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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                            ------------------------

                                   FORM 10-KSB

                       FOR ANNUAL AND TRANSITIONAL REPORTS
                        PURSUANT TO SECTIONS 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                            ------------------------
            (Mark One)

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                    For the fiscal year ended March 31, 2002

                                       OR

          [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

          For the transition period from ____________ to ____________.

                        Commission File Number 000-28909

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                (Name of Registrant as Specified in its Charter)

             Delaware                                     84-1107140
(State or Other Jurisdiction of                        (I.R.S. Employer
Incorporation or Organization)                          Identification No.)

       15303 North Dallas Parkway, Suite 1150, Addison, Texas 75001
      (Address of Principal Executive Offices)                (Zip Code)

                                 (972) 458-3900
              (Registrant's Telephone Number, Including Area Code)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None.

           Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $0.001 par value
                                (Title of Class)

     Indicate by check mark whether the registrant: (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES [X] NO [ ]

     Indicate by check mark if disclosure of delinquent filer pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

     As of August 2, 2002, the aggregate market value of the registrant's voting
stock held by non-affiliates of the registrant was approximately $13,127,607
based on the closing price of the Company's Common Stock on the Nasdaq OTC
Bulletin Board on August 2, 2002 of $0.27 per share.

     As of August 2, 2002, 75,478,325 shares of registrant's Common Stock,
$0.001 par value, and 0.0 shares of registrant's Preferred Stock, $0.001 par
value, were outstanding.

                       DOCUMENTS INCORPORATED BY REFERENCE

                                      NONE



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                                     PART I

Forward-Looking Statements

     This document contains "forward-looking statements," which may include the
following:

     -    our business strategy;

     -    the timing of and plans for the introduction of new products and
          enhancements;

     -    plans for hiring additional personnel;

     -    anticipated growth in the market for our products;

     -    completion of acquisitions or the entering into strategic alliances;
          and

     -    the adequacy of our existing resources together with anticipated
          sources of additional capital to fund our operations for at least the
          next 12 months.

     Other statements about our plans, objectives, expectations and intentions
contained in this document that are not historical facts may also be
forward-looking statements. When used in this prospectus, the words "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar
expressions are generally intended to identify forward-looking statements.
Because these forward-looking statements involve risks and uncertainties, actual
results could differ materially from those expressed or implied by these
forward-looking statements for a number of reasons, including those discussed
under "Factors That May Affect Future Performance" and elsewhere in this
document. We assume no obligation to update any forward-looking statements.

Item 1. Business

Overview

     GreyStone has operated as a software development and systems integration
company since we commenced business in San Diego, California in 1989. From our
founding we concentrated on development of real-time, interactive, and networked
three-dimensional (3-D) visual and aural software needed to create and render
simulated "virtual" environments. We offered different applications of our
software along with supporting engineering services to customers in government
and commercial markets. As a development company over these years we continued
to create new applications but have not been able to make our business grow
sufficiently from sales of our applications and supporting services to generate
self-sustaining positive cash flow from operations and have experienced
continued financial loses.

     Early in this fiscal year we concluded that our existing operations would
continue to require further investments of cash that we could not reasonably
expect to give any return or build value for the stockholders. Consequently we
initiated a program to transform and direct GreyStone into an entirely different
business. Accordingly we took steps to exit and close down our existing
operations and then use our status as a public company to acquire businesses
that appear to have better prospects for growth and near term generation of
positive cash flow. Since June 2001 we have proceeded to take actions and enter
into certain agreements with two entities that appear to have the better
prospects that we seek. These actions and proceedings are summarized as follows:

..    In July 2001 we entered into a long-term lease agreement with Kiboga
     Systems Inc., a private Texas based company founded in February 2001
     engaged in the business of the development and sale of technology software
     products with applications to law enforcement, defense, and intelligence.
     Under that lease agreement we gained the right to receive 80% of the
     revenues generated by applications of Kiboga's real-time data gathering and
     integration software used by law enforcement and intelligence agencies.
     However, since that time we have not performed all the requirements of the
     Agreement as we have not been able to pay the $700,000 cash required by the
     terms nor have we the present ability

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     to market Kiboga's software as also required. Consequently, we are
     currently in default of the Lease Agreement. There can be no assurance that
     we will be successful in overcoming our default or receive a waiver of our
     performance from Kiboga.

..    In November 2001 together with Kiboga we entered into a letter of intent to
     merge ( the "Merger") with Provo, a privately held Mexican company that is
     the largest distributor of Ladatel phone calling cards in Mexico. Provo
     represented to us that it had earned revenues of US$160 million for the
     twelve months ending October 31, 2001. The merger with us would give Provo
     access to Kiboga's smart card technology and enable Provo to enter the
     North American market with banking and international monetary transfer
     products and other applications.

..    In December 2001 our stockholders held a meeting where they adopted
     resolutions to ratify, confirm, and approve the Merger with Provo and the
     disposition of our existing government business.

..    In March 2002 our chairman and chief executive resigned after all other
     remaining directors had resigned excepting one outside director who stayed
     on and by a resolution of a majority of shareholders adopted at a meeting
     of stockholders held in April 2002 has acted as our chairman and chief
     executive.

..    In May 2002 and subsequent to this fiscal year ending March 31, 2002 we
     closed all operations in San Diego and ceased offering any of the software
     products and supporting engineering services that we had provided to our
     customers throughout our existence.

..    On June 25, 2002 we entered into a stock purchase agreement (the "Purchase
     Agreement") to acquire all of the stock of Provo for shares of GreyStone.
     This purchase will transfer to the sellers of all of the Provo stock no
     less than 40% of GreyStone's shares on a fully diluted basis. At the same
     time we entered into negotiations to merge Kiboga into a new wholly owned
     subsidiary of GreyStone to be formed to complete the Merger.

..    On July 18, 2002 the Purchase Agreement of June 25 was amended to provide
     for and confirm certain additional matters set forth in the Purchase
     Agreement. Essentially, the amendment dropped all revenues to Kiboga being
     merged into GreyStone and deleted the requirement that we pay certain cash
     to Provo. We have not performed all conditions precedent required to close
     the amended Purchase Agreement with Provo including the filing of this
     10KSB. We believe that we will be able to complete the closing of the
     amended Purchase Agreement with Provo, however, there can be no assurance
     that we will be able to do so. We currently have no other merger candidates
     other than Provo. Should the amended Purchase Agreement not be performed
     and the acquisition of Provo be abandoned then there is no assurance we
     will be successful in locating another merger or acquisition candidate.

     As of June 30, 2002 GreyStone has received no operating revenues nor
incurred any operating expenses as a consequence of the agreements set forth
above. Since November 2001 Kiboga has loaned funds to GreyStone from time to
time to help GreyStone fund certain administrative, legal and professional
expenses necessary for effecting the contemplated merger of Provo and Kiboga
into GreyStone. As at June 30, 2002 Kiboga held a total $434,398 of notes issued
by GreyStone for such loans.

History of Operations

     We commenced business in 1989 as GreyStone Technology, Inc., a private
company based in San Diego, California, with the mission of providing the United
States military and its contractors with software and engineering services for
applications to be used in highly advanced military hardware (fighting aircraft,
missiles, ships, and vehicles) and training simulators.

     In 1994, we initiated a long-term program to develop multi-player
(collaborative) real-time, interactive, and networked 3-D entertainment content
("Titles") to run on high-end 3-D multimedia home-based personal computers
("PCs") and new PC-based open architecture arcade amusement machines ("OA3Ms")
utilizing the technology and techniques we had developed in servicing our
defense clients. During 1998 we developed our first PC-based entertainment game
Title, XS-G(TM), to sell to the OA3M

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entertainment market. During 1999 we developed a motion-based platform to
support PC-based ride entertainment and initiated its commercial launch in the
fall of 2000. We stopped all marketing of the ride platform in March 2001.

     In December 1999 we became a publicly traded company by merging with a
company that had no previous operations and traded on the Over-the-Counter
Bulletin Board. GreyStone Technology, Inc. exists today as a wholly owned
subsidiary of GreyStone Digital Technology, Inc. (formerly Express Capital
Concepts, Inc.).

     After our decision in 1994, we followed a strategy whereby we invested our
capital and human resources to apply the Company's technology and experience
gained working in the defense business to the commercial entertainment business.
However, during the fiscal year ended March 31, 2001 the expense of development,
our continued financial losses and difficulties in the video game market forced
us to reconsider our strategy and in April 2001 we decided to cease all
entertainment operations and focus our attention solely on information
technology software and engineering services for defense and government. We
expected that we could achieve positive cash flow from our defense and
government operations. After several months we realized that our margins and
volume achieved on this type of business was too small to generate
self-sustaining cash flow within an acceptable period of time. To strengthen the
company early in June 2001 we initiated an effort to use our status as a public
company to acquire or merge with a business that had greater potential to
produce positive cash flow with better prospects for growth.

Our Current Markets, Products, and Services

     Until such time as the merger contemplated under the Purchase Agreement as
amended set forth above is concluded and the Lease Agreement is performed we
will have no active operations products or services. If the contemplated merger
is concluded as planned and we are able to cure our default under the terms of
the Lease Agreement we will operate two different businesses under GreyStone. We
will market phone cards and smart cards throughout Mexico and the United States
and we will market Kiboga's proprietary real-time data gathering and data
integrating software products called DILE and COMPILE to law enforcement and
intelligence agencies in the United States and around the world. However, there
can be no assurance that we will be capable of completing the merger or curing
our default under the terms of the Lease Agreement.

Competition

     Many competitors participate in the markets for phone cards and for
gathering and integrating data for clients. The Company expects that larger
companies having greater financial resources will present vigorous competition
with our products and services.

Employees

     GreyStone had seven full-time employees as of March 31, 2002. As of June
30, 2002, GreyStone had no full time employees and all its officers and
directors other than our new chairman has resigned.

Factors Which May Affect Future Performance

     Risks Related to GreyStone's Operations and Business

GreyStone will only have a future source of revenues if the Purchase Agreement
with Provo and Kiboga is concluded and closed successfully.

     GreyStone ceased all operations in May 2002 and is working to conclude and
close all necessary agreements, including the Purchase Agreement, as amended,
with Provo and its Lease Agreement with Kiboga. Currently, we have not performed
all conditions precedent to close the Purchase Agreement, as amended and we are
in default of our performance required under the terms of the Lease Agreement
with Kiboga. There is no assurance that all necessary agreements will be closed
successfully and GreyStone's prospects for generating future revenues depend
entirely upon the successful closing of the agreements.

     We are currently insolvent and subject to a going concern opinion from our
auditors.

     We currently have no material assets and debt in excess of $5.6 million
dollars. Any of our unsecured creditors could file an involuntary bankruptcy
petition against us and force us into bankruptcy. Should we be unable to
complete our stock purchase with Provo or secure significant capital we would be
unable to overcome any such bankruptcy petition and it is likely we would be
dissolved.

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GreyStone needs capital now and will need additional capital in the future,
which may not be available on acceptable terms.

     To finance its business plan and negative cash flow GreyStone has
continually obtained debt and equity financing on a private basis. Cash
deficiencies in the past and at the time of this report have required GreyStone
to defer payment of its obligations and impeded its operations and development.

     Historically, the company has funded its operations primarily through
private sales of common and preferred stock, and borrowings. The stock sales
have been made pursuant to private placements and exemptions from registration
under the Securities Act of 1933. The Company raised approximately $700,000;
$6,000,000; $5,000,000 and $3,577,000 during its business years ended March 31,
2002, 2001,2000 and 1999, respectively. The funds raised in the fiscal year
ended March 31, 2002 was primarily from the sale of common stock ($640,000), and
short term borrowings from the company's principal stockholders and officers.

     On March 31, 2002, GreyStone's total current assets were $1,649 and current
liabilities were $5,641,734, which resulted in a working capital deficiency of
$5,640,085.

     There is no assurance that GreyStone's results from operations, should it
conclude the intended transactions with Provo and Kiboga, will improve
GreyStone's financial condition.

     If GreyStone does not close upon the Purchase Agreement successfully, or if
there are any significant delays in obtaining sufficient capital, then GreyStone
risks not having cash or other resources to continue to seek alternatives to use
its standing as a public traded company. Without a source of future revenues, or
the ability to raise additional capital, GreyStone could be compelled to cease
to function. If this were to happen, GreyStone stockholders would lose all of
their investment.

Stockholders may experience substantial dilution.

     If we are successful in completing our pending merger with Provo or should
we merge with another entity then the current stockholders will experience
substantial dilution in their ownership.

We are currently in litigation and may be subject to additional litigation in
the future.

     As disclosed in the Legal Proceedings item to this 10KSB, we have been sued
by a number of past vendors and former employees. We may be the target of future
litigation of which we are currently unaware. Our current litigation, plus any
future claims, with or without merit, may result in substantial costs and divert
management's attention and resources, which may harm our reputation, business
prospects and financial condition, all of which may have a substantial effect on
our ability to pursue various strategic alternatives as well as have adverse
effect on our stock price. We may not be able to pay the expenses or liabilities
that may arise out of any possible legal claims and judgments currently rendered
against us. We cannot predict the outcome of any potential legal claims.

GreyStone may experience delays in product introductions or defects in software
code which could adversely affect our business and results of operations.

     Should GreyStone conclude the transaction with Provo and Kiboga we could
experience delays in any new product introductions. New products could contain
undetected or unresolved errors in the software code base when they are first
introduced or when newer versions of the earlier products are released. Despite
extensive testing, GreyStone may not detect all software errors in its new
products and product upgrades. Delays in product introductions and undetected
errors in software could result in an inability of GreyStone products to gain
market acceptance. GreyStone's inability to resolve these issues could have a
negative effect on business and operations.

The markets for our products in the event our transactions with Provo and Kiboga
are completed are intensely competitive and GreyStone may not be able to compete
successfully.

     The business contemplated by us, if we successfully complete our
transactions with Provo and Kiboga, involves the marketing of phone and smart
cards as well as certain data gathering and integrating

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software for which there are numerous competitors. Some of our competitors will
have greater financial and marketing resources than we have and our ability to
compete against such resources will be limited. If we can not be competitive, we
will not be able to obtain sufficient revenues to cover our expenses and our
business will fail resulting in our stockholders losing part or all of their
investment in our company.

  Risks Relating to Security Markets

There has been a limited public market for GreyStone stock and the stock price
is likely to be highly volatile.

GreyStone's common stock was delisted from NASDAQ Small Cap Market on June 21,
2001 for failing to meet the requirements of the exchange and now is quoted on
the OTC-BB. Its total average daily trading volume during the 20 day trading
period preceding June 30, 2002 was 521,885 shares with an average daily total
quoted trading value of $184,844 (based on the daily last sale price). There can
be no assurance that the trading volume or price for GreyStone common stock will
increase in the near future. During this fiscal year and currently we have not
been able to provide timely 10Q and 10K reports to the SEC and have traded as a
delinquent security with an "E" designation on the OTC-BB for three periods
including the present reporting period. There can be no assurance that we can
avoid delinquent reporting in the future.

