SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  FORM 10-KSB/A

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

                  For the Fiscal Year ended September 30, 2001

                                       or

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

                           Commission File No. 0-33235


                             DATAHAND SYSTEMS, INC.
                 (Name of Small Business Issuer in Its Charter)


           Delaware                                              86-0593507
(State or Other Jurisdiction of                               (I.R.S. Employer
 Incorporation or Organization)                              Identification No.)


               3032 North 33rd Avenue, Phoenix, Arizona 85017-5247
               (Address of Principal Executive Offices) (Zip Code)


                                 (602) 233-6000
                           (Issuer's Telephone Number)


        Securities Registered Pursuant to Section 12(b) of the Act: None.


           Securities Registered Pursuant to Section 12(g) of the Act:

                          $.001 Par Value Common Stock
                                (Title of Class)


Indicate by check mark whether the Registrant (l) 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. [X] Yes [ ] No
<PAGE>
Check if there is no disclosure of delinquent  filers in response to ITEM 405 OF
REGULATION  S-B is not  contained  in  this  form,  and no  disclosure  will  be
contained,  to the  best of  registrant's  knowledge,  in  definitive  proxy  or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

State issuer's revenues for its most recent fiscal year. $172,467.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates  computed by reference to the price at which the common equity
was sold,  or the average bid and asked  price of such  common  equity,  as of a
specified dated within the past 60 days. As of April 10, 2002, 15,786,425 shares
of common  stock were  outstanding,  and the  aggregate  number of shares of the
common stock of the Registrant held by non-affiliates was 6,155,224. There is no
public  market for the common  stock of  Registrant,  and there is  therefor  no
aggregate  market  value of the  voting and  non-voting  common  equity  held by
non-affiliates.

     (ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Check  whether the issuer has filed all  documents  and  reports  required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the  distribution  of
securities under a plan confirmed by a court. [ ] Yes [ ] No

                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date. 15,786,425

                       DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,  briefly describe them
and  identify  the part of the Form 10-KSB  (e.g.,  Part I, Part II,  etc.) into
which the document is incorporated:  (1) any annual report to security  holders;
(2) any proxy or information statement; and (3) any prospectus filed pursuant to
RULE 424 (B) OR (C) of the Securities Act of 1933 ("Securities Act"). The listed
documents should be clearly described for identification  purposes (e.g., annual
report to security  holders  for fiscal  year ended  December  24,  1990).  Form
10-KSB/A, Description of the Business, Risk Factors, suggests that the amendment
to the Form 10SB be reviewed.

Transitional Small Business Disclosure Format (Check One):  Yes [X]; No [ ]

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                            DATAHAND(R) SYSTEMS, INC.

                                  FORM 10-KSB/A

                                TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I

     ITEM 1. DESCRIPTION OF BUSINESS...........................................1
     ITEM 2. DESCRIPTION OF PROPERTY..........................................18
     ITEM 3. LEGAL PROCEEDINGS................................................18
     ITEM 4. SUBMISSION OF MATTER TO A VOTE OF SECURITY HOLDERS...............18

PART II

     ITEM 5. MARKET  FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS........19
     ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS ............................20
     ITEM 7. FINANCIAL STATEMENTS............................................F-1
     ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS....................28

PART III

     ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
                COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT ............28
     ITEM 10. EXECUTIVE COMPENSATION .........................................30
     ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT..31
     ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..................32
     ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K................................32

SIGNATURES....................................................................33


                 STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

     THE  STATEMENTS  CONTAINED  IN THIS  REPORT ON FORM  10-KSB/A  THAT ARE NOT
PURELY  HISTORICAL  ARE   FORWARD-LOOKING   STATEMENTS  WITHIN  THE  MEANING  OF
APPLICABLE  SECURITIES  LAWS.   FORWARD-LOOKING  STATEMENTS  INCLUDE  STATEMENTS
REGARDING  OUR  "EXPECTATIONS,"   "ANTICIPATION,"  "INTENTIONS,"  "BELIEFS,"  OR
"STRATEGIES"  REGARDING  THE FUTURE.  FORWARD-LOOKING  STATEMENTS  ALSO  INCLUDE
STATEMENTS  REGARDING  REVENUE,  MARGINS,  EXPENSES,  AND EARNINGS  ANALYSIS FOR
FISCAL 2002 AND THEREAFTER;  FUTURE PRODUCTS OR PRODUCT DEVELOPMENT; OUR PRODUCT
DEVELOPMENT STRATEGIES,  PARTICULARLY AS THEY RELATE TO THE INTERNET;  POTENTIAL
ACQUISITIONS OR STRATEGIC  ALLIANCES;  AND LIQUIDITY AND ANTICIPATED  CASH NEEDS
AND AVAILABILITY.  ALL  FORWARD-LOOKING  STATEMENTS  INCLUDED IN THIS REPORT ARE
BASED ON INFORMATION  AVAILABLE TO US AS OF THE FILING DATE OF THIS REPORT,  AND
WE ASSUME NO  OBLIGATION  TO UPDATE  ANY SUCH  FORWARD-LOOKING  STATEMENTS.  OUR
ACTUAL  RESULTS COULD DIFFER  MATERIALLY  FROM THE  FORWARD-LOOKING  STATEMENTS.
AMONG THE FACTORS THAT COULD CAUSE ACTUAL  RESULTS TO DIFFER  MATERIALLY ARE THE
FACTORS DISCUSSED IN PART I, ITEM 1, "DESCRIPTION OF BUSINESS - RISK FACTORS."

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<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

     Our  corporation's  name is DataHand  Systems,  Inc., and we are a Delaware
corporation which was founded in 1994. We evolved from the DataHand  Development
Group,  a private  partnership,  created in 1985 by Dale  Retter and Lee Knight.
Messrs.  Retter and  Knight  formed  Industrial  Innovations,  Inc.,  an Arizona
corporation,  in late 1987 to  develop,  design and test an  ergonomic  keyboard
system. Industrial Innovations,  Inc., subsequently merged into us in January of
1995.

