REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS              F-2

CONSOLIDATED  FINANCIAL  STATEMENTS
   Consolidated  balance  sheet                                      F-3
   Consolidated  statements  of  operations                          F-4
   Consolidated statements of shareholders' equity (deficiency)      F-5 to F-6
   Consolidated statements  of  cash  flows                          F-7 to F-8
   Notes  to  consolidated  financial  statements                    F-9 to F-31



<PAGE>
REPORT  OF  INDEPENDENT  CERTIFIED  PUBLIC  ACCOUNTANTS

The Board of Directors and Shareholders of BrightCube, Inc. (formerly Photoloft,
Inc.)

We  have audited the accompanying consolidated balance sheet of BrightCube, Inc.
(formerly  Photoloft,  Inc.  or  the  Company)  as of December 31, 2001, and the
related  consolidated  statements  of  operations,  shareholders'  equity
(deficiency),  and  cash  flows  for the years ended December 31, 2001 and 2000.
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  principles generally
accepted  in  the  United States of America.  Those standards  require  that  we
plan  and  perform our audits to obtain  reasonable  assurance about whether the
consolidated  financial statements are free of material  misstatement.  An audit
includes  examining,  on  a  test  basis, evidence supporting  the  amounts  and
disclosures  in  the  consolidated 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 BrightCube,  Inc.
(formerly  Photoloft,  Inc.)  as  of  December  31,  2001 and the results of its
operations  and  cash  flows for the years ended  December  31, 2001 and 2000 in
conformity  with  accounting  principles generally accepted in the United States
of  America.

The  accompanying  consolidated  financial  statements  have  been  prepared
assuming  that the Company  will  continue  as  a  going  concern.  As discussed
in  Note  1  to  the  consolidated  financial  statements,  the  Company  has an
accumulated  deficit  of $27,554,200 as of December  31,  2001  and  incurred  a
net  loss  of  $11,828,300  for  the  year  ended  December  31,  2001.  These
conditions  raise  substantial doubt about the  Company's  ability  to  continue
as  a  going  concern.  Management's  plans  regarding  those  matters  are also
described  in  Note  1. The consolidated financial statements do not include any
adjustments  relating  to  the  recoverability  and  classification of  reported
asset amounts or the amount and classification of liabilities that might  result
from  the  outcome  of  this  uncertainty.

/s/  BDO  Seidman,  LLP

San  Francisco, California
February 22, 2002, except for Note 16 which is as of March 13, 2002


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                         BRIGHTCUBE, INC. (FORMERLY PHOTOLOFT, INC.)
                                 CONSOLIDATED BALANCE SHEET


                                                                          DECEMBER 31, 2001
<S>                                                                      <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents (Note 10 and 11)                               $          237,200
Restricted cash (Note 7)                                                            345,000
Accounts receivable, net of allowance for doubtful accounts of $63,000              297,000
Inventory                                                                           348,400
Prepaid expenses and other current assets  (Note 15)                                213,700
-----------------------------------------------------------------------  -------------------

TOTAL CURRENT ASSETS                                                              1,441,300
PROPERTY AND EQUIPMENT, net (Note 3)                                                309,300
EXCESS OF COST OVER NET ASSETS ACQUIRED, NET (Note 2)                             3,768,000
OTHER ASSETS                                                                         45,100
-----------------------------------------------------------------------  -------------------

TOTAL ASSETS                                                             $        5,563,700
                                                                         ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Note payable to bank (Note 7)                                            $          345,000
Accounts payable                                                                    806,800
Accrued expenses (Notes 4)                                                          220,700
Deferred revenue (Note 15)                                                           63,500
Payable to shareholders (Note 12)                                                   620,500
                                                                         -------------------

TOTAL CURRENT LIABILITIES                                                         2,056,500
                                                                         -------------------

COMMITMENTS AND CONTINGENCIES (NOTES 5,6,10 and 16)

SHAREHOLDERS' EQUITY (Notes 1, 2, 6,7,8 and 16) :
Preferred stock, $0.001 par value; 500,000 shares
    authorized; no shares issued and outstanding                                         --
Common stock, $0.001 par value; 200,000,000 shares
    authorized; 77,641,995 shares issued and outstanding                             77,600
Additional paid in capital                                                       30,983,800
Accumulated deficit                                                             (27,554,200)
                                                                         -------------------

TOTAL SHAREHOLDERS' EQUITY                                                        3,507,200
                                                                         -------------------

TOTAL LIABILITIES & SHAREHOLDERS' EQUITY                                 $        5,563,700
                                                                         ===================
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                             BRIGHTCUBE, INC. (FORMERLY PHOTOLOFT, INC.)
                               CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                           YEARS ENDED DECEMBER 31,
                                                                            2001              2000
<S>                                                                   <C>                <C>
  Revenues                                                            $      1,568,000   $           -
  Cost of revenues                                                           1,006,700               -
                                                                      -----------------  --------------
  Gross Profit                                                                 561,300               -
                                                                      -----------------  --------------

  OPERATING EXPENSES:
  Sales and marketing                                                        1,184,700               -
  General and administrative, including goodwill impairment loss of         10,427,800               -
      $4,711,800 in 2001 (Note 1)
                                                                      -----------------  --------------
  TOTAL OPERATING EXPENSES                                                  11,612,500               -
                                                                      -----------------  --------------

  Loss from operations                                                     (11,051,200)              -
                                                                      -----------------  --------------

  OTHER INCOME (EXPENSE):
  Interest income                                                               26,700               -
  Other income (Note 15)                                                       126,200               -
  Interest and other expense (Note 8)                                         (542,200)              -
                                                                      -----------------  --------------
  TOTAL OTHER INCOME (EXPENSE):                                               (389,300)              -
                                                                      -----------------  --------------
  LOSS BEFORE INCOME TAXES                                                 (11,440,500)
  Income tax expense (Note 9)                                                    2,400               -
                                                                      -----------------  --------------
  LOSS FROM CONTINUING OPERATIONS                                          (11,442,900)              -

  DISCONTINUED OPERATIONS (Note 14):
       Loss from discontinued operations                                      (978,500)    (11,074,300)
       Gain on disposal of discontinued operations                             593,100               -
                                                                      -----------------  --------------
                                                                              (385,400)    (11,074,300)
                                                                      -----------------  --------------

  NET LOSS                                                                 (11,828,300)    (11,074,300)

  Deemed dividend on redemption of
       Series A Preferred Stock (Note 8)
                                                                                     -        (357,000)
                                                                      -----------------  --------------
  NET LOSS ALLOCABLE TO COMMON SHAREHOLDERS                           $    (11,828,300)  $ (11,431,300)
                                                                      =================  ==============
  Basic and diluted loss per share:
       Continuing Operations                                          $          (0.16)  $           -
       Discontinuing Operations                                                  (0.01)          (0.35)
                                                                      =================  ==============
  Net Loss                                                            $          (0.17)  $       (0.35)
                                                                      =================  ==============
  Basic and diluted weighted-average common shares outstanding              70,016,600      32,788,300
                                                                      =================  ==============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                        BRIGHTCUBE, INC. (FORMERLY PHOTOLOFT, INC.)
                               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (DEFICIENCY)


                                                   PREFERRED  STOCK         COMMON STOCK
                                               ------------------------  -------------------
                                                                                               Additional      Deferred
                                                                                                Paid-in
(Notes 1,2,6,7,8, and 16)                        Shares       Amount       Shares    Amount     Capital      Compensation
                                               ----------  ------------  ----------  -------  ------------  --------------
<S>                                            <C>         <C>           <C>         <C>      <C>           <C>
BALANCES, December 31, 1999                      -------   $   -------   12,881,875  $12,900  $ 4,904,500   $    (481,200)
Sale of Series A preferred stock,
    net of issuance costs of $79,500                 106     1,060,000           --       --      (79,500)             --
Sale of common stock warrants                         --            --           --       --       10,000              --
Redemption of Series A preferred
    stock                                           (106)   (1,060,000)          --       --     (212,000)             --
Sale of Series B convertible
    preferred Stock                                  900         9,000           --       --           --              --
Private placement of common stock, net
    of cash issuance costs of $1,089,200              --            --   10,646,600   10,700   12,208,100              --
Conversion of Series B convertible
    Preferred stock                                 (900)       (9,000)  27,914,023   27,900      (18,900)             --
Shares and warrants issued for services
    relating to the private placement of
    common stock                                      --            --       28,000       --    1,263,000              --
Offering costs relating to shares and
    warrants issued for services relating to
     private placement of common stock                --            --           --       --   (1,263,000)             --
Exercise of stock options and warrants                --            --      301,432      300       65,000              --
Deferred stock compensation                           --            --           --       --      273,000        (273,000)
Amortization of deferred stock
    compensation                                      --            --           --       --           --         596,000
Compensation associated with stock
    option grants                                     --            --           --       --    3,053,700          24,700
Shares issued for services                            --            --      237,500      200      312,300        (178,100)
Shares issued for EVG acquisition                     --            --   14,984,000   15,000    7,776,700              --
Net loss                                              --            --           --       --           --              --
=============================================  ==========  ============  ==========  =======  ============  ==============

BALANCES, December 31, 2000                           --            --   66,993,430   67,000   28,292,900        (311,600)


Private placement of common stock, net of
    issuance cost of $43,100                          --            --    6,750,000    6,800    1,300,100              --