     In addition, our common stock is subject to penny stock regulations which
could cause fewer brokers and market makers to execute trades in our common
stock. This is likely to hamper our common stock trading with insufficient
volume to provide liquidity and could cause our stock prices to go down. The
penny stock regulations require that broker dealers who recommend penny stock to
unaccredited persons make a special suitability determination of the purchaser,
provide risk disclosure documents and obtain a signed and dated acknowledgement
from the purchaser that they have received the required disclosures. These
requirements have historically resulted in reducing the level of trading
activity in securities that are subject to the penny stock rules. Holders of our
common stock may find it difficult to sell their shares of common stock, which
is expected to have an adverse effect on the market price of the common stock.

The market price of GreyStone's common stock may be subject to significant
fluctuations.

          Some factors which may cause fluctuation include:

     -    changes in the business, operations, financial results and prospects
          of GreyStone;

     -    announcements of new products by competitors;

     -    fluctuations in the stock market that are unrelated to the operating
          performance of particular companies;

     -    more shares of GreyStone stock being available for sale after the
          issuance of shares underlying options and warrants;

     -    general market and economic conditions; and

     -    other factors, such as the exercise of warrants, options, or sale of
          new common or preferred shares.

Because at least 40% of the outstanding stock of GreyStone will be beneficially
owned by directors and officers as a group if the Purchase Agreement as amended
is successfully closed, other investors will have limited influence over
management decisions.

     As of June 24, 2002, directors and executive officers of GreyStone, as a
group, beneficially owned none of the outstanding stock of GreyStone. However
the agreements that enable GreyStone to acquire and control Provo and Kiboga
will result in a minimum of 40% of the outstanding stock becoming

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beneficially owned by new directors and officers as a group. The voting power of
these stockholders can delay a change in control of GreyStone.

GreyStone's board of directors will have broad discretion in issuing preferred
stock, which may have an adverse effect on the rights of the holders of common
stock.

     The board of directors of GreyStone is authorized to issue 3,000,000 shares
of preferred stock without any vote or action by the stockholders of GreyStone.
The board of directors has the authority to issue preferred stock in one or more
series and to fix the rights, preferences, and restrictions thereof, including:

     -    Dividend rights and rates,

     -    Conversion rights,

     -    Voting rights,

     -    Terms of redemption,

     -    Redemption prices,

     -    Liquidation preferences, and

     -    The number of shares constituting a series or the designation of such
          series.

     GreyStone believes the power to issue preferred stock provides desirable
flexibility in connection with possible acquisitions or other corporate
purposes. However, the issuance of preferred stock could have the effect of
delaying, deferring or preventing a change of control of GreyStone without
further actions by the stockholders. In addition, it may adversely affect the
market price of the common stock and the voting rights of the holders of common
stock.

Sales of substantial amounts of our common stock, or the possibility of such
sales, may have an adverse effect on the market price of our common stock and
impair our ability to raise capital through an offering of equity securities in
the future.

     If our security holders sell publicly a substantial number of shares they
own or may acquire upon exercise of outstanding options and warrants, then the
market price of our common stock may decline. Public perception that those sales
will occur may also exert downward pressure on our common stock. A decline in
the price of our common stock may also impair our ability to raise capital
through the sale of equity securities.

Item 2. Properties

     GreyStone leases approximately 4,400 feet of office space at 3954 Murphy
Canyon Road, Suite D205, San Diego, CA 92123 which it no longer occupies. The
lease expires on March 31, 2003. Our principle office is located at 15303 North
Dallas Parkway, Suite 1150, Addison, Texas 75001. At this time we are not paying
rent nor do we have a lease for the premises but are utilizing space owned by
Kiboga. No other tenants have assumed our lease in San Diego as of the date of
this filing.

Item 3. Legal Proceedings

Pending Litigation

     As of July 1, 2002 seven former employees claim that the Company owes them
$168,000 for back pay and expenses in amounts that range from $4,719 to $55,140.
In addition, three former officers, Mr. Smith, Mr. Aldern and Mr. Beaudet, claim
that the Company owes them a total of $301,200 in back

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pay and $9,742 in expenses. These three claims range from $75,230 to $140,000.
We expect that these pending claims will result in litigation or labor
proceedings.

     On May 8, 2002 USA TALKS.COM, INC filed a complaint for constructive trust
and damages in the Superior Court of the State of California, County of Los
Angeles, Case No. BC259794 and named GreyStone Technologies as one of seventeen
defendants named in the complaint. The complaint asserts that a "stock scam"
caused the plaintiff to suffer over $50 million in investment equity losses
while the defendants "made off with over $15 million in ill-gotten gains." Mr.
Gelbard and Mr. Beaton are individual defendants among others that the plaintiff
names along with four individual lawyers and the law firm. In the past GreyStone
had engaged the services of Mr. Gelbard as a financial advisor, however
GreyStone has never had any connection with, relationship with or awareness of
USA TALK.COM. The complaint asserts that " at a minimum, the plaintiff believes
that GreyStone Technologies was involved in the pump and dump scam by means of
its receipt of illegal profit and/or securities, following Gelbard and/or
Beaton's illicit receipt of free trading stock pursuant to S8 registration and
through distribution of same by Gelbard and/or Beaton." We believe that
inclusion of GreyStone in the complaint has no basis, substance or merit in
fact.

     Since December 8, 2001 five vendors have filed complaints for payments
totaling $43,324 that range in amounts from $1,450 to $14,987.

     On May 25, 2001 a lawsuit was filed against GreyStone by Mahan & Nash, a
public relations service provider, in the Superior Court of the State of
California, County of Los Angeles for the payment of $68,102 under a written
contract. The Company answered with a general denial. A final status conference
was held on May 1, 2002 with a trial date set for May 6, 2002. We were not able
to answer at the conference or trial. We have not received a notice of judgment
as of the date of this filing.

Judgments, Liens and Labor Awards

     As of July 31, 2002 the Internal Revenue Service ("IRS") has given the
Company notice of Federal Tax Lien filings for employment-related taxes for the
period ending December 31, 2001. The IRS has from time to time adjusted the
total amount due based upon recalculations, but the Company believes that its
total exposure to all such amounts will not exceed $210,000.

     As of July 1, 2002 the State of California Division of Labor Standard
Enforcement had awarded $187,995.03 to seven former Company employees for back
wages due and associated penalties. The awards range from $6,441 to $70,444. In
addition, at July 1, 2002, seven other employees have filed claims totaling
$181,888 for unpaid wages, six with the State of California and one with State
of Okalahoma. These claims range from $4,025 to $74,959.

     Since April 16, 2002 we have received five different notices of judgment in
California trial courts totaling $327,564 that range in amounts from $23,250 to
$138,305 based upon amounts allegedly owed vendors and a recruiting consultant.

     On June 29, 2001 a lawsuit was filed in the Superior Court of the State of
California, County of San Diego against GreyStone and Richard A. Smith,
GreyStone's former Chairman and Chief Executive Officer, by Capital Solutions
Fund LLC (the lender of the Company's February 2001 line of credit) for breach
of contract and fraud. A total of $1,045,000 (including $200,000 in loan fees)
was drawn on the line of credit before the lender, Capital Solutions Fund,
called the line as a result of the March 2001 dissolution of GreyStone's
exclusive distributor of the MercRacer entertainment system by that
distributor's parent corporation. On June 7, 2002 we received a notice of entry
of judgment in the amount of $1,274,148.

     On December 29, 2000 the Company initiated a temporary suspension of
conversions of Series A preferred stock into common stock in order to prevent
further degradation in the market price of the Company's common stock. On
January 5, 2001 one of the 13 Series A preferred stockholders filed suit against
the Company in the United States District Court, Southern District of New York
for breach of contract for failure to honor conversions, and for an order to
compel the Company to honor conversions. The stockholder also asked for a
temporary injunction to be issued compelling the Company to honor any

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of stockholder's conversion notices. The order was granted on January 12, 2001.
A second preferred stockholder joined the suit in March 2001, and the case was
dismissed on June 19, 2001. A similar case was filed in the same court by a
group of four other preferred stockholders on March 2, 2001, and the case was
dismissed on March 23, 2001. As of June 24, 2002 all of the Series A preferred
stockholders have converted all of their preferred shares into our common stock.

Potential Claims by GreyStone

     On July 9, 2002 the Company learned from our returned bank statements that
certain customers and an insurance company had made four payments to the Company
during May and June 2002 that totaled $118,396. On March 26, 2002 the Company's
Chairman gave express written instructions to the two employees remaining in the
San Diego office having authority to sign Company checks that they could only
commit the Company for expenses necessary to relocate our offices and that
hereafter they were not authorized to write or sign any Company checks without
the prior approval of the Chairman. Further they were given written
instructions, which they acknowledged in writing, that all future remittances
were to be sent to the Dallas office for deposit to a new Company bank account
in Texas. During April 2002 these employees represented to the Chairman that all
receivables due the Company had been received and that we could expect no
further cash remittances. These two employees failed to disclose to the Chairman
that the Company was due more payments and had in fact received those payments
during May and June 2002. Further, these employees failed to send the funds to
the Texas office according to our written Company directives. During May 2002
these two employees wrote and signed checks for $52,066 without the prior
approval of the Chairman. On May 31, 2002 one of the two employees resigned.
Then on June 5 and again on June 20, 2002, contrary to explicit written Company
policy, the one employee and the ex-employee wrote and signed eight checks
totaling $71,228 made payable to five of the former employees claiming unpaid
back wages as cited above. These checks severally ranged from $7,000 to $16,000.
These employees hid these cash receipts from the Chairman contrary to policy and
then these employees directed Company cash to pay items that did not serve the
most critical concerns of the Company, including a portion of the tax lien filed
by the IRS as cited above, and funds required to keep the Company's filings
current with the Securities and Exchange Commission.

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

     On December 13, 2001 a stockholders meeting was held pursuant to a notice
and call for a meeting by stockholders holding more than ten percent (10%) of
our issued and outstanding shares of the 63,419,959 shares eligible to vote,
persons holding 42,300,000 shares attended. The stockholders voted unanimously
for the following:

     1)   Approved the moving of our offices from San Diego, California to
          Dallas, Texas;

     2)   Approved pursuing a merger of the company with Proyecciones Y Ventas
          Organizadas, S.A.DE C.V. ("Provo") a corporation organized under the
          laws of the Republic of Mexico;

     3)   Approved the Company's sale or divestiture of its government business
          in anticipation of the Provo merger;

     4)   Approved the hiring of new auditors;

     5)   Elected new directors pending acceptance of their appointment.

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A second meeting of our stockholders took place on April 5, 2002 pursuant to
notice and call by stockholders holding more than ten percent (10%) of our
issued and outstanding common stock. A total of 50.5 million shares were present
out of a total number of issued and outstanding shares of 75,633,546.

     1)   Approved the method which we anticipated using to go forward with a
          potential merger with Provo; and

     2)   Approved the disposition of our subsidiary Greystone Technology, Inc.

                                     PART II

Item 5. Market for Registrant's Common Equity and Related Stockholder Matters

     (a) The Company's Common Stock, $0.001 par value per share, traded on The
Nasdaq OTC Bulletin Board under the symbol "EXCC" from May 1988 until December
23, 1999, and under the symbol "GSTN" from December 23, 1999 until August 21,
2000. The Company's Common Stock traded on the Nasdaq Small Cap Market under the
trading symbol "GSTN" from August 22, 2000 until June 21, 2001, when it was
delisted for failing to meet the minimum market capitalization/net tangible
assets/net income criteria, an also for not having the requisite minimum three
independent members of the audit committee of the board of directors. The
Company's Common Stock has traded on the Nasdaq OTC Bulletin Board under the
symbol "GSTN" since June 21, 2001. As of July 5, 2002 the Company's stock has
traded with the delinquent filing trading symbol "GSTNE". The following table
sets forth the range of high and low bid prices for the Common Stock as reported
by the Nasdaq OTC Bulletin Board and Nasdaq Small Cap Market during each full
quarterly period during fiscal years March 31, 2000 and 2001 and for the highest
and lowest traded prices each quarter for the fiscal year ending March 31, 2002.
The data through December 23, 1999 gives retroactive effect to a 41.66667 to 1
(reverse) stock split.

         FISCAL YEAR 2000                        HIGH BID       LOW BID
         ------------------------               ------------    ------------
First Quarter to 6/30/99 ....................   $20.833         $7.917
Second Quarter to 9/30/99 ...................   $20.833         $7.917
Third Quarter to 12/31/99 ...................   $41.667         $9.115
Fourth Quarter to 3/31/00 ...................   $13.250         $4.875

         FISCAL YEAR 2001                        HIGH BID       LOW BID
         ------------------------               ------------    ------------
First Quarter to 6/30/00 ....................   $ 5.750         $3.125
Second Quarter to 9/30/00 ...................   $ 6.500         $2.937
Third Quarter to 12/31/00 ...................   $ 4.875         $0.906
Fourth Quarter to 3/31/01 ...................   $ 1.718         $0.218

         FISCAL YEAR 2002                        HIGH           LOW
         ------------------------               ------------    ------------
First Quarter to 6/30/01 ....................   $ 0.390         $0.080
Second Quarter to 9/30/01 ...................   $ 1.040         $0.150
Third Quarter to 12/31/01 ...................   $ 1.080         $0.250
Fourth Quarter to 3/31/02 ...................   $ 0.850         $0.320

     The over-the-counter market quotations reflect inter-dealer prices, without
retail mark-up, markdown or commission and may not necessarily represent actual
transactions.

     (b) As of June 30, 2002 there were 75,478,325 shares of common stock
outstanding held by approximately 369 holders of record.

     (c) No cash dividends have been paid on the Company's Common Stock during
the Company's two most recent fiscal years, and the Company does not intend to
pay cash dividends on its Common Stock in the immediate future.

                                       10

<PAGE>

     On May 22, 2000 GreyStone completed the sale of $5,000,000 in convertible
preferred stock to a group of 13 accredited investors. The sale was made in
reliance upon the exemption from securities registration afforded by Rule 506 of
Regulation D as promulgated by the United States Securities and Exchange
Commission under the Securities Act of 1933, as amended or Section 4(2) of the
Act, which permits a sale of securities by an issuer for fewer than 35
accredited or knowledgeable investors. The company issued 5,000 shares of Series
A Preferred Stock, convertible into common stock at a rate of the lower of (1)
250 shares of common stock per share of preferred stock (equivalent to an
investment of $4.00 per share of common stock issued) or (2) 80% of the volume
weighted average price for the previous 250,000 shares traded prior to
submission by the preferred shareholder of a conversion notice to the company.
The preferred stock carries a dividend of 8% per year, payable at the election
of the company in common stock or cash. The Series A investors also received
5-year warrants to purchase 1,250,000 shares of common stock at an exercise
price of $5.38 per share, and registration rights on the conversion shares and
the shares to be issued upon the exercise of the warrants. After payment of a
10% commission for introducing the investors to the company, and legal fees
totaling approximately $50,000, the company received net proceeds of $4,450,000,
which it used for general corporate purposes.

