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

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

                                 AMENDMENT NO. 1
                                       TO
                                   FORM 10-KSB

[X]      Annual Report Under Section 13 or 15(d) of the Securities  Exchange Act
         of 1934

                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2003

[_]      Transition  Report  Pursuant  to Section 13 or 15(d) of the  Securities
         Exchange Act of 1934

                        COMMISSION FILE NUMBER 001-14480

                      BRILLIANT DIGITAL ENTERTAINMENT, INC.
                 (Name of Small Business Issuer In Its Charter)

            DELAWARE                                            95-4592204
  (State or Other Jurisdiction                               (I.R.S. Employer
of Incorporation or Organization)                            Identification No.)

                    6355 TOPANGA CANYON BOULEVARD, SUITE 520
                        WOODLAND HILLS, CALIFORNIA 91367
              (Address of Principal Executive Offices and Zip Code)

                                 (818) 615-1500
                (Issuer's telephone Number, Including Area Code)

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

                                                          Name of Each Exchange
  Title of Each Class                                     On Which Registered
  -------------------                                     -------------------

                                      None

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

                          Common Stock, $.001 par value

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

         The issuer's  revenues for the fiscal year ended December 31, 2003 were
$5,655,000.

         At March 10, 2004, the aggregate  market value of the voting stock held
by non-affiliates of the issuer was $4,448,659.

         At March 10, 2004,  the issuer had  41,925,610  shares of Common Stock,
$0.001 par value, issued and outstanding.

         Transitional Small Business Disclosure Format (check one):

                               Yes [_]     No [X]

                       DOCUMENTS INCORPORATED BY REFERENCE

         None.

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


<PAGE>



                                 AMENDMENT NO. 1
                  TO THE ANNUAL REPORT ON FORM 10-KSB FILED BY
             BRILLIANT DIGITAL ENTERTAINMENT, INC. ON MARCH 30, 2004

         The  following  Items amend the Annual  Report on Form 10-KSB  filed by
Brilliant  Digital  Entertainment,  Inc. (the  "Company") on March 30, 2004 (the
"Form  10-KSB"),  as permitted by the rules and  regulations  promulgated by the
Securities and Exchange Commission.  The Form 10-KSB is hereby amended to insert
those  Items as set forth  herein.  All  capitalized  terms used  herein but not
defined shall have the meanings ascribed to them in the Form 10-KSB.


                                       (i)
<PAGE>


                                    PART III

ITEM 9.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.

         The  following  sets forth  certain  information  with  respect to each
director and executive officer of the Company as of April 26, 2004.

CLASS I DIRECTOR: TERMS EXPIRING IN 2006

RUSSELL SIMMONS              Russell  Simmons  has served as a  Director  of the
                             Company since August 2001.  Since 1985, Mr. Simmons
                             has   served  as   Chairman   of   Island/Def   Jam
                             Recordings,  a  division  of  the  Universal  Music
                             Group.  Mr.  Simmons has also been Chairman of Rush
                             Communications since 1991 and Chairman of Phat Farm
                             since 1992.
                             DIRECTOR SINCE:  2001      AGE:  46


CLASS II DIRECTORS: TERMS EXPIRING IN 2004

RAY MUSCI                    Ray Musci has served as a Director  of the  Company
                             since  October 1996.  From October 1999,  Mr. Musci
                             has  served as the  President  and Chief  Executive
                             Officer and a director of BAM! Entertainment, Inc.,
                             a publicly traded company that develops,  publishes
                             and distributes entertainment software products and
                             video games.  From May 1990 to July 1999, Mr. Musci
                             served as the President,  Chief  Executive  Officer
                             and as a director of Infogrames Entertainment, Inc.
                             (formerly  Ocean of America,  Inc.), a company that
                             develops,   publishes  and   distributes   software
                             products.  From  September  1994 to July 1996,  Mr.
                             Musci served as a director of Ocean  International,
                             Ltd., the holding company of Ocean of America, Inc.
                             and Ocean Software,  Ltd. From August 1985 to March
                             1990,     Mr.    Musci    was    Executive     Vice
                             President/General Manager of Data East USA, Inc., a
                             subsidiary of Data East Corp., a Japanese  company,
                             where  he   established  a  consumer   division  to
                             develop,   manufacture,   market   and   distribute
                             consumer  video games,  entertainment  software and
                             coin-operated   video   arcade  games  and  pinball
                             machines.
                             DIRECTOR SINCE:  1996      AGE:  43
                             MEMBER:  AUDIT COMMITTEE AND COMPENSATION COMMITTEE

MARK MILLER                  Mark Miller has served as a Director of the Company
                             since August 1996. Since September 2000, Mr. Miller
                             has served as a consultant to the Company on a part
                             time  basis,  and  as  an  investment  advisor  and
                             financial  planner.  From  October,  1996 to August
                             2000,   Mr.  Miller   served  as  Vice   President,
                             Production  and  Operations  of  the  Company.  Mr.
                             Miller  also  served as  Managing  Director  of the
                             Company's    Australian    subsidiary,    Brilliant
                             Interactive  Ideas,  Pty. Ltd.  ("BII  Australia"),
                             from March 1994 to August 2000.  Mr.  Miller served
                             as  President  and Chief  Financial  Officer of the
                             Company from August 1996 through September 1996. He
                             is also the joint Managing  Director of e-Brilliant
                             Pty.  Limited - a Singapore based animation  studio
                             that is a joint  venture  between  the  Company and
                             eNewMedia,  a Hong Kong listed public company.  Mr.
                             Miller is a chartered  accountant and has extensive
                             experience  in the  development  of large  software
                             applications, project management, people management
                             and team building and conflict resolution.
                             DIRECTOR SINCE:  1996      AGE:  44


                                        2
<PAGE>


CLASS III DIRECTORS:  TERMS EXPIRING IN 2005

KEVIN BERMEISTER             Kevin  Bermeister  has served as  President  of the
                             Company  since  October  1996,  as Chief  Executive
                             Officer since August 2001,  and as a Director since
                             August 1996. Mr. Bermeister was the founder of Sega
                             Ozisoft  Pty.  Ltd.  and  previously  served as its
                             Co-Chief   Executive   Officer.    Mr.   Bermeister
                             established,   ran  or   served  on  the  Board  of
                             Directors of various  companies  including  Packard
                             Bell NEC Australia Pty.  Ltd.,  Jacfun Pty. Ltd., a
                             property  owner  and  developer.   Mr.   Bermeister
                             currently  serves as a director of Tag-It  Pacific,
                             Inc., a publicly traded corporation.
                             DIRECTOR SINCE:  1996      AGE:  43

ABE SHER                     Abe Sher has  served as a Director  of the  Company
                             since  February  2002.  Mr. Sher has been  Managing
                             Director of Slingshot  Ventures,  LLC,  since 1998.
                             From May 1998 to June  2001,  Mr.  Sher  served  as
                             Executive  Vice  President of xSides Corp. Mr. Sher
                             also  serves as a member of the board of  directors
                             of Microlab, Inc., xSides Corp., and VKB, Inc.
                             DIRECTOR SINCE:  2002      AGE:  43


OTHER EXECUTIVE OFFICERS

TYLER TARR                   Tyler Tarr has served as Chief Financial Officer of
                             the  Company  since April 15,  2003.  Mr. Tarr also
                             serves as Vice  President  of  Scheinrock  Advisory
                             Group, Inc., a financial consulting firm. From June
                             1998 to  November  2000,  Mr. Tarr served as Senior
                             Director  of  Finance  and   Operations   at  Canon
                             Business  Solutions  in Los  Angeles.  From January
                             1994  to  May  1998,  Mr.  Tarr  served  as  Retail
                             Operations  Controller  and  Manager  of  Corporate
                             Finance and  Strategic  Planning  for Packard  Bell
                             NEC.

ANTHONY NEUMANN              Anthony  Neumann  has  served  as  Vice  President,
                             Business Development since 2000. Mr. Neumann served
                             as Director,  Business  Development  of the Company
                             from  1996  through  2000.  Mr.  Neumann  has  been
                             involved in the multimedia  entertainment  industry
                             since 1992.  Prior to 1992, Mr. Neumann worked as a
                             financial consultant at Merrill Lynch.

ANTHONY ROSE                 Anthony Rose has served as Chief Technical  Officer
                             of the Company since its inception in 1995, and has
                             been   responsible  for  overseeing  the  Company's
                             software development team and technology direction.
                             Prior to joining the Company, Mr. Rose was director
                             of A.R.  Technology Pty. Ltd. ("A.R.  Technology"),
                             an  Australian  electronics  company  he founded in
                             1988.  A.R.  Technology  designs  and  manufactures
                             digital  electronics  hardware and  software.  Past
                             projects include computer designs for Apple, Epson,
                             and  Panasonic;   telecommunications  circuits  for
                             Telstra  Australia;  and custom  data  loggers  for
                             government    labs.    Mr.   Rose   holds   several
                             international   patents   relating  to   anti-virus
                             hardware circuits for personal computers.


                                       3
<PAGE>


AUDIT COMMITTEE FINANCIAL EXPERT.

         The Audit  Committee  currently  consists  of Mr.  Musci.  The Board of
Directors has determined that Mr. Musci is an audit committee  financial expert,
as defined in Item 401(e)(2) of Regulation S-B, and is "independent," within the
meaning of Item 401(e)(1)(ii) of Regulation S-B.