Exercise of stock options and warrants                                      500,500      500       49,700              --
Compensation associated with stock option
    grants                                            --            --           --       --      370,500              --
Bridge loan interest associated with
    Warrant grant                                     --            --           --       --      475,000              --
Amortization of deferred stock
     compensation                                     --            --           --       --           --         311,600
Shares and warrants issued for services               --            --      189,417      100      145,900              --
Contingent shares issued for  EVG
    acquisition                                                           3,208,648    3,200      349,700              --
Net Loss
                                               ----------  ------------  ----------  -------  ------------  --------------
BALANCES, December 31, 2001                            -   $         -   77,641,995  $77,600  $30,983,800   $         ---
                                                           ============  ==========  =======  ============  ==============
</TABLE>


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                                              Retained Earnings
                                                            (Accumulated Deficit)       Total
<S>                                                         <C>                     <C>
BALANCES,  December 31, 1999                                           (4,651,600)      (215,400)

Sale of Series A preferred stock,
    net of issuance costs of $79,500                                           --        980,500
Sale of common stock warrants                                                  --         10,000
Redemption of Series A preferred stock                                         --     (1,272,000)
Sale of Series B convertible preferred stock                                   --          9,000
Private placement of common stock, net of
    cash issuance costs of  $1,089,200                                         --     12,218,800
Conversion of Series B convertible preferred stock                             --             --
Shares and warrants issued for services relating
    to the private placement of common stock                                   --      1,263,000
Offering costs relating to shares and warrants
     issued for services relating to the private placement
    of common stock                                                            --     (1,263,000)
Offering costs relating to shares and warrants issued for
    services relating to private placement of common stock                     --         65,300
Deferred stock compensation                                                    --             --
Amortization of deferred stock compensation                                    --        596,000
Compensation associated with stock option grants                               --      3,078,400
Shares issued for services                                                     --        134,400
Shares issued for EVG acquisition                                              --      7,791,700
Net loss                                                              (11,074,300)   (11,074,300)
----------------------------------------------------------  ----------------------  -------------

BALANCES, December 31, 2000                                           (15,725,900)    12,322,400



Private placement of common stock,  net of issuance
     cost of $43,100                                                                   1,306,900
Exercise of stock options and warrants                                                    50,200
Compensation associated with stock option grants                                         370,500
Bridge loan interest associated with warrant grant                                       475,000
Amortization of deferred stock compensation                                              311,600
Shares and warrants issued for services                                                  146,000
Contingent shares issued for EVG acquisition                                             352,900
Net Loss                                                              (11,828,300)   (11,828,300)
                                                            ----------------------  -------------

BALANCES, December 31, 2001                                 $         (27,554,200)  $  3,507,200
                                                            ======================  =============
</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>
<TABLE>
<CAPTION>
                         BRIGHTCUBE, INC. (FORMERLY PHOTOLOFT, INC.)
                            CONSOLIDATED STATEMENTS OF CASH FLOWS


DECEMBER 31,                                                        2001           2000
                                                                -------------  -------------
<S>                                                             <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Loss from Continuing Operations                               $(11,442,900)  $         --
  Adjustments to reconcile net loss to net cash
   Used in operating activities:
     Interest expense relating to stock warrants issued              475,000              -
     Depreciation                                                    245,500              -
     Compensation relating to stock options and warrants             682,100              -
     Provision for possible losses                                    33,400              -
     Loss on disposal of fixed assets                                  7,700              -
     Goodwill Impairment Loss                                      4,711,800              -
     Amortization of excess of cost over net assets acquired       1,368,100              -
      loss from discontinued operations                             (978,500)   (11,074,300)
     Gain on disposal of discontinued operations                     593,100              -
     Changes in operating assets and liabilities:
        Accounts receivable                                         (244,900)             -
        Inventory                                                   (168,700)             -
        Prepaid expenses and other current assets                    141,800              -
        Accounts payable                                             301,800              -
        Accrued expenses                                            (194,400)             -
        Deferred revenue                                              63,500              -
                                                                -------------  -------------

NET CASH USED IN CONTINUING OPERATIONS                            (4,405,600)   (11,074,300)
CHANGE IN ASSETS AND LIABILITIES OF DISCONTINUED
      OPERATIONS                                                  (1,397,700)     3,754,100
                                                                -------------  -------------

NET CASH USED IN OPERATING ACTIVITIES                             (5,803,300)    (7,320,200)
                                                                -------------  -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Principal received under note receivable                                --        250,000
  Other assets                                                        22,900         (3,700)
  Purchase of property and equipment                                 (45,600)      (306,500)
  Proceeds from disposal of discontinued operations                1,020,000            ---
                                                                =============  =============

  NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:               997,300        (60,200)
                                                                -------------  -------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Bank Overdraft                                                           -       (219,200)
  Repayments on notes payable to bank                               (345,000)             -
  Proceeds from note and loans payable to shareholder                588,800              -
  Net proceeds from issuance of stock                              1,306,900     13,273,600
  Proceeds from exercise of options and warrants                      50,200         10,000
  Restricted Cash                                                   (345,000)            --
  Payment of Note Payable to Related Party                                --       (800,000)
  Payment for redemption of preferred stock                               --     (1,272,000)
                                                                -------------  -------------


                                      F-7
<PAGE>
  NET CASH PROVIDED BY FINANCING ACTIVITIES                        1,255,900     10,992,400
                                                                -------------  -------------

NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS              (3,550,100)     3,612,000

  CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR                     3,787,300        175,300
                                                                -------------  -------------
  CASH AND CASH EQUIVALENTS, END OF YEAR                        $    237,200   $  3,787,300
                                                                =============  =============

</TABLE>

          See accompanying notes to consolidated financial statements.


                                      F-8
<PAGE>
                   BRIGHTCUBE, INC. (FORMERLY PHOTOLOFT, INC.)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
--------------------------------------------------------------------------------

1.   SUMMARY  OF  ACCOUNTING  POLICIES

The  Company

BrightCube,  Inc.  (formerly  Photoloft,  Inc.,  a  publicly  traded  shell
corporation)  (the Company), a Nevada corporation, was incorporated  on  January
23,  1986.

On  March  1,  1999,  the  Company completed the acquisition of 100% of the
outstanding  common  stock  of  Photoloft,  Inc.(Photoloft)  in  exchange  for
9,579,268 shares of the Company's  $.001  par  value  common  stock.  For
accounting purposes, the acquisition  has  been  treated  as  the  acquisition
of  the  Company  by Photoloft, with Photoloft as the acquirer (reverse
acquisition). The shares held  by  the shareholders of the Company prior to the
acquisition have been recognized as if they  were  issued  in  connection  with
the acquisition of the Company by Photoloft.

Photoloft, a California corporation, was incorporated on November 17, 1993.
Photoloft  was a  developer and provider of digital imaging infrastructure for
the photography markets.

On  December  20,  2000,  the  Company  completed its  acquisition of Extreme
Velocity Group, Inc. (EVG), a California corporation (see Note 2).  EVG was a
Los Angeles based corporation, which provided Internet and imaging solutions to
the art  market.  EVG  had a proprietary line of digital papers for use on high
quality  ink-jet  printers,  which  it  designed  and  distributed. In addition,
EVG  had  a paying subscription based network of independent art frame shops
nationwide, which received e-commerce and marketing support from EVG.

During May 2001, the Company's Board of Director's decided to either sell or
close the operations of the Company's Photoloft or ASP Services division.  In
November 2001, the Company sold this division's assets for $1,020,000 (Note 14).

Basis  of  Presentation  and  Going  Concern  Uncertainty

The accompanying financial statements have been prepared on a going concern
basis, which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business. As shown in the financial
statements, the Company had an accumulated deficit of $27,554,200 as of December
31, 2001 and incurred a net loss of $11,828,300 for the year ended December 31,
2001.

These conditions give rise to substantial doubt about the Company's ability to
continue as a going concern. The financial statements do not include any
adjustments  relating  to the recoverability and classification of reported
asset amounts or the amount and classification of liabilities that might be
necessary  should the Company be unable to continue as a going concern. The
Company's  continuation as a going concern is dependent upon its ability to
obtain  additional  financing  or  refinancing  as  may  be  required  and


                                      F-9
<PAGE>
ultimately  to  attain  profitability.  The  Company  is  actively marketing its
existing  and new products, which it believes will ultimately lead to profitable
operations.  The  Company currently anticipates that its available funds will be
sufficient  to  meet  its  anticipated  needs  for  working  capital,  capital
expenditures and business operations until May 2002. After May 2002, the Company
will  need  to seek additional funding or reduce operating expenses. However, no
assurances  can be given that these available funds will meet the Company's cash
requirements  in  the  future.

During  February and March 2002, the Company obtained a bridge loan from outside
investors  with  vFinance  Investments,  Inc.  acting as the Company's placement
agent,  in  the  amount  of  $1,325,000  at  an  annual  12% interest rate, less
financing  and bank fees of $183,350. The funds will be used for general working
capital  purposes.

The  Company  anticipates that it will require approximately $3 to $5 million in
additional  capital funding during 2002 to grow as contemplated. It is estimated
that  20%  -  30% of these requirements will come from cash from operations. The
remainder  will  be  from  equity  and  debt  financing  sources. The Company is
actively  seeking  such  financing at this time. No assurances can be given that
such  financing  will  be  available  on  terms  favorable to us, or at all. The
financial  statements  do  not  handle  any  adjustments for the outcome of this
uncertainty.

