  respectively.

Future  minimum lease payments under non-cancelable capital and operating leases
with  initial  or  remaining  terms  of  one  year  or  more  are  as  follows:
<TABLE>
<CAPTION>



<S>                                          <C>               <C>
                                             Capital Leases    Operating Leases
                                             ----------------  -----------------
YEAR ENDING JUNE 30,
2005. . . . . . . . . . . . . . . . . . . .  $            21   $             123
2006. . . . . . . . . . . . . . . . . . . .               15                 116
2007. . . . . . . . . . . . . . . . . . . .               11                  46
2008. . . . . . . . . . . . . . . . . . . .               11                   -
2009. . . . . . . . . . . . . . . . . . . .               30                   -
Net Minimum Lease Payments. . . . . . . . .  $            88   $             104
                                             ----------------  -----------------
Less:  Amounts Representing Interest. . . .              (15)
Present Value of Net Minimum Lease Payments               73
                                             ----------------
Less:  Current Portion. . . . . . . . . . .              (10)
Long-Term Portion . . . . . . . . . . . . .  $            63
                                             ----------------
</TABLE>


LEGAL  MATTERS

In  October 1999, the law firms of Weiss & Yourman and Stull, Stull & Brody made
a  public  announcement  that  they  had filed a lawsuit against the Company and
certain  current  and  past  officers  and/or  directors,  alleging violation of
federal securities laws and, in November 1999, the lawsuit, filed in the name of
Nahid  Nazarian Behfarin, on her own behalf and others purported to be similarly
situated,  was served on the Company.  In January 2003, the Company entered into
a  Stipulation  of  Settlement  with  the  plaintiffs.  It  agreed  to  pay  the
plaintiffs  5,000,000 shares of common stock and $200 in cash.  The Parties have
accepted  the settlement.  DRDF has issued the shares, and its insurance carrier
has  paid  the  $200  cash payment.  Pursuant to a hearing in May 2003 the Court
provided  approval  to  the  settlement.

                                      F-31
On August 22, 2002, the Company was sued by its former landlord, Carmel Mountain
#8  Associates,  L.P.  or  past  due  rent  on  its  former  facilities at 15175
Innovation  Drive,  San  Diego,  CA  92127.

DRDF  was  a  party to a lawsuit filed by Symphony Partners, L.P. related to its
acquisition  of  SourceOne  Group, LLC.  As reported on Form 8-K, dated July 22,
2003,  the plaintiffs sought payment of $702.  In June 2003, the Company entered
into a settlement with the plaintiffs for a cash payment of $274, which has been
paid.

DRDF  is  one  of  dozens  of  companies  sued by The Massachusetts Institute of
Technology,  et  al.,  related  to  a  patent held by the plaintiffs that may be
related  to part of the Company's ColorBlind software.  Subsequent to the period
reported  in  this  filing,  in June 2003, the Company entered into a settlement
with  the  plaintiffs  who have agreed to dismiss their claims against DRDF with
prejudice  in exchange for a settlement fee payment of $10, which has been paid.

The  Company  has been sued in Illinois state court along with AIA/Mirriman, its
insurance  brokers  by  the Arena Football League-2 ("AFS").  Damages payable to
AF2, should they win the suit, could exceed $700.  The Company expects to defend
its  position  and  rely  on  representations  of  its  insurance  brokers.

Throughout  fiscal  2003  and  2004,  and through the date of this filing, trade
creditors  have  made  claims  and/or  filed actions alleging the failure of the
Company  to  pay  its  obligations  to  them in a total amount exceeding $3,000.
These  actions  are  in  various  stages  of  litigation, with many resulting in
judgments being entered against the Company.  Several of those who have obtained
judgments have filed judgment liens on the Company's assets.  These claims range
in  value  from less than one thousand dollars to just over one million dollars,
with  the  great  majority  being  less  than  twenty  thousand  dollars.

In  connection  with  the  Company's controlling interest of Quik Pix, Inc., the
Company  is  not  aware  of  any  pending  litigation.

From  time  to  time,  the  Company is involved in litigation relating to claims
arising  out  of  their  operations  in  the  normal  course  of  business.

NOTE  11  -  GAIN  ON  EXTINGUISHMENT  OF  DEBT

During  the  year  ended  June  30,  2004,  the  Company  recognized  a  gain on
extinguishment  of  debt of $1,145.  This gain resulted primarily from the write
off  of  stale accounts payable.  The Company, based upon an opinion provided by
independent  legal  counsel,  has  been  released  as  the  obligator  of  these
liabilities.  Accordingly, management has elected to adjust its accounts payable
and  to  classify  such  adjustments  as  extinguishment  of  debt.

During  the  year  ended  June  30,  2003,  the  Company  recognized  a  gain on
extinguishment  of  debt of $2,367.  This gain resulted primarily from the write
off  of  stale  accounts  payable  as  discussed  below,  as well as a gain on a
settlement  of  a  long-term note payable of $702, which was settled for $274 in
cash  resulting  in  a  gain of $428.  With respect to the write-off of accounts
payable,  the  Company  reviewed its accounts payable and determined that $1,942
was  associated  with  unsecured  creditors.  The Company, based upon an opinion
provided  by  independent  legal  counsel, has been released as the obligator of
these  liabilities.  Accordingly,  management has elected to adjust its accounts
payable  and  to  classify  such  adjustments  as  extinguishment  of  debt.


NOTE  12  -  SUBSEQUENT  EVENTS

From July 1, 2004 to September 30, 2004, the Company issued 50,058,676 shares of
its  common  stock  to  consultants,  for  warrant  exercises, for conversion of
convertible  debt,  and  for  the  reduction  of  debt.

The  Company  also borrowed $245 from an investor to fund the acquisition of M&M
Nursing.

Quik  Pix, Inc., issued 1,000,000 shares of its common stock for settlement of a
debt.
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