<PAGE>

                                  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,
                       2002 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)


450 Claremont Road, Bernardsville, NJ                                  07924
--------------------------------------------------------------------------------
(Address of Principal Executive Offices)                             (Zip Code)


                                 (908) 630-9696
                         -------------------------------
                         (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, 2002:
$2,802,483


         State  the  aggregate   market  value  of  the  voting  stock  held  by
non-affiliates  of the Registrant:  $2,368,596 at February 28, 2003 based on the
closing sales price on that date.


         Indicate the number of shares  outstanding of each of the  Registrant's
classes of common stock, as of February 28, 2003:

Class                                                   Number of Shares
-----                                                   ----------------
Common Stock, $0.0001 par value                              9,857,000

                  Transitional Small Business Disclosure Format

                        Yes:            No:   X
                             ---             ---

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


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                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
              Item                                                                                 Page
              ----                                                                                 ----
<S>           <C>                                                                                  <C>
PART I        1.   Business.........................................................................1

              2.   Properties......................................................................15

              3.   Legal Proceedings...............................................................15

              4.   Submission of Matters to a Vote of Security Holders.............................15

PART II       5.   Market for the Company's Common Equity and Related
                   Stockholder Matters.............................................................16

              6.   Management's Discussion and Analysis and Results of Operations..................17

              7.   Financial Statements............................................................23

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

PART III      9.   Directors, Executive Officers, Promoters and Control
                   Persons; Compliance with Section 16(a) of the
                   Exchange Act....................................................................25

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

              11.  Security Ownership of Certain Beneficial Owners
                   and Management and Related Stockholder Matters..................................35

              12.  Certain Relationships and Related Transactions..................................36

              13.  Exhibits, List and Reports on Form 8-K..........................................39

              14.  Control and Procedures..........................................................39

SIGNATURES ........................................................................................40

CERTIFICATIONS.....................................................................................42

EXHIBIT INDEX .....................................................................................43

FINANCIAL STATEMENTS..............................................................................F-1
</TABLE>

                                      -i-

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                                     PART I

ITEM 1.           BUSINESS

OUR HISTORY

         We were incorporated on September 8, 2000 in the State of Nevada, under
the  name  TDT  Development,  Inc.  On May  16,  2002,  we  acquired  Stronghold
Technologies,  Inc.,  a New  Jersey  corporation,  referred  to  herein  as  the
"Predecessor Entity",  pursuant to a merger of such entity 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.  After the  closing of the  merger,  Acquisition  Sub,  the
survivor of the merger,  changed its name to Stronghold  Technologies,  Inc. and
remains our wholly-owned subsidiary.  On July 11, 2002, we changed our name from
TDT Development,  Inc. to Stronghold  Technologies,  Inc.  Finally,  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.,  for 75,000
shares of our Common Stock held by Mr. Pietro Bortolatti,  our former president.
These subsidiaries conducted an import and distribution business specializing in
truffle-based food products.

         All references to "we," "us," "our," or similar terms used herein refer
to Stronghold  Technologies,  Inc., a Nevada corporation,  formerly known as TDT
Development, Inc. or 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 777 Terrace  Avenue,
Hasbrouck  Heights,  New Jersey 07604.  Our telephone number at that location is
201-727-1464 and our Internet address is www.strongholdtech.com. The information
contained on our website is not incorporated by reference herein.

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.  We marketed our products  primarily in Florida,  South
Carolina,  North Carolina and California,  and also earned  commissions on sales
made in Belgium, Holland and Germany.



                                      -1-
<PAGE>


         As a result of our  receiving  75,000  shares of Common  Stock from Mr.
Bortolatti and the concurrent  transfer of our interest in the truffle  business
to 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.

OVERVIEW OF 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 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,  now
Stronghold,  Stronghold  continues to conduct the Predecessor  Entity's handheld
wireless technology business.

         Stronghold's   DealerAdvance(TM)   suite   of   Customer   Relationship
Management  software,  referred to as CRM,  has been  designed  to maximize  the
revenues and reduce the operating expenses of automobile dealerships. Stronghold
has completed the development of 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"  (return) and
closure rates.  We plan to introduce a full range of CRM systems,  including the
DealerAdvance  Service  Solution(TM) and the DealerAdvance  Inventory Management
Solution(TM),  products designed to increase revenues and maximize profitability
by effectively  managing  dealer service  operations,  customer  information and
vehicle  inventory.  These  products  are similar to the  handheld  and wireless
systems used in the auto rental  industry.  Consumers  are now  accustomed  to a
swift car return  process  wherein the  attendant  scans the car,  brings up the
rental terms, completes the sale and prints out a receipt, all without having to
step over to a counter.

DESCRIPTION OF PRODUCTS

         The DealerAdvance Sales Solution(TM)  provides  automobile  dealerships
the following advantages:

     o   Ease of use associated with handheld mobile communications;

     o   The handheld unit is both an input and display device;



                                      -2-
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     o   The handheld unit is programmed to access  competitive and proprietary
         industry information from a variety of sources;

     o   The  system   provides  the   capability   for  immediate   management
         involvement in the selling process;

     o   Provides for effective  monitoring of sales  performance and follow-up
         by sales personnel; and

     o   Enables  integration with existing  automotive  dealer  accounting and
         business systems.


         The  DealerAdvance  Sales  Solution(TM) is a comprehensive  CRM system,
providing  customer  history  and  contact  information,  as well as a  personal
calendar and instructions on follow-up tasks directly to the handheld,  creating
a highly effective communications tool for business development.

         The  DealerAdvance  Sales  Solution(TM)  offers  the  following  unique
features:






                                      -3-
<PAGE>



     o   Enables a high capture rate on walk-in traffic;

     o   Streamlines all sales and other follow-on processes;

     o   Provides  current and  comprehensive  information and data for new and
         used car inventory (on a real-time basis), all competing products, and
         customer history with dealership;

     o   Provides performance data and analysis on each member of a sales team;
         and

     o   Provides  management with valuable and relevant  transaction data on a
         real-time basis.

         The DealerAdvance Sales Solution(TM) offers the following services:

     o   Customer profiling;

     o   Drivers license scanning;

     o   Reverse phone look-up;

     o   Electronic signature capture;

     o   Dealer vehicle information and competitive product comparisons;

     o   Vehicle inventory status;

     o   Integrated purchase forms completion and printing;

     o   Used car appraisal;

     o   Management reports;

     o   Customer relationship management system functions;

     o   DMS integration capability; and

     o   E-mail and Internet access.

         Stronghold   installed   Version   1.0  of  the   DealerAdvance   Sales
Solution(TM) in six pilot dealerships during 2001. These dealerships were spread
throughout New Jersey, California and Connecticut. Stronghold introduced Version
2.0 of  DealerAdvance  Sales  Solution(TM)  at all of its  sites  by the  end of
September 2001.

         Stronghold introduced Version 3.0 of its software and installed another
3 dealership sites in the first quarter ending March 31, 2002,  adding customers
in New York. In the second  quarter ending June 30, 2002,  Stronghold  installed
another 7 sites,  adding  customers in Arizona,  Southern  California  and South
Carolina. In the third quarter ending September 30, 2002, Stronghold implemented
another 10 sites,  adding  customers in Virginia,  Florida,  South  Carolina and
Central  California,  and introduced Version 3.1 of its software.  In the fourth
quarter  ending  December  31,  2002,  Stronghold  installed  an  additional  13
dealerships,  adding customers in

                                      -4-
<PAGE>


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.

         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.  Stronghold began the year with business  development managers in Northern
New  Jersey  and San  Francisco,  and ended the year with  additional  sales and
operations  people operating in Atlanta,  San Francisco,  Los Angeles,  Phoenix,
Miami, Cleveland and Washington, DC.

         At  December   31,   2002,  a  total  of  37  dealers  were  using  the
DealerAdvance  Sales  Solution(TM),  of which  approximately  32 had  reached or
exceeded the 60-day performance period associated with installation.

NEW PRODUCT DEVELOPMENTS

         The Stronghold development staff is currently developing  DealerAdvance
Service Solution(TM), a handheld wireless system that allows service advisors to
leave  their  desks and greet  clients at their cars to  process  their  service
order.  Initial beta  installations  of the product are expected to begin in the
fall of 2003, with general availability by the end of 2003.

         The  DealerAdvance  Service  Solution(TM)  will  provide  for  improved
customer  service  and  reduced  vehicle  check  time in and will  allow  dealer
representatives  to scan a  particular  vehicle  identification  number from the
windshield or door.  DealerAdvance  Service  Solution(TM)  will also provide for
instant  mobile  access to client and vehicle  history and will allow the dealer
representatives  to access warrantee and service period advice  instantly.  This
product  will also provide an  up-selling  application  to increase  revenue per
repair order and will include an application to allow service  marketing through
the DealerAdvance(TM) CRM application.

         The  development  plan includes the addition of a third product  called
DealerAdvance Inventory Management Solution(TM),  a handheld wireless system for
the management of new and used car inventory. DealerAdvance Inventory Management
Solution(TM)  would  provide a handheld  device for the scanning of incoming and
outgoing  vehicles,  immediately  adjusting  inventory  on  hand  for  sale.  In
addition,  the system would provide for the printing of used car  stickers,  the
capture of Vehicle  Identification Numbers for used car appraisal and estimates,
and the loading of vehicle specifics to the dealer web site.

RESEARCH AND DEVELOPMENT

         Since inception, we have spent approximately $2,055,159 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.


                                      -5-
<PAGE>


COMPETITION RELATED TO HANDHELD TECHNOLOGY BUSINESS

         The  DealerAdvance  Sales  Solution(TM) is a wireless  dealership sales
productivity  system that improves sales performance,  reduces costs and creates
operational efficiency.  Currently,  Stronghold does not believe that it has any
direct competition in this specific sector. However, Stronghold expects emerging
competitive  players in the wireless  handheld  solutions  market in the future.
Stronghold  does compete with the traditional CRM providers and the emerging new
CRM providers in the retail automotive  dealer software market.  The leading CRM
companies that Stronghold competes against are:

     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 it 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.

MARKETING AND SALES

         Stronghold  has  defined  a  target  market  of  approximately   10,000
dealerships  that meet the base criteria for  potential use of our system.  More
specifically,  Stronghold  has  qualified  a  primary  target  market  of  6,500
dealerships where the potential sale and use of the system is the greatest.  The
primary  target market  includes  dealerships  that sell a minimum of 75 new and
used cars each month and do not have a CRM system currently installed.

         Stronghold  distributes its DealerAdvance  Sales  Solution(TM)  through
direct sales,  which  Stronghold  believes is most effective when introducing an
innovative new solution to the marketplace. Stronghold is continuing to grow its
Sales and Marketing team, which is aligned along geographic territory units.