Use  of  Estimates

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

Cash  and  Cash  Equivalents

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

Accounts  Receivable  and  Allowance  for  Doubtful  Accounts

The  Company  grants  credit  to  its  customers  after  undertaking  an
investigation  of credit risk for all significant amounts. An allowance for
doubtful accounts is provided for estimated credit losses at a level deemed
appropriate  to  adequately provide for known and inherent risks related to such
amounts.  The  allowance  is  based  on  reviews of loss, adjustments history,
current  economic  conditions  and  other  factors  that  deserve recognition
in estimating potential losses. While management uses the best    information
available in making its determination, the ultimate recovery of recorded
accounts  receivable  is  also dependent upon future economic and other
conditions  that  may  be  beyond  management's  control.

Inventory

Inventory,  consisting  primarily of finished goods, is stated at the lower of
cost  (first-in,  first-out)  or  market.


                                      F-10
<PAGE>
Property  and  Equipment

Property  and  equipment are stated at cost. Depreciation is provided using the
straight-line  method  over the estimated economic useful lives of the assets,
generally  ranging  from  three  to  five  years.

Long-Lived Assets, Including Goodwill  and Related Impairment

The  Company  periodically  reviews  its  long-lived  assets  and  certain
identifiable  intangibles  for  impairment.  Should a change in  circumstances
suggest  a  possible  impairment,  the recoverability of long-lived assets is
evaluated by comparing undiscounted estimated future net cash flows  to  the
current  carrying  value.  If the current carrying value is greater than the
undiscounted estimated future net cash flows, a loss is recognized based on the
amount by which the carrying value exceeds the estimated fair market value of
the related long-lived assets,  including goodwill. The  excess  of  cost over
net assets acquired (Goodwill), which relates to the  Company's  acquisition  of
EVG,  was amortized  through December 31, 2001 using  the straight-line method
over an estimated life of seven years. Subsequent to the acquisition of EVG (see
Note 2), the Company has experienced significant decreases in actual and
forecasted revenue of a portion of the acquired operations, principally due to a
declining membership base in its Dealer Network (part of the Technology
division) during the latter part of 2001, which indicate the recorded values of
the long-lived assets were impaired.  As a result, the Company performed an
analysis of its long lived assets in the fourth quarter of 2001 and concluded
that a $4,711,800 write-down of goodwill was necessary.

Fair  Values  of  Financial  Instruments

The  following  methods  and  assumptions  were  used  by  the  Company  in
estimating  its  fair  value  disclosures  for  financial  instruments:

     Cash  and  cash  equivalents

     The carrying amount reported in the balance sheet for cash and cash
     equivalents approximates fair value.

     Note  payable  to  bank

     The fair value of the note payable to bank approximates cost because of the
     relatively short period of time to maturity and comparability to interest
     rates that are available to the Company for loans with similar terms and
     remaining maturities.

As  of  December  31, 2001, the fair values of the Company's financial
instruments  approximate  their  historical  carrying  amounts.

Revenue  Recognition

The  Company's  revenues are derived principally from the sale of subscriptions
and digital images to a dealer network and the sale of consumable products
related to the fine art and digital market.


                                      F-11
<PAGE>
The  subscription  revenues  are  derived from numerous customers located
principally  in  metropolitan areas throughout the United States and billed to
credit  cards on a monthly basis. Generally the credit cards are billed at  the
end  of  a  month of service. Product revenues from the  sale  of  digital
paper, related products and images or download of the image are recognized when
delivered to  the  customer  (generally  upon  shipment or download)  provided
no significant  obligations  remain  and  collectibility  is  likely.

Advertising

The  cost  of  advertising  is  expensed  as  incurred,  except  for certain
magazine advertisements and trade show credits which are capitalized and
expensed the first time the magazine advertisement takes place or when the trade
show is attended (Note 15).  Included in prepaid expenses and other current
assets as of  December 31, 2001 is $161,200, representing the outstanding
balance of the magazine advertisement and trade show credits.  Advertising costs
for  the  years ended December 31, 2001 and 2000 aggregated $273,200 and
$300,500,  respectively.

Income  Taxes

The  Company  accounts  for  income  taxes  in accordance with Statement of
Financial Accounting Standards (SFAS) No. 109, Accounting for Income Taxes,
which  requires  an  asset and liability approach. This approach results in the
recognition  of  deferred  tax  assets  (future  tax  benefits)  and liabilities
for  the  expected  future  tax  consequences  of  temporary differences
between  the book carrying amounts and the tax basis of assets and  liabilities.
The  deferred  tax  assets and liabilities represent the future  tax  return
consequences of those differences, which will either be deductible or taxable
when  the  assets and liabilities are recovered or  settled.  Future  tax
benefits  are  subject to a valuation allowance when management believes it is
more likely than not that the deferred tax assets will  not  be  realized.

New Accounting  Pronouncements

In May 2000, the Emerging Issues Task Force ("EITF") reached a consensus on
Issue 00-14, "Accounting for Certain Sales Incentives." This issue addresses the
recognition, measurement, and income statement classification for sales
incentives offered voluntarily by a vendor without charge to customers that can
be used in, or are exercisable by a customer as a result of, a single exchange
transaction.   In April 2001, the EITF reached a consensus on Issue 00-25,
"Vendor Income Statement Characterization of Consideration to a Purchaser of the
Vendor's Products or Services." This issue addresses the recognition,
measurement and income statement classification of consideration, other than
that directly addressed by Issue 00-14, from a vendor to a retailer or
wholesaler. Issue 00-25 will be effective for the Company's 2002 fiscal year.
Both Issue 00-14 and 00-25 have been codified under issue 01-09, "Accounting for
Consideration Given by a Vendor to a Customer or a Reseller of the Vendor's
Products."  We are currently analyzing Issue 01-09.  Issue 01-09 is not expected
to have a material impact on the Company's financial position or results of
operations, except that certain reclassifications may occur. The consensus
reached in Issue 00-25 and Issue 00-14 (codified by Issue 01-09) are effective
for fiscal quarters beginning after December 15, 2001.


                                      F-12
<PAGE>
In June 2001, the Financial Accounting Standards Board finalized SFAS No. 141,
Business Combinations), and No. 142, Goodwill and Other Intangible Assets.  SFAS
No. 141 requires the use of the purchase method of accounting and prohibits the
use of the pooling-of-interests method of accounting for business combinations
initiated after June 30, 2001.  SFAS No. 141 also requires that the Company
recognize acquired intangible assets apart from goodwill if the acquired
intangible assets meet certain criteria.  SFAS No. 141 applies to all business
combinations initiated after June 30, 2001 and for purchase business
combinations completed on or after July 1, 2001.  It also requires, upon
adoption of SFAS No. 142, that the Company reclassify the carrying amounts of
intangible assets and goodwill based on the criteria in SFAS No. 141.

SFAS No. 142 requires, among other things, that companies no longer amortize
goodwill, but instead test goodwill for impairment at least annually.  In
addition, SFAS No.142 requires that the Company identify reporting units for the
purposes of assessing potential future impairments of goodwill, reassess the
useful lives of other existing recognized intangible assets, and cease
amortization of intangible assets with an indefinite useful life.  An intangible
asset with an indefinite useful life should be tested for impairment in
accordance with the guidance in SFAS No. 142.  SFAS No. 142 is required to be
applied in fiscal years beginning after December 15, 2001 to all goodwill and
other intangible assets recognized at that date, regardless of when those assets
were initially recognized.  SFAS No. 142 requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption.  The
Company is also required to reassess the useful lives of other intangible assets
within the first interim quarter after adoption of SFAS No. 142.

The Company's previous business combination (the acquisition of EVG) was
accounted for using the purchase method.  As of December 31 2001, the net
carrying of amount of goodwill remaining is $3,768,000.  Amortization expense
during 2001 was $1,368,100.  The Company will adopt SFAS No. 141 and SFAS No.
142 effective January 1, 2002, and as a result amortization of goodwill will
cease beginning in the first quarter of 2002.  As a result of a $4,711,800
goodwill write-down recorded as of December 31, 2001, management does not expect
the adoption of SFAS No. 141 and SFAS No. 142 to have an adverse impact on the
Company's financial position and results of operations.

In August 2001, the FASB issued SFAS No. 143 Accounting for Obligations
Associated with the Retirement of Long-Lived Assets. SFAS No. 143 addresses
financial accounting and reporting for the retirement obligation of an asset.
SFAS No. 143 states that companies should recognize the asset retirement cost,
at its fair value, as part of the cost asset and classify the accrued amount as
a liability in the balance sheet. The asset retirement liability is then
accreted to the ultimate payout as interest expense. The initial measurement of
the liability would be subsequently updated for revised estimates of the
discounted cash outflows. SFAS No. 143 will be effective for fiscal years
beginning after June 15, 2002. The Company does not expect that the adoption of
SFAS No. 143 will have a material impact on its financial position, results of
operations, or cash flows.

In October 2001, the FASB issued SFAS No. 144 Accounting for the Impairment or
Disposal of Long-Lived Assets. SFAS 144 supersedes the SFAS No. 121 by requiring
that one accounting model to be used for long-lived assets to be disposed of by
sale, whether previously held and used or newly acquired, and by broadening the
presentation of discontinued operation to include more disposal transactions.
SFAS 144 will be effective for fiscal years beginning after December 15, 2001.
The Company does not expect that the adoption of  the SFAS No. 144 will have a
material impact on its financial position, results of operations, or cash flows.


                                      F-13
<PAGE>
Reclassifications

Certain prior year amounts in the accompanying consolidated financial statements
have been reclassified to conform to the current year presentation.

