================================================================================
                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                   __________
                                  FORM 10-KSB

[X]  ANNUAL  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
     1934
                     FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
                                       OR
[ ]  TRANSITION  REPORT  UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT  OF  1934

                        COMMISSION FILE NUMBER: 1-07149
                                   __________
                               ITIS HOLDINGS INC.
                 (Name of small business issuer in its charter)

               NEVADA                                      74-3069407
   (State or other jurisdiction of                      (I.R.S. Employer
    incorporation or organization)                     Identification no.)


                      10750 HAMMERLY, HOUSTON, TEXAS, 77043
          (Address of principal executive offices including zip code)
                                 (281) 600-6000
                (Issuer's telephone number, including area code)

          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                                      NAME OF EACH EXCHANGE
       TITLE OF EACH CLASS                             ON WHICH REGISTERED
       -------------------                            ---------------------
              None                                            None

          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                    COMMON STOCK, PAR VALUE $0.001 PER SHARE
                                (TITLE OF CLASS)
                                   __________

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B contained in this form, and no disclosure will be contained, to
the best of 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. [X]

Revenues for the fiscal year ended December 31, 2002, were $997,963.

The aggregate market value of the voting common equity held by non-affiliates of
Registrant as of April 15, 2003 was $542,405 (based on the closing price of
$0.26 per share on April 11, 2003 as reported on the over-the-counter Bulletin
Board).

There were 5,189,338 shares of Registrant's Common Stock outstanding as of April
15, 2003.

                       DOCUMENT INCORPORATED BY REFERENCE

         DOCUMENT                                       PART OF FORM 10-KSB
         Proxy Statement for the 2003 Annual                    III
         Meeting of Stockholders

     Transitional Small Business Disclosure Format (Check one): Yes     No  X
                                                                    ---    ---

================================================================================


<PAGE>
                                ITIS HOLDINGS INC
                                   Form 10-KSB
                      For the Year Ended December 31, 2002

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

                                     PART I

1.  Description of Business . . . . . . . . . . . . . . . . . . . . . . .      3
2.  Description of Property . . . . . . . . . . . . . . . . . . . . . . .      6
3.  Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . .      7
4.  Submission of Matters to a Vote of Security Holders . . . . . . . . .      8

                                    PART II

5.  Market for Common Equity and Related Stockholder Matters . . . . . . .     8
6.  Management's Discussion and Analysis or Plan of Operation . . . . . .      9
7.  Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .    17
8.  Changes in and Disagreements with Accountants on Accounting and Financial
    Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .    47


                                    PART III

Items 9-12 Incorporated by reference from the Company's Proxy Statement for the
2003 Annual Meeting of StockholderS.

13. Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . .    48
14. Controls and Procedures. . . . . . . . . . . . . . . . . . . . . . . .    52


                                        2
<PAGE>
PART I

This Report contains certain forward-looking statements of the intentions,
hopes, beliefs, expectations, strategies, and predictions of ITIS or its
management with respect to future activities or other future events or
conditions 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.
These statements are usually identified by the use of words such as "believes,"
"will," "anticipates," "estimates," "expects," "projects," "plans," "intends,"
"should," "could," or similar expressions. Investors are cautioned that all
forward-looking statements involve risks and uncertainty, including, without
limitation, variations in quarterly results, volatility of ITIS's stock price,
development by competitors of new or competitive products or services, the entry
into the market by new competitors, the sufficiency of ITIS's working capital
and the ability of ITIS to retain management, to implement its business
strategy, to assimilate and integrate any acquisitions, to retain customers or
attract customers from other businesses and to successfully defend itself in
ongoing and future litigation. Although ITIS believes that the assumptions
underlying the forward-looking statements contained in this Report are
reasonable, any of the assumptions could be inaccurate, and, therefore, there
can be no assurance that the forward-looking statements included in this Report
will prove to be accurate. In light of the significant uncertainties inherent in
the forward-looking statements included in this Report, the inclusion of such
information should not be regarded as a representation by ITIS or any other
person that the objectives and plans of ITIS will be achieved. Except for its
ongoing obligation to disclose material information as required by the federal
securities laws, ITIS undertakes no obligation to release publicly any revisions
to any forward-looking statements to reflect events or circumstances after the
date of this Report or to reflect the occurrence of unanticipated events.
Accordingly, the reader should not rely on forward-looking statements, because
they are subject to known and unknown risks, uncertainties, and other factors
that may cause our actual results to differ materially from those contemplated
by the forward-looking statements.

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

ITIS Holdings Inc. owns computer-related subsidiaries that provide automated
litigation support and document management, that operate pharmacies, and that
provide technical support for operations.

The Company provides automated litigation support through its subsidiary, ITIS,
Inc., a Texas corporation, which conducts business as Litidex. Litidex currently
focuses its attention on litigation support services related to lawsuits
involving stock manipulation of publicly held companies. PharmHouse Inc.
represents a new business segment and newly formed subsidiary of ITIS.
PharmHouse concentrates its efforts in the business of pharmacy operations.
PharmHouse, originally formed as a subsidiary of Litidex, became a wholly owned
subsidiary of ITIS in May 2002. In September 2002 PharmHouse began operation of
two pharmacies that focus primarily on electronic prescription services. Another
new subsidiary, OnPoint Solutions Inc., provides technical support for
PharmHouse and Litidex, in the development and operation of the pharmacies of
PharmHouse, and in software and hardware services for both PharmHouse and
Litidex. OnPoint also provides the RightScript(TM) software used by PharmHouse.

Prior to October 31, 2001, ITIS also provided training and support for
compliance with federal regulations through its wholly owned subsidiary, Venco
Compliance, Inc., and marketed a CD-Rom product and Website that assisted in
medical billing through Compass Data Systems, Inc. On October 31, 2001, the
stock of Venco was sold and transferred by ITIS to Venco's former shareholders
and the operations and management of Compass Data Systems were turned over to
then current Compass employees.

Until August 15, 2002, ITIS provided electronic publishing services and database
content through Internet sites with subscription access, licenses, and
transaction fees for databases through its subsidiaries, GoverNet Affairs, Inc.,
National Law Library, Inc. and Brief Reporter, LLC. The content of the databases
consisted of pending legislation, statutory law, rules and case law at the
federal and state levels. As further disclosed in note 7 to the consolidated
financial statements, management of ITIS transferred the customers of the
Internet Services subsidiary GoverNet Affairs, Inc. to another provider in June
2002. While ITIS legally sold the Internet Services operations of National Law
Library, Inc. and Brief Reporter, LLC, in August 2002, the sale has been
recorded using the deposit method of accounting because, in management's
opinion, the criteria required to permit revenue recognition in relationship to
this sale have not been met at the present time. ITIS no longer maintains any
operations in the Internet Services segment.

ITIS's common stock is traded on the over-the-counter Bulletin Board under the
symbol "ITHH.OB."


                                        3
<PAGE>
CORPORATE HISTORY

ITIS was originally incorporated as Allied Silver-Lead Company in the State of
Idaho in 1967 and, until 1992, operated as an exploratory mining company. In
January 1996, ITIS was reincorporated in Delaware as a result of a merger and,
among other shareholder actions taken at that time, the corporate name was
changed to Planet Resources, Inc. Between 1992 and March of 1999, ITIS had no
operations; however, the Company maintained certain mining properties. Effective
March 27, 2001, the mineral rights and certain cash were indirectly distributed
to the original stockholders of ITIS pursuant to an Amended and Restated
Agreement and Plan of Distribution dated March 13, 2001, whereby Planet
Resources was spun-off from ITIS and acquired the mining and other interests.
ITIS no longer maintains any interest in these properties.

National Law Library, Inc., a Texas corporation, was formed in November 1998 for
the purpose of developing and marketing an Internet destination to be used for
legal research. Following its formation, National Law Library's then sole
stockholder, who is the current President, Chief Executive Officer and Chairman
of ITIS, contributed to National Law Library all of his rights and interests in
the Litidex search, retrieval and database software, and database content valued
at $934,000 and $1,096,000, respectively, in exchange for 15,152,500 shares of
common stock of National Law Library. Commercial operations began in January
1999. In March 1999, National Law Library and ITIS (then known as Planet
Resources) entered into a Plan and Agreement of Distribution in which (a) ITIS
acquired all of the outstanding shares of National Law Library, (b) a majority
of the board of directors was replaced, and (c) Planet Resources changed its
name to Internet Law Library, Inc. After giving effect to these transactions,
former National Law Library stockholders owned 18 million shares of unregistered
common stock of ITIS and the original stockholders of ITIS owned 2 million
shares of ITIS common stock. At the annual meeting in September 2001,
stockholders approved a name change from Internet Law Library to "ITIS Inc." to
better describe the products of ITIS as being information technology and
information services.

Under a Plan and Agreement of Merger dated August 26, 2002, as approved by
resolution adopted by the Board of Directors of ITIS Inc. on that date and by
written consent of a majority of the voting interests of ITIS Inc. on September
18, 2002, ITIS Inc., a Delaware corporation, merged into its wholly owned
subsidiary, ITIS Holdings Inc., a Nevada corporation, effective September 18,
2002. ITIS Holdings Inc. became the surviving corporation after the effective
date of the merger. Under the terms of the Agreement, each issued share of the
common stock of the terminating corporation, ITIS Inc., was converted into
one-tenth (0.1) share of the surviving corporation, ITIS Holdings Inc. Each
issued share of the preferred stock of ITIS Inc. was converted to one share of
preferred stock of ITIS Holdings Inc. ITIS Holdings Inc. has authority to issue
200,000,000 shares of stock, of which 150,000,000 are common stock, $.001 par
value per share, and 50,000,000 are preferred stock, $.001 par value per share.
Unless otherwise noted, all prior period share amounts reflected in the
consolidated financial statements and notes thereto have been adjusted to
account for the one-for-ten reverse split in accordance with the Plan.

PRODUCTS AND SERVICES

ITIS is engaged in providing automated litigation support services through its
subsidiary Litidex, in pharmacy operations through its subsidiary PharmHouse,
and in technical support through its subsidiary OnPoint Solutions.

Litidex and its predecessor entities have provided automated litigation support
and other document handling services for nearly twenty years. During 1999 and
2000, Litidex concentrated its efforts in assisting National Law Library in its
content and Website development. In 2001 Litidex was hired by attorneys for
automated litigation support work related to complex securities litigation.
Using the Litidex search engine, millions of documents are processed to create
databases that are instantly searchable for data retrieval.

The pharmacies of PharmHouse do not promote any non-pharmaceutical sales and
focus primarily on the distribution of medications from prescriptions generated
by our RightScript (TM) licensed technology. The electronic prescription
technology platform of PharmHouse/RightScript (TM) is developed and maintained
by OnPoint Solutions, a sister company in the ITIS family of companies.

In September 2002 PharmHouse began operation of two pharmacies in Houston,
Texas, one of which ceased operations in December 2002 due to facility
incompatibility with the strategic focus of the division. A third pharmacy began
operation in January 2003. PharmHouse has targeted additional pharmacies to be
opened in 2003, two of which are anticipated to be captive pharmacies utilizing
the RightScript (TM) technology platform. In addition, management is in final
negotiations to sell the rights to market and operate the PharmHouse pharmacy
model in Galveston, Texas, and certain other markets in the United States.


                                        4
<PAGE>
PharmHouse is focusing on duplicating and improving its RightScript (TM)
technology with a primary objective of keeping the product easy to use while
adding additional features which the physician or institution desires.

MAJOR SUPPLIERS

PharmHouse purchases the majority of its pharmaceutical products, supplies, and
equipment from McKesson HBOC and IPC, Inc., wholesalers of pharmaceutical
products. In addition, PharmHouse leases equipment used in its pharmacies from
McKesson. Relationships with both wholesalers are believed to be good. In the
event that either wholesaler ceased to supply pharmaceutical products to
PharmHouse for any reason, management believes that alternative sources of
wholesale supply would be available on similar terms. Through our relationship
with United Drug Company, which provides for third-party negotiations, we
currently have more than 900 insurance companies approved for reimbursement
under their respective plans.

CUSTOMERS

While the major clients of Litidex have been and continue to be law firms, many
businesses such as Boeing, Raytheon, Lone Star Steel, and even the United States
Government have at one time hired Litidex for litigation support whereby
millions of documents are processed to create searchable databases. In 2001 and
2002, the law firm of Christian Smith and Jewell was the major client of
Litidex(R).

PharmHouse focuses on electronic prescription services, captive pharmacies, and
institutional sales within the pharmaceutical health care delivery system.

     -    The electronic prescription services focus on medications for pain
          management, psychiatry, oncology, and gerontology.

     -    The captive pharmacy segment includes pharmacies located within
          professional office buildings, medical complexes, and small
          urgent-care facilities.

     -    The institutional segment focuses on delivery to residential treatment
          facilities, group homes, and senior care facilities.

COMPETITION

Significant competitors to the automated litigation support services of Litidex
are law firms that maintain their own databases and retrieval systems and third
party vendors whose rates are generally higher. Management believes that the
Litidex(R) search engine is a superior product to in-house programs used by
attorneys as well as to the programs of other competitors. Additionally, our
experience in the business makes it possible for our prices to be more
affordable to most attorneys and law firms than in-house costs.

The highly fragmented and extremely competitive industry of pharmaceutical
product sales includes specialty pharmacies, full-service pharmacies, discount
pharmacies, Web-based Internet pharmacy delivery systems, clinical pharmacies,
and hospital-based pharmacies. Companies such as AllScripts (TM), Pre-Scribe
(TM), e-Scripts (TM), APS (TM), and Pro-Scribe(TM) provide wireless,
Internet-based electronic prescription solutions to the medical community. These
competitors are seen as formidable in that they have superior experience in the
pharmacy management and technology industry. However, while they provide
low-end, cost-effective solutions for prescription writing, they do not provide
a comprehensive solution to the market served by PharmHouse. Their focus is to
provide electronic prescription software tied to major pharmacy retail sales
outlets such as Eckerds, Walgreens, CVS and Rite Aid. While some retail outlets
are part of major retail drug store or grocery store chains with significantly
greater financial resources and market presence than PharmHouse, this is not the
case for many other outlets. Since PharmHouse pharmacies primarily accept
prescriptions generated by the RightScript (TM) system, they typically do not
directly compete with other pharmaceutical outlets. However, PharmHouse competes
with other outlets indirectly by competing for agreements with doctors who write
prescriptions for pharmaceutical products handled by PharmHouse/RightScript (TM)
pharmacies.

SALES AND MARKETING

The market for the automated litigation support services provided by Litidex(R)
continues to grow as more class action suits and other big document cases are
filed. In particular, there is increased demand for our services in regard to
stock fraud cases. We have not needed to do any outside marketing in this area.

The marketing and business strategy of PharmHouse permits it to be one of the
first companies engaged in providing server-based communication technology to
the electronic pharmacy industry focused exclusively on specialized medicine,
captive pharmacies, and institutions. Management believes that the technology of
PharmHouse/RightScript(TM) is on the


                                        5
<PAGE>
leading edge of wireless communications and therefore is positioned to be a
leader in the arena of wireless communication within the medical industry.

Marketing of PharmHouse began with an event attended by more than 30 physicians
and providers in August 2002. Subsequently over 75% of these agreed to become
part of the PharmHouse/RightScript(TM) beta physician/provider system, and many
have had software installed for testing and use. In addition, two institutions
have executed agreements for additional captive pharmacy beta test users in
2003. PharmHouse contracts with physicians for consulting and sales support and
employs full time marketing representatives to promote our products.

INTELLECTUAL PROPERTY RIGHTS

We regard our search engines, software technologies, databases, and database
management software as proprietary. We depend on trade secrets for protection of
our software. We have entered into confidentiality agreements with our
management and key employees covering this software and limit access to this
software and other proprietary information.

PharmHouse owns a paid-up perpetual license of a pharmacy operating system. This
operating system, originally created by MedEx Systems, Inc., is the subject of a
pending patent application. No assurance can be given that such application will
be allowed in whole or in part or as to the scope of any patent that may be
issued in connection with such application. However, in the event that MedEx
ceases to pursue this patent application, PharmHouse is authorized to do so.

PharmHouse has acquired the rights to three patent applications that
specifically address the unique server-based methodology and technology
solutions developed by subsidiary OnPoint Solutions, and management believes it
will be successful in its attempt to achieve patents on these methods and
technology.

GOVERNMENT APPROVALS

Each PharmHouse pharmacy must be licensed by the state in which it is located.
While licensing requirements vary from state to state, meeting these
requirements has not been an impediment in the past and is not expected to be an
impediment to opening new locations in the future. Each PharmHouse pharmacy must
also be licensed by the federal Drug Enforcement Agency and, in addition to the
general pharmacy license, some states require a separate controlled substance
license in order to dispense certain drugs and controlled substances.

GOVERNMENTAL REGULATIONS

Many of the pharmaceutical products handled by PharmHouse pharmacies are
controlled substances, requiring PharmHouse to maintain records and report to
state agencies the names of persons to whom these drugs are dispensed and the
corresponding amounts dispensed. Pharmacy Laws and Regulations strictly govern
these requirements. PharmHouse has retained a law firm that specializes in
healthcare-related law to provide assistance as needed in ensuring compliance
with these and other requirements.

PharmHouse closely monitors all issuances from state and federal agencies to
ensure compliance with HIPPA (the Health Insurance Portability Accountability
Act), Drug Enforcement Agency regulations, Stark (I and II), as well as other
healthcare related regulations. Because the electronic prescription industry is
fairly new, many related regulations are still in the process of finalization.
As one of the first companies engaged in providing server-based technology to
the electronic pharmacy industry, PharmHouse believes it may be able to play a
significant role in contributing to the development of such regulations.

EMPLOYEEs

ITIS and its subsidiaries had 28 full-time employees, 2 part-time employees and
1 contract employee as of April 15, 2003. Our employees are not represented by
any collective bargaining organization, we have never experienced a work
stoppage, and we believe that our relationships with our employees are good.

ITEM 2. DESCRIPTION OF PROPERTY

FACILITIES

Our primary executive offices are at 10750 Hammerly, Houston, Texas, where our
monthly rent is $7,298. Our litigation support staff offices at 2328 Fannin,
Houston, Texas, where our monthly rent is $689. In addition, our subsidiary
PharmHouse maintains pharmacy locations at 2033 Telephone Rd., Houston, Texas,
and 4114 Avenue H, Rosenburg, Texas, where our monthly rents are $1,563 and
$595, respectively. Management believes that our current facilities are


                                        6
<PAGE>
adequate to meet our needs through the next 12 months and that, if required,
suitable additional space will be available on commercially reasonable terms to
accommodate expansion of our operations.

OTHER PROPERTY

We formerly owned subsurface mineral rights on approximately 190 acres located
in the City of Mullan, Idaho. We have no competitive economic position in the
mining industry as no mineral production has ever been realized. Further, we
have not received revenue from our mineral rights for the last several years. At
December 31, 1999, we recorded $10,000 as other current assets related to these
mineral rights. At December 31, 2000, we were advised that these mining assets
had no realizable value and accordingly we wrote off the $10,000 related to this
asset. Effective March 27, 2001, the foregoing mineral rights were indirectly
distributed to the original stockholders of ITIS pursuant to an Amended and
Restated Agreement and Plan of Distribution dated March 13, 2001, whereby Planet
Resources, one of ITIS's wholly owned subsidiaries, was spun-off from ITIS and
acquired the mining and related interests. ITIS no longer maintains any interest
in these properties.

ITEM 3. LEGAL PROCEEDINGS

On January 26, 2001, in order to protect ITIS and its stockholders, ITIS filed a
lawsuit in United States District Court for the Southern District of Texas,
Houston Division, against Southridge Capital Management and several other
defendants, including Cootes Drive LLC, an alleged "straw man," for damages
resulting from alleged stock manipulation, federal securities law violations,
civil RICO, fraud, violations of Texas securities laws and other Texas statutes,
and conspiracy. The case also alleges misrepresentations by co-conspirators in
connection with certain funding transactions by the defendants with ITIS. All
defendants filed a joint motion to transfer this case to New York to be
consolidated with the lawsuit filed against us, described below. The United
States District Judge granted this motion and the case has been transferred to
the Southern District of New York. The defendants filed motions to dismiss the
case, and on July 17, 2002, the Judge issued an opinion refusing dismissal. The
case is ongoing, and discovery is underway. We intend to prosecute the case
vigorously. Our litigation counsel has advised us that the case is not
sufficiently advanced to evaluate the outcome, but that resolution of the suit
is anticipated in accordance with the Judge's July 17, 2002 ruling, which
states, "the court is fully prepared to assist the parties in moving this case
forward to trial without undue delay."

On February 5, 2001, Cootes Drive LLC filed a suit against ITIS in the Southern
District of New York alleging breach of one of the financing agreements with us
for our failure to honor a conversion of its preferred shares to common stock.
The suit seeks monetary damages of $5,000 per day and seeks to compel ITIS to
issue shares of common stock to Cootes Drive LLC. ITIS filed an answer to this
lawsuit. Cootes Drive LLC amended its complaint in order to add allegations that
ITIS is in default on a $500,000 promissory note in favor of Cootes Drive LLC
(the alleged default occurring after the filing of ITIS's suit against Cootes
Drive LLC and others); that ITIS has not honored a notice of redemption of
preferred shares held by Cootes Drive LLC in the amount of $2,214,012 (allegedly
occurring after the filing of ITIS's suit against Southridge Capital Management,
Cootes Drive LLC, and others); and that ITIS defrauded Cootes Drive by failing
to disclose material information with respect to the background of an officer
and a director of ITIS. ITIS's answer was timely filed on July 20, 2001. The
preferred shares and the associated funding transactions at issue are the
subject matter of ITIS's suit against Southridge Capital Management and others.
ITIS intends to defend this case vigorously. This case has been consolidated
with the ITIS case (above) and the parties have been realigned so that ITIS is
the plaintiff and Cootes Drive is the defendant. Litigation counsel has advised
us that the case is not sufficiently advanced to evaluate the outcome, but that
resolution of the suit is anticipated in accordance with the Judge's July 17,
2002 ruling which states, "the court is fully prepared to assist the parties in
moving this case forward to trial without undue delay." John M. O'Quinn, our
Texas based litigation counsel, represents ITIS and our directors, if necessary,
in all of these lawsuits on a contingency fee basis.

On June 4, 2001, Cootes Drive LLC filed a suit in Delaware against certain
directors of ITIS on behalf of itself as a holder of preferred stock and
allegedly derivatively on behalf of ITIS, alleging that the directors breached
their fiduciary duty to the stockholders by approving repayment in common stock
of loans made to ITIS by its directors. This suit was filed in the Court of
Chancery of Delaware in and for New Castle County. The suit was dismissed by
Order of the Court entered February 15, 2002.