EMPLOYEES

         Stronghold  currently  has a  total  of 37  full-time  employees  and 3
part-time  employees,  of which 25 are  dedicated  to  marketing  and  sales and
regional customer support. During



                                      -6-
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Stronghold's  initial  expansion,  Stronghold  has hired senior and  experienced
business development mangers to provide initial regional market penetration.  As
regional managers are hired or promoted after the initial expansion,  Stronghold
will place more  responsibility  on less  senior,  but  equally  aggressive  and
professional,  sales executives for continued expansion.  Client consultants are
responsible for providing installation, training and ongoing support services to
Stronghold's new and existing  customers.  Client Consultants report to Regional
Managers  who  in  turn  report  to a  National  Manager  located  in  Virginia.
Stronghold anticipates hiring a Marketing Manager in 2003. The Marketing Manager
will work  closely  with the CEO and the Regional  Vice  Presidents  of Sales to
execute  Stronghold's  marketing strategy and to enhance market awareness of the
DealerAdvance   Sales   Solution(TM).   There  are  no   collective   bargaining
arrangements among Stronghold  employees.  We believe Stronghold's  relationship
with its employees to be good.

OUR INTELLECTUAL PROPERTY

         We have  been  granted a  trademark  for  DealerAdvance(TM)  and have a
patent  application  pending that seeks  protection of a number of  developments
pertaining to the  management of information  flow for  automotive  dealer-based
software.  An  additional  application  is currently  being  planned  which will
address certain proprietary  features pertaining to systems components,  related
equipment and software modules.

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, 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,  the our  statements  regarding the  anticipated
growth in the markets for the our technologies, the continued development of our
products,   the  approval  of  the  our  Patent  Applications,   the  successful
implementation of the 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
Securities and Exchange  Commission  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.



                                      -7-
<PAGE>

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 its
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 WE MAY NEVER ACHIEVE
PROFITABILITY.

         We have a history of operating losses in our wireless business and have
incurred  significant  net losses in such business in each fiscal  quarter since
our  inception.  We had a net  loss of  $4,528,803  for the  fiscal  year  ended
December 31, 2002. We had a net operating loss of $4,315,356 for the fiscal year
ended December 31, 2002 and a net operating loss of approximately $3,273,000 for
the period from May 17, 2002 through  December 31, 2002 to offset future taxable
income.  Loss prior to May 17, 2002 was passed directly to the shareholders and,
therefore,  is not included in the loss carry-forward.  We expect to continue to
incur net losses and negative cash flows because we intend to increase operating
expenses  to develop the  Stronghold  brand  through  marketing,  promotion  and
enhancement of our services.  As a result of this expected increase in operating
expenses,  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   Development  of  competing  products  that are more  effective or less
         costly than ours;

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

     o   Our ability to achieve  increased sales for our existing  products and
         sales for 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  on a
quarterly  or  annual  basis  in  the  future.  If we do not  achieve  sustained
profitability, we will be unable to continue our operations.

IF WE ARE UNABLE TO OBTAIN SUFFICIENT FUNDS, AND INCUR A CASH FLOW DEFICIT,  OUR
BUSINESS COULD SUFFER.

         We believe  that the funds  raised  through  our recent debt and equity
financings  will only be  sufficient  for our needs  for the  immediate  future,
raising  substantial doubt about our ability to continue as a going concern.  We
anticipate  that we will be required to raise  additional  capital by the second
quarter of 2003 and 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


                                      -8-
<PAGE>


stockholders.  For  example,  the  terms  of  any  future  financings may impose
restrictions  on  our  right  to  declare dividends or on the manner in which we
conduct our business. Also, lending institutions or private investors may impose
restrictions  on  future  decisions  by  us  to  make  capital  expenditures,
acquisitions  or  asset  sales.

         We may not be able to locate  additional  funding  sources at all or on
acceptable  terms.  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 requirements, each of which
could seriously harm our business.

         Since inception, we have financed all of our operations through private
equity and 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 HAVE A LIMITED OPERATING HISTORY.

         We were  formed in  September  2000 to import  and market  truffle  oil
products.  As of May 16, 2002, our focus shifted to development and marketing of
handheld  wireless  technology for the automotive  dealer  software  market.  We
entered this business  through the  acquisition of an entity with only 23 months
of operating history. We must, therefore,  be considered to be subject to all of
the risks  inherent  in the  establishment  of a new  business  enterprise.  Our
limited   operating  history  makes  it  difficult  to  evaluate  our  financial
performance  and  prospects.  We  cannot  assure  you 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.

IF WE FAIL TO GAIN MARKET  ACCEPTANCE OF OUR PRODUCTS,  OUR BUSINESS AND RESULTS
OF OPERATIONS WOULD BE HARMED.

         We  are  still  in  the  verification  and  validation  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. We expect to introduce our DealerAdvance Service Solution(TM) and
DealerAdvance  Inventory Management  Solution(TM) over the next two years. These
solutions are still in the development stages and are not yet at the point where
they are ready to be installed in test sites.  While we have  received  positive
feedback and market acceptance of DealerAdvance  Sales  Solution(TM) by the test
sites,  thirty-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



                                      -9-
<PAGE>


may  far  outweigh  the  revenue stream generated by such products. Finally, our
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 conglomerate of dealerships  favor other providers of similar services or not
utilize our  services to the extent  anticipated,  our business may be adversely
affected.  The economy may also have an impact on the market  acceptance  of our
products.  Big-ticket consumer purchases are sensitive to broad economic trends.
Therefore,  our business could suffer if our customers,  automobile dealerships,
are affected by the continuing poor 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.

IF WE FAIL TO PROPERLY MANAGE OUR GROWTH, OUR BUSINESS AND RESULTS OF OPERATIONS
WOULD BE HARMED.

         We have begun expanding our operations in anticipation of an aggressive
rollout of our  DealerAdvance(TM)  product suite. In the past twelve months, our
sales, marketing and customer support team has increased from 7 to 25 employees.
We have  strategically  hired  additional  sales  representatives  in seven more
states in the past twelve  months,  expanding into Arizona,  Virginia,  Southern
California,  Florida, Ohio, Texas and Georgia. Additionally, we must continue to
develop  and expand  our  systems  and  operations  as the number of  automobile
dealerships   installing  our  products  and  requiring  our  ongoing   services
increases.  The pace of our  anticipated  expansion,  together with the level of
expertise and technological  sophistication  required to provide  implementation
and  support  services,  demands an unusual  amount of focus on the  operational
needs of our future  customers  for quality and  reliability,  as well as timely
delivery and post-installation  and post-consultation  field and remote support.
This  development  and  expansion  has  placed,  and we expect it to continue to
place, strain on our managerial, operational and financial resources.

         We may be unable to develop and expand our systems and  operations  for
one or more of the following reasons:

     o   We may not be able to locate or hire at reasonable  compensation rates
         qualified and experienced sales staff and other employees necessary to
         expand our capacity on a timely basis;

     o   We may not be able to obtain the hardware necessary to meet the demand
         by automobile dealership of our products, in a timely manner;

     o   We may not be able to expand our customer  service,  billing and other
         related support systems;

     o   We may not be able to integrate new  management and employees into our
         overall operations;

     o   We may not be able to  establish  improved  financial  and  accounting
         systems; and


                                      -10-
<PAGE>


     o   We may not be able to successfully  integrate our internal  operations
         with the  operations of our product  manufacturers,  distributors  and
         suppliers to product and market commercially viable products.

         If we cannot manage our growth effectively,  our business and operating
results  will  suffer.  Additionally,  any  failure on our part to  develop  and
maintain our wireless  technology products during a period of rapid growth could
significantly  adversely affect our reputation and brand name which could reduce
demand for our services and adversely affect our business,  financial  condition
and operating results.

WE DEPEND ON ATTRACTING AND RETAINING KEY PERSONNEL.

         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
employment agreements with its 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 current  president,  Mr. Carey. Any
reduction of Mr. Carey's role in the handheld  technology  business would have a
material  adverse  effect on us.  Mr.  Carey's  employment  contract  expires on
December 31, 2004.

INCREASING POLITICAL AND SOCIAL TURMOIL, SUCH AS TERRORIST AND MILITARY ACTIONS,
INCREASE THE DIFFICULTY FOR US AND OUR STRATEGIC PARTNERS TO FORECAST ACCURATELY
AND PLAN FUTURE BUSINESS ACTIVITIES.

         Recent political and social turmoil, including the terrorist attacks of
September 11, 2001 and the current  conflict in the Middle East, can be expected
to put  further  pressure  on  economic  conditions  in the  United  States  and
worldwide. These political, social and economic conditions may make it difficult
for us to plan future business activities.  For example, if the current conflict
in the Middle East continues to escalate,  our  operations and general  economic
conditions could be adversely  affected.  Specifically,  if the current economic
conditions  continue to decline,  consumers  may be less  inclined to make large
purchases,   such  as  automobiles.   Consequently,   if  dealer  sales  suffer,
dealerships may decrease  capital  expenditures  like those  associated with our
products.


                                      -11-
<PAGE>

                    RISKS CONCERNING OUR HANDHELD TECHNOLOGY

AN INTERRUPTION IN THE SUPPLY OF PRODUCTS AND SERVICES THAT WE OBTAIN FROM THIRD
PARTIES 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 to our development effort.

         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.

         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
margins and the inability to achieve  market  acceptance  for our products.  Our
competitors  in the field are  companies  that include major  international  car
dealership   service   companies,   specialized   technology   companies,   and,
potentially,  our joint venture and strategic alliance partners.  Such companies
include:  ADP  Dealer  Services,   Reynolds  and  Reynolds  Company,  Automotive
Directions,  Higher Gear,  Autobase,  Third Coast Media,  Cowboy Corporation and
Autotown,  among others.  Many of these 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 or entirely
different approaches developed by one or more of our competitors.

WE MAY NOT HAVE ADEQUATELY PROTECTED OUR INTELLECTUAL PROPERTY RIGHTS.

         Our success  depends on our ability to sell  products  and services for
which we may not have  intellectual  property  rights.  We currently do not have
patents on any of our intellectual  property.  We have filed for a patent, which



                                      -12-
<PAGE>


protects  a  number  of developments pertaining to the management of information
flow  for  automotive  dealer-based  software.  An  additional  application  is
currently  being  planned  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
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  intellectual  property law does not
adequately  protect our  technology,  other  companies  could develop and market
similar products or services, which could adversely affect our business.

WE MAY BE SUED BY THIRD PARTIES FOR INFRINGEMENT OF THEIR PROPRIETARY RIGHTS AND
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, 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 us or our
customers with respect to our current or future products may adversely affect us
by, for example, causing us to enter into costly royalty arrangements or forcing
us to incur settlement or litigation costs.

                     RISKS CONCERNING OUR CAPITAL STRUCTURE

OUR MANAGEMENT AND OTHER AFFILIATES HAVE SIGNIFICANT CONTROL OF OUR COMMON STOCK
AND COULD CONTROL OUR ACTIONS IN A MANNER THAT  CONFLICTS WITH OUR INTERESTS AND
THE INTERESTS OF OTHER STOCKHOLDERS.

         As  of  February  28,  2003,  our  executive   officers  and  directors
beneficially  owned  in the  aggregate  approximately  72%,  and  together  with
affiliated  entities  beneficially  owned  approximately  80% of the outstanding
shares of our Common Stock,  assuming the exercise of all options,  warrants and
the conversion of any convertible  securities  held by such persons,  which were
presently  exercisable or will become  exercisable within 60 days after February
28, 2003. 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 other stockholders. Such a concentration of ownership may 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 MAY RESULT IN YOU HAVING NO CONTROL IN
OUR DIRECTION OR AFFAIRS.

