UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   ----------

                                   FORM 10-KSB
                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                     For the fiscal year ended December 31,
                       2003 Commission File No. 333-54822

                          STRONGHOLD TECHNOLOGIES, INC.
             ------------------------------------------------------
             (Exact Name of Registrant as Specified in Its Charter)

            Nevada                                        22-376235
-------------------------------             ------------------------------------
(State or Other Jurisdiction of             (I.R.S. Employer Identification No.)
Incorporation or Organization)

106 Allen Road, Basking Ridge, NJ                                          07920
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                              (Zip Code)

                                 (908) 903-1195
                         -------------------------------
                         (Registrant's Telephone Number,
                              Including Area Code)

         Securities registered under Section 12(b) of the Exchange Act:

                                      None.

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

                                      None.

<PAGE>

      Check whether the Registrant: (1) filed all reports required to be filed
by Section 13 or 15(d) of the Securities Exchange Act during the past 12 months
(or for such shorter period that the Registrant was required to file such
reports), and (2) has been subject to such filing 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]

      State Registrant's revenues for fiscal year ended December 31, 2003:
$2,996,344

      State the aggregate market value of the common stock held by
non-affiliates of the Registrant: $2,462,091 as of March 26, 2004 based on the
closing sales price of $0.65 on that date.

      Indicate the number of shares outstanding of each of the Registrant's
classes of common stock, as of March 26, 2004:

Class                                                           Number of Shares
-----                                                           ----------------

Common Stock, $0.0001 par value                                    13,392,642

      The following documents are incorporated by reference into the Annual
Report on Form 10-KSB: None.

      Transitional Small Business Disclosure Format

                               Yes: [_]   No: [X]

<PAGE>

                                TABLE OF CONTENTS

      Item                                                                  Page
      ----                                                                  ----

PART I

      Item 1.   Business .................................................     1

      Item 2.   Properties ...............................................    16

      Item 3.   Legal Proceedings ........................................    17

      Item 4.   Submission of Matters to a Vote of Security Holders ......    17

PART II

      Item 5.   Market for Common Equity and Related Stockholder Matters .    18

      Item 6.   Management's Discussion and Analysis and Results of
                Operation ................................................    18

      Item 7.   Financial Statements .....................................    28

      Item 8.   Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosures .....................    28

      Item 8A.  Controls and Procedures ..................................    29

PART III

      Item 9.   Directors, Executive Officers, Promoters and Control
                Persons; Compliance with Section 16(A) of The Exchange
                Act ......................................................    30

      Item 10.  Executive Compensation ...................................    33

      Item 11.  Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters ...............    37

      Item 12.  Certain Relationships and Related Transactions ...........    39

      Item 13.  Exhibits and Reports on Form 8-K .........................    43

      Item 14.  Principal Accountant Fees and Services ...................    44

SIGNATURES ...............................................................    46

EXHIBIT INDEX ............................................................    48

FINANCIAL STATEMENTS .....................................................   F-1

EXHIBITS

<PAGE>

Exhibit 4.6       Amended and Restated Certificate of Designation of Series A
                  $1.50 Convertible Preferred Stock of Stronghold Technologies,
                  Inc.

Exhibit 4.7       Amended and Restated Certificate of Designation of Series B
                  $0.90 Convertible Preferred Stock of Stronghold Technologies,
                  Inc.

Exhibit 24        Power of Attorney (included on page 48).

Exhibit 31.1      Certification by the Chief Executive Officer Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 31.2      Certification by the Chief Financial Officer Pursuant to
                  Section 302 of the Sarbanes-Oxley Act of 2002.

Exhibit 32.1      Certification by the Chief Executive Officer Pursuant to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

Exhibit 32.2      Certification by the Chief Financial Officer Pursuant to 18
                  U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002.

                                      -2-
<PAGE>

                                     PART I

Item 1.  BUSINESS

Our History

      We were incorporated as a Nevada corporation on September 8, 2000, under
the name TDT Development, Inc. On May 16, 2002, we acquired Stronghold
Technologies, Inc., a New Jersey corporation, referred to herein as our
"Predecessor Entity", pursuant to a merger of Stronghold Technologies into our
wholly-owned subsidiary, TDT Stronghold Acquisition Corp., referred to herein as
"Acquisition Sub". As consideration for the merger, we issued 7,000,000 shares
of our common stock, par value $0.0001 per share, to the stockholders of the
Predecessor Entity in exchange for all of the issued and outstanding shares of
the Predecessor Entity. Following the merger, Acquisition Sub, the survivor of
the merger, changed its name to Stronghold Technologies, Inc. (NJ) and remains
our only wholly-owned subsidiary. On July 11, 2002, we changed our name from TDT
Development, Inc. to Stronghold Technologies, Inc. (NV). On July 19, 2002, we
exchanged all of the shares that we held in our two other wholly-owned
subsidiaries, Terre di Toscana, Inc. and Terres Toscanes, Inc., which conducted
an import and distribution business specializing in truffle-based food product,
for 75,000 shares of our Common Stock held by Mr. Pietro Bortolatti, our former
president.

      All references to "we," "us," "our," "the Company" or similar terms used
herein refer to Stronghold Technologies, Inc., a Nevada corporation, formerly
known as TDT Development, Inc. and its wholly-owned subsidiary, Stronghold
Technologies, Inc., a New Jersey entity. All references to "Stronghold" used
herein refer to just our wholly-owned subsidiary, Stronghold Technologies, Inc.,
a New Jersey corporation. All references to the "Predecessor Entity" refer to
the New Jersey corporation we acquired on May 16, 2002, Stronghold Technologies,
Inc., which was merged with and into Stronghold.

      Our principal executive offices are located at 106 Allen Road, Basking
Ridge, NJ 07920. Our telephone number at that location is 908-903-1195 and our
Internet address is www.strongholdtech.com. Our Annual Report on Form 10-KSB,
Quarterly Reports on Form 10-QSB, Current Reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) of the Securities
Exchange Act of 1934 are available on our website (www.strongholdtech.com under
the "For Investors-SEC Filings" caption) as soon as reasonably practicable after
we electronically file such reports with the Securities and Exchange Commission
("SEC"). Our annual, quarterly and current reports, and, if applicable,
amendments to those reports, filed or furnished pursuant to Section 13(a) of the
Exchange Act are also available at the website maintained by the SEC at
http://www.sec.gov. The information contained on our website is not incorporated
by reference herein.

Overview of our Handheld Technology Business

      On May 16, 2002, we entered the handheld wireless technology business via
our acquisition by merger of the Predecessor Entity. The Predecessor Entity was
founded on August 1, 2000 by Christopher J. Carey, our current Chief Executive
Officer and President, and

<PAGE>

two other executive officers of Stronghold: Lenard J. Berger, Chief Technology
Officer and Salvatore F. D'Ambra, Vice President, Product Development. This
founding group has substantial expertise in systems design, software
development, wireless technologies and automotive dealer software applications.
The Predecessor Entity was founded to develop proprietary handheld wireless
technology for the automotive dealer software market. Since the merger of the
Predecessor Entity into our subsidiary, we continue to conduct the Predecessor
Entity's handheld wireless technology business.

      Our DealerAdvance(TM) suite of Customer Relationship Management ("CRM")
software, has been designed to maximize revenues and reduce operating expenses
of automobile dealerships. The Company has completed the development of its
DealerAdvance Sales Solution(TM), a software suite designed to increase sales by
effectively capturing a greater percentage of unsold customer prospects and
maximizing customer "be-back" rates. We are in various stages of development of
complimentary CRM systems for our handheld devices, including the DealerAdvance
Service Solution(TM), which is designed to further increase our clients'
revenues and profits by managing dealer service operations, customer information
and vehicle inventory. We are designing our products to be functionally
equivalent to the devices used by automobile rental agencies in which automobile
return and checkout is automated using scanning and other point of sale
technology.

Description of Products

      The DealerAdvance Sales Solution(TM) provides certain advantages to
automobile dealerships, including: convenient use associated with handheld
mobile communications; access to competitive and proprietary industry
information from a variety of sources, such as convenient access to vehicle
identification numbers, drivers license numbers and reverse telephone number
information which provides home and business addresses; employee access to sales
contracts as well as access to sales and performance reports; and allows
integration with existing automotive dealer accounting and business systems such
as ADP and Reynolds and Reynolds.

      The DealerAdvance Sales Solution(TM) has been designed to be a
comprehensive CRM system implemented through the use of a wireless handheld
device connected to a server that distributes the functional applications to the
units. Sales associates can also maintain on the handheld units a personal
calendar and instructions on follow-up tasks. Sales associates, using the
handheld units, collect customer contact information and other data relevant to
the customer's automotive needs. The handheld, using the DealerAdvance Sales
Solution technology aids automobile dealerships in making sales transactions
quicker and more efficient.

      The DealerAdvance Sales Solution(TM) offers features that aid in
automobile sales and service such as: enabling a high sales capture rate on
walk-in customers; streamlining and simplifying sales and follow-up processes;
providing current and comprehensive information and data for new and used car
inventory, including information regarding competing products, and customer
history with the dealership; providing performance data and analysis on each
member of a sales team; and providing management with valuable and relevant
transaction information on a real-time basis.

                                      -2-
<PAGE>

      The DealerAdvance Sales Solution(TM) is intended to provide information
about a customer's preferences and automotive needs, name and address
information; reverse phone look-up in order to contact prospective buyers,
authorization to obtain a buyer's credit information, dealer vehicle information
and competitive product comparisons, vehicle inventory status, integrated
purchase forms completion and printing, information regarding used car
appraisals; management reports; and E-mail and Internet access.

      We installed Version 1.0 of the DealerAdvance Sales Solution(TM) in six
pilot dealerships during 2001 in New Jersey, California and Connecticut. The
initial release contained the ability to capture and display information about a
prospective customer, search the dealership inventory, display competitive
product information, a financial calculator, and paging functionality from a
wireless handheld. Drivers license scanning, from a desktop station, was
introduced for the State of California. Stronghold introduced Version 2.0 of
DealerAdvance Sales Solution(TM) at all of its sites by the end of September
2001. Version 2.0 offered an electronic desk log, email and internet access from
the handheld, printing of correspondence (forms letters) , a reporting engine,
the printing of sales forms, and the ability to import prospect records from 3rd
party sources.

      We introduced Version 3.0 of our software and installed another 3
dealership sites in the quarter ended March 31, 2002, adding customers in New
York. Version 3.0 introduced the CRM rules engine, which allowed the system to
automatically schedule and manage customer follow up activities for salespeople
based on rules established by the dealership management. Other features included
DMS deal creation (allowing a user to pass information from DealerAdvance to the
DMS), management reporting, and the expansion of drivers license scanning to
include 39 states (through a partnership with Intellicheck).

      In the quarter ended June 30, 2002, Stronghold installed another 7 sites,
adding customers in Arizona, Southern California and South Carolina and
introduced Version 3.1 of its software to improve the communication protocol
between the handheld and the DealerAdvance Server. In the quarter ended
September 30, 2002, Stronghold implemented another 10 sites, adding customers in
Virginia, Florida, South Carolina and Central California. In the fourth quarter
ending December 31, 2002, Stronghold installed an additional 13 dealerships,
adding customers in Texas, Indiana and Michigan. Overall, in 2002, Stronghold
installed DealerAdvance Sales Solution(tm), in a total of 33 dealerships sites
representing Toyota, Honda, Ford, Chevrolet, Nissan, Volkswagen, Buick, Pontiac,
Cadillac, Chrysler, Dodge, Kia and Hyundai.

      In the first quarter of 2003 the Company installed in 11 dealerships and
released Version 3.2. New features included reverse phone lookup (via
partnership with Axicom), searches for duplicate customer records, wireless PDA
trade appraisal, electronic buyers order, nightly download of sold customers
from the DMS, and customer search. Additional functionality was added to the
rules engine, forms printing, management functions were added to the PDA, 3rd
party data imports, and customer tracking. In the quarter ended June 30, 2003,
the Company installed another 11 systems in 9 dealerships in California, Nevada,
Indiana, Washington, Ohio, and Michigan. We implemented our goal to expand our
direct sales network and operational support personnel for coverage of 14 major
cities from nine at the end of 2002. Additionally, in the second quarter we
realigned our sales force into geographic markets and hired several experienced
industry veterans as regional business development managers.

                                      -3-
<PAGE>

      Stronghold plans to utilize its direct sales force to market the
DealerAdvance Sales Solution(tm) on a national basis. Stronghold has established
a strong presence in most regions of the United States, and is continuing to add
business development and operations offices pursuant to an organized growth
plan. As of December 31, 2003, we had employees in Northern New Jersey, San
Francisco, Washington, DC, Atlanta, Los Angeles, Phoenix, Miami, Seattle,
Cleveland, and Dallas.

      Version 3.3, released in August 2003 introduced the concept of a
work-plan, which assists the user in prioritizing follow up for prospective
customers. The work-plan generates a simple daily "to-do" list for each
salesperson, which can be viewed and updated on the handheld. Version 3.3 also
introduced the concept of "prompted follow up" to guide the salesperson through
best of breed follow up processes. The salesperson is prompted to indicate the
action taken to complete an activity and to enter a next activity for the
customer with the goal of scheduling a next activity for a prospective customer
until they either purchase a vehicle or indicate they are no longer in the
market.

      As of December 31, 2003, a total of 70 dealers were using the
DealerAdvance Sales Solution(tm), of which approximately 40 had reached or
exceeded the 60-day performance period generally associated with installation.
In January 2004 we installed systems in 2 dealerships in Oregon.

      Version 3.4 released in January 2004 introduced integration with
WhosCalling and Call Bright, the two leading providers of phone call management
services. The dealer is assigned several toll free numbers to place in a
specific advertising outlet (newspaper, tv, radio, etc). When the customer dials
the toll free number, the call management service identifies the callers
information (name, address, demographics) and records the call. The call
information and a link to the call recording is passed by the call management
service to DealerAdvance. Version 3.4 introduced the ability to receive Internet
leads in DealerAdvance. An Internet Manager can view leads and follow up via
email with prospective customers that view the dealer's web site or are passed
by 3rd party lead providers. Through a subscription service, in Version 3.4, the
dealer can maintain their compliance with the National Do Not Call Regulations
managed by the FTC. DealerAdvance will automatically determine which customers
are safe to call based on the "established business relationship" rules defined
in the regulations. The system can produce the documentation required to
demonstrate compliance.

      We generally grant a 60-day performance guarantee period for each new
installation. If performance goals are met, the contracts become noncancellable
for their terms, usually 36 months. As of December 30, 2003, a total of 69
dealers were using the DealerAdvance Sales Solution(TM), of which approximately
55 had reached or exceeded the 60-day performance period. In the year ended
December 31, 2003, approximately 7 dealers cancelled after the 60-day
performance guarantee period.

New Product Developments

      We have identified five major prospect and customer sources within an auto
dealership that can be leveraged for revenue and profit: walk in showroom
traffic, call-in prospects, internet based leads, the existing owner base of
customers and service prospects. The vision for

                                      -4-
<PAGE>

DealerAdvance(TM) is to provide a single solution to attack all of these groups
to increase profitability and improve customer service in the dealership.
DealerAdvance(TM) provides information captured from prospects, and provides
automobile dealerships with the ability to manage prospects and customers
through a disciplined follow-up process.

      The development plan includes the addition of the following applications
and functions:

      With Version 3.4 introduced in January 2004, we introduced a Call
Management application that is expected to allow dealerships to automatically
capture and track prospects that contact the dealership via phone. This new
program allows salespeople to retrieve customer information while talking to the
customer and to conduct a needs analysis for handling prospect phone calls. The
Call Management application automatically generates management logs and reports
designed to identify sales associates that need phone skills training. In
addition, we have partnered with the two leading Call Management Systems
providers, Call Bright and Who's Calling, who provide 800 number and web based
system forwarding functions to DealerAdvance(TM). We have created a software to
poll the web sites for incoming caller ID and provide prospect assignment, and
comparative analysis relating to follow up activities. This application is
expected to significantly increase the conversion of call-in prospects to
customers.

      In Version 3.4 we expanded our offerings to include an initial application
for Internet Lead Management. Most dealerships secure Internet leads through
multiple sources including their own web site, manufacturers' forwarded leads,
and subscription services including Autobytel and others. These lead sources are
received through DealerAdvance(TM), which processes a quick response via email,
and then passes qualified leads to sales associates for phone follow-up leading
to appointment setting. We plan several enhancements to this application.

      In January 2004, we also introduced an application that lessens potential
violations of the 2003 federal Do Not Call regulations. Our system automatically
and regularly compares the prospect and customers within the system to the Do
Not Call registry data base. The application also allows the dealership
personnel to log prospect and customer requests not to be contacted. The system
deletes from the database telephone numbers that match numbers in the Do Not
Call database.

      In February 2004, we introduced Services Marketing. Services Marketing is
offered in partnership with Market One, LLC. Through Market One, we offer
services in database marketing, data warehousing, predictive modeling, marketing
consulting, campaign fulfillment, direct mail, telemarketing and surveys, and
Internet communications services. During 2004, we intend to combine the Services
Marketing application from Market One with follow-up and reporting capabilities
within DealerAdvance(TM), to provide activities reporting for increasing repeat
sales to dealership customers.

      In the third quarter of 2004 we plan to introduce online consumer credit
reporting to our customers through an ASP web hosted model integrated to
inquiries from DealerAdvance(TM). The service accesses credit reports from
Experian, Equifax and Transunion.

                                      -5-
<PAGE>

      DealerAdvance(TM) Service Solution, a handheld wireless tablet for Service
Advisors in a dealership is under development. This system is designed to
improve customer service and reduced vehicle check in time by allowing dealer
representatives to scan a vehicle identification number from the windshield or
door. DealerAdvance(TM) Service Solution also is designed to provide instant
client and vehicle history including warrantee and service advice, all to the
service technicians' wireless tablet. We expect this product will add
premium-pricing to increase repair order revenue and to add service marketing
through the DealerAdvance CRM application.

Our Revenues

      Our revenues are primarily received from system installation, software
licenses and system maintenance. The approximate average selling package price
of the system and installation also is $70,000. Additional revenues are derived
from 36 month system maintenance agreements that have a monthly fee of $850 per
month and a total contract value of $30,600. The revenues derived from these
categories are summarized below:

      o     Software License Revenues: This represents the software license
            portion of the Dealer Advance Service Solution purchased by
            customers of the Company. The software and intellectual property of
            Dealer Advance has been developed and is owned by the Company. The
            average upfront license cost to the customer is approximately
            $35,000.

      o     System Installation Revenues: This represents the installation and
            hardware portion of the Dealer Advance Service Solution. All project
            management during the installation is performed by us. The
            installation and hardware portions include cable wiring
            subcontracting services and off the shelf hardware and handheld
            computers ("PDA"s). The average upfront installation cost to the
            customer is approximately $35,000.

      o     Monthly Recurring Maintenance Revenue: This represents the
            maintenance and support contract for the Dealer Advance Service
            Solution that the customer executes with the system installation.
            The typical maintenance contract is for 36 months and is $850.00 per
            month. The average total 36 month maintenance portion of the contact
            is $30,600. In the three year operating history of the Company,
            approximately 50% of all the Company's customers have prepaid the
            maintenance fees through a third party leasing finance company.
            These prepaid maintenance fees have provided additional cash flow to
            us and have generated a deferred revenue liability on or balance
            sheet.

                                      -6-
<PAGE>

The average gross profit and cost of sales for the revenues associated with
software licenses and systems installation are summarized in the following
table:

Average Gross Profit per Installation

Software License Revenue                           $35,000
System Installation Revenue                        $35,000
---------------------------                        -------
Gross Revenue per Installation:                    $70,000

Gross Profit                                       GP $        GP %
                                                   ----        ----
Software License Revenue                           $31,500     90%
System Installation Revenue                        $12,600     36%
---------------------------
Gross Revenue per Installation:                    $44,100     63%

Cost of Sales
Software License Revenue                            $3,500     10%
System Installation Revenue                        $22,400     64%
---------------------------
Gross Revenue per Installation:                    $25,900     37%

      Cost of sales for software licensing with the installation are minimal and
are estimated at 10% of revenue for reproduction, minor customer specific
configurations and the setup cost of interface with the customers' DMS. Cost of
sales for the system installation includes direct labor and travel,
subcontractors and third party hardware. The average gross profit and cost of
sales for the revenues from recurring maintenance of software is approximately
$850.00 per system which includes Auto Research (approximately $27.5), Driver
License data (approximately $12.50), Legacy System Interface (approximately
$161.00), CDI integration (approximately $ 54.00), with total cost of sales of
$255.00, gross profit of $595.00 or 70%.