Earnings  Per  Common  Share

During  1998,  the Company adopted the provisions of SFAS No. 128, Earnings Per
Share.  SFAS No. 128 provides for the calculation of basic and diluted earnings
per  share.  Basic earnings per share includes no dilution and is computed  by
dividing  income  available  to  common  stockholders  by the weighted-average
number  of  common  shares  outstanding  for  the period.  Diluted  earnings
per  share reflects the potential dilution of securities that  could  share  in
the earnings of an entity. For the years ended December 31, 2001 and 2000,
options  and warrants to purchase 29,748,937 and 30,008,629 shares of common
stock,  respectively,  were  excluded  from  computation of diluted earnings
per  share  since  their  effect  would  be  anti-dilutive.

2.   BUSINESS  ACQUISITION

On  December  20, 2000, the Company closed its acquisition of EVG. Based on
negotiations  between  the  parties  as  set  forth  in the merger agreement,
the  Company issued an aggregate of 14,984,000 shares of common  stock  (the
"Merger Shares") to the former shareholders of EVG in exchange for  all of the
outstanding stock of EVG. Also, 3,208,600 additional common  shares  of  the
Company  were  placed  in a twelve-month escrow account as   security for the
indemnification obligations of the former EVG shareholders by  the Company as
set forth in the merger agreement.  The shares were released from the escrow
account during December 2001.  EVG had no options  or  other  rights to purchase
its stock outstanding at the time of the  acquisition.  In  addition,  the
Company  agreed to assume and pay an  $800,000  liability  of  EVG  to Marco
Fine Arts (a corporation owned by Al Marco, the principal shareholder of EVG and
now our Chief Executive Officer) and assume certain lines of credit with a
balance of approximately $690,000 in the aggregate. The Company paid the
$800,000  from  its  working capital on December 21, 2000. Upon the acquisition
of EVG, the former shareholders of EVG  held  approximately  25%  of  the
Company's  common  stock.

The  acquisition  was accounted for as a purchase, with the assets acquired and
liabilities  assumed recorded at  estimated fair values at the date of
acquisition, and the results of EVG's operations  included in the Company's
financial statements from the date of acquisition.  The results of operations of
EVG for the period from December 20,  2000  through  December  31,  2000  were
insignificant. The  components  of  purchase  price  and  its  allocation  of
assets  and liabilities  of  EVG, and subsequent amortization  and write-down of
resulting goodwill are as  follows:


                                      F-14
<PAGE>
<TABLE>
<CAPTION>
Components of Purchase Price:                                      Original Purchase Price   Contingent Consideration     TOTAL
<S>                                                               <C>                        <C>                        <C>
BrightCube common stock (a)                                              14,984,000 shares            3,208,600 shares
Value of common stock (b)                                         $         0.52 per share   $          0.11 per share
                                                                  $              7,791,600   $                 353,000
Acquisition costs                                                                  160,000                           0
----------------------------------------------------------------  -------------------------  -------------------------  -----------
Total purchase price                                              $              7,951,700   $                 352,900  $8,304,600
----------------------------------------------------------------  -------------------------  -------------------------

EVG shareholders' deficiency (c)                                                                                         1,584,400
                                                                                                                        -----------

Excess of cost over net assets acquired                                                                                  9,889,000
Less:  Accumulated  amortization through                                                                                (1,409,200)
      December 31, 2001                                                                                                 -----------

                                                                                                                         8,479,800
Less: Impairment charge                                                                                                 (4,711,800)
                                                                                                                        -----------

Excess of cost over net assets acquired, net                                                                            $3,768,000
                                                                                                                        ===========

</TABLE>


          (a)  3,208,600  shares  of  stock were placed in a twelve-month escrow
               account  as  security  for the indemnification obligations of the
               former  EVG  shareholders to the Company. These contingent shares
               were  released  from escrow and included in the purchase price on
               December  20,  2001.

          (b)  The  $0.52  per  share  represents the average stock price of the
               Company  surrounding a few days before and after the terms of the
               EVG  acquisition were agreed to and announced (December 8, 2000).
               The  $0.11 per share represents the stock price of the Company on
               December  20, 2001, when the contingent shares were released from
               escrow.

          (c)  The  fair  value  of  assets  acquired  and  liabilities  assumed
               approximates  their  book value. These assets and liabilities are
               summarized  as  follows:

              Current  assets                                  $   317,900
              Property  and  equipment,  net                       165,200
              Other  assets                                         53,600
              -----------------------------------------------  ------------
              Total assets                                         536,700
              -----------------------------------------------  ------------
              Lines of credit due bank and related party           690,000
              Due to related party                                 800,000
              Other current liabilities                            631,100
              -----------------------------------------------  ------------
              Total liabilities                                  2,121,100
              -----------------------------------------------  ------------
              Shareholders' deficiency                         $(1,584,400)
                                                               ============


                                      F-15
<PAGE>
As discussed above in Note 1, the Company determined that the goodwill related
to a portion of the acquired operations from EVG, the Technology division's
Dealer Network, was impaired and the goodwill, in total, was written down to its
current estimated fair value of $3,768,000.

3.   PROPERTY  AND  EQUIPMENT

     A  summary  of  property  and  equipment  follows:

                                              December 31,
                                                 2001
            Computer and office equipment   $      571,600
            Furniture and Fixtures                  43,400
            Leasehold Improvements                 103,400
            ------------------------------  ---------------
                                                   718,400
            ------------------------------  ---------------
            Less accumulated depreciation         (409,100)
                                            $      309,300
            ==============================  ===============
Depreciation expense during the years ended December 31, 2001 and 2000 was
$245,500 and $234,400, respectively.

4.   ACCRUED  EXPENSES

     A  summary  of  accrued  expenses  follows:

                                  December 31, 2001
           ---------------------  -----------------
           Vacation               $         139,800
           Professional fees                 50,300
           Salaries and wages                 6,300
           Sales Tax                         10,300
           Other                             14,000
           ---------------------  -----------------
                                  $         220,700
           =====================  =================

5.   COMMITMENTS  AND  CONTINGENCIES

Leases

The Company leases its facility and certain equipment under operating leases
expiring on various years through December 2005. With the acquisition of EVG,
the facility in El Segundo, CA is leased from the Company's Chief


                                      F-16
<PAGE>
Executive Officer and  Shareholder,  for $13,120 per month, subject to 5% annual
increases (Note 12).  The  facility  leases  require  the Company to pay certain
maintenance  and  operating  expenses,  such  as  utilities, property  taxes and
insurance costs. Rent expense related to operating leases for the years ended
December 31, 2001 and 2000 was $258,200 and $98,100,  respectively.

A  summary  of  the  future  minimum  lease  payments  required  under
non-cancelable  operating  leases  with  terms  in excess of one year, follows:

           Years  ending  December  31,       Amount
           -----------------------------  ----------
           2002                             $186,200
           2003                              185,700
           2004                              111,700
           2005                                4,200
           -----------------------------  ----------
           Future minimum lease payments    $487,800
           -----------------------------  ==========


Employment  Agreements

In  May 2000, the Company entered into an employment agreement with an
officer/director  to  serve  as  Vice  Chairman  and  Chairman of the Executive
Committee.  The  agreement term is until April 2002 and provides for a base
salary  of  $240,000 and a bonus of at least 25% of base salary based  on
meeting  certain  financial  goals.  The Company did not meet these goals in
either 2000 or 2001.

In July 2000, the Company entered into an employment agreement with an officer,
expiring July 2003, to serve as President and Chief Operating Officer.  The
agreement  provides  for his nomination to the Board of Directors,  an  annual
base salary of $240,000 and the granting of an option  to purchase 1,500,000
shares of common stock. In February 2001, the  Company  entered  into  a
Separation and General Release Agreement under which  this executive terminated
his employment and immediately vested options  to  purchase  500,000  shares  of
common stock at an exercise price  of  $1.38 per share.  The contractual life of
these options was extended for two years, and as such, will expire in January
2003.  The original option grant, based on his July 2000 employment contract,
was for 1,500,000 options vesting over three years.   As of February 2001, he
had vested in approximately 250,000 shares of his option grant, and therefore,
the Separation and General Release Agreement resulted in the accelerated vesting
of 250,000 additional options.  For accounting purposes, the Company treated the
accelerated options as a new grant to a non-employee resulting in additional
expense of $65,400 under SFAS No. 123.

In  December  2000,  the  Company entered into an employment agreement with  an
officer to serve as Chief Executive Officer, reporting to the Board  of
Directors  for  a  period  of  three  years. The employment agreement  provides
that the officer receives an annual base salary of $240,000  and a discretionary
bonus based  on whether certain  revenue levels attained  by the Company in
2001. If such targets are met, the officer will  have  the option of either (i)
a bonus of 100% of Base Salary in cash  or  (ii)  a  stock  option grant for the
number of shares of the Company's  common  stock  equal  to 120% of Base Salary
divided by the average  closing  stock  price.  The Company did not meet the
criteria necessary for the bonus in 2001 and no such bonus was accrued or paid.
The  officer was granted an option to purchase  1,500,000  shares  of the Common
Stock, at an exercise price equal  to  $0.34 per share, vesting  over  three
years.