         As of February 28, 2003, our president owned  approximately  58% of our
current outstanding Common Stock, assuming the exercise of all options, warrants
and the  conversion  of any  convertible  securities  held by  him,  which  were
presently  exercisable or will become  exercisable within 60 days after February
28, 2003.  As a result,  he has the ability to control us



                                      -13-
<PAGE>


and direct our affairs  and  business,  including  the  approval of  significant
corporate  transactions.  This concentration of ownership may have the effect of
delaying,  deferring  or  preventing  a change  in  control  and may  make  some
transactions  more  difficult  or  impossible   without  the  support  of  these
stockholders.  Any of these events could decrease the market price of our Common
Stock.

STOCKHOLDERS  MAY  SUFFER  DILUTION  AS A RESULT OF SHARES  ELIGIBLE  FOR FUTURE
ISSUANCE.

         As of February 28, 2003,  we had  9,857,000  shares of our Common Stock
issued and  outstanding.  In addition,  we had the potential to issue  1,364,847
shares of our Common Stock upon the  exercise of all  outstanding  options,  and
4,005,500  shares of our Common  Stock  upon the  exercise  of certain  warrants
outstanding  and upon the conversion of certain shares of our Series A Preferred
Stock.  Consequently,  sales of  substantial  amounts of our Common Stock in the
public  market,  or the  perception  that such sales could occur,  may adversely
affect the market price of our Common Stock.

VOLATILITY OF TRADING MARKET MAY AFFECT YOUR INVESTMENT.

         The market price for our securities is highly  volatile.  The following
factors have a  significant  impact on the market price of our  securities:  our
financial  results;  introduction of new products into the marketplace;  various
factors affecting the automobile  industry and the wireless industry  generally,
including extreme volatility and extended steep declines in equity market values
of other wireless-related  publicly traded companies;  sharp declines in private
equity valuations of wireless-related  privately-held  companies;  the price and
volume  volatility  affecting  small and emerging  growth  companies in general,
which  are  not  necessarily  related  to  the  operating  performance  of  such
companies.

BECAUSE  WE DO NOT  INTEND  TO PAY ANY CASH  DIVIDENDS  ON OUR  SHARES OF COMMON
STOCK,  OUR  STOCKHOLDERS  WILL NOT BE ABLE TO RECEIVE A RETURN ON THEIR  SHARES
UNLESS THEY SELL THEM.

         We have never paid or declared  any cash  dividends on our Common Stock
or other  securities  and 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 CONSIDERED A PENNY STOCK AND MAY BE DIFFICULT TO SELL.

         Investing in our stock  involves a particular  risk that does not exist
with many other  companies  - our stock is a penny  stock.  The  Securities  and
Exchange Commission has adopted regulations,  which generally define penny stock
to be 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.
Presently,  the market  price of our Common  Stock is less than $5.00 per share.
Therefore,  the SEC "penny  stock" rules govern the trading in our Common Stock.
These  rules  require,  among  other  things,  that  any  broker  engaging  in a
transaction in our securities provide its customers with the following:


                                      -14-
<PAGE>

     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 dispose of our Common  Stock.  In
addition, the broker prepares the information provided to the broker's customer.
Because  we do not  prepare  the  information,  we cannot  assure  you that such
information is accurate, complete or current.

ITEM 2.           PROPERTIES

         At  present,  we own no real  property.  We lease a 6,000  square  foot
development facility in Sterling, Virginia, which is staffed with 15 development
and field support personnel.  We also operate and lease business development and
operations offices in Hasbrouck Heights, New Jersey;  Walnut Creek,  California;
and Cincinnati, Ohio.

         We are obligated  under these leases through April 2006. In addition to
the base rent, one lease requires us to pay a  proportionate  share of operating
costs and other expenses.

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

         Year ended December 31,

                  2003                                 $ 128,000
                  2004                                   129,000
                  2005                                   108,000
                  2006                                    27,000
                                                       ---------
                                                       $ 392,000

         Rent expense was approximately $128,000 for the year ended December 31,
2002.

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.



                                      -15-
<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 July 2001 when our Common Stock was first listed on the OTCBB. The
quotations set forth below reflect inter-dealer prices,  without retail mark-up,
markdown or commission and may not represent actual transactions.


              2001                                          HIGH           LOW
              ----                                          ----           ---
              July 1, 2001 - September 30, 2001             $0.14        $0.05

              October 1, 2001 - December 31, 2001           $0.14        $0.14

              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


         As of February 28, 2003, there were  approximately 49 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.

         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 is for a period of
twelve months, with all principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 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 principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 was outstanding under the AC Trust Fund
loan  agreement.  Amie Carey,  Mr. Carey's  daughter,  is the beneficiary of the



                                      -16-
<PAGE>


trust, and Mary Carey, Mr. Carey's wife, is the trustee of the trust.

         No underwriter  was employed by the  Registrant in connection  with the
issuance of the securities  described  above.  The Registrant  believes that the
issuance of the foregoing  securities was exempt from registration under Section
4(2) of the Securities Act of 1933, as amended,  as transactions not involving a
public offering.  Each of the recipients were either accredited or sophisticated
investors as defined under Section 501 of the  Securities  Act, and acquired the
securities for investment  purposes only and not with a view to distribution and
had adequate information about the Registrant.  Neither the Registrant,  nor any
person acting on its behalf, offered or sold the securities by means of any form
of general solicitation or general advertising. A legend was placed on the stock
certificates  stating that the  securities  have not been  registered  under the
Securities Act and cannot be sold or otherwise  transferred without an effective
registration or an exemption therefrom.

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

OVERVIEW

         The  following  discussion  should  be read  in  conjunction  with  our
financial statements and the accompanying notes appearing subsequently under the
caption  "Financial  Statements",  along  with  other  financial  and  operating
information  included elsewhere in this annual report.  Certain statements under
this 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
Statements".  For a more  complete  understanding  of our  operations  see "Risk
Factors" and "Description of Business".

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

         As of December  31, 2002,  our cash  balance was $13,384.  We had a net
loss of  $4,528,803  for the fiscal year ended  December 31, 2002.  We had a net
operating  loss of $4,315,356  for the fiscal year ended December 31, 2002 and a
net operating loss of approximately  $3,273,000 for the period from May 17, 2002
through December 31, 2002 to offset future taxable income. Loss prior to May 17,
2002 was passed directly to the shareholders and, therefore,  is 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 at December 31, 2002 was $1,192,451 (less allowances for
doubtful  accounts of  $200,000),  as  compared to $282,360  for the fiscal year
ended December 31, 2001. The increase in accounts receivable  represents amounts
owed to Stronghold 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  operating
expenses.  We have  not been  profitable  since  our  inception,  we will  incur
additional  operating  losses  in the  future,  and we  may  require  additional
financing to continue the  development and subsequent  commercialization  of our
technology.


                                      -17-
<PAGE>


         We expect our capital  requirements to increase  significantly over the
next  several  years as we continue  to develop  and test the  DealerAdvance(TM)
suite of products and as we increase marketing and administration infrastructure
and embark on developing  in-house  business  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  to  promote  our  products  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 our President,  Christopher Carey, who is also the President of Stronghold.
According to such line of credit, Mr. Carey 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,  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 pursuant to which the Predecessor  Entity borrowed
$1.5  million.  The line of  credit  was due to  expire  by its  terms,  and all
outstanding amounts were due to be paid, on June 30, 2002.

         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 debt under the line of credit.

         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 agreed to issue 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 (May 16, 2002 and July 3, 11, and 19, 2002), at 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.

         On May 16, 2002, the total amount  outstanding under the 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 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.

         On June 30, 2002, our line of credit with  UnitedTrust Bank expired and
a  three-month  extension  was granted.  On September 30, 2002, we converted our
outstanding line of credit with  UnitedTrust  Bank into a $1,500,000  promissory



                                      -18-
<PAGE>


note,  pursuant  to  which  Stronghold  will  pay  UnitedTrust  Bank all amounts
outstanding  under  the  line of credit. Such promissory note will be paid in 36
monthly  installments,  which  will begin in February 2003 and will terminate on
January  1,  2006.  Interest accrues on the note at the prime rate, which is the
highest New York City prime rate as is published in The Wall Street Journal. The
initial  prime  rate  that  applies  to  the  promissory  note  is  4.750%.

         During  August  and  September  2002,  we entered  into 9  subscription
agreements with private  investors,  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 as  required  by the  promissory  note  with  UnitedTrust  Bank.
According to the new terms of the loan,  Mr. Carey extended the repayment of the
principle  amount until  December 1, 2005.  Until such time as the  principle is
paid, we will pay an interest only fee of 12% per month. Mr. Carey's  promissory
note is expressly  subordinated in right of payment to the prior payment in full
of all of Stronghold'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  principle  payments or  distribution  of
assets.  As of December 31, 2002,  $970,749 was outstanding under the promissory
note issued to Mr. Carey.

         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 is for a period of
twelve months, with all principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 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 principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 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, we issued a promissory  note to  Christopher  J. Carey
for the amount of $165,000.  Such  promissory  note is due on or before December
31, 2003.  Until such time as the  principle is paid,  interest on the note will
accrue at the rate of 12.5%

         We believe we have  sufficient  cash on hand to support  our  operating
plan for at least the next six  months.  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



                                      -19-
<PAGE>


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
for  purposes  of  this  periodic  filing.  As  a  result,  we  believe  that
period-to-period comparisons of our results of operations will not be meaningful
and  should  not  be relied upon as indicators of future performance. 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 must, therefore, be considered to be subject to all of the
risks inherent in the  establishment of 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, ESTIMATES AND RISKS

         Financial  Reporting Release No. 60, which was 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  the  our  Consolidated  Financial  Statements.  The  following  is  a  brief
discussion of the more significant accounting policies and methods used by us.

         In addition,  Financial  Reporting Release No. 61 was recently released
by the SEC to require all  companies to include a discussion  to address,  among
other things, liquidity, off-balance sheet arrangements, contractual obligations
and commercial commitments.

         The discussion  and analysis of our financial  condition and results of
operations are based upon its 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  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:



                                      -20-
<PAGE>


         REVENUE RECOGNITION POLICY

         Revenue  related to the sale of our  products is  comprised of one-time
charges  to  the   dealerships   for  hardware   (including   server,   wireless
infrastructure,  desktop PC, printer,  interior/exterior  access points/antennas
and  handheld  devices),   software  licensing  fees  and  installation/training
services.  We charged each of our DealerAdvance Sales Solution(TM) pilot dealers
and all of our subsequent  dealers for all costs  associated with  installation.
The average  installation for  DealerAdvance  Sales  Solution(TM) from inception
through September 30, 2002 was $83,000. The most significant variable in pricing
is the  number of  handheld  devices.  We have not  qualified  our  pricing  for
DealerAdvance  Service  Solution(TM),  but expect that it will be  approximately
$50,000.