ITIS is also a party to other lawsuits related to matters normally incidental to
the Company's business. No other case, or group of related cases presenting
substantially similar issues of law or fact, exceeds 10% of the Company's
current assets or is expected to have a material effect on the manner in which
the Company conducts its business.


                                        7
<PAGE>
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

There were no matters submitted to ITIS's security holders during the fourth
quarter of the fiscal year ended December 31, 2002.

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

ITIS's common stock trades on the over-the-counter Bulletin Board under the
symbol "ITHH.OB." The following table shows the high and low of closing bid
prices for the common stock as reported by the over-the-counter Bulletin Board.
The closing bid price quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission and may not necessarily represent actual
transactions. Quotations have been adjusted to account for the one-for-ten
reverse split that occurred in September 2002.

                                                    HIGH    LOW

     FISCAL YEAR ENDED DECEMBER 31, 2001
     First quarter                                  $ 6.30  $ 1.30
     Second quarter                                 $ 3.10  $ 1.40
     Third quarter                                  $ 2.90  $ 1.50
     Fourth quarter                                 $ 1.90  $ 1.00

     FISCAL YEAR ENDED DECEMBER 31, 2002
     First quarter                                  $ 1.10  $ 0.80
     Second quarter                                 $ 1.10  $ 0.50
     Third quarter                                  $ 1.00  $ 0.40
     Fourth quarter                                 $ 0.41  $ 0.10


Holders

At December 31, 2002, there were 1,547 holders of record of ITIS's common stock
and 5,189,338 shares outstanding.

Dividends

ITIS has never declared any cash dividends on its common stock. ITIS does not
anticipate paying any cash dividends on its common stock in the foreseeable
future and intends to retain its earnings, if any, to finance the expansion of
its business and for general corporate purposes. Any payment of future dividends
will be at the discretion of the board of directors and will depend upon, among
other things, ITIS's earnings, financial condition, capital requirements, level
of indebtedness, contractual restrictions, and other factors that ITIS's board
of directors deems relevant.


                                        8
<PAGE>
<TABLE>
<CAPTION>
Securities Authorized for Issuance under Equity Compensation Plans

                                                         EQUITY COMPENSATION PLAN INFORMATION
                                  ---------------------------------------------------------------------------

                                  NUMBER OF SECURITIES TO BE  WEIGHTED AVERAGE EXERCISE
                                   ISSUED UPON EXERCISE OF        EXERCISE PRICE OF      NUMBER OF SECURITIES
                                     OUTSTANDING OPTIONS,       OUTSTANDING OPTIONS,     REMAINING AVAILABLE
PLAN CATEGORY                        WARRANTS AND RIGHTS         WARRANTS AND RIGHTS     FOR FUTURE ISSUANCE
--------------------------------  --------------------------  -------------------------  --------------------
<S>                               <C>                         <C>                        <C>
Equity compensation plans
  approved by security holders                             -                                          865,000

Equity compensation plans not
  approved by security holders                     5,217,688                       3.01             5,217,688
                                  --------------------------  -------------------------  --------------------

Total                                              5,217,688                                        6,082,688
                                  ==========================  =========================  ====================
</TABLE>


Sales of Unregistered Securities

During the three months ended December 31, 2002, there were no sales of
unregistered securities.


ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

The following discussion should be read in conjunction with the Consolidated
Financial Statements of ITIS, which are included elsewhere in this Form 10-KSB.
Included in this discussion are certain forward-looking statements regarding
ITIS's expectations for its business and its capital resources. The reader
should not rely on forward-looking statements because they are subject to known
and unknown risks, uncertainties and other factors that may cause our actual
results to differ materially from those contemplated by the forward-looking
statements. ITIS and its subsidiaries may experience high volatility in
operating results and cash flows from quarter to quarter and from year to year.

Management realizes that anticipated revenues to be generated by the automated
litigation support services of Litidex and the PharmHouse stores will be
critical in providing some of the funds necessary to continue company operations
and to remain in business. Our expense levels are based, in part, on our
expectations as to future revenues. To the extent that revenues are below
expectations, we may be unable or unwilling to reduce expenses proportionately,
and operating results and cash flows are likely to be adversely affected.

The reader of the following discussion of the results of our operations and
liquidity and capital resources should be aware of critical accounting policies
applied by management as follows:

     -    Accounts receivable, net of doubtful accounts, at December 31, 2002
          and 2001 amount to $1,523,681 and $2,217,328 respectively. Of the
          accounts receivable at December 31, 2002, 95%, or $1,442,801,
          represents receivables related to the automated litigation support
          services of subsidiary Litidex. Management has elected not to provide
          an allowance for doubtful accounts for these receivables due to the
          nature of the agreements, which, in management's opinion, provides
          assurance for the ultimate collection of the fees due. Management has
          classified a portion of the receivable as long term based upon
          expected receipts within the next twelve months and has discounted the
          value of those receivables using a 12% discount rate.

     -    ITIS subsidiary Litidex contracts with law firms to provide litigation
          support services. These generally include determining if the law
          firm's potential client has a viable cause of action, providing the
          law firm with a database containing securities litigation data, and
          developing a specific case-related database. Litidex does not have any
          future delivery requirements with respect to the first two elements
          and the revenue associated with those elements is recognized when
          evidence exists that indicates that an arrangement with the attorney
          exists. This evidence


                                        9
<PAGE>
          usually includes receipt of some form of non-refundable compensation.
          The third element of the arrangement requires development of a
          case-specific database of information at a future date. Revenues
          associated with this third element are deferred and recognized as
          actual document production occurs. This method of revenue recognition
          is consistent with the method adopted by the Company in the second
          quarter of 2001 when Litidex began providing this type of litigation
          service.

          An average of 22% of litigation support revenues are deferred as a
          substantial portion of the work required has been performed to
          complete the first two elements of the arrangement. Management has
          calculated the deferral amount based upon the future estimated work to
          complete the services under the contract, which includes the
          development of a case-specific litigation database in an electronic
          format with the client's information as it becomes available.
          Management recognizes revenues from these services as they are
          performed. In determining the amount of income to defer, management
          consulted with the experienced personnel of Litidex and others
          regarding the number of documents likely to be processed over the
          course of the litigation support project and an appropriate retail
          price to assign to these services. A consensus was reached that
          100,000 pages of data was an appropriate estimate to use, and
          management accordingly applied a fair market value per page processing
          charge to 100,000 pages of production to determine the deferral
          amount. While it is virtually impossible to predict the length of time
          a case may be in litigation, it is reasonable to arrive at a projected
          number of documents to be processed as part of a litigation support
          project using the Company's extensive experience in providing these
          services.

          As disclosed in our December 31, 2001 Form 10-K and subsequent SEC
          filings, management contacted the SEC on a voluntary basis and had
          numerous discussions with the SEC regarding revenue recognition with
          respect to the litigation services of subsidiary Litidex. As a result
          of those discussions and further research into this matter, management
          has concluded that the method of accounting used by the Company to
          record its litigation services revenues is in accordance with
          generally accepted accounting principles. However, on August 30, 2002,
          the Staff of the Securities & Exchange Commission requested, on a
          voluntary basis, additional information regarding the Company's
          position. The Company fully complied with this request on September
          17, 2002.

     -    On July 29, 2002 ITIS entered into an Asset Purchase Agreement with
          American Legal Data, LLC, a Delaware limited liability company
          (Buyer). Under the terms of the Purchase Agreement, ITIS sold to Buyer
          all right, title and interest in one complete copy of data consisting
          of an electronic form of federal and state constitutions, statutes,
          regulations, case law, rules and legal briefs, together with
          additions, derivations and updates, as it existed on July 29, 2002. In
          consideration for these assets, Buyer agreed to pay to ITIS $2
          million, of which $25,000 was paid in 2001 and $66,000 was paid at or
          prior to closing on July 29, 2002. The balance of the consideration
          ($1,909,000) is payable in minimum monthly installments of $16,000 for
          120 months beginning August 16, 2002. Unpaid principal accrues
          interest at the rate of 8% per year, and in the 121st month following
          the closing date, Buyer will make a lump sum payment equal to the
          outstanding principal and any accumulated interest. On February 24,
          2003, ITIS agreed to move seven monthly payments of $16,000 ($112,000)
          to the lump sum payment due at the end of the note. At December 31,
          2002, the principal balance owed by American Legal Data was
          $1,892,481. During the year ended December 31, 2002, $16,519 and
          $15,481 were collected in principal and interest, respectively,
          related to this note.

          Based on the guidelines of SEC Staff Accounting Bulletin No. 101,
          Revenue Recognition in Financial Statements, it is the opinion of
          management that the installment method of accounting is appropriate
          for this sale, as uncertainty exists as to the ultimate collectibility
          of the sale price. Accordingly, management has provided for deferred
          gross profit in an amount equal to the outstanding balance of the note
          receivable at December 31, 2002, or $1,892,481. Principal and interest
          payments on the note receivable will be recorded as income, and a
          reduction for the principal amount will be recorded to the note
          receivable and deferred gross profit, as future payments are received.

     -    On August 27, 2002, ITIS subsidiaries National Law Library, Brief
          Reporter and Litidex completed the sale of their data and Internet
          domains, as well as the trademark for "ITISLAW," the pending
          application rights for National Law Library, and the operations of
          Brief Reporter in Charlottesville, Virginia, to JuriSearch Holdings,
          LLC. The Asset Purchase Agreement includes a Security Agreement that
          grants to ITIS a security interest in all intellectual property,
          customers, equipment, machinery, furniture and fixtures, supplies and
          assets being purchased. Payments for the assets will be made monthly
          over the next twenty-five years based on a percentage of subscriber
          income, with guaranteed monthly minimums totaling in aggregate
          $2,423,750 over the first five years.


                                       10
<PAGE>
          At December 31, 2002, the outstanding balance of guaranteed payments
          amounted to $2,269,995, as payments totaling $153,755 were received in
          the year ended December 31, 2002.

          Based on the guidelines of SEC Staff Accounting Bulletin No. 101,
          Revenue Recognition in Financial Statements, it is the opinion of
          management that the criteria required to permit revenue recognition in
          relationship to this sale have not been met at the present time.
          Specifically, full delivery of the database assets has not yet
          occurred (buyer has the right of access to the ITIS server for the
          purpose of copying data from that Website; in the interim, National
          Law Library is maintaining the site at buyer's expense), and the
          seller's price to the buyer is not fixed or readily determinable at
          the date of this filing (inadequate information is currently available
          to reasonably project future payments to be made based on a percentage
          of subscriber income). Accordingly, utilizing the deposit method of
          accounting, management has reclassified the database assets from
          "fixed assets and intangibles" to "assets held for sale" on the
          December 31, 2002 balance sheet, and has accounted for payments
          received on the contract through December 31, 2002, as "deposit on
          sales contract". When, in management's opinion, the criteria has been
          met to permit revenue recognition and the recording of cost in
          relationship to this sale, the assets held for sale and the deposit on
          sales contract will be reclassified to the statement of operations and
          a gain or loss will be recorded on the sale. Management has recorded
          an impairment charge to assets held for sale in the amount of
          $6,529,053 based on a valuation study prepared by an independent
          appraiser as of December 31, 2002 (see note 6). Losses on sale of
          assets for the year ended December 31, 2002 would reflect an increase
          of $2,276,250 had management not recorded this sale using the deposit
          method of accounting, and had instead recorded the sale price at the
          undiscounted guaranteed minimum payment total of $2,423,750 less
          $4,700,000 in cost basis of the assets sold. This would result in a
          net loss for the year ended December 31, 2002 in the amount of
          $13,555,386.

     -    SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
          Assets," addresses financial accounting and reporting for the
          impairment of long-lived assets to be disposed of by sale. Assets
          classified as held for sale are to be reported at the lower of their
          carrying amount or fair value less cost to sell, and, if at the date
          of commitment to the plan to sell the asset, the carrying amount of
          the assets to be sold exceeds the fair value of those assets less the
          cost to sell, an impairment loss should be recognized. Management
          hired an independent appraiser to prepare valuation estimates of
          future net cash flows projected over the twenty-five year life of the
          JuriSearch sales contract discussed above, and, based on these
          estimates, management has recorded an impairment charge in the year
          ended December 31, 2002 in the amount of $6,529,053. Because this
          impairment is now judged to have existed at the time of the sale,
          management intends to restate its quarterly report on form 10-Q for
          the quarter ended September 30, 2002 to include this charge. In
          determining the impairment charge, an assumed 37% income tax rate and
          30% discount rate were applied to projected future cash flows from the
          sales contract to determine fair value of the assets held for sale.
          While use of these discounts is in accordance with SFAS No. 144, the
          Financial Accounting Standards Board acknowledges "an entity's best
          estimate of the present value of cash flows will not necessarily equal
          the fair value of those uncertain cash flows." It is management's
          opinion that the value of the assets held for sale will ultimately
          exceed the $4,700,000 calculated fair value recorded in our financial
          statements. Management's estimate of the fair value of these assets
          less cost to sell will be re-evaluated, if necessary, in subsequent
          periods to determine if it has changed, until, in management's
          opinion, the criteria has been met to permit revenue recognition and
          the recording of cost in relationship to the sale. Subsequent
          decreases in the fair value less cost to sell the assets, if any, will
          be reported as adjustments to the carrying amount of the assets.

Certain assets and liabilities of GoverNet Affairs and Brief Reporter as
originally reflected on the December 31, 2001 balance sheet have been
reclassified as follows:

<TABLE>
<CAPTION>
                                                           GoverNet    Brief
                                                            Affairs   Reporter     Total
                                                           ---------  ---------  ----------
<S>                                                        <C>        <C>        <C>
          Current assets of entity to be disposed of       $  93,318  $   9,972  $  103,291
          Net fixed assets and intangibles of
              entity to be disposed of                     $ 732,161  $ 573,339  $1,305,501
          Current liabilities of entity to be disposed of  $ 206,947  $       -  $  206,947
</TABLE>


                                       11
<PAGE>
The following is management's discussion and analysis of certain significant
factors that have affected ITIS's financial condition and results of operations
during the years ended December 31, 2002 and 2001.

RESULTS OF OPERATIONS

REVENUES. Revenue decreased by $1,693,892 from $2,691,855 for the year ended
December 31, 2001 to $997,963 for the year ended December 31, 2002.

Revenues from the automated litigation support services of subsidiary Litidex(R)
decreased by $1,884,051 from $2,691,855 for the year ended December 31, 2001 to
$807,804 for the year ended December 31, 2002. While four contracts for
litigation support services were recorded during the year ended December 31,
2001, only one was recorded in the year ended December 31, 2002. While
additional contracts to provide these services are pending and we have begun due
diligence services in regard to these cases, revenues and cash flow from
automated litigation support services may not be sustained if no additional
contracts are obtained.

Revenues generated by our database management segment during the year ended
December 31, 2002 amounted to $170,400. These revenues include payments received
totaling $82,519 related to the sale of a copy of the National Law Library data
(see note 7). The balance of the revenues, $87,881, represents fees for database
management services.

Revenues of new subsidiary PharmHouse, which began operations in September 2002,
amounted to $19,759 for the year ended December 31, 2002.

Revenues from discontinued operations amounted to $797,633 for 2002 and
$1,856,531 for 2001. On the consolidated statement of operations and
comprehensive loss for 2002 and 2001 the sales and expenses have been netted
together and reflected as a loss from discontinued operations in the amount of
$340,198 for 2002 and $2,335,021 for 2001.

SALES AND MARKETING EXPENSE. Sales and marketing expense increased by $29,964
from $100,588 for the year ended December 31, 2001, to $130,552 for the year
ended December 31, 2002. A decrease in sales and marketing expense resulting
from decreased commission expense of subsidiary Litidex(R) in the amount of
$50,000 was primarily offset by contract sales and marketing efforts related to
the new PharmHouse stores in the amount of $79,964.

COST OF SALES. Cost of sales in the amount of $15,952 for the year ended
December 31, 2002 reflects the cost of pharmaceutical products sold by
subsidiary PharmHouse.

GENERAL AND ADMINISTRATIVE Expense. General and administrative expense increased
by $380,745 from $2,525,525 for the year ended December 31, 2001 to $2,906,270
for the year ended December 31, 2002 as a result of the following.

     -    Payroll and related costs increased by $161,046 from $1,079,248 for
          the year ended December 31, 2001 to $1,240,294 for the year ended
          December 31, 2002. New payroll costs related to PharmHouse amounted to
          $159,114 for the year ended December 31, 2002. Employee health
          insurance costs increased by $30,350 from $74,030 for the year ended
          December 31, 2001, to $104,380 for the year ended December 31, 2002,
          and payroll tax expense increased by $19,121 from $80,016 for the year
          ended December 31, 2001 to $99,137 for the year ended December 31,
          2002. These increases were offset by payroll reductions at the
          corporate level in the amount of $47,539 during the year ended
          December 31, 2002.
     -    Non-cash expense related to stock and option awards for the year ended
          December 31, 2002 amounted to $665,877, representing an increase of
          $206,310 from the $459,567 reported for the year ended December 31,
          2001.
     -    Administrative expense reductions were realized for the year ended
          December 31, 2002 in professional fees, contract services, and the
          expense of outside consulting, which in aggregate decreased by $28,015
          from $586,686 for the year ended December 31, 2001, to $558,671 for
          the year ended December 31, 2002.
     -    Rent, utilities, and related expenses increased by $22,054 from
          $165,977 for the year ended December 31, 2001, to $188,031 for the
          year ended December 31, 2002. Reductions in expense in the amount
          $30,137 were due to a corporate move to smaller office space in June
          2002. An increase in the amount of $52,191 during 2002 results from
          rent expense relating to the two new PharmHouse locations.
     -    Tax expense unrelated to income taxes increased by $28,884 from
          $41,328 for the year ended December 31, 2001 to $70,212 for the year
          ended December 31, 2002. The increase results from a net increase in
          state franchise taxes in the amount of $6,123, payment related to a
          sales tax audit in the amount of $3,563, and approximately $19,198 in
          property tax payments relating to prior years.


                                       12
<PAGE>
     -    Miscellaneous other general and administrative expenses, which include
          materials and supplies and general insurance expense, were reduced by
          $59,534 from $192,720 for the year ended December 31, 2001 to $133,186
          for the year ended December 31, 2002. General and administrative
          expense increased by $50,000 during 2002 due to the recording of a bad
          debt allowance relating to a non-trade or business receivable.

PRODUCTION AND COMPUTER SERVICE EXPENSE. Production and computer service expense
increased by $184,787 from $100,460 for the year ended December 31, 2001 to
$285,247 for the year ended December 31, 2002. Production labor costs increased
by $161,060 due to increased labor costs related to the automated litigation
support services of Litidex, while computer service expense increased by $23,727
primarily due to a non-recurring co-location expense in the amount of $21,986.

AMORTIZATION AND DEPRECIATION EXPENSE. Amortization and depreciation expense
decreased by $766,022 from $1,305,234 for the year ended December 31, 2001 to
$539,212 for the year ended December 31, 2002. The decrease is primarily due to
the completion of amortization of a $2 million service contract of subsidiary
Litidex. Quarterly amortization of the contract amounted to $260,868 per quarter
during 2001 until expiration of the contract in the first quarter of 2002.

IMPAIRMENT CHARGE. In the first quarter of 2002, in accordance with Statement of
Financial Standards No. 144 ("SFAS 144"), "Accounting for the Impairment or
Disposal of Long-Lived Assets," which superseded SFAS 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,"
management of ITIS internally conducted a strategic review of certain aspects of
its business. Based on the results of this evaluation, management determined
that impairment in the amount of $2,741,955 existed at December 31, 2001. The
impairment charge was determined as a result of valuation estimates provided by
management using net cash flow projections over the estimated useful lives of
the asset. In the first quarter of 2003, management engaged the services of an
independent appraiser to prepare a valuation study relating to assets held for
sale and estimates of future net cash flows projected over the twenty-five year
life of the sales contract related to those assets (see note 6). Based on the
results of this study, management has recorded an impairment charge in the
amount of $6,529,053 for the year ended December 31, 2002.

OTHER EXPENSE. Other expense of $150,000 during the year ended December 31, 2002
represents earnest money and consulting fees for the contemplated purchase of
stock in MedEx Systems, Inc. and an associated entity, Pegasus Pharmacy, as
further discussed in note 14 to the financial statements. The purchase was not
consummated, and this expense is not expected to recur.

INTEREST EXPENSE. Interest expense increased by $468,522 from $403,760 for the
year ended December 31, 2001, to $872,282 for the year ended December 31, 2002.
The interest expense increase is due to $1,075,000 in new debt acquired in 2002.
In addition, proceeds of $2,173,500 received from the sale of a PharmHouse net
revenue interest to Rainmaker Ventures, Ltd., a related party, have been
recorded as a liability of ITIS rather than as a sale. During the year ended
December 31, 2002, ITIS recorded $56,117 as accrued interest payable in regard
to this liability.

LIQUIDITY AND CAPITAL RESOURCES

ITIS's ability to execute its business strategy depends to a significant degree
on its ability to generate an established source of revenues, working capital,
and positive cash flow, and its ability to attract additional capital. ITIS's
principal demands for liquidity are cash for normal operations, funds to support
its automated litigation support segment, and funds for development of
PharmHouse stores.

During the year ended December 31, 2002, ITIS's cash and cash equivalents
increased in total by $255,370 from the December 31, 2001 balance of $34,165 in
available cash and a $40,813 bank overdraft to $248,722 in available cash at
December 31, 2002. The Company has working capital of $3,549,431 at December 31,
2002, including $4,700,000 in assets held for sale. Exclusive of the assets held
for sale, the Company has a working capital deficit of $1,150,569. Cash used in
operating activities was $2,985,183, cash provided by investment activities was
$524,929 and cash provided by financing activities was $2,674,811.

The Company had $1,523,681 in accounts receivable at December 31, 2002. Of this
amount, $1,442,801 represents receivables related to the automated litigation
support services of Litidex. Management has elected not to provide an allowance
for doubtful accounts for these receivables due to the nature of the agreements,
which, in management's opinion, provides assurance for the ultimate collection
of the fees due. Management has classified a portion of the


                                       13
<PAGE>
receivable as long term based upon expected receipts within the next twelve
months and has discounted the value of those receivables using a 12% discount
rate.

The Company has an unrecorded receivable from JuriSearch Holdings, LLC relating
to the sale of the National Law Library database and other assets . Under the
terms of this sale agreement, ITIS is scheduled to receive a total of $509,990
in guaranteed minimum monthly payments during the twelve-month period ending
December 31, 2003. Should JuriSearch fail to perform under the terms of the
purchase agreement, ITIS maintains a security interest in all assets purchased
as well as in all intellectual property, customers, equipment, machinery,
furniture and fixtures and supplies of JuriSearch.