     We filed a Report on Form 10-SB on  October  9, 2001 and a first  amendment
thereto on January 3, 2002 with the  Securities  and  Exchange  Commission.  The
Report on Form 10-SB and its amendment  contain more  information  on us that is
contained herein,  and it is suggested that you should consider  accessing those
reports filed with the  Securities  and Exchange  Commission  by contacting  the
Securities  and Exchange  Commission at the addresses  hereafter  provided or by
contacting us.

     Our  principal  business  is  the  design,  sale  and  distribution  of the
DataHand(R)  minimum motion  keyboard  which either  reduces  and/or  eliminates
ergonomic trauma and/or injuries related to data entry operations (e.g.,  carpal
tunnel  syndrome,   etc.).  The  DataHand(R)  Ergonomic  Keyboard  System  is  a
programmable ergonomic keyboard with an onboard mouse.

     Although  various  statistics  have been  provided  to  indicate  the large
magnitude of this problem, a comprehensive  study that quantifies these costs is
unavailable. However, Repetitive Stress Injuries (RSI), also known as Repetitive
Motion Injuries (RMI), alone cost U.S.  businesses an estimated $100 billion per
year in  additional  expenses  and lost  productivity  (Source:  Bureau of Labor
Statistics  as  reported  in the WALL  STREET  JOURNAL).  The poor design of the
standard computer keyboard is a large contributor to this problem.

     The  DataHand(R)  Ergonomic  Keyboard  system is a  programmable  ergonomic
computer keyboard with an onboard mouse. The DataHand(R)  Ergonomic  Keyboard is
also called  "The  DataHand(R)  Professional  II" and the  "DataHand(R)  Minimum
Motion Keyboard".

     We began Beta testing our current product, the DataHand Professional II(R),
in 1995 and  completed  commercialization  of the  design in 1997.  With  volume
production,  engineering and tooling investments,  we will be able to reduce the
present  product   manufactured  cost  significantly.   We  are  developing  the
ErgoHand(R)  which we believe will serve a larger  consumer market and provide a
significant increase in sales because of its lower purchase price.

     We obtain certain of our raw materials in the form of finished switches and
modules from  Atronix,  Incorporated  of  Billerica,  MA, which is our principal
supplier  for  the  DataHand(R)   Ergonomic  Keyboard.   Atronix,   Incorporated
manufacturers  the switches and modules in accordance  with our patent and using
our technology.  We can obtain these switches and modules from other  suppliers,
but if we do so we believe our costs of goods would  increase.  We are testing a
new,  lower cost  ergonomic  keyboard we have named the  ErgoHand(R),  which was
developed  in joint  cooperation  with  DuraSwitch  Industries,  Inc.,  of Mesa,
Arizona.

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<PAGE>
     We are not  dependent  on one or a few  major  customers.  We have sold our
products to 3,500 customers in the  trauma/injury  market and to 2,900 customers
in the data entry market.  These  customers  presently  purchase on an as needed
basis.

     We have  spent  $32,031  in the  last two  fiscal  years  on  research  and
development  activities.  While  ultimately all of our  development and research
costs will be born by our customers  over our business life span, to date all of
such  costs  have been  funded by  capital  invested  in us in ether the form of
equity or loans.

     During the next twelve (12) months, we intend to:

*    reduce the cost of the current Professional II design by at least 22%;
*    complete  proof  of  design  prototype  and  production   tooling  for  the
     ErgoHand(R)with  a target in production  manufacturing  direct cost of $50;
     and
*    increase  staffing  modestly  to  manage  use  of  subcontract  design  and
     manufacturing activities.

COMPANY OVERVIEW

     It is our mission to be the recognized  leader in profitably  manufacturing
and marketing proprietary computer keyboards for the commercial,  industrial and
consumer  markets for the benefit of our customers,  employees and  shareholders
by:

*    designing and marketing human to computer interface technology; and
*    ergonomic  products  for   business-to-business   and  business-to-consumer
     markets.

     Our  patented  technology  and know-how is the basis on which we will carry
out our mission.  Our development of the DataHand(R)  Ergonomic Keyboard is well
positioned to take  advantage of the $3.2 billion  corporate  data entry systems
market  (Source:  Frosts & Sullivan  U.S.  MARKETS FOR  COMPUTER  KEYBOARDS  AND
POINTING DEVICES) and the rapidly growing $600 million ergonomic keyboard market
(Source:  Frosts & Sullivan  U.S.  MARKETS FOR COMPUTER  KEYBOARDS  AND POINTING
DEVICES).  Product  development,  testing and test marketing of our  DataHand(R)
Ergonomic  Keyboards  have been  completed  and the  results  are,  we  believe,
compelling.  Some of our users have  provided  testimonials  to us to the effect
that our  DataHand(R)  keyboards are more  healthful,  comfortable,  productive,
accurate and enabling than traditional flat keyboards.  Full-scale production of
our  DataHand(R)  keyboards  commenced in October 1998 with sales and  marketing
starting shortly thereafter.  With OSHA regulations  regarding worker health and
safety  imminent  and  with  a  growing  number  of  keyboard  related  injuries
worldwide,  the ergonomic  keyboard  market offers  tremendous  room for growth.
Because of our patent positions and existing market  penetration,  we believe no
other keyboard manufacturer is better positioned to exploit this new market than
we are  because of the design of our  DataHand(R)  Ergonomic  Keyboards  and our
patented  technology.  It is our opinion that no other keyboard design addresses
the  circumstances  that cause carpal tunnel or hand injury by keyboarding.  Our
DataHand(R)  Ergonomic Keyboards have been in the marketplace for over 11 years,
longer than any other ergonomic  keyboard  manufacturer.  Our keyboards are well
known and used, not only in the United States but world wide.