     On July 7, 2001 GreyStone completed the sale of $631,000 of common stock to
11 accredited investors. The sale was made in reliance upon the exemption from
securities registration afforded by Regulation D as promulgated by the United
States Securities and Exchange Commission under the Securities Act of 1993, as
amended, or Section 4(2) of the Act, which permits a sale of securities by an
issuer for fewer than 35 accredited or knowledgeable investor. The company
issued 8,022,000 shares of common stock, which included 1,112,000 shares issued
to 2 parties who introduced the investors to the company's private placement.
The proceeds were used for general corporate purposes.

Item 6. Management's Discussion and Analysis of Financial Condition and Results
of Operations

     Except for the historical information contained herein, the following
contains forward-looking statements that involve risks and uncertainties.
GreyStone's actual results in future periods could differ materially from those
discussed here. Factors that could cause or contribute to such differences
include, but are not limited to, those discussed in Item 1 "Business" and
"Factors which may effect future performance", as well as those discussed
elsewhere and any document incorporated herein by reference. Also see
GreyStone's financial statements included herein.

Overview

     In December 1999, GreyStone Technology, Inc., a privately held company
merged with Express Capital Concepts, Inc., a company which had no previous
operations and was traded on the Over-the-Counter Bulletin Board. GreyStone
Technology, Inc. exists today as a wholly owned subsidiary of GreyStone Digital
Technology, Inc. (formerly Express Capital Concepts, Inc.). All references to
"GreyStone's" operations in this report are those of the wholly owned
subsidiary, under which all of GreyStone Digital Technology, Inc.'s operations
have been conducted.

     GreyStone has operated as a software development and systems integration
company since we commenced business in San Diego, California in 1989. From our
founding date we concentrated on development of real-time, interactive, and
networked three-dimensional (3-D) visual and aural software needed to create and
render simulated "virtual" environments. We offered different applications of
our software along with supporting engineering services to customers in
government and commercial markets. As a development company over these years we
continued to create new applications but have not been able to make our business
grow sufficiently from sales of our applications and supporting services to
generate self-sustaining positive cash flow from operations.

     Early in this fiscal year we concluded that our existing operations would
continue to require further investments of cash that we could not continue to
support. Consequently we initiated a program to transform and direct GreyStone
into an entirely different business. Accordingly we took steps to exit and close
down our existing operations and then use our status as a public company to
acquire businesses that appear to have better prospects for growth and near term
generation of positive cash flow. Since June 2001 we have proceeded to take
actions and enter into certain agreements with two entities that appear to have

                                       11

<PAGE>

the better prospects that we seek. See the overview under "Business" above for a
summary of those agreements and proceedings.

Management's Discussion and Analysis of Financial Condition and Results of
Operations for the Years Ended March 31, 2002 and 2001

     Revenues for the year ended March 31, 2002 were $ 1,460,147 as compared to
$2,367,731 for the year ended March 31, 2001, reflecting a decrease in revenue
of $907,584 or approximately 38%. During both these periods, the Government
Strategic Business Unit (SBU) generated essentially all revenues The decrease in
revenue was primarily the result of a reduced government customer base. In March
1999, GreyStone was awarded a $15.1 million delivery order contract from
SPARWARSYSCEN - San Diego. During the twelve month period ending March 31, 2002
we were not able to continue to fund the payroll of the employees serving this
contract and other government contracts due to margins in the contracts that
were not sufficient to provide adequate cash flow to support further work under
these awards. During the year we lost two major programs and concluded two
delivery order contracts to the Navy early. We narrowed the scope of work on the
remaining delivery order contracts as we lost the staff needed to provide the
full work available under these delivery orders. As of March 31, 2002, the
Company began to close down and cease to pursue further business under the
Government SBU.

     Cost of revenues decreased to $1,113,899 for the current year, compared to
$2,160,860 for the previous year. As a percentage of revenues, costs of revenues
were 76% in the current period, compared to 91% in the previous period. Cost of
revenues decreased in the current period due to a decrease in the level of work
and our refusal to pursue lower margin business.

     The components that make up the cost of revenues include burdened labor,
direct travel, other direct costs, direct material, subcontracts and applicable
SBU burden. These cost components can vary in amount from period to period and
are highly dependent on such factors as the nature of the work performed,
location and duration of the work (company vs. contractor site), who performs
the work (company personnel vs. subcontractors) and who provides any required
equipment (company vs. customer).

     Marketing and sales expenses were $520,390 or 36% of revenues in the
current year compared to $965,039 or 41% of revenues for the previous year, a
decrease of $444,649 in the current year. The decrease reflects a reduced level
of marketing effort due to financial constraints and inadequate margins realized
on the company's UAV Toolkit/TM/ and RAGE/TM/ software products. In general,
marketing and sales expenses resulted from bid and proposal activity as well as
attendance at trade shows, company product demonstrations and in-house marketing
related activities such as product brochures and marketing software development.
These types of expenses vary from period to period and depend upon the extent
and manner in which the company focuses its efforts regarding potential future
opportunities during the reporting period.

     Research and development expenses were $405,762 for the current year,
compared to $634,312 for the previous year, resulting in a decrease of $229,550.
The decrease was the result of reduced development work during the fiscal year.

     General and administrative expenses were $3,236,125 compared to $3,759,060
for the previous year, resulting in a decrease of $522,935. The decrease in
general and administrative cost in the current year was in the area of reduced
scale of operations, curtailing expenses for public relations and the use of
outside professional services and consultants.

     During the year ended March 31, 2002, the Company recognized an impairment
charge of $194,416 related to property and equipment as substantially all of the
Company's property, equipment and leasehold improvements were abandoned when the
Company moved from San Diego to Dallas.

     Effective on October 8, 2001, pursuant to an agreement entered into on July
16, 2001, the Company issued 29,614,274 common shares to Kiboga Systems, Inc. in
connection with a Marketing and

                                       12

<PAGE>

Licensing Agreement. Under the Agreement, the Company acquired the rights to
certain software developed by Kiboga for which they will pay a 20% royalty. In
addition to the shares issued, above, the Company agreed to pay $700,000 in cash
and to issue additional shares of common stock, as necessary, in order to
preserve Kiboga's shareholding percentage in the Company. If revenues from the
Kiboga software reach certain prescribed targets, up to 15,000,000 additional
shares may be issued to Kiboga. If the revenues fail to reach certain minimum
targets, 5,000,000 shares of common stock issued to Kiboga shall be returned to
the Company. This Agreement has resulted in a change of control of the Company
and the parties to the Agreement anticipate changes in management and directors
of the Company.

     The Company valued the license based on the trading value of the stock at
the time the stock was acquired. On this basis an intangible asset was recorded
totaling $1,905,810 (which includes the $700,000 in cash due). Subsequently, the
Company has written off this asset due to uncertainty of the amount and timing
of any future revenue and profit streams that the license Agreement may
generate. Accordingly, an expense in the amount of $1,905,810 has been recorded
for the year ended March 31, 2002 relating to this write off.

     Total other income (expense) of $(88,340) consisted of net interest expense
of $(226,045), interest income of 22,646 and other miscellaneous income of
$115,059.

     The loss from continuing operations was $6,004,595 for the current year,
compared with $7,792,441 in the previous year, a decrease of $1,787,846. The
loss from discontinued operations was $0 this year as compared to $1,920,056 for
the prior year.

     The net loss of $6,004,593 decreased by $4,125,902 from the $10,130,497 net
loss reported in the previous year.

     The Company recorded a non-cash preferred stock dividend of $171,526 for
the current year as compared to $311,103 for the prior year for the 8% stock
dividend feature provided for in the Series A Convertible Preferred Stock.

     The net loss applicable to common stock was $6,176,121 for the current
year. This compares to the net loss of $14,890,953 for the prior year. During
the previous year the Company recorded imputed stock dividends of $3,645,250
related to the issuance of warrants in connection with the sale of preferred
stock and $804,103 for the beneficial conversion feature associated with the
preferred stock issued in May 2000.

                                       13

<PAGE>

Liquidity and Capital Resources

     Net cash used in operating activities for the year ended March 31, 2002 was
$1,666,015 whereas cash used for operating activities for the year ended March
31, 2001 was $4,491,783. The net loss for the current year was $6,004,595, a
decrease of $4,125,902 from the previous year net loss amount of $10,130,497.
Non-cash expenses were $6,342,239, as compared to $3,192,820 in the previous
reporting period. Depreciation (including impairment write off) and compensation
expense for issuance of options and warrants totalled was $961,445 for the year
ended March 31, 2002, as compared to $689,432 in the previous reporting period.
Valuation reserves were $0 in the current reporting period as compared to
$2,503,388 for the prior year. Additionally, net accounts receivable decreased
by $304,598, other assets decreased by $45,442 and accounts payable and accrued
expenses increased by $1,121,285. There was cash used in disposal of
discontinued operations in the year ended March 31, 2002 of $418,000.

     Net cash used in investing activities was $0 during the year ended March
31, 2002 compared to $896,399 for the previous reporting period. There were no
investing activities during the current period.

     Net cash provided by financing activities was $1,700,045 in the year ended
March 31, 2002 compared to $5,604,853 for the previous year. $585,900 of the
cash provided for financing activities was the net proceeds of the sale of
common stock in June, 2001. The Company also had net proceeds from loans from
related parties of $1,114,145 in 2002. The Company used the net proceeds of the
sale for general corporate purposes.

                                       14

<PAGE>

     In December 1999, the company took a promissory note in the amount of
$1,183,292 for the partial payment of common stock issued for the exercise of
warrants by close advisors to the Company. The note was secured by a lien on
property owned by the advisors and carried an interest rate of 10% per year. The
maturity date of the note was extended three times and last matured on December
22, 2000. Total principal and unpaid interest accrued through March 31, 2000 was
$1,202,737. The Company did not accrue any interest on the note after that date.
A valuation reserve of $1,202,737 was established in the prior year while the
Company pursued collection of the note. In March 2001, in order to meet critical
cash needs, the Company negotiated a settlement wherein the Company agreed to
release the lien on the property which collateralized the note in exchange for a
cash payment of $200,000, the return of the previously issued stock, valued at
$78,301 (the trading value on the date received), less transaction costs of
$13,750.

     At March 31, 2002, the Company had $0 cash and cash equivalents, as
compared to $383,970 for the fiscal year ended March 31, 2001. The Company
anticipates that in the future, it must close upon the agreements summarized in
the Overview section above and will require additional debt or equity financing
to continue its operations for at least the next 12 months, as it currently has
no method for generating revenues. The Company plans to continue to borrow funds
from related parties to continue operations in the near future.

     As of the date of this report, the Company had $0 cash, $0 accounts
receivable, and overdue obligations of approximating $5,600,000. These overdue
obligations include all judgments and valid claims detailed above in legal
proceedings.

Item 7. Financial Statements and Supplemental Data

     See the Index to Financial Statements on page F-1.

                                       15

<PAGE>

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

     On February 21, 2002, we formally engaged King Griffin & Adamson, PC as our
independent accountants to replace J.H. Cohn LLP. J.H. Cohn LLP has furnished us
with a letter addressed to the Securities and Exchange Commission stating that
there have been no disagreements with us preceding the resignation on any matter
of accounting principals or practices, financial statement disclosure or
auditory scope or procedure in connection with our two most recent fiscal years.

                                    PART III

Item 9. Directors and Executive Officers of the Registrant

     Jon M. Reynolds -- (Director; Chairman of the Board) Mr. Reynolds has been
a member of the board of directors of GreyStone since February 1994 and served
as GreyStone's President from April 1995 until January 1997. Mr. Reynolds was a
Senior Vice President of Hoak, Breedlove & Wesneski & Co., Inc., an investment
banking firm in Dallas, Texas from April 1998 until March 1999. Mr. Reynolds is
also the president of The Pointe-Force Company, a private Dallas-based merchant
banking concern. From 1985 until 1992 Mr. Reynolds was a director of Sun Coast
Plastics, Inc., a company specializing in plastic molded closures and food
service products, and from 1988 to 1992 Mr. Reynolds served as that company's
Chairman and Chief Executive Officer. From 1984 through 1988 Mr. Reynolds also
served as president of Mayfair Capital, a merchant banking company. In February
1983, Mr. Reynolds joined Rauscher Pierce Refsnes in Dallas. From 1971 through
1982, Mr. Reynolds worked in New York as an investment banker engaged in project
and corporate finance at Salomon Brothers and at CS First Boston. Mr. Reynolds
is a certified public accountant and holds an A.B. from Harvard College in
economics. He received his MBA from Rutgers University.

Item 10. Executive Compensation
<TABLE>
<CAPTION>
-----------------------------------
Summary Compensation Table
--------------------------------------------------------------------------------         Options Grants Last Fiscal Year
                                    Annual Compensation         Long-term Comp.          -------------------------------------------
                                    --------------------------------------------         Options   % of Options    Exercise  Expires
Name and Position            Year     Salary          Other     Options                  Granted       Granted       Price
--------------------------------------------------------------------------------         -------------------------------------------
<S>                         <C>      <C>         <C>           <C>                 <C>    <C>      <C>            <C>       <C>
Richard A Smith               2002    $250,000    1        $0         0
  Chairman, President and     2001    $250,000             $0         0
  Chief Executive Officer
Carl A. Beaudet               2002    $160,000    2                                May   150,000        6.05%       $0.20    05/18
  Vice President              2002                                                 Dec   150,000        6.05%       $0.66    12/20
                              2001    $160,000
Bernard J. Crowe              2002     $20,800    3
  Vice President              2001    $125,000    4
Thomas D. Aldern              2002    $120,000    5                                May   150,000        6.05%       $0.20    05/18
  Vice President              2002                                                 Dec    50,000        2.02%       $0.66    12/20
                              2001    $120,000
All Options Granted 2002                                                                 2,480,000      100.00%
Payments made to Pointe-Force
Jon M. Reynolds               2002          $0    6
 director                     2001     $77,000

Notes:                                                There are no SAR's
1  Deferred Pay of salary of          $250,000
2  Deferred Pay of salary of          $160,000
3  Deferred Pay of salary of           $20,800
4  Deferred Pay of salary of           $31,250
5  Deferred Pay of salary of          $120,000
6 Jon Reynolds owns warrants to purchase 100,000 shares at $10 per share expire
January 2009
Pointe-Force holds warrants to purchase 400,000 shares at $10 per share expire
May 2003
</TABLE>

<TABLE>
<CAPTION>

                                             Aggregated Option Exercised in last Fiscal year
                     Potential Value         ------------------------------------------------
                     at Stock Appreciation   Shares         Value           Exercisable
                     of  5%      of 10%      Acquired       Realized
                     ----------------------  ------------------------------------------
<S>                 <C>                     <C>            <C>
Richard A Smith                              200,000        $44,000


Carl A. Beaudet     $29,258     $46,589
                    $96,553    $153,744


Bernard J. Crowe


Thomas D. Aldern    $29,258     $46,589
                    $32,184     $51,248

</TABLE>

                  Assessment of in the money options at year end
                  Number of exercisable options     Value of unexercised options
                  at fiscal year end                at fiscal year end
                  --------------------------------------------------------------
                  exercisable   unexercisable       exercisable    unexercisable
                  --------------------------------------------------------------

Richard A Smith                0                0


Carl A. Beaudet          100,000           50,000         $25,000        $12,500


Bernard J. Crowe               0                0

Thomas D. Aldern         100,000           50,000         $25,000        $12,500

Item 11. Security Ownership of Certain Beneficial Owners and Management


    The following table sets forth information with respect to the ownership of
our common stock as of March 31, 2002 by:

     .    The holders of more than 5% of our common stock;

     .    Each of our directors and officers; and

     .    All of our directors and executive officers as a group.