The Company also has an unrecorded receivable from American Legal Data, LLC
relating to the sale of a copy of the National Law Library data. Under the terms
of this sale agreement, ITIS is scheduled to receive monthly payments in the
amount of $16,000 for 120 months beginning June 1, 2002. On February 24, 2003,
ITIS agreed to move seven monthly payments of $16,000 ($112,000) to the lump sum
payment due at the end of the note.

Cash used in operating activities of $2,985,183 is primarily due to operating
losses and disposal of operating segments (GoverNet Affairs and Brief Reporter).
Cash provided by investment activities of $524,929 is primarily due to proceeds
from sales of investments ($1,333,661), reduced by additions to the data of
National Law Library prior to its sale ($664,213), additions to software costs
and furniture and equipment net of disposals ($106,597), and the purchase of
inventory for PharmHouse stores ($39,856). Cash provided by financing activities
of $2,674,811 is due to increased borrowings to finance working capital needs
and the recording of the related party sale of a net revenue interest in
PharmHouse stores in the amount of $2,173,500 as a liability rather than a sale.

As further outlined in note 8 to the financial statements, the Company has
incurred significant amounts of debt to finance its working capital
requirements. As of December 31, 2002 and 2001, the total principal amount owed
to Hunter Carr, CEO of ITIS, was $2,150,117. Accrued but unpaid interest
amounted to $298,663 and $160,196 at December 31, 2002 and 2001, respectively.

On February 28, 2002, Stephen Fonicello exercised the option to convert his
$25,000 note plus accrued interest into restricted common shares of ITIS.
Accordingly, on March 4, 2002, ITIS issued 192,384 pre-reverse split restricted
common shares to Mr. Fonicello, such shares representing repayment of $25,000 in
principal and $2,068 in accrued and unpaid interest at February 28, 2002. In
March 2002, ITIS executed a demand note for $250,000 in favor of George A.
Roberts, a member of its board of directors. The note bore interest at the rate
of prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the
lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On May 22, 2002, this note was renewed
and consolidated with other notes payable to Dr. Roberts. In connection with the
new note, ITIS issued detachable warrants to Dr. Roberts to purchase up to
2,107,352 shares of common stock at $.96 per share and cancelled any and all
rights to convert principal and interest of the prior notes to common stock. The
new note bears interest at 18% per year, and is payable on demand after one
year. With respect to this note payable, Dr. Roberts has provided written
commitment to ITIS to provide forbearance and extend the due date on such note
to at least July 15, 2004, if to demand payment would impair ITIS's ability to
meet its other existing liabilities and commitments. Management believes that to
demand payment would impair ITIS's ability to meet other obligations and
therefore, the note has been classified as long-term.

In March 2002, ITIS wholly owned subsidiary National Law Library executed a
promissory note for $425,000 in favor of Houston RPM, L.C. The note bore
interest at 18% per year and was payable in monthly installments including
principal and interest commencing April 1, 2002. On April 17, 2002, National Law
Library executed a new promissory note for $675,441 in favor of Houston RPM,
L.C. This note refinanced $325,441 of the note dated March 1, 2002 in the
original amount of $425,000, and provided $350,000 in new funding to National
Law Library. The note bears interest at 18% per year and is payable in monthly
installments including principal and interest commencing May 17, 2002. The
amount of each monthly installment shall equal the total amount of credit card
receipts generated by National Law Library, but in no event shall the monthly
installment be less than $65,000. Any unpaid principal and accrued interest is
due in full on April 17, 2003. A Security Agreement covering all proceeds paid
or otherwise due from credit card companies and others pursuant to a Continuing
Service Agreement between Litidex and National Law Library secures the note, as
do guarantees from ITIS Holdings Inc. and Litidex. At December 31, 2002, the
total principal amount owed to Houston RPM, L.C. was $249,385. During the year
ended December 31, 2002, National Law Library paid $525,615 in principal and
$67,996 in interest, respectively, related to this note.


                                       14
<PAGE>
In April 2002, ITIS executed a demand note for $50,000 in favor of W. Paul
Thayer, a member of its board of directors. The note bore interest at the rate
of prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the
lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On May 22, 2002, this note was renewed
and consolidated with other notes payable to Mr. Thayer. In connection with the
new note, ITIS issued detachable warrants to Mr. Thayer to purchase up to
204,102 shares of common stock at $.96 per share and cancelled any and all
rights to convert principal and interest of the prior notes to common stock. The
new note bears interest at 18% per year, and is payable on demand after one
year. With respect to this note payable, Mr. Thayer has provided written
commitment to ITIS to provide forbearance and extend the due date on such note
to at least July 15, 2004, if to demand payment would impair ITIS's ability to
meet its other existing liabilities and commitments. Management believes that to
demand payment would impair ITIS's ability to meet other obligations and
therefore, the note has been classified as long-term.

On July 1, 2002, ITIS and its wholly owned subsidiary PharmHouse entered into a
Purchase Agreement and Grant of Net Revenue Interest with Rainmaker Ventures,
Ltd., a Texas limited partnership in which Hunter M.A. Carr, W. Paul Thayer and
George Roberts are limited partners. Messrs. Carr, Thayer and Roberts are
directors of ITIS and Mr. Carr is the President, Chief Executive Officer, and
Chairman of the Board of ITIS. Under the terms of the Purchase Agreement,
Rainmaker committed to fund up to $2,500,000 to ITIS in exchange for a 50%
interest in the net revenues of the first 14 pharmacy locations opened by
PharmHouse. The Purchase Agreement also grants to Rainmaker an option to acquire
a 50% net revenue interest in an additional 4 pharmacies in exchange for
additional funding of $500,000 to ITIS. As of December 31, 2002, Rainmaker has
funded $2,139,500 of the $2,500,000 purchase price. Although it is the intent of
the parties that a material amount of the purchase price will be used for the
purpose of constructing and opening separately licensed pharmacy locations, the
Agreement does not place any restrictions on the use of such funds by ITIS. The
amount of funding of the $2,500,000 is dependent upon the opening of at least
one separately licensed specialty medication pharmacy for each $166,667 invested
by Rainmaker as of the date of the funding request. While only two pharmacies
have begun operations as of the filing date of this Form 10-KSB, Rainmaker has
honored all funding requests made by ITIS. Due to the related- party nature of
this transaction and pursuant to EITF 88-18, management has recorded the funding
from Rainmaker as a long-term liability of ITIS rather than as deferred revenue,
and has recorded accrued interest payable in regard to this liability in the
amount of $56,117 during the year ended December 31, 2002. At the time the
pharmacies begin to generate net revenues to distribute to Rainmaker, ITIS will
apply those payments to the long-term liability and accrued interest payable
until the recorded liabilities are extinguished. Payments made thereafter will
be recorded as an ordinary operating expense.

ITIS's financial statements are prepared using principles applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. While the sale of a net revenue
interest in the first 14 PharmHouse stores in July 2002 provided $2.5 million in
available cash to ITIS, we do not at this time have an established source of
revenues, working capital or cash flow to cover operating costs to allow the
Company to remain in business. Management's business plan realizes that
anticipated revenues to be generated by the automated litigation support
services of Litidex and the PharmHouse stores will be critical in providing some
of the funds necessary to continue company operations and to remain in business.
However, cash provided by the automated litigation support services of Litidex
is not received on a scheduled basis, and the pharmacy operations of PharmHouse
are too new to evaluate. While management believes that revenues provided by
these subsidiaries may be adequate to fund company operations, it is possible
that such revenues may never be sufficient to meet company needs. While
additional automated litigation support contracts are anticipated by management,
the revenues of Litidex cannot be sustained if no additional contracts are
obtained. If this should be the case, management plans to continue to utilize
additional loans from Mr. Carr (President and Chairman of the Board of Directors
of ITIS) and other directors and investors as long as funds from these sources
remain available. If the receivables associated with the litigation services
contracts are not collected timely, or at all, cash flow will be severely
restricted and additional reliance will have to be placed on other sources of
cash, if available when needed. Although management believes that the
receivables will be collected, collections to date have been irregular. If
adequate funding from the operations of Litidex, PharmHouse or other sources is
not available, ITIS will be unable to remain in business.

ITIS may be required to obtain additional financing or equity capital to remain
in business, and that capital, if available, may have provisions that could
further suppress current and future stock prices and cause significant dilution
to current shareholders. Our internally generated cash flows from operations
have historically been insufficient for our cash needs and will continue to be
for the foreseeable future. While management projects that the internal source
of liquidity may improve, this objective may not be achieved in the near term,
if ever. As of April 15, 2003, sources of external and


                                       15
<PAGE>
internal financing are very limited. It is not expected that the internal source
of liquidity will improve until significant net cash is provided by operating
activities (which may not be achieved), and until such time, ITIS will rely upon
external sources for liquidity. ITIS may not ever become profitable and could
fail as a going concern.

We may in the future experience significant fluctuations in the results of our
operations. Such fluctuations may result in significant volatility in the price
and/or value of ITIS's common stock. Shortfalls in revenues, financing or
capital may adversely and disproportionately affect the results of operations
because a high percentage of current operating expenses are relatively fixed and
are primarily financed through loans and capital contributions. These funds are
not guaranteed and may not continue in the future. Accordingly, management
believes that period-to-period comparisons of results of operations should not
be relied upon as an indication of future results of operations.



                                       16
<PAGE>
ITEM 7. FINANCIAL STATEMENTS



REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND

FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

Reports of Independent Public Accountants . . . . . . . . . . . . . . . .    18

Consolidated Balance Sheets as of December 31, 2002
and December 31, 2001 . . . . . . . . . . . . . . . . . . . . . . . . . .    21

Consolidated Statements of Operations for the years ended
December 31, 2002 and December 31, 2001 . . . . . . . . . . . . . . . . .    23

Consolidated Statements of Stockholders' Equity for the
years ended December 31, 2002 and December 31, 2001 . . . . . . . . . . .    24

Consolidated Statements of Cash Flow for the years
ended December 31, 2002 and December 31, 2001 . . . . . . . . . . . . . .    25

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . .    27



                                       17
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT




To the Board of Directors
ITIS Holdings Inc. and Subsidiaries
Houston, Texas


We have audited the accompanying consolidated balance sheet of ITIS Holdings
Inc. (formerly ITIS Inc.) and Subsidiaries as of December 31, 2002, and the
related consolidated statements of operations, changes in stockholders' equity
and cash flows for the year then ended.  These financial statements are the
responsibility of the Company's management. The financial statements of ITIS
Inc. for the year ended December 31, 2001 were audited by other auditors whose
report, dated March 29, 2002, on those financial statements included an
explanatory paragraph that expressed substantial doubt about the Company's
ability to continue as a going concern.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of ITIS Holdings Inc. and
Subsidiaries as of December 31, 2002, and the results of its operations and its
cash flows for the year then ended in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern.  The Company has a deficit equity
position of $1.3 million at December 31, 2002 and incurred net losses of $11.3
and $7.4 million during 2002 and 2001.  These and other conditions, more fully
described in Note 15, raise substantial doubt about the Company's ability to
continue as a going concern.  The financial statements do not include any
adjustments relating to the recoverability and classification of recorded
assets, or the amounts and classification of liabilities that might be necessary
in the event the Company cannot continue in existence.



/s/ Fitts, Roberts & Co., P.C.
Houston, Texas
March 24, 2003




                                       18
<PAGE>
                          INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders of ITIS Inc.:

We have audited the accompanying consolidated balance sheets of ITIS Inc.
(formerly Internet Law Library, Inc.) and Subsidiaries as of December 31, 2001
and 2000 and the related consolidated statements of operations, changes in
stockholders' equity and cash flows for the years then ended. 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 audit. The accompanying consolidated statements of
operations, changes in stockholders' equity and cash flows for the six months
ended December 31, 1999, were audited by other auditors, whose report thereon
dated May 11, 2000, expressed an unqualified opinion on those statements.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of ITIS Inc. and
Subsidiaries at December 31, 2001 and 2000 and the results of their operations
and their cash flows for the years then ended, in conformity with generally
accepted accounting principles in the United States.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As reflected in the
accompanying consolidated financial statements and more fully discussed in Note
15 to the consolidated financial statements, the Company's recurring losses from
operations, negative working capital and cash flows, and retained deficits raise
substantial doubt about its ability to continue as a going concern. Because the
Company does not have significant cash or other material liquid assets, nor an
established source of revenues sufficient to cover its operating expenses, the
Company will be required to obtain substantial additional financing and capital
or to dramatically reduce operating expenses in order to continue as a going
concern. As of March 29, 2002, the date of this report, the Company's sources of
an adequate supply of financing or capital are severely limited. In order to
remain in business during the years 2001 and 2000, and the first quarter of
2002, the Company received substantial debt and equity financing from the
Company's Chairman of the Board and other shareholders and directors. If
additional equity or debt financings are not timely consummated, projected
revenues do not meet management's expectations, or costs are not reduced and
instead exceed projections, the Company may not be able to remain in business.
Management's plans in regards to these matters are also discussed in Note 15. If
the Company is unable to remain in business and continue as a going concern,
assets as now reflected on the accompanying consolidated balance sheet, will be
severely impaired resulting in significant charge offs and declines in values
coupled with an increase in contingent liabilities resulting from the Company's
inability to timely and adequately service its credit obligations as they become
due. While impairment charges of $2,741,955 and $748,024 to the Company's
database, content and software have been recognized at December 31, 2001 and
2000, the consolidated financial statements do not include any future
adjustments relating to the recoverability and classification of asset carrying
amounts or the amounts and classification of liabilities that might result
should the Company be unable to remain in business.

During 2001, the Company recognized revenues amounting to $2,691,855 related to
its automated litigation support services. See Note 2 to the consolidated
financial statements for more information on this matter. Due to the unique


                                       19
<PAGE>
nature of the services provided by the Company's subsidiary, Litidex, the
Company plans to seek a "preference letter" from the United States Securities &
Exchange Commission (the Commission) during the second quarter of 2002 to
determine whether their revenue recognition policy is appropriate for these
services. Depending upon the response of the United States Securities & Exchange
Commission, the reporting of these revenues may require restatement, which may
result in additional revenues being deferred and recognized in future periods.
At this time, it is not possible to determine what, if any, response the
Commission may have to this accounting matter. At December 31, 2001, $2,103,598
of these revenues are uncollected and due from a single law firm located in
Houston, Texas. Management believes that these uncollateralized receivables are
fully collectible.

As more fully discussed in Note 8 to the consolidated financial statements, the
Company has entered into material financing agreements with the Company's
Chairman of the Board and other directors of the Company.

As more fully discussed in Notes 9 and 11 to the consolidated financial
statements, the Company is involved in substantial litigation as both plaintiff
and defendant.



/s/ Harper & Pearson Company
March 29, 2002


                                       20
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


                                                                    DECEMBER 31,   DECEMBER 31,
                                                                        2002           2001
                                                                    -------------  -------------
<S>                                                                 <C>            <C>

                                     ASSETS

Current assets:

  Cash and cash equivalents                                         $     248,722  $      34,165
  Accounts receivable, net of allowance for doubtful accounts
    of  $34,127 at  December 31, 2002 and December 31, 2001               828,612      1,457,328
  Investments available for sale, at fair market value                    751,535        199,250
  Other current assets                                                     43,052         13,910
  Inventory                                                                39,856              -
  Assets held for sale                                                  4,700,000              -
  Current assets of entity to be disposed of                                    -        103,291
                                                                    -------------  -------------

    Total current assets                                                6,611,777      1,807,944
                                                                    -------------  -------------

Long term assets:

  Accounts receivable                                                     695,069        760,000
  Other long term assets                                                   52,898              -
                                                                    -------------  -------------

    Total long term assets                                                747,967        760,000
                                                                    -------------  -------------

Fixed assets and intangibles, net of amortization and depreciation
  Database content                                                              -     10,961,358
  Software costs                                                          435,966        525,774
  Furniture and equipment                                                 222,340        315,826
  Intangible assets                                                       143,750        410,868
  Net fixed assets and intangibles of entity to be disposed of                  -      1,305,501
                                                                    -------------  -------------
    Total fixed assets and intangibles, net                               802,056     13,519,327
                                                                    -------------  -------------

    Total assets                                                    $   8,161,800  $  16,087,271
                                                                    =============  =============
</TABLE>


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


                                       21
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


                                                            DECEMBER 31,    DECEMBER 31,
                                                                2002            2001
                                                           --------------  --------------
<S>                                                        <C>             <C>

            LIABILITIES AND STOCKHOLDERS' (DEFICIT) EQUITY

Current liabilities:
  Bank overdraft                                           $           -   $      40,813
  Notes payable-other                                            307,351         182,320
  Disputed note to Cootes Drive LLC                              500,000         500,000
  Accounts payable                                               507,175         535,599
  Accounts payable-related parties                                     -          83,125
  Accrued interest                                               781,186         342,658
  Accrued liabilities                                             80,229         439,785
  Deferred revenue                                               732,650         670,245
  Deposit on sales contract                                      153,755               -
  Current liabilities of entity to be disposed of                      -         206,948
                                                           --------------  --------------
    Total current liabilities                                  3,062,346       3,001,493
                                                           --------------  --------------
  Long term notes payable to Chairman                          2,150,117       2,150,117
  Long term notes payable to Directors                         2,022,500       1,722,500
  Imputed note payable to related party                        2,173,500               -
  Notes payable-other                                             10,207          18,114
                                                           --------------  --------------
    Total long term liabilities                                6,356,324       3,890,731
                                                           --------------  --------------
Total liabilities                                              9,418,670       6,892,224
                                                           --------------  --------------

  Commitments and contingencies

Stockholders' (deficit) equity:
  Series A Convertible Preferred stock, par value $.001;
    50,000,000 shares authorized; 161.08 shares issued
    and outstanding                                            2,027,526       2,027,526
  Common stock, par value $.001, 150,000,000 shares
    authorized;  5,357,450 and 3,938,340 shares issued
    and 5,189,338 and 3,770,228 shares outstanding,
    respectively at December 31, 2002 and December 31, 2001       53,575          39,383
  Warrants                                                     1,405,349       1,213,372
  Additional paid in capital                                  25,475,869      24,801,383
  Accumulated deficit                                        (29,836,383)    (18,557,247)
  Treasury stock, at cost, 194,957 and 168,112 shares
    respectively at December 31, 2002 and
    December 31, 2001                                           (320,877)       (284,554)
  Accumulated other comprehensive income,
    unrealized gain/(loss) on investments                        (11,810)          1,083
  Less notes receivable issued for purchase of
    common stock                                                 (50,119)        (45,899)
                                                           --------------  --------------
    Total stockholders' (deficit) equity                      (1,256,870)      9,195,047
                                                           --------------  --------------

    Total liabilities and stockholders' (deficit) equity   $   8,161,800   $  16,087,271
                                                           ==============  ==============
</TABLE>


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


                                       22
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS


                                               For the Year ended    For the Year ended
                                               December 31, 2002     December 31, 2001
                                              --------------------  --------------------
<S>                                           <C>                   <C>
  REVENUE, NET OF DEFERRED INCOME
    Automated litigation support services     $           807,804   $         2,691,855
    Database management sales and services                170,400                     -
    Pharmaceutical sales                                   19,759                     -
                                              --------------------  --------------------
    Total revenues                                        997,963             2,691,855
                                              --------------------  --------------------

  OPERATING EXPENSES:
    Cost of sales-pharmaceuticals                          15,952                     -
    Selling and marketing                                 130,552               100,588
    General and administrative                          2,906,270             2,525,525
    Production and computer service                       285,247               100,460
    Amortization and depreciation                         539,212             1,305,234
    Other expense                                         150,000                     -
                                              --------------------  --------------------
    Total operating expenses                            4,027,233             4,031,807
                                              --------------------  --------------------

  (LOSS) FROM CONTINUING
    OPERATIONS                                         (3,029,270)           (1,339,952)

  DISCONTINUED OPERATIONS (Notes 3 and 7):
    (Loss) from operations of
      discontinued business segments                   (6,869,251)           (5,076,976)
    (Loss) on disposal of business segments            (1,094,833)             (971,368)

  INTEREST INCOME (EXPENSE), net                         (836,374)             (398,844)
  GAIN ON SALE OF INVESTMENTS
    AND EQUIPMENT                                         550,592               408,135
                                              --------------------  --------------------

  NET LOSS                                            (11,279,136)           (7,379,005)

  OTHER COMPREHENSIVE INCOME (LOSS)
    Unrealized (loss) gain on investments
      available for sale                                  (46,531)                1,083
                                              --------------------  --------------------

  NET AND COMPREHENSIVE LOSS                          (11,325,667)           (7,377,922)
                                              ====================  ====================

  LOSS PER COMMON SHARE                       $             (2.62)  $             (1.95)
                                              ====================  ====================
  LOSS PER COMMON SHARE AS A RESULT
    OF DISCONTINUED OPERATIONS                $             (1.85)  $             (1.60)
                                              ====================  ====================
  WEIGHTED AVERAGE SHARES USED IN
    COMPUTING LOSS PER
    COMMON SHARE                                        4,315,085             3,784,648
                                              ====================  ====================
</TABLE>


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


                                       23
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the years ended December 31, 2002 and 2001


                                                            Number of
                                            Preferred     Common Shares    Common                  Additional         Deferred
                                              Stock           Issued       Stock     Warrants    Paid-in Capital    Compensation
<S>                                      <C>              <C>             <C>       <C>          <C>               <C>
                                         ----------------------------------------------------------------------------------------
Balance, December 31, 2000               $    2,027,526      35,421,284   $ 35,422  $ 1,167,372  $     23,447,757  $     (15,625)
                                         ----------------------------------------------------------------------------------------
Issuance of common stock in
  exchange for debt                                   -       1,153,828      1,153            -           248,847              -
Spin off of Planet Resources, Inc.                    -               -          -            -            13,880              -
Issuance of stock options for services                -          50,000         50            -             7,990              -
Issuance of common stock for services                 -       1,145,000      1,145            -           271,103              -
Issuance of common stock for
  insurance premium                                   -          47,139         47            -            10,795              -
Amortization of deferred compensation                 -               -          -            -                 -         15,625
Issuance of common stock warrants                     -               -          -       46,000                 -              -
Issuance of common stock pursuant
  to the "2001 Executive Stock
  Option Plan"                                        -       1,500,000      1,500            -           323,200              -
Issuance of common stock pursuant
  to the "1999 Employee Stock
  Purchase Plan"                                      -          66,145         66            -            11,770              -
Shareholder contribution of profit
  on sale of common stock                             -               -          -            -            40,991              -
Debt forgiveness by Shareholder                       -               -          -            -           425,050              -
Fair value adjustment to available
  for sale securities                                 -               -          -            -                 -              -
Reposession of Compass Data
  Systems stock                                       -               -          -            -                 -              -
Notes Receivable issued for purchase of
  common stock                                        -               -          -            -                 -              -
Net loss                                              -               -          -            -                 -              -
                                         ----------------------------------------------------------------------------------------