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE.

         Section  16(a) of the  Securities  Exchange  Act of 1934  requires  the
Company's  executive  officers,  directors,  and  persons  who own more than ten
percent of a registered class of the Company's equity securities to file reports
of  ownership  and  changes  in  ownership  with  the SEC.  Executive  officers,
directors  and  greater-than-ten   percent  stockholders  are  required  by  SEC
regulations to furnish the Company with all Section 16(a) forms they file. Based
solely on its  review of the  copies of the  forms  received  by it and  written
representations  from certain reporting persons that they have complied with the
relevant filing  requirements,  the Company believes that, during the year ended
December  31, 2003,  all of the  Company's  executive  officers,  directors  and
greater-than-ten  percent  stockholders  complied  with all Section 16(a) filing
requirements,  except for the following:  Joltid Ltd (a beneficial owner of more
than ten percent of the  outstanding  shares of our Common Stock) filed one late
Form 3 reporting late one transaction; Kevin Bermeister (our President and Chief
Executive  Officer) filed one late Form 4 reporting late one  transaction;  Mark
Dyne (a beneficial  owner of more than ten percent of the outstanding  shares of
our Common Stock and our former  Chairman)  filed one late Form 4 reporting late
two  transactions;  Jeff  Scheinrock (a former member of the Board of Directors)
filed one late Form 4 reporting late one transaction;  Abe Sher (a member of the
Board of Directors)  filed one Form 5 reporting late one transaction that should
have been reported on Form 4; Tyler Tarr (our Chief Financial Officer) filed one
late Form 3 reporting late one transaction,  and filed one Form 5 reporting late
one  transaction  that should have been filed on Form 4;  Anthony Rose (our Vice
President,  Technology)  filed one Form 5 reporting  late one  transaction  that
should  have been  filed on Form 4; and  Anthony  Neumann  (our Vice  President,
Business  Development)  filed one Form 5  reporting  late one  transaction  that
should have been filed on Form 4.

CODE OF ETHICS DISCLOSURE.

         We have adopted a Code of Ethical Conduct which is applicable to all of
our  officers,  directors  and  employees,  including  our  principal  executive
officer,  principal financial officer,  principal accounting officer and persons
performing similar functions.  A copy of the Code of Ethical Conduct is filed as
an exhibit to this Annual Report on Form 10-KSB.


                                       4
<PAGE>


ITEM 10. EXECUTIVE COMPENSATION.

                           SUMMARY COMPENSATION TABLE

         The following table sets forth,  as to the Chief Executive  Officer and
as  to  each  of  the  other  three  most  highly  compensated   officers  whose
compensation exceeded $100,000 during the last fiscal year (the "Named Executive
Officers"),  information  concerning all  compensation  paid for services to the
Company  in all  capacities  for  each of the  three  years  ended  December  31
indicated  below.  No other officer was paid more than $100,000  during the last
fiscal year.


<TABLE>
<CAPTION>
                                                 ANNUAL COMPENSATION         LONG TERM COMPENSATION
                                                 -------------------         ----------------------
                                                                          NUMBER OF
                                 FISCAL YEAR                              SECURITIES          ALL
NAME                                ENDED                                 UNDERLYING         OTHER
PRINCIPAL POSITION               DECEMBER 31,      SALARY     BONUS        OPTIONS        COMPENSATION
------------------               ------------      ------     -----        -------        ------------

<S>                                  <C>        <C>          <C>          <C>                 <C>
Kevin Bermeister.............        2003       $ 275,000       --        2,186,018(2)        --
   President & Chief                 2002       $ 250,000       --        5,470,000           --
   Executive Officer                 2001       $ 250,000       --          100,000           --

Tyler Tarr (1)...............        2003       $ 160,000       --          750,000           --
   Chief Financial Officer &         2002       $    --         --             --             --
   Secretary                         2001       $    --         --             --             --

Anthony Neumann..............        2003       $ 150,000    $10,800        500,000           --
   Vice President, Business          2002       $ 150,000     $2,191        300,000           --
   Development                       2001       $ 150,000       --          100,000           --

Anthony Rose.................        2003       $ 182,000       --          750,000           --
   Chief Technical Officer           2002       $ 130,000       --          250,000           --
                                     2001       $ 156,000       --          100,000           --

----------
<FN>
(1)      Mr.  Tarr's  employment  with the  Company as Chief  Financial  Officer
         commenced in April 2003.
(2)      In May 2003, we issued to Mr. Bermeister  options to purchase 2,186,018
         shares or our Common  Stock at an exercise  price of $0.12 per share as
         deferred compensation for services rendered to us as President.
</FN>
</TABLE>

                          OPTION GRANTS IN FISCAL 2003

         The following table sets forth certain information  regarding the grant
of stock options made during fiscal 2002 to the Named Executive Officers.

                            NUMBER OF      PERCENT OF
                            SECURITIES    TOTAL OPTIONS
                            UNDERLYING     GRANTED TO      EXERCISE
                             OPTIONS      EMPLOYEES IN     OR BASE    EXPIRATION
NAME                        GRANTED(1)    FISCAL YEAR(2)   PRICE(3)      DATE
----                       -----------    --------------   --------   ----------

Kevin Bermeister (4)       2,186,018          40.2%         $ 0.12    05/22/2013
Tyler Tarr .........         750,000          13.8%         $ 0.41    06/03/2013
Anthony Neumann ....         500,000           9.2%         $ 0.41    06/03/2013
Anthony Rose .......         750,000          13.8%         $ 0.41    06/03/2013
----------


                                       5
<PAGE>

     (1) These option grants vest in four equal annual installments of 25%, each
         commencing on the subsequent January 1st from the date of the grant and
         were granted for a term of 10 years.
     (2) Options  covering an  aggregate  of  3,250,000  shares were  granted to
         employees during fiscal 2003.
     (3) The exercise price and tax withholding  obligations related to exercise
         may be paid by delivery  of already  owned  shares,  subject to certain
         conditions.
     (4) In May 2003, we issued to Mr. Bermeister  options to purchase 2,186,018
         shares or our Common  Stock at an exercise  price of $0.12 per share as
         deferred compensation for services rendered to us as President.


                 AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
                        AND FISCAL YEAR-END OPTION VALUES

         The  following  table  sets  forth,  for  each of the  Named  Executive
Officers,  certain  information  regarding the exercise of stock options  during
fiscal 2003, the number of shares of common stock  underlying stock options held
at fiscal  year-end and the value of options held at fiscal  year-end based upon
the last reported sales price of the common stock on the American Stock Exchange
on December 31, 2003 ($0.35 per share).

<TABLE>
<CAPTION>
                          SHARES                   NUMBER OF SECURITIES
                         ACQUIRED                 UNDERLYING UNEXERCISED         VALUE OF UNEXERCISED
                            ON       VALUE              OPTIONS AT              IN-THE-MONEY OPTIONS AT
                         EXERCISE   REALIZED         DECEMBER 31, 2003             DECEMBER 31, 2003
---------------------    --------   --------   ----------------------------   ---------------------------
NAME                                           EXERCISABLE    UNEXERCISABLE   EXERCISABLE   UNEXERCISABLE
----                                           -----------    -------------   -----------   -------------
<S>                       <C>       <C>          <C>             <C>           <C>             <C>
Kevin Bermeister.....       --         --        3,913,518       4,122,500     $  726,309      $  609,775
Tyler Tarr...........       --         --            --            750,000          --              --
Anthony Neumann......     21,000    $ 5,397        201,500         767,500     $   19,625      $   44,625
Anthony Rose.........       --         --          225,000         980,000     $   19,500      $   39,500
</TABLE>

EMPLOYMENT AGREEMENTS.

         As of June 1, 2003, we entered into an employment  agreement with Kevin
Bermeister,  pursuant  to which Mr.  Bermeister  serves  as our Chief  Executive
Officer and  President.  This  agreement  provides for a two year initial  term,
unless terminated earlier.  Pursuant to this agreement,  Mr. Bermeister's annual
base salary is $275,000, with annual cost-of-living adjustments.  Mr. Bermeister
is also  eligible to receive an annual bonus based on  percentage of our EBITDA.
In the event that we terminate Mr.  Bermeister's  employment  agreement  without
cause, Mr.  Bermeister  terminates the agreement with good reason or termination
upon Mr.  Bermeister's  death or  disability  (as such terms are  defined in the
agreement),  Mr. Bermeister will be entitled to receive severance payments equal
to one year of his base salary and all options to purchase our Common Stock held
by Mr. Bermeister will become fully vested and exercisable.

         As of June 1, 2003, we entered into an employment  agreement with Tyler
Tarr,  pursuant to which Mr. Tarr serves as our Chief  Financial  Officer.  This
agreement  provides for a two year initial term with  automatic one year renewal
terms thereafter,  unless terminated  earlier.  Pursuant to this agreement,  Mr.
Tarr's annual base salary is $200,000,  with annual cost-of-living  adjustments.
Mr. Tarr is also eligible to receive an annual bonus and was granted  options to
purchase 750,000 shares of our Common Stock in accordance with the agreement. In
the event that we terminate Mr. Tarr's employment agreement without cause or Mr.
Tarr terminates the agreement with good reason (as such terms are defined in the
agreement), Mr. Tarr will be entitled to receive severance payments equal to one
year of his base salary.

EMPLOYEE BENEFIT PLANS.