General and Administrative Operating Expenses:

      The general operating expenses of the Company are primarily comprised of:

      o     Marketing and Selling;

      o     General and Administrative;

      o     Development & Operations;

      Our marketing and selling expenses include all labor, sales commissions
and non-labor expenses of selling and marketing of our products and services.
These include the salaries of two Vice Presidents of Sales and the Business
Development Manager ("BDM") staff. The sales commission plan compensates the
sales force at the rate of 6% and is broken down in the following table:

        BDM per contract                             3.5%
        Regional VP                                  1.5%
        Management Override                          1.0%
                                                    -----
                                                    6.00%

                                      -7-
<PAGE>

      Our general and administrative expenses include expenses for all
facilities, insurance, benefits, telecommunications, legal and auditing expenses
are included as well as the executive management group wage expense.

      Our development & operations expenses include the expenses for the Client
Consultant group which advises and supports the installations of our Dealer
Advance(TM) clients.

Research and Development

      Since our inception in September 2000, we have spent approximately
$3,612,685 on research and development activities. While we have been successful
in meeting planned goals in the development and introduction of DealerAdvance
Sales Solution(TM), there can be no assurance that our research and development
efforts will be successful with respect to additional products, or if
successful, that we will be able to successfully commercially exploit such
additional products.

Competition Related to Handheld Technology Business

      We do not believe that we have direct competition for our handheld
product. However, we expect competitors in the wireless handheld solutions
market in the future. We compete with the traditional CRM providers and the
emerging new CRM providers in the retail automotive dealer software market.

      Some of our potential competitors include:

      o     Automotive Directions, a division of ADP Dealer Services, and a
            provider of PC-based customer relationship management systems as
            well as marketing research and consulting services;

      o     Higher Gear, a provider of client server based front-end sales and
            customer relationship management software which serves the retail
            automotive industry exclusively;

      o     Autobase, a provider of PC based front-end software which serves the
            retail automotive industry exclusively;

      o     Cowboy Corporation, recently acquired by Cobalt Corporation, and a
            provider of ASP sales prospect management systems and customer
            relationship management systems which services the retail automotive
            industry exclusively; and

      o     Autotown, a provider of PC and web-based front-end sales systems,
            which services the retail automotive industry exclusively.

      We believe that our proprietary technology is unique and, therefore,
places us at a competitive advantage in the industry. However, there can be no
assurance that our competitors will not develop a similar product with
properties superior to our own or at greater cost-effectiveness.

                                      -8-
<PAGE>

Marketing and Sales

      We have identified a target market of approximately 12,000 automobile
dealerships in the United States that meet the base criteria for our system.
More specifically, we target a primary market of 6,500 dealerships that sell a
minimum of 75 new and used cars each month and do not currently have CRM
systems.

      We have an in-house sales force that distributes its DealerAdvance Sales
Solution(TM) and we continue to grow our Sales and Marketing team, adding
geographically defined territories.

Employees

      As of December 31, 2003, we had a total of 41 full-time employees, of
which 26 are dedicated to marketing and sales and regional customer support. As
of December 31, 2003, we had 41 employees: 1 in Arizona, 9 in California, 2 in
Florida, 1 in Georgia, 2 in North Carolina, 6 in New Jersey, 1 in Ohio, 2 in
Texas, 15 in Virginia and 2 in Washington.

      We have no collective bargaining arrangements with our employees. We
believe that our relationship with our employees is good.

Our Intellectual Property

      We have a trademark for "DealerAdvance(TM)" and have patent applications
pending to protect a number of information management software programs. We also
plan to file to protect certain proprietary processes pertaining to systems
components, related equipment and software modules.

Summary of Discontinued Truffle Business Operations

      From our inception on September 8, 2000, through July 19, 2002, we
imported, marketed and distributed specialized truffle-based food products,
including fresh truffles, truffle oils, truffle pates, truffle creams and
truffle butter, through our former wholly-owned subsidiaries, Terre di Toscana,
Inc. and Terres Toscanes, Inc. Our target market included retailers such as
restaurants, specialty food stores, delicatessens and supermarkets. We imported
products directly from Italian producers and marketed our products in the
specialty food industry primarily in Florida, South Carolina, North Carolina and
California, and also earned commissions on sales made in Belgium, Holland and
Germany. On July 19, 2002, we exchanged all of the shares that we held in our
wholly-owned subsidiaries for 75,000 shares of our Common Stock held by Mr.
Pietro Bortolatti, our former president. As a result of our transfer of our
interest in the truffle business to Mr. Bortolatti him, we are no longer
involved in the truffle business. The sale of these subsidiaries was part of our
effort to focus on the handheld technology business.

Safe Harbor Statement

      The statements contained in this Annual Report on Form 10-KSB that are not
historical facts are forward-looking statements within the meaning of Section
21E of the Securities Exchange Act of 1934 ("the Securities Act"), as amended
and the Private Securities Litigation Reform Act of 1995. Such forward-looking
statements may be identified by, among other things,

                                      -9-
<PAGE>

the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. In particular, our statements regarding the anticipated
growth in the markets for our technologies, the continued development of our
products, the approval of our Patent Applications, the successful implementation
of our sales and marketing strategies, the anticipated longer term growth of our
business, and the timing of the projects and trends in future operating
performance are examples of such forward-looking statements. The forward-looking
statements include risks and uncertainties, including, but not limited to, the
timing of revenues due to the uncertainty of market acceptance and the timing
and completion of pilot project analysis, and other factors, including general
economic conditions, not within our control. The factors discussed herein and
expressed from time to time in our filings with the SEC could cause actual
results to be materially different from those expressed in or implied by such
statements. The forward-looking statements are made only as of the date of this
filing and we undertake no obligation to publicly update such forward-looking
statements to reflect subsequent events or circumstances.

Factors that Might Affect Our Business, Future Operating Results, Financial
Condition and/or Stock Price

      The more prominent risks and uncertainties inherent in our business are
described below. However, additional risks and uncertainties may also impair our
business operations. If any of the following risks actually occur, our business,
financial condition or results of operations may suffer.

                          Risks Concerning Our Business

We Have A History Of Incurring Net Losses; We Expect Our Net Losses To Continue
As A Result Of Planned Increases In Operating Expenses; And, Therefore, We May
Never Achieve Profitability Which May Cause Us To Seek Additional Financing Or
To Cease Operations.

      We have a history of operating losses and have incurred significant net
losses in each fiscal quarter since our inception. We had a net loss of
$4,258,007 and $4,528,803 for the fiscal years ended December 31, 2003 and
December 31, 2002, respectively. We have an accumulated net operating loss of
approximately $7,531,007 for the period from May 17, 2002 through December 31,
2003 to offset future taxable income. Losses prior to May 17, 2002 were passed
directly to the shareholders and, therefore, are not included in the loss
carry-forward. We expect to continue to incur net losses and negative cash flows
for the foreseeable future. We will need to generate significant additional
revenue to achieve profitability. Our ability to generate and sustain
significant additional revenues or achieve profitability will depend upon the
factors discussed elsewhere in this "Risk Factors" section, as well as numerous
other factors outside of our control, including:

      o     Competing products that are more effective or less costly than ours;

      o     Our ability to develop and commercialize our own products and
            technologies; and

                                      -10-
<PAGE>

      o     Our ability to increase sales of our existing products and any new
            products.

It is possible that we may never achieve profitability and, even if we do
achieve profitability, we may not sustain or increase profitability in the
future. If we do not achieve sustained profitability, we may be unable to
continue our operations.

There Is A Possibility That We Will Be Unable To Obtain Sufficient Funds, Will
Incur A Cash Flow Deficit, Therefore Our Business Could Suffer A Loss Of Clients
And Employees As Well As A Decrease In Continued Research And Development
Efforts.

      We believe that our current funds and accounts receivable will only be
sufficient for our immediate future, raising substantial doubt about our ability
to continue as a going concern. During 2004, management of the Company will rely
on raising additional capital to fund its future operations. If the Company is
unable to generate sufficient revenues or raise sufficient additional capital,
there could be a material adverse effect on the consolidated financial position,
results of operations and cash flows of the Company.

      We require additional capital by the second quarter of 2004 and expect to
seek subsequent financing over the next several years in order to operate
according to our business plan. We may have difficulty obtaining additional
funds as and if needed, and we may have to accept terms that would adversely
affect our stockholders. For example, the terms of any future financings may
restrict our right to declare dividends, the manner in which we conduct our
business, future capital expenditures, acquisitions or asset sales.

      We may not be able to locate additional funding sources on acceptable
terms or at all. If we cannot raise funds on acceptable terms, if and when
needed, we may not be able to develop or enhance our products, grow our business
or respond to competitive pressures or unanticipated cash requirements, each of
which could seriously harm our business.

      Since our inception, we have financed all of our operations through sales
of private equity, debt financings and commercial bank loans. Our future capital
requirements depend on numerous factors, including:

      o     The scope of our research and development;

      o     Our ability to successfully commercialize our technology; and

      o     Competing technological and market developments.

We Are Currently In Default Under Our Bank Loan Agreement; Therefore If We Are
Unable To Reach A Forbearance Agreement With The Lender They Could Accelerate
The Maturity Date Of The Loan Or Attempt To Seize The Assets Of The Company
Pledged As Security For The Loan.

      On November 1, 2001, our Predecessor Entity entered into a line of credit
with UnitedTrust Bank (now PNC Bank) pursuant to which the Predecessor Entity
borrowed $1.5 million. On September 30, 2002, we converted the outstanding line
of credit with UnitedTrust

                                      -11-
<PAGE>

Bank into a $1,500,000 promissory note. As of December 31, 2003, $1,231,667 was
outstanding under the promissory note.

      On January 9, 2004, the Company was served with a Notice of an Event of
Default by United Trust Bank under its Loan Agreement stating that pursuant to
section 6.01(d) of the Loan Agreement, an Event of Default exists due to the
Company's failure to pay Payroll Tax Obligations aggregating in the amount of
$1,089,897 as of December 31, 2003 (including estimated penalties and interest).
On April 1, 2004, the Company received a second Notice of Event of Default
stating that the Bank had accelerated the maturity of the Loan and declared all
principal, interest, and other outstanding amounts due and payable. The Company
continues to make timely scheduled payments pursuant to the terms of the loan
and is in forbearance negotiations with the Bank with respect to the default.
However, if the Company is unable to reach a forbearance agreement with the
Bank, we may be required to pay off the amounts outstanding under the loan, and
if we are unable to pay off the amounts outstanding, the Bank could seize the
assets of the Company pledged as security for the Loan. If either of these
actions occur, we may be unable to continue our operations.

We Have A Limited Operating History, Therefore It Is Difficult To Evaluate Our
Financial Performance And Prospects.

      We were formed in September 2000 to import and market truffle oil
products. As of May 16, 2002, our business purpose focus shifted to the
development and marketing of handheld wireless technology for the automotive
dealer software market. We entered the handheld wireless technology business
through the acquisition of an entity with a 23-month operating history. We are,
therefore, subject to all of the risks inherent in a new business enterprise.
Our limited operating history makes it difficult to evaluate our financial
performance and prospects. We cannot assure you that in the future we will
operate profitably or that we will have adequate working capital to meet our
obligations as they become due. Because of our limited financial history, we
believe that period-to-period comparisons of our results of operations will not
be meaningful in the short term and should not be relied upon as indicators of
future performance.

We May Fail To Gain Market Acceptance Of Our Products, Therefore Our Business
And Results Of Operations Could Be Harmed.

      We are still in the early marketing stages of our DealerAdvance(TM) suite
of products. Our first pilot system for DealerAdvance Sales Solution(TM) was
installed in April 2001 and our sixth and final pilot system was installed in
September 2001. We implemented a total of 33 additional sites in 2002. As of
December 31, 2003, a total of 69 Dealerships were using the DealerAdvance Sales
Solution(TM) in 13 states. We expect to introduce our DealerAdvance Service
Solution(TM) over the next two years. This solution is still in the development
stages and is not yet ready for testing. While we have received positive
feedback of DealerAdvance Sales Solution(TM) by the test sites, sixty-nine
systems is a small number and results in such sites may not be indicative of the
overall market acceptance and success of DealerAdvance Sales Solutions(TM) or
our entire DealerAdvance(TM) suite of products. We may experience design,
marketing, and other difficulties that could delay or prevent our development,
introduction, or marketing of these and other new products and enhancements. In
addition, the costs of developing and marketing our products may far outweigh
the revenue stream generated by such products. Finally, our

                                      -12-
<PAGE>

prospects for success will depend on our ability to successfully sell our
products to key automobile dealerships that may be inhibited from doing business
with us because of their commitment to their own technologies and products, or
because of our relatively small size and lack of sales and production history.

      The nature of our handheld product and technology requires us to market
almost exclusively to automobile dealerships. Should any particular dealership
or group of dealerships decide not to utilize our services to the extent
anticipated, our business may be adversely affected. Large and costly consumer
products such as automobiles are sensitive to broad economic trends. Therefore,
our business could suffer if automobile dealerships are affected by poor
economic conditions. If dealer sales are trending downward, capital
expenditures, like those associated with our DealerAdvance (TM) suite of
products, may be delayed or abandoned.

We Depend On Attracting And Retaining Key Personnel To Maintain Our Competitive
Advantage, Therefore The Loss Of Their Services May Significantly Delay Or
Prevent The Achievement Of Our Strategic Objectives.

      We are highly dependent on the principal members of our management,
research and sales staff. The loss of their services might significantly delay
or prevent the achievement of our strategic objectives. Our success depends on
our ability to retain key employees and to attract additional qualified
employees. Competition for personnel is intense, and we cannot assure you that
we will be able to retain existing personnel or attract and retain additional
highly qualified employees in the future.

      Our subsidiary, Stronghold, has an employment agreement in place with its
President and Chief Executive Officer, Christopher J. Carey, which provides for
vesting of options exercisable for shares of our Common Stock based on continued
employment and on the achievement of performance objectives defined by the board
of directors. Stronghold does not have similar retention provisions in its
employment agreements with other key personnel. If we are unable to hire and
retain personnel in key positions, our business could be significantly and
adversely affected unless qualified replacements can be found.

      Our success is dependent on the vision, technological knowledge, business
relationships and abilities of our president, Mr. Carey. Any reduction of Mr.
Carey's role in our business would have a material adverse effect on us. Mr.
Carey's employment contract expires on December 31, 2004. He has not, however,
expressed any intention or desire to leave the Company.

                    Risks Concerning Our Handheld Technology

We Obtain Products And Services From Third Parties, Therefore An Interruption In
The Supply Of These Products And Services Could Cause A Decline In Sales Of Our
Products And Services.

      We are dependant upon certain providers of software, including Microsoft
Corporation and their Pocket PC software, to provide the operating system for
our applications. If there are significant changes to this software, or if this
software stops being available or supported, we will experience a disruption to
our product and development efforts.

                                      -13-

<PAGE>

      In designing, developing and supporting our wireless data services, we
rely on mobile device manufacturers, content providers, database providers and
software providers. These suppliers may experience difficulty in supplying us
products or services sufficient to meet our needs or they may terminate or fail
to renew contracts for supplying us these products or services on terms we find
acceptable. Any significant interruption in the supply of any of these products
or services could cause a decline in sales of our products and services, unless
and until we are able to replace the functionality provided by these products
and services. We also depend on third parties to deliver and support reliable
products, enhance their current products, develop new products on a timely and
cost-effective basis and respond to emerging industry standards and other
technological changes.

Competition In The Wireless Technology Industry Is Intense And Technology Is
Changing Rapidly, Therefore We May Be Unable To Compete Successfully Against Our
Current And Future Competitors In The Future.

      Many wireless technology and software companies are engaged in research
and development activities relating to our range of products. The market for
handheld wireless technology is intensely competitive, rapidly changing and
undergoing consolidation. We may be unable to compete successfully against our
current and future competitors, which may result in price reductions, reduced
profit margins and the inability to achieve market acceptance for our products.
Our competitors in the field are major international car dealership service
companies, specialized technology companies, and, potentially, our joint venture
and strategic alliance partners. Many of our competitors have substantially
greater financial, marketing, sales, distribution and technical resources than
us and have more experience in research and development, sales, service,
manufacturing and marketing. We anticipate increased competition in the future
as new companies enter the market and new technologies become available. Our
technology may be rendered obsolete or uneconomical by technological advances
developed by one or more of our competitors.

We May Not Have Adequately Protected Our Intellectual Property Rights, Therefore
We May Not Be Successful In Protecting Our Intellectual Property Rights.

      Our success depends on our ability to sell products and services for which
we do not currently have intellectual property rights. We currently do not have
patents on any of our intellectual property. We have filed for a patent which
protects a number of developments pertaining to the management of information
flow for automotive dealer-based software. We plan to file an additional patent
application which will address certain proprietary features pertaining to our
systems components, related equipment and software modules. We cannot assure you
we will be successful in protecting our intellectual property right through
patent law.

      We rely primarily on trade secret laws, patent law, copyright law, unfair
competition law and confidentiality agreements to protect our intellectual
property. To the extent that these avenues do not adequately protect our
technology, other companies could develop and market similar products or
services, which could adversely affect our business.

                                      -14-

<PAGE>

We May Be Sued By Third Parties For Infringement Of Their Proprietary Rights,
Therefore We May Incur Defense Costs And Possibly Royalty Obligations Or Lose
The Right To Use Technology Important To Our Business.

      The wireless technology and software industries are characterized by the
existence of a large number of patents and frequent litigation based on
allegations of patent infringement or other violations of intellectual property
rights. As the number of participants in our market increases, the possibility
of an intellectual property claim against us could increase. Any intellectual
property claims, whether with or without merit, could be time consuming and
expensive to litigate or settle and could divert management attention from the
administration of our business. A third party asserting infringement claims
against the Company or our customers with respect to our current or future
products may adversely affect us.

                     Risks Concerning Our Capital Structure

Our Management And Other Affiliates Have Significant Control Of Our Common Stock
And, Therefore, Could Control Our Actions In A Manner That Conflicts With Our
Interests And The Interests Of Other Stockholders.

      As of December 31, 2003, our executive officers and directors held
approximately 42% of the voting power of the Company on a fully diluted basis.
As a result, these stockholders, acting together, will be able to exercise
considerable influence over matters requiring approval by our stockholders,
including the election of directors, and may not always act in the best
interests of unaffiliated shareholders. Such a concentration of ownership could
have the effect of delaying or preventing a change in control, including
transactions in which our stockholders might otherwise receive a premium for
their shares over then current market prices.

We Are Controlled By Our President, Which, Therefore, May Result In Shareholders
Having No Control Over Our Direction Or Affairs.

      As of December 31, 2003, our President and Chief Executive Officer held
approximately 33% of the voting power of the Company on a fully diluted basis.
As a result, he has the ability to control us and direct our affairs and
business, including the approval of significant corporate transactions. This
concentration of ownership could have the effect of delaying, deferring or
preventing a change in control and may make some transactions more difficult or
impossible without his support. Any of these events could decrease the market
price of our Common Stock.

We Have Shares Eligible for Future Issuance, Therefore Our Stockholders May
Suffer Dilution As A Result.

      As of December 31, 2003, we had 13,291,218 shares of our Common Stock
issued and outstanding. In addition, we have 1,909,309 shares of Common Stock
reserved for issuance upon the exercise of all outstanding options, and
4,763,444 shares of Common Stock reserved for issuance upon the exercise of
certain outstanding warrants and upon the conversion of certain shares of our
Series A and Series B Preferred Stock.

                                      -15-
<PAGE>

We Do Not Intend to Pay Cash Dividends On Our Shares of Common Stock, Therefore
Our Stockholders Will Not Be Able to Receive a Return on Their Shares Unless
They Sell Them.