COMPANY BACKGROUND

     We have been until now a privately held Delaware corporation  headquartered
in Phoenix, Arizona. In the early years after our formation, we concentrated our
efforts on the engineering and testing of our DataHand(R) Ergonomic Keyboard and

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<PAGE>
achieved   many   milestones   despite  the  hurdles  we  faced  in  design  and
manufacturing. These milestones include:

1990      1st of 12 US and international patents issued.
1992      Keyboard  prototype  development  completed and first  prototype units
          were tested;
1993      Began low volume pilot production of original keyboard model;
1994      Product testing and test marketing;  sold  approximately 475 keyboards
          at $2,000 each;
1995      Company founded;
1996      Introduced  two  new  keyboard  models,  the  Professional  II and the
          DataProof (10-Key), and commenced corporate data entry systems sales;
1997      Signed  a  high  volume   manufacturing   agreement  with  Key  Tronic
          Corporation, a leading U.S. based keyboard manufacturer;
1998      Latest  of 12  US  and  international  patents;  technology  agreement
          executed with leading  switch design and  manufacturing  company;  new
          management team on board;  keyboard production  commenced;  rigorously
          tested and qualified the product;
1999      Reduced cost of product,  commenced single unit ergonomic based sales,
to        increased   corporate   data  entry   system   client   implementation
Present   agreements;  introduced Personal Edition model; developed an ergonomic
          value-added reseller program; began expansion of our web site.

     In addition to these milestone  accomplishments,  we have: 1) developed our
initial client  accounts;  2) built our low-volume  manufacturing  facility;  3)
purchased the parts and tooling to build our initial 1000 DataHand(R)  Ergonomic
Keyboard units and rigorously  tested and qualified the product for  production;
4) began development of our training materials,  training methods,  and training
processes;  and 5) added a Sales and Marketing Manager.  Over the years, we have
sold our  keyboards  to  hundreds  of Fortune  1000  companies,  which they have
purchased on an as needed basis.  We do not have standing  contracts  with these
customers.

OUR OPPORTUNITIES

     Changes to federal,  state and local laws (See "The Market  Climate" below)
as  they  apply  to  ergonomics  in  the  workplace,  provide  opportunities  to
capitalize on a growing market segment.  Recent OSHA rule announcements (Source:
1999 OSHA  Meetings  as  reported in the  Congressional  Record)  and  potential
federal and state  legislation  all provide an  increased  interest and sense of
urgency for ergonomic solutions in the market place.

     We address these  opportunities  with our unique patented flagship product.
The DataHand(R)  Ergonomic  Keyboard was designed to correct the poor designs of
the  standard  keyboard,  including  keyboards  labeled  as  "ergonomic."  These
standard  keyboards and also their "ergonomic"  derivatives  result in increased
employee  health-related costs and reduced  productivity.  Costs include medical
expenses such as physical  therapy and surgery (such as carpal tunnel  surgery),
the impact on Workers  Compensation  insurance costs,  lost workdays and reduced
employee  productivity.  Additional  non-quantifiable  costs  include  the pain,
suffering and discomfort of users.

     Recent  government-derived data underscores the epidemic of worker injuries
caused by conventional keyboard use. The data includes:

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<PAGE>
*    Bureau of Labor Statistics  (1999) reports  Repetitive  Strain Injury (RSI)
     accounts for 60% of all  reported  occupational  illnesses - the  estimated
     direct  costs to  businesses  was over $60  billion  in 2000  (and  growing
     today);
*    The  National  Center for Health  Statistics  reported  849,000 new problem
     visits were made to  physicians  due to Carpal  Tunnel  Syndrome and carpal
     tunnel related  operations are the second most common surgical procedure in
     the U.S. (and growing today);
*    OSHA studies show Carpal Tunnel  Syndrome has the highest  median days away
     from work (25 days);
*    A  Cumulative  Trauma  Disorder  News survey  revealed  that Carpal  Tunnel
     Syndrome is the costliest Cumulative Trauma Disorder.

THE CAUSE OF KEYBOARD RELATED INJURIES

     The  increasing  use of computers at work and home has resulted in a growth
of keyboard related  Repetitive Stress Injuries and Cumulative Trauma Disorders.
According to  ergonomists  and physical  therapists,  injuries are caused by the
following debilitating characteristics of traditional keyboards:

1.   Repetition  -  traditional   keyboards  require  downward  motion  for  all
     keystrokes;
2.   Workload - at the end of a typical workday on a traditional keyboard, users
     fingers have  traveled an average of 16 miles and lifted the  equivalent of
     1.25  tons  (Source:  Professor  R.  M.  Fernandez,   Professor,   Stanford
     University Report dated January 20, 1997 FSM PILOT AT RIO SALADO);
3.   Carpal Tunnel  Involvement - traditional  keyboards require the involvement
     of the carpal tunnel for all keystrokes performed;
4.   Hand  Tension -  traditional  keyboards  require the user to maintain  hand
     position in a flattened plane hovering above the keyboard;
5.   Wrist Bend - the necessary wrist bend associated with traditional  keyboard
     use  further  crimps  the  carpal  tunnel,  increasing  tension  and tendon
     friction;
6.   Upper Body Support - support above a traditional  keyboard requires chronic
     upper  body  musculoskeletal  involvement,  spinal  compression  and muscle
     tension;
7.   Hand Pronation - wrist pronation for traditional keyboarding is awkward and
     fatiguing;
8.   Wrist  Motion - as much as 40  degrees  of wrist  motion is  required  with
     traditional keyboard use; and
9.   External Mouse - most standard  keyboards  require the user to repetitively
     reach for an external mouse.

THE SOLUTION TO KEYBOARD RELATED INJURIES

     The  patented  DataHand(R)  Ergonomic  Keyboard  is  designed  to provide a
comfortable  and  healthful  keyboard  that  addresses  each of the  traditional
keyboards'  limitations.  No  other  keyboard  available  offers  the  following
characteristics:

1.   Repetition - DataHand(R) keyboards divide each finger's workload among five
     unique keys, with unique directions;
2.   Workload - DataHand(R) keyboards reduce both the force required to activate
     keys and total finger  travel  resulting in a 96%  reduction in  Repetitive
     Stress Injury exposure;
3.   Carpal  Tunnel  Involvement  - only 60% of the  DataHand(R)  keyboard  keys
     require tendons that travel through the carpal tunnel ;
4.   Hand Tension - DataHand(R)  keyboards allow the hands to work in a relaxed,
     natural position;

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5.   Wrist Bend - unwanted and problematic  wrist bends are eliminated 100% with
     a DataHand(R) keyboard;
6.   Upper Body Support - DataHand(R) keyboards fully support the hands;
7.   Hand  Pronation  - hand  pronation  can  be  completely  eliminated  with a
     DataHand(R) keyboard;
8.   Wrist  Motion  - 100%  elimination  of  wrist  motion  with  a  DataHand(R)
     keyboard;
9.   External Mouse - an intrinsic  mouse  eliminates  repetitively  reaching an
     external mouse.