         We have  adopted a Stock  Option Plan (the "1996  Plan"),  which became
effective on September 13, 1996. Each director,  officer, employee or consultant
of the Company or any of its  subsidiaries  is eligible to


                                       6
<PAGE>


be considered for the grant of awards under the 1996 Plan. The maximum number of
shares of Common Stock that may be issued  pursuant to awards  granted under the
1996 Plan is 20,000,000, subject to certain adjustments to prevent dilution. Any
shares of Common  Stock  subject to an award,  which for any  reason  expires or
terminates unexercised are again available for issuance under the 1996 Plan. The
maximum number of shares of Common Stock with respect to which options or rights
may be granted under the 1996 Plan to any executive or other employee during any
fiscal year was  increased at the Annual  Meeting of  Stockholders  to an annual
limitation per individual of up to one-half of the number of shares reserved for
issuance under the amended 1996 Plan, subject to certain  adjustments to prevent
dilution.  Although any award that was duly granted may  thereafter be exercised
or settled in accordance with its terms, no shares of Common Stock may be issued
pursuant to any award made after September 13, 2006.  Options granted  generally
have a term of 10 years  and  usually  vest  over 4 years at the rate of 25% per
year beginning on the first day in the year subsequent to the year of the grant.
As of December 31, 2003, there were 15,380,500 outstanding options granted under
the 1996 Plan.

DIRECTORS' COMPENSATION.

         Non-employee  directors  of the Company  currently  are paid $1,500 for
their personal  attendance at any meeting of the Board of Directors and $500 for
attendance at any telephonic meeting of the Board of Directors or at any meeting
of a committee of the Board of  Directors.  Directors  also are  reimbursed  for
their  reasonable  travel  expenses  incurred in  attending  Board or  committee
meetings.

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

PRINCIPAL STOCKHOLDERS.

         The following table sets forth as of April 15, 2004,  unless  otherwise
indicated,  certain information relating to the ownership of our Common Stock by
(i) each  person  known by the Company to be the  beneficial  owner of more than
five percent of the outstanding shares of our Common Stock (41,925,610  shares),
(ii)  each  of the  Company's  directors,  (iii)  each  of the  Named  Executive
Officers,  and (iv) all of the Company's  executive  officers and directors as a
group.  Except as may be indicated in the  footnotes to the table and subject to
applicable  community  property  laws,  each such person has the sole voting and
investment  power with respect to the shares  owned.  The address of each person
listed is in care of the Company,  6355  Topanga  Canyon  Boulevard,  Suite 520,
Woodland Hills, California 91367, unless otherwise set forth below such person's
name.

<TABLE>
<CAPTION>
                                                                             NUMBER OF SHARES
                                                                             OF COMMON STOCK
                                                                              BENEFICIALLY
                         NAME AND ADDRESS                                       OWNED (1)            PERCENT (1)
                         ----------------                                    ---------------         -----------
                            Directors:
<S>                                                                          <C>                        <C>
Kevin Bermeister....................................................         18,460,189  (2)            34.6%
Abe Sher............................................................          1,000,000  (3)             2.3
Russell Simmons.....................................................            775,000  (4)             1.8
Mark Miller.........................................................            667,500  (5)             1.6
Ray Musci...........................................................            617,500  (6)             1.5

NON-DIRECTOR NAMED EXECUTIVE OFFICERS:
Anthony Rose........................................................            525,000  (7)             1.2
Anthony Neumann.....................................................            477,500  (8)             1.1
Tyler Tarr..........................................................            187,500  (9)              *


                                       7
<PAGE>


<CAPTION>
                                                                             NUMBER OF SHARES
                                                                             OF COMMON STOCK
                                                                              BENEFICIALLY
                         NAME AND ADDRESS                                       OWNED (1)            PERCENT (1)
                         ----------------                                    ---------------         -----------
                            Directors:
<S>                                                                          <C>                        <C>
5% HOLDERS:
Harris Toibb..........................................................       97,786,396  (10)           72.9
    6355 Topanga Canyon Blvd., Woodland Hills, California 91367
Mark Dyne.............................................................       25,131,510  (11)           41.9
MarKev Services, LLC..................................................       15,657,339  (12)           30.6
    15821 Ventura Boulevard, Suite 525, Encino, California 91436
Sharman Networks Limited..............................................        7,000,000  (13)           14.3
    C/-BDO House, Father W H, Lini Highway, PO Box 240, Port Vila,
    Vanuatu
Capel Capital Ltd.....................................................       13,900,410  (14)           24.9
Europlay 1, LLC.......................................................        7,528,588  (15)           15.2
    15821 Ventura Boulevard, Suite 525, Encino California 91436
Ronald Lachman........................................................        6,388,722  (16)           13.4
    3140 Whisperwoods Court, Northbrook, IL 60062
Joltid, Ltd...........................................................        8,000,000                 13.0
    28-30 The Parade, St. Helier, JE4 8XY Jersey, Channel Islands
Kinetech, Inc.........................................................        5,000,000  (17)           10.7
    3140 Whisperwoods Court, Northbrook, IL 60062
Ziffren, Brittenham, Branca, Fischer, Gilbert-Lurie & Stiffelman, LLP.        5,000,000  (18)           10.7
    1801 Century Park West, Los Angeles, California 90067
David Wilson..........................................................        4,674,882  (19)           10.4
    P.O. Box 98, Preston, Maryland 21655
Preston Ford, Inc.....................................................        3,113,822  (20)            7.1
    P.O. Box 98, Preston, Maryland 21655

Directors and officers as a group (8 persons).........................       22,710,189  (21)           39.7%
----------
<FN>
     * Less than one percent.

     (1) Under Rule 13d-3, certain shares may be deemed to be beneficially owned
         by more than one person (if,  for example,  persons  share the power to
         vote or the power to dispose of the shares).  In  addition,  shares are
         deemed to be beneficially owned by a person if the person has the right
         to acquire the shares (for example,  upon exercise of an option) within
         60 days  of the  date as of  which  the  information  is  provided.  In
         computing the percentage  ownership of any person, the amount of shares
         outstanding  is deemed to  include  the  amount of shares  beneficially
         owned  by such  person  (and  only  such  person)  by  reason  of these
         acquisition  rights. As a result,  the percentage of outstanding shares
         of any person as shown in this table does not  necessarily  reflect the
         person's actual ownership or voting power with respect to the number of
         shares of Common Stock actually outstanding at April 15, 2004.

     (2) Consists of 595,350 shares of Common Stock,  (ii)  5,571,850  shares of
         Common  Stock  held by  MarKev  Services,  LLC,  an entity of which Mr.
         Bermeister  is a  manager,  (iii)  9,185,489  shares  of  Common  Stock
         reserved  for  issuance  upon the  exercise of warrants  held by MarKev
         Services,  LLC,  (iv) 900,000  shares of Common Stock held by a general
         partnership the managing partner of which is MarKev Services,  LLC, and
         (v)  2,207,500  shares of  Common  Stock  reserved  for  issuance  upon
         exercise of stock  options,  which  currently are  exercisable  or will
         become exercisable on or before June 14, 2004.

     (3) Consists of 1,000,000  shares  reserved for issuance  upon  exercise of
         stock  options,   which   currently  are  exercisable  or  will  become
         exercisable on or before June 14, 2004.

     (4) Consists of (i) 200,000  shares of Common Stock and (ii) 575,000 shares
         of Common Stock  reserved for issuance upon exercise of stock  options,
         which currently are exercisable or will become exercisable on or before
         June 14, 2004.

     (5) Consists of (i) 70,000  shares of Common  Stock held by the Mark Miller
         Family Trust, of which Pacific Interactive Pty. Limited is trustee, and
         (ii) 597,500 shares of Common Stock reserved for issuance upon exercise
         of stock  options,  which  currently  are  exercisable  or will  become
         exercisable  on or before June 14, 2004.  Mark Miller and his wife are
         the sole stockholders of Pacific Interactive Pty. Limited.


                                       8
<PAGE>


     (6) Consists of 617,500  shares of Common Stock  reserved for issuance upon
         exercise of stock  options,  which  currently are  exercisable  or will
         become exercisable on or before June 14, 2004.

     (7) Consists  of  (i)  20,000   shares  of  Common  Stock  held  by  HiTech
         Corporation  Limited  over  which Mr.  Rose has  exclusive  voting  and
         investment  power, and (ii) 505,000 shares of Common Stock reserved for
         issuance  upon  exercise  of  stock   options,   which   currently  are
         exercisable or will become exercisable on or before June 14, 2004.

     (8) Consists of (i) 25,000  shares of Common  Stock held by Neumann  Family
         Trust,  and (ii) 452,500  shares of Common Stock  reserved for issuance
         upon exercise of stock options, which currently are exercisable or will
         become exercisable on or before June 14, 2004.

     (9) Consists of 187,500  shares of Common Stock  reserved for issuance upon
         exercise of stock  options,  which  currently are  exercisable  or will
         become exercisable on or before June 14, 2004.

     (10)Consists  of (i)  5,529,567  shares of Common  Stock,  (ii)  19,534,497
         shares of Common Stock reserved for issuance upon the conversion of the
         principal  amount  of  secured  convertible   promissory  notes,  (iii)
         5,416,089  shares of Common Stock reserved for issuance upon conversion
         of  the  interest  accumulated  on  the  principal  amount  of  secured
         convertible promissory notes and (iv) 67,306,243 shares of Common Stock
         reserved for issuance upon the exercise of warrants.