    Each stockholder's address is in care of our company at 15303 North Dallas
Parkway, Suite 1150, Addison, Texas 75001.

                                  NUMBER OF SHARES       PERCENT OF COMMON STOCK
  NAME OF BENEFICIAL OWNER        OF COMMON STOCK OWNED  OWNED PRIOR TO OFFERING
--------------------------        ---------------------  -----------------------

Richard A. Smith                         5,765,089                  7.61%
Carl A. Beaudet                            400,000                  0.53%
Thomas D. Aldem                            600,700                  0.79%
Jon M. Reynolds                                  0                  0.00%
Kiboga Systems, Inc. (1)                30,809,979                 40.67%
H.s. Dent Investments/Strategic
Sector Fund 1 L.P. and
Harry S. Dent Jr.                       11,045,000                 14.58%
All officers and directors
  as a group (four persons)              6,765,789                  8.93%
----------
(1)  Approximately 29,000,000 shares issued to Kiboga are subject to
     cancellation in the event the Lease Agreement between us and Kiboga is
     rescinded or abandoned.

     We note that Kiboga was issued approximately 29,000,000 shares that should
have resulted in a Schedule 13D or Form 3 being filed with the Commission and
that such filing by Kiboga is delinquent.

                                       16

<PAGE>

Item 12. Certain Relationships and Related Transactions

     As part of the Kiboga transaction, discussed above, we incurred a $700,000
     liability to Kiboga during the year ended March 31, 2002. Additionally the
     Company has borrowed $434,398 from Kiboga that was due on demand at March
     31, 2002.

     We had outstanding notes payable to a shareholder of $186,500 at March 31,
     2001, which were unsecured, nonconvertible and are interest free bear
     interest at 3% in 2001.

     The shareholder borrowed a portion of the funds used to make the loans to
     us from a group of investors by issuing notes (the "Smith Notes") with the
     same interest rates and due dates as the notes issued by us to the
     shareholder. In addition, the shareholder granted the holders of the Smith
     Notes the right to convert the principal balance and accrued interest into
     shares of common stock that he owns at a conversion rate of $4.50 per
     share.

     During 2001, we reduced the principal balance of, and the accrued interest
     on, the notes payable to the shareholder by $20,000 and $8,329,
     respectively, by issuing 6,296 shares of common stock to certain holders of
     the Smith Notes. The conversions of the principal balances and accrued
     interest during 2001 were at $4.50 per share, as originally provided in the
     conversion forms of the debt agreement.

     Loans payable to officers in the amount of $222,496 and $74,000 at March
     31, 2002 and 2001, respectively, were unsecured, non-interest bearing and
     due upon demand. We also borrowed $198,750 (including interest) from a
     shareholder.

     The subscriptions receivable from equity transactions of $327,500 that was
     reflected as an increase to stockholders deficiency at March 31, 2000 was
     evidenced by notes received as part of the consideration for the sale of
     common stock in 1992 to three of the Company's founding stockholders who
     were employees of the Company. The notes are collateralized by the shares
     of the Company's common stock, mature in August 2001 (except under certain
     specified circumstances) and bear interest at 8.2% which is payable at
     maturity. Because of the continued financial difficulties of the Company,
     there is substantial doubt that those receivables will ever be collected.
     Accordingly, we charged $327,500 to continuing operations during the year
     ended March 31, 2001.

     During 2000, we issued 248,147 shares of common stock upon exercise of
     warrants in exchange for cash, services and a subscription receivable in
     the amount of $1,183,292 from an entity owned by close advisors of the
     Company. The note bears interest at 10% and is collateralized by a first
     deed of trust on residential property held by the entity. The subscription
     receivable which was originally due March 31, 2000, was extended three
     additional times and last matured on December 22, 2000.

     Total principal and unpaid interest accrued is $1,202,737. We have not
     accrued any interest on the note during the current period. A valuation
     reserve of $1,202,737 was established while we pursued collection of the
     note. In March 2001, the Company negotiated a settlement where by we agreed
     to release the lien on the property in exchange for a cash payment of
     $200,000, the return of the previously issued stock, valued at $78,301 (the
     trading value on the date received), less transaction costs incurred of
     $13,750.

                                     PART IV

Item 13. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) The following documents are filed as part of this report:

     FINANCIAL STATEMENTS:

     Report of Independent Accountants

     Consolidated Balance Sheets as of March 31, 2002 and 2001

     Consolidated Statements of Operations the Years Ended March 31, 2002 and
     2001

     Consolidated Statements of Stockholders' Equity (Deficiency) for the Years
     Ended March 31, 2002 and 2001

     Consolidated Statements of Cash Flows for the Years Ended March 31, 2002
     and 2001,

     Notes to Consolidated Financial Statements

(b) Reports on Form 8-K

     The Company filed 9 Current Reports on Form 8-K during the fiscal year
ended March 31, 2002.

1.   Report on Form 8K dated May 19, 2001 announcing dissolution of MercRacer
     3000 team and resignation of two directors.
2.   Report on Fork 8K dated September 27, 2001 announcing change of control and
     delisting from NASDAQ Small Cap.
3.   Report on Form 8K dated November 14, 2001 announcing additional shares
     issued to Kiboga as a result of agreement between us and Kiboga.
4.   Report on Form 8K dated January 18, 2002 announcing changes in certifying
     accountant and letter of intent with Provo.
5.   Report on Form 8K amending Form 8K dated January 18, 2002 to include
     exhibit of former accountant's letter.
6.   Report on Form 8K dated February 22, 2002 announcing intention to engage
     new certifying accountants, potential merger with Provo and the moving of
     our principal offices.
7.   Report on Form 8K dated February 28, 2002 announcing the engagement of King
     Griffin & Adamson, P.C. as our independent accountants.
8.   Report on Form 8K dated March 26, 2002 announcing a special meeting of our
     Board of Directors to fill vacancies on our Board and the resignations of
     our Chief Executive Officer and Director, Richard A. Smith.
9.   Report on Form 8K dated April 12, 2002 announcing results of stockholder
     meeting dated April 5, 2002.

(c) Exhibits:

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

3.1*     Amended and Restated Certificate of Incorporation of the Company which
         was filed as Exhibit 3.1 to the Company's Registration Statement on
         Form S-4 (No. 333-65963) is incorporated herein by reference.
3.2*     By-laws of the Company which was filed as Exhibit 3.2 to the Company's
         Registration Statement on Form S-4 (No. 333-65963) is incorporated
         herein by reference.
4*       Specimen Common Stock Certificate which was filed as Exhibit 4.3 to the
         Company's Registration Statement on Form S-4 (No. 333-65963) is
         incorporated herein by reference.
10.1     Kiboga/GreyStone Stock Purchase Agreement
10.2     Kiboga/GreyStone Lease Agreement
10.3     Provo/GreyStone Stock Purchase Agreement with Amendment.
21*      Subsidiaries of Registrant which was filed as Exhibit 21 to the
         Company's Annual Report on Form 10-K on July 16, 2001 (No. 000-28909).
99.1     Certification of Director Pursuant to 18 U.S.C. Section 1350, as
         adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

-----------
*  Previously filed as indicated and incorporated herein by reference.

                                       17

<PAGE>

                                   SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                        GREYSTONE DIGITAL TECHNOLOGY, INC.

                                        By:          /s/ JON M. REYNOLDS
                                           -------------------------------------
                                                   Jon M. Reynolds
                                                   Chairman

August 5, 2002

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

            Signature                      Title                       Date
          -------------                 -----------               --------------

     /s/ JON M. REYNOLDS            Chairman and Director         August 5, 2002
--------------------------------    (Principal and Sole Officer)
         Jon M. Reynolds

                                       18

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                                      INDEX

                                                                            Page
                                                                            ----

Report of Independent Certified Public Accountants ......................... F-2

Report of Independent Public Accountants ................................... F-3

Consolidated Balance Sheets March 31, 2002 and 2001 ........................ F-4

Consolidated Statements of Operations Years Ended March 31, 2002 and 2001 .. F-5

Consolidated Statements of Stockholders' Equity (Deficiency) Years Ended
March 31, 2002 and 2001 .................................................... F-7

Consolidated Statements of Cash Flows Years Ended March 31, 2002 and 2001 .. F-9

Notes to Consolidated Financial Statements .................................F-11

                                       F-1

<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
GreyStone Digital Technology, Inc.

We have audited the accompanying consolidated balance sheet of GREYSTONE
DIGITAL TECHNOLOGY, INC. and Subsidiary as of March 31, 2002, and the related
consolidated statements of operations, stockholders' deficit and cash flows for
the year then ended. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
GreyStone Digital Technology, Inc. and Subsidiary as of March 31, 2002 and their
consolidated results of operations and cash flows for the year then ended, in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
that GreyStone Digital Technology, Inc. and Subsidiary will continue as a going
concern. As discussed in Note 2 to the consolidated financial statements, the
Company had substantial working capital and stockholders deficiencies at March
31, 2002 and substantial losses for the years ended March 31, 2002 and 2001. In
addition, as discussed in Note 9, the Company was in default on certain of its
outstanding debt and as discussed in Note 16, the Company has a substantial
amount of litigation that has been filed or claimed against them. These matters
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regard to these matters are also described in
Note 2. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

                                                     KING GRIFFIN & ADAMSON P.C.

Dallas, Texas
August 4, 2002

                                       F-2

<PAGE>

                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders and Board of Directors
  GreyStone Digital Technology, Inc.

We have audited the accompanying consolidated balance sheet of GREYSTONE DIGITAL
TECHNOLOGY, INC. (Formerly GreyStone Technology, Incorporated) and Subsidiary as
of March 31, 2001, and the related consolidated statements of operations,
stockholders equity (deficiency) and cash flows for the year then ended. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of
GreyStone Digital Technology, Inc. and Subsidiary as of March 31, 2001, and
their consolidated results of operations and cash flows for the year then ended,
in conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared assuming
that GreyStone Digital Technology, Inc. and Subsidiary will continue as a going
concern. As discussed in Note 2 to the consolidated financial statements, the
Company had substantial working capital and stockholders' deficiencies at March
31, 2001 and a substantial loss for the year ended March 31, 2001. In addition,
as discussed in Note 9, the Company was in default on certain of its outstanding
debt. These matters raise substantial doubt about the Company's ability to
continue as a going concern. Management's plans in regard to these matters are
also described in Note 2. The consolidated financial statements do not include
any adjustments that might result from the outcome of these uncertainties.

                                                        J. H. COHN LLP

San Diego, California
July 14, 2001

                                       F-3

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>

                                                                                              2002                    2001
                                                                                       -------------------    ---------------------
<S>                                                                                    <C>                    <C>
Current assets:
    Cash and cash equivalents                                                          $                 -    $             383,970
    Accounts receivable, net of allowance for doubtful
       accounts of $19,068 in 2002                                                                   1,649                  306,248
    Other current assets                                                                                 -                    9,755
                                                                                       -------------------    ---------------------
        Total current assets                                                                         1,649                  699,973

Equipment, furniture and leasehold improvements, net                                                 2,500                  460,094
Deposits                                                                                                 -                   35,687
                                                                                       -------------------    ---------------------

                                                                                       $             4,149    $           1,195,754
                                                                                       ===================    =====================

Current liabilities:
    Accounts payable and accrued expenses                                              $         2,811,942    $           2,002,332
    Settlement payable - line of credit                                                          1,274,148                        -
    Notes payable to related parties                                                               855,644                  186,500
    Other notes payable                                                                                  -                1,186,767
    Due to Kiboga for license agreement                                                            700,000
    Accrued loss from disposal of discontinued segment                                                   -                  418,000
                                                                                       -------------------    ---------------------
        Total liabilities                                                                        5,641,734                3,793,599

Commitments and contingencies (notes 2, 8 and 16)

Stockholders' deficit:
    Series A Preferred Stock, $.001 par value; $1,000 liquidation preference
       value per share; 3,000,000 shares authorized; 0 and 3,731 shares
       issued and outstanding in 2002 and 2001, respectively                                             -                        4
    Additional paid in capital - Preferred stock                                                         -                4,295,605
    Common stock, $.001 par value; 100,000,000 shares authorized;
       75,756,977 and 17,301,785 shares issued in 2002 and 2001, respectively                       75,757                   17,302
    Additional paid in capital - Common stock                                                   53,096,544               45,723,009
    Accumulated deficit                                                                        (58,731,585)             (52,555,464)
    Treasury stock, at cost, 278,652 shares held                                                   (78,301)                 (78,301)
                                                                                       -------------------    ---------------------
        Total stockholders' deficit                                                             (5,637,585)              (2,597,845)
                                                                                       -------------------    ---------------------

                                                                                       $             4,149    $           1,195,754
                                                                                       ===================    =====================
</TABLE>

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

                                       F-4

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                       YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                                   2002                 2001
                                                                          -------------------- --------------------

<S>                                                                        <C>                  <C>
Revenues                                                                   $      1,460,147      $      2,367,731

Expenses:
    Cost of revenues                                                              1,113,899             2,160,860
    Marketing and sales                                                             520,390               965,039
    Research and development                                                        405,762               634,312
    Write off of idle plant, property and equipment                                 194,416                     -
    Write off of Kiboga license agreement                                         1,905,810                     -
    General and administrative                                                    3,236,125             3,759,060
                                                                          -------------------- --------------------
                                                                                  7,376,402             7,519,271
                                                                          -------------------- --------------------
Loss from operations                                                             (5,916,255)           (5,151,540)