         Once DealerAdvance Sales Solution(TM) is installed, Stronghold provides
hardware  and  software   maintenance   services  for  a  yearly  fee  equal  to
approximately 10% of the one-time  implementation fees. All dealerships contract
these services and pay on a monthly basis.  Stronghold  provides other services,
including software and report customization, business and operations consulting,
and sales  training  services.  All of these  services are  contracted  on an as
needed  basis  and  typically  are  charged  on a time and  expenses  basis.  In
addition,  we offer a sixty-day  performance  trial  period.  After this time, a
large portion of the dealerships may convert the one-time fee into a third party
lease.  Stronghold  has  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.  Stronghold
accepts no  liability  under these  arrangements,  and the lease is based on the
creditworthiness  of the dealership.  The leasing  company  receives the invoice
from Stronghold, and remits funds upon acceptance by the dealership.  Stronghold
receives  all  funds  as  invoiced,  with  all  interest  costs  passed  to  the
dealership.  These leases typically run 36 months in duration, during which time
Stronghold  contracts for service and maintenance  services.  Stronghold charges
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.

         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 Securities and Exchange Commission.

         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.

         Historically, we have 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."



                                      -21-
<PAGE>


This  four-stage  delivery  process  will result in current sales revenues being
carried  into  future  quarters.  We  estimate  that  this change will delay the
recognition  of  revenue  from  installed  dealership  sites  by  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, 2002,  Stronghold
capitalized  $223,224 of development costs in developing enhanced  functionality
of its DealerAdvance(TM) product.

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

         For the fiscal year ended  December 31, 2002,  we had total  revenue of
$2,802,483.  Revenue  for  the  year  ended  December  31,  2001  was  $614,540,
representing  an  increase  of 356%.  This  increase  is due to the  progress of
Stronghold's  business from beta-test phase to sales and marketing phase and the
related  installation  of  Stronghold's  DealerAdvance(TM)  products  in 33  new
dealerships  from January 1, 2002 through  December  31, 2002,  compared  with 6
dealerships implemented in the comparable twelve-month period in 2001.

         Revenue  is  comprised  of  one-time  charges  to the  dealerships  for
hardware  (including  server,  wireless  infrastructure,  desktop  PC,  printer,
interior/exterior   access  points/antennas  and  handheld  devices),   software
licensing fees and  installation/training  services. The average installation is
$80,000.  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 recorded up front to unearned
maintenance  fees at the  present  value  of the  36-month  revenue  stream  and
amortized monthly to revenue.

         Total  operating  expenses for the fiscal year ended  December 31, 2002
and December  31, 2001 were  comprised  of general and  administrative  expenses
(which includes research and development  expenses,  consulting and professional
costs,  recruiting  fees,  office  rent and  investor  relations  expenses)  and
professional  salaries  and  benefits.  Operating  expenses  for the year  ended
December  31,  2002 and  December  31,  2001  were  $5,490,419  and  $2,645,396,
respectively,  an increase of  $2,845,023,  or 93%.  The  increase in  operating
expenses is attributable to the general  increase in overhead which  accompanies
the expansion of a business,  and  specifically  includes an increase in product
development,  the  build-out of a support  network for  Stronghold's  dealership
sites and  salaries  for sales  personnel  and project  managers who oversee the
dealerships where Stronghold's DealerAdvance(TM) products are installed.

         Gross profit contribution,  after cost of sales, totaled $1,175,063 for
the fiscal year ended  December  31, 2002,  and was 42% of revenue.  Prior to an
inventory  write  down of  $300,000,  gross  profit  was  $1,475,063,  or 53% of
revenue.  This is compared to $366,743  for the fiscal year ended  December  31,
2001, which was 60% of revenue.



                                      -22-
<PAGE>


         After all operating  expenses and interest costs, we reported a loss of
$4,528,803  for the fiscal year ended  December 31, 2002.  This  compares with a
loss for the fiscal year ended December 31, 2001 of  $2,420,088,  an increase of
$2,180,715,  or 87%. This increase is  attributable  to a one time write down of
inventory of $300,000 and increased  expenditures  for sales and marketing,  and
product development to substantially complete DealerAdvance Sales Solution(TM).

         Stronghold's  business  operations  and  financial  results  for  prior
periods were  representative of a start-up company in a beta-testing  phase and,
therefore,  not in a position to generate  significant  revenue.  As  Stronghold
moved out of its  beta-testing  phase and into a marketing  and sales  position,
revenues  increased  as  the  number  of  dealerships  installing   Stronghold's
DealerAdvance(TM)  suite of  products  increased.  We can  offer  no  assurance,
however,  that revenues in future  accounting  periods will increase at the rate
that  revenues   grew  during  the  twelve  months  ended   December  31,  2002.
Notwithstanding  the  revenue and gross  profit  growth,  Stronghold  has yet to
generate a profit in any accounting period.

INDUSTRY TRENDS

         The automotive industry has identified sales productivity tools and CRM
systems to be of high priority.  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 these 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  big-ticket  consumer  purchases are sensitive to broad  economic
trends,  our  operations  may be affected by general  economic  conditions.  Our
business could suffer if Stronghold's  customers,  automobile  dealerships,  are
affected by the  continuing  poor economic  conditions.  For example,  if dealer
sales are trending  downward,  capital  expenditures  like those associated with
Stronghold's DealerAdvance(TM) suite of products may be delayed or abandoned.

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  has sole  discretion  to pay cash
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.  A list of the  financial
statements  filed herewith is found at "Item 13.  Exhibits,  List and Reports on
Form 8-K."



                                      -23-
<PAGE>


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

         On July 10,  2002,  we  determined  to change  our  independent  public
accountants  from Rogoff & Company,  P.C.  to  Rothstein,  Kass & Company,  P.C.
Rothstein has served as the independent  public  accountants of Stronghold since
its inception. Our board of directors determined that because our business focus
has transitioned  toward the business of Stronghold (the development and sale of
hand-held wireless technology to be used by automobile  dealerships),  Rothstein
would provide a better fit as our independent public accountants.  The dismissal
of Rogoff and the engagement of Rothstein were approved by unanimous  consent of
our board of directors.

         Rogoff acted as our independent  public accountants for the period from
our inception  (September 2000) through July 10, 2002. During such period, there
were no  disagreements  with Rogoff on any matter of  accounting  principles  or
practices, financial statement disclosure or auditing scope or procedure, which,
if not  resolved  to the  satisfaction  of Rogoff,  would have caused it to make
reference  to the subject  matter of the  disagreement  in  connection  with its
reports on the  financial  statements  for such years.  Rogoff's  reports on our
financial statements since our inception did not contain an adverse opinion or a
disclaimer of opinion,  nor were they  qualified or modified as to  uncertainty,
audit  scope or  accounting  principles.  Since  our  inception,  there  were no
reportable events as discussed in Regulation S-B Item 304(a)(1)(iv)(B).

         We  requested  that Rogoff  furnish us with a letter  addressed  to the
Securities  and  Exchange  Commission  stating  that it  agreed  with the  above
statements.  A copy of that  letter  dated  July  15,  2002 was  filed  with the
Securities and Exchange  Commission as an exhibit to the Form 8-K dated July 17,
2002.

         We engaged Rothstein as our independent public accountants effective as
of July 10, 2002 for the fiscal  year ending  December  31,  2002.  Our board of
directors approved the engagement. Since our inception, neither we nor anyone on
our behalf  consulted with  Rothstein  regarding  either (i) the  application of
accounting principles to a specified transaction,  either completed or proposed,
or the type of audit opinion that might be rendered on our financial statements,
and  neither a written  report nor oral advice was  provided to us by  Rothstein
that was an important  factor  considered by us in reaching a decision as to any
accounting,  auditing or financial  reporting issue; or (ii) any matter that was
either  the  subject  of a  disagreement,  as  that  term is  discussed  in Item
304(a)(1)(iv)(A)  of Regulation S-B and the related  instructions to Item 304 of
Regulation  S-B,  or an  event  that is  identified  in  response  to  paragraph
(a)(1)(iv)(B) of Regulation S-B.



                                      -24-
<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, 2002 are as follows:

<TABLE>
<CAPTION>
                     NAME                 AGE                        POSITION(S)
         ---------------------------      ---      -----------------------------------------------
<S>                                        <C>     <C>
         Christopher J. Carey.......       50      President, Chief Executive Officer and Director

         Lenard Berger..............       33      Chief Technology Officer and Vice President

         James Cummiskey............       38      Vice President of Sales and Marketing

         Salvatore D'Ambra..........       42      Chief Engineer and Vice President

         Robert J. Corliss*.........       49      Director

         Robert Cox*................       61      Director

         William Lenahan*...........       51      Director

         Luis Delahoz*..............       42      Director
</TABLE>

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

         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
successful,  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.

         ROBERT J. CORLISS has been our 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 is very active
in the  sporting  goods  industry  and serves on the board of  directors  of The



                                      -25-
<PAGE>


Athlete's  Foot Group, Inc. He is 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. He is also an Advisor for Emory University's
Goizueta  Business  School.

         ROBERT COX has been our 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. Active in New Jersey's
business and community  service  organizations,  Mr. Cox is a former Chairman of
the New Jersey  Bankers  Association  (NJBA) and is an honorary  chairman of its
board of directors.

         WILLIAM  LENAHAN has been our 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 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 our 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-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.

         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 Stronghold.  Prior to the founding of Stronghold'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.

         JAMES CUMMISKEY has served as our Vice President of Sales and Marketing
since May 2002. Mr.  Cummiskey is also the Vice President of Sales and Marketing
of Stronghold. Prior to the founding of Stronghold's predecessor entity in 2000,
Mr. Cummiskey was the Vice President of Sales and Marketing for Payback Training
Systems,  Inc. From 1996 until 1998,  Mr.  Cummiskey  was the Vice  President of
Sales and Marketing for Datatec Industries, Inc.

         SALVATORE  D'AMBRA has served as our Vice  President and Chief Engineer
since May 2002.  Mr.  D'Ambra is also the Vice  President and Chief  Engineer of
Stronghold.  Prior to the founding of Stronghold's  predecessor  entity in 2000,



                                      -26-
<PAGE>


Mr.  D'Ambra  was  the  President and Chief Executive Officer of Pagecount, Inc.
From  1985  until  1996,  Mr. D'Ambra was a Professor of Graduate Engineering at
Loyola  College  of  Maryland.

EXECUTIVE OFFICERS

         Each  executive  officer  serves  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 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.

DIRECTOR COMPENSATION

         Upon the initial election to our board of directors,  each non-employee
board member will receive an option  grant to purchase  40,000  shares of Common
Stock, which will vest 50% on each of the first and second  anniversaries of the
date of grant. In addition,  each non-employee director is 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.  All
stock options granted to members of our board of directors will have an exercise
price equal to the fair market  value of the Common  Stock on the date of grant.
We also reimburse  directors for reasonable  out-of-pocket  expenses incurred in
attending meetings of the board of directors and any meetings of its committees.
We have not yet granted any of the foregoing  options to our board of directors,
but intend to do so as soon as reasonably  practicable  after the filing of this
Form 10-KSB.