Balance, December 31, 2001               $    2,027,526      39,383,396   $ 39,383  $ 1,213,372  $     24,801,383  $           -
                                         ----------------------------------------------------------------------------------------

Issuance of common stock in
  exchange for debt                                   -       1,793,949      1,795            -           137,383              -
Issuance of stock options for services                -               -          -            -            45,900              -
Issuance of common stock for services                 -      10,957,143     10,957            -           435,043              -
Issuance of common stock in
  exchange for related party
  accounts payable                                    -       1,440,008      1,440            -            56,160              -
Issuance of common stock warrants                     -               -          -      191,977                 -              -
Change in Note Receivable issued
  for purchase of common stock                        -               -          -            -                 -              -
Fair value adjustment to securities
  available for sale                                  -               -          -            -                 -              -
Purchase of treasury stock                      (36,323)        (36,323)
Ten for one reverse split of
  common stock                                        -     (48,217,046)         -            -                 -              -
Net loss                                              -               -          -            -                 -              -
                                         ----------------------------------------------------------------------------------------
Balance, December 31, 2002               $    2,027,526       5,357,450   $ 53,575  $ 1,405,349  $     25,475,869  $           -
                                         ========================================================================================


                                                                                               Comprehensive
                                                                                Receivable        Income
                                                                                   from       Unrealized Gain
                                          Retained Deficit    Treasury Stock    Shareholder    on Investments       TOTAL
<S>                                      <C>                 <C>               <C>            <C>               <C>
                                         ------------------------------------------------------------------------------------
Balance, December 31, 2000               $     (11,178,242)  $       (43,184)  $          -   $             -   $ 15,441,026
                                         ------------------------------------------------------------------------------------
Issuance of common stock in
  exchange for debt                                      -                 -              -                 -        250,000
Spin off of Planet Resources, Inc.                       -                 -              -                 -         13,880
Issuance of stock options for services                   -                 -              -                 -          8,040
Issuance of common stock for services                    -                 -              -                 -        272,248
Issuance of common stock for
  insurance premium                                      -                 -              -                 -         10,842
Amortization of deferred compensation                    -                 -              -                 -         15,625
Issuance of common stock warrants                        -                 -              -                 -         46,000
Issuance of common stock pursuant
  to the "2001 Executive Stock
  Option Plan"                                           -                 -              -                 -        324,700
Issuance of common stock pursuant
  to the "1999 Employee Stock
  Purchase Plan"                                         -                 -              -                 -         11,836
Shareholder contribution of profit
  on sale of common stock                                -                 -              -                 -         40,991
Debt forgiveness by Shareholder                          -                 -              -                 -        425,050
Fair value adjustment to available
  for sale securities                                    -                 -              -             1,083          1,083
Reposession of Compass Data
  Systems stock                                          -          (241,370)             -                 -       (241,370)
Notes Receivable issued for purchase of
  common stock                                           -                 -        (45,899)                -        (45,899)
Net loss                                        (7,379,005)                -              -                 -     (7,379,005)
                                         ------------------------------------------------------------------------------------

Balance, December 31, 2001               $     (18,557,247)  $      (284,554)  $    (45,899)  $         1,083   $  9,195,047
                                         ------------------------------------------------------------------------------------

Issuance of common stock in
  exchange for debt                                      -                 -              -                 -        139,178
Issuance of stock options for services                   -                 -              -                 -         45,900
Issuance of common stock for services                    -                 -              -                 -        446,000
Issuance of common stock in
  exchange for related party
  accounts payable                                       -                 -              -                 -         57,600
Issuance of common stock warrants                        -                 -              -                 -        191,977
Change in Note Receivable issued
  for purchase of common stock                           -                 -         (4,220)                -         (4,220)
Fair value adjustment to securities
  available for sale                                     -                 -              -           (12,893)       (12,893)
Purchase of treasury stock
Ten for one reverse split of
  common stock                                           -                 -              -                 -              -
Net loss                                       (11,279,136)                -              -                 -    (11,279,136)
                                         ------------------------------------------------------------------------------------
Balance, December 31, 2002               $     (29,836,383)  $      (320,877)  $    (50,119)  $       (11,810)  $ (1,256,870)
                                         ====================================================================================
</TABLE>


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


                                       24
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW


                                                        For the Year ended December 31,
                                                        -------------------------------
                                                               2002           2001
                                                           -------------  ------------
<S>                                                        <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net (loss)                                               $(11,279,136)  $(7,379,005)
  Adjustments to reconcile net loss to net
    cash used in operating activities:
    Issuance of common stock, options,
      or warrants for goods or services                         665,877       444,130
    Amortization of deferred compensation                             -        15,625
    Amortization and depreciation                               539,212     1,305,234
    Impairment charge                                         6,529,053     2,741,955
    Gain on sales of investments                               (602,773)     (403,535)
    Loss (Gain) on sale of equipment                             10,488        (5,869)
    Services provided for investments                                 -      (976,192)
    Disposal of operating segments                            1,598,362     3,084,387
    Changes in:
      Accounts receivable                                      (722,929)   (2,168,701)
      Accrued interest on notes receivable                       (4,220)       (4,564)
      Other assets                                              (82,040)       39,108
      Accounts payable                                             (387)      254,428
      Accrued liabilities                                       147,150       489,897
      Deferred revenue                                           62,405       670,245
      Deposit on sales contract                                 153,755             -
      Assets distributable to stockholders                            -        (1,761)
                                                           -------------  ------------

    Net cash (used in) operating activities                  (2,985,183)   (1,894,618)
                                                           -------------  ------------

CASH FLOWS FROM INVESTMENT ACTIVITIES:
  Purchase of inventory                                         (39,856)            -
  Purchases of investments and treasury stock                    (5,374)      (39,462)
  Purchase of licensing agreement                                     -      (150,000)
  Proceeds from sales of investments                          1,333,661     1,221,022
  Proceeds from sale of equipment                                 7,308         6,269
  Additions to database content                                (664,213)   (1,427,894)
  Additions to furniture and equipment                          (67,426)      (26,566)
  Additions to software                                         (96,404)            -
  Dispositions of equipment                                      57,233        31,146
                                                           -------------  ------------

    Net cash provided by (used in) investment activities        524,929      (385,485)
                                                           -------------  ------------
</TABLE>
                                                                     (continued)


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


                                       25
<PAGE>
<TABLE>
<CAPTION>
ITIS HOLDINGS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOW


                                                        For the Year ended December 31,
                                                        -------------------------------
                                                              2002         2001
                                                           -----------  -----------
<S>                                                        <C>          <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
  Bank overdraft                                           $  (40,813)  $   38,201
  Proceeds from notes payable                               1,075,000    2,067,617
  Proceeds from imputed note payable                        2,173,500            -
  Payments on notes payable                                  (532,876)     (59,614)
  Payments received on notes receivable                             -      176,365
  Proceeds from sale of common stock                                -       11,836
  Shareholder contribution to paid in capital                       -       40,991
  Distribution of Planet Resources assets and liabilities           -       13,880
                                                           -----------  -----------

    Net cash provided by financing activities               2,674,811    2,289,276
                                                           -----------  -----------

NET INCREASE IN CASH AND CASH
  EQUIVALENTS                                                 214,557        9,173

CASH AND CASH EQUIVALENTS, beginning of period                 34,165       24,992
                                                           -----------  -----------

CASH AND CASH EQUIVALENTS, end of period                   $  248,722   $   34,165
                                                           ===========  ===========


SUPPLEMENTAL CASH FLOW INFORMATION:
  Cash paid for interest                                   $  303,646   $   61,187
  Cash paid for income taxes                               $        -   $        -
  Non cash investing and financing transactions:
    Fair value of warrants issued                          $  191,977   $   46,000
    Fair value of common stock issued as
      note reduction                                       $  125,000   $  250,000
    Fair value of common stock issued as
      compensation for goods and services                  $  549,500   $   23,248
    Notes receivable issued for exercise
      of stock options                                     $        -   $  217,700
    Unrealized gains (losses) on investments               $  (11,810)  $    1,083
    Long-term debt forgiveness by Chairman                 $        -   $  425,050
</TABLE>


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


                                       26
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE  1-BUSINESS:

ITIS Inc. was originally incorporated as Allied Silver-Lead Company in the State
of Idaho in 1967 and, until 1992, operated as an exploratory mining company with
extremely limited operations. In January 1996, ITIS Inc. was reincorporated in
Delaware as a result of a merger and, among other shareholder actions taken at
that time, the corporate name was changed to Planet Resources, Inc. On March 27,
2001, pursuant to an Amended and Restated Agreement and Plan of Distribution
dated March 13, 2001, Planet Resources was spun-off from ITIS Inc.

Under a Plan and Agreement of Merger dated August 26, 2002, as approved by
resolution adopted by the Board of Directors of ITIS Inc. on that date and by
written consent of a majority of the voting interests of ITIS Inc. on September
18, 2002, ITIS Inc., the Delaware corporation, merged into its wholly owned
subsidiary, ITIS Holdings Inc., a Nevada corporation, effective September 18,
2002. ITIS Holdings Inc. became the surviving corporation after the effective
date of the merger. Under the terms of the Agreement, each issued share of the
common stock of the terminating corporation, ITIS Inc., was converted into
one-tenth (0.1) share of the surviving corporation, ITIS Holdings Inc. Each
issued share of the preferred stock of ITIS Inc. was converted to one share of
preferred stock of ITIS Holdings Inc. ITIS Holdings Inc. has authority to issue
200,000,000 shares of stock, of which 150,000,000 are common stock, $.001 par
value per share, and 50,000,000 are preferred stock, $.001 par value per share.
Unless otherwise noted, all prior period share amounts reflected in the
consolidated financial statements and notes thereto have been adjusted to
account for the one-for-ten reverse split in accordance with the Plan.

ITIS Holdings Inc. owns computer-related subsidiaries that provide automated
litigation support and document management, that operate pharmacies, and that
provide technical support for operations.

The Company provides automated litigation support through its subsidiary, ITIS,
Inc., a Texas corporation, which conducts business as Litidex. Litidex currently
focuses its attention on litigation support services related to lawsuits
involving stock manipulation of publicly held companies. PharmHouse Inc.
represents a new business segment and newly formed subsidiary of ITIS.
PharmHouse concentrates its efforts in the business of pharmacy operations.
PharmHouse, originally formed as a subsidiary of Litidex, became a wholly owned
subsidiary of ITIS in May 2002. In September 2002 PharmHouse began operation of
two pharmacies that focus primarily on electronic prescription services. Another
new subsidiary, OnPoint Solutions Inc., provides technical support for
PharmHouse and Litidex in the development and operation of the pharmacies of
PharmHouse and in software and hardware services for both PharmHouse and
Litidex. OnPoint also provides the RightScript(TM) software used by PharmHouse.

Prior to October 31, 2001, ITIS also provided training and support for
compliance with federal regulations through its wholly owned subsidiary, Venco
Compliance, Inc., and marketed a CD-Rom product and Website that assisted in
medical billing through Compass Data Systems, Inc. On October 31, 2001, the
stock of Venco was sold and transferred by ITIS to Venco's former shareholders
and the operations and management of Compass Data Systems were turned over to
then current Compass employees.

Until August 15, 2002, ITIS provided electronic publishing services and database
content through Internet sites with subscription access, licenses, and
transaction fees for databases through its subsidiaries, GoverNet Affairs, Inc.,
National Law Library, Inc. and Brief Reporter, LLC. The content of the databases
consisted of pending legislation, statutory law, rules and case law at the
federal and state levels. As further disclosed in note 7 to the consolidated
financial statements, management of ITIS transferred the customers of the
Internet Services subsidiary GoverNet Affairs, Inc. to another provider in June
2002. While ITIS legally sold the Internet Services operations of National Law
Library, Inc. and Brief Reporter, LLC, in August 2002, the sale has been
recorded using the deposit method of accounting because, in management's
opinion, the criteria required to permit revenue recognition in relationship to
this sale have not been met at the present time. ITIS no longer maintains any
operations in the Internet Services segment.

ITIS's common stock is traded on the over-the-counter Bulletin Board under the
symbol "ITHH.OB."

NOTE 2-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Basis of Presentation-These consolidated financial statements reflect the
assets, liabilities, results of operations, and cash flows of the business
conducted by ITIS for the years ended December 31, 2001 and 2002.


                                       27
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Principles of Consolidation-The accompanying consolidated financial statements
include the accounts of ITIS and its wholly owned operating subsidiaries,
National Law Library, PharmHouse, and ITIS, Inc. (Litidex). All significant
inter-company balances and transactions have been eliminated in consolidation.

Reclassification of Accounts- Certain reclassifications have been made to prior
year balances for discontinued operations to conform to current year
presentation. Included in those reclassifications are certain assets and
liabilities of GoverNet Affairs and Brief Reporter as follows:

<TABLE>
<CAPTION>
                                                 GoverNet     Brief
                                                  Affairs   Reporter     Total
                                                 ---------  ---------  ----------
<S>                                              <C>        <C>        <C>
Current assets of entity to be disposed of       $  93,318  $   9,972  $  103,291
Net fixed assets and intangibles of
  entity to be disposed of                       $ 732,161  $ 573,339  $1,305,501
Current liabilities of entity to be disposed of  $ 206,947  $       -  $  206,947
</TABLE>


Use of Estimates-The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and
revenues and expenses and the disclosure of contingent assets and liabilities.
Actual results could differ from those estimates. The Company has made
significant estimates related to revenue recognition for automated litigation
support revenues, valuation and impairment of assets held for sale, and
collectibility of accounts receivable. Management believes that it has accounted
for these items properly based upon all of the information available.

Cash and Cash Equivalents-ITIS considers all highly liquid investments with
maturities of three months or less at the time of purchase to be cash
equivalents. Cash equivalents are stated at cost, which approximates fair value.

Investments-Investments include available-for-sale equity securities at their
fair value. For the available-for-sale securities, any unrealized holding gains
and losses are excluded from operating results and are recognized as other
comprehensive income. The fair values of the securities at year-end are
determined based on prevailing market prices. During the year management may
estimate the fair value of securities not regularly traded.

Inventory-Inventory includes drugs and pharmaceutical products of subsidiary
PharmHouse, which are stated at the lower of cost or net realizable value, using
the first-in, first-out method.

Revenue Recognition-Revenues consist of service fees charged for the automated
litigation support services of Litidex(R) and fees charged for products sold in
the pharmacies of PharmHouse. Revenues are recognized in accordance with the
provisions of Staff Accounting Bulletin No. 101, Revenue Recognition in
Financial Statements, as follows:

     Product Revenue-Revenue from the sales of products is recognized after
     ---------------
     shipment of the products and fulfillment of acceptance terms, if any.

     Services Revenue- ITIS subsidiary Litidex(R) contracts with law firms to
     ----------------
     provide litigation support services. These generally include determining if
     the law firm's potential client has a viable cause of action, providing the
     law firm with a database containing securities litigation data, and
     developing a specific case-related database. Litidex(R) does not have any
     future delivery requirements with respect to the first two elements and the
     revenue associated with those elements is recognized when evidence exists
     that indicates that an arrangement with the attorney exists. This evidence
     usually includes receipt of some form of non-refundable compensation. The
     third element of the arrangement requires development of a case-specific
     database of information at a future date. Revenues associated with this
     third element are deferred and recognized as actual document production
     occurs. This method of revenue recognition is consistent with the method
     adopted by the Company in the second quarter of 2001 when Litidex(R) began
     providing this type of litigation service.

     An average of 22% of litigation support revenues are deferred as a
     substantial portion of the work required has been performed to complete the
     first two elements of the arrangement. Management has calculated the
     deferral amount based upon the future estimated work to complete the
     services under the contract, which includes the development of a
     case-specific litigation database in an electronic format with the client's
     information as it becomes available. Management recognizes revenues from
     these services as they are performed. In Determining


                                       28
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

     the amount of income to defer, management consulted with the experienced
     personnel of Litidex(R) and others regarding the number of documents likely
     to be processed over the course of the litigation support project and an
     appropriate retail price to assign to these services. A consensus was
     reached that 100,000 pages of data was an appropriate estimate to use, and
     management accordingly applied a fair market value per page processing
     charge to 100,000 pages of production to determine the deferral amount.
     While it is virtually impossible to predict the length of time a case may
     be in litigation, it is reasonable to arrive at a projected number of
     documents to be processed as part of a litigation support project using the
     Company's extensive experience in providing these services.

     As disclosed in our December 31, 2001 Form 10-K and subsequent SEC filings,
     management contacted the SEC on a voluntary basis and had numerous
     discussions with the SEC regarding revenue recognition with respect to the
     litigation services of subsidiary Litidex(R). As a result of those
     discussions and further research into this matter, management has concluded
     that the method of accounting used by the Company to record its litigation
     services revenues is in accordance with generally accepted accounting
     principles. However, on August 30, 2002, the Staff of the Securities &
     Exchange Commission requested, on a voluntary basis, additional information
     regarding the Company's position. The Company fully complied with this
     request on September 17, 2002.

Concentration of Credit Risk-The primary source of the automated litigation
support revenues of Litidex(R) at the present time is the law firm of Christian
Smith & Jewell. At December 31, 2002, Christian Smith & Jewell owed Litidex(R)
$1,443,895 for automated litigation support services, which represents
approximately 88% of the accounts receivable of ITIS. Management has elected not
to provide an allowance for doubtful accounts for these receivables due to the
nature of the agreements, which, in management's opinion, provides assurance for
the ultimate collection of the fees due.

Fair value of Financial Instruments-The fair values of financial instruments
approximate their reported carrying amounts at December 31, 2002 and 2001 due to
their relative short lives for current assets, and liabilities and long-term
liabilities are at interest rates comparable to current market rates. The
carrying cost of long term accounts receivable in the amount of $793,895 has
been discounted at 12% to approximate fair value of $695,069.

Database content and software costs- Database content at December 31, 2001
includes content databases containing federal and state case law, statutory law,
rules, pending legislation, and database and retrieval software. The capitalized
value of the content database was determined from the cost of purchasing,
verifying and installing the database for release to Internet customers. Once a
case law database has been capitalized, the cost of updating the database with
current case law was expensed. The cost of updating statutory law and pending
legislation databases was capitalized. At December 31, 2002, the database and
development costs have been reclassified to "Assets Held for Sale." (see note 4)

ITIS applies SOP 98-1, "Software for Internal Use," which provides guidance on
accounting for the cost of computer software developed or obtained for internal
use. The capitalized value of software is derived from programming expenses
incurred directly in the application or development of the software and includes
the cost of related patents.

ITIS uses the straight-line method to amortize the database content and software
costs. Content and software assets at December 31, 2002 and 2001 consist of the
following:

                                        Useful life
                                         (in years)        2002         2001
                                        -------------  ------------  -----------

Database content . . . . . . . . . . .       8-20      $ 6,434,974   $12,299,814

Software costs . . . . . . . . . . . .        5-8        1,586,106     1,489,702

Less:  Accumulated amortization. . . .                  (2,885,114)  (2,302,384)
                                                       ------------  -----------

                                                       $ 11,487,132  $ 5,135,966
                                                       ============  ===========


                                       29
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Furniture and Equipment-Furniture and equipment is stated at cost less
accumulated depreciation. Depreciation is computed using the straight-line
method over a five-year period. At December 31, 2002 and 2001 accumulated
depreciation was $228,749 and $204,838 respectively.

Intangible Assets-Intangible assets at December 31, 2001 include a contractual
service agreement of subsidiary Litidex(R) in the original amount of $2,000,000
less accumulated amortization of $1,739,132. The remaining value of this
contract was fully amortized during the year ended December 31, 2002. Also
included in intangible assets at December 31, 2002 and 2001 is the cost of a
paid-up perpetual license for a pharmacy operating system in the amount of
$150,000 (see note 14). Amortization is computed using the straight-line method
over a twenty-year period. At December 31, 2002 and 2001 accumulated
amortization was $6,250 and $-0-, respectively.

Income Taxes-ITIS accounts for income taxes in accordance with the liability
method prescribed by SFAS No. 109, "Accounting for Income Taxes." Under this
method, deferred income taxes reflect the impact of temporary differences
between financial accounting and tax bases of assets and liabilities. Such
differences relate primarily to the capitalization, amortization and write-off
of certain intangibles, the deductibility of certain accruals and reserves and
the effect of tax loss and tax credit carry-forwards not yet utilized. Deferred
tax assets are evaluated for realization based on a more-likely-than-not
criteria in determining if a valuation allowance should be provided.

Stock-Based Compensation-Under SFAS No. 123, "Accounting for Stock-Based
Compensation," as amended by SFAS No. 148, "Accounting For Stock-Based
Compensation-Transition and Disclosure," ITIS has elected the method that
requires disclosure of stock-based compensation. Because of this election, ITIS
has historically accounted for its employee stock-based compensation plan under
Accounting Principles Board ("APB") Opinion No. 25 and the related
interpretations. Accordingly, compensation has been recorded for stock-based
compensation grants to employees based on the excess of the estimated fair value
of the common stock on the measurement date over the exercise price.
Additionally, for stock-based compensation grants to consultants, ITIS
recognizes as compensation expense the fair value of such grants as calculated
pursuant to SFAS No. 123, recognized over the related service period. SFAS No.
148 requires companies to disclose proforma results of the estimated effect on
net income and earnings per share to reflect application of the fair value
recognition provision of SFAS No. 123.

<TABLE>
<CAPTION>
                                   Year Ended           Year Ended
                                December 31, 2002    December 31, 2001
                               -------------------  -------------------
<S>                            <C>                  <C>
Net loss applicable
  to common shareholders:
  As reported:                 $       11,279,136   $        7,379,005
  Less: compensation expense
    charged to income:                   (665,877)            (459,567)
  Plus: proforma compensation
    expense:                              803,076              489,997
                               -------------------  -------------------
Proforma net loss applicable
  to common shareholders:      $       11,416,335   $        7,409,435
                               ===================  ===================
Basic loss per common share:
  As reported:                 $             2.62   $             1.95
  Proforma:                    $             2.65   $             1.96
</TABLE>

Basic Loss Per Share-Basic loss per share has been computed by dividing net loss
by the weighted average number of shares outstanding. All options outstanding at
December 31, 2001 and 2002 have not been included because they are
anti-dilutive. Accordingly, basic and diluted loss per share is the same for all
periods presented.