     (11)Consists of (i) 594,750 shares of Common Stock,  (ii) 1,780,133 shares,
         505,978  shares  and  5,242,477  shares of Common  Stock  reserved  for
         issuance  upon the  conversion  of the  principal  amount  of a secured
         convertible  promissory note, conversion of the interest accumulated on
         the principal  amount of a secured  promissory note and the exercise of
         warrants,  respectively,  held by Europlay 1, LLC,  over which Mr. Dyne
         has exclusive  voting and  investment  power,  (iii) 900,000  shares of
         Common  Stock held by a general  partnership  the  managing  partner of
         which is MarKev  Services,  LLC, an entity of which Messrs.  Bermeister
         and Dyne are managers,  (iv)  5,571,850  shares of Common Stock held by
         MarKev Services, LLC, (v) 9,185,489 shares of Common Stock reserved for
         issuance  upon the exercise of warrants held by MarKev  Services,  LLC,
         (vi)  533,333  shares of Common Stock  reserved  for issuance  upon the
         exercise of warrants held by Europlay Capital Advisors,  LLC, an entity
         in which Mark Dyne is a principal  owner,  and (vii) 817,500  shares of
         Common Stock reserved for issuance upon exercise of stock options which
         currently are exercisable or will become  exercisable on or before June
         14, 2004.

     (12)Consists  of (i)  5,571,850  shares  of  Common  Stock  held by  MarKev
         Services,  LLC,  (ii) 900,000  shares of Common Stock held by a general
         partnership the managing partner of which is MarKev Services,  LLC, and
         (iii)  9,185,489  shares of Common Stock reserved for issuance upon the
         exercise of warrants held by MarKev Services, LLC.

     (13)Consists of 7,000,000 shares of Common Stock reserved for issuance upon
         the exercise of warrants.

     (14)Consists of (i) 3,325,021  shares of Common Stock reserved for issuance
         upon the  conversion  of the  principal  amount of secured  convertible
         promissory  notes,  (ii) 783,227  shares of Common  Stock  reserved for
         issuance upon  conversion of the interest  accumulated on the principal
         amount of  secured  convertible  promissory  notes and (iii)  9,792,162
         shares of Common  Stock  reserved  for  issuance  upon the  exercise of
         warrants.

     (15)Consists of (i) 1,780,133  shares of Common Stock reserved for issuance
         upon the  conversion of the principal  amount of a secured  convertible
         promissory  note,  (ii)  505,978  shares of Common  Stock  reserved for
         issuance  upon  the  conversion  of  the  interest  accumulated  on the
         principal  amount of a secured  promissory  note,  and (iii)  5,242,477
         shares of Common  Stock  reserved  for  issuance  upon the  exercise of
         warrants.


                                       9
<PAGE>


     (16)Consists of (i) 521,558 shares of Common Stock,  (ii) 867,214 shares of
         Common Stock  reserved for issuance upon the exercise of warrants,  and
         (iii)  5,000,000  shares of Common Stock reserved for issuance upon the
         exercise of warrants held by Kinetech, Inc., over which Mr. Lachman has
         exclusive voting and investment power.

     (17)Consists of 5,000,000 shares of Common Stock reserved for issuance upon
         the exercise of warrants.

     (18)Consists of 5,000,000 shares of Common Stock reserved for issuance upon
         the exercise of warrants.

     (19)Consists of (i) 1,355,905 shares of Common Stock,  (ii) 415,628 shares,
         118,269  shares  and  1,224,020  shares of Common  Stock  reserved  for
         issuance  upon the  conversion  of the  principal  amount  of a secured
         convertible  promissory note, conversion of the interest accumulated on
         the principal  amount of a secured  promissory note and the exercise of
         warrants, respectively, held by Preston Ford Inc. over which Mr. Wilson
         has exclusive  voting and  investment  power,  (iii) 106,875  shares of
         Common Stock held by Millsboro  Auto Mart,  Inc.  over which Mr. Wilson
         has  exclusive  voting and  investment  power,  (iv) 189,999  shares of
         Common Stock  reserved for issuance  upon the exercise of warrants held
         by Millsboro Auto Mart, Inc. over which Mr. Wilson has exclusive voting
         and investment power, and (v) 1,264,186 shares of Common Stock reserved
         for issuance upon the exercise of warrants.

     (20)Consists of (i) 1,355,905  shares of Common Stock,  (ii) 415,628 shares
         of Common  Stock  reserved  for  issuance  upon the  conversion  of the
         principal  amount  of a  secured  convertible  promissory  note,  (iii)
         118,269   shares  of  Common  Stock  reserved  for  issuance  upon  the
         conversion of the interest  accumulated  on the  principal  amount of a
         secured  promissory  note,  (iv) 1,224,020 of Common Stock reserved for
         issuance upon the exercise of warrants.

     (21)Includes (i)  6,142,500  shares of Common  Stock  reserved for issuance
         upon exercise of stock options, which currently are exercisable or will
         become exercisable on or before June 14, 2004, (ii) 5,571,850 shares of
         Common Stock held by a general partnership,  of which Mr. Bermeister is
         a general partner,  and (iii) 9,185,489 shares of Common Stock reserved
         for  issuance   upon  the  exercise  of  warrants  held  by  a  general
         partnership, of which Mr. Bermeister is a general partner.
</FN>
</TABLE>

         The information as to shares  beneficially  owned has been individually
furnished by the  respective  directors,  Named  Executive  Officers,  and other
stockholders of the Company, or taken from documents filed with the SEC.


                                       10
<PAGE>


EQUITY COMPENSATION PLAN INFORMATION.

         The following table sets forth certain information regarding our equity
compensation plans as of December 31, 2003.

<TABLE>
<CAPTION>
                              NUMBER OF SECURITIES TO      WEIGHTED-AVERAGE          NUMBER OF SECURITIES
                              BE ISSUED UPON EXERCISE      EXERCISE PRICE OF        REMAINING AVAILABLE FOR
                              OF OUTSTANDING OPTIONS,    OUTSTANDING OPTIONS,    FUTURE ISSUANCE UNDER EQUITY
                                WARRANTS AND RIGHTS       WARRANTS AND RIGHTS         COMPENSATION PLANS
--------------------------    -----------------------    --------------------    ----------------------------
<S>                                  <C>                        <C>                       <C>
Equity compensation
plans approved by
security holders..........           6,359,000                  $ 0.94                    13,395,375

Equity compensation
plans not approved by
security holders..........          35,818,804                  $ 0.36                        --

Total.....................          42,177,804                  $ 0.45                    13,395,375
</TABLE>


MATERIAL  FEATURES  OF  INDIVIDUAL  EQUITY  COMPENSATION  PLANS NOT  APPROVED BY
STOCKHOLDERS.

         In February  2002, we issued to VoxPop,  LLC warrants to purchase up to
200,000  shares of our common  stock at an exercise  price of $0.15 per share as
consideration  for consulting  services provided to us. The warrants have a term
of 4 years.

         In April 2002,  we issued to The Rose Group  warrants to purchase up to
14,823 shares with an exercise price of $0.4385,  20,212 shares with an exercise
price of $0.3216,  and 39,251  shares  with an exercise  price of $0.1656 of our
common  stock.  The warrants were issued to The Rose Group in  consideration  of
consulting services provided to us. The warrants have a term of 3 years.

         In April 2002, we issued to Business Development Experts, Inc. warrants
to purchase  up to 250,000  shares of our common  stock at an exercise  price of
$0.25 per share as  consideration  for consulting  services  provided to us. The
warrants have a term of 4 years.

         In April 2002, we issued to mPRm Public Relations  warrants to purchase
up to 75,000 shares of our common stock at an exercise  price of $0.25 per share
as  consideration  for consulting  services  provided to us. The warrants have a
term of 3 years.

         In April  2002,  we issued to KaZaA,  B.V.  warrants  to purchase up to
150,000  shares of our common stock at an exercise price of $0.2710 per share as
consideration  for consulting  services provided to us. The warrants have a term
of 30 months.

         In July 2002,  we issued to Kayoss  warrants  to  purchase up to 10,000
shares  of our  common  stock  at an  exercise  price  of  $0.75  per  share  as
consideration  for consulting  services rendered to us. The warrants have a term
of 48 months.

         In August 2002, we issued to SRO Consultants, Inc. warrants to purchase
up to 150,000 shares of our common stock at an exercise price of $0.17 per share
as  consideration  for consulting  services  provided to us. The warrants have a
term of 48 months.


                                       11
<PAGE>


         In October 2002, we issued to Kinetech, Inc. warrants to purchase up to
5,000,000 shares of our common stock at an exercise price of $0.001 per share as
consideration  for a patent  license  agreement.  The warrants  have a term of 6
years.

         In June  2003,  we issued  to  Sharman  Networks  Limited  warrants  to
purchase up to  14,000,000  shares of our common  stock at an exercise  price of
$0.6096  per share in  connection  with,  and as partial  consideration  for the
rights  granted to us in, the Joint  Enterprise  Agreement  entered into in June
2003 between Sharman  Networks Limited and our Altnet  subsidiary.  The warrants
have a term of five years.

         In January  2003,  we issued to Lee Jaffe  warrants  to  purchase up to
165,000  shares of our common  stock at an exercise  price of $0.18 per share as
consideration for consulting services rendered to the company. The warrants have
a term of 4 years.