      We have never declared or paid dividends on our Common Stock and we do not
intend to pay any Common Stock dividends in the foreseeable future. We intend to
retain any future earnings to finance the development and expansion of our
business. We do not anticipate paying any cash dividends on our Common Stock in
the foreseeable future. Unless we pay dividends, our stockholders will not be
able to receive a return on their shares unless they sell them.

Our Common Stock Is A Penny Stock And Therefore May Be Difficult To Sell.

      Our stock is a penny stock. The SEC generally defines a penny stock as an
equity security that has a market price of less than $5.00 per share or an
exercise price of less than $5.00 per share, subject to specific exemptions. The
market price of our Common Stock is currently less than $5.00 per share. The SEC
"penny stock" rules govern the trading of our Common Stock. These rules require,
among other things, that any broker engaging in a purchase or sale of our
securities provide its customers with the following:

      o     A risk disclosure document;

      o     Disclosure of market quotations, if any;

      o     Disclosure of the compensation of the broker and its salespersons in
            the transaction; and

      o     Monthly account statements showing the market values of our
            securities held in the customer's accounts.

      The broker must provide the bid and offer quotations and compensation
information before effecting the transaction. This information must be contained
on the customer's confirmation. Generally, brokers may be less willing to effect
transactions in penny stocks due to these additional delivery requirements. This
may make it more difficult for investors to sell our Common Stock. Because the
broker, not us, prepares this information, we cannot assure that such
information is accurate, complete or current.

Item 2.  PROPERTIES

      We do not currently own any real property. We lease a 6,000 square foot
development facility in Sterling, Virginia, which is staffed with 11 development
and field support personnel. We also operate and lease business development and
operations offices in Basking Ridge, New Jersey, and Lafayette, California. We
carry insurance for each of these properties.

      We are obligated under these leases through August 2007. In addition to
the base rent, one lease requires us to pay a proportionate share of operating
costs and other expenses.

                                      -16-
<PAGE>

      Future aggregate minimum annual rent payments under these leases are
approximately as follows:

        Year ended December 31,

                  2004                              $186,000
                  2005                              $192,000
                  2006                              $100,000
                  2007                               $95,000
                  2008                               $34,000

                 TOTAL                              $607,000

      Rent expenses were approximately $165,000 for the year ended December 31,
2003.

Item 3.  LEGAL PROCEEDINGS

      In the normal course of business, we may be a party to legal proceedings.
We are not currently a party to any material litigation.

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

      None.

                                      -17-
<PAGE>

                                    PART II

Item 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

      Our Common Stock is traded on the OTC Bulletin Board, referred to herein
as the OTCBB, under the symbol "SGHT". The following table sets forth the high
and low bid prices of our Common Stock, as reported by the OTCBB for each
quarter since January 1, 2002. The quotations set forth below reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
represent actual transactions.

      2002                                                  High          Low
      ----                                                  ----          ---
      January 1, 2002 - March 31, 2002                     $0.14         $0.14

      April 1, 2002 - June 30, 2002                        $1.15         $0.14

      July 1, 2002 - September 30, 2002                    $1.60         $0.25

      October 1, 2002 - December 31, 2002                  $2.25         $1.25

      2003                                                  High          Low
      ----                                                  ----          ---
      January 1, 2003 - March 31, 2003                     $1.70         $0.25

      April 1, 2003 - June 30, 2003                        $1.01         $0.59

      July 1, 2003 - September 30, 2003                    $0.98         $0.47

      October 1, 2003 - December 31, 2003                  $0.70         $0.30

      As of March 26, 2004, there were approximately 76 holders of record of our
Common Stock.

      We have appointed Continental Stock Transfer & Trust Company, 17 Battery
Place, New York, New York 10004, as transfer agent for our shares of Common
Stock.

Item 6. MANAGEMENT'S DISCUSSION AND ANALYSIS AND RESULTS OF OPERATION

      This section provides a narrative on the Company's operating performance,
financial condition and liquidity and should be read in conjunction with the
accompanying financial statements. Certain statements under the caption
"Management's Discussion and Analysis and Results of Operation" constitute
"forward-looking statements" under the Private Securities Litigation Reform Act
of 1995. See "Risk Factors-Cautionary Note Regarding Forward Looking

                                      -18-
<PAGE>

Statements". For a more complete understanding of our operations see "Risk
Factors" and "Description of Business".

EXECUTIVE OVERVIEW

      We are a Customer Relationship Management ("CRM") solutions provider for
the retail automotive software industry. The Company's DealerAdvance(TM) Sales
Solution is designed to streamline dealership sales operations using software
that integrates existing systems.

      Our strategic focus since our entry into the automotive retail market on
May 2002 has been:

      o     Applying wireless technology, leveraging the Internet, providing
            software and process improvement methods to improve buying and
            servicing satisfaction at retail automobile dealerships.

      o     Establishment and growth of customer base.

      o     Geographic diversification to penetrate large national markets.

      o     Development of user friendly applications.

      o     Development of a complete solution that replaces multiple
            applications that typically are not designed to work together as
            seamlessly as DealerAdvance(TM).

      The Company's current initiatives include the following:

      o     Growing our customer base.

      o     Leveraging the installed base to generate new and recurring revenues
            through the introduction of new services.

      o     Developing products through internal research and development,
            strategic partnerships and acquisitions that target a series of
            applications surrounding the dealership accounting systems (DMS -
            Dealer Management System). The goal of these efforts is to become a
            leading, single source solution provider to automobile dealerships.

      o     Our new products include: in-coming call management; advertising
            effectiveness reporting; Internet lead management; services
            marketing; online credit reporting; and compliance with Do Not Call
            regulations.

      o     Making strategic acquisitions.

                                      -19-
<PAGE>

FINANCIAL CONDITION

Liquidity and Capital Resources

      As of December 31, 2003, our cash balance was $8,161. We had a net loss of
$4,258,007 for the fiscal year ended December 31, 2003. We had a net operating
loss of $4,528,803 for the fiscal year ended December 31, 2002, and a net
operating loss of approximately $7,531,000 for the period from May 17, 2002
through December 31, 2003 to offset future taxable income. Losses incurred prior
to May 17, 2002 were passed directly to the shareholders and, therefore, are not
included in the loss carry-forward. There can be no assurance, however, that we
will be able to take advantage of any or all tax loss carry-forwards, in future
fiscal years. Our accounts receivable as of December 31, 2003 was $805,234 (less
allowances for doubtful accounts of $218,446), and $1,192,541 (less allowances
for doubtful accounts of $200,000) for the fiscal year ended December 31, 2002.
Accounts receivable balances represent amounts owed to us for new installations
and maintenance, service, training services, software customization and
additional systems components.

Financing Needs

      To date, we have not generated revenues in excess of our operating
expenses. We have not been profitable since our inception, we expect to incur
additional operating losses in the future and we may require additional
financing to continue the development and commercialization of our technology.
The Company has incurred a net loss of approximately $4,258,000 and has negative
cash flows from operations of approximately $1,551,000 for the year ended
December 31, 2003, and has a working capital deficit of approximately $4,333,000
and a stockholders' deficit of approximately $4,346,000 as of December 31, 2003.
These conditions raise substantial doubt about the Company's ability to continue
as a going concern. During 2004, management of the Company will rely on raising
additional capital to fund its future operations. If we are unable to generate
sufficient revenues or raise sufficient additional capital, there could be a
material adverse effect on the consolidated financial position, results of
operations and we could be unable to continue our operations.

      We expect our capital requirements to increase significantly over the next
several years as we continue to develop and market the DealerAdvance(TM) suite
and as we increase marketing and administration infrastructure and develop
capabilities and facilities. Our future liquidity and capital funding
requirements will depend on numerous factors, including, but not limited to, the
levels and costs of our research and development initiatives, the cost of hiring
and training additional sales and marketing personnel and the cost and timing of
the expansion of our marketing efforts.

Financings

      On July 31, 2000, the Predecessor Entity entered into a line of credit
with Mr. Chris Carey, our President and Chief Executive Officer and the
President and Chief Executive Officer of Stronghold. The terms of the line of
credit made available $1,989,500, which the Predecessor Entity could borrow from
time to time, until August 1, 2001. The outstanding amounts accrued interest at
the per annum rate equal to the floating base rate, as defined therein, computed
daily,

                                      -20-
<PAGE>

for the actual number of days elapsed as if each full calendar year consisted of
360 days. The first interest payment under the line of credit was due on August
1, 2001. On such date, the parties agreed to extend the line of credit for one
more year, until August 1, 2002.

      On November 1, 2001, the Predecessor Entity entered into a line of credit
with UnitedTrust Bank (now PNC Bank) pursuant to which the Predecessor Entity
borrowed $1.5 million. This line of credit was due to expire by its terms, and
all outstanding amounts were due to be paid, on June 30, 2002. On June 30, 2002,
the line of credit came due and the bank granted a three-month extension. On
September 30, 2002, we converted the outstanding line of credit with UnitedTrust
Bank into a $1,500,000 promissory note. Such promissory note is to be paid in 36
monthly installments, which commenced in February 2003 and is due to terminate
on January 1, 2006. Interest accrues on the note at the prime rate, adjusted
annually, which is the highest New York City prime rate published in The Wall
Street Journal. The initial prime rate that applied to the promissory note was
4.750%.

      On August 7, 2003, we entered into a modification of the loan agreement
with UnitedTrust Bank, of which the principal balance was $1,291,666 at the time
of closing of the modification. Pursuant to the modification agreement,
UnitedTrust Bank agreed to subordinate its lien against our assets to a new
lender and reduce the monthly payments from $41,666 per month principal plus
accrued interest as follows: (a) from the date of closing through December 15,
2003, $10,000 per month plus accrued interest (b) from January 15, 2004 through
December 15, 2004, $15,000 per month plus accrued interest, (c) from January 15,
2005 through December 15, 2005, $20,000 per month plus interest and (d) on the
maturity date of January 1, 2006, a balloon payment equal to all the outstanding
principal and accrued interest. We are current with our payment of $15,000 per
month.

      On January 9, 2004, the Company was served with a notice of an event of
default by United Trust Bank, now PNC Bank, a successor by merger effective
January 2004 with United Trust Bank, ("the Bank"), under its Loan Agreement.
Pursuant to section 6.01(d) of the Loan Agreement, an Event of Default exists
due to the Company's failure to pay Payroll Tax Obligations aggregating in the
amount of $1,089,897 as of December 31, 2003 (including estimated penalties and
interest). The Company continues to make timely scheduled payments pursuant to
the terms of the loan and is in forbearance negotiations with the Bank with
respect to the default. On April 1, 2004, the Company received a second Notice
of Event of Default stating that the Bank had accelerated the maturity of the
Loan and declared all principal, interest, and other outstanding amounts due and
payable. The Company continues to make timely scheduled payments pursuant to the
terms of the loan and is in forbearance negotiations with the Bank with respect
to the default. However, if the Company is unable to reach a forbearance
agreement with the Bank, we may be required to pay off the amounts outstanding
under the loan, and if we are unable to pay off the amounts outstanding, the
Bank could seize the assets of the Company pledged as security for the Loan. If
either of these actions occur, we may be unable to continue our operations.

      Because we are in technical default under the terms of the loan, the Bank
has instituted the default rate of interest which is 5% above the "highest New
York City prime rate" stated above. We are in negotiations with the United
States Internal Revenue Service to develop a schedule to pay the withholding
taxes.

                                      -21-
<PAGE>

      On April 22, 2002, the Predecessor Entity issued 500,000 shares of its
Common Stock to Mr. Carey (which converted into 1,093,750 shares of our Common
Stock when we acquired the Predecessor Entity on May 16, 2002) in exchange for
cancellation of $1 million of outstanding indebtedness under the July 31, 2000
line of credit from Mr. Carey.

      On May 16, 2002, the total amount outstanding under the July 31, 2000 line
of credit with Mr. Carey was $2.2 million. On such date, we issued 666,667
shares of our Common Stock to Mr. Carey in exchange for the cancellation of $1
million of the then outstanding amount under the line of credit. We agreed to
pay Mr. Carey the remaining $1.2 million according to the terms of a
non-negotiable promissory note, which was issued on May 16, 2002.

      On May 15, 2002, we entered into a Securities Purchase Agreement with
Stanford Venture Capital Holdings, Inc., referred to herein as Stanford, in
which we issued to Stanford (i) such number of shares of our Series A $1.50
Convertible Preferred Stock, referred to herein as Series A Preferred Stock,
that would in the aggregate equal 20% of the total issued and outstanding shares
of our Common Stock, and (ii) such number of warrants for shares of our Common
Stock that would equal the number of shares of Series A Preferred Stock issued
to Stanford. The total aggregate purchase price for the Series A Preferred Stock
and warrants paid by Stanford was $3,000,000. The issuance of the Series A
Preferred Stock and warrants took place on each of four separate closing dates
from May 16, 2002 through and July 19, 2002, at which we issued an aggregate of
2,002,750 shares of our Series A Preferred Stock and warrants for 2,002,750
shares of our Common Stock to Stanford.

      On April 24, 2003, we entered into a Securities Purchase Agreement with
Stanford Venture Capital Holdings, Inc. for the issuance of 2,444,444 shares of
our Series B $0.90 Convertible Preferred Stock. The issuance of the Series B
Preferred Stock took place on six separate closing dates beginning on May 5,
2003 through September 15, 2003. In connection with the Securities Purchase
Agreement, we agreed to modify the previously issued five-year warrants to
purchase 2,002,750 shares of our Common Stock: (i) to reduce the exercise price
to $.25 per share; and (ii) to extend the expiration date through August 1,
2008. In addition, our President and Chief Executive Officer, Christopher J.
Carey, agreed to convert outstanding loans of $543,000 to 603,333 shares of our
common stock at a price of $.90 per share.

      During August and September 2002, we entered into 9 subscription
agreements with accredited private investors, as defined in Rule 501 of the
Securities Act, pursuant to which we issued an aggregate of 179,333 shares of
our Common Stock at $1.50 per share. These private investments generated total
proceeds to us of $269,000.

      On September 30, 2002, we renegotiated the $1,200,000 promissory note with
Mr. Carey pursuant to a requirement contained in the promissory note with
UnitedTrust Bank. According to the new terms of the loan, Mr. Carey extended the
repayment of the principal amount until December 1, 2005. Until such time as the
principal is paid, we will pay an interest only fee of 12% per year. Mr. Carey's
promissory note is expressly subordinated in right of payment to the prior
payment in full of all of the Company's senior indebtedness. Subject to the
payment in full of all senior indebtedness, Mr. Carey is subrogated to the
rights of the holders of such senior indebtedness to receive principal payments
or distribution of assets. As of December 31, 2002, $970,749 was outstanding
under the promissory note issued to Mr. Carey.

                                      -22-
<PAGE>

      On September 30, 2002, we entered into a loan agreement with CC Trust Fund
to borrow an amount up to $355,128. This bridge loan was for a period of twelve
months, with all principal due and payable on September 30, 2003. The 12.5%
interest on the outstanding principal is due each year. At the end of the loan
period, the CC Trust Fund will be entitled to exercise 25,000 warrants at $1.50
per share. On September 30, 2003, the CC Trust Fund agreed to extend the term of
their loan to December 30, 2003. On December 30, 2003, the CC Trust Fund agreed
to extend the term of their loan to March 31, 2004. On March 30, 2004, the CC
Trust Fund agreed to extend the term of their loan to March 31, 2005. As of
December 31, 2003, $355,128 was outstanding under the CC Trust Fund loan
agreement. Christopher Carey Jr., Mr. Carey's son, is the beneficiary of the
trust, and Mary Carey, Mr. Carey's wife, is the trustee of the trust.

      On September 30, 2002, we entered into a loan agreement with AC Trust Fund
to borrow an amount up to $375,404. This bridge loan is for a period of twelve
months, with all principal due and payable on September 30, 2003. The 12.5%
interest on the outstanding principal is due each year. At the end of the loan
period, the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. On September 30, 2002, the AC Trust Fund agreed to extend the term of
their loan to December 30, 2003. On December 30, 2003, the AC Trust Fund agreed
to extend the term of their loan to March 31, 2004. On March 30, 2004, the AC
Trust Fund agreed to extend the term of their loan to March 31, 2005. As of
December 31, 2003, $375,404 was outstanding under the AC Trust Fund loan
agreement. Amie Carey, Mr. Carey's daughter, is the beneficiary of the trust,
and Mary Carey, Mr. Carey's wife, is the trustee of the trust.

      In October 2002, in connection with a loan to the Company in the amount of
$165,000, we issued a promissory note to Christopher J. Carey for $165,000. Such
promissory note was due on or before December 31, 2003. On December 30, 2003,
Mr. Carey agreed to extend the term of his loan to March 31, 2004. On March 30,
2004, Mr. Carey agreed to extend the term of his loan to March 31, 2005. As of
December 31, 2003, the amount outstanding on this promissory note was $10,000.
Until such time as the principal is paid, interest on the note will accrue at
the rate of 12.5% per year.

      On March 18, 2003, we entered into a bridge loan agreement with
Christopher J. Carey, for a total of $400,000. The agreement stipulates that the
Company will pay an 8% interest rate on a quarterly basis until the loan becomes
due and payable on June 30, 2004. We also issued to Mr. Carey 391,754 warrants
exercisable for Common Stock for 10 years at a price of $0.97 per share. On
December 30, 2003, Christopher J. Carey agreed to extend the term of the
promissory note to June 30, 2004. As of December 31, 2003, $380,000 was
outstanding under this bridge loan agreement.

      In October 2003, the Company commenced offerings to accredited investors
in private placements of up to $3,000,000 of the Company's Common Stock. In the
period of October 2003 through January 9, 2004 the Company raised $225,000 under
the terms of these private placements. The shares offered in the private
placement are priced at the 5 trading day trailing average closing price of the
Common Stock on the OTCBB, less 20%. For each share purchased in the private
placements, purchasers received a warrant to purchase one half (0.5) share of
common stock at 130% of the purchase price. A minimum of $25,000 is required per
investor. The number shares issued under this placement total 509,559, at an
average price of $0.44/share.

                                      -23-
<PAGE>

      On March 3, 2004 and March 15, 2004 we received loans in the amount of
$437,500 each from Stanford. The final terms of the investment are to be
determined but the Company expects to pay Stanford an 8% annual dividend on the
funds invested and to redeem the securities not later than three years from the
date of funding.

      To enable us to fund our research and development and commercialization
efforts, during the next several months, we may enter into additional private
placement transactions with individual investors.

RESULTS OF OPERATIONS

      Operations through May 16, 2002, were comprised solely of our truffle
business, which was conducted through our wholly-owned subsidiaries, Terre di
Toscana, Inc. and Terres Toscanes, Inc. Operations from May 16, 2002 through
June 30, 2002 were comprised of our truffle business (which was divested on July
19, 2002, as described above) and our handheld wireless technology business. Our
results of operations as described below reflect the treatment of the truffle
business as discontinued operations and, therefore, figures from those periods
reflect operations of our handheld wireless technology business only, other than
with respect to other expenses. We believe that a comparison of our truffle
business to our handheld wireless technology business is not a relevant
analysis. Therefore, results of operations for the fiscal years ended 2001 and
2002 reflect operations of our handheld wireless technology business only.

      We entered the handheld wireless technology business through the
acquisition of the Predecessor Entity, which had only twenty-two months of
operating history. We are subject to all of the risks inherent in a new business
enterprise. Our limited operating history makes it difficult to evaluate our
financial performance and prospects. We cannot make assurances at this time that
we will operate profitably or that we will have adequate working capital to meet
our obligations as they become due. Because of our limited financial history, we
believe that period-to-period comparisons of our results of operations will not
be meaningful in the short term and should not be relied upon as indicators of
future performance.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

      Financial Reporting Release No. 60, recently released by the Securities
and Exchange Commission, requires all companies to include a discussion of
critical accounting policies or methods used in the preparation of financial
statements. The notes to the consolidated financial statements include a summary
of significant accounting policies and methods used in the preparation of our
Consolidated Financial Statements. In addition, Financial Reporting Release No.
61 was recently released by the SEC requires all companies to include a
discussion which addresses, among other things, liquidity, off-balance sheet
arrangements, contractual obligations and commercial commitments. The following
is a brief discussion of the more significant accounting policies and methods
used by us.