SALES AND MARKETING ANALYSIS

THE MARKET CLIMATE

     The epidemic of keyboard related  repetitive stress injuries offer a unique
market opportunity for us.

     In August 1998, at the National Academy of Sciences in Washington,  D.C., a
group  of  over   seventy   nationally   renowned   experts   in  the  field  of
musculoskeletal disability and occupational medicine examined the most prominent
twentieth century studies of  musculoskeletal  workplace injury and affirmed the
reality of work-related causation.  Previously,  hobbies,  housework,  heredity,
general  health,  smoking,  life-style and other factors were often blamed.  The
meeting did not deny possible secondary causation, but it pointed to work on the
flat keyboards as the major cause.  (Source:  National  Research Council and the
Institute of Medicine (2001),  Musceleoskeletal Disorders and the Workplace: Low
Back  and  Upper  Extremities:  Panel  on  Musceleoskeletal  Disorders  and  the
Workplace,   Commission  on  Behavioral  and  Social   Sciences  and  Education,
Washington, DC: National Academy Press: p. 363)

     In 1999, the Occupational Safety and Health  Administration (OSHA) released
proposed  regulations  that favor  companies to proactively  address the growing
epidemic  of  workplace  related  injuries.  Included  in OSHA's  standards  are
keyboard related  repetitive  stress injuries such as Carpal Tunnel Syndrome and
tendonitis.  The  medical  need is  significant  with the  previously  mentioned
National  Center for Health  Statistics  reporting  849,000 new  problem  visits
(Source: 1999 OSHA Report on Work Place Injuries - Congressional Record) and the
U.S. Department of Labor statistic:  Carpal Tunnel Syndrome affects some 600,000
U. S. workers each year. OSHA officials have gone on record  (Source:  1999 OSHA
Report on Work Place  Injuries--Congressional  Record)  that the  Department  of
Labor statistics may underestimate real data by as much as a third.

     In  February  2000 a meeting of the larger  U.S.  corporations'  Industrial
Relations  Executives,  CEO's and  Ergonomists  in Florida  affirmed the need to
address  worker  health  issues.  The  emergence  of a new  corporate  ethic was
signaled.  Presidential  candidates  were  quoted  in  major  national  business
magazines  stating  the  need  to  restore  disabled  workers  to  productivity.
Corporations  were  asked  to work  together  to meet the  common  need for more
employable  workers.  Even with the  repeal  of the  Federal  Government's  OSHA
Ergonomics  Standard by the George W. Bush  administration  in February of 2001,
many corporations have begun implementing ergonomic programs. This is due to the
fact of being sold on ergonomic programs that reduce worker's compensation costs
and  improve  productivity.   (Source:   Kansas  City  Star,  The  Economics  of
Ergonomics,  April 18, 2000) Also,  OSHA will be reissuing new  ergonomic  rules
within a year that focus on carpal  tunnel and RSI  injuries  as reported by the
OSHA administration in February, 2001.

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<PAGE>
     In  addition,  the  Federal  Government's  agencies  have been  required by
Section 508 Federal  Acquisition  Regulations to make the Internet accessible to
the  disabled.  Further,  Section 508 mandates  that  alternative  technology be
provided for the disabled as well.  Add to this  government  program,  President
Bush's New Freedom  Initiative that was announced in March 2001. This program if
adopted by Congress  will  provide  nearly $1 Billion over a five year period to
provide jobs for the disabled and assistive  technology to allow the disabled to
work. We intend to work with President Bush's committee  (LASER) to promote this
program.  Finally,  every state also has an assistive  technology  program where
equipment is being  provided to the disabled.  In April of 2002,  President Bush
announced his new ergonomic program.

     We believe this bodes well for us as the DataHand(R)  Ergonomic Keyboard is
positioned to address these needs,  as well as the new ergonomic rules when they
are implemented.

MARKETS

THE DATAHAND(R) ERGONOMIC KEYBOARD MARKET

     While our potential  DataHand(R)  Ergonomic  Keyboard customers include any
user of a computer  keyboard  or other  keypad  data entry  device,  the current
market is more narrowly defined into four distinct sub-markets:

*    The Enabling and/or Assistive Technology Keyboard Market
*    The Retail Keyboard Market
*    The Productivity Keyboard Market
*    Other Keyboard Markets - Laptop Computers and Games

     Currently our customers are  purchasing  our products on an as needed basis
without long-term requirement contracts. As set forth below in Market Strategy -
Retail Keyboard  Market,  we expect to enter into contracts with major suppliers
of computers in early 2002.

ENABLING AND/OR ASSISTIVE TECHNOLOGY MARKET

     We have existing knowledge and business development  experience within each
sub-market.  The enabling and/or assistive technology keyboards market meets the
needs of people  unable to perform  work due to  debilitating  keyboard  related
injuries such as Carpal  Tunnel  Syndrome  (CTS),  tendonitis,  or  DeQuervain's
Syndrome. These keyboard related injuries have been estimated by the U.S. Bureau
of Labor Statistics in 1999 (Source:  Congressional  Record) to account for more
than half of reported occupational  illnesses and are estimated to significantly
affect costs and productivity of 185,000 U.S. companies each year, and cost U.S.
businesses billions annually.

     Further, as CTS problems become better understood, it is expected that both
legislation  and lawsuits  will  increase  liability  costs for many  companies.
Because of both the human and financial impact of keyboard related injuries, the
enabling and/or assistive  technology  keyboard market is fairly  insensitive to
price and very reactive to quality and proven  solutions such as our DataHand(R)
Ergonomic  Keyboard.  Insurance  companies,  such as Kempers  Workers Comp, have
already paid for their clients to obtain a DataHand(R)  Ergonomic Keyboard as an
alternative to a very expensive (nearly $30,000) carpal tunnel  operation.  Most
of the sales we receive  over the  Internet on our web site are from people that
have carpal tunnel  injuries.  When  interviewed  after the purchase on why they
bought the $1,000 DataHand(R)  Ergonomic  Keyboard,  they reported that cost was

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<PAGE>
not a factor in making  their  decision.  They  wanted  something  that  worked.
(Please see the over 100 testimonials  from current customers on the DataHand(R)
web site - (www.datahand.com)

     The current  DataHand(R)  Ergonomic  Keyboard models serve this market very
well at their  existing  price points.  With OSHA  standards on  musculoskeletal
injury  imminent,  this  market is  expected  to grow  quickly  and become  more
lucrative for us. Thanks to the unique  DataHand(R)  Ergonomic Keyboard features
and benefits,  we believe no other keyboard  product is better poised to address
this growing market's needs.