                                      F-17
<PAGE>
In  December  2000, the Company entered into two employment agreements with
substantially  the  same terms with two officers. The employment agreements are
for three years. The employment agreement provides that the  officers  will
receive an annual  base  salary  of  $100,000 each  and a discretionary  bonus
based  on  certain revenue levels attained by the  Company  in  2001.  The
officer  will have the option of either (i) a bonus  of 100% of Base Salary in
cash or (ii) a stock option grant for the  number  of  shares of the Company's
Common Stock equal to 120% of Base  Salary  divided by the average closing stock
price. The Company did not meet the criteria necessary for the bonus in 2001,
and no such bonus was accrued or paid. The officers were  granted  an option to
purchase 500,000 shares of the Common Stock at  an  exercise  price  of  $0.34
per share,  vesting  over  three  years.

In  November 2001, the Company entered into an employment agreement with an
officer with substantially  the  same terms as the agreements with the two
officers referred to above. The employment agreement is for three years. The
employment agreement provides that the officer  will  receive an annual  base
salary  of  $100,000  and a discretionary  bonus  based  on  certain revenue
levels attained by the  Company  in  2001.  The  officer  will have the option
of either (i) a bonus  of 100% of Base Salary in cash or (ii) a stock option
grant for the  number  of  shares of the Company's Common Stock equal to 120% of
Base  Salary  divided by the average closing stock price. The Company did not
meet the criteria necessary for the bonus in 2001, and no such bonus was accrued
or paid.  The officer was granted  an option to purchase 500,000 shares of the
Common Stock at  an  exercise  price  of  $0.34 per share,  vesting  over  three
years.

6.   LEGAL  MATTERS

In January 2000, a plaintiff filed an action against the Company alleging breach
of contract arising out of a lease agreement for office space.  During May 2001,
the Company settled with the plaintiff for $174,000, of which $20,000 was paid
in May 2001 and $154,000 was paid in July 2001.  The $174,000 estimated
settlement amount was included in accrued expenses as of December 31, 2000.

In September 2001, the Company entered into a settlement agreement and general
release relating to claims by a stockholder regarding his purchase of the
Company's stock in a non-public transaction. The Company agreed to register for
resale certain shares held by that stockholder, and the Company paid the
stockholder $100,000 to settle the claim without admitting fault.

7.   DEBT  AGREEMENTS

In  connection  with the acquisition of EVG on December 20, 2000 (Note 2),  the
Company  refinanced  a  $690,000 bank loan assumed from EVG.  Under  the
refinanced  terms, the $690,000 loan is due in twenty-four monthly  principal


                                      F-18
<PAGE>
payments of $28,800 plus interest at the prime rate (4.75%  at  December  31,
2001)  plus 1.25% through December 2002.  The refinanced  terms  also require
that the Company maintain minimum cash balances  of  at least 1.75 times the
current principal balance of the loan.  Should  the  cash  balance  fall  below
the  minimum  cash requirements,  an  amount  equal  to the principal balance
will become restricted.  In April 2001, the bank informed the Company that it
was out of compliance with this loan covenant.  As a result, the bank
transferred $517,500 into a restricted account.  Once the Company's cash
balances exceed the minimum requirements, the funds will be released.  As of
December 31, 2001, the Company's loan balance was $345,000.  As required by the
Company's  loan covenant, $345,000 was held in a restricted account as of
December 31, 2001 as collateral for repayment of the loan.

During July 2001, the Company obtained a Bridge Loan from one of the
stockholders, Intellect Capital Group (ICG), in the amount of $500,000 at an 8%
interest rate.  The funds were used for general working capital purposes and had
a 15 day demand notice call provision.  On August 14, 2001 the Company
negotiated a forbearance agreement with ICG providing  the Company with a 30 day
period commencing July 16, 2001 during which ICG would not call the loan.  In
return, the Company agreed to provide ICG with a warrant to purchase 1,875,000
shares of common stock at a purchase price of $0.30.  The warrant includes a
provision for cashless exercise.  The Company has determined the fair value of
these warrants to be $475,000 based on the Black Scholes model and recorded this
amount in the statement of operations as interest expense. The assumptions used
in the Black Scholes model were as follows: no dividend yield, expected
volatility of 132%, risk free interest rate of 5% and expected life of five
years.  At December 31, 2001, the balance of this bridge loan was $500,000.  The
bridge loan was subsequently amended in February 2002 (see Note 16).

8.   SHAREHOLDERS'  EQUITY

Preferred  Stock

Upon the reverse acquisition and reorganization referred to in Note 1, the
Company authorized 500,000 shares of Preferred Stock, which may be issued in one
or more series. The Preferred Stock can be issued with such rights, preferences,
and designations as determined by the Board of Directors.

In March 2000, the Company obtained financing of $980,500, net of issuance costs
of $79,500, through the issuance of 106 shares of Series A convertible preferred
stock to investors. The Company also issued warrants to purchase an aggregate of
185,500 shares of common stock with an exercise price of $3.30, expiring March
2005. The preferred stock was convertible into shares of the Company's common
stock, based on the number of days from the issuance date through the conversion
date, and the conversion price, which is the lower of $2.65 per share or 80% of
the average market price for the Company's common stock for the last five
trading days immediately preceding the date of conversion. In June 2000, the
Company redeemed all 106 shares of Series A convertible preferred stock by
paying an aggregate of $1,272,000 and issuing warrants to purchase an aggregate
of 80,140 shares of common stock at an exercise price of $3.30 per share. The
Company recorded a deemed dividend of $357,000 for the $212,000 cash premium
paid by the Company to redeem the stock and the $145,000 fair value of the
warrants.


                                      F-19
<PAGE>
In June 2000, the Company issued 900 shares of Series B convertible preferred
stock to an investor for proceeds of $9,000. The Series B convertible preferred
stock was convertible, on or before July 8, 2000, into 50% of the Company's
shares of common stock on a fully-diluted basis, following such conversion. In
July 2000, the Series B convertible preferred stock was exchanged for 27,914,023
shares of common stock and warrants to purchase 11,900,000 shares of common
stock at an exercise price of $1.65 per share. The warrants can be exchanged for
5,950,000 shares of common stock (a two-for-one basis) after December 8, 2000.
This transaction has been recorded as a stock issuance cost for the subsequent
May 2000 private placement of common stock.

Common  Stock

In July 2000, the Company's Board of Directors increased the number of
authorized  shares  of  common  stock  to  200,000,000.

From May 2000 through July 2000, the Company issued 10,646,600 shares in a
private placement of common stock and three-year warrants to purchase 5,323,300
shares of common stock at an exercise price of $1.65 per share for proceeds of
$12,218,800, net of stock issuance costs of $1,089,200. In connection with the
private placement, 28,000 shares of common stock and three-year warrants to
purchase 1,221,000 shares of common stock at an exercise price of $1.65 per
share were issued as investor referral fees. The 28,000 shares of common stock
and the 1,221,000 three-year warrants issued as fees have an aggregate value of
$1,263,000 and are considered a stock issuance cost.

In May 2000, the Company entered into a service agreement with a company to
provide investor relation services over a six-month period. Based on the fair
market value of the Company's common stock, 37,500 shares of common stock were
issued to the consultant in lieu of $75,000 in fees, which has been recorded as
compensation cost. In addition, warrants to purchase 100,000 shares of common
stock at exercise prices ranging from $2.75 to $4.50 were issued. The warrants
vested immediately, and their $157,800 value was recorded as compensation cost.
In November 2000, the Company entered into a new investor relations service
agreement. The new agreement provided for the issuance of 200,000 shares of
common stock, payment of $100,000 and the issuance of warrants to purchase
200,000 shares of common stock at exercise prices ranging from $2.75 to $4.50 in
exchange for investor relations services to be provided over a six month period.
The shares and warrants vested immediately and are non-refundable, resulting in
a measurement date upon the execution of the agreement and valuation of $237,500
and $178,000, respectively. The values of these shares and warrants were
amortized over the six month term of the agreement, resulting in deferred
compensation cost of $178,100 and $133,500 and compensation expense of $59,400
and $44,500 relating to the shares and warrants, respectively.

In December 2000, the Company acquired all of EVG's common stock in exchange for
18,192,600  restricted  common shares of which 3,208,600 shares were placed in a
twelve-month  escrow  account as security for the indemnification obligations of
the  former  EVG  shareholders  (see Note 2) and subsequently released in
December 2001.

In January 2001 and June 2001, the Company issued 500,000 shares of common stock
upon the exercise of warrants. The exercise price was $0.10 per share, and the
Company received $50,000 upon exercise.  In June 2001, the Company issued 500
shares of common stock upon the exercise of options.  The Company received $200
upon exercise.


                                      F-20
<PAGE>
In August 2001, the Company accepted $1,350,000 in new equity investment from
several accredited investors and issued 6,750,000 shares of common stock.  Stock
issuance costs relating to this equity financing were $43,100 which have been
recorded as a reduction of total proceeds received. The Company filed a
registration statement with the Securities and Exchange Commission in November
2001 to register these shares.

During July 2001, the Company entered into a six month contract with an investor
relations firm, which required the Company to issue 173,333 shares of common
stock and a warrant to purchase up to 200,000 shares of common stock at an
exercise price of $0.50 for 100,000 shares and $0.75 for 100,000 shares. The
common stock warrants have piggyback registration rights and are non-forfeitable
and vest immediately. The 100,000 warrants at $0.50 are entitled to demand
registration rights should the Company's stock price exceed $1.00 per share. The
fair value of the shares and warrants totaled $80,900 which was expensed in the
statement of operations over the six month term of the contract.