      The discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States. The preparation of financial statements in accordance with
generally accepted accounting principles in the United States

                                      -24-
<PAGE>

requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities, including the recoverability of tangible and
intangible assets, disclosure of contingent assets and liabilities as of the
date of the financial statements and the reported amounts of revenues and
expenses during the reported period.

      On an on-going basis, we evaluate our estimates. The most significant
estimates relate to our recognition of revenue and the capitalization of our
software development.

      We believe the following critical accounting policies affect our more
significant judgments and estimates used in the preparation of our consolidated
financial statements:

Revenue Recognition Policy

      Revenue related to the sale of our products is comprised of one-time
charges to our dealership customers for hardware (including server, wireless
infrastructure, desktop PCs, printers, interior/exterior access points/antennas
and handheld devices), software licensing fees and installation/training
services. We charge each of our DealerAdvance Sales Solution(TM) dealers for all
costs associated with installation. The average installation for DealerAdvance
Sales Solution(TM) from inception through December 31, 2003 was $70,000. The
most significant variable in pricing is the number of handheld devices
purchased. We have not measured our pricing for DealerAdvance Service
Solution(TM), but expect that it will be approximately $50,000 per system.

      Once our DealerAdvance Sales Solution(TM) is installed, we provide
hardware and software maintenance services for a yearly fee equal to
approximately 10% of the one-time implementation fees. All dealerships are
required to purchase maintenance with installations and pay maintenance fees on
a monthly basis. We provide our customers with services, including software and
report customization, business and operations consulting, and sales training
services on an as needed basis and typically are charged on a time and expenses
basis.

      We offer all of our new customers a sixty-day performance trial period,
during which time we set performance targets, installs the system and agrees to
remove the system at no charge if the performance targets are not met. If
performance is met, a large portion of the dealerships enter into a third party
lease generally with lessors introduced by us. We have entered into a number of
relationships with leasing companies in which the leasing company finances the
implementation fees for the dealership in a direct contractual relationship with
the dealership. The lease is based solely on the creditworthiness of the
dealership without recourse to us. The leasing company receives an invoice from
us, and remits funds upon acceptance by the dealership. We receive all funds as
invoiced, with interest costs passed to the dealership. These leases typically
run 36 months in duration, during which time we contract for service and
maintenance services. We charge separately for future software customization
after the initial installation, for additional training, and for additions to
the base system (e.g., more handheld devices for additional sales people).
Depending upon the dealership arrangement, the support and maintenance contracts
are either billed monthly and recorded as revenue monthly, or are recorded up
front to unearned maintenance fees at the present value of the 36-month revenue
stream and amortized monthly to revenue over the life of the agreement.

                                      -25-
<PAGE>

Revenue Restatement

      On December 26, 2002, we reclassified our consolidated financial
statements for the first three quarters of 2002. This step was taken on the
advice of Rothstein, Kass & Company, P.C., our accounting firm, to reflect
accounting changes in accordance with revenue recognition guidelines released by
the SEC.

      Accordingly, our revenue was reclassified such that it may be recognized
in future quarters. For the nine months ended September 30, 2002, revenue was
reclassified from $2,952,076 to $1,898,884 with the difference treated as
deferred revenue.

      Historically, we recorded revenue as a three-stage process: at the time
the equipment and software were delivered, installed and the personnel trained.
We will now recognize each sale with an additional stage as outlined in the
analysis provided by our accounting firm, which includes a fourth stage defined
as, "the system is handed over to the customer to run on their own." This
four-stage delivery process results in current sales revenues being carried into
future quarters. We estimate that this change delays our recognition of revenue
by approximately 20-50 days.

Software Development Capitalization Policy

      Software development costs, including significant product enhancements
incurred subsequent to establishing technological feasibility in the process of
software production, are capitalized according to Statement of Financial
Accounting Standards No. 86, "Accounting for the Costs of Computer Software to
Be Sold, Leased, or Otherwise Marketed." Costs incurred prior to the
establishment of technological feasibility are charged to research and
development expenses. For the fiscal year ended December 31, 2003, we
capitalized $666,853 of development costs in developing enhanced functionality
of our DealerAdvance(TM) products.

COMPARISON OF YEAR ENDED DECEMBER 31, 2003 and YEAR ENDED DECEMBER 31, 2002

      For the fiscal year ended December 31, 2003, we had total revenue of
$2,996,344. Revenue for the year ended December 31, 2002 was $2,802,483,
representing an increase of 7%. Sustained revenue levels are due to increased
installation of our DealerAdvance(TM) products in 63 new dealerships from
January 1, 2002 through December 31, 2003, compared with 6 dealerships
implemented in the twelve-month period ended in 2001.

      Revenue is comprised of one-time charges to the dealerships for hardware
(including server, wireless infrastructure, desktop PCs, printers,
interior/exterior access points/antennas and handheld devices), software
licensing fees and installation/training services. Average installation cost is
$70,000. The most significant variable in pricing is the number of handheld
devices. Other sources of revenue include monthly support and maintenance
contracts (required with purchase of DealerAdvance(TM)) and fee-based business
development consulting and sales training services. Depending upon the
dealership arrangement, the support and maintenance contracts are either billed
monthly and recorded as revenue monthly, or are paid up front and recorded to
unearned maintenance fees at the present value of the 36-month revenue stream
and amortized monthly to revenue.

                                      -26-
<PAGE>

      Total operating expenses for the fiscal years ended December 31, 2003 and
December 31, 2002 were comprised primarily of general and administrative
expenses (which includes research and development expenses, consulting and
professional costs, recruiting fees, office rent and investor relations
expenses), professional salaries, benefits, stock compensation and bad debt
write-off expense. Operating expenses for the year ended December 31, 2003 and
December 31, 2002 were $5,512,042 and $5,490,419. The increase in operating
expenses is primarily attributable to one time non-cash expense items that
included in $269,500 of stock based compensation and $539,630 of bad debt
write-off expense.

      We generated $1,766,170 in gross profits from sales for the year ended
December 31, 2003, an increase of $591,107 from the year ended December 30,
2002. We were able to improve our gross profit margin from 42% in the year ended
December 30, 2002 to 59% in the year ended December 30, 2003. The higher gross
profit as a percentage of revenue reflects the Company's ability to increase
sales prices based upon performance of prior installations and continued efforts
to reduce cost of services. Additional factors are attributed to better buying
of third party services, lower software and information licensing costs, lower
costs for materials, and better negotiated prices with customers.

      After all operating expenses and interest costs, we reported a loss of
$4,258,007 for the fiscal year ended December 31, 2003. This compares with a
loss for the fiscal year ended December 31, 2002 of $4,528,803, a decrease of
$270,796, or 6%.

      Our business operations and financial results for prior periods were
representative of a start-up company and, therefore, not in a position to
generate significant revenue. As we moved out of our start-up phase and into a
marketing and sales position, our revenues have become more predictable as
dealerships install our DealerAdvance(TM) suite of products. We can offer no
assurance, however, that future revenues will be maintained or increase.
Notwithstanding the gross profit growth, we have yet to generate a profit in any
accounting period.

INDUSTRY TRENDS

      The automotive industry has identified sales productivity tools and CRM
systems as high priorities. Many consolidators and independent dealership owners
have begun to explore and pilot some of these solutions to determine the most
effective means for managing and exploiting prospects and customers to increase
car sales. To date, only a small number of the 22,600-dealership sites in the
United States have implemented CRM systems. There remains substantial
uncertainty as to the type of systems that will be implemented as well as the
pace at which implementation will take place.

      Since large consumer purchases are sensitive to broad economic trends, our
operations may be affected by general economic conditions. For example, if
dealer sales are trending downward, capital expenditures like those associated
with our DealerAdvance(TM) suite of products may be delayed or abandoned.

                                      -27-
<PAGE>

Our Customers

      As of December 2003, the U.S. retail automotive industry consisted of
approximately 22,150 franchise dealerships covering all domestic and foreign
brands. These franchises are granted for specific geographic territories and
allow the franchisee to pursue sales within that territory. In many cases, a
franchisee with two or more brands will operate at one location or property
(e.g., Honda/Acura or Lincoln/Mercury).

      Over the last 10 years, the industry has experienced some consolidation of
ownership with large consolidators (large public and private companies) buying
up independently owned retail sites and dealer groups. However, the market is
still highly fragmented with the 100 top consolidators operating 1,689
dealerships, or only 7.6% of total dealerships.

The Automobile Dealer Software Market

      The automotive dealer software industry began as a spin-off of companies
providing accounting and business forms to dealerships. Today, two major and two
minor providers control the market for DMS, which is primarily an accounting and
business system. The major providers are ADP Dealer Services, a unit of ADP,
Inc. (33% market share) and Reynolds & Reynolds, an $850 million (in revenue)
public company (35% market share). The minor players are Universal Computer
Systems (UCS), a privately held company with approximately $150 million in
revenues (1% market share) and a division of Electronic Data Services (EDS), the
public company originally formed by H. Ross Perot (1% market share).
Approximately 98% of dealerships utilize some form of DMS.

DIVIDEND POLICY

      We have never declared or paid any cash dividends on our Common Stock. We
anticipate that any earnings will be retained for development and expansion of
our business and we do not anticipate paying any cash dividends in the
foreseeable future. Our board of directors, subject to any restrictions or
prohibitions that may be contained in our loan or preferred stock agreements,
has sole discretion to pay dividends based on our financial condition, results
of operations, capital requirements, contractual obligations and other relevant
factors.

Item 7.  FINANCIAL STATEMENTS

      The financial statements required to be filed pursuant to this Item 7 are
included in this Annual Report on Form 10-KSB beginning on page F-1. A list of
the financial statements filed herewith is found on page F-1.

Item 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURES

      None.

                                      -28-
<PAGE>

Item 8A. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

      The Company maintains controls and procedures designed to ensure that it
is able to collect the information it is required to disclose in the reports it
files with the SEC, and to process, summarize and disclose this information
within the time periods specified in the rules of the SEC. The Company's Chief
Executive and Chief Financial Officers are responsible for establishing and
maintaining these procedures and, as required by the rules of the SEC, evaluate
their effectiveness. Based on their evaluation of the Company's disclosure
controls and procedures, which took place as of a date within 90 days of the
filing date of this report, the Chief Executive and Chief Financial Officers
believe that these procedures are effective to ensure that the Company is able
to collect, process and disclose the information it is required to disclose in
the reports it files with the SEC within the required time periods.

Internal Controls

      The Company maintains a system of internal controls designed to provide
reasonable assurance that: transactions are executed in accordance with
management's general or specific authorization; transactions are recorded as
necessary (i) to permit preparation of financial statements in conformity with
generally accepted accounting principles and (ii) to maintain accountability for
assets. Access to assets is permitted only in accordance with management's
general or specific authorization and the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.

      Since the date of the most recent evaluation of the Company's internal
controls by the Chief Executive and Chief Financial Officers, there have been no
significant changes in such controls or in other factors that could have
significantly affected those controls, including any corrective actions with
regard to significant deficiencies and material weaknesses.

                                      -29-
<PAGE>

PART III

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

      Our executive officers and directors and their respective ages and
positions as of December 31, 2003 are as follows:

<TABLE>
<CAPTION>
                    Name                    Age                        Position(s)
      ----------------------------------------------------------------------------------------------
<S>                                          <C>     <C>
      Christopher J. Carey............       51      President, Chief Executive Officer and Director

      Lenard Berger...................       34      Chief Technology Officer and Vice President

      Robert Nawy.....................       43      Chief Financial Officer

      Robert J. Corliss*..............       50      Director

      Robert Cox*.....................       62      Director

      William Lenahan*................       52      Director

      Luis Delahoz*...................       43      Director
</TABLE>

      * Member of audit, compensation and governance/nominating committees.

      The business address for each executive officer and director is 106 Allen
Road, Basking Ridge, NJ 07920.

      Christopher J. Carey has served as our President and Chief Executive
Officer since May 2002. Mr. Carey is also the founder, President and Chief
Executive Officer of Stronghold, our wholly-owned subsidiary. Since founding
Stronghold in 2000, Mr. Carey has set the strategic direction and corporate
vision for Stronghold, drawing on over 25 years of experience building
technology-focused businesses. From 1976 until 1996, Mr. Carey was President and
Chief Executive Officer of Datatec Industries, Inc., which became North
America's largest specialist in the rapid deployment of network and computing
systems. After negotiating a merger with Glasgal Communications in 1996, Mr.
Carey became President of Datatec Systems, Inc., the combined entity until May
2002. Mr. Carey is currently a member of Board of Trustees of The Albert Dorman
Honors College, New Jersey Institute of Technology, and a past Chairman of the
New Jersey Chapter of the Young President's Organization.

      Lenard Berger has served as our Chief Technology Officer and Vice
President since May 2002. Mr. Berger is also the Chief Technology Officer and
Vice President of the Company. Prior to the founding of the Company's
predecessor entity in 2000, Mr. Berger was the President of eBNetworks, a
division of Computer Horizons, Inc. From 1990 until 1999, Mr. Berger was the
Vice President of RPM Consulting, Inc.

                                      -30-
<PAGE>

      Robert Nawy joined Stronghold on July 22, 2003 and is responsible for
financial management, with emphasis on strategic planning and day-to-day
financial operations of the business. Mr. Nawy became the Chief Financial
Officer in the fourth quarter of 2003. Nawy is a CPA, holds an MBA and is
financial management veteran in the information technology industry, with over
19 years of experience in both public and privately held companies. Prior to
joining the Company, Mr. Nawy served as CFO of Exenet Technologies, Inc. from
2001 through 2003 Prior to Exenet, Mr. Nawy served as CFO for Maden
Technologies, Inc. 1998 to 2001.

      Robert J. Corliss has been a director since May 2002. Mr. Corliss has
been, since 1998, the President and Chief Executive Officer of the Athlete's
Foot Group, Inc., a privately owned, 800-store retail chain with operations in
50 countries. Since 1999, Mr. Corliss has been a member of the board of Kahala
Corporation, a publicly traded franchising corporation dedicated to the design,
development and marketing of quick service restaurants serving nutritious
products. From 1996 until 1998, Mr. Corliss was the President and Chief
Executive Officer of Infinity Sports, Inc., a manufacturer, distributor and
licensor of athletic products primarily under the brand Bike Athletic. Prior to
founding Infinity Sports, Inc., Mr. Corliss was the Chief Executive Officer and
President of Hermann's Sporting Goods retail chain. Mr. Corliss serves on the
Advisory Council for the Sporting Goods Manufacturers Association's recently
announced Physical Education for Progress (P.E.P.) initiative. Additionally, Mr.
Corliss serves as a Director and Executive Committee member of the National
Retail Federation and the National Retail Foundation and serves on the board of
directors for The World Federation of the Sporting Goods Industry and serves on
the board of directors of The Athlete's Foot Group, Inc. He is also an Advisor
for Emory University's Goizueta Business School.

      Robert Cox has been a director since May 2002. Mr. Cox is a retired
business executive. From 1996 until 2000, Mr. Cox served as President and a
Director of Summit Bancorp, a $39 billion NJ bank holding company. Mr. Cox was
the Chief Executive Officer of The Summit Bancorporation from 1994 until 1996,
when Summit Bancorporation merged into UJB Financial. Mr. Cox is currently a
member the Board of Trustees of NJ SEEDS, a statewide educational
not-for-profit. Mr. Cox also sits on the board of directors of the Bay View Bank
and the Bay View Capital Corporation in San Mateo, CA. Mr. Cox is a former
Chairman of the New Jersey Bankers Association and is an honorary chairman of
its board of directors.

      William Lenahan has been a director since May 2002. Mr. Lenahan has been
the Chief Executive Officer of KMC Telecom Holdings, Inc. since 2000. KMC is a
$500 million nationwide provider of next generation telecommunications,
including outsourcing services, consulting and financing for metro access and
advanced voice, data and Internet services to business customers. Mr. Lenahan
was the President and CEO of BellSouth Wireless Data (currently Cingular
Wireless) from 1984 to 2000 and was responsible for financial performance and
nationwide wireless data strategy for this division of BellSouth Corporation.
Mr. Lenahan has served nearly 30 years in the information technology,
telecommunications and data industries. He presently serves on the board of
directors of Broadbeam Corporation.

      Luis Delahoz has been a director since May 2002. Mr. Delahoz is the
current President and Chief Executive Officer of TWS International, Inc., a
leading provider of professional technical consulting services to the rapidly
growing telecommunications industry. From 1998 until 2001, Mr. Delahoz was the
Executive Vice President of Client Soft, Inc., a provider of e-

                                      -31-
<PAGE>

business solutions. In 1996, Mr. Delahoz co-founded TOC Global Communications,
Inc., where he served as Vice President until 1998. Currently, Mr. Delahoz is a
member of the board of directors of TWS, Inc. and TWS International, Inc.

Executive Officers

      Christopher J. Carey, Lenard Berger and Robert Nawy each have employment
contracts with the Company. The remaining officers serve at the discretion of
our board of directors and holds office until his successor is elected and
qualified or until his earlier resignation or removal. There are no family
relationships among any of our directors or executive officers.

Board Committees

      Our board of directors has an audit committee, compensation committee and
governance/nominating committee. The audit committee reviews the results and
scope of the audit and other services provided by our independent public
accountant. The audit committee does not currently have an "audit committee
financial expert", as defined by the SEC, due to the Company's status as an
early-development stage company. The Company is in the process of identifying an
audit committee financial expert to join its board of directors and audit
committee.

      The compensation committee establishes the compensation policies
applicable to our executive officers and administers and grants stock options
pursuant to our stock plans. The governance/nominating committee oversees board
procedures and nominates prospective members of the board should a vacancy
arise. The current members of each of the audit, compensation and
governance/nominating committees are Messrs. Corliss, Cox, Lenahan and Delahoz.

Code of Ethics

      Because the Company is an early-development stage company with limited
resources, it has not yet adopted a "code of ethics", as defined by the SEC,
that applies to the Company's Chief Executive Officer, Chief Financial Officer,
principal accounting officer or controller and persons performing similar
functions. The Company is in the process of drafting and adopting a Code of
Ethics.

Director Compensation

      We have granted an initial one-time option grant to purchase 40,000 shares
of Common Stock to each non-employee board member upon election to our board of
directors. This one-time grant was awarded to the current non-employee board
members on October 7, 2003. The options will vest 50% on each of the first and
second anniversaries of the date of grant. In addition, each non-employee
director will be granted, on an annual basis, an option to purchase 30,000
shares of our Common Stock, which will vest 50% on each of the first and second
anniversaries of the date of grant. We have not yet granted the annual option
grants to our board of directors, but intend to do so as soon as reasonably
practicable after the filing of this Form 10-KSB. All stock options granted to
members of our board of directors will have exercise prices equal to the fair
market value of the Common Stock on the date of grant. We also

                                      -32-
<PAGE>

reimburse directors for reasonable out-of-pocket expenses incurred in attending
meetings of the board of directors and any meetings of its committees.

Item 10. EXECUTIVE COMPENSATION

      The following table sets forth executive compensation for fiscal years
ended December 31, 2003, 2002 and 2001. We have not paid any salaries or bonuses
to any of our officers from our inception through the date hereof. All of our
executive officers also serve as officers of and are paid by our operating
subsidiary, Stronghold. The following table shows compensation paid during the
fiscal years ended December 31, 2002 and 2001 by Stronghold to our former
president and other former executive officers. The table also provides
information regarding executive compensation for Stronghold's current president
and three other most highly compensated executive officers. We refer to all of
these officers collectively as our "named executive officers."