         In February  2003, we issued to Scheinrock  Advisory  Group warrants to
purchase up to 350,000  shares of our common stock at an exercise price of $0.14
per share as consideration for consulting services rendered to the company.  The
warrants have a term of 5 years.

         In August  2003,  we issued to Ziffren,  Brittenham,  Branca,  Fischer,
Gilbert-Lurie  & Stiffelman  warrants to purchase up to 5,000,000  shares of our
common stock at an exercise price of $0.54 per share as consideration  for legal
and consulting  services rendered to the company.  The warrants have a term of 5
years

         In May  2003,  we issued to Mark Dyne  options  to  purchase  8,208,500
shares or our common  stock at an exercise  price of $0.12 per share as deferred
compensation for services rendered to us as chief executive officer.

         In May  2003,  we  issued  to  Kevin  Bermeister  options  to  purchase
2,186,018  shares or our common stock at an exercise price of $0.12 per share as
deferred compensation for services rendered to us as president.



ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

         Except as disclosed  in this Annual  Report,  neither our  directors or
executive  officers,  nor any  stockholder  owning more than five percent of our
issued shares,  nor any of their  respective  associates or affiliates,  had any
material interest,  direct or indirect,  in any material transaction to which we
were a party during fiscal 2002 or 2003, or which is presently proposed.

         At December 31, 2003,  we were  indebted to our secured debt holders in
the amount of  $4,033,000.  The holders of this senior debt are Harris  Toibb (a
beneficial  owner of more than five  percent  of the  outstanding  shares of our
Common Stock), Europlay 1, LLC (an entity in which Mark Dyne, a beneficial owner
of more than five percent of the outstanding  shares of our Common Stock and our
former Chairman,  has an ownership  interest),  Preston Ford, Inc. (a beneficial
owner of more than five percent of the  outstanding  shares of our Common Stock)
and Capel  Capital  Ltd. (a  beneficial  owner of more than five  percent of the
outstanding shares of our Common Stock). This indebtedness is convertible by the
holders  into our  Common  Stock  at price  $0.1203  per  share,  for a total of
31,141,103  shares of our Common Stock at December 31, 2003. In connection  with
this financing,  the note holders received warrants to purchase up to 44,542,718
shares of our Common Stock at an exercise price of $0.1353 per share. In October
2002,  in  consideration  of an  agreement  to extend the  maturity  date of the
secured  indebtedness  to  December  31,  2003,  we issued  to the note  holders
warrants to purchase up to an aggregate of 25,226,028 shares of our Common Stock
at an exercise price of $0.2091 per share. In December 2003, in consideration of
an agreement to extend the maturity date of the secured indebtedness to March 1,
2004, we paid the holders a


                                       12
<PAGE>


$15,000 extension fee, and increased the principal amount of the indebtedness by
$300,000 in payment of the note holders legal fees and costs.  Finally, in March
2004,  in  consideration  of an  agreement  to extend the  maturity  date of the
secured indebtedness to September 26, 2004, we agreed to the following:

         o        To  amend  the   expiration   date  of  warrants  to  purchase
                  44,542,718  shares of Common  Stock  held by the note  holders
                  from May 23, 2004 to October 4, 2005;

         o        To issue the note holders  additional  warrants to purchase up
                  to an aggregate of 4,018,867  shares of our Common Stock at an
                  exercise price of $0.15 per share; and

         o        To apply on a monthly  basis,  50% of our "Excess Cash" toward
                  repayment of the secured indebtedness,  until the indebtedness
                  is paid in full.  Excess Cash is defined to mean,  at any time
                  of   determination,   the   amount   which  is  equal  to  our
                  consolidated revenues minus costs and expenses consisting only
                  of costs of revenues,  sales and marketing costs,  general and
                  administrative  costs, and research and development costs, all
                  of which  are  determined  monthly  in the same  manner  as is
                  reported  in  our   consolidated   statements  of  operations.
                  Non-cash   expenses   are  not  deducted   from   revenues  in
                  calculating Excess Cash.

         On March 7, 2002,  we entered into a Common Stock and Warrant  Purchase
Agreement among the Company,  Harris Toibb and MarKev  Services,  LLC, an entity
co-owned  by Mark Dyne  (collectively,  the  "Purchasers"),  whereby we sold (i)
5,673,222  shares  of our  Common  Stock at  $0.1322  per share  (the  "Purchase
Price"),  a price per share of Common Stock based on the volume weighted average
price of a share of the our Common Stock on the American Stock Exchange over the
five (5) consecutive  trading days  immediately  preceding March 7, 2002, for an
aggregate  investment amount of $750,000,  and (ii) warrants (the "Warrants") to
purchase in the  aggregate  up to  10,085,728  shares of our Common  Stock at an
exercise price per share of $0.148725,  which  represents a price paid per share
equal to  1.125  times  the  Purchase  Price.  Each of the  Purchasers  received
"piggyback"  registration rights with respect to the Common Stock they purchased
and with respect to the Common Stock issuable upon exercise of the Warrants.

         On March 20, 2002, we entered into a Common Stock and Warrant  Purchase
Agreement with David Wilson (a beneficial owner of more than five percent of the
outstanding  shares of our Common Stock who also  controls  Preston  Ford,  Inc.
which  participated  in the May 2001  financing),  whereby  we sold (i)  378,215
shares of our Common Stock at $0.1322 per share (the "Purchase  Price"), a price
per share based on the volume  weighted  average  price of a share of our Common
Stock on the American Stock Exchange over the five (5) consecutive  trading days
immediately  preceding  March 7, 2002,  for an  aggregate  investment  amount of
$50,000,  and (ii) warrants (the "Wilson Warrants") to purchase in the aggregate
up to  672,382  shares of our  Common  Stock at an  exercise  price per share of
$0.148725,  which  represents  a price paid per share  equal to 1.125  times the
Purchase Price. Mr. Wilson received "piggyback" registration rights with respect
to the Common Stock he purchased  and with respect to the Common Stock  issuable
upon exercise of the Wilson Warrants.

         In April and May 2002, we sold an aggregate of 2,276,045  shares of our
common stock to Michael Toibb (the son of Harris Toibb), Crestview Capital Fund,
LP, Crestview  Capital Fund II, LP,  Crestview  Capital Offshore Fund, Inc., and
certain other investors,  in private  placements for aggregate proceeds to us of
$450,000. Michael Toibb purchased 144,425 shares of our Common Stock for $25,000
in this transaction. The prices per share ranged from $0.1731 to $0.25, and were
based on the market price of our Common Stock at the time the investor committed
to purchase the shares.  In connection with the  offering,we  also issued to the
investors  warrants to purchase up to an aggregate of 4,145,921 shares of common
stock at exercise  prices  ranging  from  $0.19474 to  $0.28125  per share.  The
warrants expire on May 23, 2004.

         In August 2002, we engaged Europlay Capital Advisors,  LLC ("ECA"),  an
entity in which  Mark Dyne is a  principal  owner,  for a period of 12 months to
assist in business development activities primarily for


                                       13
<PAGE>


Altnet.  We agreed to remit  $10,000  per month to ECA as a retainer  fee.  This
retainer  fee will accrue  until such time as we  recognize at least Two Hundred
Fifty Thousand  Dollars  ($250,000) in revenues  (determined in accordance  with
generally accepted  accounting  principles) in two consecutive  calendar months.
Additionally,  ECA will be eligible to receive a commission  with respect to any
net  receipts  recognized  by us  resulting  from  ECA's  direct  efforts.  Such
commission  shall be calculated as a percentage of net receipts  calculated on a
cumulative basis as follows: 12.5% of net receipts up to $20 million; and 15% of
net receipts in excess of $20 million.

         In September  2002,  we sold an  aggregate  of 7,123,836  shares of our
Common Stock to Harris Toibb,  MarKev Services,  LLC (an entity co-owned by Mark
Dyne),  Ronald  Lachman  (a  beneficial  owner of more than five  percent of the
outstanding  shares of our Common  Stock),  David Wilson (a beneficial  owner of
more than five  percent  of the  outstanding  shares of our Common  Stock),  and
certain other investors, in a private placement at a price per share of $0.1502,
for aggregate proceeds to us of $1,070,000.  In connection with the offering, we
also  issued  to the  investors  warrants  to  purchase  up to an  aggregate  of
12,664,597  shares of Common Stock at an exercise  price of $0.168975 per share.
The warrants expire on September 3, 2005.

         In  October  2002,  we entered  into a patent  license  agreement  with
Kinetech,  Inc.  pursuant  to which we  acquired a license  to certain  patented
technology of Kinetech,  and in  consideration  for such  license,  we issued to
Kinetech a warrant to purchase up to 5,000,000  shares of our Common Stock at an
exercise price of $0.001 per share. In connection with the  transaction,  Ronald
Lachman,  a principal  with Kinetech  (and a beneficial  owner of more than five
percent of the outstanding shares of our Common Stock), agreed to become and now
serves  as  our  Chief  Scientist.   The  warrants  vest  in  two  equal  annual
installments  so  long  as  Ronald  Lachman  continues  to  serve  as our  Chief
Scientist.  Mr. Lachman also is a partner in Kingsport Capital, LLC, the general
partner  of  Crestview  Capital  Fund,  LP and  Crestview  Capital  Fund II,  LP
(Crestview  Capital Fund, LP is a beneficial  owner of more than five percent of
the outstanding shares of our Common Stock).