Other income (expense):
    Interest income                                                                  22,646                83,563
    Interest expense, including $109,182 to
      related parties in 2002                                                      (226,045)             (668,000)
    Reserve for notes receivable, including accrued interest of
      $70,097 in 2001                                                                     -              (643,151)
    Reserve for contracts receivable                                                      -              (135,000)
    Reserve for subscriptions receivable, including accrued interest of
      $19,445 in 2001                                                                     -            (1,530,237)
    Recovery of subcription receivable reserve                                            -               264,551
    Reserve for Optmark                                                                   -               (30,000)
    Other                                                                           115,059                17,373
                                                                          -------------------- --------------------
                                                                                    (88,340)           (2,640,901)
                                                                          -------------------- --------------------
  </TABLE>
               The accompanying notes are an inegral part of these
                       consolidated financial statements

                                       F-5

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF OPERATIONS (CONTINUED)
                      YEARS ENDED MARCH 31, 2002 AND 2001

<TABLE>
<CAPTION>
                                                                            2002               2001
                                                                       ----------------  -----------------

<S>                                                                    <C>               <C>
Loss from continuing operations                                         $   (6,004,595)   $   (7,792,441)
    Loss from discontinued operations                                                -        (1,920,056)
    Loss on disposal of commercial segment                                           -          (418,000)
                                                                       ----------------  -----------------

Net loss                                                                    (6,004,595)      (10,130,497)

Preferred stock dividends:
    Imputed stock dividends related to issuance of
     detachable warrants                                                $            -    $   (3,645,250)
    Imputed stock dividends for beneficial conversion feature                        -          (804,103)
    Imputed cumulative stock dividends                                        (171,526)         (311,103)
                                                                       ----------------  -----------------

Net loss applicable to common stock                                     $   (6,176,121)   $  (14,890,953)
                                                                       ================  =================

Net loss applicable to common stock attributed to continuing
    operations                                                          $   (6,176,121)   $  (12,552,897)

Net loss applicable to common stock attributed to discontinued
    operations                                                                       -        (2,338,056)
                                                                       ----------------  -----------------
Net loss applicable to common stock                                     $   (6,176,121)   $  (14,890,953)
                                                                       ================  =================
Basic net loss per share from continuing operations                     $         (.14)   $        (0.76)

Basic net loss per share from discontinued operations                                -             (0.14)
                                                                       ----------------  -----------------

Basic net loss per share                                                $         (.14)   $        (0.90)
                                                                       ================  =================

Basic weighted average number of common shares outstanding                  44,588,809        16,528,113
                                                                       ================  =================
</TABLE>
               The accompanying notes are an integral part of these
                       consolidated financial statements

                                       F-6

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

          CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
                       YEARS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>


                                     Series A Preferred Stock                 Common Stock
                                  --------------------------------   --------------------------------             Subscriptions
                                                                                                                    Receivable
                                                     Additional                                    Additional      from Equity
                                  Shares  Dollars  Paid-In Capital     Shares        Dollars     Paid-In Capital   Transactions
                                  ------  -------  ---------------   -----------   -----------   ---------------  -------------
<S>                               <C>     <C>      <C>               <C>           <C>              <C>           <C>
Balance, April 1, 2000                                                16,278,179   $    16,278      $ 39,816,415  $  (1,510,792)

Preferred stock sold for
cash, net of expenses of
$550,647                          5,000        5        4,449,348

Imputed preferred stock
dividends related to issuance
of detachable warrants for
common stock in connection
with the sale of
preferred stock                                                                                        3,645,250

Imputed preferred stock
dividends for beneficial
conversion feature                                        804,103

Common stock issued as payment
for notes payable to principal
stockholder                                                                4,444             5            19,995

Common stock issued to pay
accrued interest upon
conversion of notes
payable to principal
stockholder                                                                1,852             2             8,327

Warrants issued to purchase
common stock                                                                                             406,689

Warrants issued to purchase
common stock associated with
the line of credit                                                                                       463,000

Stock options to purchase
common stock granted to
non-employees                                                                                             50,400

Common stock issued to Board
of Directors for annual
compensation                                                               9,231             9            44,991

Imputed preferred stock dividends
at 8%                                                     311,103

Preferred stock converted to
common stock                     (1,269)      (1)      (1,268,949)     1,008,079         1,008         1,267,942

Treasury stock, 278,652
shares held

Reserve for subscription
receivable                                                                                                            1,510,792


Net loss
                                  ------  -------  ---------------   -----------   -----------   ---------------  -------------
</TABLE>

<TABLE>
<CAPTION>

                                                    Treasury Stock
                                   Accumulated   ----------------------
                                    Deficit       Shares      Dollars      Total
                                 --------------  -----------  ---------  -----------
<S>                              <C>             <C>          <C>        <C>
Balance, April 1, 2000            $ (37,664,511)                          $  657,390

Preferred stock sold for
cash, net of expenses of
$550,647                                                                   4,449,353

Imputed preferred stock
dividends related to issuance
of detachable warrants for
common stock in connection
with the sale of
preferred stock                      (3,645,250)                                   -

Imputed preferred stock
dividends for beneficial
conversion feature                     (804,103)                                   -

Common stock issued as payment
for notes payable to principal
stockholder                                                                   20,000

Common stock issued to pay
accrued interest upon
conversion of notes
payable to principal
stockholder                                                                    8,329

Warrants issued to purchase
common stock                                                                 406,689

Warrants issued to purchase
common stock associated with
the line of credit                                                           463,000

Stock options to purchase
common stock granted to
non-employees                                                                 50,400

Common stock issued to Board
of Directors for annual
compensation                                                                  45,000

Imputed preferred stock dividends
at 8%                                  (311,103)                                   -

Preferred stock converted to
common stock                                                                       -

Treasury stock, 278,652
shares held                                         278,652      (78,301)    (78,301)

Reserve for subscription
receivable                                                                 1,510,792

Net loss                            (10,130,497)                         (10,130,497)
                                 --------------  -----------  ---------  -----------
</TABLE>

                                       F-7

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
                       YEARS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>
                                   Series A Preferred Stock                   Common Stock
                              ----------------------------------- -----------------------------------
                                                                                                        Subscriptions
                                                 Additional                                Additional     Receivable
                                                  Paid-In                                    Paid-In     from Equity    Accumulated
                              Shares   Dollars    Capital            Shares     Dollars      Capital     Transactions      Deficit
                              ------   -------   ------------     ----------   --------   -----------   -------------   -----------
<S>                             <C>     <C>        <C>            <C>          <C>        <C>            <C>          <C>
Balance, April 1, 2001          3,731   $    4     $4,295,605     17,301,785   $17,302    $45,723,009    $        -    $(52,555,464)

Common stock sold for cash,
net of selling expenses                                            7,235,000     7,235        578,665

Warrants issued to purchase
common stock                                                              -         -         409,548

Common stock issued as payment
of note payable to related party                                     980,756       980        356,639

Common stock issued as
payment of
accounts payable                                                     597,077       597        232,263

Common stock options issued
for services                                                                                   94,303

Common stock issued to
Kiboga                                                            30,809,979    30,810      1,175,000

Common stock issued for services                                   1,373,991     1,374         77,441

Imputed preferred stock
dividend                                              171,526                                                              (171,526)

Preferred stock converted
to common stock                (3,731)  $   (4)    (4,467,131)    17,458,389    17,459      4,449,676

Net loss                                                                                                                 (6,004,595)
                               ------   -------  -------------    ----------   -------    -----------   -------------  ------------
Balance, March 31, 2002            -   $     -   $          -     75,756,977   $75,757    $53,096,544   $         -    $(58,731,585)
                               ======  ========  =============    ==========   =======    ===========   =============  ============

</TABLE>

<TABLE>
<CAPTION>
                                   Treasury Stock
                                 -------------------
                                  Shares     Dollars      Total
                                 --------  ---------  ------------
<S>                              <C>       <C>        <C>
Balance, April 1, 2001           278,652   $(78,301)  $(2,597,845)

Common stock sold for cash,
net of selling expenses                                   585,900

Warrants issued to purchase
common stock                                              409,548

Common stock issued as payment
of note payable to related party                          357,619

Common stock issued as
payment of accounts payable                               232,860

Common stock options issued for services                   94,303

Common stock issued to Kiboga                           1,205,810

Common stock issued for services                           78,815

Imputed preferred stock
dividend                                                       -


Preferred stock converted
to common stock                                                -




Net loss                                               (6,004,595)
                                -------    --------   -----------
Balance, March 31, 2002         278,652    $(78,301)  $(5,637,585)
                                =======    ========   ===========

</TABLE>

              The accompanying notes are an integral party of this
                        consolidated financial statement



                                       F-8

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                       YEARS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>
                                                                      2002                 2001
                                                                  ------------        -------------
<S>                                                               <C>                 <C>
Operating activities:
  Net Loss                                                        $ (6,004,595)       $ (10,130,497)
  Adjustments to reconcile net loss to net cash used
   in operating activities of continuing operations.
    Loss from discontinued operations                                        -            1,920,056
    Loss on disposal of commercial segment                                   -              418,000
    Write-off of idle plant, property and equipment                    194,416                    -
    Return of stock in settlement of debt                                    -              (78,301)
    Depreciation and amortization                                      263,178              187,343
    Write off of Kiboga license agreement                            1,905,810                    -
    Compensation expense recorded upon issuance of
     annual stock award for Board of Directors                               -               45,000
    Compensation expense recorded upon issuance of
     warrants and compensatory stock options                           503,851              457,089
    Reserve for notes receivable, including accrued
     interest                                                                -              643,151
    Reserve for related party notes receivable,
     including accrued interest                                              -               56,655
    Forensic vehicle valuation reserve                                       -              330,000
    Reserve for contract receivable                                          -              135,000
    Reserve for subscription receivable, including
     accrued interest of $19,445                                             -            1,530,237
    Reserve for OptMark                                                      -               30,000
    Write-off of line of credit fees                                         -              668,000
    Changes in operating assets and liabilities:
      Accounts receivable                                              304,598              106,733
      Other current assets                                               9,755                    -
      Other assets                                                      35,687               96,471
      Accounts payable and accrued expenses                          1,121,285              788,939
                                                                  ------------        -------------
    Net cash used in operating activities of
     continuing operations                                          (1,666,015)          (2,796,124)
                                                                  ------------        -------------
    Net cash used in discontinued operations                          (418,000)          (1,695,659)
                                                                  ------------        -------------
      Net cash used in operating activities                         (2,084,015)          (4,491,783)
                                                                  ------------        -------------
Investing activities:
  Purchase of forensic vehicles                                              -             (330,000)
  Purchase of contract receivables                                           -             (135,000)
  Investment in OptMark                                                      -              (30,000)
  Notes receivable accrued interest                                          -              (32,037)
  Purchases of software licenses, equipment,
   furniture and leasehold improvements                                      -             (369,362)
                                                                  ------------        -------------
      Net cash used in investing activities                                  -             (896,399)
                                                                  ------------        -------------
</TABLE>

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

                                       F-9

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
                       YEARS ENDED MARCH 31, 2002 AND 2001
<TABLE>
<CAPTION>

                                                                     2002               2001
                                                                 -----------        -----------
<S>                                                              <C>                <C>
Financing activities
  Proceeds from loans from related parties                         1,114,145            260,500
  Proceeds from line of credit borrowings                                  -          1,295,000
  Repayments of notes payable and other                                    -           (400,000)
  Sale of common stock, net of selling expense                       585,900                  -
  Sales of preferred stock, net of selling expenses                        -          4,449,353
                                                                 -----------        -----------
      Net cash provided by financing activities                    1,700,045          5,604,853
                                                                 -----------        -----------
Net increase (decrease) in cash and cash equivalents                (383,970)           216,671
Cash and cash equivalents, beginning of year                         383,970            167,299
                                                                 -----------        -----------
Cash and cash equivalents, end of year                           $         -        $   383,970
                                                                 ===========        ===========
Supplemental disclosure of cash flow data:
    Interest paid                                                $         -        $    14,679
                                                                 ===========        ===========
Supplemental disclosure of noncash investing and
 financing activities:
   Common stock issued upon conversion of convertible
    preferred stock                                              $ 4,467,135        $ 1,268,950
                                                                 ===========        ===========
   Common stock issued as payable for:
     Accounts payable                                            $   232,860        $         -
                                                                 ===========        ===========
     Services                                                    $    78,815        $         -
                                                                 ===========        ===========
     Notes payable to related parties                            $   357,619        $    20,000
                                                                 ===========        ===========
     Accrued interest payable                                    $         -        $     8,329
                                                                 ===========        ===========
     Licensing agreement                                         $ 1,205,810        $         -
                                                                 ===========        ===========
</TABLE>
               The accompanying notes are an integral part of these
                       consolidated financial statements

                                       F-10


<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -- Business and summary of significant accounting policies:

Merger and principles of consolidation:

     On December 27, 1999, a merger between Express Capital Concepts, Inc. and
     GreyStone Technology, Incorporated was completed, whereupon Express Capital
     Concepts was renamed GreyStone Digital Technology, Inc., underwent a
     1-for-41.66667 reverse stock split (which reduced its issued and
     outstanding common stock to 480,000 shares), changed the par value of the
     stock from $.0001 to $.001 per share, and reduced the total authorized
     common stock from 50,000,000 shares to 30,000,000 shares. Simultaneously,
     15,101,937 shares of common stock were issued to GreyStone Technology, Inc.
     common stockholders. The transaction has been accounted for as a reverse
     acquisition, wherein GreyStone Technology, Incorporated, the operating
     company, is treated as the acquirer for accounting purposes. The
     consolidated financial statements include the accounts of GreyStone Digital
     Technology, Inc, and GreyStone Technology, Inc. (the "Company"). All
     significant intercompany accounts and transactions are eliminated in
     consolidation.

Description of operations:

     The Company ceased all operations and closed its main operations in San
     Diego in May 2002. The Company had seven full-time employees at March 31,
     2002 and no employees at June 30, 2002. Currently all corporate expenses
     are paid by Kiboga Systems, Inc. and various shareholders on behalf of the
     Company. See Additional Discussion in Note 2.

     In June 2002 the Company entered into an agreement to purchase all of the
     outstanding stock of Proyecciones Y Ventas Orginizadas, S.A. de C.V.
     ("Provo") by issuing Provo's shareholders newly issued common shares of the
     Company representing 18% of the fully diluted shares of the Company to be
     outstanding immediately after concluding the exchange of shares and by the
     Provo shareholders receipt of 50% ownership of the Company's stock held by
     Kiboga Systems, Inc. ("Kiboga"). Kiboga owned 30,809,979 common shares of
     the Company at March 31, 2002. Kiboga's ownership of the Company shares
     represented 41% of the Company's outstanding common stock at March 31,
     2002. Subject to certain other conditions the purchase agreement stipulates
     that the transaction with Provo will occur on or before August 31, 2002.
     Provo is the largest distributor of pre-paid phone cards in Mexico.