ITEM 10. EXECUTIVE COMPENSATION

     The following table sets forth executive compensation for fiscal 2002, 2001
and  2000.  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  other  compensation  paid during the fiscal years ended
December  31,  2002,  2001  and  2000  to  our former president and other former
executive  officers.  The  table  also  provides information regarding executive
compensation  for  our current president and three other most highly compensated
executive officers. We refer to all of these officers collectively as our "named
executive  officers."



                                      -27-
<PAGE>


                           SUMMARY COMPENSATION TABLE
                           ---------------------------
<TABLE>
<CAPTION>
                                                 ANNUAL COMPENSATION
                                          --------------------------------

                                                              OTHER ANNUAL          ALL OTHER
  NAME AND PRINCIPAL POSITION     YEAR    SALARY    BONUS     COMPENSATION        COMPENSATION
  ---------------------------     ----    ------    -----     ------------        ------------
Former Officers and Directors
-----------------------------
<S>                               <C>     <C>        <C>       <C>               <C>

Pietro Bortolatti.........        2002    $  --      $  --     $     --          $       --
  President, Chief Executive      2001       --         --       20,500 (1)              --
  Officer and Chairman of the     2000       --         --        4,000 (1)              --
  Board

Tiziana DiRocco...........        2002        --         --          --                  --
  Vice President and              2001        --         --      15,370 (1)              --
  Director of European            2000        --         --      20,800 (1)              --
  Operations

David Rector..............        2002       --          --          --                  --
  Director                        2001       --          --          --              16,224 (2)
                                  2000       --          --          --              37,677 (2)


Current Officers(3)

Christopher J. Carey(4)...        2002    264,000      --            --                9,600
  President, Chief Executive      2001    165,000      --            --                6,600
  Officer and Chairman of the     2000       --        --            --                 --
  Board

Lenard Berger(5)..........        2002    160,416    22,558        28,025              7,100
  Vice President and Chief        2001    150,000      --          2,804               7,150
  Technology Officer              2000    52,500       --            --                3,300

Salvatore D'Ambra(6)......        2002    121,397      --          8,000               6,600
  Vice President - Development    2001    106,782      --          2,818               6,600
                                  2000    48,875       --            --                3,300

James J. Cummiskey(7).....        2002    195,763      --          20,000              6,830
  Vice President - Sales          2001    184,500      --          2,786               6,250
                                  2000    72,436       --            --                2,296
</TABLE>

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

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

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").  Pursuant to the merger, the stockholders of
the Predecessor Entity acquired a controlling  interest in us. As a condition to
the merger,  our existing  executive  officers were required to resign and a new
management team resumed operations.

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.


                                      -28-
<PAGE>


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 August 2001 through August 2002 was $150,000, as set forth in
his Employment Agreement with Stronghold. As of August 2002, Mr. Berger's salary
increased  to  $175,000. 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
since the merger, and holds the same position at Stronghold.  Mr. D'Ambra'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.
D'Ambra's  salary increased to $122,000.  The terms of Mr. D'Ambra'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.  $4,667 of Mr. D'Ambra's salary for 2002,
representing  a retroactive  pay increase for November and December of 2002, has
been deferred and is payable as funds allow.

7 James J. Cummiskey has been our Vice President - Sales of Stronghold since the
merger,  and holds the same position at Stronghold.  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.  The terms of Mr. Cummiskey'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.

OPTIONS GRANTS

         The Predecessor  Entity granted options to its named executive officers
during fiscal 2002. When we acquired the Predecessor  Entity on May 16, 2002, we
assumed  the  2000  Stock  Option  Plan  of the  Predecessor  Entity,  and  each
outstanding option was automatically converted into an option to acquire, on the
same terms and conditions as were  applicable  under the original  option,  such
number of  shares of our  Common  Stock as was equal to the  number of  existing
options  multiplied  by 2.1875.  The  exercise  price was also  adjusted  to the
exercise price that was equal to the existing exercise price divided by 2.1875.

         The following table sets forth information concerning individual grants
of stock  options made pursuant to the 2000 Stock Option Plan and the 2002 Stock
Incentive Plan during Fiscal 2002 to each of the named  executive  officers.  We
have never granted any stock appreciation rights.


                        OPTION GRANTS IN LAST FISCAL YEAR

<TABLE>
<CAPTION>

                                                    Individual Grants
                              Number of Securities     % of Total Options Granted   Exercise or Base       Grant
           Name               Underlying Options            to Employees in 2002      Price ($/Sh)         Date
           ----               --------------------     --------------------------   ----------------       -----
<S>                           <C>                      <C>                          <C>                  <C>
Christopher J. Carey                 437,500 (1)                      47%                   $1.50         5/5/02
Lenard Berger                            100                           *                    $1.50         8/20/02
Salvatore D'Ambra                        100                           *                    $1.50         8/20/02
James Cummiskey                          100                           *                    $1.50         8/20/02
</TABLE>


     * less than one percent

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

(1) On May 15, 2002, the Predecessor Entity granted an option for 200,000 shares
of its common  stock to  Christopher  J. Carey.  While Mr.  Carey is employed by
Stronghold, the options will vest on the earlier of: (i) the seventh anniversary
of May 15, 2002; or (ii) the achievement of the  performance  goals based on the
plan and budget approved by the board of directors,  as set forth below (amounts
reflect the number of shares of Predecessor Entity common stock,  except for the
column entitled "Cumulative Options Vested As Converted"):



                                      -29-
<PAGE>


        TOTAL OPTIONS VESTING FOR FISCAL YEAR FOR ACHIEVING THE SPECIFIED
                       PERCENTAGE OF THE PLANNED EBITDA(1)

<TABLE>
<CAPTION>

                                                                                                       TOTAL
                                                                                                 CUMULATIVE OPTIONS
                                                                                                VESTED AS CONVERTED
   FISCAL YEAR ENDED             80-100%               100-120%              OVER 120%               (X 2.1875)
   -----------------             -------               --------              ----------              ----------
<S>                              <C>                  <C>                    <C>                  <C>
          2002                   27,300                 52,500                  87,500                  87,500
          2003                   50,300                100,100                 175,000                 175,000
          2004                   50,300                100,100                 175,000                 175,000
</TABLE>


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

(1) "EBITDA" refers to our earnings before  interest,  taxes,  depreciation  and
amortization.

         Options granted to certain of the Predecessor  Entity's named executive
officers in 2000 vest only if certain  fiscal year net sales goals are  achieved
for fiscal years 2002,  2003,  and 2004.  Certain  options which were subject to
vesting based on net sales goals for fiscal year 2001 failed to vest because the
Predecessor Entity did not achieve the established goals. Such unvested options,
and any future unvested  options,  lapse and are not subject to further vesting.
The vesting schedules for certain of the named executive  officers are set forth
below (amounts reflect the number of shares of Predecessor  Entity Common Stock,
except for the column entitled "Options Remaining As Converted"):

                             OPTIONS GRANTED IN 2000
                             -----------------------
<TABLE>
<CAPTION>
                                       TOTAL                  NUMBER OF OPTIONS
                                      OPTIONS                SUBJECT TO VEST IN        NUMBER OF OPTIONS
         NAMED                       GRANTED AS   OPTIONS           2002            SUBJECT TO VEST IN 2003            MAXIMUM
       EXECUTIVE                     CONVERTED     LAPSED         NET SALES                NET SALES                   OPTIONS
        OFFICER       GRANT DATE    (X 2.1855)    IN 2001    > $5M   > $ 5.8M      > $10M    > $15      > $20         REMAINING
        -------       ----------    ----------    -------    -----   ---------     ---------------------------        ---------
<S>                   <C>           <C>           <C>        <C>       <C>         <C>       <C>        <C>        <C>
LENARD BERGER           11/12/00      218,000     (43,600)   32,700     32,700     21,800    32,700     54,500      174,400
SALVATORE D'AMBRA       11/12/00       98,100     (21,800)   21,800     32,700     21,800    32,700     43,600       76,300
JAMES CUMMISKEY         11/12/00       98,100     (21,800)   21,800     32,700     21,800    32,700     43,600       76,300
</TABLE>

                        OPTIONS TO BE GRANTED IN 2003 (1)
                       ----------------------------------
<TABLE>
<CAPTION>
                                               NUMBER OF OPTIONS
                                              SUBJECT TO VEST IN       NUMBER OF OPTIONS               NUMBER OF OPTIONS
         NAMED                      TOTAL             2002           SUBJECT TO VEST IN 2003         SUBJECT TO VEST IN 2004
       EXECUTIVE          GRANT    OPTIONS         NET SALES                 NET SALES                      NET SALES
        OFFICER            DATE    GRANTED     > $5.8M   >$ 10M     > $15M      > $18    > $30     > $20M    > $27      > $30
        -------            ----    -------     -------   ------     --------------------------     ---------------------------
<S>                       <C>      <C>         <C>       <C>        <C>         <C>      <C>       <C>       <C>        <C>
LENARD BERGER                      100,000          --      --          --          --      --     15,000    30,000     60,000
SALVATORE D'AMBRA                  158,100      21,800      --      21,850      54,500      --     15,000    30,000     60,000
JAMES CUMMISKEY                         --          --      --          --          --      --         --        --         --
</TABLE>

----------------
(1) We did not grant any  options in fiscal  2001 and  fiscal  2002 to our named
    executive officers,  but we intend to grant the following options as soon as
    reasonably practicable in fiscal 2003.

EMPLOYMENT AGREEMENTS WITH EXECUTIVE OFFICERS

         Christopher J. Carey

         On May 15, 2002,  Stronghold assumed the employment  agreement that was



                                      -30-
<PAGE>

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 Stronghold will continue until December
31, 2004, unless sooner terminated. 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 Stronghold 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
Stronghold  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  Stronghold  achieves  90-100% of budgeted
EBITDA,  Mr. Carey will  receive a bonus of 10% of his then current  annual base
salary;  (ii) if Stronghold achieves 101-110% of budgeted EBITDA, Mr. Carey will
receive  a total  bonus of 20% of his then  current  annual  base;  and (iii) if
Stronghold  achieves 111-120% of budgeted EBITDA, Mr. Carey will receive a total
bonus of 30% of his then current annual base salary; (iv) if Stronghold achieves
121-130% of budgeted EBITDA,  Mr. Carey will receive a total bonus of 40% of his
then current annual base salary; (v) if Stronghold achieves 131-140% of budgeted
EBITDA,  Mr. Carey will receive a total bonus of 50% of his then current  annual
base salary;  (vi) if Stronghold 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  Stronghold  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.

         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  Stronghold,  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
Section entitled "Option Grants".

         Upon a change in control of  Stronghold,  the  unvested  portion of the
options shall immediately vest and become exercisable by

Mr. Carey

         If  Stronghold   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 Stronghold 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.