         In May 2003,  we entered into a license to use rights to Joltid  Ltd.'s
Content  Distribution  Environment   peer-to-peer  computer  program,   commonly
referred to as PeerEnabler,  the most significant technological component of the
Altnet  network.  In  exchange  for the  license,  we  agreed  to pay  Joltid  a
guaranteed  monthly fee of $30,000 based on a percentage of revenues earned from
the exploitation of the licensed rights,  subject to a maximum aggregate amount.
We reflect  the  current  portion of the  guaranteed  payment of  $360,000  as a
current liability,  and the balance of the commitment of $540,000 as a long-term
liability.  We  initially  recorded  $1,080,000  related  to the  value of these
license  rights  under this  agreement  and  amortized  the license  rights on a
straight-line basis over three years, recognizing $180,000 as license expense in
2003. In conjunction with our FAS 144 impairment  review, it was determined that
the  carrying  value of the asset  would  not be  recoverable.  As a result  the
unamortized  balance of $900,000 was written off as impairment  loss in 2003. We
paid Joltid  $221,700 for services  provided  during the year ended December 31,
2003,  have an  outstanding  trade  payable to them of $19,841  in  addition  to
guaranteed minimum payments of $900,000, as of December 31, 2003.

         In June 2003, we entered into a Joint Enterprise Agreement with Sharman
Networks, our largest distributor and source of over 90% of our revenues, to act
as their exclusive  representative for the sale, license and/or other commercial
exploitation of its search  technology.  Under the terms of this  agreement,  we
issued  Sharman  Networks  warrants to purchase up to  14,000,000  shares of our
common  stock,  par value  $0.001 per share,  at an exercise  price of $0.61 per
share,  expiring  in  June  2008.  These  warrants  were  initially  vested  and
exercisable  with respect to 7,000,000 shares on the issuance date and will vest
and become exercisable with respect to the remaining  7,000,000 shares two years
following the issuance date provide that the Joint Enterprise  Agreement has not
been  terminated  prior to such date.  The fair value of warrants as examined at
the  date of  grant  is  based  on a  Black-Scholes  model  with  the  following
weighted-average  assumptions for 2003:  interest rates of 4.5%;  dividend yield
rates of 0;  volatility  factors of the expected  market price of the  Company's
common stock of 50.0%;  and expected life of the warrants.  The initial value


                                       14
<PAGE>


of these  warrants was  determined to be  $2,951,000,  based on a  Black-Scholes
model. We reflected the total value of these warrants,  net of amortized warrant
expense, as License Rights on the balance sheet and amortized the license rights
over three years, the life of the agreement.  We recognized  $574,000 of warrant
expense in fiscal 2003. In conjunction  with our FAS 144 impairment  review,  it
was determined that the carrying value of the asset was not recoverable and as a
result the  remaining  unamortized  amount of  $2,377,000  was written off as an
impairment  charge.  As of  December  31, 2003 we have an  outstanding  accounts
payable balance to Sharman Networks of $3,064,000.

         In  June  2003,  we  received  additional  financing  in the  form of a
promissory note,  totaling $100,000,  from Europlay Capital Advisors ("ECA"), an
entity in which Mark Dyne is an  executive,  bearing an interest rate of 10% per
annum and due August 10, 2003. In conjunction with this  transaction,  we issued
warrants  to purchase  up to 533,333  shares of our common  stock at an exercise
price equal to $0.28125 per share,  expiring in June 2006.  ECA agreed to extend
the  maturity  date of the note from August 10, 2003 to December  31,  2003.  In
consideration  for their agreement to extend the maturity date, we issued to the
ECA additional  warrants to purchase up to an aggregate of 227,272 shares of our
Common  Stock at an  exercise  price of $0.44 per share.  The fair value of both
warrant  grants  as  examined  at the date of grant is based on a  Black-Scholes
model with the following  weighted-average  assumptions for 2003: interest rates
of 4.5%;  dividend yield rates of 0;  volatility  factors of the expected market
price of the  Company's  common  stock of 50.0%;  and the  expected  life of the
warrants,  or 3 years.  The value of the warrants was determined to be $187,835.
The note was paid in full in December  2003 and the value of these  warrants and
related  discount,  were fully  expensed  during the current  year. In addition,
during  2003 the  Company  paid ECA  $610,000  for  commissions  and  consulting
services, and as of December 31, 2003 has outstanding accrued expenses to ECA of
$639,000

         In 2003, we issued warrants to purchase  350,000 shares of common stock
in  consideration  for consulting  services,  related to a management  initiated
audit of systems and procedures,  to Scheinrock  Advisory Group, an entity owned
by Jeff Scheinrock, a previous member of the Board of Directors.

         We lease our U.S. offices, under operating lease agreements, from Toibb
Enterprises  ("Toibb"),  an entity owned by Harris Toibb,  a secured debt holder
and our largest stockholder. We paid rent to Toibb of $84,000 and $41,000 during
2003 and 2002 respectively.

         During  fiscal  year 2003,  we paid Abe Sher,  a member of the Board of
Directors,  $173,750 for consulting services. During fiscal 2002, we paid to Abe
Sher, a member of the Board of  Directors,  $125,000  for  business  development
services  unrelated to his position on the Board. Mr. Sher became an employee of
the Company in December 2003.

         The Board of Directors believes,  based on its reasonable judgment, but
without  further  investigation,  that  the  terms  of  each  of  the  foregoing
transactions  or  arrangements  between  the  Company  on the one  hand  and the
affiliates,  officers,  directors  or  stockholders  of the  Company  which were
parties to such  transactions  on the other hand,  were, on an overall basis, at
least as  favorable  to the  Company  as could  then  have  been  obtained  from
unrelated parties.


                                       15
<PAGE>


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

         (a)      Exhibits:

                  See attached Exhibit Index.

         (b)      Reports on Form 8-K.

                  None.


                                       16
<PAGE>


ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

AUDIT FEES.

         Fees for professional services rendered by BDO Seidman LLP ("BDO"), our
principal  independent  accountants,  for  the  audit  of our  annual  financial
statements and review of our financial  statements included in our Forms 10-Q or
services that are normally  provided in connection with statutory and regulatory
filings,  totaled  approximately  $47,700 in 2002 and  approximately  $62,100 in
2003.

AUDIT-RELATED FEES.

         No  fees  were   incurred   during  fiscal  years  2002  and  2003  for
professional  services  rendered  by BDO  for  assurance  and  related  services
reasonably  related to the  performance  of the audit or review of our financial
statements (other than those reported above).

TAX FEES.

         No  fees  were   incurred   during  fiscal  years  2002  and  2003  for
professional  services  rendered by BDO for tax  compliance,  tax advice and tax
planning, including tax compliance, tax advice and tax planning.

ALL OTHER FEES.

         There  were no fees  incurred  during  fiscal  years  2002 and 2003 for
services rendered by BDO to the Company other than the services  described above
under "Audit Fees."

         The Audit  Committee  considered all these services in connection  with
BDO's audit or review of our 2003  financial  statements and concluded that they
were compatible with maintaining BDO's independence.


                                       17
<PAGE>


                                   SIGNATURES

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

                                   BRILLIANT DIGITAL ENTERTAINMENT, INC.

                                   By:        /S/ TYLER TARR
                                            --------------------------
                                            Tyler Tarr
                                   Its:     Chief Financial Officer (Principal
                                            Financial and Accounting Officer)





         In accordance  with the Exchange Act, this report has been signed below
by the following  persons on behalf of the  Registrant and in the capacities and
on the dates indicated.

      SIGNATURE                            TITLE                       DATE
      ---------                            -----                       ----

/S/ KEVIN BERMEISTER           Acting Chairman of the Board       April 29, 2004
-----------------------           of Directors, Chief Executive
   Kevin Bermeister               Officer and President

 /S/ TYLER TARR                Chief Financial Officer            April 29, 2004
-----------------------           (Principal Financial and
      Tyler Tarr                  Accounting Officer)

          *                    Director                           April 29, 2004
-----------------------
     Mark Miller
          *                    Director                           April 29, 2004
-----------------------
   Russell Simmons
          *                    Director                           April 29, 2004
-----------------------
      Ray Musci
          *                    Director                           April 29, 2004
-----------------------
       Abe Sher

* By:  /S/ TYLER TARR
       -------------------------------
       Tyler Tarr, as Attorney-In-Fact