     Before the Company ceased operations, it designed, developed and marketed
     real-time, interactive, and networked three dimensional, digital media
     content ("digital media") principally for defense (i.e., training and
     simulation) applications. The Company began operations in 1989 and worked
     primarily as a contractor for U.S. defense customers. Company engineers
     performed systems software engineering, specializing in the application of
     advanced software techniques for developing "smarter" systems that learn,
     reason and achieve some level of intelligence (i.e., artificial
     intelligence). Substantially all of the Company's revenue from its
     inception through March 31, 2002 have been derived from government related
     contracts. In November 1993, the Company started attempting to apply its
     technical skills to develop and market video entertainment products suited
     for the "out-of-home" entertainment market. In June 2001, the Company
     elected to discontinue all further efforts to develop its entertainment
     business line. Additionally, the Company estimated the additional losses to
     be incurred from discontinued operations until the operations totally
     ceased, and accrued an additional loss for disposing of entertainment
     segment as of March 31, 2001. The assets, liabilities, revenues and
     expenses of this segment have been presented as discontinued operations at
     March 31, 2001 and for the year then ended. This segment had no assets,
     liabilites, revenues or expenses at March 31, 2002 or during the year then
     ended. See additional discussion in Note 3.

Cash and cash equivalents:

     The Company considers all highly-liquid investments with maturities of
     three months or less when acquired to be cash equivalents.

                                      F-11

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -- Business and summary of significant accounting policies (continued)

Equipment, furniture, and leasehold improvements:

     Equipment, furniture, and leasehold improvements are stated at cost and are
     depreciated over their estimated useful lives of three to five years using
     the straight-line method.

Revenue recognition:

     Revenues are earned under a variety of cost reimbursement and fixed-price
     contracts with the U.S. Government, subcontracts with prime contractors and
     commercial contracts. Contract revenues on fixed price long-term contracts
     are recorded using the percentage of completion method, primarily based on
     contract costs incurred to date, compared with total estimated completion
     costs. Provisions for estimated losses on contracts are recorded as such
     losses become known. Because of the inherent uncertainties in estimating
     costs, it is at least reasonably possible that the estimates used will
     change significantly within the near term. Contract revenues on cost
     reimbursement type contracts are recognized as the related costs are
     incurred. Revenues on time and material contracts are recognized as earned.

Cost of revenues:

     Cost of revenues consists of direct labor, fringe benefits, direct costs
     and overhead. Overhead is allocated based on the amount of direct labor and
     fringe benefits incurred on revenue projects.

Advertising:

     The Company expenses the cost of advertising and promotions as incurred.
     Advertising costs charged to continuing operations were approximately
     $47,000 and $410,000 in 2002 and 2001, respectively.

Research and development:

     Since the technological feasibility of software products is not established
     until completion of the development, costs and expenses related to research
     and product development are expensed as incurred.

Income taxes:

     The Company accounts for income taxes pursuant to the asset and liability
     method which requires deferred income tax assets and liabilities to be
     computed for temporary differences between the financial statement and tax
     bases of assets and liabilities that will result in taxable or deductible
     amounts in the future based on enacted laws and rates applicable to the
     periods in which the temporary differences are expected to affect taxable
     income. Valuation allowances are established when necessary to reduce
     deferred tax assets to the amounts expected to be realized. The income tax
     provision is the tax payable or refundable for the period plus or minus the
     change during the period in deferred tax assets and liabilities.

Fair Value of Financial Instruments

     The Company's financial instruments (with the exception of all related
     party amounts), including accounts receivable, accounts payable and accrued
     expenses and all remaining short-term obligations are carried at cost,
     which approximates fair value.

                                      F-12

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 -- Business and summary of significant accounting policies (continued):

Loss per share:

     Basic loss per common share is calculated by dividing net loss applicable
     to common shares by the weighted average number of common shares
     outstanding during the period. The calculation of diluted earnings per
     common share is similar to that of basic earnings per common share, except
     that dilutive earnings per common share reflects the amount of earnings for
     the period available to each share of common stock outstanding during the
     reporting period, while giving effect to all dilutive potential common
     shares that were outstanding during the period such as common shares that
     could result from the potential exercise or conversion of securities and
     debt into common stock. Dilutive earnings per share has not been presented
     since the effects would be anti-dilutive due to the Company's losses. The
     Company's options and warrants, however, could potentially dilute earnings
     per share in the future.

Use of estimates:

     The preparation of financial statements in conformity with accounting
     principles generally accepted in the United States of America requires
     management to make estimates and assumptions that affect certain reported
     amounts and disclosures. Accordingly, actual results could differ from
     those estimates.

Recent Accounting Pronouncements:

     In August 2001, the FASB issued Statement of Financial Accounting Standards
     No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets"
     ("FAS 144"). FAS 144 supercedes FAS 121, "Accounting for Long-Lived Assets
     and for Long-Lived Assets to be Disposed of" (FAS 121") and the accounting
     and reporting provisions of the Accounting Principles Board Opinion No. 30,
     "Reporting the Results of Operation - Reporting the Effects of Disposal of
     a Segment of a Business, and Extraordinary, Unusual and Infrequently
     Occurring Events and Transactions." FAS 144 establishes a single accounting
     model, based on the framework established by FAS 121, for long-lived assets
     to be disposed of by sale and resolved significant implementation issues
     related to FAS 121. FAS 144 retains the requirements of FAS 121 to
     recognize an impairment loss only if the carrying amount of a long-lived
     asset is not recoverable from its undiscounted cash flows and measure an
     impairment loss as the difference between the carrying amount and the fair
     value of the asset. FAS 144 excludes goodwill from its scope, describes a
     probability-weighted cash flow estimation approach and establishes a
     "primary-asset" approach to determine the cash flow estimation period for
     groups of assets and liabilities. FAS 144 is effective for fiscal years
     beginning after December 15, 2001, and interim periods within those fiscal
     years, with early application encouraged.

                                      F-13

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 2-- Going concern:

     As shown in the accompanying consolidated financial statements, the Company
     had a working capital deficiency of $5,640,085 at March 31, 2002; net
     losses attributed to continued operations of $6,004,595 and $7,792,441 for
     the years ended March 31, 2002 and 2001, respectively; and an accumulated
     deficit of $58,731,585 at March 31, 2002. Additionally, the Company
     currently has no operations and has closed its main office in San Diego.
     The Company also has no cash and has a substantial amount of legal
     judgments and claims against it as discussed in Note 16. Among these are
     liens by the IRS for back payroll taxes. The Company is also in default on
     certain of its outstanding debt as discussed in Note 9. These matters raise
     substantial doubt about the ability of the Company to continue as a going
     concern.

     Historically, the Company has funded its operations primarily through sales
     of common stock to, and borrowings from, its principal stockholder and
     sales of preferred and common stock and convertible notes payable to
     private investors pursuant to private placement memorandums and exemptions
     from registration under the Securities Act of 1933.

     Early in fiscal year 2002, the Company concluded that its existing
     operations would continue to require further investments of cash that it
     could not continue to support. Consequently, the Company initiated a
     program to move into an entirely different business. Accordingly, the
     Company took steps to exit and close down its existing operations and then
     use its status as a public company to acquire businesses that appear to
     have better prospects for growth and near term generation of positive cash
     flow. Since June 2001, the Company has proceeded to take actions and enter
     into certain agreements with two entities that appear to have the better
     prospects that it seeks. These actions and proceedings are summarized as
     follows:

     o    In July 2001, the Company entered into a long-term lease agreement
          with Kiboga, a Texas based private company founded in February 2001
          engaged in the business of the development and sale of technology
          software products with applications to law enforcement, defense, and
          intelligence. Under that lease agreement the Company gained the right
          to receive 80% of the revenues generated by applications of Kiboga's
          real-time data gathering and integration software used by law
          enforcement and intelligence agencies.

     o    In November 2001, together with Kiboga, the Company entered into a
          letter of intent to merge (the "Merger") with Provo, a privately held
          Mexican company that is the largest distributor of Ladatel phone
          calling cards in Mexico. On July 18, 2002 the original Provo purchase
          agreement was amended to provide that Kiboga would not be part of
          the Merger and that the Company transfer to the sellers of Provo stock
          no less than 18% of the Company's shares on a fully diluted basis. The
          amendment requires the transfer of shares to be made no later than
          August 31, 2002.

     As of the date of this report, the Company has received no revenue nor
     incurred any operating expenses in connection with the above agreements and
     no assurance can be made that the Company will receive any revenues in the
     future.

     The accompanying consolidated financial statements have been prepared in
     conformity with accounting principles generally accepted in the United
     States of America which contemplates (1) that the Company will continue as
     a going concern (2) realization of assets and (3) satisfaction of
     liabilities in the ordinary course of business. If the Company is unable to
     raise additional capital, it may be required to take actions that may not
     be favorable to the Company. The consolidated financial statements do not
     include any adjustments that might result from the outcome of these
     uncertainties.

                                      F-14

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 3-- Discontinued operations:

     Previously, the Company identified and reported on two industry segments
     based on strategic business units that were in turn based along market
     lines. The Government Business Unit works primarily as a contractor for
     U.S. defense contractors and the U.S. Government. The Commercial Business
     Unit developed products to be sold for entertainment centers and home
     entertainment. In June 2001, the Company discontinued its Commercial
     Business Unit and eliminated that business segment. At March 31, 2001, the
     Company estimated the additional losses to be incurred until the segment's
     operations totally ceased and accrued an additional loss for disposal of
     the segment.

Note 4-- License agreement:

     On July 16, 2001, the Company entered into an exclusive 99 year Marketing
     and Licensing Agreement with Kiboga. The Company shall serve as marketing
     agent and advisor and will assume financial responsibility for all
     attendant expenses necessary to realize value from the License Agreement.

     Under the Agreement, the Company will pay Kiboga a 20% royalty, and receive
     the remaining 80% of the revenue generated by those applications of
     Kiboga's network data mining, acquisition and distribution software. The
     Company will be entitled to 100% of any profits generated by this activity
     in return for a payment by the Company of 29,614,274 shares of common stock
     (subsequently adjusted as described below) and $700,000 in cash that has
     not yet been paid. The agreement provides that the Company will issue an
     additional 1,000,000 to 15,000,000 common shares if the earnings
     contributed to the Company from the Kiboga software are between $8,572,727
     and $29,572,727 over the next 24 months beginning July 16, 2001. Under the
     original agreement, if revenues were less than $6,000,000 through the next
     12 months beginning July 16, 2001 then Kiboga would return 5,000,000 shares
     to the Company. In addition, the original agreement provided for an
     anti-dilution formula, which effectively ensured that Kiboga's percentage
     of ownership could not be diluted by future transactions. The Agreement
     anticipates changes in management and directors of the Company. The
     provision which requires the return of 5,000,000 shares and the original
     anti-dilution provision have both been waived.

     On October 8, 2001, a voting majority of the holders of the common stock of
     the Company, holding not less than a sixty percent majority did adopt and
     approve, by their written consent, the Kiboga transaction that was
     announced on September 27, 2001, and did ratify and confirm the issuance of
     29,614,274 restricted shares to Kiboga under the Agreement. Accordingly,
     October 8, 2001 is the effective date of the transaction. On October 15,
     2001, the Company issued to Kiboga 29,614,274 shares of restricted stock
     and on January 12, 2002 the Company issued 1,195,705 additional restricted
     shares under the original anti-dilution formula.

     The Company valued the License based on the trading value of the stock at
     the time it was issued plus a $700,000 required cash payment. On this
     basis, an intangible asset was recorded totaling $1,905,810. The trading
     value used was the average share value received in the equity issued for
     cash during June and July 2001, and the value of the shares received was
     adjusted downward by 50% for the restrictions placed upon the shares issued
     for the License. Additionally the Company has recorded a liability of
     $700,000 for the cash to be paid. Subsequently, the Company has recorded an
     impairment loss related to this asset due to the uncertainty of future
     revenue and profit streams that may be generated by the License Agreement.
     Accordingly, an expense in the amount of $1,905,810 was recorded during the
     year ended March 31, 2002 related to this write off.

     The Company has been unable to comply with all provisions of the Marketing
     and Licensing Agreement and Kiboga, at any time, could declare the Company
     in default and cancel the Agreement. Specifically, the Company has not
     directed its efforts to developing and marketing the Kiboga product, as
     envisaged in the Agreement, nor has it made the required $700,000 cash
     payment.

Note 5 -- Concentration of credit risk and sales to major customers:

     The Company maintained its cash balances with a financial institution and
     also in an uninsured money market account. At times, financial institution
     balances may exceed the Federal Deposit Insurance Corporation limitation
     for coverage thereby exposing the Company to credit risk.

     Accounts receivable are financial instruments that also expose the Company
     to a concentration of credit risk. The Company routinely assesses the
     financial strength of its customers and maintains an allowance for doubtful
     accounts that management believes will adequately provide for credit
     losses.

Note 6-- Notes receivable:

     Notes receivable at March 31, 2001, included two notes from an individual
     originally due on February 20, 2000. The notes accrue interest at 9.00% and
     are collateralized by common stock in a company owned entirely by the
     individual. The notes were subsequently extended several times. The last
     maturity date was November 18, 2000. The Company has requested repayment of
     the notes and, as the notes are currently in default, has reserved for the
     full amount of the notes plus accrued interest.

     In 2000, the Company identified a potential acquisition candidate that
     manufactures forensic and surveillance vehicles. The Company loaned the
     acquisition candidate's president $500,000 in November 1999 and an
     additional $100,000 in February 2000. Those notes, which were originally
     due in February 2000 and subsequently extended several times, are currently
     in default. Accordingly, in 2001 the Company fully reserved the notes and
     related accrued interest totalling $643,151 to continuing operations. These
     notes are collateralized by all of the borrower's stock in the target
     company. The Company believes the value of the collateral is worthless.

     On June 9, 2000, the Company purchased finished goods inventory in the
     amount of $330,000 from the target company. Additionally, the Company paid
     the target company $135,000 for the right to receive future payment on
     invoices to be generated by the target company upon their completion of
     work in progress and subsequent delivery of product. The Company has
     determined that the value of these assets has been impaired. As a result, a
     reserve of $465,000 was recorded in the period ended March 31, 2001.

                                      F-15

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 7-- Equipment, furniture and leasehold improvements:

     Equipment, furniture and leasehold improvements at March 31, 2002 and 2001
     consisted of the following:
<TABLE>
<CAPTION>
                                                        2002            2001
                                                     ----------      ------------
     <S>                                           <C>             <C>
     Computer, other equipment and furniture         $    2,500      $  2,848,407
     Leasehold improvements                                   -           102,029
                                                     ----------      ------------
                                                     $    2,500         2,950,436
     Less accumulated depreciation and amortization           -        (2,490,342)
                                                     ----------      ------------
                                                     $    2,500      $    460,094
                                                     ==========      ============
</TABLE>
     During the year ended March 31, 2002, the Company recognized an impairment
     charge of $194,416 related to property and equipment as substantially all
     of the Company's property, equipment and leasehold improvements were
     abandoned when the Company moved from San Diego to Dallas.