New Accounting Pronouncements-Statement of Financial Accounting Standards
("SFAS") No. 141, "Business Combinations", was issued in June 2001 and
effectively eliminates the use of the "pooling of interests" method to account
for business combinations after July 1, 2001. Management believes that the
adoption of this statement will not adversely impact future operations, and all
potential future acquisitions, if consummated, will be accounted for using the
"purchase" method.

Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets", was issued in June 2001. Required adoption of this
statement is effective for all fiscal years beginning after December 31, 2001.
This statement amends SFAS No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to be Disposed Of", to exclude from its scope
goodwill and intangible assets that are not amortized. Under SFAS No. 142,
goodwill and intangible assets with indeterminate lives will no longer be
amortized as expense over estimated useful lives after December 31, 2001 for
assets acquired prior to July 1, 2001, and no amortization will occur for any
goodwill and intangible assets acquired after June 30, 2001. These costs are to
be tested for impairment at least annually, or more frequently if events or
changes in circumstances indicate that the asset might be impaired.

SFAS No. 143, "Accounting for Asset Retirement Obligations", addresses financial
reporting for obligations associated with the retirement of long-lived assets
that result from the acquisition, construction, development and (or) the normal
operation of a long-lived asset (except for certain obligations of lessees) and
is effective for financial statements issued for fiscal years beginning after
June 15, 2002. The implementation of this standard is not anticipated to have a
material impact on the financial statements of the Company.


                                       30
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets as well as expands the qualifications of discontinued
operations and is effective for financial statements issued for fiscal years
beginning after December 15, 2001. ITIS has elected to early adopt this
statement. Accordingly, ITIS has recorded losses from discontinued operations in
2002 of $607,656 and $487,177 for the disposal of GoverNet Affairs and Brief
Reporter, respectively, and losses from discontinued operations in 2001 of
$897,418 and $73,950 for the disposal of Compass Data Systems and Venco
Compliance, respectively. (see note 7) Impairment in the amount of $6,529,053
and $2,741,955 was recorded during the years ended December 31, 2002 and 2001,
respectively. (see note 6).

NOTE 3-DISCONTINUED OPERATIONS:

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets",
addresses financial accounting and reporting for the impairment or disposal of
long-lived assets as well as expands the qualifications of discontinued
operations and is effective for financial statements issued for fiscal years
beginning after December 15, 2001. ITIS has elected to early adopt this
statement.

During the year ended December 31, 2002, ITIS recorded a loss from discontinued
operations of $607,656 for the disposal of GoverNet Affairs and $487,177 for the
disposal of Brief Reporter. During the year ended December 31, 2001, ITIS
recorded a loss from discontinued operations of $897,418 for the disposal of
Compass Data Systems and $73,950 for the disposal of Venco Compliance. (see note
7)

For the years ended December 31, 2002 and 2001, losses related to the
discontinued operations of GoverNet Affairs amounted to $163,317 and $557,013,
respectively, and losses related to the discontinued operations of Brief
Reporter amounted to $98,901 and $148,658, respectively. For the year ended
December 31, 2001, losses related to the discontinued operations of Compass Data
Systems and Venco Compliance amounted to $865,850 and $50,333, respectively.

Losses from discontinued operations of $6,607,033 and $3,455,122 (including
impairment charges in the amount of $6,529,053 and $2,741,955) were recorded for
years ended December 31, 2002 and 2001, respectively, for the disposal of the
Internet Services operations of National Law Library.

NOTE 4-ASSETS HELD FOR SALE:

On August 27, 2002, ITIS subsidiaries National Law Library, Brief Reporter and
Litidex completed the sale of their data and Internet domains, as well as the
trademark for "ITISLAW," the pending application rights for National Law
Library, and the operations of Brief Reporter in Charlottesville, Virginia, to
JuriSearch Holdings, LLC. (see note 7) Based on the guidelines of SEC Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements, it is
the opinion of management that the criteria required to permit revenue
recognition in relationship to this sale have not been met at the present time.
Accordingly, utilizing the deposit method of accounting, management has
reclassified the database assets from "fixed assets and intangibles" to "assets
held for sale" on the December 31, 2002 balance sheet, and has accounted for
payments received on the contract through December 31, 2002, as "deposit on
sales contract". When, in management's opinion, the criteria has been met to
permit revenue recognition and the recording of cost in relationship to this
sale, the assets held for sale and the deposit on sales contract will be
reclassified to the statement of operations and a gain or loss will be recorded
on the sale. Management has recorded an impairment charge to assets held for
sale in the amount of $6,529,053 based on a valuation study prepared by an
independent appraiser as of December 31, 2002 (see note 6). Because this
impairment is now judged to have existed at the time of the sale, management
intends to restate its quarterly report on form 10-Q for the quarter ended
September 30, 2002 to include this charge. In determining the impairment charge,
an assumed 37% income tax rate and 30% discount rate were applied to projected
future cash flows from the sales contract to determine fair value of the assets
held for sale.

NOTE 5-BUSINESS SEGMENTS:


                                       31
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

During the year ended December 31, 2001, ITIS and its subsidiaries were engaged
in the business of providing Internet services, compliance and safety training
materials, and automated litigation support services. As of October 31, 2001 we
no longer provide compliance and safety training materials, and results from
these activities have been classified as discontinued operations. Further, the
results of Internet Services operations of subsidiary GoverNet Affairs, which
discontinued operations in June 2002, and the results of the consolidated
Internet Services operations of subsidiaries National Law Library and Brief
Reporter, which were sold in August 2002, are classified as discontinued
operations. As of August 15, 2002, ITIS no longer has an ongoing Internet
Services operating segment. However, as a result of the July 29, 2002 sale by
National Law Library of a copy of data to American Legal Data, LLC, (see note
7), National Law Library as a corporate entity continues to have sales proceeds
and some ongoing expenses. The results of this activity have been classified as
"Database Management". The new segment, "Pharmacy Operations," reflects results
of new subsidiary PharmHouse, which began operation of two pharmacies in
September 2002. Corporate overhead amounts have been reallocated for all periods
to the continuing and new business segments. Accordingly, financial results from
continuing operations are as follows:

<TABLE>
<CAPTION>
                                             SEGMENT INFORMATION
                                            ---------------------
                                             INCOME
TWELVE MONTHS ENDED                         (LOSS) FROM   INTEREST      TOTAL       DEPRECIATION/
DECEMBER 31, 2002              NET SALES     OPERATIONS   EXPENSE       ASSETS      AMORTIZATION
----------------------------  ------------  ------------  --------  --------------  -------------
<S>                           <C>           <C>           <C>       <C>             <C>
Database Management           $    170,400  $  (746,217)  $595,046  $    5,233,952  $     216,348
Automated Litigation Support       807,804   (1,617,995)   221,119       2,505,576        309,148
Pharmacy Operations                 19,759     (665,058)    56,117         422,272         13,716
                              ------------  ------------  --------  --------------  -------------
Total, ITIS Holdings Inc.     $    997,963  $(3,029,270)  $872,282  $    8,161,800  $     539,212
                              ============  ============  ========  ==============  =============

                                            INCOME
TWELVE MONTHS ENDED                         (LOSS) FROM   INTEREST      TOTAL       DEPRECIATION/
DECEMBER 31, 2001             NET SALES     OPERATIONS    EXPENSE       ASSETS      AMORTIZATION
----------------------------  ------------  ------------  --------  --------------  -------------
Database Management           $          -  $  (627,145)  $351,192  $   12,813,833  $     215,816
Automated Litigation Support     2,691,855     (712,807)    52,568       3,273,438      1,089,418
Pharmacy Operations                      -            -          -               -              -
                              ------------  ------------  --------  --------------  -------------
Total, ITIS Holdings Inc.     $  2,691,855  $(1,339,952)  $403,760  $   16,087,271  $   1,305,234
                              ============  ============  ========  ==============  =============
</TABLE>


NOTE 6-IMPAIRMENT OF LONG-LIVED ASSETS:

Because ITIS had not obtained substantial new capital or long-term funding and
in consideration of significant losses by the Company, especially in the
Internet Services segment, management recorded an impairment charge to our
database assets in the amount of $2,741,955 at December 31, 2001 based on
valuation estimates using net cash flows projected over the estimated useful
lives of the assets.

During the quarter ended September 30, 2002, ITIS subsidiaries National Law
Library, Brief Reporter and Litidex completed the sale of their data and
Internet domains, as well as the trademark for "ITISLAW," the pending
application rights for National Law Library, and the operations of Brief
Reporter in Charlottesville, Virginia, to JuriSearch Holdings, LLC (see note 7).
Payments for the assets will be made monthly over the next twenty-five years
based on a percentage of subscriber income, with a guaranteed monthly minimum
for the first five years. Based on the guidelines of SEC Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements, it is the opinion
of management that the criteria required to permit revenue recognition in
relationship to this sale have not been met at the present time. Specifically,
full delivery of the database assets has not yet occurred (buyer has the right
of access to the ITIS server for the purpose of copying data from that Website;
in the interim, National Law Library is maintaining the site at buyer's
expense), and the seller's price to the buyer is not fixed or readily
determinable at the date of this filing (inadequate information is currently
available to reasonably project future payments to be made based on a percentage
of subscriber


                                       32
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

income). Accordingly, utilizing the deposit method of accounting, management has
reclassified the database assets from "fixed assets and intangibles" to "assets
held for sale" on the December 31, 2002 balance sheet, and has accounted for
payments received on the contract through December 31, 2002 as "deposit on sales
contract".

SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
addresses financial accounting and reporting for the impairment of long-lived
assets to be disposed of by sale. Assets classified as held for sale are to be
reported at the lower of their carrying amount or fair value less cost to sell,
and, if at the date of commitment to the plan to sell the asset, the carrying
amount of the assets to be sold exceeds the fair value of those assets less the
cost to sell, an impairment loss should be recognized. Management hired an
independent appraiser to prepare valuation estimates of future net cash flows
projected over the twenty-five year life of the sales contract, and, based on
these estimates, management has recorded an impairment charge in the year ended
December 31, 2002 in the amount of $6,529,053. Because this impairment is now
judged to have existed at the time of the sale, management intends to restate
its quarterly report on form 10-Q for the quarter ended September 30, 2002 to
include this charge, which has been recorded to "loss from operations of
discontinued business segments." In determining the impairment charge, an
assumed 37% income tax rate and 30% discount rate were applied to projected
future cash flows from the sales contract to determine fair value of the assets
held for sale. Losses on sale of assets for the year ended December 31, 2002
would reflect an increase of $2,276,250 had management not recorded this sale
using the deposit method of accounting, and had instead recorded the sale price
at the undiscounted guaranteed minimum payment total of $2,423,750 less
$4,700,000 in cost basis of the assets sold. This would result in a net loss for
the year ended December 31, 2002 in the amount of $13,555,386.

Management believes that the evaluation of potential future impairment of its
assets held for sale and other intangibles continues to represent an estimate
made by management that is subject to impact in the near term in accordance with
the American Institute of Certified Public Accountant's Statement of Position
(SOP) 94-6 "Disclosure of Certain Significant Risks and Uncertainties".

NOTE 7-ACQUISITIONS & DISPOSITIONS:

Compass Data Systems

On July 27, 2000, ITIS's board of directors approved the purchase of a
controlling interest in Compass Data Systems, Inc. (Compass), a private Nevada
corporation that provides electronic information publishing services in a
completely searchable information database to industries and organizations.
Stock purchase agreements by and between ITIS and three stockholders of Compass
were signed with each of the sellers effective as of October 1, 2000. Under the
terms of these stock purchase agreements, ITIS agreed to issue an aggregate of
1,676,105 pre-reverse split restricted, unregistered shares of ITIS's common
stock, valued at approximately $2.3 million, for approximately 63% of the total
outstanding shares of Compass. As of September 30, 2001, 1,670,378 pre-reverse
split shares had been issued to the selling shareholders. The issuances of ITIS
stock were made in reliance upon the Section 4(2) private placement exemption
from registration. None of the sellers received registration rights for the ITIS
shares they received in this transaction. The acquisition was accounted for
under the purchase method of accounting. The total purchase price of $2,294,425
included ITIS's allocation of $1,294,425 to database content and software costs
and $1 million to a contractual agreement, based on the results of an
independent appraisal.

Under the terms of the purchase agreement dated October 2000, sixty-eight
percent of Compass stock was to be delivered; however, the required percentage
was never received. Further, it appears that the three Compass shareholders
never took appropriate action with respect to the sale of their shares of
Compass stock.

In August 2001, certain shareholders of Compass filed suit in Washoe County,
Nevada against the aforementioned three Compass shareholders, alleging that the
stock the three individuals delivered to ITIS was not valid, and that as a
result, ITIS has no ownership interest in Compass. The wrongful actions as
alleged in the suit relate to stock ownership of a predecessor of Compass. ITIS
is not a party to this lawsuit and has placed the shares of Compass received in
the transaction in the registry of the Nevada Court. Additionally, ITIS has
canceled the restricted shares of ITIS that were issued to the three
individuals. As of October 31, 2001, the operations and management of Compass,
previously reported


                                       33
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

as a subsidiary of ITIS, were turned over to current Compass employees. As a
result, ITIS wrote off $1,229,704 in assets at September 30, 2001, representing
the net book value of the Compass database content and software costs originally
valued at $1,294,425. The $1 million value assigned to a contractual agreement
of Compass at the time of acquisition had been fully amortized as of the date
operations were returned. A loss on disposition of $897,418 for the disposition
of Compass was recorded in the year ended December 31, 2001. For the year ended
December 31, 2001, losses related to the operations of Compass Data Systems
amounted to $865,850. These losses have been reported as "discontinued
operations" in accordance with SFAS 144.


Venco Compliance

On October 1, 2000, ITIS purchased of all of the outstanding stock of Venco
Compliance, Inc., a private Texas corporation in the business of selling
compliance and safety training information to businesses such as dry cleaners
and others that deal with hazardous chemicals, biomaterials and other regulated
substances. In connection with this acquisition, ITIS issued an aggregate of
100,000 unregistered pre-reverse split shares of its common stock at closing on
October 1, 2000, valued then at $90,600, to Donald E. and Cathryn V. Tull. These
issuances were made in reliance upon Section 4(2) private placement exemption
from registration. Neither of the two sellers received registration rights for
the shares of ITIS they received in this transaction. The results of operations
of Venco Compliance and the fair value of tangible and intangible assets
acquired and liabilities assumed have been included in ITIS's consolidated
financial statements as of the acquisition date.

The acquisition was accounted for under the purchase method of accounting and
resulted in $90,600 of the purchase price being allocated to goodwill. On
October 31, 2001, the stock of Venco was sold and transferred by ITIS to its
former shareholders, Donald E. and Cathryn V. Tull. ITIS received $1,000 on
December 1, 2001 and will receive 5% of any future revenues of Venco in excess
of $10,000 per month. A loss on disposition of $73,950 was recorded in the year
ended December 31, 2001. For the year ended December 31, 2001, losses related to
the operations of Venco amounted to $50,333. These losses have been reported as
"discontinued operations" in accordance with SFAS 144. ITIS has not received any
amounts related to the agreement to receive 5% of any future revenues of Venco
in excess of $10,000 per month and no receipts under this agreement are expected
in the near term.

GoverNet Affairs

On November 15, 1999, ITIS's board of directors approved the purchase of
GoverNet Affairs, Inc., a Georgia corporation that owned and operated an
Internet site and connected databases that provided subscribers with a Federal
and state legislative tracking and monitoring system. In connection with this
acquisition, ITIS issued an aggregate of 446,352 pre-reverse split shares of
common stock in exchange for all the outstanding stock of GoverNet Affairs. The
total purchase price of $1,341,400 includes the estimated fair value of common
stock issued of $1.3 million, $22,000 of promissory notes payable to two
stockholders of GoverNet Affairs, and assumption of $19,400 of other debt. The
acquisition was accounted for under the purchase method of accounting and
resulted in $1,271,854 of the purchase price being allocated to developed
technology, based on the results of an independent appraisal. The results of
operations of GoverNet Affairs and the fair value of tangible and intangible
assets acquired and liabilities assumed have been included in ITIS's
consolidated financial statements as of the acquisition date.

As part of the purchase agreement to acquire GoverNet Affairs, options to
purchase 320,000 pre-reverse split shares of ITIS's common stock were granted to
the former stockholders of GoverNet Affairs. These stock options were
exercisable on August 31, 2000, August 31, 2001, and August 31, 2002 provided
certain revenue and earnings targets were achieved in each of the three
preceding twelve-month periods. The options are subject to an exercise price of
$2.94 per share. None of these options were exercised, and all expired on August
31, 2002.

In June 2002, management of ITIS transferred the customers of GoverNet Affairs
to another provider for no monetary or other consideration and ceased operation
of this subsidiary, which had never reached profitability. As a result, ITIS
wrote off $593,529 in assets at June 30, 2002, representing the net book value
of the developed technology of GoverNet Affairs, originally valued at
$1,271,854. A loss on disposition of $607,656 was recorded in the quarter ended
June 30, 2002. For


                                       34
<PAGE>
the years ended December 31, 2002 and 2001, losses related to the operations of
GoverNet Affairs amounted to $163,317 and $557,013, respectively. These losses
have been reported as "discontinued operations" in accordance with SFAS 144.

National Law Library Assets and Brief Reporter

On July 29, 2002 ITIS entered into an Asset Purchase Agreement with American
Legal Data, LLC, a Delaware limited liability company (Buyer). Under the terms
of the Purchase Agreement, ITIS sold to Buyer all right, title and interest in
one complete copy of data consisting of an electronic form of federal and state
constitutions, statutes, regulations, case law, rules and legal briefs, together
with additions, derivations and updates, as it existed on July 29, 2002. In
consideration for these assets, Buyer agreed to pay to ITIS $2 million, of which
$25,000 was paid in 2001 and $66,000 was paid at or prior to closing on July 29,
2002. The balance of the consideration ($1,909,000) is payable in minimum
monthly installments of $16,000 for 120 months beginning August 16, 2002. Unpaid
principal accrues interest at the rate of 8% per year, and in the 121st month
following the closing date, Buyer will make a lump sum payment equal to the
outstanding principal and any accumulated interest. On February 24, 2003, ITIS
agreed to move seven monthly payments of $16,000 ($112,000) to the lump sum
payment due at the end of the note. At December 31, 2002, the principal balance
owed by American Legal Data was $1,892,481. During the year ended December 31,
2002, $16,519 and $15,481 were collected in principal and interest,
respectively, related to this note.

Based on the guidelines of SEC Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, it is the opinion of management that the
installment method of accounting is appropriate for this sale, as uncertainty
exists as to the ultimate collectibility of the sale price. Accordingly,
management has provided for deferred gross profit in an amount equal to the
outstanding balance of the note receivable at December 31, 2002, or $1,892,481.
Principal and interest payments on the note receivable will be recorded as
income, and a reduction for the principal amount will be recorded to the note
receivable and deferred gross profit, as future payments are received.

National Law Library, a Texas corporation and wholly owned subsidiary of ITIS,
was formed in November 1998 for the purpose of developing and marketing an
Internet destination to be used for legal research. Commercial operations began
in January 1999. On December 10, 1999, ITIS's Board of Directors approved
National Law Library's purchase of Brief Reporter, LLC, a Virginia limited
liability company which owns and operates an Internet site and a connected
database containing appellate briefs and trial memoranda written by attorneys
for certain significant cases in all Federal and state jurisdictions. In
connection with this acquisition, ITIS issued an aggregate of 483,325
pre-reverse split shares, valued at $1,000,000, in exchange for all of the
outstanding interests of Brief Reporter. The acquisition was accounted for under
the purchase method of accounting and resulted in $710,206 and $250,000 of the
purchase price being allocated to database content and developed technology,
respectively. The results of operations of Brief Reporter and the fair value of
tangible and intangible assets acquired and liabilities assumed have been
included in ITIS's consolidated financial statements as of the acquisition date.

On August 27, 2002, ITIS subsidiaries National Law Library, Brief Reporter and
Litidex(R) completed the sale of their data and Internet domains, as well as the
trademark for "ITISLAW," the pending application rights for National Law
Library, and the operations of Brief Reporter in Charlottesville, Virginia, to
JuriSearch Holdings, LLC. The Asset Purchase Agreement includes a Security
Agreement that grants to ITIS a security interest in all intellectual property,
customers, equipment, machinery, furniture and fixtures, supplies and assets
being purchased. Payments for the assets will be made monthly over the next
twenty-five years based on a percentage of subscriber income, with guaranteed
monthly minimums totaling in aggregate $2,423,750 over the first five years. At
December 31, 2002, the outstanding balance of guaranteed payments amounted to
$2,269,995, as payments totaling $153,755 were received in the year ended
December 31, 2002.

Based on the guidelines of SEC Staff Accounting Bulletin No. 101, Revenue
Recognition in Financial Statements, it is the opinion of management that the
criteria required to permit revenue recognition in relationship to this sale
have not been met at the present time. Specifically, full delivery of the
database assets has not yet occurred (buyer has the right of access to the ITIS
server for the purpose of copying data from that Website; in the interim,
National Law Library is maintaining the site at buyer's expense), and the
seller's price to the buyer is not fixed or readily determinable at the date of
this filing (inadequate information is currently available to reasonably project
future payments to be made based on a percentage of subscriber income).
Accordingly, utilizing the deposit method of accounting, management has
reclassified the database assets from "fixed assets and intangibles" to "assets
held for sale" on the December 31, 2002 balance sheet, and has


                                       35
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

accounted for payments received on the contract through December 31, 2002, as
"deposit on sales contract". When, in management's opinion, the criteria has
been met to permit revenue recognition and the recording of cost in relationship
to this sale, the assets held for sale and the deposit on sales contract will be
reclassified to the statement of operations and a gain or loss will be recorded
on the sale. Management has recorded an impairment charge to assets held for
sale in the amount of $6,529,053 based on a valuation study prepared by an
independent appraiser as of December 31, 2002 (see note 6). Because this
impairment is now judged to have existed at the time of the sale, management
intends to restate its quarterly report on form 10-Q for the quarter ended
September 30, 2002 to include this charge. In determining the impairment charge,
an assumed 37% income tax rate and 30% discount rate were applied to projected
future cash flows from the sales contract to determine fair value of the assets
held for sale. Losses on sale of assets for the year ended December 31, 2002
would reflect an increase of $2,276,250 had management not recorded this sale
using the deposit method of accounting, and had instead recorded the sale price
at the undiscounted guaranteed minimum payment total of $2,423,750 less
$4,700,000 in cost basis of the assets sold. This would result in a net loss for
the year ended December 31, 2002 in the amount of $13,555,386.