                                       18
<PAGE>


                                  EXHIBIT INDEX


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

     3.1        Amended  and  Restated   Certificate  of  Incorporation  of  the
                Registrant, as amended. Incorporated by reference to Exhibit 3.1
                to  Quarterly  Report on Form 10-QSB for the quarter  ended June
                30, 2002.
     3.2        Amended  and  Restated  Bylaws of  Registrant.  Incorporated  by
                reference  to  Exhibit  3.2 to Form S-1 filed on  September  17,
                1996, and the amendments thereto.
     4.1        Specimen  Stock  Certificate  of  Common  Stock  of  Registrant.
                Incorporated  by  reference  to Exhibit 4.1 to Form S-1 filed on
                September 17, 1996, and the amendments thereto.
     10.1       Registrant's Third Amended and Restated 1996 Stock Option Plan.*
     10.2       Form of Registrant's Stock Option Agreement (Non-Statutory Stock
                Option).  Incorporated  by reference to Exhibit 10.2 to Form S-1
                filed on September 17, 1996, and the amendments thereto.
     10.3       Form of Registrant's  Stock Option  Agreement  (Incentive  Stock
                Option).  Incorporated  by reference to Exhibit 10.3 to Form S-1
                filed on September 17, 1996, and the amendments thereto.
     10.4       Form of Registrant's Indemnification Agreement.  Incorporated by
                reference to Exhibit  10.28 to Form S-1 filed on  September  17,
                1996, and the amendments thereto.
     10.5       Form  of  Registrant's  Employee  Confidential  Information  and
                Non-Solicitation Agreement. Incorporated by reference to Exhibit
                10.29  to  Form  S-1  filed  on  September  17,  1996,  and  the
                amendments thereto.
     10.6       Note and Warrant Purchase Agreement, dated as of April 19, 2001,
                between   Registrant  and  Europlay  I,  LLC.   Incorporated  by
                reference to Exhibit 10.1 to Quarterly Report on Form 10-QSB for
                the quarter ended June 30, 2001.
     10.7       Note and Warrant Purchase Agreement, dated as of April 19, 2001,
                between  Registrant and Harris Toibb.  Incorporated by reference
                to  Exhibit  10.2 to  Quarterly  Report on Form  10-QSB  for the
                quarter ended June 30, 2001.
     10.8       Note and Warrant Purchase Agreement, dated as of April 26, 2001,
                between  Registrant  and  Preston  Ford,  Inc.  Incorporated  by
                reference to Exhibit 10.3 to Quarterly Report on Form 10-QSB for
                the quarter ended June 30, 2001.
     10.9       Amendment to Note and Warrant Purchase  Agreements,  dated as of
                May  23,  2001,   between   Registrant   and  Harris  Toibb  and
                acknowledged  ad consent to by Europlay 1, LLC and Preston Ford,
                Inc.  Incorporated  by  reference  to Exhibit  10.4 to Quarterly
                Report on Form 10-QSB for the quarter ended June 30, 2001.
    10.10       Form of Secured Convertible Promissory Note of Registrant, dated
                May 23,  2001.  Incorporated  by  reference  to Exhibit  10.5 to
                Quarterly  Report on Form 10-QSB for the quarter  ended June 30,
                2001.


                                       E-1
<PAGE>


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

    10.11       Form of Warrant to Purchase  Common Stock of  Registrant,  dated
                May 23,  2001.  Incorporated  by  reference  to Exhibit  10.6 to
                Quarterly  Report on Form 10-QSB for the quarter  ended June 30,
                2001.
    10.12       Security  and  Pledge  Agreement,  dated May 23,  2001,  made by
                Registrant,  B3D, Inc., and Brilliant Studios,  Inc. in favor of
                Harris  Toibb,  as agent.  Incorporated  by reference to Exhibit
                10.7 to  Quarterly  Report on Form 10-QSB for the quarter  ended
                June 30, 2001.
    10.13       Guaranty,  dated May 23, 2001,  made by B3D,  Inc. and Brilliant
                Studios,  Inc. in favor of Harris Toibb, as agent.  Incorporated
                by reference to Exhibit 10.8 to Quarterly  Report on Form 10-QSB
                for the quarter ended June 30, 2001.
    10.14       Note and Warrant Purchase Agreement, dated December 10, 2001, by
                and  between  Registrant  and  Harris  Toibb.   Incorporated  by
                reference to Exhibit  10.41 to Annual  Report on Form 10-KSB for
                the year ended December 31, 2001.
    10.15       Note and Warrant Purchase Agreement, dated December 10, 2001, by
                and between  Registrant and Capel Capital Ltd.  Incorporated  by
                reference to Exhibit  10.42 to Annual  Report on Form 10-KSB for
                the year ended December 31, 2001.
    10.16       Secured Convertible Promissory Note, dated December 19, 2001, in
                favor of Harris  Toibb.  Incorporated  by  reference  to Exhibit
                10.43  to  Annual  Report  on Form  10-KSB  for the  year  ended
                December 31, 2001.
    10.17       Secured Convertible Promissory Note, dated December 19, 2001, in
                favor of Capel Capital Ltd. Incorporated by reference to Exhibit
                10.44  to  Annual  Report  on Form  10-KSB  for the  year  ended
                December 31, 2001.
    10.18       Common Stock Purchase  Warrant,  dated December 19, 2001, by and
                between  Registrant and Harris Toibb.  Incorporated by reference
                to Exhibit  10.45 to Annual  Report on Form  10-KSB for the year
                ended December 31, 2001.
    10.19       Common Stock Purchase  Warrant,  dated December 19, 2001, by and
                between  Registrant  and  Capel  Capital  Ltd.  Incorporated  by
                reference to Exhibit  10.46 to Annual  Report on Form 10-KSB for
                the year ended December 31, 2001.
    10.20       Amendment  Number Two to Note and Warrant  Purchase  Agreements,
                dated  December 19, 2001, by and between  Registrant  and Harris
                Toibb.  Incorporated  by  reference  to Exhibit  10.47 to Annual
                Report on Form 10-KSB for the year ended December 31, 2001.
    10.21       Amendment Number One to Secured  Convertible  Promissory  Notes,
                dated December 19, 2001, in favor of Harris Toibb.  Incorporated
                by  reference to Exhibit  10.48 to Annual  Report on Form 10-KSB
                for the year ended December 31, 2001.
    10.22       Amendment  No. 1 to  Warrant to  Purchase  Common  Stock,  dated
                December 19, 2001, by and between  Registrant  and Harris Toibb.
                Incorporated  by reference to Exhibit  10.49 to Annual Report on
                Form 10-KSB for the year ended December 31, 2001.
    10.23       Amendment  No. 1 to  Warrant to  Purchase  Common  Stock,  dated
                December 19,  2001,  by and between  Registrant  and Europlay 1,
                LLC. Incorporated by reference to Exhibit 10.50 to Annual Report
                on Form 10-KSB for the year ended December 31, 2001.


                                       E-2
<PAGE>


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

    10.24       Amendment  No. 1 to  Warrant to  Purchase  Common  Stock,  dated
                December 19, 2001, by and between  Registrant  and Preston Ford,
                Inc. Incorporated by reference to Exhibit 10.51 to Annual Report
                on Form 10-KSB for the year ended December 31, 2001.
    10.25       Amendment Number One to Security and Pledge Agreement,  dated as
                of December 19, 2001, by and between Registrant,  B3D, Inc., and
                Brilliant  Studios,  Inc.  in favor of Harris  Toibb,  as agent.
                Incorporated  by reference to Exhibit  10.52 to Annual Report on
                Form 10-KSB for the year ended December 31, 2001.
    10.26       Security  and Pledge  Agreement,  dated as of December 19, 2001,
                made by Registrant,  B3D, Inc., and Brilliant  Studios,  Inc. in
                favor of Harris Toibb,  as agent.  Incorporated  by reference to
                Exhibit 10.53 to Annual Report on Form 10-KSB for the year ended
                December 31, 2001.
    10.27       Investor Rights  Agreement,  by and between  Registrant,  Harris
                Toibb,  Europlay 1, LLC,  Preston  Ford,  Inc. and Capel Capital
                Ltd. Incorporated by reference to Exhibit 10.54 to Annual Report
                on Form 10-KSB for the year ended December 31, 2001.
    10.28       Guaranty,  dated  December  19,  2001,  made  by B3D,  Inc.  and
                Brilliant  Studios,  Inc.  in favor of Harris  Toibb,  as agent.
                Incorporated  by reference to Exhibit  10.55 to Annual Report on
                Form 10-KSB for the year ended December 31, 2001.
    10.29       Acknowledgement,  Consent and Reaffirmation,  dated December 19,
                2001, by Brilliant Studios,  Inc. and B3D, Inc.  Incorporated by
                reference to Exhibit  10.56 to Annual  Report on Form 10-KSB for
                the year ended December 31, 2001.
    10.30       Letter  Agreement,  dated October 2, 2002,  among Registrant and
                the  holders  of  Registrant's  Secured  Convertible  Promissory
                Notes.  Incorporated  by  reference to Exhibit 10.5 to Quarterly
                Report on Form 10-QSB for the quarter ended September 30, 2002.
    10.31       Form of Amendment Number One to Secured  Convertible  Promissory
                Note dated as of December 19, 2001. Incorporated by reference to
                Exhibit 10.6 to Quarterly  Report on Form 10-QSB for the quarter
                ended September 30, 2002.
    10.32       Form of Amendment Number Two to Secured  Convertible  Promissory
                Note dated as of May 23,  2001.  Incorporated  by  reference  to
                Exhibit 10.7 to Quarterly  Report on Form 10-QSB for the quarter
                ended September 30, 2002.
    10.33       Form of Warrant issued in connection  with extension of maturity
                date of Secured  Convertible  Promissory Notes.  Incorporated by
                reference to Exhibit 10.8 to Quarterly Report on Form 10-QSB for
                the quarter ended September 30, 2002.
    10.34       Letter  Agreement  Regarding  Extension  of Maturity  Date dated
                December 31, 2003 by and among the Registrant and the holders of
                Secured Convertible  Promissory Note of the Registrant set forth
                on Schedule 1 thereto. *
    10.35       Form of Amendment  Number Three to Convertible  Promissory  Note
                dated December 31, 2003 between the Registrant and the holder to
                be set forth therein. *
    10.36       Form of Amendment Number Two to Secured  Convertible  Promissory
                Note dated  December  31, 2003  between the  Registrant  and the
                holder to be set forth therein. *