MARKET STRATEGY - ENABLING AND/OR ASSISTIVE TECHNOLOGY KEYBOARD MARKET

     We believe the  DataHand(R)  Ergonomic  Keyboard stands alone at the top of
this  market.  The unique and patented  designs  differentiate  the  DataHand(R)
Ergonomic Keyboard from all other ergonomic keyboard designs. We do not know the
market share  available at this time as the total high end market  volume is not
known.  There is a growing  number of specialized  vendors  serving this market.
Computer  operators  who  want to  avoid  future  injury  as well as to  address
existing pain residual from work on the  traditional  flat keyboard can be drawn
to our  DataHand(R)  Ergonomic  Keyboard's  unique design and  benefits.  As the
ergonomic  marketplace  has grown,  our  DataHand(R)  Ergonomic  Keyboards  have
increasingly  been seen by leading  vendors in the  ergonomic  market as a major
solution to the problems suffered by persons  suffering  keyboard  injuries.  We
believe  that the  other  ergonomic  keyboards  are only  partial,  marginal  or
limited, shot-term answers to the problems.

     This market is approached  via our web site:  Internet  marketing;  inbound
telesales from injured  individuals;  outbound  telesales;  and the  value-added
ergonomic   reseller  channel.   The  marketing  efforts  are  directed  towards
influencers  such as physical  therapists,  ergonomists,  assistive and adaptive
technology centers, occupational medicine clinicians and therapists,  government
agencies,   worker's  compensation  personnel,   and  corporate  human  resource
departments.

THE RETAIL KEYBOARD MARKET

     Companies  such as Dell, HP and Gateway are starting to market  products in
the  ergonomic and  assistive  technology  markets.  The  DataHand(R)  Ergonomic
Keyboard has been approved by them as one of their  products for these  markets.
While we are not in contract with these marketing companies,  we anticipate that
contracts with them for the sales of our products will be in place by the end of
the third quarter of 2002.  Dell, HP and Gateway are currently  selling over 100
million  computer  keyboards  per year.  Our  marketing  focus is to supply  our
keyboards to their very large retail base.

MARKET STRATEGY - RETAIL KEYBOARD MARKET

     We  will   continue   to   market   our   keyboards   via   our  web   site
(www.datahand.com), distributors, resellers and direct sales to enter the retail
keyboard market. Web site traffic additional sales increase will be by utilizing
known web  resources.  The following  breakdowns are the average number of sites
listed under each sub category on three major search engines (Yahoo,  Lycos, and
NorthernLight) for the keyword: ERGONOMICS as of June 30, 2001:

Companies (61)
Conferences (3)
Institutes (10)
Organizations (4)

                                       7
<PAGE>
SEARCH ENGINE REGISTRATION: (PLACEMENTS FOR GENERATING WEB TRAFFIC)

     Search  engines  are a source of  potential  customers  that search the web
looking for certain keywords such as "ergonomic  keyboards,  ergonomic  computer
keyboards and preventing carpal tunnel injury". We are registered with all major
search  engines.  Ninety  percent  (90%) of our sales  during  fiscal  year 2000
occurred  because  of our web site,  and search  engines  are the means by which
persons  searching the web for specific items are directed to web sites offering
the items.

     Market  knowledge and demand will also be increased by focused  advertising
utilizing selected  periodicals serving the targeted markets.  These periodicals
include:

<TABLE>
<S>                                                     <C>
The American Industrial Hygiene Association Journal     Aviation, Space and Environmental
AIIE Transactions                                       Medicine
Annals of Occupational Hygiene                          British Journal of Industrial Medicine
Applied Ergonomics                                      Clinical Biomechanics
Applied Industrial Hygiene                              CTD News
Applied Occupational and Environmental Hygiene          Ergonomics Abstracts
The Human Factors and Ergonomics Society                Ergonomics in Design
Elsevieer Science Publishing                            Human Factors and Ergonomics Society
Institute of Industrial Engineers                       International Journal of Systems Journal
of Applied Biomechanics                                 Automation
Journal of Biomechanics                                 Taylor and Francis
Journal of the Society for Health Systems               Journal of Biomechanical Engineering
International Journal of Industrial Ergonomics          Journal of Occupational Medicine
Journal of Safety Research                              International Journal of Human Factors
Occupational Safety and Health Reporter-Current         in Manufacturing
Report                                                  Scandinavian Journal of Work,
Occupational Safety and Health Reporter-Decisions       Environment and Health
Sound and Vibration                                     Workplace Ergonomics
</TABLE>

     We have advertised in a few of these periodicals, such as the AAMT Journal,
Journal of Hand Therapy,  Occupational Practice Magazine and Occupational Health
and Safety Magazine. As we obtain and/or generate additional working capital, we
intend to increase our advertising in the above listed periodicals.

     We also plan to license the product to a large and well-respected  computer
company at an attractive  wholesale price justified by the proprietary  value of
the DataHand(R)  product name and technology.  We have been in negotiations with
HP, Dell,  Gateway and  Microsoft  during the last half of 2001.  Microsoft  has
recently added assistive  technology  products to its product line and web site,
and our  DataHand(R)  Ergonomic  Keyboard  has been  placed  on its web site for
availability  of products.  Microsoft  has  announced  that it is hoping that by
February of 2002 to have  contracts  in place with  manufacturers  of  assistive
technology  products,  such as us.  Gateway has announced  that it is working on
setting up an  ergonomic  section  in each of its  stores,  and our  DataHand(R)
Ergonomic  Keyboard has been approved for that  program.  Dell has just verbally
agreed to sell the  DataHand(R)  Ergonomic  Keyboard.  This strategy will enable
computers to be sold with a  competitively  priced  DataHand(R)  keyboard at the
original  point of sale.  We believe that once the right  technology  partner is
acquired (IBM,  Dell,  Gateway,  etc.),  our  DataHand(R)  keyboard will quickly
establish  market  share.  We further  believe rapid growth in sales volume will

                                       8
<PAGE>
result as the ergonomic  liability  and lower  productivity  of the  traditional
keyboard becomes more widely understood.