                                      -31-
<PAGE>


         Lenard Berger

         On August 1, 2000,  the  Predecessor  Entity entered into an employment
agreement with Lenard Berger,  which Stronghold 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.  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  Stronghold'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 Stronghold'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. Mr. Berger is also eligible to receive
extra compensation at the discretion of Stronghold'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 Stronghold  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 Stronghold, 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 Stronghold 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 termination  occurs during the first six months of the
initial term of the agreement and the lesser of (x) base salary  payable for the
balance  of the  term  of the  agreement  or (y)  two  months  base  salary,  if
termination  occurs  during the second six months during the initial term of the
agreement.  If Mr.  Berger  resigns for good reason after the first full year of
employment, Mr. Berger shall 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.  In addition, Mr. Berger will be paid
his allocable share of the "Accumulated Adjustments Account", which is his share
of any amounts taxable to S Corporation  stockholders but not fully  distributed
to such stockholders.

         Mr.  Berger's  agreement  provides  that  all  rights  to  discoveries,
inventions,  improvements, and innovations related to Stronghold's business that
originates  during the term of Mr.  Berger's  employment  will be the  exclusive
property of Stronghold.  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.



                                      -32-
<PAGE>


         Salvatore D'Ambra

         On July 10, 2000,  the  Predecessor  Entity  entered into an employment
agreement with Salvatore D'Ambra,  which Stronghold assumed.  Under the terms of
the agreement,  Mr.  D'Ambra's  employment as Vice President,  Development  will
continue until July 9, 2005 unless sooner terminated.  Mr. D'Ambra's base salary
is $102,000,  $112,000  and  $122,000  for his first,  second and third years of
employment,  respectively.   Thereafter,  Mr.  D'Ambra's  base  salary  will  be
increased  annually by a percentage  determined  by the  Consumers  Price Index.
Beginning  his second year of  employment,  Mr.  D'Ambra is also  eligible for a
commission not to exceed $8,000 for the second year of the term of the agreement
and $28,000 for any year  during the balance of the term of the  agreement.  The
commission is equal to 1% of net sales,  as defined  above.  Mr. D'Ambra is also
eligible  to  receive  extra  compensation  at the  discretion  of the  board of
directors,  a car allowance  and any insurance and 401(k) plans  provided by the
employer.  If we register shares of Common Stock in an initial public  offering,
Mr.  D'Ambra has the right to include any shares of Common Stock that he owns in
the registration.

         Mr. D'Ambra  received an option grant to purchase  45,000 shares of the
Predecessor  Entity's  common  stock.  Such option  converted  into an option to
purchase  98,438  shares of our Common  Stock when  Stronghold  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 Stronghold,
50% of any unvested options shall become vested and exercisable immediately.  If
we register  shares of Common Stock in an initial public  offering,  Mr. D'Ambra
has the  right  to  include  any  shares  of  Common  Stock  that he owns in the
registration.

         If Stronghold  terminates Mr.  D'Ambra'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 termination  occurs during the first six months of
the initial term of the agreement and the lesser of (x) base salary  payable for
the  balance of the term of the  agreement  or (y) two months  base  salary,  if
termination  occurs  during the second six months during the initial term of the
agreement. If Mr. D'Ambra resigns for good reason after the first full year, the
Mr.  D'Ambra will receive as 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.  In  addition,  Mr.  D'Ambra  shall be paid his
allocable share of the Accumulated Adjustments Account, as described above.

         Mr.  D'Ambra's  agreement  provides  that all  rights  to  discoveries,
inventions,  improvements, and innovations related to Stronghold's business that
originates  during the term of Mr.  D'Ambra 's employment  will be the exclusive
property of Stronghold.  Mr. D'Ambra's agreement also contains a confidentiality
provision and further  provides that Mr.  D'Ambra 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.

         James J. Cummiskey

         On August 14, 2000, the  Predecessor  Entity entered into an employment
agreement with James J. Cummiskey,  which Stronghold assumed. Under the terms of
the  agreement,  Mr.  Cummiskey's  employment  as Vice  President  of Sales  and
Marketing  will  continue  until August 13, 2004 unless sooner  terminated.  Mr.
Cummiskey's  base salary is $180,000 and $192,000 for his first and second years
of employment,  respectively.  Thereafter,  Mr.  Cummiskey's base salary



                                      -33-
<PAGE>


will be increased  annually by a percentage  determined by the  Consumers  Price
Index. Mr. Cummiskey is also eligible for a commission not to exceed $20,000 for
the first year of the term of the  agreement and $50,000 for any year during the
balance  of the  term of the  agreement.  The  commission  is equal to 1% of net
sales,  as defined  above.  Mr.  Cummiskey  is also  eligible  to receive  extra
compensation  at the  discretion of the board of directors,  a car allowance and
any insurance and 401(k) plans provided by the employer.  If we register  shares
of Common Stock in an initial public  offering,  Mr.  Cummiskey has the right to
include any shares that he owns in the registration.

         Mr.  Cummiskey also received an option grant to purchase  45,000 shares
of the Predecessor  Entity's common stock.  Such option converted into an option
to purchase  98,438 shares of our Common Stock when  Stronghold  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 Stronghold,
50% of any unvested options shall become vested and exercisable immediately.  If
we register shares of Common Stock in an initial public offering,  Mr. Cummiskey
has the  right  to  include  any  shares  of  Common  Stock  that he owns in the
registration.

         If Stronghold  terminates Mr. Cummiskey'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 termination  occurs during the first six months of
the initial term of the agreement and the lesser of (x) base salary  payable for
the  balance of the term of the  agreement  or (y) two months  base  salary,  if
termination  occurs  during the second six months during the initial term of the
agreement.  If Mr. Cummiskey  resigns for good reason after the first full year,
the Mr.  Cummiskey  will receive as 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.  In addition,  Mr.  Cummiskey will be
paid his  allocable  share of the  Accumulated  Adjustments  Account,  described
above.

         Mr.  Cummiskey's  agreement  provides  that all rights to  discoveries,
inventions,  improvements, and innovations related to Stronghold's business that
originates  during the term of Mr. Cummiskey 's employment will be the exclusive
property   of   Stronghold.   Mr.   Cummiskey's   agreement   also   contains  a
confidentiality  provision and further  provides that Mr. Cummiskey 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.



                                      -34-
<PAGE>



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 February 28, 2003.  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 9,857,000  shares  outstanding on February 28,
2003,  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 February 28, 2003.

                     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                                      5,697,917 (1)               57.8
         450 Claremont Road
         Benardsville, NJ 07924
      Stanford Venture Capital Holdings, Inc.                   4,005,500 (2)              28.9
         6075 Poplar Avenue
         Memphis, TN 38119

      OTHER EXECUTIVE OFFICERS AND DIRECTORS
      --------------------------------------
      Lenard Berger                                               437,600 (3)               4.4
      James Cummiskey                                             437,600 (3)               4.4
      Salvatore D'Ambra                                           437,600 (3)               4.4
      Robert J. Corliss                                                 0                    --
      Robert Cox                                                   60,000                    *
      William Lenahan                                                   0                    --
      Luis Delahoz                                                      0                    --
                                                               ----------                 -----
      EXECUTIVE OFFICERS AND DIRECTORS AS A GROUP
        (8 PEOPLE)                                              7,070,717                  71.7
</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  4,004,300  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)
               2,002,750  shares of Common Stock  issuable  upon the exercise of
               warrants.

          (3)  Includes an option  grant to purchase  100 shares of Common Stock
               which was immediately exercisable on the date of grant.

          *    Indicates less than one percent of the total  outstanding  Common
               Stock.



                                      -35-
<PAGE>


EQUITY COMPENSATION IN FISCAL 2002

         The  following   table  provides   information   about  the  securities
authorized for issuance under our equity  compensation  plans as of December 31,
2002.

                      EQUITY COMPENSATION PLAN INFORMATION

<TABLE>
<CAPTION>
                                    Number of securities
                                    to be issued upon        Weighted-average       Number of securities remaining
                                    exercise of outstanding  exercise price of      available for future issuance
                                    options (1)              outstanding options    under equity compensation plans (2)
----------------------------------- ------------------------ ---------------------- ------------------------------------
<S>                                 <C>                      <C>                    <C>
Equity compensation plans approved
by security holders                         1,364,847                 $0.50                        161,350
----------------------------------- ------------------------ ---------------------- ------------------------------------
Equity compensation plans not
approved by security holders                   --                      --                            --
----------------------------------- ------------------------ ---------------------- ------------------------------------
                            Total           1,364,847                 $0.50                        161,350
----------------------------------- ------------------------ ---------------------- ------------------------------------
</TABLE>


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


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

(2) 134,350 shares are available for future issuance  pursuant to the 2002 Stock
    Incentive Plan and 27,000 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 the
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,  Stronghold,  Pietro  Bortolatti and Mr. Carey, we
agreed to issue to Stanford  (i) 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 (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 (May 16, 2002 and July 3, 11, and 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 has the
right to  maintain  its  percentage  ownership  with  respect to any  additional
securities we may issue, with certain exceptions.



                                      -36-
<PAGE>



         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 that they own, the other party has a (i) 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 residual  right to purchase  such shares,  and (ii)
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 us, 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 of our board and the  Carey's  have agreed to
vote for such nominee.

         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.  According to such arrangement, Mr. Carey made available $1,989,500,
which the  Predecessor  Entity  could  borrow from time to time until  August 1,
2001. Any borrowing  under the facility  could be reborrowed  during the term of
the  agreement  and the  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  calendar  year  consisted of 360
days. Any 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 interest 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.  Stronghold  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 we have filed our Annual  Report on
Form 10-K for the year  ended  December  31,  2002.  Each  subsequent  quarterly
installment  will be paid two days  after we file  each  subsequent  Form  10-Q.
Interest  accrues  under  the  promissory  note at an  annual  rate  of 10%.  If
Stronghold'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 Stronghold'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 payments or distribution of assets.

         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



                                      -37-
<PAGE>


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 either
surrendered  or  exchanged  all  of  such  shares.

         In August 2002,  our outside  director,  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 us in which  Mr.  Cox made  certain  investment
representations and warranties.

         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.

         David  Rector is a former  director of ours and is also a principal  of
The David Stephens  Group. In the past, we have engaged The David Stephens Group
to perform certain  management  consulting  services for which we paid The David
Stephens Group $26,243.70 through January 31, 2001.

         Lenard Berger, our Chief Technology  Officer and Vice President,  James
Cummiskey, our Vice President of Sales and Marketing, and Salvatore D'Ambra, our
Vice President and Chief Engineer,  each received 200,000 shares of common stock
from the 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 is for a period of
twelve months, with all principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 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 principle due and payable on September 30, 2003. We will
pay 12.5% interest on the  outstanding  principle each month.  At the end of the
loan period,  the Fund will be entitled to exercise 25,000 warrants at $1.50 per
share. As of December 31, 2002, $305,000 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, we issued a promissory  note to  Christopher  J. Carey
for the amount of $165,000.  Such  promissory  note is due on or before December
31, 2003.  Until such time as the  principle is paid,  interest on the note will
accrue at the rate of 12.5%

         We believe that the terms 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.



                                      -38-
<PAGE>


ITEM 13. EXHIBITS, LIST AND REPORTS ON FORMS 8K

         (a) (1) Financial Statements.

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

         (a) (2) Financial Statement Schedules.

                  None.

         (a) (3) Exhibits.