Stock  Purchase  Warrants

In  September  1999,  the  Company issued warrants to purchase 350,000 shares
of  common  stock  at an exercise price of $2.31 in connection with  a  services
agreement.  175,000  of  these  warrants  vested immediately,  resulting  in
deferred  compensation  cost of $218,800, which  was  amortized  over  the  one
year term of the agreement. The remaining 175,000 warrants vested during 2000
resulting in $309,800 in compensation  expense,  of  which  $139,500  related to
those warrants vesting  during  2000 and was originally recorded as deferred
compensation  cost.

In  November  1999,  the Company  issued warrants to purchase 500,000 shares  of
common  stock  at an exercise price of $1.01 in connection with  a  service
agreement  with  a consultant. These warrants vested immediately,  resulting  in
deferred  compensation  cost of $585,000, which was being amortized over the six
month term of the agreement. In April  2000, the Company repriced these warrants
to $0.10 and recorded $85,000  in  compensation  expense. In December 2000,
220,000 of these warrants  were  exercised.  In  January 2001, an additional
100,000 of these  warrants  were  exercised.

In  March  2000,  the  Company  sold 400,000 warrants with an exercise price  of
$0.10  to an investor for proceeds of $10,000. The warrants became exercisable
in May 2000 and were  exercised during 2001.

In April 2000, the Company granted warrants to purchase 200,000 shares  of
common  stock  to  a consultant at an exercise price of $0.10, and granted
warrants  to  purchase  100,000 shares of common stock to the same  consultant
at  an  exercise price of $1.00. The warrants expire April  2005  and vested
during the second quarter of 2000 resulting in $682,000  in  compensation
expense in 2000.

In  July  2000,  the  Company  issued  three year warrants to purchase 300,000
shares  of  common  stock  at  an  exercise price of $1.65 in settlement  of a
dispute relating to a binding letter of intent for an equity  financing.  The
$378,000  fair  value of the warrant was recorded  as  stock  based
compensation  expense in 2000.


                                      F-21
<PAGE>
As further discussed in Note 7 and 16, on August 14, 2001 in connection with a
bridge loan, the Company issued a warrant to ICG to purchase 1,875,000 shares of
common stock at a purchase price of $0.30.  The warrant includes a provision for
cashless exercise.  During February 2002, the warrant was repriced to $0.09 per
share.

In August 2001, the Company entered into a financial advisory and investment
banking agreement with vFinance Investments, LLC (vFinance) to help raise money
for the Company for a one year period ending August 2002. The contract with
vFinance for financial advisory services required the Company to issue a warrant
for the purchase of 200,000 shares of common stock at an exercise per of $0.27
per share, non-forfeitable, vesting immediately, with a term of five years,
piggyback registration rights and a provision for cashless exercise.  The fair
value of the warrant was $56,700 which is being expensed in the statement of
operations over the one year period of the agreement to provide financial
advisory services.

A summary of the activity of the Company's outstanding warrants during 2001 and
2000 follows:

<TABLE>
<CAPTION>

                            Warrants Outstanding

                  December 31, 2001                 December 31, 2000
                           Weighted-Average                Weighted-Average
            Shares          Exercise Price      Shares     Exercise Price
<S>        <C>                 <C>                 <C>          <C>
Beginning    20,605,940   $             1.63     916,000   $          1.05
Granted       2,275,000   $             0.15  19,909,940   $          1.64
Exercised      (500,000)  $             0.10    (220,000)  $          0.10
           -------------                      -----------
Ending       22,380,940   $             1.52  20,605,940   $          1.63
---------  =============  ------------------  ===========  ---------------

</TABLE>

The  weighted  average fair value of warrants granted in 2001 and 2000 was
$0.24 and  $1.23,  respectively.

As  of  December  31,  2001,  the following common stock warrants were issued,
outstanding  and  exercisable:

<TABLE>
<CAPTION>
                           Shares
                          subject    Exercise    Fair     Expiration
                         to warrant    price    Value        Date
<S>                      <C>         <C>        <C>     <C>
Issued with respect to:
Services agreement          350,000  $    2.31  $ 1.52  September 2004
Services agreement          180,000       0.10    1.17  November 2004
Issuance of common
stock                        66,000       1.53    1.21  December 2004
Issuance of preferred
stock
and redemption of
previous
warrants                    265,640       3.30    1.81  May  2005
Services Agreement          200,000       0.10    2.33  April  2005
Services Agreement          100,000       1.00    2.16  April  2005
Conversion of


                                      F-22
<PAGE>
preferred stock          11,900,000       1.65    1.26  December  2005
Settlement  Agreement       300,000       1.65    1.26  June 2003
Issuance of common
stock                     6,544,300       1.65    1.01  May-July  2003
Services  Agreement          50,000       2.75    0.92  December  2002
Services Agreement           50,000       3.25    0.90  December  2002
Services Agreement           50,000       4.00    0.88  December  2002
Services Agreement           50,000       4.50    0.86  December  2002
Bridge Loan               1,875,000       0.30    0.25  August 2006
Services Agreement          200,000       0.27    0.28  October 2003
Services Agreement          100,000       0.75    0.14  October 2003
Services Agreement          100,000       0.50    0.16  October 2003
-----------------------  ----------  ---------  ------  --------------
Total                    22,380,940  $    1.53
-----------------------  ----------  ---------  ------  --------------
</TABLE>

The  Company estimates the fair value of warrants at the grant date by using
the  Black-Scholes  option  pricing-model  with  the  following weighted-average
assumptions  used  for  the grants in 2001 and 2000, respectively:  dividend
yield  of  0; expected volatility of 128% and 199%;  risk-free  interest rate of
5.0% and 6.5%; and an expected life of five  years  for  all  warrants.

Stock  Options

In March 1999, the Company adopted a stock option plan for its  employees,
directors,  and  consultants. This Plan was amended in June  1999  and
subsequently  in  December 2000. In April 2001, the Company adopted a new stock
option plan ("the Plan").  The plan has not yet been formally approved by
shareholders and therefore no options granted under the plan are exercisable.
The number of shares authorized  for  options  under all plans were 13,750,000.
In March 2002, the Company's Board of Directors voted to increase the total
options available for issuance to 20,000,000, subject to shareholder approval.
As of December 31, 2001 there were 6,382,003 options available for grant,  prior
to the increase of available options to 20,000,000. Options are exercisable  as
determined  by  the Board of Directors on the date of grant  and expire not more
than ten years after the date of grant. The Company  applies  Accounting
Principles Board (APB) No. 25, Accounting for  Stock  Issued  to  Employees,
and  Related  Interpretations  in Accounting  for  Stock  Options Issued to
Employees. Under APB Opinion No.  25,  employee  compensation cost is recognized
when the estimated fair  value  of  the  underlying  stock  on  date of grant
exceeds the exercise  price  of  the  stock option. For stock options and
warrants issued  to non-employees, the Company applies SFAS No. 123, Accounting
for  Stock-Based  Compensation,  which  requires  the  recognition  of
compensation  cost  based  upon the fair value of stock options at the grant
date  using  the  Black-Scholes  option  pricing  model.

A  summary  of  the  status  of  the Company's stock option plan as of December
31,  2001  and  2000 and changes during the years then ended is presented  in
the  following  table:


                                      F-23
<PAGE>
<TABLE>
<CAPTION>
                                OPTIONS OUTSTANDING

                               December 31, 2001          December 31, 2000
                                        Wtd.-Avg.                  Wtd.-Avg.
                            Shares     Exer. Price     Shares     Exer. Price
<S>                      <C>           <C>           <C>          <C>
Beginning                  9,402,689   $       1.04   3,641,501   $       0.75
Granted                    2,050,000   $       0.46   7,237,018   $       1.28
Exercised                       (500)  $       0.48     (81,432)  $       0.53
Canceled                  (4,084,192)  $       1.33  (1,394,398)  $       1.50
                         ------------                -----------
Ending                     7,367,997   $       0.72   9,402,689   $       1.04
                         ============                ===========
Exercisable at
year-end                   3,047,260   $       0.78   2,488,404   $       0.92
-----------------------  ------------                -----------

Wtd.-avg. fair value of
options
granted during the year  $      0.11                              $       0.29
</TABLE>


During 2001, $65,400 in non-employee  compensation expense was recorded in
connection with a Separation and General Release Agreement entered into with a
former employee.  During  the  year ended December 31, 2000, the Company granted
140,000 options  to  non-employees,  resulting  in  compensation  expense  of
$29,100.  The  Company  estimates the fair value of non-employee stock options
at  the  grant  date  by  using  the  Black-Scholes  option pricing-model with
the following weighted average assumptions used for grants  in  2001 and 2000,
respectively: no dividend yield, expected volatility  of  128%  and 215%; risk
free interest rate of 5.0% and 6.5%; and  expected  life  of  four and  five
years.  Additionally,  the  Company granted 475,000 below-market price options
to  employees in 2000,  resulting  in  compensation  expense  of  $370,500 and
$115,700 during 2001 and  2000, respectively.