THE PRODUCTIVITY KEYBOARD MARKET

     This market is defined as the corporate and/or government data entry market
in need of keyboard solutions that offer increased typing speed, improved typing
accuracy and reduced keyboard related fatigue.  In this market,  our DataHand(R)
Ergonomic  Keyboards  compete against the less efficient and injurious  standard
keyboards and keypads with our  DataProof  10-Key and  Professional  II keyboard
models. These models feature user-defined  programmability in addition to a more
efficient  design. We have existing  reference  accounts in this market segment.
Typical customers include high volume data entry  applications such as banks and
data processing centers.

MARKET STRATEGY - PRODUCTIVITY KEYBOARD MARKET

     We  have  market   experience   selling  keyboards  based  on  productivity
improvement.  Our experience selling keyboards to enhance  productivity has been
based  strictly on the design of our  keyboard.  To increase  productivity  on a
keyboard,  the  product  must have an  extremely  light  touch  (gram  force) to
activate  the keys,  the range of finger  motion  must be  minimal  and the hand
position must be a neutral location. Our product meets all of these criteria. We
plan to partner with a large data entry hardware  manufacturer and/or innovative
computer  manufacturers  to assist in productivity  keyboard sales and marketing
strategies.  We do not yet have a  contract  with a large  data  entry  hardware
manufacturer.   This  market  is  virtually  untapped,  and  no  other  keyboard
manufacturer is better positioned to make productivity  market advances.  We and
our  partner(s)  will  approach this market via direct sales  efforts,  outbound
telesales, OEM relationships, and data application trade shows and publications.
The  marketing  efforts  are  directed  towards  influencers  such  as  workflow
managers, operations managers, and data entry hardware product managers. We have
also approached  Microsoft,  Dell,  Gateway,  UNISYS,  Insight  Direct,  CDW and
CompUcom. No agreement has been reached with these companies to actively promote
our products.

     We have entered into an agreement with DuraSwitch, Inc., of Tempe, Arizona,
to develop a low-cost  DataHand(R)  Ergonomic  Keyboard  named the ErgoHand (R).
DuraSwitch is in the business of developing and licensing high quality switches.
Currently  its switches  are  licensed to companies  such as Maytag (for washing
machines,  etc.) and Delphi  (for  automobiles).  DuraSwitch's  co-founder  Tony
VanZeeland is its chief engineer,  holding over twenty patents for switches. Mr.
VanZeeland was formerly our vice-president of engineering, and in that capacity,
helped  develop the current model of the  DataHand(R)  Ergonomic  Keyboard - the
Professional  II.  We  and  DuraSwitch  are  developing  the  ErgoHand(R)  on  a
"handshake"  agreement  at this time.  However,  we have  entered  into a formal
technology exchange agreement, a copy of which is attached as an exhibit.

OTHER KEYBOARD MARKETS - LAPTOP COMPUTERS AND GAMES

     Laptop  computers  are among the fastest  growing  sectors of the  computer
market.  Some projections are that the number of laptop computers may exceed the
number of desktop  computers  within this decade (Source:  Frost & Sullivan U.S.
MARKETS FOR COMPUTER KEYBOARDS AND POINTING  DEVICES--1997).  The opportunity to
license our  DataHand(R)  technology for inclusion with a laptop computer may be
of considerable value. Our DataHand(R)  keyboard design incorporated into laptop
computers would offer several advantages. Because DataHand(R) keyboard operation
does not require the user to look at his or her hands,  the computer  screen can

                                       9
<PAGE>
be placed on a more  horizontal,  rather than  vertical,  plane above the hands.
This screen over hands  position will allow the computer  screen to be closer to
the user,  with a more  perpendicular  line of sight.  In this way, the computer
workspace  can  be  physically  more  compact  and  offer  better  balance.  Our
DataHand(R)  keyboard  provides an  integrated  mouse that many users may prefer
over  touch-pads or force-gage  (eraser style) pointer  devices that many laptop
computers must include. Additionally, our DataHand(R) keyboard may be grasped to
facilitate  stabilization  during typing on the lap.  Although we do not plan to
manufacture a laptop computer,  we will seek to license this technology to other
computer manufactures.

     Game console unit sales for several of the more popular systems are already
measured  in millions  of units.  New game  consoles  are under  development  by
companies  such as Sony,  Nintendo,  Calico and Atari.  The potential to license
DataHand(R)  technology to one or more of these manufacturers exist as a part of
the  standard  game  unit  or as  an  available  accessory  to  provide  several
significant  advantages.  Our DataHand(R)  technology  provides  comfort and the
extra  utility  than a  conventional  keyboard.  A key entry device is important
because many new game units are intended to be multi-functional, serving as more
than simple game  controllers.  For  example,  the new Sony units are planned to
have Web-TV capability, and others may have the ability to read and send E-mail.
Some units may also  include  basic word  processing,  printing  capability  and
educational  programming that would require full keyboard usage. Our DataHand(R)
keyboard technology could be used for typing and provide new and more fun gaming
features that are not supported by a conventional keyboard.

SALES, MARKETING AND DISTRIBUTION PROGRAMS:

          *    DISTRIBUTORS  - enroll  major  distributors  serving the targeted
               markets:  Ingram  Micro,  Synnex and Tech Data - total sales 2000
               about $60B (Source:  Annual Reports for Ingram Micro,  Synnex and
               Tech  Data).  We  currently  have 52  distributors  in the United
               States and world wide.
          *    RESELLERS - sign on (5) major resellers  focusing on the targeted
               markets.
          *    CATALOG SALES - place  advertisements  in (3) major print and (3)
               major  electronic  magazines.  Catalog sales have only marginally
               begun. One reseller from New York currently lists the DataHand(R)
               Ergonomic  Keyboard in its catalog.  We plan to list our products
               in catalogs on a more  extensive  basis  beginning  in the second
               quarter of 2002.
          *    WEB  SITE - use  latest  electronic  sales  and web  site  design
               technology  to  generate  increasing  web site  visits and sales.
               Considerable  time and  expense  has also  been  expended  in the
               development  of our web  site,  www.datahand.com,  and  this  has
               resulted in a steady flow of orders  (twenty to thirty  units per
               month).