                           Summary Compensation Table

<TABLE>
<CAPTION>
                                                                                   Other Annual         All Other
Name and Principal Position                    Year       Salary        Bonus      Compensation       Compensation
------------------------------------------     ----      --------      -------     ------------       ------------
<C>                                            <C>       <C>           <C>         <C>                <C>
Former Officers and Directors
------------------------------------------
Pietro Bortolatti                              2003         --           --             --                 --
   President, Chief Executive Officer and
   Chairman of the Board
                                               2002         --           --          20,500(1)             --
                                               2001         --           --             --                 --

Tiziana DiRocco                                2003         --           --             --                 --
   Vice President and Director of
   European Operations
                                               2002         --           --             --                 --
                                               2001         --           --          15,370(1)             --

David Rector                                   2003         --           --             --                 --
   Director
                                               2002         --           --             --                 --
                                               2001         --           --             --              16,244(2)

Current Officers(3)
------------------------------------------
Christopher J. Carey(4)                        2003      300,000                                          9,600
   President, Chief Executive Officer and
   Chairman of the Board
                                               2002      264,000         --             --                9,601
                                               2001      165,000         --             --                9,602

Lenard Berger(5)                               2003      175,000         --           29,963              7,200
   Vice President and Chief Technology
   Officer
                                               2002      160,416       22,558         28,025              7,100
                                               2001      150,000         --            2,804              7,150

Salvatore D'Ambra(6)                           2003      134,375         --           27,135              5,912
   Vice President - Development
                                               2002      121,397         --            8,000              6,600
                                               2001      106,782         --            2,818              6,600

Robert Nawy(8)                                 2003       82,967         --             --                2,398
   Chief Financial Officer
                                               2002         --           --             --                 --
                                               2001         --           --             --                 --
</TABLE>

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

1     Commissions of sales from Terre Di Toscana, Inc., and Terres Toscanas,
      Inc.

                                      -33-
<PAGE>

2     Includes consulting service fees paid to the David Stephen Group, of which
      David Rector, our former director, is a principal.

3     On May 16, 2002, our wholly-owned subsidiary merged with a New Jersey
      corporation, Stronghold Technologies, Inc. (the "Predecessor Entity"). Our
      wholly-owned subsidiary survived and changed its name to Stronghold
      Technologies, Inc. ("Stronghold").

4     Christopher J. Carey became our President and Chief Executive Officer on
      May 16, 2002, following the merger. Mr. Carey also remains the President,
      Chief Executive Officer and the sole Director of Stronghold. Mr. Carey's
      base salary from May 15, 2002 until December 31, 2002 was $260,000, as set
      forth in his Employment Agreement with Stronghold. The terms of Mr.
      Carey's Employment Agreement are more fully set forth below. "All Other
      Compensation" consists solely of the reimbursement of automobile expenses.
      All of Mr. Carey's salary for 2002 has been deferred and accrued.

5     Lenard Berger has been our Vice President and Chief Technology Officer
      since the merger, and holds the same positions at Stronghold. Mr. Berger's
      base salary for the period of July 2001 through July 2002 was $112,000, as
      set forth in his Employment Agreement with Stronghold. As of July 2002,
      Mr. Berger's salary increased to $122,000. The terms of Mr. Berger's
      Employment Agreement are more fully set forth below. "Other Annual
      Compensation" consists solely of sales commissions. "All Other
      Compensation" consists solely of the reimbursement of automobile expenses.

6     Salvatore D'Ambra has been our Vice President - Development of Stronghold
      from the merger until November 12, 2003. Mr. D'Ambra's base salary for the
      period of August 2001 through August 2002 was $150,000, as set forth in
      his Employment Agreement with Stronghold. As of August 2002, Mr. D'Ambra's
      salary increased to $175,000. Mr. D'Ambra resigned from Stronghold in
      November 2003.

7     James J. Cummiskey has been our Vice President - Sales of Stronghold from
      the merger until January 27, 2003. Mr. Cummiskey's base salary for the
      period of August 2001 through August 2002 was $192,000, as set out in his
      Employment Agreement with Stronghold. As of August 2002, Mr. Cummiskey's
      salary increased to $195,763. Mr. Cummiskey resigned from Stronghold on
      January 27, 2003.

8     Robert Nawy joined Stronghold on July 22, 2003 as Assistant Chief
      Financial Officer and became the Chief Financial Officer in November 2003.
      Mr. Nawy's base salary for the period of June 2003 through July 2004 is
      $180,000, as set out in his Employment Agreement with Stronghold.

Options Grants

      The following table sets forth information concerning individual grants of
stock options under the 2002 Stock Incentive Plan during the fiscal year ended
December 31, 2003 to each of the named executive officers.

              Option Grants in Fiscal Year ended December 31, 2003

<TABLE>
<CAPTION>
                                                          % of Total Options Granted     Exercise or
                                  Number of Securities           to Employees               Base
             Name                  Underlying Options               in 2002             Price ($/Sh)     Grant Date
-------------------------------- ---------------------    ---------------------------   -------------    -----------
<S>                                     <C>                        <C>                       <C>          <C>
Lenard Berger                           153,100                    10.7%                     $0.60         7/22/03
Robert Nawy                              50,000                     3.5%                     $0.60         7/22/03
Robert Nawy                             200,000                    14%                       $0.03        12/19/03
</TABLE>

                                      -34-
<PAGE>

Employment Agreements with Executive Officers

      Christopher J. Carey

      On May 15, 2002, the Company assumed the employment agreement that was in
place between Christopher J. Carey and the Predecessor Entity. Under the terms
of the agreement, Mr. Carey's employment as Chairman of the Board, President and
Chief Executive Officer of the Company will continue until December 31, 2004,
unless terminated sooner. The agreement may be renewed through mutual agreement
of the parties. Mr. Carey receives a base salary of $260,000 per year. Such base
salary was increased effective January 1, 2003, to the annualized rate of
$300,000 and increased, effective January 1, 2004, to the annualized rate of
$350,000. Such salary will be reviewed annually and is subject to increase as
determined by the board of directors of the Company or the Compensation
Committee in its sole discretion.

      The employment agreement provides that each fiscal year after fiscal year
2002, Mr. Carey will be eligible to receive an annual bonus based upon the
Company meeting and exceeding its annual budget, as same has been reviewed and
approved by the board of directors for earnings before interest, taxes,
depreciation and amortization, referred to as EBITDA. This bonus will be earned
according to the following: (i) if the Company achieves 90-100% of budgeted
EBITDA, Mr. Carey will receive a bonus of 10% of his then current annual base
salary; (ii) if the Company achieves 101-110% of budgeted EBITDA, Mr. Carey will
receive a total bonus of 20% of his then current annual base; and (iii) if the
Company achieves 111-120% of budgeted EBITDA, Mr. Carey will receive a total
bonus of 30% of his then current annual base salary; (iv) if the Company
achieves 121-130% of budgeted EBITDA, Mr. Carey will receive a total bonus of
40% of his then current annual base salary; (v) if the Company achieves 131-140%
of budgeted EBITDA, Mr. Carey will receive a total bonus of 50% of his then
current annual base salary; (vi) if the Company achieves 141-150% of budgeted
EBITDA, Mr. Carey will receive a total bonus of 55% of his then current annual
base salary; and (vii) if the Company achieves 151% or more of budgeted EBITDA,
Mr. Carey will receive a total bonus of 60% of his then current annual base
salary. The bonus, if any, shall be paid in one lump sum within sixty (60) days
after the close of the fiscal year for which it was earned. To date, Mr. Carey
has not been awarded a bonus.

      In accordance with the agreement, the Predecessor Entity granted to Mr.
Carey stock options under the 2000 Stock Option Plan for the purchase of an
aggregate of 200,000 shares of the Predecessor Entity's common stock at an
option exercise price equal of $1.50 per share, the fair market value of the
underlying common stock on the date of the grant. Such option converted into an
option to purchase 437,500 shares of our Common Stock when we merged with the
Predecessor Entity and our wholly-owned subsidiary, Stronghold, assumed the 2000
Stock Option Plan. While Mr. Carey is employed by the Company, the option will
become exercisable on the earlier of: (i) the seventh anniversary of May 15,
2002; or (ii) the achievement of the performance goals set forth above in the
paragraph above.

      Upon a change in control of the Company, the unvested portion of the
options shall immediately vest and become exercisable by Mr. Carey.

                                      -35-
<PAGE>

      If the Company terminates Mr. Carey's employment (i) after the expiration
of the term of employment; or (ii) with cause; or if Mr. Carey resigns for no
good reason, he will receive all accrued compensation and vested benefits. If
the Company terminates his employment without cause, Mr. Carey will receive all
unpaid accrued compensation, vested benefits and a severance benefit equal to
his base salary until the earlier of the balance of the term of his agreement,
the renewal term or twelve months following the date of termination.

      Mr. Carey's agreement contains a confidentiality provision and further
provides that Mr. Carey may not work for, or hold 1% or more of the outstanding
capital stock of a publicly traded corporation, which is a competing business
anywhere in the world for one year after the conclusion of his employment. Mr.
Carey has not expressed a desire to leave the Company.

      Lenard Berger

      On August 1, 2000, the Predecessor Entity entered into an employment
agreement with Lenard Berger, which the Company assumed. Under the terms of the
agreement, Mr. Berger's employment as Vice President, Chief Technology Officer
will continue until July 31, 2005 unless sooner terminated. The agreement may be
renewed through mutual agreement of the parties. Mr. Berger received a base
salary of $10,500 per month during the first six months of the term of the
agreement and $12,500 per month commencing February 1, 2001. During the second
year of the term of the agreement, Mr. Berger's base salary will be $150,000,
but may increase to $175,000 if the Company's Net Sales, as defined below,
achieved in the first year of the term of the agreement equal or exceed
$2,000,000. During the third year of the term of the agreement, Mr. Berger's
base salary will be $175,000, but may increase to $200,000 if the Company's Net
Sales, as defined below, achieved in the second year of the term of the
agreement equal or exceed $10,000,000. During the fourth and fifth years of the
term of his agreement, Mr. Berger's base salary will be increased annually by a
percentage determined by the Consumers Price Index. Beginning his second year of
employment, Mr. Berger is eligible for a commission not to exceed $50,000 for
any year during the balance of the term of the agreement. The commission is
equal to 1% of net sales, which is determined by subtracting certain costs from
the gross sales of products and services. To date, Mr. Berger has not been
awarded a commission. Mr. Berger is also eligible to receive extra compensation
at the discretion of the Company's board of directors, a car allowance and any
insurance and 401(k) plans provided by the employer.

      Pursuant to his employment agreement, Mr. Berger received an option grant
to purchase 100,000 shares of the Predecessor Entity's common stock. Such option
converted into an option to purchase 218,750 shares of our Common Stock when the
Company merged with the Predecessor Entity. The vesting schedule for such grant
is set forth above under the section entitled "Option Grants". Upon a change of
control of the Company, 50% of any unvested options shall become vested and
exercisable immediately. If we register shares of Common Stock in an initial
public offering, Mr. Berger has the right to include any shares of Common Stock
that he owns in the registration.

      If the Company terminates Mr. Berger's employment without cause, he will
receive payment of his base salary in effect at the time of his termination for
a period of one month. If Mr. Berger resigns for good reason after the first
full year of employment, Mr. Berger shall

                                      -36-
<PAGE>

receive as his severance pay the lesser of (x) base salary payable for the
balance of the then existing term of the agreement or (y) two months' base
salary, plus one week's base salary for each full or part year worked after the
first year of employment.

      Mr. Berger's agreement provides that all rights to discoveries,
inventions, improvements, and innovations related to our business that
originates during the term of Mr. Berger's employment will be the exclusive
property of the Company. Mr. Berger's agreement also contains a confidentiality
provision and further provides that Mr. Berger may not work for or hold 5% or
more of the outstanding capital stock of a publicly traded corporation, which is
a competing business anywhere in the world for one year after the conclusion of
his employment. Mr. Berger has not expressed a desire to leave the Company.

      Robert Nawy

      On June 23, 2003, the Company entered into an employment agreement with
Robert Nawy. Under the terms of the agreement, Mr. Nawy's employment as Chief
Financial Officer of the Company will continue until July 31, 2006, unless
terminated sooner. The agreement may be renewed through mutual agreement of the
parties. Mr. Nawy receives a base salary at an annualized rate of $180,000 from
July 28th, 2003 until July 31, 2004. From August 1, 2004 to July 31, 2006, Mr.
Nawy's salary will be increased annually by a percentage determined by the
Consumers Price Index. Such salary will be reviewed annually and is subject to
increase as determined by the board of directors of the Company or the
Compensation Committee in its sole discretion.

      The employment agreement provides that each fiscal year after fiscal year
2003, Mr. Nawy will be eligible to receive an annual bonus based upon the
Company meeting and exceeding its annual budget, as same has been reviewed and
approved by the board of directors for earnings before interest, taxes,
depreciation and amortization, referred to as EBITDA. This bonus will be earned
according to the following: (i) if the Company achieves 65-99% of budgeted
EBITDA, Mr. Nawy will receive a bonus of 10% of his then current annual base
salary; (ii) if the Company achieves 100-124% of budgeted EBITDA, Mr. Nawy will
receive a total bonus of 20% of his then current annual base; and (iii) if the
Company achieves 125% or more of budgeted EBITDA, Mr. Nawy will receive a total
bonus of 30% of his then current annual base salary The bonus, if any, shall be
paid in one lump sum within sixty (60) days after the close of the fiscal year
for which it was earned. To date, Mr. Nawy has not been awarded a bonus.

      In accordance with the agreement, the Company granted to Mr. Nawy stock
options under the 2002 Stock Option Plan for the purchase of an aggregate of
200,000 shares of the Company's common stock at an option exercise price equal
to $0.80 per share, the fair market value of the underlying common stock on the
date of the grant. While Mr. Nawy is employed by the Company, the options will
become exercisable at the rate of 25,000 options on July 28, 2003, 60,000
options on July 31, 2004, 60,000 options on July 31, 2005 and 55,000 options on
July 31, 2006.

                                      -37-
<PAGE>

      Upon a change in control of the Company, an additional 50% of the unvested
portion of the options shall immediately vest and become exercisable by Mr.
Nawy.

      If the Company terminates Mr. Nawy's employment without cause within one
year following a Change of Control, or Mr. Nawy resigns after one year following
a Change of Control, he will receive all accrued compensation and vested
benefits. If the Company terminates his employment without cause, Mr. Nawy will
receive a severance benefit equal to: one month salary if termination occurs
within the first six months of employment; two months salary if termination
occurs within the second six months of employment; and the lesser of the balance
of the term of the agreement and three months if termination occurs after
completion of one full year of employment.

      Mr. Nawy's agreement contains a confidentiality provision and further
provides that Mr. Nawy may not work for, or hold 1% or more of the outstanding
capital stock of a publicly traded corporation, which is a competing business
anywhere in the world for one year after the conclusion of his employment. Mr.
Nawy has not expressed a desire to leave the Company.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
         RELATED STOCKHOLDER MATTERS

      The following table sets forth information regarding the beneficial
ownership of our Common Stock as of March 26, 2004. The information in this
table provides the ownership information for:

      o     each person known by us to be the beneficial owner of more than 5%
            of our Common Stock;

      o     each of our directors;

      o     each of our executive officers; and

      o     our executive officers and directors as a group.

      Beneficial ownership has been determined in accordance with the rules and
regulations of the SEC and includes voting or investment power with respect to
the shares. Unless otherwise indicated, the persons named in the table below
have sole voting and investment power with respect to the number of shares
indicated as beneficially owned by them. Common Stock beneficially owned and
percentage ownership is based on 13,392,642 shares outstanding on March 26,
2004, and assuming the exercise of any options or warrants or conversion of any
convertible securities held by such person, which are presently exercisable or
will become exercisable within 60 days after March 26, 2004.

                                      -38-
<PAGE>

                     Security Ownership of Beneficial Owners

<TABLE>
<CAPTION>
                                                      Number of Shares        Percentage
Name and Address of Beneficial Owner                 Beneficially Owned      Outstanding
---------------------------------------              ------------------      -----------
<S>                                                      <C>                      <C>

5% Stockholders
---------------------------------------
Christopher J. Carey
   450 Claremont Road
   Bernardsville, NJ 07924                               6,006,250(1)             33.0

Stanford Venture Capital Holdings, Inc.
   6075 Poplar Avenue
   Memphis, TN 38119                                     6,449,944(2)             35.4

Other Executive Officers and Directors
---------------------------------------
Lenard Berger                                              437,600                 2.4
Robert J. Corliss                                               --                --
Robert Cox                                                 207,059                 1.1
William Lenahan                                                 --                --
Luis Delahoz                                                    --                --
Robert Nawy                                                200,000(3)              1.1
                                                     ------------------      -----------

Executive Officers and Directors as a Group
   (7 people)                                            6,850,909                37.6
</TABLE>

(1)   3,937,500 of these shares are owned by Christopher J. Carey and his wife,
      Mary Carey, as Joint Tenants with Right of Survivorship.

(2)   The total beneficial ownership of Stanford Venture Capital Holdings, Inc.
      is 6,449,944 shares which consists of: (i) 2,002,750 shares of Common
      Stock issuable upon the conversion of 2,002,750 shares of our Series A
      Preferred Stock; and (ii) 2,444,444 shares of Common Stock issuable upon
      the conversion of 2,444,444 shares of our Series B Preferred Stock, and
      (iii) 2,002,750 shares of Common Stock issued upon exercise of warrants.

(3)   Includes an option grant to purchase 200,000 shares of Common Stock which
      was immediately exercisable on the date of grant.

Equity Compensation in Fiscal 2003

      The following table provides information about the securities authorized
for issuance under our equity compensation plans as of December 31, 2003.

                                      -39-
<PAGE>

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                    Number of securities     Weighted-average       Number of securities remaining
                                    to be issued upon        exercise price of      available for future issuance
                                    exercise of              outstanding options    under equity compensation plans (2)
                                    outstanding options (1)
-----------------------------------------------------------------------------------------------------------------------
<S>                                        <C>                       <C>                          <C>
Equity compensation plans                  1,909,309                 $0.86                        638,450
approved by security holders

Equity compensation plans not                 --                      --                            --
approved by security holders

Total                                      1,909,309                 $0.86                        638,450
</TABLE>

(1)   Issued pursuant to our 2002 Stock Incentive Plan, our 2002 California
      Stock Incentive Plan, and our 2000 Stock Option Plan.

(2)   625,950 shares are available for future issuance pursuant to the 2002
      Stock Incentive Plan and 12,500 shares are available for future issuance
      pursuant to the 2002 California Stock Incentive Plan. We do not intend to
      issue any additional options under our 2000 Stock Option Plan.

Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Stronghold became our wholly-owned subsidiary on May 16, 2002 pursuant to
a merger of the Predecessor Entity with and into Acquisition Sub. Pursuant to
the merger, the Predecessor Entity's stockholders surrendered all of their
outstanding shares of the Predecessor Entity's common stock in exchange for a
total of 7,000,000 shares of our Common Stock. Of these shares, Christopher J.
Carey and his wife received a total of 3,937,500 shares held jointly, and Mr.
Carey received an additional 1,093,750 shares individually.

      Pursuant to a Securities Purchase Agreement which we entered into on May
15, 2002, with Stanford, the Company, Pietro Bortolatti and Mr. Carey, we agreed
to issue to Stanford such number of shares of our Series A Preferred Stock that
would in the aggregate equal 20% of the total issued and outstanding shares of
our Common Stock, and a warrant to purchase an equal number of shares of our
Common Stock. The aggregate purchase price for the Series A Preferred Stock and
warrants purchased by Stanford was $3,000,000. The Series A Preferred Stock and
warrant purchase took place on four separate closing dates from May 16, 2002
through July 19, 2002, in which we issued an aggregate of 2,002,750 shares of
our Series A Preferred Stock to Stanford and warrants for 2,002,750 shares of
our Common Stock. So long as any shares of Series A Preferred Stock are
outstanding and held by Stanford, Stanford had the right to maintain its
percentage ownership with respect to any additional securities we may issue,
with certain exceptions under the Series A Securities Purchase Agreement.