Note 8-- Lease commitment:

     The Company has a noncancelable operating lease for its office space which
     expires on March 31, 2003. Rent expense approximated $86,000 in 2002 and
     $343,000 in 2001. Effective March 31, 2002, the Company and its former
     lessor reached an agreement to cancel the Company's lease agreement and the
     Company moved to another location. Effective April 1, 2002, the Company
     entered into a new noncancelable lease agreement for office space which
     expires on March 31, 2003. Subsequently, the Company moved its operations
     from San Diego to Dallas. Although this leased premises is not being
     utilized by the Company, they are obligated to make the rent payments for
     the duration of the lease term. Future minimum lease payments under the
     operating lease are approximately $66,000 for the year ended March 31,
     2003.

Note 9-- Notes payable:

     At March 31, 2001, the Company had an outstanding note payable with a
     principal balance of $50,000 that was originally due on June 22, 2001. The
     note was unsecured and bore interest at 10%. The note was subsequently
     extended to September 30, 2001. During the year ended March 31, 2002, the
     Company settled the note and related accrued interest by issuing 173,292
     shares of common stock.

                                      F-16

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 9-- Notes payable (continued):

     In February 2001, the Company obtained a line of credit from a lender that
     provided for maximum borrowings not to exceed $2,500,000 to be used to
     provide working capital for production of its Merc Racer product by its
     commercial business unit and for general corporate matters. The credit
     facility provided that the Company pay a loan commitment fee of 8% plus
     costs of $205,000 and issued 1,150,000 warrants to purchase common stock.
     The expense relating to the warrants issued was $463,000, for a total
     commitment fee of $668,000. The loan fee and the fair value of the warrants
     was to be amortized as additional interest expense over the term of the
     agreement, 12 months. In addition the note bears interest at 14%. The
     credit agreement also provided for certain restrictive covenants dealing
     with, among other things, any substantial deterioration of the Company's
     financial condition. As of March 31, 2001, in addition to the $205,000 loan
     fee, the Company had drawn another $845,000 in advances. Citing a breech of
     the loan covenants dealing with material changes in the Company's financial
     condition, the lender declared the line of credit to be in default and has
     demanded the balance of $1,050,000 plus accrued interest be paid
     immediately. Since the loan has been declared to be in default, the Company
     has written off the entire loan fee and the fair value of the warrants as a
     charge to interest expense in 2001. On January 23, 2002, the Company
     reached a court-mandated settlement with the lender to repay a total of
     $1,274,148, commencing with a $72,000 payment in February 2002. The Company
     has not made any payments on the debt and has the total amount classified
     as settlement payable on the balance sheet at March 31, 2002.

     As of March 31, 2002 and 2001, the Company had borrowed $222,496 and
     $74,000, respectively, from certain of its officers and shareholders. The
     loans are unsecured, non-interest bearing and due upon demand.
     Additionally, during the year ended March 31, 2002 the Company borrowed
     $105,000 from a shareholder of the Company. This loan is unsecured, bears
     interest at 10% and was due on June 1, 2001. As the note is past due it
     currently accrues additional interest at $5,000 per month. At March 31,
     2002, this loan balance, including accrued interest, was $198,750.

     At March 31, 2002, the Company had borrowed $434,398 from Kiboga. The loans
     are unsecured, non-interest bearing and due upon demand.

     During the year ended March 31, 2002, an additional 807,464 shares of
     common stock were issued to settle $301,509 of short-term notes payable.
     The common shares were issued at the fair value of the common stock at the
     date of settlements.

                                      F-17

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 10 -- Warrants:

     The Company has issued warrants in conjunction with the sale of convertible
     notes payable, assisting the Company in acquiring capital, extending loans,
     as an incentive to equity investors and as part of the consideration paid
     to various consultants. All of the warrants issued were for services or
     actions that had already been rendered at the date of issuance. Based on
     the provisions of Statement of Financial Accounting Standards No. 123,
     Accounting for Stock-Based Compensation ("SFAS 123") using the
     Black-Scholes option-pricing model and assuming a risk-free interest rate
     for 2002 and 2001 of 4.75% and 6%, expected warrant lives of one to five
     years, expected volatility of 159% to 224% and 5% to 147% and no dividends,
     respectively. The fair value of the warrants issued was $409,548 and
     $869,689 in 2002 and 2001, respectively. Each warrant entitles the holder
     to purchase one share of common stock upon exercise. The warrants expire at
     various dates from 2002 through 2010. The following is a summary of warrant
     activity during 2002 and 2001:

<TABLE>
<CAPTION>
                                                                          Number of                 Exercise
                                                                           Warrants                   Price
                                                                          ---------               ------------
<S>                                                                      <C>                    <C>
     Outstanding at March 31, 2000                                        7,209,096               $4.95 to $12
        Granted                                                           2,700,000               $0.60 to $12
                                                                          ---------

     Outstanding at March 31, 2001                                        9,909,096               $0.60 to $12
        Granted                                                           2,986,167               $1.00 to $2.50
        Cancelled                                                          (921,924)              $0.60 to $10
                                                                         ----------
     Outstanding at March 31, 2002                                       11,973,339               $0.60 to $12
                                                                         ==========
     Weighted average fair value of warrants granted during 2002                                         $1.03
                                                                                                  ============

     Weighted average fair value of warrants granted during 2001                                         $1.67
                                                                                                  ============
</TABLE>
Note 11 -- Income taxes:

     The Company had net operating loss carryforwards at March 31, 2002 of
     approximately $46,111,000 available to reduce future Federal taxable income
     and approximately $14,796,000 available to reduce future state taxable
     income. The Federal net operating losses expire between 2007 and 2021.
     Pursuant to Internal Revenue Code Section 382, use of the Company's net
     operating loss carryforwards have been severely limited as a result of a
     cumulative change in ownership of more than 50% within a three-year
     period. The Company has net deferred tax assets at March 31, 2002 and 2001
     comprised of the following:

<TABLE>
<CAPTION>

                                                                      2002                    2001
                                                                  ------------           ------------
<S>                                                             <C>                  <C>
           Deferred tax assets:
               Net operating loss carry-forwards                  $  1,097,000           $ 14,960,000
               SFAS 123 stock option and warrant expense                37,000                569,000
               Accrued salary and vacation expense                      91,000                 91,000
               Accrued loss on disposal of segment                           -                179,000
               Other                                                         -                 33,000
                                                                   -----------           ------------
                  Totals                                             1,225,000             15,832,000
           Valuation allowance for deferred tax assets              (1,225,000)           (15,832,000)
                                                                   -----------           ------------
           Net deferred tax assets                                 $        --           $         --
                                                                   ===========           ============
</TABLE>
                                      F-18

<PAGE>


                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 11 -- Income taxes (continued):

     The Company has offset the net deferred tax assets by an equivalent
     valuation allowance due to the uncertainties related to the extent and
     timing of its future taxable income.

     The expected Federal income tax benefit, computed based on the Company's
     pre-tax losses in 2002 and 2001 using the statutory Federal income tax
     rate, is reconciled to the actual tax provision reflected in the
     accompanying consolidated financial statements as follows:
<TABLE>
<CAPTION>

                                                         2002             2001
                                                    ===============  ===============
 <S>                                                <C>              <C>
 Expected tax benefit at statutory rates            $    2,042,000   $    3,444,000
 Decrease (increase) in valuation allowance             14,607,000       (3,444,000)
 Loss of NOL carryforward due to change of control     (16,649,000)              --
                                                    ---------------  ---------------
             Totals                                 $           --   $           --
                                                    ===============  ===============
</TABLE>

Note 12-- Issuances of stock:

     During fiscal years 2002 and 2001, the Company sold shares of preferred and
     common stock to private investors pursuant to private placement memorandums
     and exemptions from registration under the Securities Act of 1933.

     On May 22, 2000, the Company completed the sale of $5,000,000 in
     convertible preferred stock to a group of private investors. The Company
     issued 5,000 shares of Series A Preferred Stock, convertible immediately at
     the holders discretion, into common stock at a rate of the lower of (1) 250
     shares of common stock per share of preferred stock (equivalent to an
     investment of $4.00 per share of common stock issued) or (2) 80% of the
     volume weighted average price for the previous 250,000 shares traded prior
     to submission by the preferred stockholder of a conversion notice to the
     Company. Embedded in the preferred stock is a mandatory conversion
     requirement effective three years after the date of issuance. The Series A
     investors also received warrants to purchase 1,250,000 shares of common
     stock at an exercise price of $5.38 per share, and registration rights on
     the conversion shares and the shares issuable upon the exercise of the
     warrants. The preferred stock provides for a cumulative dividend of 8% per
     year, payable in common stock or cash. After payment of a 10% commission
     for introducing the investors to the Company, and legal fees totaling
     approximately $50,000, the Company received net proceeds of approximately
     $4,449,000 which it has substantially used for general corporate purposes.
     In accordance with the Emerging Issues Task Force (EITF) Issue No 98-5, the
     Company recognized a beneficial conversion feature in the amount of
     $804,103 as a one-time non-cash preferred stock dividend. The amount
     represented the difference between the initial conversion price at the date
     of issuance of the preferred shares and the market price of the common
     stock at that date. In addition, the Company recorded a one-time, imputed
     (non-cash) preferred stock dividend of $3,437,500 as a result of allocating
     a portion of the proceeds received to the fair value of the warrants
     issued, as determined by the Black-Scholes model.

                                      F-19

<PAGE>



                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 12 -- Issuances of stock (continued):

     In connection with the above sale of convertible preferred stock, the
     Company issued warrants to purchase 75,000 shares of common stock at an
     exercise price of $5.38 per share to the party who introduced the Company
     to the Series A private placement group. As a result, the Company recorded
     a one-time imputed (non-cash) preferred stock dividend of $207,750. The
     aforementioned imputed preferred stock dividends associated with issuing
     the stock resulted in a one-time loss applicable to common stockholders of
     $(0.27) per share.

     In June 2001 the principal shareholder of Kiboga entered into negotiations
     with the major holders of the Company's Series A Convertible Preferred
     Stock. Among certain agreements negotiated with these holders was a verbal
     agreement that the preferred shares would be converted at a fixed price of
     $0.30 per share and that the holders would waive further accruals of
     preferred dividends in determining the number of shares they would receive
     upon conversion. The Company recorded non-cash preferred stock dividends of
     $171,526 and $311,103 for the years ended March 31, 2002 and 2001,
     respectively, due to the 8% cumulative preferred stock dividend feature.

     As of March 31, 2002, all of the 5,000 shares of Series A Preferred Stock
     issued at a price of $5,564,559 had been converted into 18,466,468 shares
     of common stock.

     During 2002, the Company sold 7,235,000 shares of common stock at $.08 per
     share resulting in net proceeds of $585,900. In addition, the Company
     issued 980,756 shares of common stock to retire $357,619 of short-term debt
     to related parties. The Company issued 1,373,991 shares of common stock for
     $78,815 of services rendered (valued at the value of the services rendered)
     and 597,077 shares of common stock as payment for $232,860 of accounts
     payable.

     During 2002, the Company issued 30,809,979 shares to Kiboga as discussed in
     Note 4.

                                      F-20

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13-- Stock options:

     The Company has three incentive stock option ("ISO") plans -- the "1991
     Plan", the "1994 Plan" and the "2000 Plan". In addition, the Company
     granted nonqualified stock options ("NSOs") in 1994, 1995, 1997 and 1998.
     Information related to the plans and the other options granted follows:

                                                              Options
                                                           Outstanding at

   Year           Type          Options Authorized         March 31, 2002
-----------   -------------    ----------------------     ------------------
   1991           ISO                 1,000,000                       --
   1994           NSO                   200,000                       --
   1994           ISO                 2,000,000                1,441,667
   1995           NSO                   200,000                       --
   1997           NSO                   640,000                       --
   1998           NSO                   750,000                       --
   2000           ISO                 4,000,000                       --
                                                          ------------------
  Total                                                        1,441,667
                                                          ==================



     Generally, the plans specify that the options to purchase shares may be
     granted at prices which approximate their fair market value at the date of
     grant. At March 31, 2001, options to purchase 450,000 shares were available
     for future grant under the 1991 Plan. The 1991 Plan terminated on August
     16, 2001.

     In July 1997, the Company modified the 1994 grant to its then Vice
     President, Corporate Development and General Counsel of incentive stock
     options to purchase 800,000 shares of the Company stock to provide that in
     the event his employment was terminated for any reason, then he would have
     a period of thirty-six months from the date of termination to exercise his
     vested options. Accordingly, the 800,000 ISO options were cancelled and
     800,000 of NSO options were issued. During 1999, 160,000 of non-vested NSO
     options were cancelled due to his employment termination.

     As of March 31, 2002, the Company had issued and outstanding options to
     purchase 1,441,667 shares and options to purchase 7,348,333 shares were
     available for future grant under the 1994 Plan. The 1994 Plan will
     terminate in July 2004 unless terminated as of an earlier date by the Board
     of Directors.

     Options issued under the plans and the other options granted vest over a
     five-year period and are exercisable over a ten-year period from the date
     of grant.

     The amount of compensation expense recognized relating to the granting of
     stock options to employees based on the fair value of the options at the
     grant date under the provisions of SFAS 123 and assuming a risk-free
     interest rate for 2002 and 2001 of 4.75% and 6%, expected option lives of 5
     years, expected volatility of 185% to 229% and 5% and no dividends totaled
     $94,303 and $50,400 in 2002 and 2001, respectively.