                                       E-3
<PAGE>


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

    10.37       Technology  Bundle  License  Agreement,  dated as of  October 2,
                2001, by and between Registrant and Consumer Empowerment B.V., a
                company  organized under the laws of The Netherlands.  [Portions
                of this Exhibit have been omitted and filed  separately with the
                Securities  and  Exchange  Commission  pursuant to a request for
                confidential treatment by Registrant.] Incorporated by reference
                to Exhibit  10.40 to Annual  Report on Form  10-KSB for the year
                ended December 31, 2001.
    10.38       Form of Warrant to Purchase  Common Stock from March 7, 2002 and
                March 20, 2002 financings.  Incorporated by reference to Exhibit
                10.1 to  Quarterly  Report on Form 10-QSB for the quarter  ended
                June 30, 2002.
    10.39       Form of  Warrant  to  Purchase  Common  Stock from April 2, 2002
                financing.   Incorporated   by  reference  to  Exhibit  10.2  to
                Quarterly  Report on Form 10-QSB for the quarter  ended June 30,
                2002.
    10.40       Form of Warrant to  Purchase  Common  Stock from April 23,  2002
                financing.   Incorporated   by  reference  to  Exhibit  10.3  to
                Quarterly  Report on Form 10-QSB for the quarter  ended June 30,
                2002.
    10.41       Warrant to Purchase Common Stock, dated February 1, 2002, issued
                in favor of VoxPop,  LLC.  Incorporated  by reference to Exhibit
                10.4 to  Quarterly  Report on Form 10-QSB for the quarter  ended
                June 30, 2002.
    10.42       Form of Warrant to Purchase  Common Stock,  dated April 5, 2002,
                issued in favor of The Rose Group.  Incorporated by reference to
                Exhibit 10.5 to Quarterly  Report on Form 10-QSB for the quarter
                ended June 30, 2002.
    10.43       Warrant to Purchase Common Stock,  dated April 15, 2002,  issued
                in favor of Business Development Experts,  Inc.  Incorporated by
                reference to Exhibit 10.6 to Quarterly Report on Form 10-QSB for
                the quarter ended June 30, 2002.
    10.44       Warrant to Purchase Common Stock,  dated April 15, 2002,  issued
                in favor of mPRm Public Relations.  Incorporated by reference to
                Exhibit 10.7 to Quarterly  Report on Form 10-QSB for the quarter
                ended June 30, 2002.
    10.45       Warrant to Purchase Common Stock,  dated April 22, 2002,  issued
                in favor of KaZaA,  B.V.  Incorporated  by  reference to Exhibit
                10.7 to  Quarterly  Report on Form 10-QSB for the quarter  ended
                June 30, 2002.
    10.46       Common  Stock and Warrant  Purchase  Agreement  dated August 26,
                2002, by and among Registrant and Harris Toibb, Markev Services,
                LLC, Ronald Lachman,  David Wilson,  Bob Haya and Scott Hergott.
                Incorporated by reference to Exhibit 10.1 to Quarterly Report on
                Form 10-QSB for the quarter ended September 30, 2002.
    10.47       Form of Warrant to  Purchase  Common  Stock from August 26, 2002
                financing.   Incorporated   by  reference  to  Exhibit  10.2  to
                Quarterly  Report on Form 10-QSB for the quarter ended September
                30, 2002.
    10.48       Warrant to Purchase Common Stock,  dated August 28, 2002, issued
                in favor of SRO  Consulting,  Inc.  Incorporated by reference to
                Exhibit 10.3 to Quarterly  Report on Form 10-QSB for the quarter
                ended September 30, 2002.


                                       E-4
<PAGE>


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

    10.49       Letter Agreement,  dated August 19, 2002, between Registrant and
                Europlay  Capital  Advisors,  LLC.  Incorporated by reference to
                Exhibit 10.4 to Quarterly  Report on Form 10-QSB for the quarter
                ended September 30, 2002.
    10.50       Contractor,   Confidential   Information  and   Non-Solicitation
                Agreement, dated as of February 2002, between Registrant and Abe
                Sher.  Incorporated  by  reference  to Exhibit 10.9 to Quarterly
                Report on Form 10-QSB for the quarter ended September 30, 2002.
    10.51       Strategic Alliance,  Marketing and Distribution  Agreement dated
                April 14, 2003 between Brilliant Digital Entertainment, Inc. and
                The Excite  Network,  Inc.  [Portions  of this Exhibit have been
                omitted and filed  separately  with the  Securities and Exchange
                Commission  pursuant to a request for confidential  treatment by
                Registrant.]  Incorporated  by  reference to the Exhibit 10.1 to
                Quarterly Report on Form 10-QSB for quarter ended June 30, 2003.
    10.52       Digital  Content  Merchant  Agreement,   dated  November,  2002,
                between Registrant and NewGenPay, Inc. Incorporated by reference
                to Exhibit  10.44 to  Amendment  No. 1 to Form S-3  Registration
                Statement as filed July 3, 2003.
    10.53       Warrant to Purchase  Common  Stock,  dated  February  19,  2003,
                issued in favor of Scheinrock  Advisory  Group.  Incorporated by
                reference  to  Exhibit  10.46  to  Amendment  No.  1 to Form S-3
                Registration Statement as filed July 3, 2003.
    10.54       Share Exchange and Option  Agreement  dated May 28, 2003 between
                Brilliant   Digital   Entertainment,   Inc.  and  Joltid,   Ltd.
                Incorporated  by  reference  to the  Exhibit  10.2 to  Quarterly
                Report on Form 10-QSB for quarter ended June 30, 2003.
    10.55       Joltid Software  Licensing  Agreement dated May 28, 2003 between
                Altnet,  Inc.  and Joltid,  Ltd.  [Portions of this Exhibit have
                been  omitted  and  filed  separately  with the  Securities  and
                Exchange  Commission  pursuant  to a  request  for  confidential
                treatment  by  Registrant.]  Incorporated  by  reference  to the
                Exhibit  10.3 to  Quarterly  Report on Form  10-QSB for  quarter
                ended June 30, 2003.

    10.56       Form of Brilliant Digital  Entertainment,  Inc.  Promissory Note
                dated June 11,  2003.  Incorporated  by reference to the Exhibit
                10.4 to Quarterly  Report on Form 10-QSB for quarter  ended June
                30, 2003.
    10.57       Form of Warrant to Purchase  Common Stock of  Brilliant  Digital
                Entertainment,   Inc.  dated  June  11,  2003.  Incorporated  by
                reference to the Exhibit 10.5 to Quarterly Report on Form 10-QSB
                for quarter ended June 30, 2003.
    10.58       Joint  Enterprise  Agreement dated June 23, 2003 between Altnet,
                Inc.  and Sharman  Networks  Limited.  [Portions of this Exhibit
                have been omitted and filed  separately  with the Securities and
                Exchange  Commission  pursuant  to a  request  for  confidential
                treatment  by  Registrant.]  Incorporated  by  reference  to the
                Exhibit  10.6 to  Quarterly  Report on Form  10-QSB for  quarter
                ended June 30, 2003.
    10.59       Warrant  to  Purchase   Common   Stock  of   Brilliant   Digital
                Entertainment,  Inc.,  dated  June 23,  2003,  issued to Sharman
                Networks Limited.  Incorporated by reference to the Exhibit 10.7
                to  Quarterly  Report on Form 10-QSB for quarter  ended June 30,
                2003.
    10.60       Brilliant  Digital  Entertainment,  Inc.  Deferred  Compensation
                Plan. Incorporated by reference to the Exhibit 10.8 to Quarterly
                Report on Form 10-QSB for quarter ended June 30, 2003.


                                       E-5
<PAGE>


EXHIBIT NUMBER                        EXHIBIT DESCRIPTION
--------------                        -------------------

    10.61       Form  of  Brilliant   Digital   Entertainment,   Inc.   Deferred
                Compensation Relinquishment Opportunity Agreement.  Incorporated
                by reference  to the Exhibit  10.9 to  Quarterly  Report on Form
                10-QSB for quarter ended June 30, 2003.
    10.62       Standard Form Lease  Agreement  dated September 21, 2003 between
                the Registrant and Topanga & Victory  Partners LP.  Incorporated
                by reference to Exhibit 10.1 to Quarterly  Report on Form 10-QSB
                for the quarter ended September 30, 2003.
    10.63       Employment  Agreement  dated June 1, 2003 between the Registrant
                and Tyler Tarr. *
    10.64       Executive  Employment  Agreement  dated June 1, 2003 between the
                Registrant and Kevin Bermeister. *
     14.1       Code of Ethics. *
     21.1       Subsidiaries. *
     23.1       Consent of BDO Seidman, LLP. *
     24.1       Power of Attorney. *
     31.1       Certificate  of  Chief  Executive   Officer   pursuant  to  Rule
                13a-14(a)  under the  Securities  and Exchange  Act of 1934,  as
                amended
     31.2       Certificate  of  Chief  Financial   Officer   pursuant  to  Rule
                13a-14(a)  under the  Securities  and Exchange  Act of 1934,  as
                amended
     32.1       Certificate  of Chief  Executive  Officer  and  Chief  Financial
                Officer  pursuant to Rule  13a-14(b)  under the  Securities  and
                Exchange Act of 1934, as amended.

         *  Previously filed on Form 10-KSB.


                                       E-6