During fiscal 2001, the Company did not grant any stock options with exercise
prices that were less than the quoted market price of the Company's common
stock.  A summary of stock option grants with exercise prices equal to or less
than the estimated fair market value on the date of grant during the year ended
December 31, 2000 is as follows:

<TABLE>
<CAPTION>
                                                          Weighted Avg Exer  Weighted Avg Fair
                                       Options Granted         Price         Value of Options
<S>                                   <C>                <C>                 <C>
Fiscal 2000
Grants with exercise price above
  estimated fair market value                   654,112  $             3.38  $            2.98
Grants with exercise price equal
  to fair market value                        4,660,906                0.91               0.83
Grants with exercise price less than
  estimated fair market value or less         1,922,000                1.40               1.77
                                      -----------------
                                              7,237,018
                                      =================
</TABLE>

The  following  table  summarizes  information  about  stock  options
outstanding  as  of  December  31,  2001:


                                      F-24
<PAGE>
<TABLE>
<CAPTION>

                     Options Outstanding                                Options Exercisable

                      Weighted -Average                                  Weighted -Average

Range of Exercise                          Remaining                            Number
      Prices        Number Outstanding  Contractual Life        Price        Outstanding   Exercise Price
<S>                 <C>                 <C>               <C>           <C>             <C>

0.34                         3,000,000       9.04  years  $       0.34         958,333              $0.34
0.44-.50                     3,173,349        3.72 years          0.27       1,545,308               0.27
0.84-1.375                     579,970         8.6 years          1.35         265,217               1.35
1.50-2.00                       60,666        8.30 years          1.62          28,195               1.62
2.125-2.80                     100,000        8.50 years          2.59          50,000               2.59
3.40                           454,012        8.24 years          3.44         200,207               3.44
                          ------------                                     -----------
                             7,367,997        6.65 years          0.65       3,047,260               0.65
                          ============                                     ===========
</TABLE>

While the Company continues to apply APB Opinion No. 25, SFAS No. 123,
Accounting  for  Stock-Based  Compensation,  requires  the  Company to provide
pro  forma  information  regarding  net loss as if compensation  cost  for  the
Company's  stock  option  plans had been determined  in  accordance with the
fair value based method prescribed by  SFAS  No.  123.  The  Company estimates
the fair value of employee stock  options  at  the  grant  date by using the
Black-Scholes option pricing-model with the following weighted-average
assumptions used for the grants in 2001 and 2000, respectively: no dividend
yield, expected volatility  of 128% and 215%; risk-free interest rate of 5.0%
and 6.5%; and  an  expected  lives of  four and  five  years.

Under  the  accounting  provisions  of SFAS No. 123, the Company's net loss
available to  common  shareholders and net loss per share would have  been
increased  to  the  pro  forma  amounts  indicated  below:


                                            Years ended
                                  December 31,        December 31,
                                      2001               2000

                                 Net loss allocable to common shareholders:
                 As reported     $ (11,828,300)     $  (11,431,300)
            -------------------------------------------------------

                 Pro forma       $ (13,757,800)     $  (12,367,500)
                 --------------------------------------------------

                 Basic and diluted loss per share:
                 As  reported    $       (0.17)     $       (0.35)
                 Pro forma       $       (0.20)     $       (0.38)
                                 --------------     --------------


9.  INCOME  TAXES

For  the  years  ended  December  31,  2001  and 2000, income tax expense
consists of the $800 California state minimum taxes for each entity.  In 2000,
this amount is included in loss from discontinued operations in the consolidated
statement of operations.


                                      F-25
<PAGE>
The  following  summarizes  the  differences between the income tax expense and
the amount computed by applying the Federal income tax rate of  34%  in  2001
and  2000  to  loss  before  income  taxes:

<TABLE>
<CAPTION>
     Years ended December 31,                                   2001         2000
<S>                                                       <C>            <C>
     Federal income tax at statutory rate                 $ (4,020,800)  $(3,718,200)
     State income taxes, net of federal                       (709,600)     (635,200)
     Benefit
     Compensation  associated  with                            272,800     1,435,500
      Warrant/stock  option  grants
     Increase in valuation                                   2,021,200     2,634,700
     allowance Non-deductible  expense  and
     other,  net                                             2,438,800       284,000
                                                          -------------  ------------

     State Taxes                                          $      2,400   $       800
                                                          =============  ============
</TABLE>

Deferred  tax  assets  (liabilities)  comprise  the  following:



                                        December 31, 2001
    ----------------------------------  ------------------
    Loss carryfowards                          $6,802,700
    Reserves not currently deductible              86,700
    Depreciation                                   (2,000)
                                        ------------------
                                                6,887,400
    Valuation allowance                        (6,887,400)
    ----------------------------------  ------------------
    Net deferred tax asset                     $   ------
    ----------------------------------  ------------------


The Company has placed a valuation allowance against its gross deferred tax
assets  due  to the uncertainty surrounding the realization of such assets.

As  of December 31, 2001, the Company has net operating loss carry forwards
available  to  reduce  future  taxable  income,  if  any,  of approximately
$18,465,300 and  $8,741,200 for Federal and California state tax purposes,
respectively. The benefits from these carryforwards expire in various years
through  2021.

Pursuant  to  the "change in ownership" provisions of the Tax Reform Act of
1986,  utilization  of  the  Company's  net operating loss carryover may be
limited, if a cumulative change of ownership of more than 50% occurs within any
three-year  period. The Company has not determined if such a change in ownership
has  occurred. An ownership change may have occurred as a result of the
transactions as described in Notes 2 and 8. However, the Company has not
determined  the  amount  of  the  loss  carryover  limitation, if any, resulting
from  these  transactions  or  any  prior  transaction.


                                      F-26
<PAGE>
10.  CONCENTRATIONS

Major  Customers

For the year ended December 31, 2001, no individual customer accounted for more
than 10% of net revenues.

During the year ended December 31, 2000, three customers accounted for 19%, 18%
and  14% of net revenues, respectively. As of December 31, 2000, these customers
accounted  for  52%  of  total  accounts  receivable.

Credit  Risk

Financial instruments that potentially subject the Company to concentration of
credit  risk  consist  principally  of  cash  and cash equivalents. The Company
places  its  cash and cash equivalents with high quality financial institutions.
As  of  December  31,  2001, the Company had deposits with financial
institutions, including restricted cash,  that  aggregated  $582,200,  of  which
$100,000  is insured by the Federal Deposit Insurance  Corporation.

11.  STATEMENTS  OF  CASH  FLOWS

During  the  year  ended  December  31,  2001  the  Company paid $46,800 for
interest  and  $2,400  for  income  taxes. During the year ended December 31,
2000,  the  Company  paid  $9,500 for interest and $800 for income taxes.
During the year ended December 31, 2001, non-cash financing activities consisted
of the following:  the issuance of  189,417 shares of common stock and warrants
to purchase 400,000 shares of common stock in exchange for services; and the
performance of web site development services for $182,500 worth of advertising
and trade show credits. During  the  year  ended  December  31, 2000, non-cash
financing activities consisted  of  the following: the issuance of 32,500 shares
of common stock in exchange for accrued expenses totaling $15,600; the issuance
of warrants to  purchase an aggregate of 11,900,000 shares of common stock
exchangeable on  a  two for one basis for common stock; the issuance of 28,000
shares of common  stock and warrants to purchase 1,221,000 shares of common
stock for fees  relating  to the private placement of common stock; a deemed
dividend of  $357,000 on the redemption of Series A Preferred Stock; the
issuance of 237,500  shares  of common stock in exchange for services; and the
issuance of  14,984,000  shares  of common stock in exchange for EVG's common
stock.

12.  RELATED  PARTY  TRANSACTIONS

In July 2000, the Company paid one of its stockholders Intellect Capital Group
LLC (ICG) fees of approximately $630,000 in connection with a private placement
of the Company's common stock.  These fees were based on the Stock Purchase
Agreement entered into between the Company and ICG on June 8, 2000 under which
ICG purchased 900 shares of Series B Convertible Preferred Stock (Note 8).  This
transaction occurred before ICG owned any common stock of the Company.

During July 2001, the Company obtained a bridge loan from ICG in the amount of
$500,000 at an annual 8% interest rate (see Note 7). The bridge loan had a 15
day demand notice call provision. On July 14, 2001, the Company negotiated a
forbearance agreement with ICG that provided the Company with a 30 day period


                                      F-27
<PAGE>
commencing July 16, 2001 during which ICG would not call the loan.  In exchange
for this, the Company issued 1,875,000 warrants to purchase shares of the
Company's common stock at a purchase price of $0.30 and included a provision for
cashless exercise.  As further discussed in Note 16, an amendment to the Bridge
Loan was executed in February 2002, which resulted in an increase in the
interest rate to 12%, the issuance of a warrant to purchase 500,000 additional
shares at an exercise price of $0.09 and the repricing of the original 1,875,000
warrants from $0.30 to $0.09 per share.

Al Marco, the former majority owner of EVG and current minority shareholder of
the Company, is a majority owner of Marco Fine Arts ("MFA"). Pursuant to the
acquisition of EVG on December 20, 2000, the Company has assumed a non-interest
bearing loan of $800,000 owed by EVG to MFA and a $12,000 loan from one of its
minority  shareholders. The entire balance of both loans were repaid on December
21, 2000 and January 10, 2001, respectively. In connection with the acquisition
of EVG, the Company acquired $100,000 of promotional art prints previously
contributed to EVG by MFA for use in future promotions. This amount was included
in prepaid expenses and other current assets at December 31, 2000.  During 2001,
due to a change in strategy to no longer utilize these promotional art prints as
a promotional tool, the prepaid amounts related to these promotional art prints
lost their value and were subsequently written off.

In September 2001, the Company entered into a settlement agreement and general
release relating to claims against us from a third party that also provided a
benefit to our Board of Directors.

As of December 31, 2001, the Company owed $104,500 to ICG, a minority
shareholder, for interest on the bridge loan from ICG and expenses paid by ICG
on the Company's behalf.  This amount is included in the payable to
shareholders.