Management has recorded a loss on disposition of the operations of Brief
Reporter in the quarter ended September 30, 2002 in the amount of $487,177,
which primarily represents the net book value of the Brief Reporter database
content and developed technology. For the year ended December 31, 2002, losses
related to the discontinued operations of National Law Library and Brief
Reporter amounted to $77,980 and $98,901 respectively, while losses for year
ended December 31, 2001 amounted to $713,167 and $148,658, respectively. The
operations of National Law Library related to Internet Services and the
operations of Brief Reporter have been reported as "discontinued operations" in
accordance with SFAS 144.

PharmHouse Net Revenue Interest

On July 1, 2002, ITIS and its wholly owned subsidiary PharmHouse entered into a
Purchase Agreement and Grant of Net Revenue Interest with Rainmaker Ventures,
Ltd., a Texas limited partnership in which Hunter M.A. Carr, W. Paul Thayer and
George Roberts are limited partners. Messrs. Carr, Thayer and Roberts are
directors of ITIS and Mr. Carr is the President, Chief Executive Officer, and
Chairman of the Board of ITIS. Under the terms of the Purchase Agreement,
Rainmaker committed to fund up to $2,500,000 to ITIS in exchange for a 50%
interest in the net revenues of the first 14 pharmacy locations opened by
PharmHouse. The Purchase Agreement also grants to Rainmaker an option to acquire
a 50% net revenue interest in an additional 4 pharmacies in exchange for
additional funding of $500,000 to ITIS. As of December 31, 2002, Rainmaker has
funded $2,139,500 of the $2,500,000 purchase price. Although it is the intent of
the parties that a material amount of the purchase price will be used for the
purpose of constructing and opening separately licensed pharmacy locations, the
Agreement does not place any restrictions on the use of such funds by ITIS. The
amount of funding of the $2,500,000 is dependent upon the opening of at least
one separately licensed specialty medication pharmacy for each $166,667 invested
by Rainmaker as of the date of the funding request. While only two pharmacies
have begun operations as of the filing date of this Form 10-KSB, Rainmaker has
honored all funding requests made by ITIS. Due to the related- party nature of
this transaction and pursuant to EITF 88-18, management has recorded the funding
from Rainmaker as a long-term liability of ITIS rather than as deferred revenue,
and has recorded accrued interest payable in regard to this liability in the
amount of $56,117 during the year ended December 31, 2002. At the time the
pharmacies begin to generate net revenues to distribute to Rainmaker, ITIS will
apply those payments to the long-term liability and accrued interest payable
until the recorded liabilities are extinguished. Payments made thereafter will
be recorded as an ordinary operating expense.


                                       36
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)






NOTE 8-NOTES PAYABLE AND FINANCING AGREEMENTS:

The following table summarizes the notes payable and financing agreements of
ITIS excluding a disputed $500,000 note to Cootes Drive L.L.C. (see note 9).


                             DATE OF          DECEMBER 31,    DECEMBER 31,
LENDER                       ISSUANCE             2002            2001
---------------------------  --------------  --------------  --------------
Hunter M.A. Carr, CEO        May 2002        $   2,150,117   $   2,150,117
George A. Roberts, Director  May 2002            1,840,000       1,590,000
W. Allyn Hoaglund, Director  October 2000           50,000          50,000
Phoenix Energy               January 2001                -         100,000
Stephen A. Fonicello         February 2001               -          25,000
W. Paul Thayer, Director     May 2002              182,500         132,500
Frost National Bank          February 2002          18,173          25,434
Houston RPM, L.C.            March 2002            249,385               -
Rainmaker Ventures, Ltd.     July 2002           2,173,500               -
                                             --------------  --------------
                                                 6,663,675       4,073,051

Less long-term portion to
Hunter M.A. Carr, CEO        May 2002           (2,150,117)     (2,150,117)
George A. Roberts, Director  May 2002           (1,840,000)     (1,590,000)
W. Paul Thayer, Director     May 2002             (182,500)       (132,500)
Frost National Bank          February 2002         (10,207)        (18,114)
Rainmaker Ventures, Ltd.     July 2002          (2,173,500)              -
                                             --------------  --------------

Current portion of debt                      $     307,351   $     182,320
                                             ==============  ==============


As of December 31, 2002 and 2001, the total principal amount owed to Hunter
Carr, CEO of ITIS, was $2,150,117. Accrued but unpaid interest amounted to
$298,663 and $160,196 at December 31, 2002 and 2001, respectively. Prior to May
22, 2002, notes payable to Mr. Carr bore interest at the rate of prime plus two
percent per year, payable in cash on demand after one year. At Mr. Carr's option
and with 30 days written notice, the notes could be repaid in common stock of
ITIS at a discounted price based on the lowest price at which ITIS had sold its
common stock during the one-year period preceding the exercise of this option.
On May 22, 2002, a new note was issued to Mr. Carr in the amount of $2,150,117
as a renewal and consolidation of all prior notes. The new note bears interest
at the rate of 18% per year, and is payable on demand after one year. In
connection with the new note, ITIS issued detachable warrants to Mr. Carr to
purchase up to 2,464,977 shares of common stock of ITIS at $.96 per share and
cancelled any and all rights to convert principal and interest of the prior
notes to common stock. Expense of $99,074 related to the issuance of these
warrants was recorded in May 2002.With respect to this note payable, Mr. Carr
has provided written commitment to ITIS to provide forbearance and extend the
due date on such note to at least July 15, 2004, if to demand payment would
impair


                                       37
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

ITIS's ability to meet its other existing liabilities and commitments.
Management believes that to demand payment would impair ITIS's ability to meet
other obligations and therefore, the note has been classified as long-term.

In October 2000, February 2001, and March 2002, ITIS executed demand notes for
$400,000, $190,000, and $250,000 respectively, in favor of George A. Roberts, a
member of its board of directors. The notes bore interest at the rate of prime
plus two percent per year, payable in cash on demand after one year. At the
option of the holder and with 30 days written notice, the notes could be repaid
in common stock of ITIS at a discounted price based on the lowest price at which
ITIS has sold its common stock during the one-year period preceding the exercise
of this option. On October 24, 2001, ITIS wholly owned subsidiary ITIS, Inc., a
Texas corporation that conducts business as Litidex(R), executed a promissory
note for $1,000,000 in favor of Dr. Roberts. This note bore interest at an
annual fixed rate equal to the lesser of the maximum amount allowed by law as
adjusted from time to time or 18%, and was payable in full with accrued interest
after one year. The note was secured by a Security Agreement covering all
accounts, contract rights and general intangibles arising out of the litigation
support project among Litidex(R), the law firm of Christian Smith & Jewell, and
the law firm of O'Quinn, Laminack & Pirtle. Legal fees of $29,100 were paid from
the proceeds of this note. On May 22, 2002, a new note was issued to Dr. Roberts
in the amount of $1,840,000 as a renewal and consolidation of all prior notes.
The new note bears interest at the rate of 18% per year, and is payable on
demand after one year. In connection with the new note, ITIS issued detachable
warrants to Dr. Roberts to purchase up to 2,107,352 shares of common stock of
ITIS at $.96 per share and cancelled any and all rights to convert principal and
interest of the prior notes to common stock. Expense of $84,700 related to the
issuance of these warrants was recorded in May 2002. With respect to this note
payable, Dr. Roberts has provided written commitment to ITIS to provide
forbearance and extend the due date on such note to at least July 15, 2004, if
to demand payment would impair ITIS's ability to meet its other existing
liabilities and commitments. Management believes that to demand payment would
impair ITIS's ability to meet other obligations and therefore, the note has been
classified as long-term.

In October 2000, ITIS executed a demand note for $50,000 in favor of W. Allyn
Hoaglund, a member of its board of directors. The note bears interest at the
rate of prime plus two percent per year and is payable in cash on demand after
one year. At the option of the holder and with 30 days written notice, the note
may be repaid in common stock of ITIS at a discounted price based on the lowest
price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option.

On January 16, 2001, ITIS executed a demand promissory note in the amount of
$100,000 payable to Phoenix Energy Consulting Services, Inc. The note bore
interest at 10% per year and was payable in cash on demand after one year. At
the option of the holder and with 30 days written notice, the note could be
repaid in common stock of ITIS at a discounted price based on the lowest price
at which ITIS had sold its common stock during the one-year period preceding the
exercise of this option. On April 2, 2002, the lender exercised the option to
convert the note plus accrued interest into restricted common shares of ITIS.
Accordingly, ITIS issued 1,601,565 pre-reverse split restricted common shares to
the lender, such shares representing $100,000 in principal and $12,109 in
accrued and unpaid interest at April 2, 2002.

On February 28, 2001, ITIS executed a demand promissory note in the amount of
$25,000 payable to Stephen A. Fonicello. The note bore interest at the rate of
prime plus two percent per year and was payable in cash on demand after one
year. At the option of the holder and with 30 days written notice, the note
could be repaid in common stock of ITIS at a discounted price based on the
lowest price at which ITIS has sold its common stock during the one-year period
preceding the exercise of this option. On February 28, 2002, Mr. Fonicello
exercised the option to convert the note plus accrued interest into restricted
common shares of ITIS. Accordingly, on March 4, 2002, ITIS issued 192,384
pre-reverse split restricted common shares to Mr. Fonicello, such shares
representing $25,000 in principal and $2,068 in accrued and unpaid interest at
February 28, 2002.

On February 5, March 21, April 11, and May 16 of 2001, and on April 3, 2002,
ITIS executed demand promissory notes for $50,000, $70,000, $25,000, $12,500,
and $50,000 respectively, in favor of W. Paul Thayer, a member of the board of
directors. On May 31, 2001, ITIS repaid Mr. Thayer $25,000 of principal toward
these notes. Prior to May 22, 2002, the notes bore interest at the rate of prime
plus two percent per year, payable in cash on demand after one year. At the
option of the holder and with 30 days written notice, the notes could be repaid
in common stock of ITIS at a discounted price based on the lowest price at which
ITIS had sold its common stock during the one-year period preceding the exercise
of this option. On May 22, 2002, a new note was issued to Mr. Thayer in the
amount of $182,500 as a renewal and


                                       38
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

consolidation of all prior notes. The new note bears interest at the rate of 18%
per year, and is payable on demand after one year. In connection with the new
note, ITIS issued detachable warrants to Mr. Thayer to purchase up to 204,102
shares of common stock of ITIS at $.96 per share and cancelled any and all
rights to convert principal and interest of the prior notes to common stock.
Expense of $8,203 related to the issuance of these warrants was recorded in May
2002. With respect to this note payable, Mr. Thayer has provided written
commitment to ITIS to provide forbearance and extend the due date on such note
to at least July 15, 2004, if to demand payment would impair ITIS's ability to
meet its other existing liabilities and commitments. Management believes that to
demand payment would impair ITIS's ability to meet other obligations and
therefore, the note has been classified as long-term.

In March 2002, ITIS wholly owned subsidiary National Law Library executed a
promissory note for $425,000 in favor of Houston RPM, L.C. The note bore
interest at 18% per year and was payable in monthly installments including
principal and interest commencing April 1, 2002. On April 17, 2002, National Law
Library executed a new promissory note for $675,441 in favor of Houston RPM,
L.C. This note refinanced $325,441 of the note dated March 1, 2002 in the
original amount of $425,000, and provided $350,000 in new funding to National
Law Library. The note bears interest at 18% per year and is payable in monthly
installments including principal and interest commencing May 17, 2002. The
amount of each monthly installment shall equal the total amount of credit card
receipts generated by National Law Library, but in no event shall the monthly
installment be less than $65,000. Any unpaid principal and accrued interest is
due in full on April 17, 2003. A Security Agreement covering all proceeds paid
or otherwise due from credit card companies and others pursuant to a Continuing
Service Agreement between Litidex(R) and National Law Library secures the note,
as do guarantees from ITIS Holdings Inc. and Litidex(R). At December 31, 2002,
the total principal amount owed to Houston RPM, L.C. was $249,385. During the
year ended December 31, 2002, National Law Library paid $525,615 in principal
and $67,996 in interest, respectively, related to this note.

On July 1, 2002, ITIS and its wholly owned subsidiary PharmHouse entered into a
Purchase Agreement and Grant of Net Revenue Interest with Rainmaker Ventures,
Ltd., a Texas limited partnership in which Hunter M.A. Carr, W. Paul Thayer and
George Roberts are limited partners. Messrs. Carr, Thayer and Roberts are
directors of ITIS and Mr. Carr is the President, Chief Executive Officer, and
Chairman of the Board of ITIS. Under the terms of the Purchase Agreement,
Rainmaker committed to fund up to $2,500,000 to ITIS in exchange for a 50%
interest in the net revenues of the first 14 pharmacy locations opened by
PharmHouse. The Purchase Agreement also grants to Rainmaker an option to acquire
a 50% net revenue interest in an additional 4 pharmacies in exchange for
additional funding of $500,000 to ITIS. As of December 31, 2002, Rainmaker has
funded $2,139,500 of the $2,500,000 purchase price. Although it is the intent of
the parties that a material amount of the purchase price will be used for the
purpose of constructing and opening separately licensed pharmacy locations, the
Agreement does not place any restrictions on the use of such funds by ITIS. The
amount of funding of the $2,500,000 is dependent upon the opening of at least
one separately licensed specialty medication pharmacy for each $166,667 invested
by Rainmaker as of the date of the funding request. While only two pharmacies
have begun operations as of the filing date of this Form 10-KSB, Rainmaker has
honored all funding requests made by ITIS. Due to the related- party nature of
this transaction and pursuant to EITF 88-18, management has recorded the funding
from Rainmaker as a long-term liability of ITIS rather than as deferred revenue,
and has recorded accrued interest payable in regard to this liability in the
amount of $56,117 during the year ended December 31, 2002. At the time the
pharmacies begin to generate net revenues to distribute to Rainmaker, ITIS will
apply those payments to the long-term liability and accrued interest payable
until the recorded liabilities are extinguished. Payments made thereafter will
be recorded as an ordinary operating expense.

NOTE 9-FINANCING AGREEMENT WITH COOTES DRIVE L.L.C.:

On November 20, 2000, ITIS entered into an equity line financing arrangement
with Cootes Drive LLC. This arrangement was the successor to an intermediate
financing agreement of May 11, 2000. The financing arrangement was in the form
of a Securities Purchase Agreement providing for the purchase by Cootes Drive of
up to $25 million worth of shares of common stock of ITIS over an 18-month
period. Under the terms of the Securities Purchase Agreement, ITIS could have
delivered a put to Cootes Drive specifying the dollar amount of shares ITIS
intended to sell on each put. The maximum amount that ITIS could have received
under the Securities Purchase Agreement was $25 million or a lesser amount
depending on the limitation on the number of shares Cootes Drive (and its
affiliates) were permitted to hold at any one time. Certain conditions had to be
met before Cootes Drive was obligated to accept a put from ITIS. Due to
litigation in


                                       39
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

regard to the foregoing financing agreement (see note 11), it is not expected
that Cootes Drive would honor a put even if ITIS were to meet the funding
requirements in the future.

On December 5, 2000, ITIS executed a convertible promissory note in the face
amount of $500,000 in favor of Cootes Drive. The note was a demand note to
accrue interest at the rate of 5% per annum, and the principal could have been
converted to common stock of ITIS. In connection with this promissory note, ITIS
issued a warrant to Cootes Drive for 41,650 shares of ITIS common stock at an
exercise price of $0.288 per share. A commission of $17,500 and legal fees of
$30,000 related to the equity line financing arrangement were paid from the
proceeds of this note. On December 5, 2000, ITIS also entered into a side letter
agreement that obligated Cootes Drive to provide an additional $500,000 on
January 14, 2001, in exchange for another convertible promissory note, on
similar terms. This additional funding never occurred.

ITIS disputes the validity of the $500,000 convertible promissory note dated
December 5, 2000, on the grounds that this convertible note is a part of Cootes
Drive's efforts to defraud ITIS and to manipulate the price of ITIS's stock.
This convertible note and the associated funding transactions are all the
subject of ITIS's suit against Cootes Drive and others (see note 11). The note
is reflected on the accompanying balance sheet as a current liability entitled
"Disputed Note to Cootes Drive LLC."

On December 5, 2000, ITIS granted registration rights to Cootes Drive for up to
17,541,650 shares of common stock it could have acquired under the equity line
financing, the convertible promissory note financings and the warrants granted
in connection with all of these financings. ITIS filed a registration statement
with the SEC covering the resale of these shares that was declared effective on
January 11, 2001. Due to litigation as discussed herein (see note 11) and
because ITIS does not meet the funding requirements, it is not expected that any
further funding will occur from this source.

NOTE 10-INCOME TAXES:

ITIS has had losses since inception and, therefore, has not been subject to
federal income taxes. As of December 31, 2002 and 2001, ITIS had accumulated net
operating loss ("NOL") carryforwards for income tax purposes of approximately
$18.2 million and $14 million, respectively, resulting in deferred tax asset
amounts of $6.2 million and $4.8 million, respectively. These carryforwards
begin to expire in 2018 through 2022. The Tax Reform Act of 1986 provided for an
annual limitation on the use of NOL and tax credit carryforwards following
certain ownership changes that limit ITIS's ability to utilize these
carryforwards. Additionally, because U.S. tax laws limit the time during which
NOL and tax credit carryforwards may be applied against future taxable income
and tax liabilities, ITIS may not be able to take full advantage of its NOL and
tax credits for federal income tax purposes. Since ITIS has had recurring
operating losses since inception and there is no assurance of future taxable
income, a valuation allowance has been established to fully offset the deferred
tax assets.

NOTE 11-COMMITMENTS AND CONTINGENCIES:

Leases

ITIS leases its office space under the terms of operating leases. ITIS is
committed to making monthly payments of $7,298 under a lease agreement for
corporate office space that expires in June 2004. PharmHouse leases office space
pursuant to two lease agreements requiring monthly payments of $1,563 through
January 2004, and $595 through December 2003. Litidex(R) rents office space for
$689 monthly on a month-to-month basis.


                                       40
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

               Future minimum lease payments under operating leases are:

                         2003               171,085
                         2004                87,698
                         2005                38,141
                         2006                22,754
                                            -------
                         Total              319,678
                                            =======

Rent expense under operating leases was $170,993 and $112,190 for the years
ended December 31, 2002 and 2001, respectively.

Litigation

On January 26, 2001, in order to protect ITIS and its stockholders, ITIS filed a
lawsuit in United States District Court for the Southern District of Texas,
Houston Division, against Southridge Capital Management and several other
defendants, including Cootes Drive LLC, an alleged "straw man," for damages
resulting from alleged stock manipulation, federal securities law violations,
civil RICO, fraud, violations of Texas securities laws and other Texas statutes,
and conspiracy. The case also alleges misrepresentations by co-conspirators in
connection with certain funding transactions by the defendants with ITIS. All
defendants filed a joint motion to transfer this case to New York to be
consolidated with the lawsuit filed against us, described below. The United
States District Judge granted this motion and the case has been transferred to
the Southern District of New York. The defendants filed motions to dismiss the
case, and on July 17, 2002, the Judge issued an opinion refusing dismissal. The
case is ongoing, and discovery is underway. We intend to prosecute the case
vigorously. Our litigation counsel has advised us that the case is not
sufficiently advanced to evaluate the outcome, but that resolution of the suit
is anticipated in accordance with the Judge's July 17, 2002 ruling, which
states, "the court is fully prepared to assist the parties in moving this case
forward to trial without undue delay."

On February 5, 2001, Cootes Drive LLC filed a suit against ITIS in the Southern
District of New York alleging breach of one of the financing agreements with us
for our failure to honor a conversion of its preferred shares to common stock.
The suit seeks monetary damages of $5,000 per day and seeks to compel ITIS to
issue shares of common stock to Cootes Drive LLC. ITIS filed an answer to this
lawsuit. Cootes Drive LLC amended its complaint in order to add allegations that
ITIS is in default on a $500,000 promissory note in favor of Cootes Drive LLC
(the alleged default occurring after the filing of ITIS's suit against Cootes
Drive LLC and others); that ITIS has not honored a notice of redemption of
preferred shares held by Cootes Drive LLC in the amount of $2,214,012 (allegedly
occurring after the filing of ITIS's suit against Southridge Capital Management,
Cootes Drive LLC, and others); and that ITIS defrauded Cootes Drive by failing
to disclose material information with respect to the background of an officer
and a director of ITIS. ITIS's answer was timely filed on July 20, 2001. The
preferred shares and the associated funding transactions at issue are the
subject matter of ITIS's suit against Southridge Capital Management and others.
ITIS intends to defend this case vigorously. This case has been consolidated
with the ITIS case (above) and the parties have been realigned so that ITIS is
the plaintiff and Cootes Drive is the defendant. Litigation counsel has advised
us that the case is not sufficiently advanced to evaluate the outcome, but that
resolution of the suit is anticipated in accordance with the Judge's July 17,
2002 ruling which states, "the court is fully prepared to assist the parties in
moving this case forward to trial without undue delay." John M. O'Quinn, our
Texas based litigation counsel, represents ITIS and our directors, if necessary,
in all of these lawsuits on a contingency fee basis.

On June 4, 2001, Cootes Drive LLC filed a suit in Delaware against certain
directors of ITIS on behalf of itself as a holder of preferred stock and
allegedly derivatively on behalf of ITIS, alleging that the directors breached
their fiduciary duty to the stockholders by approving repayment in common stock
of loans made to ITIS by its directors. This suit was filed in the Court of
Chancery of Delaware in and for New Castle County. The suit was dismissed by
Order of the Court entered February 15, 2002.


                                       41
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

ITIS is also a party to other lawsuits related to matters normally incidental to
the Company's business. No other case, or group of related cases presenting
substantially similar issues of law or fact, exceeds 10% of the Company's
current assets or is expected to have a material effect on the manner in which
the Company conducts its business.

NOTE 12-COMMON AND PREFERRED STOCK:

Under a Plan and Agreement of Merger dated August 26, 2002, as approved by
resolution adopted by the Board of Directors of ITIS Inc. on that date and by
written consent of a majority of the voting interests of ITIS Inc. on September
18, 2002, ITIS Inc., the Delaware corporation, merged into its wholly owned
subsidiary, ITIS Holdings Inc., a Nevada corporation, effective September 18,
2002. ITIS Holdings Inc. became the surviving corporation after the effective
date of the merger. Under the terms of the Agreement, each issued share of the
common stock of the terminating corporation, ITIS Inc., was converted into
one-tenth (0.1) share of the surviving corporation, ITIS Holdings Inc. Each
issued share of the preferred stock of ITIS Inc. was converted to one share of
preferred stock of ITIS Holdings Inc. ITIS Holdings Inc. has authority to issue
200,000,000 shares of stock, of which 150,000,000 are common stock, $.001 par
value per share, and 50,000,000 are preferred stock, $.001 par value per share.
Unless otherwise noted, all prior period share amounts reflected in the
following discussion of common and preferred stock have been adjusted to account
for the one-for-ten reverse split in accordance with the Plan.