      Pursuant to a Securities Purchase Agreement which we entered into on April
24, 2003, we agreed to issue to Stanford a total of 2,444,444 shares of the
Company's Series B $0.90 Convertible Preferred Stock ("Series B Preferred
Stock"). The issuance of the Series B Preferred Stock occurred on six separate
closing dates beginning on April 24, 2003 and closing on September 15, 2003. In
connection with the Purchase Agreement, the Company modified the warrants issued
in connection with the Series A offering to reduce the exercise price to $0.25
per share and extend the expiration date to August 1, 2008. Stanford was also
granted the right to maintain its percentage ownership with respect to any
additional securities we may issue, with

                                      -40-
<PAGE>

certain exceptions under the Series B Securities Purchase Agreement. In
addition, the Company agreed to convert all outstanding loans and unreimbursed
expenses to certain stockholders of the Company for 603,000 shares of the
Company's common stock at a price of $0.90 per share. The value of the warrant
modification was treated as additional costs associated with raising capital and
was shown as a reduction of additional paid-in capital of approximately $557,000
(computed using the Black-Scholes model with the following assumptions: expected
volatility of 0%, expected dividend yield rate of 0%, expected life of 5 years,
and a risk-free interest rate of 4.91% for September 30, 2003).

      In connection with the Series B Purchase Agreement, the Company and
Stanford also entered into a Registration Rights Agreement, dated April 30,
2003, in which the Company agreed to register the shares of the Company's Common
Stock issuable upon conversion of the Series B Preferred Stock with the SEC, no
later than November 15, 2003. Stanford has agreed to extend the date to register
with the SEC the Company's Common Stock issuable upon conversion of the Series B
Preferred Stock until March 15, 2004. The Company is in the process of
negotiating an additional extension with Stanford.

      In connection with the Series B Purchase Agreement, the Company and
Stanford entered into a Consulting Agreement, pursuant to which Stanford has
agreed to perform certain financial consulting and advisory services, in
exchange for which the Company has agreed to pay Stanford a fee of $50,000 per
year for two years, payable quarterly in equal installments of $12,500, with the
first such installment due on July 1, 2003. Pursuant to the terms of the
Consulting Agreement, the Company may, at its sole option, choose to issue
shares of its Common Stock to Stanford in lieu of such payments.

      On November 11, 2003, the Company and Stanford agreed to modify the terms
of the Series A and Series B Preferred Stock to facilitate acquisitions and
other Company actions. The basic terms of the modification are: (i) waiver
Section 2(e)(iii) of the Series A Certificate of Designation, which provides for
anti-dilution protection if the Company shall issue securities which are
convertible into shares of the Company's Common Stock for an exercise price of
less than $1.50; (ii) waiver of any rights of Stanford to Default Warrants (as
defined in the Series A Registration Rights Agreement) due to the Company's
failure to register its shares of Common Stock; and (iii) modification of the
warrants previously issued to Stanford and its assigns to purchase 2,002,750
shares of the Company's Common Stock to reduce the initial exercise price to
$0.25 per share and to extend the expiration date to August 1, 2008.

      Pursuant to the Amended and Restated Series A Certificate of Designation
and Series B Certificate of Designation, dated November 11, 2003, by and between
the Company and Stanford and a Written Notice, Consent, and Waiver Among The
Holders Of Series A $1.50 Convertible Preferred Stock, Series B $.90 Convertible
Preferred Stock and Warrants and Company and Stanford agreed to certain
amendments and restatements including:

      (a) the filing of an Amended and Restated Certificate of Designation for
Series A $1.50 Convertible Preferred Stock substantially in the form attached
hereto ("Amended and Restated Series A Certificate of Designation") pursuant to
which the Company Stanford will (x) waive dilution adjustments for certain
issuances of Common Stock and Common Stock equivalents, (y) reduce for an
eighteen month period the Stated Value and Conversion Price

                                      -41-
<PAGE>

(each as defined therein) to $0.50 and to $0.87 thereafter and (z) forego
certain rights to approve acquisitions of fixed assets, capital stock or capital
expenditures, credit facilities and sales of shares of the Company's securities.
The authorized shares of Series A Preferred Stock was reduced from 2,017,200 to
2,002,750 shares.

      (b) the filing of an Amended and Restated Certificate of Designation
Series B $0.90 Convertible Preferred Stock substantially in the form attached
hereto pursuant to which the Company Stanford will (x) waive dilution
adjustments for certain issuances of Common Stock and Common Stock equivalents,
(y) reduce for an eighteen month period the Stated Value and Conversion Price
(each as defined therein) to $0.50 and to $0.87 thereafter and (z) forego
certain rights to approve acquisitions of fixed assets, capital stock or capital
expenditures, credit facilities and sales of shares of the Company's securities.

      In connection with the Series B Purchase Agreement, the Company and
Stanford also entered into a Registration Rights Agreement, dated April 30,
2003, in which the Company agreed to register the shares of the Company's Common
Stock issuable upon conversion of the Series B Preferred Stock with the
Securities and Exchange Commission, no later than November 15, 2003. The Company
and Stanford have agreed to extend dare of the filing requirements of the
Registration Rights Agreement to March 14, 2004. To date we have not yet filed a
registration statement.

      (c) In consideration of the Notice and the granting of the Consents and
Waivers, the Company reduced the Exercise Price of the Stanford Warrants from
$0.25 per share to $.001. On November 11, 2003, Stanford exercised in full the
Stanford Warrant purchasing 2,002,750 shares of Common Stock for the purchase
price of $2,002.75.

      Pursuant to a Stockholders' Agreement which we entered into on May 16,
2002 with Stanford, Mr. Carey and his wife, if either Stanford or the Careys
should ever want to sell any shares of our Series A Preferred Stock or Common
Stock, the other party has a right of first refusal regarding such sale and, if
such non-selling party does not want to exercise its right of first refusal, we
have the right to purchase such shares, and a right of co-sale under the same
terms and for the same type of consideration. In the case of a material adverse
event related to the Company, the Careys agreed to vote their shares as directed
by Stanford, including removing and replacing the members of the board with
designees nominated by Stanford. Finally, Stanford has the right to nominate one
member to our board of directors and the Carey's have agreed to vote for such
nominee.

      Stanford is an affiliate of Stanford Financial Group, which is the
majority stockholder of TWS International, Inc. Luis Delahoz, one of our outside
directors, is the president and chief executive officer of TWS International,
Inc. and is Stanford's representative on our board of directors.

      On July 31, 2000, the Predecessor Entity entered into a line of credit
loan arrangement with our President, Christopher Carey, who is also president of
Stronghold. Mr. Carey made available $1,989,500, which the Predecessor Entity
could borrow from time to time until August 1, 2001. Outstanding amounts accrued
interest at the rate of interest per annum equal to the floating Base Rate,
computed daily, for the actual number of days elapsed as if each full

                                      -42-
<PAGE>

calendar year consisted of 360 days. Overdue amounts accrued interest at an
annual rate of 2% greater than the base rate, which is 2% above the floating
base rate announced from time to time by Citibank, N.A. Under the agreement, the
first payment was due on August 1, 2001. On such date, the line of credit was
extended for one more year, until August 1, 2002. On April 22, 2002, the
Predecessor Entity issued 500,000 shares of its common stock (which converted
into 1,093,750 shares of our Common Stock when we acquired the Predecessor
Entity on May 16, 2002) in exchange for cancellation of $1 million of
outstanding debt under such line of credit. On May 16, 2002, the total amount
outstanding under the line of credit was $2.2 million. On such date, we issued
666,667 shares of our Common Stock to Mr. Carey in exchange for cancellation of
$1 million of the then outstanding amount. The Company will pay Mr. Carey the
remaining $1.2 million according to the terms of a non-negotiable promissory
note, which was issued on May 16, 2002.

      Under the promissory note, the principal amount and accrued interest is
due and payable in six equal consecutive quarterly installments commencing on
the date which is two business days after April 15, 2003. Each subsequent
quarterly installment will be paid two days after we file each subsequent Form
10-QSB or Form 10-KSB. Interest accrues under the promissory note at an annual
rate of 10%. If the Company's net income does not meet certain benchmarks, then
either the principal balance and accrued interest due for the quarter will be
deferred and the repayment will be amortized during the remaining quarters or,
depending upon the net income amount achieved, the principal balance and accrued
interest due will be automatically converted into shares of our Common Stock, at
a conversion price equal to the average closing price of our Common Stock for
the twenty (20) trading days immediately preceding the date of conversion. The
promissory note is expressly subordinated in right of payment to the prior
payment in full of all of the Company's senior indebtedness.

      On September 14, 2002, we issued 5,000,000 shares of our Common Stock to
our former president, Pietro Bortolatti, in exchange for the transfer from Mr.
Bortolatti of all of the outstanding shares of Terre di Toscana, Inc. to us. The
assets of Terre di Toscana, Inc. included rights in several customer agreements.
We valued the 5,000,000 shares issued to Mr. Bortolatti at par value, $.0001 per
share. As part of our merger with the Predecessor Entity and the exchange of
shares for our truffle business, Mr. Bortolatti has surrendered or exchanged all
of such shares.

      In August 2002, one of our outside directors, Robert Cox, purchased 60,000
shares of our Common Stock at a purchase price of $1.50 per share for aggregate
proceeds to us of $90,000. Such purchase was pursuant to a Subscription
Agreement between Mr. Cox and the Company in which Mr. Cox made certain
investment representations and warranties. The price paid by Mr. Cox had been
negotiated by third parties in an arms-length transaction. The third parties who
negotiated the transaction purchased a number of shares concurrently with Mr.
Cox.

      In January 2004, our outside director, Robert Cox, purchased an additional
147,059 shares and a warrant to purchase 73,529 shares at $0.59/share. The price
of $0.59/share was based on 130% of the trailing five day closing price of our
Common Stock on the effective purchase date of January 9, 2004.

      Lenard Berger, our Chief Technology Officer and Vice President and James
Cummiskey, our Vice President of Sales and Marketing, received 200,000 shares of
common stock from the

                                      -43-
<PAGE>

Predecessor Entity as founders of such entity, at a per share price of $0.005.
Such shares converted into 437,400 shares of our Common Stock.

      On September 30, 2002, we entered into a loan agreement with CC Trust Fund
to borrow an amount up to $355,128. This bridge loan was for a period of twelve
months, with all principal due and payable on September 30, 2003. The 12.5%
interest on the outstanding principal is due each year. At the end of the loan
period, the CC Trust Fund will be entitled to exercise 25,000 warrants at $1.50
per share. As of March 31, 2003, $355,128 was outstanding under the CC Trust
Fund loan agreement. On September 30, 2003, the CC Trust Fund agreed to extend
the term of their loan to December 30, 2003. On December 30, 2003, the CC Trust
Fund agreed to extend the term of their loan to March 31, 2004. On March 30,
2004, the CC Trust Fund agreed to extend the term of their loan to March 31,
2005. As of December 31, 2003, $355,128 was outstanding under the CC Trust Fund
loan agreement. Christopher Carey Jr., Mr. Carey's son, is the beneficiary of
the trust, and Mary Carey, Mr. Carey's wife, is the trustee of the trust.

      On September 30, 2002, we entered into a loan agreement with AC Trust Fund
to borrow an amount up to $375,404. This bridge loan is for a period of twelve
months, with all principal due and payable on September 30, 2003. The 12.5%
interest on the outstanding principal is due each year. At the end of the loan
period, the AC Trust Fund will be entitled to exercise 25,000 warrants at $1.50
per share. On September 30, 2002, the AC Trust Fund agreed to extend the term of
their loan to December 30, 2003. On December 30, 2003, the AC Trust Fund agreed
to extend the term of their loan to March 31, 2004. On March 30, 2004, the AC
Trust Fund agreed to extend the term of their loan to March 31, 2005. As of
December 31, 2003, $375,404 was outstanding under the AC Trust Fund loan
agreement. Amie Carey, Mr. Carey's daughter, is the beneficiary of the trust,
and Mary Carey, Mr. Carey's wife, is the trustee of the trust.

      In October 2002, in connection with a loan to the Company in the amount of
$165,000, we issued a promissory note to Christopher J. Carey for $165,000. Such
promissory note was due on or before December 31, 2003. On March 30, 2004, Mr.
Carey agreed to extend the term of his loan to March 31, 2005. Until such time
as the principal is paid, interest on the note will accrue at the rate of 12.5%
per year.

      We believe that the terms of all of the above transactions are
commercially reasonable and no less favorable to us than we could have obtained
from an unaffiliated third party on an arm's length basis.

Item 13. EXHIBITS AND REPORTS ON FORM 8-K

(a)(1) Financial Statements.

      Reference is made to the Index to Financial Statements on Page F-1.

(a)(2) Financial Statement Schedules.

      None.

                                      -44-
<PAGE>

(a)(3) Exhibits.

      4.6   Amended and Restated Certificate of Designation of Series A $1.50
            Convertible Preferred Stock of Stronghold Technologies, Inc.

      4.7   Amended and Restated Certificate of Designation of Series B $0.90
            Convertible Preferred Stock of Stronghold Technologies, Inc.

      24    Power of Attorney (included on page 48).

      31.1  Certification by the Chief Executive Officer Pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      31.2  Certification by the Chief Financial Officer Pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

      32.1  Certification by the Chief Executive Officer Pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

      32.2  Certification by the Chief Financial Officer Pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the
            Sarbanes-Oxley Act of 2002.

(b)   Reports on Form 8-K.

      None.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table presents the aggregate fees billed for professional services
rendered by Rothstein, Kass & Company, P.C. in 2002 and 2003. Other than as set
forth below, no professional services were rendered or fees billed by Rothstein,
Kass & Company, P.C. during 2002 or 2003.

                                                      2002              2003
                                                     -------           -------

Audit Fees (1).................................      $9,200            $39,000
Audit-Related Fees (2) ........................      $16,000           $2,000
Tax Fees (3)...................................      $20,000           $16,000
Other Fees ...................................       $6,000            $2,000

TOTAL..........................................      $51,200           $59,000

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

(1)   Audit fees consist of professional services rendered for the audit of the
      Company's annual financial statements and the reviews of the quarterly
      financial statements.

(2)   Audit-related fees include fees related to assurance and related services.
      This category also includes fees for issuance of comfort letters, consents
      and assistance with and review of documents filed with the SEC.

                                      -45-
<PAGE>

(3)   Tax fees consist of fees for services rendered to the Company for tax
      compliance, tax planning and advice.

      All work performed by Rothstein, Kass & Company, P.C. as described above
under the caption Audit Fees for the fiscal year ended March 31, 2003, has been
approved by the Audit Committee.

                                      -46-
<PAGE>

                                   SIGNATURES

      Pursuant to the requirements of 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 14th day of April,
2004.

                                      STRONGHOLD TECHNOLOGIES, INC.

                                      By: /s/ Christopher J. Carey
                                          --------------------------------------
                                          Christopher J. Carey, President and
                                          Chief Executive Officer

                                      -47-
<PAGE>

                                POWER OF ATTORNEY

      KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Christopher J. Carey his true and lawful
attorneys-in-fact and agents, each with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments to this registration statement, and
to file the same, with exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents, and each of them, full power and authority to do
and perform each and every act and thing requisite or necessary to be done in
and about the premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that each of said
attorneys-in-fact and agents, or his substitute or substitutes, may lawfully do
or cause to be done by virtue hereof.

      Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
          Signature                                        Title                               Date
          ---------                                        -----                               ----
<S>                                      <C>                                              <C>
/s/ Christopher J. Carey                 President and, Chief Executive Officer and       April 14, 2004
------------------------                 Chairman of the Board of Directors
Christopher J. Carey

/s/ Karen Jackson                        Controller                                       April 14, 2004
------------------------                 (Principal Accounting Officer)
Karen Jackson

/s/ Robert J. Corliss                    Director                                         April 14, 2004
------------------------
Robert J. Corliss

/s/ Robert Cox                           Director                                         April 14, 2004
------------------------
Robert Cox

/s/ William Lenahan                      Director                                         April 14, 2004
------------------------
William Lenahan

/s/ Luis Delahoz                         Director                                         April 14, 2004
------------------------
Luis Delahoz
</TABLE>

                                      -48-
<PAGE>

                                  EXHIBIT INDEX

Exhibit
Number      Description
-------     -----------

2.1 (1)(4)  Merger Agreement and Plan of Merger, dated May 15, 2002, by and
            among TDT Development, Inc., Stronghold Technologies, Inc., TDT
            Stronghold Acquisition Corp., Terre Di Toscana, Inc., Terres
            Toscanes, Inc., certain stockholders of TDT Development, Inc. and
            Christopher J. Carey.

2.2 (5)     Stock Purchase Agreement, dated July 19, 2002, by and between TDT
            Development, Inc. and Mr. Pietro Bortolatti.

3.1 (2)     Articles of Incorporation, as amended on July 11, 2002.

3.2 (3)     By-Laws.

4.1 (2)     Certificate of Designations filed on May 16, 2002.

4.2 (5)     Specimen Certificate of Common Stock.

4.3 (8)     Promissory Note for $300,000, dated March 18, 2003, made by
            Stronghold Technologies, Inc. in favor of Christopher J. Carey.

4.4 (8)     Promissory Note for $100,000, dated March 18, 2003, made by
            Stronghold Technologies, Inc. in favor of Christopher J. Carey.

4.5 (8)     Form of Warrant with Christopher J. Carey.

4.6 (10)    Amended and Restated Certificate of Designation of Series A $1.50
            Convertible Preferred Stock of Stronghold Technologies, Inc.

4.7 (10)    Amended and Restated Certificate of Designation of Series B $0.90
            Convertible Preferred Stock of Stronghold Technologies, Inc.

10.1 (2)    2002 Stock Incentive Plan.

10.2 (2)    Form of Incentive Stock Option Agreement to be issued under the 2002
            Stock Incentive Plan.

10.3 (2)    Form of Nonstatutory Stock Option Agreement to be issued under the
            2002 Stock Incentive Plan.

10.4 (5)    California 2002 Stock Incentive Plan.

10.5 (5)    Form of Incentive Stock Option Agreement to be issued under the
            California 2002 Stock Incentive Plan.

                                      -49-
<PAGE>

10.6 (5)    Form of Nonstatutory Stock Option Agreement to be issued under the
            California 2002 Stock Incentive Plan.

10.7 (2)    Executive Employment Agreement by and between Stronghold
            Technologies, Inc. and Christopher J. Carey, dated May 15, 2002.

10.8 (2)    Employment and Non-Competition Agreement by and between Stronghold
            Technologies, Inc. and Lenard Berger, dated August 1, 2000.

10.9 (2)    Employment and Non-Competition Agreement by and between Stronghold
            Technologies, Inc. and Salvatore D'Ambra, dated July 10, 2000.

10.10 (2)   Employment and Non-Competition Agreement by and between Stronghold
            Technologies, Inc. and James J. Cummiskey, dated August 14, 2000.

10.11 (2)   Business Loan Agreement by and between Stronghold Technologies, Inc.
            and UnitedTrust Bank, dated June 30, 2002.

10.12 (2)   Promissory Note issued by Stronghold Technologies, Inc. made payable
            to UnitedTrust Bank, Dated June 30, 2002.

10.13 (2)   Commercial Security Agreement by and between Stronghold
            Technologies, Inc. and UnitedTrust Bank, dated June 30, 2002.

10.14 (2)   Promissory Note issued by Stronghold Technologies, Inc. made payable
            to Christopher J. Carey, dated May 16, 2002.

10.15 (4)   Securities Purchase Agreement, dated May 15, 2002, by and among TDT
            Development, Inc., Stanford Venture Capital Holdings, Inc., Pietro
            Bortolatti, Stronghold Technologies, Inc. and Christopher J. Carey.

10.16 (4)   Registration Rights Agreement, dated May 16, 2002, by and among TDT
            Development, Inc. and Stanford Venture Capital Holdings, Inc.

10.17 (4)   Lock-Up Agreement, dated May 16, 2002, by and among TDT Development,
            Inc.

10.18 (4)   Stockholders' Agreement, dated May 16, 2002, by and among TDT
            Development, Inc., Christopher J. Carey, Mary Carey and Stanford
            Venture Capital Holdings, Inc.

10.19 (4)   Form of Warrant to be issued pursuant to the Securities Purchase
            Agreement (Exhibit 10.11).


                                      -50-
<PAGE>

Exhibit
Number      Description
-------     -----------

10.20 (6)   Loan Agreement by and among Stronghold Technologies, Inc., its
            subsidiary and UnitedTrust Bank, dated September 30, 2002.