                  Reference is made to the Exhibit Index on Page 42.

         (b) Reports on Form 8-K.

ITEM 14. CONTROLS AND PROCEDURES

         (a)  Evaluation of  disclosure  controls and  procedures.  Based on his
             -----------------------------------------------------
evaluation of the our  disclosure  controls and  procedures (as defined in Rules
13a-14(c) and 15d-14(c) under the Securities  Exchange Act of 1934) as of a date
within 90 days of the filing  date of this  Annual  Report on Form  10-KSB,  our
chief executive  officer and acting chief  financial  officer has concluded that
our  disclosure  controls  and  procedures  are  designed  to  ensure  that  the
information  we are  required to disclose in the reports we file or submit under
the Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms and are operating in an effective
manner.

                  In the course of evaluation during the period in question,  we
identified the need for, and hired, a chief  financial  officer with the purpose
of having such person,  among other duties,  supervise  disclosure  controls and
procedures.  However,  shortly  after  being  hired,  such person  resigned  his
position on December 2, 2002.  We are  continuing  to search for an  appropriate
person to serve as chief financial officer.  In the interim,  supervision of our
disclosure controls and procedures remains with our chief executive officer.

         (b) Changes in internal controls.  There were no significant changes in
             ---------------------------
our internal controls or in other factors that could significantly  affect these
controls subsequent to the date of their most recent evaluation.



                                      -39-
<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 ____ day of
April, 2003.

                                         STRONGHOLD TECHNOLOGIES, INC.


                                         By:
                                            ------------------------------------
                                             Christopher J. Carey, President,
                                             Chief Executive Officer and Acting
                                             Chief Financial Officer












                                      -40-
<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>
Christopher J. Carey
--------------------------------------         President, Chief Executive Officer and Acting    April 15, 2003
                                               Chief Financial Officer
                                               (Principal Executive Officer and Principal
                                               Financial Officer) and Chairman of the Board
                                               of Directors


-------------------------------------          Controller                                       April 15, 2003
Karen Jackson                                  (Principal Accounting Officer)


-------------------------------------          Director                                         April 15, 2003
Robert J. Corliss


-------------------------------------          Director                                         April 15, 2003
Robert Cox


-------------------------------------          Director                                         April 15, 2003
William Lenahan


-------------------------------------          Director                                         April 15, 2003
Luis Delahoz

</TABLE>


                                      -41-
<PAGE>


                                 CERTIFICATIONS

      I, Christopher J. Carey, certify that:

1.       I have  reviewed  this  annual  report  on Form  10-KSB  of  Stronghold
         Technologies, Inc.;

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

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

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

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

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

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

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

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

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

6.       The registrant's other certifying officers and I have indicated in this
         annual report whether or not there were significant changes in internal
         controls or in other factors that could  significantly  affect internal
         controls  subsequent  to  the  date  of  our  most  recent  evaluation,
         including   any   corrective   actions   with  regard  to   significant
         deficiencies and material weaknesses.

Date: April 15, 2003

                                     -------------------------------------------
                                     Christopher J. Carey
                                     President, Chief Executive Officer and
                                     Acting Chief Financial Officer
                                     (Principal Executive Officer and Principal
                                     Financial Officer)




                                      -42-
<PAGE>


                                  EXHIBIT INDEX


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

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.

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 (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.

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

10.13 (4)             Lock-Up Agreement, dated May 16, 2002, by and among TDT Development, Inc.
</TABLE>


                                      -43-
<PAGE>

<TABLE>
<CAPTION>
<S>                   <C>
10.14 (4)             Stockholders' Agreement, dated May 16, 2002, by and among TDT Development, Inc.,
                      Christopher J. Carey, Mary Carey and Stanford Venture Capital Holdings, Inc.

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

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

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

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

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

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.


21 (5)                Subsidiaries of the Registrant.

23.1 (6)              Consent of Rothstein, Kass & Company, P.C.

24 (6)                Power of Attorney (included on page 40).

99.1 (6)              Section 906 Certification for principal executive officer and principal financial officer.
</TABLE>

                                      -44-

<PAGE>


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

(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.  TDT 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) Filed herewith.



                                      -45-



<PAGE>
                  STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

                        CONSOLIDATED FINANCIAL STATEMENTS
                                       AND
                          INDEPENDENT AUDITORS' REPORT

                                DECEMBER 31, 2002


<PAGE>

                  STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONTENTS

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

INDEPENDENT AUDITORS'  REPORT                                                  1

CONSOLIDATED FINANCIAL STATEMENTS

     Consolidated Balance Sheet                                                2

     Consolidated Statements of Operations                                     3

     Consolidated Statements of Stockholders' Deficit                          4

     Consolidated Statements of Cash Flows                                     5

     Notes to Consolidated Financial Statements                             6-16


<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,  2002,  and the related
statements of operations,  stockholders'  deficit,  and cash flows for the years
ended December 31, 2002 and 2001. 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, 2002,  and the results of
their  operations and their cash flows for the years ended December 31, 2002 and
2001, 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, a substantial
working  capital deficit and negative cash flows from  operations,  which raises
substantial doubt about its ability to continue as a going concern. Management's
plans  in  regard  to  these  matters  are  also  described  in  Note  2.  These
consolidated  financial  statements  do not include any  adjustments  that might
result from the outcome of this uncertainty.


                                             /s/ Rothstein, Kass & Company, P.C.

Roseland, New Jersey
February 28, 2003


                                                                               1
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED BALANCE SHEET

================================================================================
December 31, 2002
--------------------------------------------------------------------------------

ASSETS

CURRENT ASSETS
  Cash                                                              $    13,384
  Accounts receivable, less allowance for doubtful
   accounts of $200,000                                               1,192,451
  Inventories                                                           228,413
  Prepaid expenses                                                       19,906
                                                                    -----------
     Total current assets                                             1,454,154
                                                                    -----------
PROPERTY AND EQUIPMENT, NET                                             173,743
                                                                    -----------

OTHER ASSETS
  Software development costs                                            223,224
  Other                                                                  27,075
                                                                    -----------
     Total other assets                                                 250,299
                                                                    -----------
                                                                    $ 1,878,196
                                                                    ===========

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
  Accounts payable                                                  $   851,660
  Accrued expenses and other current liabilities                        511,905
  Interest payable, stockholders                                        193,118
  Notes payable, stockholders, current portion                          775,000
  Note payable, current portion                                         458,333
  Obligations under capital leases, current portion                      15,033
                                                                    -----------
     Total current liabilities                                        2,805,049
                                                                    -----------

LONG-TERM LIABILITIES
  Notes payable, stockholders, less current portion                     970,749
  Note payable, less current portion                                  1,041,667
  Obligations under capital leases, less current portion                 21,791
                                                                    -----------
     Total long-term liabilities                                      2,034,207
                                                                    -----------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT
  Preferred stock, $.0001 par value; authorized 5,000,000
     shares, 2,002,750 issued and outstanding
     (aggregate liquidation preference of $3,004,125)                       201
  Common stock, $.0001 par value, authorized 50,000,000
     shares, 9,857,000 issued and outstanding                               986
  Additional paid-in capital                                          4,839,635
  Stock subscription receivable                                          (3,000)
  Accumulated deficit                                                (7,798,882)
                                                                    -----------
     Total stockholders' deficit                                     (2,961,060)
                                                                    -----------
                                                                    $ 1,878,196
                                                                    ===========


See accompanying notes to consolidated financial statements.                   2

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF OPERATIONS

================================================================================
YEARS ENDED DECEMBER 31,                                   2002            2001
--------------------------------------------------------------------------------

SALES                                               $ 2,802,483     $   614,540

COST OF SALES                                         1,627,420         247,797
                                                    ---------------------------

GROSS PROFIT                                          1,175,063         366,743

SELLING, GENERAL AND ADMINISTRATIVE                   5,490,419       2,645,396
                                                    ---------------------------

LOSS FROM OPERATIONS                                 (4,315,356)     (2,278,653)

INTEREST EXPENSE                                        213,447         141,435
                                                    ---------------------------

NET LOSS                                             (4,528,803)     (2,420,088)

DIVIDENDS                                              (294,843)
                                                    ---------------------------

NET LOSS APPLICABLE TO COMMON STOCKHOLDERS          $(4,823,646)    $(2,420,088)
                                                    ===========================

BASIC AND DILUTED LOSS PER
COMMON SHARE                                        $     (0.55)    $     (0.41)
                                                    ===========================

WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING                             8,834,730       5,906,250
                                                    ===========================


See accompanying notes to consolidated financial statements.                   3

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
=====================================================================================================
YEARS ENDED DECEMBER 31, 2002 AND 2001
-----------------------------------------------------------------------------------------------------
                                                                                       ADDITIONAL
                                   PREFERRED STOCK               COMMON STOCK           PAID-IN
                                 SHARES       AMOUNT         SHARES        AMOUNT       CAPITAL

<S>                            <C>         <C>            <C>           <C>           <C>
BALANCES, January 1, 2001             --   $        --      5,906,250   $       591   $    12,909

NET LOSS
                               ----------------------------------------------------------------------
BALANCES, December 31, 2001                                 5,906,250           591        12,909

ISSUANCE OF PREFERRED STOCK
 AND WARRANTS, 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
                               ======================================================================

========================================================================
YEARS ENDED DECEMBER 31, 2002 AND 2001
------------------------------------------------------------------------
                                  STOCK                        TOTAL
                               SUBSCRIPTION   ACCUMULATED    STOCKHOLDERS'
                                RECEIVABLE      DEFICIT        DEFICIT

BALANCES, January 1, 2001       $   (3,000)   $  (555,148)   $  (544,648)

NET LOSS                                       (2,420,088)    (2,420,088)
                               -----------------------------------------
BALANCES, December 31, 2001         (3,000)    (2,975,236)    (2,964,736)

ISSUANCE OF PREFERRED STOCK
 AND WARRANTS, net of costs                                    2,264,979

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.                   4

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

CONSOLIDATED STATEMENTS OF CASH FLOWS


<TABLE>
<CAPTION>
==============================================================================================
YEARS ENDED DECEMBER 31,                                                2002          2001
----------------------------------------------------------------------------------------------

CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                 <C>            <C>
Net loss                                                            $(4,528,803)   $(2,420,088)
Adjustments to reconcile net loss to
 net cash used in operating activities:
  Provision for doubtful accounts                                       200,000
  Depreciation and amortization                                          61,905         32,986
  Increase (decrease) in cash attributable to
   changes in operating assets and liabilities:
   Accounts receivable                                               (1,110,091)      (282,360)
   Inventories                                                         (147,065)       (81,348)
   Prepaid expenses                                                     (15,021)          (285)
   Other receivables                                                    250,139       (250,139)
   Accounts payable                                                     794,019         35,528
   Accrued expenses and other current liabilities                       645,923        445,334
   Interest payable, stockholders                                        58,715        121,923
                                                                    --------------------------

NET CASH USED IN OPERATING ACTIVITIES                                (3,790,279)    (2,398,449)
                                                                    --------------------------

CASH FLOWS FROM INVESTING ACTIVITIES
 Payments for purchase of property and equipment                        (94,585)       (82,139)
 Payments for software development costs                               (223,224)
 Payments for security deposits                                          (7,185)
                                                                    --------------------------

NET CASH USED IN INVESTING ACTIVITIES                                  (317,809)       (89,324)
                                                                    --------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
 Proceeds from notes payable, stockholders                            1,781,000        985,000
 Principal repayments of notes payable, stockholders                   (222,000)
 Proceeds from note payable                                           1,500,000
 Proceeds from issuance of preferred stock, net of financing costs    2,264,979
 Proceeds from issuance of common stock                                 267,500
 Principal payments for obligations under capital leases                 (8,274)
                                                                    --------------------------

NET CASH PROVIDED BY FINANCING ACTIVITIES                             4,083,205      2,485,000
                                                                    --------------------------

NET DECREASE IN CASH                                                    (24,883)        (2,773)

CASH, beginning of year                                                  38,267         41,040
                                                                    --------------------------

CASH, end of year                                                   $    13,384    $    38,267
                                                                    ==========================

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION,
 cash paid during the period for interest                           $   154,732    $    19,512
                                                                    ==========================
</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 reclassified 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.