On March 10, 2001, in accordance with conversion terms in the February 28, 2001
demand note payable to Hunter M.A. Carr, ITIS issued 115,383 restricted shares
of common stock priced at $2.16667 per share to Mr. Carr, representing payment
of $250,000 towards the note payable to Mr. Carr in the original amount of
$2,060,000.

On April 6, 2001, ITIS issued 12,500 shares of common stock, valued at $23,248,
as compensation to its outside directors. These awards were recorded as
compensation expense in April 2001.

On April 19, 2001, ITIS issued 100,000 shares of common stock to Kelley V.
Kirker, Director and Chief Operations Office of ITIS, who purchased the shares
for $140,700 pursuant to exercising stock options issued to him under the 2001
Executive Stock Option Plan.

On May 17, 2001, ITIS issued 50,000 shares of common stock to Joanna Hoover,
Chief Financial Officer of ITIS, who purchased the shares for $77,000 pursuant
to exercising stock options issued to her under the 2001 Executive Stock Option
Plan.

On July 20, 2001, ITIS issued 5,000 shares of common stock to Robert Sarlay,
previously Vice President for Special Programs and Shareholder Relations for
ITIS, who was awarded the shares pursuant to exercising stock options issued to
him under the 2001 Executive Stock Option Plan. The shares were valued at
$8,040.

In September 2001, ITIS entered into an agreement with a vendor pursuant to
which ITIS agreed to issue 4,714 shares of unregistered common stock, valued at
$10,842, as consideration for insurance coverage. Insurance expense of $10,842
was recorded on September 5, 2001.

Pursuant to the 1999 Employee Stock Purchase Plan, 6,615 shares of ITIS common
stock were issued to employees of ITIS and its subsidiaries in September 2001.
The employees paid an aggregate $11,836 for these shares.

In October 2001, ITIS issued 2,000 shares of unregistered common stock, valued
at $5,000, to a vendor as compensation for services rendered. Consulting expense
of $5,000 was recorded in October 2001.

In October 2001, ITIS entered into a compensation agreement with James W.
Christian pursuant to which ITIS agreed to issue 100,000 shares of common stock
as consideration for legal services rendered and to provide an effective
registration statement for these shares. On October 3, 2001, the SEC accepted
the registration statement for these shares. Legal fees of $244,000 were
recorded in October 2001 for the aggregate fair value of the 1,000,000 shares
issued.

On February 28, 2002, Stephen A. Fonicello, holder of a demand promissory note
dated February 28, 2001 in the principal amount of $25,000, exercised his option
to convert the note plus accrued interest into restricted common shares of ITIS.
Accordingly, on March 4, 2002, ITIS issued 19,238 restricted common shares to
Mr. Fonicello, such shares representing $25,000 in principal and $2,068 in
accrued and unpaid interest at February 28, 2002.


                                       42
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

On April 2, 2002, Phoenix Energy Consulting Services, Inc., holder of a demand
promissory note dated January 16, 2001 in the principal amount of $100,000,
exercised the option to convert the note plus accrued interest into restricted
common shares of ITIS. Accordingly, on April 2, 2002, ITIS issued 160,157
restricted common shares to the lender, such shares representing $100,000 in
principal and $12,109 in accrued and unpaid interest at April 2, 2002.

On April 11, 2002, ITIS entered into an agreement with a vendor pursuant to
which ITIS issued 25,714 shares of unregistered common stock, valued at $18,000,
as consideration for professional services rendered during the 1st quarter of
2001.

On September 6, 2002, at the recommendation of the Compensation Committee and
with the approval of the Board of Directors, ITIS issued 1,214,001 shares of
unregistered common stock, valued at $485,600, to members of its Board of
Directors and key employees as compensation for services rendered and in payment
of accrued but unpaid directors fees and expenses as follows:

                                                 Number of
     Recipient                                   Shares       Value
     ------------------------------------------  ---------  ---------

     Hunter M.A. Carr, President and CEO           175,000  $  70,000
     George A. Roberts, Director                   119,324     47,729
     W. Paul Thayer, Director                      125,000     50,000
     W. Allyn Hoaglund, Director                   120,000     48,000
     Kelley V. Kirker, Director and COO            152,177     60,871
     Walter B. Rae, Director                       117,500     47,000
     Donald W. Sapaugh, past Director               80,000     32,000
     K. Charles Peterson, General Counsel           87,500     35,000
     Carol A. Wilson-Story, Corporate Secretary     75,000     30,000
     Kara A. Kirker, Corporate Treasurer            50,000     20,000
     Joanna Hoover, CFO                             75,000     30,000
     Michael Hluchanek, Chief Programmer            37,500     15,000
                                                 ---------  ---------

                                                 1,214,001  $ 485,600
                                                 =========  =========


Through December 2000, holders of 138.92 shares of Series A convertible
preferred stock converted the preferred shares to 313,715 shares of common
stock. At December 31, 2002 and 2001, 161.08 shares of Series A convertible
preferred stock remain outstanding.

NOTE 13-STOCK OPTIONS AND WARRANTS:

On March 26, 1999, the board of directors and the majority stockholders of ITIS
adopted the 1999 Stock Option Plan for ITIS. Under the Plan, the compensation
committee of the board of directors, consisting of at least two non-employee
members of the board of directors, may grant stock options to purchase common
stock of ITIS (either incentive or non-qualified stock options) and stock
appreciation rights to officers and employees, including directors who are
employees, of ITIS. The Compensation Committee has discretion to determine the
terms and conditions upon which the options may be exercised. Originally, the
stockholders approved 30,000 shares of common stock for the grant of options
under the Plan, subject to anti-dilution provisions. In February 2000, the
stockholders approved a resolution increasing this number to 300,000 shares.


                                       43
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

Also, on March 26, 1999, the board of directors and the majority stockholders
approved the 1999 Director Option Plan. The Director Plan provides for automatic
grants of stock options to non-employee directors. ITIS has reserved 20,000
shares of common stock for the grant of options under the Director Plan, subject
to anti-dilution adjustments. As of December 31, 2002, 11,200 options were due
to non-employee directors under the Director Option Plan; however, no options
had been issued under either the Stock Option Plan or the Director Option Plan.

ITIS granted certain stock options and warrants outside both the Stock Option
Plan and the Director Option Plan during the years ended December 31, 2002 and
2001, as summarized below:
                            Year Ended             Year Ended
                       ---------------------  ---------------------
                         December 31, 2002      December 31, 2001
                       ---------------------  ---------------------
                       Weighted               Weighted
                        Average                Average
                       Exercise   Number of   Exercise   Number of
                         Price      Shares      Price      Shares
                       ---------  ----------  ---------  ----------
Options Outstanding,
  Beginning of Period  $   27.10    443,257   $   28.90    425,757
Options Granted        $     .77     60,000   $    1.50    155,000
Warrants Granted       $    0.96  4,776,431   $    1.50     30,000
Options Cancelled      $   15.08    (62,000)  $   28.20    (12,500)
Options Exercised              -          -   $    1.50   (155,000)
                                  ----------             ----------
Options Outstanding,
  End of Period        $    3.01  5,217,688   $   27.10    443,257
                                  ==========             ==========
Options Exercisable,
  End of Period        $    3.01  5,217,688   $   28.80    372,757
                                  ==========             ==========

Other information regarding stock options outstanding at December 31, 2002 is as
follows:

                                Options Outstanding   Options Exercisable
                                -------------------  ---------------------
                                           Weighted              Weighted
                    Remaining               Average               Average
Range of Exercise      Life     Number of  Exercise   Number of  Exercise
Price                (Years)     Shares      Price     Shares      Price
------------------  ----------  ---------  ---------  ---------  ---------
$.77-1.50              2.3-3.5  4,866,431  $    0.96  4,866,431  $    0.96
$25.00-35.60            .6-7.2    340,000  $   30.84    340,000  $   30.84
$45.00-51.90            .5-6.3     11,257  $   47.84     11,257  $   47.84


On February 22, 2001, ITIS issued warrants to James W. Christian to purchase
30,000 shares of ITIS's common stock at an exercise price of $1.50 per share, at
any time and from time to time from and after February 22, 2001 and through and
including February 22, 2006. These warrants were issued in exchange for services
provided to ITIS and have an estimated value of $46,000.

At the September 2001 annual meeting, stockholders ratified the 2001 Executive
Stock Option Plan which had been approved by the board of directors in March
2001.Under the Plan, the stock option committee of the board of directors,
consisting of at least two non-employee members of the board of directors, may
grant stock options to purchase up to 700,000 shares of common stock of ITIS
(either incentive or non-qualified stock options) to employees of ITIS or its
subsidiary corporations. The stock option committee has discretion to determine
the terms and conditions upon which the options may be exercised.


                                       44
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

On April 16, 2001, pursuant to the 2001 Executive Stock Option Plan, ITIS
awarded 100,000 stock options to Kelley V. Kirker, Director and Chief Operations
Officer of ITIS. These options were fully vested at the grant date and were
exercisable in whole or in part at any time for a period of 3 years at an
exercise price equal to 67% of the bid price of common shares of ITIS at the
date of exercise. Mr. Kirker exercised these options on April 18, 2001, and
100,000 shares of ITIS common stock were issued to Mr. Kirker on April 19, 2001.
Compensation expense of $69,000 was recorded in April 2001 as a result of this
award.

On April 19, 2001, pursuant to the 2001 Executive Stock Option Plan, ITIS
awarded 50,000 stock options to Joanna Hoover, Chief Financial Officer of ITIS.
These options were fully vested at the grant date and were exercisable in whole
or in part at any time for a period of 3 years at an exercise price equal to 67%
of the bid price of common shares of ITIS at the date of the exercise. Ms.
Hoover exercised these options on May 16, 2001, and 50,000 shares of ITIS common
stock were issued to Ms. Hoover on May 17, 2001. Compensation expense of $38,000
was recorded in April 2001 as a result of this award.

In July 2001, pursuant to the 2001 Executive Stock Option Plan, ITIS issued
5,000 stock options to Robert Sarlay, previously Vice President for Special
Programs and Shareholder Relations for ITIS, in appreciation of his service to
ITIS. These options were fully vested at the grant date and were exercisable in
whole or in part at any time for a period of 3 years at an exercise price equal
to 67% of the bid price of common shares of ITIS at the date of exercise. Mr.
Sarlay exercised these options and 5,000 shares of ITIS common stock were issued
to him on July 20, 2001. Compensation expense of $8,040 was recorded as a result
of this award.

Had the compensation cost for all stock options been determined under the
alternative method under SFAS No. 123, ITIS's net loss for the years ended
December 31, 2002 and 2001 would have changed to the following pro forma
amounts:


                                  Year Ended          Year Ended
                              December 31, 2002   December 31, 2001
                              ------------------  ------------------
Net loss applicable
  to common shareholders:
  As reported:                $       11,279,136  $        7,379,005
  Proforma:                   $       11,416,335  $        7,409,435

Basic loss per common share:
  As reported:                $             2.62  $             1.95
  Proforma                    $             2.65  $             1.96


For pro forma disclosures, the fair value of each option grant is estimated at
the date of the grant using the Black-Scholes option pricing model with the
following assumptions: no expected dividends, risk-free interest rate of five
percent, price volatility of approximately 20% for the year ended December 31,
2002, 52% for the year ended December 31, 2001, and an average expected life of
4 years.

On March 1, 2002, ITIS issued stock options to Merit Financial, Inc. to purchase
60,000 shares of ITIS's common stock at an exercise price defined as the market
price of the stock on the date that the option is exercised, less fifteen
percent. These options were issued in exchange for consulting services
previously provided to ITIS, and related expense of $45,900 was recorded in
March 2002.

On May 22, 2002, in conjunction with the renewal and consolidation of various
notes payable to Hunter M.A. Carr, W. Paul Thayer, and George A. Roberts (see
note 8), ITIS cancelled any and all rights to convert principal and interest of
the prior notes to common stock and instead issued warrants to Carr, Thayer and
Roberts to purchase up to 2,464,977, 204,102, and 2,107,352 shares of common
stock, respectively, at $.96 per share. Expense of $191,977 and an equal amount
of equity related to issuance of these warrants was recorded in May 2002.

NOTE 14 - LICENSING AGREEMENT:

On March 8, 2002, Litidex(R) entered into an agreement with MedEx Systems, Inc.
whereby Litidex(R), through a newly


                                       45
<PAGE>
ITIS HOLDINGS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

formed Litidex(R) subsidiary, PharmHouse, Inc., intends to operate pharmacies in
81 exclusive territories identified in a Settlement and Separation Agreement.
MedEx is a Louisiana corporation that has developed a patent-pending system for
technologies related to the operation of such pharmacies. The agreement between
MedEx and Litidex(R) provided for a paid-up perpetual license from MedEx for the
operating system to be used in pharmacies to be established in territories
belonging to Litidex(R). This licensing agreement has been recorded at its cost
of $150,000 and is being amortized over a twenty-year term. Subsequent to
signing this agreement, and by a letter of intent dated March 27, 2002,
Litidex(R) paid MedEx an additional $150,000 as earnest money and consulting
fees towards a contemplated purchase of 50% of the issued and outstanding shares
of MedEx and an associated entity, Pegasus Pharmacy, Inc. This stock purchase
was not consummated, and the $150,000 earnest money and consulting fees was
recorded as "other expense" in March 2002.

NOTE 15-CONDITIONS AFFECTING ONGOING OPERATIONS:

ITIS's financial statements are prepared using principles applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. While the sale of a net revenue
interest in the first 14 PharmHouse stores in July 2002 provided $2.5 million in
available cash to ITIS, we do not at this time have an established source of
revenues, working capital or cash flow to cover operating costs to allow the
Company to remain in business. Management's business plan realizes that
anticipated revenues to be generated by the automated litigation support
services of Litidex(R) and the PharmHouse stores will be critical in providing
some of the funds necessary to continue company operations and to remain in
business. However, cash provided by the automated litigation support services of
Litidex(R) is not received on a scheduled basis, and the pharmacy operations of
PharmHouse are too new to evaluate. While management believes that revenues
provided by these subsidiaries may be adequate to fund company operations, it is
possible that such revenues may never be sufficient to meet company needs. While
management anticipates additional automated litigation support contracts, the
revenues of Litidex(R) cannot be sustained if no additional contracts are
obtained. If this should be the case, management plans to continue to utilize
additional loans from Mr. Carr (President and Chairman of the Board of Directors
of ITIS) and other directors and investors as long as funds from these sources
remain available. If the receivables associated with the litigation services
contracts are not collected timely, or at all, cash flow will be severely
restricted and additional reliance will have to be placed on other sources of
cash, if available when needed. Although management believes that the
receivables will be collected, collections to date have been irregular. If
adequate funding from the operations of Litidex(R), PharmHouse or other sources
is not available, ITIS will be unable to remain in business.

ITIS may be required to obtain additional financing or equity capital to remain
in business, and that capital, if available, may have provisions that could
further suppress current and future stock prices and cause significant dilution
to current shareholders. Our internally generated cash flows from operations
have historically been insufficient for our cash needs and will continue to for
the foreseeable future. While management projects that the internal source of
liquidity may improve, this objective may not be achieved in the near term, if
ever. As of April 15, 2003, sources of external and internal financing are very
limited. It is not expected that the internal source of liquidity will improve
until significant net cash is provided by operating activities (which may not be
achieved), and until such time, ITIS will rely upon external sources for
liquidity.

As reflected in the accompanying financial statements, ITIS has incurred
$29,836,383 in losses since inception and has used significant amounts of cash
in operating the company. Our current working capital is not sufficient to cover
cash requirements for the 2003 fiscal year or to bring the Company to a positive
cash flow position. ITIS may not ever become profitable and could fail as a
going concern.

We may in the future experience significant fluctuations in the results of our
operations. Such fluctuations may result in significant volatility in the price
and/or value of ITIS's common stock. Shortfalls in revenues, financing or
capital may adversely and disproportionately affect the results of operations
because a high percentage of current operating expenses are relatively fixed and
are primarily financed through loans and capital contributions. These funds are
not guaranteed and may not continue in the future. Accordingly, management
believes that period-to-period comparisons of results of operations should not
be relied upon as an indication of future results of operations.


                                       46
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

On February 19, 2001, upon recommendation of the Audit Committee, the board of
directors of ITIS voted to dismiss and replace Arthur Andersen LLP as ITIS's
independent accountants with Harper & Pearson Company. ITIS's consolidated
financial statements for the fiscal years ended December 31, 2001 have been
audited by Harper & Pearson Company.

For the period July 1, 1999 to December 31, 1999, Arthur Andersen LLP's report
did not contain any adverse opinions or disclaimers of opinion and was not
qualified or modified as to uncertainty, audit scope, or accounting principles.
During the period July 1, 1999 to December 31, 1999, and the subsequent interim
period through February 19, 2001, there were no disagreements with Arthur
Andersen LLP on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreement, if not
resolved to the satisfaction of Arthur Andersen LLP, would have caused it to
make reference to the subject matter of the disagreement in connection with its
reports on the financial statements of ITIS for such period. ITIS authorized
Arthur Andersen LLP to respond fully to the inquiries of Harper & Pearson
Company.

On September 16, 2002, upon recommendation of the Audit Committee, the board of
directors of ITIS voted to dismiss and replace Harper & Pearson Company as
ITIS's independent accountants with Fitts, Roberts & Co., P.C. ITIS's
consolidated financial statements for the fiscal year ended December 31, 2002
have been audited by Fitts, Roberts & Co., P.C.

For the years ended December 31, 2000 and 2001, Harper & Pearson Company's
report did not contain any adverse opinions or disclaimers of opinion and was
not qualified or modified as to uncertainty, audit scope, or accounting
principles. During the subsequent interim period January 1, 2002 through
September 16, 2002, there were no disagreements with Harper & Pearson Company on
any matter of accounting principles or practices, financial statement
disclosure, or auditing scope or procedure, which disagreement, if not resolved
to the satisfaction of Harper & Pearson Company, would have caused it to make
reference to the subject matter of the disagreement in connection with its
reports on the financial statements of ITIS for such period. ITIS authorized
Harper & Pearson Company to respond fully to the inquiries of Fitts, Roberts &
Co. P.C.

PART III

Pursuant to general instruction E, Items 9 through 12 are incorporated by
reference to the Company's proxy statement to be filed with the Commission
relating to the 2003 annual meeting of shareholders.

                              Cross  Reference

Form 10-KSB Item Number and caption       Proxy Materials Caption
-----------------------------------       -----------------------

Item 9. Directors, Executive              Election of Directors; Executive
Officers, Promoters and Control           Officers; Transactions with
Person; Compliance with Section           Management and Certain Business
16(a) of the Exchange Act.                Relationships; and Section 16(a)
                                          Beneficial

Item 10. Executive Compensation           Executive Compensation

Item 11. Security Ownership of            Voting Securities and Ownership
Certain Beneficial Owners and             Thereof by Certain Beneficial
Management and Related                    Owners and Management
Stockholder Matters.


                                       47
<PAGE>
Item 12. Certain Relationships and        Transactions with Management and
Related Transactions                      Certain Business Relationships

Item 15. Principal Accountant Fees        Auditor Fees
and Services


ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

The following documents are filed as exhibits to the Form 10-KSB of ITIS
Holdings Inc. and incorporated by reference.

<TABLE>
<CAPTION>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------
<S>      <C>

    2.1  Agreement and Plan of Reorganization dated March 25, 1999, between Planet Resources, National
         Law Library and the stockholders of National Law Library  (incorporated by reference to Exhibit
         A to ITIS's Form 8-K filed on April 2, 1999).

    2.2  First Amendment to Agreement and Plan of Reorganization dated as of March 30, 1999, between
         Planet Resources, National Law Library and the stockholders of National Law Library
         (incorporated by reference to Exhibit 2.2 to ITIS's Form 10-K filed on October 13, 1999).

    2.3  Agreement and Plan of Distribution dated as of March 25, 1999, between Planet Resources, New
         Planet Resources, Inc. and National Law Library  (incorporated by reference to Annex B to ITIS's
         Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed on
         April 19, 1999).

    2.4  Contract for Sale of Stock, dated November 8, 1999, by and between John R. Marsh, Ronald W.
         Hogan, and Charles E. Bowen, Jr., as Sellers, and ITIS, as Buyer (incorporated by reference to
         Exhibit 2.1 to ITIS's Form 8-K filed on November 30, 1999).

    2.5  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and Ronald W. Hogan, as Optionee (incorporated by reference to Exhibit 2.2 to ITIS's Form 8-K
         filed on November 30, 1999).

    2.6  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and Charles E. Bowen, Jr., as Optionee (incorporated by reference to Exhibit 2.3 to ITIS's Form 8-
         K filed on November 30, 1999).

    2.7  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and John R. Marsh, as Optionee (incorporated by reference to Exhibit 2.4 to ITIS's Form 8-K filed
         on November 30, 1999).

    2.8  Contract of Sale, dated December 8, 1999, by and between David P. Harriman, Andrew
         Wyszkowski, Eugene Meyung, Suzanne Meyung, and Christina Brown, as Sellers, and ITIS, as
         Buyer (incorporated by reference to Exhibit 2.7 to ITIS's Form 8-K filed December 23, 1999).

    2.9  Stock Exchange Agreement by and among ITIS and the shareholders of ITIS relating to the
         acquisition of all of the outstanding stock of ITIS, dated April 30, 2000 (incorporated by reference
         to Exhibit 2.9 to ITIS's Form 10-K/A filed on May 24, 2000).


                                       48
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

   2.10  Stock Purchase Agreement by and between ITIS and Jeremiah Kane, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.10 to the Registrant's Form 8-K filed on October 16, 2000).

   2.11  Stock Purchase Agreement by and between ITIS and John McHugh, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.11 to the Registrant's Form 8-K filed on October 16, 2000).

   2.12  Stock Purchase Agreement by and between ITIS and Jack Ben Ezra, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.12 to the Registrant's Form 8-K filed on October 16, 2000).

   2.13  Stock Exchange Agreement by and among ITIS and all of the shareholders of Venco Compliance,
         Inc., a Texas corporation, dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.13 to the Registrant's Form 8-K filed on October 16, 2000).

   2.14  Amended and Restated Agreement and Plan of Distribution dated as of March 13, 2001, between
         Planet Resources, National Law Library and the stockholders of National Law Library
         (incorporated by reference to Exhibit 2.14 to ITIS's form 10-K filed on April 17, 2001).