10.21 (6)   Commercial Loan Note issued by Stronghold Technologies, Inc. and its
            subsidiary made payable to UnitedTrust Bank, dated September 30,
            2002.

10.22 (6)   Security Agreement by and between Stronghold Technologies, Inc. and
            UnitedTrust Bank, dated September 30, 2002.

10.23 (6)   Security Agreement by and between Stronghold's subsidiary and
            UnitedTrust Bank, dated September 30, 2002.

10.24 (6)   Subordination Agreement by and among Christopher J. Carey,
            Stronghold Technologies, Inc. and UnitedTrust Bank, dated September
            30, 2002.

10.25 (6)   Subordination Agreement by and among Christopher J. Carey,
            Stronghold's subsidiary and UnitedTrust Bank, dated September 30,
            2002.

10.26 (6)   Guaranty by Christopher J. Carey in favor UnitedTrust Bank, dated
            September 30, 2002.

10.27 (6)   Loan Agreement by and among Stronghold Technologies, Inc., its
            subsidiary and AC Trust Fund, dated September 30, 2002.

10.28 (6)   Loan Agreement by and among Stronghold Technologies, Inc., its
            subsidiary and CC Trust Fund, dated September 30, 2002.

10.29 (6)   Form of Subscription Agreement by and between Stronghold
            Technologies, Inc. and each of the parties listed on the schedule of
            purchasers attached thereto.

10.30 (6)   Promissory Note issued by Stronghold Technologies, Inc. made payable
            to Christopher J. Carey, dated September 30. 2002.

10.31 (7)   Securities Purchase Agreement, dated April 30, 2003, by and between
            Stronghold Technologies, Inc. and Stanford Venture Capital Holdings,
            Inc.

10.32 (7)   Registration Rights Agreement, dated April 30, 2003, by and between
            Stronghold Technologies, Inc. and Stanford Venture Capital Holdings,
            Inc.

10.33 (7)   Consulting Agreement, dated April 30, 2003, by and between
            Stronghold Technologies, Inc. and Stanford Venture Capital Holdings,
            Inc.

10.34 (9)   First Modification to Loan Agreement and Note among Stronghold
            Technologies, Inc., Christopher J. Carey and UnitedTrust Bank, dated
            July 31, 2003.

                                      -51-
<PAGE>

Exhibit
Number      Description
-------     -----------

21 (5)      Subsidiaries of the Registrant.

24 (10)     Power of Attorney (included on page 48).

31.1 (10)   Certification by the Chief Executive Officer Pursuant to Section 302
            of the Sarbanes-Oxley Act of 2002.

31.2 (10)   Certification by the Chief Financial Officer Pursuant to Section 302
            of the Sarbanes

32.1 (10)   Certification by the Chief Executive Officer Pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes

32.2 (10)   Certification by the Chief Financial Officer Pursuant to 18 U.S.C.
            Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes

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

(1)   The exhibits and schedules to the Merger Agreement have been omitted from
      this filing pursuant to Item 601(b)(2) of Regulation S-K. The Company will
      furnish copies of any of the exhibits and schedules to the U.S. Securities
      and Exchange Commission upon request

(2)   Incorporated herein by reference to the exhibits to Registrant's Quarterly
      Report on Form 10-QSB for the fiscal quarter ended June 30, 2002.

(3)   Incorporated herein by reference to the exhibits to the Registrant's
      Registration Statement on Form SB-2 as filed with the Securities and
      Exchange Commission on February 1, 2001 (No. 333-54822).

(4)   Incorporated herein by reference to the exhibits to the Registrant's
      Current Report on Form 8-K dated May 16, 2002.

(5)   Incorporated herein by reference to the exhibits to the Registrant's
      Registration Statement on Form SB-2 as filed with the Securities and
      Exchange Commission on September 24, 2002.

(6)   Incorporated herein by reference to the exhibits to Registrant's Annual
      Report on Form 10-KSB for the fiscal year ended December 31, 2002.

(7)   Incorporated by reference to Exhibit 99.3 to the Company's Form 8-K as
      filed with the Securities and Exchange Commission on May 8, 2003.)

(8)   Incorporated by reference to the exhibits to Registrants Quarterly Report
      on Form 10-QSB for the quarterly period ended March 31, 2003.

(9)   Incorporated by reference to the exhibits to Registrants Quarterly Report
      on Form 10-QSB for the quarterly period ended June 30, 2003.

(10)  Filed herewith.

                                      -52-

<PAGE>

                          STRONGHOLD TECHNOLOGIES, INC.
                                 AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                                DECEMBER 31, 2003

<PAGE>

CONTENTS



Independent Auditors' Report                                                  1


Consolidated Financial Statements

     Consolidated Balance Sheet                                               3

     Consolidated Statements of Operation                                     5

     Consolidated Statements of Stockholders' Deficit                         6

     Consolidated Statements of Cash Flows                                    8

     Notes to Consolidated Financial Statements                              11

<PAGE>

INDEPENDENT AUDITORS' REPORT



To the Board of Directors and Shareholders
Stronghold Technologies, Inc.


We have audited the accompanying consolidated balance sheet of Stronghold
Technologies, Inc. and Subsidiary as of December 31, 2003, and the related
consolidated statements of operations, stockholders' deficit, and cash flows for
the years ended December 31, 2003 and 2002. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Stronghold
Technologies, Inc. and Subsidiary as of December 31, 2003, and the results of
their operations and their cash flows for the years ended December 31, 2003 and
2002, 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. As discussed in Note 2, the Company's
ability to continue in the normal course of business is dependent upon the
success of future operations. The Company has recurring losses, substantial
working capital and stockholders' deficit and negative cash flows from
operations. These conditions raise substantial doubt about the Company's ability
to continue as a going concern. Management's plans regarding these matters are
also described in

                                                                               1
<PAGE>

Note 2. These consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.



Roseland, New Jersey
March 17, 2004

                                                                               2
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET



December 31, 2003
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
ASSETS
<S>                                                             <C>
Current assets
     Cash                                                       $         8,161
     Accounts receivable, less allowance for doubtful
       accounts of $218,446                                             586,788
     Inventories                                                        171,746
     Prepaid expenses                                                    11,641
                                                                ----------------
         Total current assets                                           778,336
                                                                ----------------
Property and equipment, net                                             162,808
                                                                ----------------
Other assets
     Software development costs                                         770,952
     Other                                                               74,207
                                                                ----------------
         Total other assets                                             845,159
                                                                ----------------
                                                                $     1,786,303
                                                                ================
LIABILITIES AND STOCKHOLDERS' DEFICIT

Current liabilities
     Accounts payable                                           $       681,323
     Accrued expenses and other current liabilities                   2,354,696
     Interest payable, stockholders                                     407,904
     Notes payable, stockholders, current portion                       390,000
     Note payable, current portion                                    1,231,667
     Obligations under capital leases, current portion                   45,827
                                                                ----------------
         Total current liabilities                                    5,111,417
                                                                ----------------
Long-term liabilities
     Notes payable, stockholders, less current portion                  986,905
     Obligations under capital leases, less current portion              34,329
                                                                ----------------
         Total long-term liabilities                                  1,021,234
                                                                ----------------
See accompanying notes to consolidated financial statements.

                                                                               3
<PAGE>

Commitments and contingencies

Stockholders' deficit
     Preferred stock, series A, $.0001 par value; authorized
       5,000,000 shares, 2,002,750 issued and outstanding
       (aggregate liquidation preference of $3,004,125)                     201
     Preferred stock, series B, $.0001 par value;
       authorized 2,444,444 shares, 2,444,444 issued and
       outstanding (aggregate liquidation preference of
       $2,200,000)                                                          244
     Common stock, $.0001 par value, authorized
       50,000,000 shares, 13,291,218 issued and outstanding               1,329
     Additional paid-in capital                                       7,711,767
     Stock subscription receivable                                       (3,000)
     Accumulated deficit                                            (12,056,889)
                                                                ----------------
         Total stockholders' deficit                                 (4,346,348)
                                                                ----------------
                                                                $     1,786,303
                                                                ================
</TABLE>

See accompanying notes to consolidated financial statements.

                                                                               4
<PAGE>

CONSOLIDATED STATEMENTS OF OPERATION



<TABLE>
<CAPTION>
Years Ended December 31,                          2003           2002
------------------------------------------   ------------    ------------
<S>                                          <C>             <C>
Sales                                        $  2,996,344    $ 2,802,483

Cost of sales                                   1,230,174      1,627,420
                                             ------------    ------------

Gross profit                                    1,766,170      1,175,063

Selling, general and administrative             5,512,042      5,490,419
                                             ------------    ------------

Loss from operations                           (3,745,872)    (4,315,356)

Interest expense                                  512,135        213,447
                                             ------------    ------------

Net loss                                       (4,258,007)    (4,528,803)

Dividends                                                       (294,843)
                                             ------------    ------------

Net loss applicable to common stockholders   $ (4,258,007)   $(4,823,646)
                                             ============    ============

Basic and diluted loss per
  common share                               $      (0.38)   $     (0.55)
                                             ============    ============

Weighted average number of
  common shares outstanding                    11,304,347      8,834,730
                                             ============    ============
</TABLE>

See accompanying notes to consolidated financial statements.

                                                                               5
<PAGE>

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT



Years Ended December 31, 2003 and 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                         Preferred Stock         Preferred Stock
                                            Series A                Series B              Common Stock         Additional
                                      -------------------      ------------------     --------------------      Paid-in
                                     Shares       Amount      Shares      Amount      Shares       Amount       Capital
--------------------------------    ---------   ---------   ---------   ---------   ----------   ----------   -----------
<S>                                 <C>         <C>         <C>         <C>         <C>          <C>          <C>
Balances, December 31, 2001                     $      --               $      --    5,906,250   $      591   $    12,909

Issuance of preferred stock, net
of costs                            2,002,750         201                                                       2,264,778

Warrants issued as dividends                                                                                      294,843

Issuance of common stock                                                             2,190,333          219       267,281

Conversion of stockholder loan
to common stock                                                                      1,760,417          176     1,999,824

Net loss
                                    ---------   ---------   ---------   ---------   ----------   ----------   -----------

Balances, December 31, 2002         2,002,750         201          --                9,857,000          986     4,839,635

<CAPTION>

                                       Stock                           Total
                                    Subscription     Accumulated    Stockholders'
                                     Receivable        Deficit        Deficit
--------------------------------    -------------   -------------   -------------
<S>                                 <C>             <C>             <C>
Balances, December 31, 2001         $     (3,000)   $ (2,975,236)   $(2,964,736)

Issuance of preferred stock, net
of costs                                                              2,264,778

Warrants issued as dividends                            (294,843)             -

Issuance of common stock                                                267,500

Conversion of stockholder loan
to common stock                                                       2,000,000

Net loss                                              (4,528,803)    (4,528,803)
                                    -------------   -------------   -------------

Balances, December 31, 2002               (3,000)     (7,798,882)    (2,961,060)
</TABLE>



See accompanying notes to consolidated financial statements.

                                                                               6
<PAGE>

Years Ended December 31, 2003 and 2002
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                         Preferred Stock         Preferred Stock
                                            Series A                Series B              Common Stock         Additional
                                      -------------------      ------------------     --------------------      Paid-in
                                     Shares       Amount      Shares      Amount      Shares       Amount       Capital
--------------------------------    ---------   ---------   ---------   ---------   ----------   ----------   -----------
<S>                                 <C>         <C>         <C>         <C>         <C>          <C>          <C>

Issuance of preferred stock,
net of costs                                                2,444,444         244                               1,897,649

Warrants issued with debt                                                                                          95,000

Issuance of common stock                                                               362,500           36       174,964

Conversion of warrants to common
stock                                                                                2,002,750          201

Stock issued for services                                                              465,635           46       161,579

Conversion of stockholder loan
to common stock                                                                        603,333           60       542,940

Net loss
                                    ---------   ---------   ---------   ---------   ----------   ----------   -----------

Balances, December 31, 2003         2,002,750   $     201   2,444,444   $     244   13,291,218   $    1,329   $ 7,711,767

<CAPTION>
                                       Stock                           Total
                                    Subscription     Accumulated    Stockholders'
                                     Receivable        Deficit        Deficit
--------------------------------    -------------   -------------   -------------
<S>                                 <C>             <C>             <C>
Issuance of preferred stock,
net of costs                                                          1,897,893

Warrants issued with debt                                                95,000

Issuance of common stock                                                175,000

Conversion of warrants to common
stock                                                                       201

Stock issued for services                                               161,625

Conversion of stockholder loan
to common stock                                                         543,000

Net loss                                              (4,258,007)    (4,258,007)
                                    -------------   -------------   -------------

Balances, December 31, 2003         $     (3,000)   $(12,056,889)   $(4,346,348)

</TABLE>



See accompanying notes to consolidated financial statements.

                                                                               7
<PAGE>

CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<CAPTION>
                           Years Ended December 31,                                    2003               2002
------------------------------------------------------------------------------   ----------------   ----------------
<S>                                                                              <C>                <C>
Cash flows from operating activities
   Net loss                                                                      $    (4,258,007)   $    (4,528,803)
   Adjustments to reconcile net loss to
     net cash used in operating activities:
     Provision for doubtful accounts                                                     489,205            200,000
     Depreciation and amortization                                                       222,678             61,905
     Warrants issued with debt                                                            95,000
     Stock issued for services                                                           161,625
    Increase (decrease) in cash attributable to
       changes in operating assets and liabilities:
     Accounts receivable                                                                 116,458         (1,110,091)
     Inventories                                                                          56,667           (147,065)
     Prepaid expenses                                                                      8,265            (15,021)
     Other receivables                                                                                      250,139
     Accounts payable                                                                   (170,337)           794,019
     Accrued expenses and other current liabilities                                    1,512,979            645,923
     Interest payable, stockholders                                                      214,786             58,715
                                                                                 ----------------   ----------------
Net cash used in operating activities                                                 (1,550,681)        (3,790,279)
                                                                                 ----------------   ----------------

Cash flows from investing activities
     Payments for purchase of property and equipment                                     (19,574)           (94,585)
     Payments for software development costs                                            (683,052)          (223,224)
     Payments of security deposits                                                       (47,132)
                                                                                 ----------------   ----------------

Net cash used in investing activities                                                   (749,758)          (317,809)
                                                                                 ----------------   ----------------

Cash flows from financing activities
     Proceeds from notes payable, stockholders                                           712,968          1,781,000
     Principal repayments of notes payable, stockholders                                (209,000)          (222,000)
     Principal repayments of notes payable                                              (268,333)
     Proceeds from issuance of preferred stock, net of financing costs                 1,897,893          2,264,979
     Proceeds from issuance of common stock                                              175,201            267,500
     Principal payments for obligations under capital leases                             (13,513)            (8,274)
                                                                                 ----------------   ----------------

Net cash provided by financing activities                                              2,295,216          4,083,205
                                                                                 ----------------   ----------------
</TABLE>



See accompanying notes to consolidated financial statements.

                                                                               8
<PAGE>

<TABLE>
<CAPTION>
                           Years Ended December 31,                                    2003               2002
------------------------------------------------------------------------------   ----------------   ----------------
<S>                                                                              <C>                <C>
Cash flows from operating activities

Net decrease in cash                                                                      (5,223)           (24,883)

Cash, beginning of year                                                                   13,384             38,267
                                                                                 ----------------   ----------------

Cash, end of year                                                                $         8,161    $        13,384
                                                                                 ================   ================

Supplemental disclosure of cash flow information,
   cash paid during the period for interest                                      $       202,349    $       154,732
                                                                                 ================   ================
</TABLE>


Supplemental disclosures of noncash investing and financing activities

During the year ended December 31, 2002, the Company entered into two separate
agreements to convert $2,000,000 of notes payable, stockholders into 1,760,417
shares of common stock.

On May 15, 2002, the Company consolidated the outstanding amounts due to the
majority stockholder into a promissory note of approximately $1,200,000
classified as a note payable, stockholder. Approximately $262,000 of accrued
expenses has been classified to notes payable, stockholders.

On June 30, 2002, the Company converted their outstanding line of credit with a
non-affiliated bank into a note payable of $1,500,000.

During the year ended December 31, 2002, obligations under capital leases
aggregating $45,099 were incurred when the Company entered into various leases
for computer equipment.

During the year ended December 31, 2003, obligations under capital leases
aggregating $56,845 were incurred when the Company entered into various leases
for computer equipment.

During the year ended December 31, 2003, the Company entered into an agreement
to convert $543,000 of notes payable, stockholders into 603,333 shares of common
stock.

See accompanying notes to consolidated financial statements.

                                                                               9
<PAGE>

During the year ended December 31, 2003, the Company reclassed $329,812 of notes
payable, stockholder to accrued expenses.



See accompanying notes to consolidated financial statements.

                                                                              10
<PAGE>

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



1.    Nature of operations

Stronghold Technologies, Inc. (the "Company") was incorporated in the state of
New Jersey on August 1, 2000. The Company is engaged principally as a developer
of wireless and internet-based systems for auto dealers in the United States.

On May 15, 2002, the Company entered into a Merger Agreement (the "Merger
Agreement") with Stronghold Technologies, Inc. a Nevada corporation (formally
known as TDT Development, Inc. ("Parent")) whereby Parent issued 7,000,000
shares of its common stock in exchange for all of the Company's outstanding
shares in a transaction accounted for as a reverse purchase acquisition. As a
result, the Company is considered for accounting purposes, to be the acquiring
company since the stockholders of the Company acquired more than 50% of the
issued and outstanding stock of Parent. Pursuant to this Merger Agreement, the
outstanding options of the Company were also converted into options to purchase
Parent common stock based on a conversion rate of 2.1875 as defined in the
Merger Agreement. Prior to the merger, Parent's operations were comprised solely
of a business that sold truffles imported from Italy through its wholly owned
subsidiaries, Terre di Toscana, Inc. and Terres Toscanes, Inc. (the
"Subsidiaries"). The Subsidiaries were sold on July 19, 2002 and had virtually
no material operations for the period of May 16, 2002 through July 19, 2002.
Since this transaction resulted in a change in reporting entity, the historical
financial statements prior to May 16, 2002 are those of the Company. The
stockholders' deficit of the Company has been retroactively restated.

2.    Going concern

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. The Company has incurred a
net loss of approximately $4,258,000 and has negative cash flows from operations
of approximately $1,551,000 for the year ended December 31, 2003, and has a
working capital deficit of approximately $4,333,000 and a stockholders' deficit
of approximately $4,346,000 as of December 31, 2003. These conditions raise
substantial doubt about the Company's ability to continue as a going concern.
During 2004, management of the Company will rely on raising additional capital
to fund its future operations. If the Company is unable to generate sufficient
revenues or raise sufficient additional capital, there could be a material
adverse effect on the consolidated financial position, results of operations and
cash flows of the Company. The accompanying consolidated financial statements do
not include any adjustments that might be necessary if the Company is unable to
continue as a going concern.

                                                                              11
<PAGE>

3.    Summary of significant accounting policies

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
its wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated in consolidation.

Property and Equipment

Property and equipment is stated at cost less accumulated depreciation and
amortization. The Company provides for depreciation and amortization as follows:

                                       Estimated
              Asset                   Useful Life        Principal Method
----------------------------------- ----------------- ------------------------
Computer equipment                      5 Years       Declining-balance
Computer software                       3 Years       Declining-balance
Furniture and fixtures                  7 Years       Declining-balance
Leasehold improvements                  4 Years       Straight-line

Accounts Receivable

The Company carries its accounts receivable at cost less an allowance for
doubtful accounts. On a periodic basis, the Company evaluates its accounts
receivable and establishes an allowance for doubtful accounts, based on a
history of past write-offs and collections and current credit conditions.
Accounts are written off as uncollectable at the discretion of management.

Inventories

Inventories, which are comprised of hardware for resale, are stated at cost, on
an average cost basis, which does not exceed market value.

Software Development Costs

Capitalized software development costs, including significant product
enhancements, incurred subsequent to establishing technological feasibility in
the process of software development and production, are capitalized according to
Statement of Financial Accounting Standards (SFAS) No. 86, "Accounting for the
Costs of Computer Software to Be Sold, Leased, or Otherwise Marketed." Costs
incurred prior to the establishment of technological feasibility are charged to
research and development expenses. The capitalized software is amortized over a
three year period using the straight-line method. For the years ended December
31, 2003 and 2002 the amount of software development costs incurred that were
not capitalized were approximately $nil and $1,322,000, respectively.