     Our  marketing  plan  requires  the  markets and  distribution  channels of
distributors and resellers.  These companies play a major roll to increase sales
significantly  in the first six months  following  our  obtaining of  additional
financing. There are approximately 70 thousand resellers purchasing from the top
four distributors,  approximately 5000 electronic  reseller and in excess of 100
catalog  companies  (Source:  Catalog of Resellers - Public  Library).  With our
planned  marketing  campaign to these  resellers,  we will see a major influx of
orders.  As a  supplier,  we will be  required  to ship  within  2 1/2  weeks to
distributors and resellers.  Further,  the in-house sales staff will concentrate
on call centers,  brokerage firms,  financial institutions and corporations with
50  employees or more and require a ship time frame of 0-30 days.  To date,  all
distributor and reseller  agreements have been a standard  agreement to sell our
products.  No material  contracts  currently exist. We have arrangements with 38
distributors/resellers  in  the  United  States  and  14  distributors/resellers
internationally.

                                       10
<PAGE>
     To date,  most efforts to market our  products  (other than through our web
site) have been through  attendance  at trade shows.  We attended the  Ergonomic
Conference  and Expo held in Las  Vegas,  Nevada  during  December  2001 and the
Workers Comp Conference in Atlanta, Georgia in August 2001.

TRAINING

     Training and system  implementation  consulting is a separate revenue model
that offers great  potential for us. We have the  capability  to assist  clients
with the DataHand(R)  Ergonomic Keyboard  implementation and with evaluating and
improving their data entry business  processes.  This involves  project planning
and management,  application and business process analysis,  user training,  and
change management training.  Through this process, we can add value and increase
the prospect of a successful  implementation  and also create and operate a very
profitable data entry productivity improvement consulting business.

     Our training programs are designed to assist an individual or business with
implementing  a new keying  technology and improving  productivity.  In order to
best maximize the benefits of our products, training is an integral component of
our experience and is designed to match the users specific goals and needs in an
efficient and effective manner.  All employees need freedom from pain to perform
their job productively  that will provide positive  benefits both to the company
and the employee.

     For individual keyboard sales,  training tools are provided and have proven
to be effective in both  minimizing  the time needed for learning and maximizing
the return on investment.  Due to these users' particular health problems and/or
the  productivity  benefits,  they  are  highly  motivated  to  learn to use our
DataHand(R)  Ergonomic Keyboard.  Individual  keyboard  purchasers  occasionally
purchase one-on-one  training.  Training is not sold to anyone other than a user
of our keyboards.

     In the future, training tools will be offered through our web site, as well
as being delivered with each individual  keyboard and through  training  courses
offered and taught by our qualified and licensed trainers.

INTERNET ADVERTISING

     We desire to enter into advertising agreements with internet providers such
as AOL and Lycos pursuant to which these companies will display  Internet banner
advertisements  for  DataHand(R)  Ergonomic  Keyboard.  America on Line (AOL) is
currently scheduled to begin offering our DataHand(R)  Ergonomic Keyboard on its
web site beginning in mid-January  2002 There currently does not exist a written
advertising  agreement with either AOL or Lycos, although negotiations with both
companies is on-going.  We want these advertisements to appear when users of AOL
and Lycos search for certain key words, such as "keyboards." The  advertisements
will allow users to click on the advertisement to link directly to our Web site.
We anticipate  that the agreements will require us to pay the portal sites based
on  the  number  of   impressions   we  receive.   We  plan  to  initiate  these
advertisements  during  fiscal  2002.  We also  intend to  continue  to seek new
opportunities  to expand our presence  within  top-tier  portal sites and highly
trafficked content sites.

                                       11
<PAGE>
OFFLINE ADVERTISING

     We intend to actively pursue a variety of offline  advertising  channels to
promote the DataHand(R)  Ergonomic Keyboard in the magazines and journals listed
above.  Our efforts in this area will focus on promoting the brand through print
advertisements.  While we have not spent  significant  marketing dollars in this
area in the past, we expect to  significantly  increase our offline  advertising
campaign in the future.

COMPETITION

     The DataHand(R)  Systems  products serves two distinct  markets:  corporate
(and government) data entry systems and ergonomic  keyboards.  Data entry system
devices are  employed  on  equipment  such as mail  sorting  machines  and check
sorters.  This type of equipment has  traditionally  been supplied with either a
standard  keyboard or a numeric keypad for corporate  data entry.  Corporate and
government  data entry systems are  DataHand's(R)  primary  market.  DataHand(R)
competes against the less efficient standard keyboards and keypads with the data
Proof (10 Key) and  Professional  II models,  which feature  programmability  in
addition  to  improved   design,   to  support  a  wide  variety  of  processing
applications.

     The ergonomic  keyboard market is more consumer focused and subdivided into
two parts.  The first category  includes  keyboards that consist of a split, but
attached,  keyboard  angled to align with the typist's writs through a wave-like
wrist rest such as Microsoft's Natural keyboard. PC Concepts and Adesso are also
competitors in this market and the three together have  approximately 87% of the
total  ergonomic  keyboard  market.  The  second  segment,   that  includes  the
DataHand(R),  is all other  ergonomic  keyboards  in a wide  array of shapes and
configurations. DataHand(R) stands alone at the high end of this market with its
uniquely  patented  keyboard  technology  providing minimum motion and force and
ideal posture and the only proven health and comfort and productivity  benefits.
The published list price for the DataHand(R)  Ergonomic  Keyboard - Professional
II is $1,295.  For the Personal  Edition,  the published list price is $995. The
difference in the two models,  which appear to be nearly identical,  is that the
Professional II is a fully programmable  model, i.e., the user can program every
key if desired. This cannot be done on the Personal Edition.