   2.15  Plan and Agreement of Merger of ITIS Inc. with and into ITIS Holdings Inc. dated August 26,
         2002 (incorporated by reference to Exhibit 2.15 to ITIS's Form 8-K filed on September 23, 2002)

   3.1*  Articles of Incorporation of ITIS Holdings Inc.

   3.2*  Articles of Amendment of ITIS Holdings Inc.

   3.3*  Bylaws of ITIS Holdings Inc.

   3.4*  Amendment No. 1 to Bylaws of ITIS Holdings. Inc.

   3.5   2001 Executive Stock Option Plan dated effective March 15, 2001 (incorporated by reference to
         Exhibit 4.4 to ITIS's Registration Statement on Form S-8 filed on March 30, 2001).

   10.1  Stock Option Agreement between ITIS and Hunter M.A. Carr (incorporated by reference to
         Exhibit D to Schedule 13D filed on October 12, 1999, by Hunter M.A. Carr).

   10.2  Stock Option Agreement between ITIS and Jack I. Tompkins (incorporated by reference to Exhibit
         D to Schedule 13D filed on October 12, 1999, by Jack I. Tompkins).

   10.3  Consulting Agreement between National Law Library and Castle Development, Ltd.  (incorporated
         by reference to Exhibit 4(A) to ITIS's Registration Statement on Form S-8 filed on April 2, 1999).

   10.4  Continuing Service Agreement between National Law Library and ITIS, effective December 1,
         1998 (incorporated by reference to Exhibit 10.4 to Internet Law's Form 10-K filed on October 13,
         1999).


                                       49
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

   10.5  Management and Financial Services Agreement between National Law Library and ITIS, effective
         March 1, 1999 (incorporated by reference to Exhibit 10.5 to ITIS's Form 10-K filed on October 13,
         1999).

   10.6  Software Development and Consulting Agreement between National Law Library and ITIS, dated
         March 24, 1999 (incorporated by reference to Exhibit 10.6 to ITIS's Form 10-K filed on October
         13, 1999).

   10.7  Option Agreement to Purchase Stock, effective March 30, 1999, by and between ITIS and
         Jonathan Gilchrist (incorporated by reference to Exhibit 10.7 to ITIS's Form 10-K filed on October
         13, 1999).

   10.8  Planet Resources 1999 Stock Option Plan (incorporated by reference to Exhibit 10.1 to ITIS's
         Form 10-K/A filed on October 28, 1999).

   10.9  Planet Resources Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to
         ITIS's Form 10-K/A filed on October 28, 1999).

  10.10  New Planet Resources, Inc.  Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to
         ITIS's Form 10-K/A filed on October 28, 1999).

  10.11  Planet Resources 1999 Director Option Plan (incorporated by reference to Exhibit 10.4 to ITIS's
         Form 10-K/A filed on October 28, 1999).

  10.12  Consulting and Option Agreement by and between ITIS, Frank Fisher and Steve Tebo, dated
         January 22, 2000, as amended (incorporated by reference to Exhibit 10.12 to ITIS's Form 10-K/A
         filed on May 24, 2000).

  10.13  Convertible Preferred Stock Purchase Agreement by and among ITIS and Cootes Drive LLC,
         dated May 11, 2000 (incorporated by reference to Exhibit 10.13 to ITIS's Form 10-K/A filed on
         May 24, 2000).

  10.14  Registration Rights Agreement by and among ITIS and Cootes Drive LLC, dated May 11, 2000
         (incorporated by reference to Exhibit 10.15 to ITIS's Form 10-K/A filed on May 24, 2000).

  10.15  Warrant to purchase 200,000 shares of ITIS's common stock issued to Aspen Capital Partners, Inc.,
         dated May 19, 2000 (incorporated by reference to Exhibit 10.16 to ITIS's Form 10-K/A filed on
         May 24, 2000).

  10.16  Securities Purchase Agreement by and between ITIS and Cootes Drive LLC, dated November 20,
         2000 (incorporated by reference to Exhibit 10.16 to ITIS's Form S-1 filed on December 22, 2000).

  10.17  Amended and Restated Registration Rights Agreement by and between ITIS and Cootes Drive
         LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.17 to ITIS's Form S-1
         filed on December 22, 2000).

  10.18  Warrant to purchase 250,000 shares of ITIS's common stock issued to Cootes Drive LLC, dated
         May 11, 2000 (incorporated by reference to Exhibit 10.18 to ITIS's Form S-1 filed on December
         22, 2000).


                                       50
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

  10.19  Warrant to purchase 250,000 shares of ITIS's common stock issued to Cootes Drive LLC, dated
         November 20, 2000 (incorporated by reference to Exhibit 10.19 to ITIS's Form S-1 filed on
         December 22, 2000).

  10.20  Minimum Commitment Warrant to purchase up to 100,000 shares of ITIS's common stock issued
         to Cootes Drive LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.20 to
         ITIS's Form S-1 filed on December 22, 2000).

  10.21  Vesting Warrant to purchase 1,000 shares of ITIS's common stock per $100,000 invested issued to
         Cootes Drive LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.21 to ITIS's
         Form S-1 filed on December 22, 2000).

  10.22  Convertible Promissory Note made by ITIS in favor of Cootes Drive LLC in the principal amount
         of $500,000, dated December 5, 2000 (incorporated by reference to Exhibit 10.22 to ITIS's Form
         S-1 filed on December 22, 2000).

  10.23  Warrant to purchase 41,650 shares of ITIS's common stock issued to Cootes Drive, LLC, dated
         December 5, 2000 (incorporated by reference to Exhibit 10.23 to ITIS's Form S-1 filed on
         December 22, 2000).

  10.24  Side Letter Agreement dated December 5, 2000, by and between ITIS and Cootes Drive LLC to
         enter into a convertible Promissory Note financing arrangement for $500,000 (incorporated by
         reference to Exhibit 10.24 to ITIS's Form S-1 filed on December 22, 2000).

  10.25  Consulting Agreement by and between Venco Compliance, Inc. and Cathryn Tull d/b/a First
         Choice Consulting, dated October 1, 2000 (incorporated by reference to Exhibit 10.17 to the
         Registrant's Form 8-K filed on October 16, 2000).

  10.26  Consulting Agreement by and between Venco Compliance, Inc. and Cathryn Tull d/b/a First
         Choice Consulting, dated October 1, 2000 (incorporated by reference to Exhibit 10.17 to ITIS's
         Form 8-K filed on October 16, 2000).

  10.27  Warrant to purchase 300,000 shares of ITIS's common stock issued to James W. Christian dated
         February 22, 2001 (incorporated by reference to Exhibit 10.27 to ITIS's Form 10-Q filed on May
         15, 2001).

  10.28  Warrant to purchase 24,649,771 shares of ITIS's common stock issued to Hunter M.A. Carr dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).

  10.29  Warrant to purchase 21,073,520 shares of ITIS's common stock issued to George A. Roberts dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).

  10.30  Warrant to purchase 2,041,020 shares of ITIS's common stock issued to W. Paul Thayer dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).


                                       51
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

  10.31  Purchase of Net Revenue Interest agreement dated July 1, 2002, by and among ITIS Inc.,
         PharmHouse Inc. and Rainmaker Ventures, Ltd. (incorporated by reference to Exhibit 2.1 to ITIS'S
         Form 8-K filed on July 15, 2002)

  10.32  Asset Purchase Agreement dated August 27, 2002 by and between ITIS, Inc., National Law
         Library, Inc. and Brief Reporter, LLC and JuriSearch Holdings, LLC (incorporated by reference to
         Exhibit 2.15 to ITIS'S form 8-K filed on September 11, 2002)

   16.1  Letter, dated April 5, 2000, from Harper & Pearson Company to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.1 to ITIS's Form 8-K/A filed on April 5,
         2000).

   16.2  Letter, dated February 21, 2001 from Arthur Andersen LLP to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.2 to ITIS's Form 8-K filed on February 23,
         2001)

   16.3  Letter, dated September 16, 2002 from Harper & Pearson Company to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.3 to ITIS'S Form 8-K filed on September 19,
         2002)

    21*  Subsidiaries of ITIS.
</TABLE>


*Filed herewith

(b)  Reports on Form 8-K

No reports on Form 8-K were filed during the last quarter of the period covered
by this report.

ITEM 14. CONTROLS AND PROCEDURES

The Chief Executive Officer and the Chief Financial Officer have reviewed the
disclosure controls and procedures relating to the Company within the 90 days
preceding this report and concluded that such controls and procedures are
effective to make known to the Company all material information about the
financial and operation activities of the Company. There were no deficiencies
identified in such controls or procedures and there have been no changes in such
controls and procedures since our evaluation that could significantly affect
their effectiveness.


                                       52
<PAGE>
                              SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized, this 15 day of April 2003.

                                   ITIS Holdings Inc.

                                   By: /s/ Hunter M.A. Carr
                                     --------------------------
                                   Hunter M.A. Carr
                                   Chairman of the Board of Directors,
                                   President and Chief Executive Officer

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

<TABLE>
<CAPTION>
<S>                     <C>                                                    <C>
/s/ Hunter M.A. Carr    Chairman of the Board, President and Chief Executive   Apri115, 2003
----------------------  Officer (Principal Executive Officer)
Hunter M.A. Carr

/s/ Kelley V. Kirker    Director, President of ITIS, Inc. (Texas)              April 15, 2003
----------------------
Kelley V. Kirker

/s/ George A. Roberts   Director                                               Apri115, 2003
----------------------
George A. Roberts

/s/ W. Paul Thayer      Director                                               Apri115, 2003
----------------------
W. Paul Thayer

/s/ W. Allyn Hoaglund   Director                                               Apri115, 2003
----------------------
W. Allyn Hoaglund

/s/ Walter B. Rae       Director                                               Apri115, 2003
----------------------
Walter B. Rae

/s/ Joanna Hoover       Chief Financial Officer (Principal Financial and       Apri115, 2003
----------------------  Accounting Officer)
Joanna Hoover
</TABLE>


                                       53
<PAGE>
                                  CERTIFICATION
                                  -------------

     I, Hunter M.A. Carr, the Principal Executive Officer of ITIS Holdings Inc.,
certify that:

     1. I have reviewed this annual report on Form 10-KSB of ITIS Holdings Inc.;

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

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

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

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

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

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

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

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

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

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

     Date: April 15, 2003
     --------------------

      /s/ Hunter M.A. Carr
      --------------------
      Name: Hunter M.A. Carr
      Title: Chief Executive Officer


                                       54
<PAGE>
                                  CERTIFICATION
                                  -------------

     I, Joanna Hoover, the Principal Financial Officer of ITIS Holdings Inc.,
certify that:

     1. I have reviewed this annual report on Form 10-KSB of ITIS Holdings Inc.;

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

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

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

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

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

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

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

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

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

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

     Date: April 15, 2003
     --------------------

     /s/ Joanna Hoover
     -----------------
     Name: Joanna Hoover
     Title: Chief Financial Officer


                                       55
<PAGE>
<TABLE>
<CAPTION>
Exhibit  Index

EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------
<C>      <S>

    2.1  Agreement and Plan of Reorganization dated March 25, 1999, between Planet Resources, National
         Law Library and the stockholders of National Law Library  (incorporated by reference to Exhibit
         A to ITIS's Form 8-K filed on April 2, 1999).

    2.2  First Amendment to Agreement and Plan of Reorganization dated as of March 30, 1999, between
         Planet Resources, National Law Library and the stockholders of National Law Library
         (incorporated by reference to Exhibit 2.2 to ITIS's Form 10-K filed on October 13, 1999).

    2.3  Agreement and Plan of Distribution dated as of March 25, 1999, between Planet Resources, New
         Planet Resources, Inc. and National Law Library  (incorporated by reference to Annex B to ITIS's
         Information Statement Pursuant to Section 14(c) of the Securities Exchange Act of 1934 filed on
         April 19, 1999).

    2.4  Contract for Sale of Stock, dated November 8, 1999, by and between John R. Marsh, Ronald W.
         Hogan, and Charles E. Bowen, Jr., as Sellers, and ITIS, as Buyer (incorporated by reference to
         Exhibit 2.1 to ITIS's Form 8-K filed on November 30, 1999).

    2.5  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and Ronald W. Hogan, as Optionee (incorporated by reference to Exhibit 2.2 to ITIS's Form 8-K
         filed on November 30, 1999).

    2.6  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and Charles E. Bowen, Jr., as Optionee (incorporated by reference to Exhibit 2.3 to ITIS's Form 8-
         K filed on November 30, 1999).

    2.7  Option Agreement to Purchase Stock, dated November 8, 1999, by and between ITIS, as Seller,
         and John R. Marsh, as Optionee (incorporated by reference to Exhibit 2.4 to ITIS's Form 8-K filed
         on November 30, 1999).

    2.8  Contract of Sale, dated December 8, 1999, by and between David P. Harriman, Andrew
         Wyszkowski, Eugene Meyung, Suzanne Meyung, and Christina Brown, as Sellers, and ITIS, as
         Buyer (incorporated by reference to Exhibit 2.7 to ITIS's Form 8-K filed December 23, 1999).

    2.9  Stock Exchange Agreement by and among ITIS and the shareholders of ITIS relating to the
         acquisition of all of the outstanding stock of ITIS, dated April 30, 2000 (incorporated by reference
         to Exhibit 2.9 to ITIS's Form 10-K/A filed on May 24, 2000).

   2.10  Stock Purchase Agreement by and between ITIS and Jeremiah Kane, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.10 to the Registrant's Form 8-K filed on October 16, 2000).

   2.11  Stock Purchase Agreement by and between ITIS and John McHugh, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.11 to the Registrant's Form 8-K filed on October 16, 2000).


                                       56
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

   2.12  Stock Purchase Agreement by and between ITIS and Jack Ben Ezra, dated July 27, 2000, as
         amended by that amendment dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.12 to the Registrant's Form 8-K filed on October 16, 2000).

   2.13  Stock Exchange Agreement by and among ITIS and all of the shareholders of Venco Compliance,
         Inc., a Texas corporation, dated effective October 1, 2000 (Incorporated by reference to Exhibit
         2.13 to the Registrant's Form 8-K filed on October 16, 2000).

   2.14  Amended and Restated Agreement and Plan of Distribution dated as of March 13, 2001, between
         Planet Resources, National Law Library and the stockholders of National Law Library
         (incorporated by reference to Exhibit 2.14 to ITIS's form 10-K filed on April 17, 2001).

   2.15  Plan and Agreement of Merger of ITIS Inc. with and into ITIS Holdings Inc. dated August 26,
         2002 (incorporated by reference to Exhibit 2.15 to ITIS's Form 8-K filed on September 23, 2002)

   3.1*  Articles of Incorporation of ITIS Holdings Inc.

   3.2*  Articles of Amendment of ITIS Holdings Inc.

   3.3*  Bylaws of ITIS Holdings Inc.

   3.4*  Amendment No. 1 to Bylaws of ITIS Holdings. Inc.

   3.5   2001 Executive Stock Option Plan dated effective March 15, 2001 (incorporated by reference to
         Exhibit 4.4 to ITIS's Registration Statement on Form S-8 filed on March 30, 2001).

   10.1  Stock Option Agreement between ITIS and Hunter M.A. Carr (incorporated by reference to
         Exhibit D to Schedule 13D filed on October 12, 1999, by Hunter M.A. Carr).

   10.2  Stock Option Agreement between ITIS and Jack I. Tompkins (incorporated by reference to Exhibit
         D to Schedule 13D filed on October 12, 1999, by Jack I. Tompkins).

   10.3  Consulting Agreement between National Law Library and Castle Development, Ltd.  (incorporated
         by reference to Exhibit 4(A) to ITIS's Registration Statement on Form S-8 filed on April 2, 1999).

   10.4  Continuing Service Agreement between National Law Library and ITIS, effective December 1,
         1998 (incorporated by reference to Exhibit 10.4 to Internet Law's Form 10-K filed on October 13,
         1999).

   10.5  Management and Financial Services Agreement between National Law Library and ITIS, effective
         March 1, 1999 (incorporated by reference to Exhibit 10.5 to ITIS's Form 10-K filed on October 13,
         1999).

   10.6  Software Development and Consulting Agreement between National Law Library and ITIS, dated
         March 24, 1999 (incorporated by reference to Exhibit 10.6 to ITIS's Form 10-K filed on October
         13, 1999).


                                       57
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

   10.7  Option Agreement to Purchase Stock, effective March 30, 1999, by and between ITIS and
         Jonathan Gilchrist (incorporated by reference to Exhibit 10.7 to ITIS's Form 10-K filed on October
         13, 1999).

   10.8  Planet Resources 1999 Stock Option Plan (incorporated by reference to Exhibit 10.1 to ITIS's
         Form 10-K/A filed on October 28, 1999).

   10.9  Planet Resources Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.2 to
         ITIS's Form 10-K/A filed on October 28, 1999).

  10.10  New Planet Resources, Inc.  Stock Incentive Plan (incorporated by reference to Exhibit 10.3 to
         ITIS's Form 10-K/A filed on October 28, 1999).

  10.11  Planet Resources 1999 Director Option Plan (incorporated by reference to Exhibit 10.4 to ITIS's
         Form 10-K/A filed on October 28, 1999).

  10.12  Consulting and Option Agreement by and between ITIS, Frank Fisher and Steve Tebo, dated
         January 22, 2000, as amended (incorporated by reference to Exhibit 10.12 to ITIS's Form 10-K/A
         filed on May 24, 2000).

  10.13  Convertible Preferred Stock Purchase Agreement by and among ITIS and Cootes Drive LLC,
         dated May 11, 2000 (incorporated by reference to Exhibit 10.13 to ITIS's Form 10-K/A filed on
         May 24, 2000).

  10.14  Registration Rights Agreement by and among ITIS and Cootes Drive LLC, dated May 11, 2000
         (incorporated by reference to Exhibit 10.15 to ITIS's Form 10-K/A filed on May 24, 2000).

  10.15  Warrant to purchase 200,000 shares of ITIS's common stock issued to Aspen Capital Partners, Inc.,
         dated May 19, 2000 (incorporated by reference to Exhibit 10.16 to ITIS's Form 10-K/A filed on
         May 24, 2000).

  10.16  Securities Purchase Agreement by and between ITIS and Cootes Drive LLC, dated November 20,
         2000 (incorporated by reference to Exhibit 10.16 to ITIS's Form S-1 filed on December 22, 2000).

  10.17  Amended and Restated Registration Rights Agreement by and between ITIS and Cootes Drive
         LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.17 to ITIS's Form S-1
         filed on December 22, 2000).

  10.18  Warrant to purchase 250,000 shares of ITIS's common stock issued to Cootes Drive LLC, dated
         May 11, 2000 (incorporated by reference to Exhibit 10.18 to ITIS's Form S-1 filed on December
         22, 2000).

  10.19  Warrant to purchase 250,000 shares of ITIS's common stock issued to Cootes Drive LLC, dated
         November 20, 2000 (incorporated by reference to Exhibit 10.19 to ITIS's Form S-1 filed on
         December 22, 2000).

  10.20  Minimum Commitment Warrant to purchase up to 100,000 shares of ITIS's common stock issued
         to Cootes Drive LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.20 to
         ITIS's Form S-1 filed on December 22, 2000).


                                       58
<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

  10.21  Vesting Warrant to purchase 1,000 shares of ITIS's common stock per $100,000 invested issued to
         Cootes Drive LLC, dated November 20, 2000 (incorporated by reference to Exhibit 10.21 to ITIS's
         Form S-1 filed on December 22, 2000).

  10.22  Convertible Promissory Note made by ITIS in favor of Cootes Drive LLC in the principal amount
         of $500,000, dated December 5, 2000 (incorporated by reference to Exhibit 10.22 to ITIS's Form
         S-1 filed on December 22, 2000).

  10.23  Warrant to purchase 41,650 shares of ITIS's common stock issued to Cootes Drive, LLC, dated
         December 5, 2000 (incorporated by reference to Exhibit 10.23 to ITIS's Form S-1 filed on
         December 22, 2000).

  10.24  Side Letter Agreement dated December 5, 2000, by and between ITIS and Cootes Drive LLC to
         enter into a convertible Promissory Note financing arrangement for $500,000 (incorporated by
         reference to Exhibit 10.24 to ITIS's Form S-1 filed on December 22, 2000).

  10.25  Consulting Agreement by and between Venco Compliance, Inc. and Cathryn Tull d/b/a First
         Choice Consulting, dated October 1, 2000 (incorporated by reference to Exhibit 10.17 to the
         Registrant's Form 8-K filed on October 16, 2000).

  10.26  Consulting Agreement by and between Venco Compliance, Inc. and Cathryn Tull d/b/a First
         Choice Consulting, dated October 1, 2000 (incorporated by reference to Exhibit 10.17 to ITIS's
         Form 8-K filed on October 16, 2000).

  10.27  Warrant to purchase 300,000 shares of ITIS's common stock issued to James W. Christian dated
         February 22, 2001 (incorporated by reference to Exhibit 10.27 to ITIS's Form 10-Q filed on May
         15, 2001).

  10.28  Warrant to purchase 24,649,771 shares of ITIS's common stock issued to Hunter M.A. Carr dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).

  10.29  Warrant to purchase 21,073,520 shares of ITIS's common stock issued to George A. Roberts dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).

  10.30  Warrant to purchase 2,041,020 shares of ITIS's common stock issued to W. Paul Thayer dated
         May 22, 2002 (incorporated by reference to Exhibit 10.28 to ITIS's Form 10-Q filed on August 19,
         2002).

  10.31  Purchase of Net Revenue Interest agreement dated July 1, 2002, by and among ITIS Inc.,
         PharmHouse Inc. and Rainmaker Ventures, Ltd. (incorporated by reference to Exhibit 2.1 to ITIS'S
         Form 8-K filed on July 15, 2002)

  10.32  Asset Purchase Agreement dated August 27, 2002 by and between ITIS, Inc., National Law
         Library, Inc. and Brief Reporter, LLC and JuriSearch Holdings, LLC (incorporated by reference to
         Exhibit 2.15 to ITIS'S form 8-K filed on September 11, 2002)


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<PAGE>
EXHIBIT  DESCRIPTION
-------  -----------
NUMBER
------

   16.1  Letter, dated April 5, 2000, from Harper & Pearson Company to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.1 to ITIS's Form 8-K/A filed on April 5,
         2000).

   16.2  Letter, dated February 21, 2001 from Arthur Andersen LLP to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.2 to ITIS's Form 8-K filed on February 23,
         2001)

   16.3  Letter, dated September 16, 2002 from Harper & Pearson Company to the Securities and Exchange
         Commission (incorporated by reference to Exhibit 16.3 to ITIS'S Form 8-K filed on September 19,
         2002)

    21*  Subsidiaries of ITIS.
</TABLE>


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