                                      F-21

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 -- Stock options (continued):

     If compensation cost for the stock options granted to employees had been
     determined based on the fair value of the options at the grant dates under
     the provisions of SFAS 123 and assuming a risk-free interest rate of 4.75%,
     expected option lives of one to five years, expected volatility of 185% to
     229% and no dividends, the Company's net loss and net loss per share would
     have been increased to the pro forma amounts set forth below:
<TABLE>
<CAPTION>
                                                                   2002             2001
                                                             --------------    -------------
        <S>                                                 <C>               <C>
        Net loss applicable to common stock attributed to    $   (6,004,595)   $ (12,552,897)
             continued operations-- as reported

        Net loss applicable to common stock attributed to
             continued operations-- pro forma                    (6,992,333)     (13,197,897)

        Net loss applicable to common stock per common share
             attributed to continued operations-- as reported          (.14)            (.76)

        Net loss applicable to common stock per common share
            attributed to continued operations-- pro forma             (.16)            (.80)
</TABLE>

     Additional information regarding options outstanding under the Company's
     stock option plans at March 31, 2002 and 2001 and changes in outstanding
     options in 2002 and 2001 are as follows:
<TABLE>
<CAPTION>
                                                        2002                           2001
                                              --------------------------     -------------------------
                                                              Weighted                       Weighted
                                                 Shares or     Average         Shares or      Average
                                                 Price Per    Exercise         Price Per     Exercise
                                                   Share        Price            Share        Price
                                              --------------- ----------     -------------- ----------
        <S>                                   <C>             <C>            <C>            <C>
        Outstanding at beginning of year           4,081,851     $ 4.42          4,106,762     $ 4.31
        Granted                                    2,500,000        .36            101,089       4.95
        Exercised                                   (200,000)       .28
        Cancelled                                 (4,920,184)      6.87           (126,000)      5.14
                                              ---------------                --------------
        Outstanding at end of year                 1,441,667       1.22          4,081,851       4.42
                                              ===============                ==============
        Price range at end of year             $.20 to $7.00                     $ 2.75 to
                                                                                     $6.80

        Exercisable at end of year                   801,667       1.75          3,954,238       4.40
                                              ===============                ==============
        Available for grant at end of year         7,348,333                     4,918,149
                                              ===============                ==============
        Weighted average fair value of                             $.09                        $ 3.64
            options granted during the year
</TABLE>
                                              F-22

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                  AND SUBSIDIY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 13 -- Stock options (continued):

     The following table summarizes information about stock options outstanding
     at March 31, 2002:

                                     Number                 Number
            Exercise               of Options             of Options
             Price                 Outstanding            Exercisable
         ---------------        ------------------     ------------------
              $0.20                  620,000                  413,333
              $0.66                  650,000                  216,667
              $7.00                  171,667                  171,667
                                   ---------                ---------
                                   1,441,667                  801,667
                                   =========                =========

Note 14 -- Related party transactions and balances:

     As part of the Kiboga transaction, discussed in Note 4, the Company
     incurred a $700,000 liability to Kiboga during the year ended March 31,
     2002. Additionally the Company has borrowed $434,398 from Kiboga that was
     due on demand at March 31, 2002.

     The Company had outstanding notes payable to a shareholder of $186,500 at
     March 31, 2001, which were unsecured, nonconvertible and are interest free
     in 2001.

     The shareholder borrowed a portion of the funds used to make the loans to
     the Company from a group of investors by issuing notes (the "Smith Notes")
     with the same interest rates and due dates as the notes issued by the
     Company to the shareholder. In addition, the shareholder granted the
     holders of the Smith Notes the right to convert the principal balance and
     accrued interest into shares of common stock that he owns at a conversion
     rate of $4.50 per share.

     During 2001, the Company reduced the principal balance of, and the accrued
     interest on, the notes payable to the shareholder by $20,000 and $8,329,
     respectively, by issuing 6,296 shares of common stock to certain holders of
     the Smith Notes. The conversions of the principal balances and accrued
     interest during 2001 were at $4.50 per share, as originally provided in the
     conversion forms of the debt agreement.

     Loans payable to officers in the amount of $421,246 and $74,000 at March
     31, 2002 and 2001, respectively, were unsecured, non-interest bearing and
     due upon demand.

     The subscriptions receivable from equity transactions of $327,500 that was
     reflected as an increase to stockholders deficiency at March 31, 2000 was
     evidenced by notes received as part of the consideration for the sale of
     common stock in 1992 to three of the Company's founding stockholders who
     were employees of the Company. The notes are collateralized by the shares
     of the Company's common stock, mature in August 2001 (except under certain
     specified circumstances) and bear interest at 8.2% which is payable at
     maturity. Because of the continued financial difficulties of the Company,
     there is substantial doubt that those receivables will ever be collected.
     Accordingly, the Company charged $327,500 to continuing operations during
     the year ended March 31, 2001.

     During 2000, the Company issued 248,147 shares of common stock upon
     exercise of warrants in exchange for cash, services and a subscription
     receivable in the amount of $1,183,292 from an entity owned by close
     advisors of the Company. The note bears interest at 10% and is
     collateralized by a first deed of trust on residential property held by the
     entity. The subscription receivable which was originally due March 31,
     2000, was extended three additional times and last matured on December 22,
     2000. Total principal and unpaid interest accrued is $1,202,737. The
     Company has not accrued any interest on the note during the current period.
     A valuation reserve of $1,202,737 was established while the Company pursued
     collection of the note. In March 2001, the Company negotiated a settlement
     where by the Company agreed to release the lien on the property in exchange
     for a cash payment of $200,000, the return of the previously issued stock,
     valued at $78,301 (the trading value on the date received), less
     transaction costs incurred of $13,750.

                                      F-23

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 14 -- Related party transactions and balances (continued):

     A related entity and its owners have provided advisory and introduction
     services to GreyStone since July 1997. In late May 2000, the Company paid
     the entity $150,000. In addition, the Company paid one of the owners
     $60,000 in July 2000, $60,000 in October 2000, and accrued $60,000 in May
     2001 for services performed through March 31, 2001. The current service
     agreement expires on September 30, 2001 and includes tasking to develop
     sales and marketing programs, assist with possible acquisition or joint
     venture opportunities, locate and attract third party debt or equity
     funding for the company or its major interests, and provide general
     management services.

     In July 1999, a professional services agreement was entered into between
     the Company and the Pointe Force Company, Inc. ("Pointe Force"), an entity
     owned by a director and officer of the Company. Pointe Force supports the
     Company in the areas of mergers and acquisitions, strategic planning,
     corporate financing and relations with the investment community. Under this
     mutually extendable one-year advisory services agreement, the director of
     Pointe Force was compensated in the amount of $11,000 per month, exclusive
     of expenses. Additionally, the Company loaned $20,000 on August 6, 1999,
     $10,000 on September 22, 1999 and $20,000 on November 17, 1999 to Pointe
     Force and its principal. All loans were for a one-year term and plus
     interest at 8.75% per year. All of the loans have matured and are in
     default. The Company has recorded a valuation reserve of $56,635 during the
     year ended March 31, 2001 and the Company has deferred collection of the
     note. Since December 1, 2000 the director has continued to serve on the
     board and under the terms of the advisory services agreement has continued
     to support the Company on behalf of Pointe Force without compensation.
     After the resignation of the former Chairman, Chief Executive Officer and
     Founder of the Company on March 25, 2002 and the resignation of all other
     directors of the Company, this director has continued to serve as the sole
     director of the Company without compensation.

Note 15 -- Employee benefit plan:

     The Company maintained a defined contribution "Section 401(k)" retirement
     plan which covered all full-time eligible employees. Employees could elect
     to contribute a portion of their salaries directly to the plan, up to the
     maximum allowed by the Internal Revenue Code. The Company matched, on a
     discretionary basis, up to 50% of each participant's annual contributions
     to the plan; however, the Company's matching contribution could not exceed
     8% of the participant's annual compensation. The Company did not make any
     contributions in 2002 and made contributions of approximately $1,000 in
     2001. The 401K plan was terminated in May 2002.

Note 16-- Litigation:

Pending Litigation

     As of July 1, 2002 seven former employees claim that the Company owes them
     $168,000 for back pay and expenses in amounts that range from $4,719 to
     $55,140. In addition, three former officers, Mr. Smith, Mr. Aldern and Mr.
     Beaudet, claim that the Company owes them a total of $301,200 in back pay
     and $9,742 in expenses. These three claims range from $75,230 to $140,000.
     The Company expects that these pending claims will result in litigation or
     labor proceedings. At March 31, 2002, the Company has accrued liabilities
     of $478,942 related to these claims.

     On May 8, 2002 USA TALKS.COM, INC filed a complaint for constructive trust
     and damages in the Superior Court of the State of California, County of Los
     Angeles, Case No. BC259794 and named GreyStone Technologies as one of
     seventeen defendants named in the complaint. The complaint asserts that a
     "stock scam" caused the plaintiff to suffer over $50 million in investment
     equity losses while the defendants "made off with over $15 million in
     ill-gotten gains." Mr. Gelbard and Mr. Beaton are individual defendants
     among others that the plaintiff names along with four individual lawyers
     and the law firm. In the past GreyStone had engaged the services of Mr.
     Gelbard as a financial advisor, however GreyStone has never had any
     connection with, relationship with or awareness of USA TALK.COM. The
     complaint asserts that " at a minimum, the plaintiff believes that
     GreyStone Technologies was involved in the pump and dump scam by means of
     its receipt of illegal profit and/or securities, following Gelbard and/or
     Beaton's illicit receipt of free trading stock pursuant to S8 registration
     and through distribution of same by Gelbard and/or Beaton." The Company
     believes that inclusion of GreyStone in the complaint has no basis,
     substance or merit in fact.

     Since December 8, 2001 five vendors have filed complaints for payments
     totaling $43,324 that range in amounts from $1,450 to $14,987. This amount
     is included in accounts payable at March 31, 2002.

                                      F-24

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 16-- Litigation (continued):

     On May 25, 2001 a lawsuit was filed against GreyStone by Mahan & Nash, a
     public relations service provider, in the Superior Court of the State of
     California, County of Los Angeles for the payment of $68,102 under a
     written contract. The Company answered with a general denial. A final
     status conference was held on May 1, 2002 with a trial date set for May 6,
     2002. The Company was not able to answer at the conference or trial. The
     Company has not received a notice of judgment as of the date of this
     filing. At March 31, 2002 the Company has recorded a liability of $68,102
     related to this lawsuit.

Judgments, Liens and Labor Awards

     As of July 31, 2002 the Internal Revenue Service ("IRS") has given the
     Company notice of Federal Tax Lien filings for employment-related taxes for
     the period ending December 31, 2001. The IRS has from time to time adjusted
     the total amount due based upon recalculations, but the Company believes
     that its total exposure to all such amounts will not exceed $210,000 and at
     March 31, 2002 has recorded a liability for this amount.

     As of July 1, 2002 the State of California Division of Labor Standard
     Enforcement had awarded $187,995 to seven former Company employees for back
     wages due and associated penalties. The awards range from $6,441 to
     $70,444. In addition, at July 1, 2002, seven other employees have filed
     claims totaling $181,888 for unpaid wages, six with the State of California
     and one with State of Oklahoma. These claims range from $4,025 to $74,959.
     At March 31, 2002 the Company has accrued $369,883 related to these awards
     and claims.

     Since April 16, 2002 we have received five different notices of judgment in
     California trial courts totaling $327,564 that range in amounts from
     $23,250 to $138,305 based upon amounts allegedly owed vendors and a
     recruiting consultant. This amount is included in amounts payable at March
     31, 2002.

     On June 29, 2001 a lawsuit was filed in the Superior Court of the State of
     California, County of San Diego against the Company and Richard A. Smith,
     the Company's former Chairman and Chief Executive Officer, by Capital
     Solutions Fund LLC (the lender of the Company's February 2001 line of
     credit) for breach of contract and fraud. A total of $1,045,000 (including
     $200,000 in loan fees) was drawn on the line of credit before the lender,
     Capital Solutions Fund, called the line as a result of the March 2001
     dissolution of the Company's exclusive distributor of the MercRacer
     entertainment system by that distributor's parent corporation. On June 7,
     2002 the Company received a notice of entry of judgment in the amount of
     $1,274,148. This amount is recorded as a liability at March 31, 2002.

     On December 29, 2000 the Company initiated a temporary suspension of
     conversions of Series A preferred stock into common stock in order to
     prevent further degradation in the market price of the Company's common
     stock. On January 5, 2001 one of the 13 Series A preferred stockholders
     filed suit against the Company in the United States District Court,
     Southern District of New York for breach of contract for failure to honor
     conversions, and for an order to compel the Company to honor conversions.
     The stockholder also asked for a temporary injunction to be issued
     compelling the Company to honor any of stockholder's conversion notices.
     The order was granted on January 12, 2001. A second preferred stockholder
     joined the suit in March 2001, and the case was dismissed on June 19, 2001.
     A similar case was filed in the same court by a group of four other
     preferred stockholders on March 2, 2001, and the case was dismissed on
     March 23, 2001. As of March 31, 2002 all of the Series A preferred
     stockholders have converted all of their preferred shares into our common
     stock.

                                      F-25

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 17-- Subsequent events:

     As of the date of this report, all Company officers have resigned and there
     is only one director of the Company and the Company has ceased all
     operation.

     On May 22, 2002 the Company entered into an agreement with Kiboga to cure
     the Company's default on meeting the terms of the Marketing and Licensing
     Agreement. Under the terms of the new agreement the Company waives the
     revenue requirement and earnings tests that Kiboga must achieve to
     receive upon closing an additional fifteen million shares of the Company's
     common stock and the Company agrees to pay Kiboga $700,000 cash due
     Kiboga upon signing the original agreement on May 22, 2003 instead
     conditioned upon the closing of the Merger.

     On June 25, 2002 the Company entered into a stock purchase agreement (the
     "Purchase Agreement") to acquire all of the stock of Provo for shares of
     GreyStone. This purchase will transfer to the sellers of all of the Provo
     stock no less than 40% of GreyStone's shares on a fully diluted basis. At
     the same time the Company entered into negotiations to merge Kiboga into a
     new wholly owned subsidiary of GreyStone to be formed to complete the
     Merger.

                                      F-26

<PAGE>

                       GREYSTONE DIGITAL TECHNOLOGY, INC.
                                 AND SUBSIDIARY

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 17 -- Subsequent events (continued):

     On July 18, 2002 the Purchase Agreement of June 25, 2002 was amended to
     provide that GreyStone transfer to the sellers of Provo stock no less than
     18% of GreyStone's shares on a fully diluted basis rather than the original
     agreement which provided that GreyStone would transfer 40% of GreyStone's
     shares and that Kiboga transfer to the sellers of Provo 50% of GreyStone's
     stock held be Kiboga. The amendment stipulated that the transfer of shares
     shall occur no later than August 31, 2002. In addition the amendment to the
     Purchase Agreement released GreyStone and Kiboga from their respective
     obligations to consummate the Merger as contemplated in the Purchase
     Agreement, to escrow GreyStone shares and cash and to pay other
     consideration under the Purchase Agreement signed on June 25, 2002.

     On July 18, 2002 the Company announced the close on all terms precedent to
     effecting the Purchase Agreement with Provo and our intention to change our
     name to Provo International as soon as possible. The agreement with Provo
     is dependent upon the Company becoming current on its SEC filing.

     As of July 30, 2002 GreyStone has received no operating revenues nor
     incurred any operating expenses as a consequence of the agreements set
     forth above. Since November 2001 Kiboga has loaned funds to GreyStone from
     time to time to help GreyStone fund certain administrative, legal and
     professional expenses necessary for effecting the contemplated merger of
     Provo and Kiboga into GreyStone.

                                      F-27

<PAGE>


                       GREYSTONE DIGITAL TECHNOLOGY, INC.

                                 EXHIBITS INDEX

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

10.1     Kiboga/GreyStone Lease Agreement
10.2     Kiboga/GreyStone Stock Purchase Agreement
10.3     Provo/GreyStone Stock Purchase Agreement with Amendment
99.1     Certification of Director Pursuant to 18 U.S.C. Section 1350, as
         Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.