Al Marco, the Company's CEO and minority shareholder, owns the building occupied
by the Company in El Segundo, California. The Company paid $128,700 in rent to
Al Marco during 2001.  As of December 31, 2001, the Company owed Al Marco
$11,400 for rent, including the 5% increase adjustment.

During 2001, the Company paid $133,900 to Marco Fine Arts, a company owned by Al
Marco, the Company's CEO.  This payment related to various operating expenses
paid on the Company's behalf by Marco Fine Arts.   As of December 31, 2001, the
Company owed Marco Fine Arts $4,600.

In January 2002, the Company entered into an independent contractor agreement
with one of its directors whereby the Company will receive business development,
marketing and product development services over a one-year period (Note 16).

13.   SEGMENT INFORMATION

The Company has two reportable segments:  Technology and Consumables.  See Note
14, Discontinued Operations and Asset Sale below.  Technology, previously
referred to as Dealer Network, provides marketing and Internet solutions to a
network of independent frame shops and art galleries around the country, in
addition to the BrightCube Solution, which distributes art images via the
internet for print on demand by its customers.   The Consumables unit develops
and distributes a line of proprietary digital inkjet papers.   Since the
Company's Board of Directors decided to discontinue its ASP Service operations
in May 2001, the ASP Services division is no longer a reportable segment.


                                      F-28
<PAGE>
The accounting policies of the segments are the same as those described in the
summary of significant accounting policies.  The Company evaluates segment
performance based on income or loss before income taxes, not including
nonrecurring gains or losses. Inter-segment transfers between reportable
segments have been insignificant. Expenses that are incurred for the benefit of
all of the business segments and that are not directly attributable to one
business line, such as administrative overhead, are allocated to each segment
based on that segment's share of the consolidated revenues.  During the  year
ended  December 31, 2001, the Company reduced the allocation of general and
administrative expenses to the ASP Services division as this division was
discontinued.  As the majority of these  general and administrative expenses
will not be reduced with this discontinuation, the expenses are being allocated
to the remaining operating divisions.  The Company's reportable segments are
strategic business units that offer different products and services.  They are
managed separately because each business requires different technologies or
products and marketing strategies.


The following table presents information about reported segment loss and segment
assets for the  year ended December 31, 2001:

<TABLE>
<CAPTION>
                                          TECHNOLOGY    CONSUMABLES       TOTAL
<S>                                      <C>           <C>            <C>
Revenues from external customers         $   435,600   $  1,132,400   $  1,568,000
Interest income                                7,400         19,300         26,700
Interest and other expense                   124,600        417,600        542,200
Depreciation                                  56,500        189,000        245,500
Segment loss from continuing operations   (6,235,900)    (5,207,000)   (11,442,900)
Segment assets                             1,892,900      3,670,800      5,563,700
Expenditures for segment assets               18,200         27,400         45,600
</TABLE>


The total of reported segment revenues, loss before income taxes and total
assets equals the Company's consolidated totals except amounts included under
discontinued operations.  Prior to the year ended December 31, 2001, the Company
only operated in one business segment, which was discontinued in 2001.

14.     DISCONTINUED OPERATIONS AND ASSET SALE

During May 2001 the Company's Board of Directors decided to either sell or close
the operations of the Company's ASP Services division.   In October 2001
Brightcube entered into an asset purchase agreement to sell this division.  This
transaction closed during November  2001, and the Company received $1,020,000 in
cash at closing.  An additional $180,000 is being held in escrow for 14 months
but is not included in the gain from the sale of  the operations due to the
uncertainty of collections.

A calculation of the gain from the sale of the ASP Services division assets is
as follows:

Sales Price                                           $  1,020,000

Net Book Value of Assets Sold                             (203,900)

Loss from operations from May to October 2001             (223,000)
                                                      -------------
Gain                                                  $    593,100
                                                      =============

                                      F-29
<PAGE>
The operating results of this discontinued operation for 2001 are as follows:
<TABLE>
<CAPTION>

                           Year ended  December 31,
                             2001           2000
<S>                      <C>           <C>
Net Sales                $   505,800   $     481,000
                         ------------  --------------
Gross Profit                 310,900          94,600
                         ------------  --------------
(Loss) from Operations      (223,000)    (11,268,500)
                         ------------  --------------
NET (Loss)               $  (385,400)  $ (11,074,300)
                         ------------
</TABLE>


15.     BARTER TRANSACTION

During the fourth quarter of 2001, the Company entered into a barter agreement
with an unrelated party whereby the Company agreed to develop and maintain two
web sites in return for magazine advertisement and trade show booth space
credits.  The Company has valued this transaction based on the estimated fair
value of the services received of $182,500.  As a result of this transaction,
the Company recorded $161,200 in prepaid advertising and $63,500 in deferred
revenue as of December 31, 2001.  During the year ended December 31, 2001, the
Company recognized $119,000 in other income for web site development services
provided and $21,300 in advertising expense for trade show space utilized
related to this barter agreement.

16. SUBSEQUENT EVENTS

In January 2002, the Company entered into a consulting agreement with one of its
Directors,   for a twelve month period.  In exchange for business development,
marketing, and product development consulting services, this Director will be
paid $2,500 per month as base consulting fees for services in regards to the
Company's OEM paper sales and $2,500 per month as a draw against future
commissions.  Additionally, the Director is to receive 1% to 3% commissions on
paper sales to large customers based on his efforts.  The Director also was
granted non-qualified options to purchase 350,000 shares of Common Stock at an
exercise price of $0.11 per share in the Company.  50% of these options vest
immediately upon issuance and the remaining 50% vest evenly over two years.  In
accordance with SFAS No. 123, the value of the 350,000 options will be recorded
as compensation expense over the one year term of the agreement, with the value
attributable to the initial 175,000 options vesting immediately of $22,900 being
recorded during the first quarter of 2002 and the value of the remaining 175,000
options being recorded over the one year life of the contract,  subject to
variable accounting rules, until final measurement occurs over the two-year
vesting period.

In February and March 2002, on two closing dates with the same terms, the
Company obtained  $1,325,000, less financing and bank fees of $185,350, from a
bridge loan from outside investors through a placement agent, vFinance
Investments, Inc, (the "Bridge").  The Bridge consisted of 26.5 Units (each unit
("Unit") consisting of a 12% nine-month Promissory Note in the principal amount
of $50,000 (the "Notes") and 50,000 five-year Common Stock purchase warrants


                                      F-30
<PAGE>
exercisable at $0.09 per share; pursuant to a Subscription Agreement dated
January 25, 2002 by and among the Company and certain investors (the
"Investors") (the "Subscription Agreement").  Additionally, under the terms of
the Subscription Agreement if the Notes are not repaid within 9-months, the
Company will issue to holders of any Notes then outstanding a total of 2,500,000
Common Stock purchase warrants exercisable at $0.06 per share per month past
due, up to a maximum of 10,000,000 Common Stock purchase warrants, (the "Penalty
Warrants").  The Company has determined the fair value of the 1,325,000 warrants
issued in connection with this 2002 Bridge to be $119,300 based on the Black
Scholes model, and will record this amount in the statement of operations as
interest expense over the nine-month term of the loan.  The assumptions used in
the Black Scholes model were as follows: no dividend yield, expected volatility
of 128%, risk free interest rate of 5% and expected life of five years.

In February 2002, in connection with the Bridge, ICG agreed to amend its earlier
bridge loan from July 2001 for $500,000 as follows: (i) ICG will subordinate its
repayment right and will have the right to receive up to $1 for every $2 paid to
the note holders under the Bridge unless the Bridge is repaid in full, and  (ii)
ICG will not exercise the ability under the Loan and Security Agreement and
Promissory Note, both dated July 16, 2001 by and between the Company and ICG,
for demand payment rights until the earlier of (a) November 30, 2002 or (b) the
Bridge is repaid in full.  In return the Company agreed to: (i) issue 500,000
Common Stock purchase warrants exercisable at $0.09 per share to ICG under the
same terms as the Note holders under the Bridge, (ii) lower the exercise price
of the previously issued 1,875,000 Common Stock purchase warrants from $.30 to
$.09 per share and (iii) allow ICG to participate pro rata in the Penalty
Warrants, if any, and (iv) increase the interest rate on the loan from 8% to 12%
per annum effective February 19, 2002.  The Company has determined the fair
value of the 500,000 additional warrants and the incremental fair value of the
1,875,000 warrants repriced from $0.30 to $0.09 to be $62,200 based on the Black
Scholes model and will record this amount in the statement of operations as
interest expense over the amended nine-month term of the loan.  The assumptions
used in the Black Scholes model were the same as noted in the paragraph above.

On March 13, 2002, the Board of Directors granted options to purchase common
shares to management, outside board members, and various other employees as part
of a 2002 compensation package. Management and several employees received
5,340,000 options to purchase common stock at $0.11 per share, vesting over
three years. Outside Board members received 2,200,000 options with the same
exercise price vesting over one year. The intrinsic value of the options issued
to management and employees and 600,000 of the options issued to outside Board
members was $415,800. The Company has determined the fair value of the remaining
1,600,000 Board options to be $838,800 based on the Black Scholes model, with
the following assumptions: no dividend yield, expected volatility of 128%,
risk-free interest rate of 5%, and expected life of ten years. The Company will
record compensation expense relating to these option issuances over their
respective vesting periods.


                                      F-31
<PAGE>