                                                                              12
<PAGE>

Fair Value of Financial Instruments

Financial instruments held by the Company include cash, accounts receivable,
notes payable and accounts payable. The book value of cash, accounts receivable
and accounts payable are considered to be representative of fair value because
of the short maturity of these instruments. The fair values of the notes payable
approximate book values primarily because the contractual interest rates
approximate prevailing market rates.

Impairment of Long-Lived Assets

The Company periodically assesses the recoverability of the carrying amounts of
long-lived assets, including intangible assets. A loss is recognized when
expected undiscounted future cash flows are less than the carrying amount of the
asset. The impairment loss is the difference by which the carrying amount of the
asset exceeds its fair value.

Retirement Plan

The Company has a retirement plan under Section 401(k) of the Internal Revenue
Code ("the Plan"), which covers all eligible employees. The Plan provides for
voluntary deduction of the employee's salary, subject to Internal Revenue Code
limitations. The Company can make a matching contribution to the Plan, which is
at the discretion of the Company and is determined annually. There were no
matching contributions for the years ended December 31, 2003 and 2002.

Income Taxes

The Company complies with SFAS No. 109, "Accounting for Income Taxes," which
requires an asset and liability approach to financial accounting and reporting
for income taxes. Deferred income tax assets and liabilities are computed for
differences between the financial statement and tax bases of assets and
liabilities that will result in future taxable or deductible amounts, based on
enacted tax laws and rates applicable to the periods in which the differences
are expected to affect taxable income. Valuation allowances are established,
when necessary, to reduce deferred tax assets to the amount expected to be
realized.

Stock-Based Compensation

In December 2002, the Financial Accounting Standards Board (FASB) issued SFAS
No. 148, "Accounting for Stock-Based Compensation-Transition and Disclosure,"
which amended SFAS No. 123, "Accounting for Stock-Based Compensation." This
Statement provides alternative methods of transition for a voluntary change to
the fair value based method of accounting for stock-based compensation. It also
amends the disclosure provisions to require more prominent disclosure about the
effects on reported net income (loss) of an entity's accounting policy decisions
with respect to stock-based employee compensation. As permitted by the
Statement, the Company does not plan to adopt the fair value recognition
provisions of SFAS No. 123 at this time. However, the Company has adopted the
disclosure provisions of the Statement.

The Company accounts for its stock-based employee compensation plans under
Accounting Principles Board Opinion No. 25, under which no compensation cost has
been recognized in the

                                                                              13
<PAGE>

accompanying consolidated statements of operations, as all options granted under
those plans had an exercise price equal to or in excess of the market value of
the underlying common stock at the date of grant (see Note 10).

Had compensation cost for these options been determined consistent with the fair
value method provided by SFAS No. 123, the Company's net loss and net loss per
common share would have been the following pro forma amounts for the years ended
December 31, 2003 and 2002.


                                            2003                2002
------------------------------------ ------------------- --------------------
Net loss applicable to common
   shareholders, as reported           $    (4,258,007)    $    (4,823,646)

Deduct
Total Stock-based compensation
expense determined under fair
value method for all awards, net
of related tax effect                           55,857              73,329
                                     ------------------- --------------------

Pro Forma                              $    (4,313,864)    $    (4,896,975)
                                     =================== ====================

Basic and diluted EPS
   As reported                         $         (0.38)    $         (0.55)
   Pro Forma                           $         (0.38)    $         (0.55)


The fair value of issued stock options is estimated on the date of grant using
the Black-Scholes option-pricing model including the following assumptions:
expected volatility of 2.06%, expected dividend yield rate of 0%, expected life
of 10 years, and a risk-free interest rate of 4.27% and 4.03% for the years
ended December 31, 2003 and 2002, respectively.

Revenue Recognition

Revenue is recognized under the guidelines of SFAS No. 48 "Revenue Recognition
When Right of Return Exists" and has a four step process that must be met prior
to the recording of revenue. The steps consist of the following: signing of
sales contract, installation of hardware, completion of the training period and
a signed contract from the customer stating they accept the product for the
sixty-day trial period. Payment is due upon the completion of the trial period.
The sales revenue and cost of sales reported in the consolidated statements of
operations is reduced to reflect estimated returns. Service revenue is
recognized when earned.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent

                                                                              14
<PAGE>

assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results
could differ from those estimates.

Loss Per Common Share

Loss per common share is based on the weighted average number of common shares
outstanding. The Company complies with SFAS No. 128, "Earnings Per Share," which
requires dual presentation of basic and diluted earnings (loss) per share. Basic
earnings (loss) per share exclude dilutions and are computed by dividing net
loss applicable to common stockholders by the weighted average number of common
shares outstanding for the year. Diluted earnings (loss) per share reflects the
potential dilution that could occur if securities or other contracts to issue
common stock were exercised or converted into common stock or resulted in the
issuance of common stock that then shared in the earnings of the entity. Since
the effect of the outstanding options and warrants are anti-dilutive, they have
been excluded from the Company's computation of loss per common share.

New Accounting Pronouncements

During 2003, the Financial Accounting Standards Board ("FASB") issued SFAS No.
149, "Amendment of Statement No. 133 on Derivative Instruments and Hedging
Activities" and No. 150, "Accounting for Certain Financial Instruments with
Characteristics of both Liabilities and Equity." SFAS No. 149 amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts and for
hedging activities under SFAS No. 133. SFAS No. 150 requires certain
freestanding financial instruments, such as mandatory redeemable preferred
stock, to be measured at fair value and classified as liabilities. The
implementation of SFAS Nos. 149 and 150 did not have a material impact on the
Company's consolidated financial position, results of operations or cash flows.

4.    Property and equipment

Property and equipment at December 31, 2003 consists of the following:

        Computer equipment                                  $     187,732
        Computer software                                          18,493
        Furniture and fixtures                                     21,717
        Computer equipment recorded under capital leases          113,491
        Leasehold improvements                                      7,982
                                                            ----------------
                                                                  349,415

        Less accumulated depreciation and amortization,
        including $28,709 relating to computer equipment
        recorded  under capital leases                           (186,607)
                                                            ----------------

                                                            $     162,808
                                                            ================

                                                                              15

<PAGE>

5.    Software development costs

Software development costs consist of the following at December 31, 2003:

Carrying amount                                    $906,276
Less accumulated amortization                       135,324
                                                ------------
                                                   $770,952
                                                ============

For the years ended December 31, 2003 and 2002, amortization of capitalized
software development costs charged to operations was $135,324 and nil,
respectively.

Estimated amortization expense for the five years subsequent to December 31,
2003 is approximately as follows:

         Year ending December 31,
---------------------------------------------------------
         2004                                               $     292,000
         2005                                                     302,000
         2006                                                     177,000

6.    Accrued expenses and other current liabilities

Accrued expenses and other current liabilities consist of the following at
December 31, 2003:

Deferred maintenance fees                                    $     342,421
Commissions                                                        166,210
Compensation                                                       228,028
Payroll taxes, withholding and penalties                         1,156,103
Accrued officer's compensation                                     329,812
Other                                                              132,122
                                                           -----------------
                                                             $   2,354,696
                                                           =================

                                                                              16
<PAGE>

7.    Notes payable, stockholders

At December 31, 2003, notes payable, stockholders consists of the following:

Note payable, stockholder bearing interest at 12.5%
  per annum and due on March 31, 2005, collateralized
  by the assets of the Company.  Up to $375,404 can be
  borrowed by the Company.                                         $     375,403

Note payable, stockholder bearing interest at 12.5%
  per annum and due on March 31, 2005, collateralized
  by the assets of the Company.  Up to $355,128 can be
  borrowed by the Company.                                               355,127

Note payable, stockholder bearing interest at 12.5% is
subordinated to the note payable of $1,500,000 (Note 8)
and is due after the terms of that note in 2006 (except
for $10,000 which is current).                                           266,375

Note payable, stockholder bearing interest at 8% per
  annum and due on June 30, 2004.  Up to $300,000 can
  be borrowed by the Company. (Note 12)                                  300,000

Note payable, stockholder bearing interest at 8% per
  annum and due on June 30, 2004.  Up to $100,000 can
  be borrowed by the Company. (Note 12)                                   80,000
                                                                   -------------
                                                                       1,376,905

Less current portion                                                     390,000
                                                                   -------------
                                                                   $     986,905
                                                                   =============

8.    Note payable

At June 30, 2002, the Company converted its outstanding line of credit into a
note payable of $1,500,000. The note bears interest at a variable rate equal to
the prime rate (4.00% at December 31, 2003), and is due in variable monthly
installments plus interest to PNC Bank (formerly known as "United Trust Bank"),
commencing in February 2003 through January 1, 2006. The principal payments are
due monthly in the following amounts; $15,000 a month plus accrued interest from
January 15, 2004 through December 15, 2004, $20,000 a month plus accrued
interest from January 15, 2005 through December 15, 2005, and a balloon payment
for the balance due on all outstanding principal and accrued interest on January
1, 2006. The note is collateralized by substantially all the assets of the
Company and is guaranteed by the majority stockholder of the Company. The note
payable, stockholder, of $266,375 is subordinated to this

                                                                              17
<PAGE>

note. Interest expense on the note payable for the year ended December 31, 2003
was approximately $215,000. As of December 31, 2003 this note payable was in
default of its covenants and as a result, is classified as current.

9.    Stock subscription receivable

The stock subscription receivable represents 600,000 shares of the Company's
original common stock (restated to 1,312,500 as defined in the Agreement) due
from two key employees and one stockholder.

10.   Stock option plans

The Company has adopted three stock option plans ("Plans") providing for
incentive stock options ("ISOs") and non-qualified stock options ("NQSOs"). The
Company has reserved 1,985,938 shares of common stock for issuance upon the
exercise of stock options granted under the Plans. The exercise price of an ISO
or NQSO will not be less than 100% of the fair market value of the Company's
common stock at the date of the grant. The exercise price of an ISO granted to
an employee owning greater than 10% of the Company's common stock will not be
less than 110% of the fair market value of the Company's common stock at the
date of the grant. The Plans further provide that the maximum period in which
stock options may be exercised will be determined by the board of directors,
except that they may not be exercisable after ten years from the date of grant.
All of the stock option plans vest over a three year period with each year
earning 1/3 of total options granted as long as the employee is in employment
with the Company upon the anniversary date.

                                                                              18
<PAGE>

The status of the Company's restated stock options per the Plans are summarized
below:

<TABLE>
<CAPTION>
                                                             Restated Per
                                                            Share Exercise     Weighted Average
                                            Plan Options         Price          Exercise Price
------------------------------------------- -------------- ------------------ -------------------
<S>                                           <C>             <C>                   <C>
Outstanding at
    January 1, 2002                             562,187       $0.10-$0.69           $0.11
    Granted in the year ended
    December 31, 2002                         1,090,900       $0.25-$2.25           $1.53
    Terminated in the year ended
    December 31, 2002                          (288,240)      $0.10-$2.00           $0.69
                                            --------------
Outstanding at
   December 31, 2002                          1,364,847       $0.10-$2.25           $0.50
    Granted in the year ended
    December 31, 2003                         1,426,600       $0.45-$0.88           $0.59
    Terminated in the year ended
    December 31, 2003                          (882,138)      $0.10-$2.25           $0.82
                                            --------------
Outstanding at
    December 31, 2003                         1,909,309       $0.10-$2.25           $0.86
                                            ==============
</TABLE>

The exercise price ranges for options outstanding and exercisable at December
31, 2003 were:

<TABLE>
<CAPTION>
                               Number of Shares         Number of Shares
                               Outstanding as of         Exercisable at           Weighted       Weighted Average
                                 December 31,             December 31,            Average            Remaining
   Exercise Price Range              2003                     2003             Exercise Price    Contractual Life
--------------------------- ------------------------ ------------------------ ----------------- --------------------
<S>                                <C>                       <C>                   <C>               <C>
    $.10 through $.50               355,850                  240,682               $0.36              9 Years
    $.51 through $1.50             1,531,459                 69,532                $0.98             10 Years
   $1.51 through $2.25              22,000                    8,000                $1.67             10 Years
                            ------------------------ ------------------------
                                   1,909,309                 318,214
                            ======================== ========================
</TABLE>

11.   Income taxes

Until May 15, 2002, the date of the Merger Agreement, the Company operated as an
"S" corporation and, as a result, the earnings and losses were included in the
personal income tax returns of the respective stockholders. From the date of the
Merger Agreement through December 31, 2002, the Company operated as a "C"
corporation and had net operating losses of approximately $3,273,000. At
December 31, 2003, the Company had net operating losses of approximately
$7,483,000 that will expire between 2009 and 2023.

                                                                              19
<PAGE>

The components of the Company's deferred tax asset at December 31, 2003 is
approximately as follows:

Net operating loss carry forwards                               $   3,033,000
Allowance for doubtful accounts                                        89,000
Interest payable, stockholder                                         165,000
Accrued compensation                                                  226,000
Deferred maintenance fees                                             139,000
                                                              -----------------
                                                                    3,652,000
Less valuation allowance                                           (3,652,000)
                                                              -----------------
Net deferred income tax asset                                   $           -
                                                              =================

The components of the Company's income tax benefit for the year ended December
31, 2003 are approximately as follows:

                                               2003               2002
                                         ----------------- ------------------
Deferred
   Federal                                 $   1,738,000      $   1,373,000
   State                                         302,000            239,000
                                         ----------------- ------------------
                                               2,040,000          1,612,000
Change invaluation allowance                  (2,040,000)        (1,612,000)
                                         ----------------- ------------------
                                           $           -      $           -
                                         ================= ==================

A reconciliation of the statutory federal income tax rate and the effective tax
rate follows:

<TABLE>
<CAPTION>
                                                               2003                   2002
                                                         ----------------- ---- -----------------
<S>                                                                   <C>                    <C>
Federal statutory rate                                                34   %                 34   %
State income taxes, net of federal effect                              7                      7
S-Corporation earnings passes to shareholders and other                `                     (4)
Change in valuation allowance and other                              (41)                   (37)
                                                         ----------------- ---- -----------------
Effective income tax rate                                              0   %                  0    %
</TABLE>

12.   Commitments and contingencies

Securities Purchase Agreements

The Company, along with Parent, and certain stockholders of the Company
(together the "Parties"), entered into a Securities Purchase Agreement (the
"Series A Purchase Agreement") dated and executed on May 15, 2002, with Stanford
Venture Capital Holdings, Inc. ("Stanford"). Pursuant to the Series A Purchase
Agreement, the Parties agreed to issue to Stanford a total of 2,002,750 shares
of the Company's Series A $1.50 Convertible Preferred Stock ("Series A

                                                                              20
<PAGE>

Preferred Stock"), plus five-year warrants purchasing 2,002,750 shares of the
Company's common stock at an exercise price of $1.50 for the first 1,001,375
shares and $2.25 for the remaining shares. The value of the warrants was treated
as a dividend for approximately $295,000 (computed using the Black-Scholes model
with the following assumptions: expected volatility of 0%, expected dividend
yield rate of 0%, expected life of 5 years, and a risk-free interest rate of
4.03% for December 31, 2002) on May 15, 2002, the date of issuance. Pursuant to
the Series A Purchase Agreement, the issuance of the Series A Preferred Stock
and Warrants took place on four separate closing dates beginning on May 16, 2002
and closing on July 19, 2002.

The Parties entered into an additional Securities Purchase Agreement (the
"Series B Purchase Agreement") dated and executed on April 30, 2003 with
Stanford. Pursuant to the Series B Purchase Agreement, the Parties agreed to
issue to Stanford a total of 2,444,444 shares of the Company's Series B $.90
Convertible Preferred Stock ("Series B Preferred Stock"). Pursuant to the Series
B Purchase Agreement, the issuance of the Series B Preferred Stock took place on
six separate closing dates beginning on April 30, 2003 and closing on September
15, 2003. In connection with the issuance of the Series B Preferred Stock, the
Series B Purchase Agreement also required the Company to lower the exercise
price of the 2,002,750 warrants that were issued with the Series A Purchase
Agreement. The conversion price for these warrants was reduced to $0.25 from the
original conversion prices of $1.50 and $2.25, and was accounted for as a cost
of issuance of the Series B Purchase Agreement.

In connection with both the Series A and Series B Purchase Agreements, certain
stockholders of the Company entered into a Lock-Up Agreement in which the
Parties agreed not to sell, assign, transfer, pledge, mortgage, encumber or
otherwise dispose of their shares of the Company's capital stock for a period of
two years, with certain exceptions, as defined in the Lock-Up Agreement.

Warrants

The 2,002,750 warrants issued to Stanford were modified again on December 15,
2003 for the waiver of Stanford's anti-dilution rights that were associated with
the Series A Purchase Agreement. The conversion price of the warrants were
reduced from the modified $0.25 to $.0001 and were exercised on December 15,
2003 for 2,002,750 shares of common stock. The modification of warrants were
accounted for as a cost of issuance of the common shares. There are no
additional outstanding warrants with Stanford.

During the year ended December 31, 2003, an aggregate of 391,753 warrants were
issued in conjunction with the stockholder notes payable of $300,000 and $80,000
(Note 7). The fair value of the warrants issued in connection with the debt was
$95,000 and it was fully expensed as additional interest. The warrants have an
exercise price of $0.97 and expire on March 18, 2013. All 391,753 warrants have
been assigned from the Stockholder to unrelated third parties as of March 2003.

                                                                              21
<PAGE>

Leases

The Company rents facilities under leases in New Jersey, Virginia and
California. The Company is obligated under these leases through January 2008. In
addition to the base rent, one lease provides for the Company to pay a
proportionate share of operating costs and other expenses. Future aggregate
minimum annual rent payments under these leases are approximately as follows:

Years ending December 31,
                2004                                           $     199,000
                2005                                                 180,000
                2006                                                 100,000
                2007                                                  81,000
                2008                                                   7,000
                                                             -----------------
                                                               $     567,000
                                                             =================

Rent expense was approximately $165,000 and $128,000 for the years ended
December 31, 2003 and 2002, respectively.

Obligations Under Capital Leases

At December 31, 2003, the Company has computer equipment recorded under capital
leases expiring at various dates through 2006. The assets and liabilities under
capital leases are recorded at the lower of the present values of the minimum
lease payments or the fair values of the assets. The assets are included in
property and equipment and are depreciated over their estimated useful lives.

As of December 31, 2003, minimum future lease payments are approximately as
follows:

Years ending December 31,
                2004                                          $      56,000
                2005                                                 38,000
                2006                                                  4,000
                                                            -----------------

Total minimum lease payments                                         98,000
Less amounts representing interest                                   18,000
                                                            -----------------
Present value of net minimum lease payments                          80,000
Less current portion                                                 46,000
                                                            -----------------

Long-term portion                                             $      34,000
                                                            =================

13.   Stockholders' deficit

On April 22, 2002 and May 16, 2002, the majority stockholder converted and
exchanged an aggregate of $2,000,000 of borrowings that were outstanding under a
line of credit agreement for an aggregate of 1,093,750 and 666,667 shares of the
Company's common stock, at a conversion

                                                                              22
<PAGE>

price of $0.914 and $1.50, respectively. The remaining amounts outstanding under
the line of credit, plus accrued interest, accrued officer compensation and
un-reimbursed expenses were converted into a promissory note for approximately
$1,200,000 on May 15, 2002 (Note 7). On April 30, 2003, the same stockholder
converted $543,000 of note payable, stockholder into 603,333 shares of common
stock at a conversion price of $0.90.

14.   Subsequent events

During the period of January 1, 2004 through March 15, 2004 the Company received
two separate loans from Stanford in the aggregated amount of $875,000. The final
terms of the loans are to be determined but the Company expects to pay Stanford
an 8% annual coupon on the funds and to redeem the loan no later than three
years from the date of funding.

During January 2004 the Company sold approximately 150,000 shares of common
stock for $50,000 to a related party.

                                                                              23