See accompanying notes to consolidated financial statements.                   5

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

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  "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 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 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  $4,529,000 and has negative cash flow from operations
of  approximately  $3,790,000  for the year ended  December 31, 2002,  and has a
working capital deficit of approximately  $1,351,000 and a stockholders' deficit
of  approximately  $2,961,000 as of December 31, 2002.  These  conditions  raise
substantial  doubt about the Company's  ability to continue as a going  concern.
During 2003,  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.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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


                                                                               6
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

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.  For the years ended  December 31, 2002 and
2001,  software  development  costs incurred were  approximately  $1,322,000 and
$633,000, respectively.

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  discounted  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.


                                                                               7

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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, 2002 and 2001.

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 as of December 31, 2002.

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 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, 2002 and 2001.


                                                                               8
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                                                      2002              2001
NET LOSS APPLICABLE TO COMMON
SHAREHOLDERS, as reported                         $(4,823,646)      $(2,420,088)

DEDUCT
Total stock-based compensation
 expense determined under fair
 value method for all awards, net
 of related tax effect                                 73,329             2,372
                                                  -----------------------------

PRO FORMA                                         $(4,896,975)      $(2,422,460)
                                                  =============================
BASIC AND DILUTED EPS
As reported                                       $     (0.55)      $     (0.41)
Pro forma                                         $     (0.55)      $     (0.41)


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 0%, expected dividend yield rate of 0%, expected life of
10 years, and a risk-free interest rate of 4.03% and 5.09% for December 31, 2002
and 2001, 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  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.


                                                                               9
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

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  excludes  dilutions  and is 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

In July 2002, the FASB issued SFAS No. 146 "Accounting for Costs Associated with
Exit or Disposal Activities", which addresses financial accounting and reporting
for costs  associated with exit or disposal  activities and nullifies EITF Issue
No. 94-3,  "Liability  Recognition for Certain Employee Termination Benefits and
Other  Costs  to  Exit  an  Activity  (Including  Certain  Costs  Incurred  in a
Restructuring)."  SFAS No. 146 is effective for exit or disposal activities that
are initiated after December 31, 2002, with earlier application encouraged.  The
Company does not  anticipate  that this  pronouncement  will have a  significant
impact on its  consolidated  financial  position,  results of operations or cash
flows.

4. PROPERTY AND EQUIPMENT

Property and equipment at December 31, 2002 consists of the following:

     Computer equipment                                          $ 180,799
     Computer software                                              18,593
     Furniture and fixtures                                         20,523
     Computer equipment recorded under capital leases               45,099
     Leasehold improvements                                          7,982
                                                                 ---------
                                                                   272,996
     Less accumulated depreciation
     and amortization, including $15,031
     relating to computer equipment recorded
     under capital leases                                          (99,253)
                                                                 ---------
                                                                 $ 173,743
                                                                 =========


                                                                              10
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

5. SOFTWARE DEVELOPMENT COSTS

For the years  ended  December  31,  2002 and  2001,  amortization  of  software
development  costs  charged  to  operations  was nil due to the  release  of the
capitalized product being projected in the second quarter of 2003. Technological
feasibility was met as of July 1, 2002.

6. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

Accrued  expenses  and other  current  liabilities  consist of the  following at
December 31, 2002:

Deferred maintenance fees                  $209,043
Commissions                                 137,332
Compensation                                100,461
Payroll taxes                                65,069
                                           --------
                                           $511,905
                                           ========

7. NOTES PAYABLE, STOCKHOLDERS

At December 31, 2002, notes payable, stockholders consists of the following:

Note payable, stockholder bearing interest at 12.5%
 per annum and due on September 30, 2003,
 collateralized by the assets of the Company.  Up
 to $375,404 can be borrowed by the Company                           $  305,000

Note payable, stockholder bearing interest at 12.5%
 per annum and due on September 30, 2003,
 collateralized by the assets of the Company.  Up
 to $355,128 can be borrowed by the Company                              305,000

Note payable, stockholder bearing interest
 at 12.5% is due prior to December 31, 2003                              165,000

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                                                                 970,749
                                                                      ----------
                                                                       1,745,749
Less current portion                                                     775,000
                                                                      ----------
                                                                      $  970,749
                                                                      ==========


                                                                              11

<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

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 (4.25% at December 31, 2002), and is due in monthly  installments
of $41,667  plus  interest to United  Trust Bank,  commencing  in February  2003
through 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 $970,749 is  subordinated  to this
note.  Interest expense on the note payable for year ended December 31, 2002 was
approximately $76,000.

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.

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

                                                 RESTATED        WEIGHTED
                                  PLAN          PER SHARE        AVERAGE
                                OPTIONS       EXERCISE PRICE   EXERCISE PRICE
Outstanding at
January 1, 2001                  415,625       $0.05 - $0.12      $0.12
Granted in the year
   ended December 31, 2001       260,312       $0.12 - $0.69      $0.32
Terminated in the year
   ended December 31, 2001      (113,750)      $        0.05      $0.05
                               ---------
Outstanding at
December 31, 2001                562,187       $0.05 - $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       $0.05 - $1.50      $0.50
                               =========


                                                                              12
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

10. STOCK OPTION PLANS (CONTINUED)

The exercise price ranges for options  outstanding  and  exercisable at December
31, 2002 were:

<TABLE>
<CAPTION>
                                                                             WEIGHTED
                         NUMBER OF SHARES    NUMBER OF SHARES   WEIGHTED      AVERAGE
          Exercise       OUTSTANDING AS OF    EXERCISABLE AT     AVERAGE     REMAINING
           Price           DECEMBER 31,        DECEMBER 31,     EXERCISE   CONTRACTUAL
           Range               2002                2002           PRICE        LIFE
  ---------------------  --------------------------------------------------------------
<S>               <C>          <C>                <C>            <C>            <C>
     $.05 through $ 50         203,333            21,498         $0.08          9 Years
     $.51 through $1.50      1,102,514            72,854         $1.50         10 Years
    $1.51 through $2.25         59,000             2,000         $1.74         10 Years
                         ------------------------------------
                             1,364,847            96,352
                         ====================================
</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 ("NOL") of  approximately  $3,273,000
that will expire between 2009 and 2022.

The  components  of the  Company's  deferred  tax asset at December  31, 2002 is
approximately as follows:

Net operating loss carryforwards                                    $ 1,327,000
Allowance for doubtful accounts                                          81,000
Accrued shareholder interest                                             78,000
Accrued officer's compensation                                           41,000
Deferred maintenance fees                                                85,000
                                                                    -----------
                                                                      1,612,000
Less valuation allowance                                             (1,612,000)
                                                                    -----------

Net deferred income tax asset                                       $        --
                                                                    ===========


                                                                              13
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

11. INCOME TAXES (CONTINUED)

The  components of the Company's  income tax benefit for the year ended December
31, 2002 are approximately as follows:

DEFERRED
Federal                                    $ 1,373,000
State                                          239,000
                                           -----------
                                             1,612,000
Change in valuation allowance               (1,612,000)
                                           -----------
                                           $        --
                                           ===========

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

                                                                2002      2001

Federal statutory rate                                            34 %     34 %
State income taxes, net of federal effect                          7        7
S-Corporation earnings passes to shareholders and other           (4)     (41)
Change in valuation allowance                                    (37)
                                                                ----      ----
Effective income tax rate                                          0 %      0 %
                                                                ====      ====

12. COMMITMENTS AND CONTINGENCIES

Securities Purchase Agreement

The  Company,  along  with  Parent,  and  certain  stockholders  of the  Company
(together the  "Parties"),  entered into a Securities  Purchase  Agreement  (the
"Purchase  Agreement") dated and executed on May 15, 2002, with Stanford Venture
Capital Holdings,  Inc.  ("Stanford").  Pursuant to the 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 Preferred  Stock"),  plus
five-year warrants to purchase 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
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.


                                                                              14
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

In connection with the Purchase  Agreement,  Parent and Stanford  entered into a
Registration  Rights Agreement,  dated May 16, 2002, in which the Company agreed
to register the shares of the Company's common stock issuable upon conversion of
the  Series A  Preferred  Stock and upon  conversion  of the  warrants  with the
Securities  and  Exchange  Commission  within 180 days from the date of the last
closing  under the Purchase  Agreement,  which was July 19,  2002.  In addition,
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.

Leases

The  Company  rents  facilities  under  leases  in  New  Jersey,   Virginia  and
California.  The Company is obligated  under these leases through April 2006. 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:

YEAR ENDING DECEMBER 31,

      2003               $ 128,000
      2004                 129,000
      2005                 108,000
      2006                  27,000
                         ---------
                         $ 392,000
                         =========

Rent  expense  was  approximately  $128,000  and  $132,000  for the years  ended
December 31, 2002 and 2001, respectively.

 Obligations Under Capital Leases

At December 31, 2002, the Company has computer  equipment recorded under capital
leases expiring at various dates through 2005. 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.


                                                                              15
<PAGE>

STRONGHOLD TECHNOLOGIES, INC. AND SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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

12. COMMITMENTS AND CONTINGENCIES (CONTINUED)

As of December 31, 2002,  minimum  future lease  payments are  approximately  as
follows:


     YEARS ENDING DECEMBER 31,

          2003                                                     $18,000
          2004                                                      18,000
          2005                                                      11,000
                                                                   -------

     Total minimum lease payments                                   47,000
     Less amounts representing interest                             10,000
                                                                   -------
     Present value of net minimum lease payments                    37,000
     Less current portion                                           15,000
                                                                   -------
     Long-term portion                                             $22,000
                                                                   =======

License Agreement

On February 27, 2001,  the Company  entered  into a software  license  agreement
expiring June 30, 2003.  Future payments under this agreement total $75,000.  In
addition,  the  agreement  provides  for an option to renew from July 1, 2003 to
June 30,  2005.  The  Company  will be  required  to pay  $100,000 a year plus a
percentage equal to the last published Consumer Price Index.

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 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).


                                                                              16


<PAGE>