     Currently there is minimal awareness of the DataHand(R) System. Despite the
limited  awareness,  interested  prospects find  DataHand(R) on the Internet and
purchase the product.  Companies  that have purchased in this manner include MIT
(15 keyboards),  Intel, Silicon Graphics, Hewlett Packard (5 keyboards),  Analog
Devices,  Cisco, Lucent,  Caterpillar,  Motorola,  Netscape, US Airways and many
others.

     Our marketing  plan has been developed to address the markets  served.  The
plan  includes the  initiation  of research  projects,  the creation of database
marketing,  the  development  of sales aids  (including  a video to be mailed to
prospects and a PC based sales presentation), increased advertising (principally
on Internet  search  engines  and in trade  publications,  including  journals),
development of a enhanced  marketing  materials  (including client case studies,
research synopses and client testimonials), formation of a medical and ergonomic
advisory  board and  "productizing"  training and  installation  programs,  with
possible performance guarantees.

     We have identified four sales channels.  In the corporate (and  government)
data entry systems market, there are two sub markets: speed/productivity and RMI
prevention or relief for those already  injured.  In the individual user markets
there are also two sub markets:  rehabilitation  and retail.  These  markets are
very different, and our marketing plan identifies different strategies for each.
The following is a description  of each market and the  strategies for attacking
them.

                                       12
<PAGE>
     First, the CORPORATE DATA ENTRY  (SPEED/PRODUCTIVITY)  market is approached
via direct sales  efforts that have already  begun.  The target of these selling
efforts  is the  data  entry  production  manager  who is  seeking  to  increase
productivity. The Plan provided for the adding of a Vice President of Sales, who
is Mr. Robert Caplan, four direct sales personnel in the calendar years 2001 and
2002 and substantially  increased sales personnel in subsequent years. Leads for
direct sales will be generated primarily through  telemarketing  directly to the
operating manager.

     Second,  the RMI PREVENTION  COMPONENT OF THE ERGONOMIC  KEYBOARD MARKET is
approached via direct sales and indirectly through corporate safety consultants.
The target of these selling  efforts are the managers of human  resources,  risk
management  and  occupational  safety and  include  the person  responsible  for
managing workman's  compensation insurance expense. The Plan is to approach this
market directly through telesales that will be accomplished  in-house or through
outsourcing.   Corporate   safety   consultants  will  also  be  approached  via
telemarketing and telesales.

     Third,  the  REHABILITATION  COMPONENT OF THE ERGONOMIC  KEYBOARD MARKET is
approached through inbound telesales, outbound telesales to hand therapists, and
the  ergonomic  reseller  channel.  The target of these  selling  efforts is the
injured individual.  Inbound telesales is currently underway and is based on our
Internet  web site with calls taken by one sales  person.  The activity is being
actively  managed  (using search engine  management and banner  advertising)  to
increase  the number of injured  workers who are  directed to the web site.  The
resale  channel  marketing  efforts are  directed  towards  influencers  such as
physical  therapists,  government  agencies,  ergonomic  resellers and corporate
human resource departments.

     Fourth,  the RETAIL  individual  user  market  will be  approached  through
licensing.  It is  believed  that the  product  will be licensed at 12.5% of the
wholesale  price that is justified  by the  proprietary  nature and  significant
benefit provided by the DataHand(R) product.

INTELLECTUAL PROPERTY

     The following patents are material to protecting the DataHand(R)  Ergonomic
Keyboard  design.  United  States  patents  have a term of 17 years and European
patents have a term of 20 years.  The list  includes  United  States and foreign
patents and trademarks.

                                     PATENTS

              TITLE                          PAT. #       COUNTRY   ISSUED
              -----                          ------       -------   ------
     Alpha Numeric Keyboard                  0279553      EPO       2/2/88
     Alpha Numeric Keyboard                  4,913,573    U.S.      4/3/90
     Comb. Computer Keyboard &
     Mouse Date Entry System                 4,917,516    U.S.      4/17/90
     Data Entry Terminal (Design)            D311,522     U.S.      10/23/90
     Date Entry Device                       M8904784.2   Germany   7/7/89
     Data Entry Device                       0057386                7/17/89
     Data Entry Device                       894,920      France    5/9/90
     Data Entry Device                       1,060,442    U.K.      5/9/90
     Switch Assembly                         5,514,866    U.S.      5/7/96

                                       13
<PAGE>
     Switch Assembly (design)                D362,425     U.S.      9/19/95
     Keyboard (design)                       5,376,764    U.S.      3/21/95
     Three Way Switch                        5,743,666    U.S.      12/27/94
     Adjustable Keyboard                     5,743,666    U.S.      4/28/98
     Magnetically Enhanced Membrane Switch   5,921,382    U.S.      7/13/99

                                   TRADEMARKS

              MARK                           REG. #                 ISSUED
              ----                           ------                 ------
     DataHand                                1,741,088              12/22/92

ENVIRONMENTAL MATTERS

     Our business  does not involve the use,  handling,  storage and disposal of
potentially  toxic  substances  or wastes.  Accordingly,  we are not  subject to
regulation by federal,  state, and local authorities  establishing  requirements
for the use,  management,  handling,  and disposal of these materials and health
and environmental quality standards,  liability related to those standards,  and
penalties for violations of those standards.  We believe that we do not have any
material   environmental   liabilities.   Compliance  with  environmental  laws,
ordinances and  regulations has not had, and we do not expect such compliance to
have, a material adverse effect on our business, financial condition, or results
of operations.

EMPLOYEES

     As of September 30, 2001, we had 16 employees, including 8 in production, 3
in sales and marketing and 5 in management and administrative  support.  We have
experienced  no work  stoppages  and are not a party to a collective  bargaining
agreement. We believe that we maintain good relations with our employees.

WE OWN THE TECHNOLOGY, PATENTS AND TRADEMARKS ON WHICH WE RELY.

     We rely on a  combination  of patent and  trademark  laws,  confidentiality
procedures and contractual  provisions to protect our intellectual  property. We
may receive  notices  from third  parties that claim the  products,  software or
other  aspects  of our  business  that we own or have the right to use  infringe
their  rights.  Any  future  claim,  with or  without  merit,  could  result  in
significant litigation costs and diversion of resources, including the attention
of  management,  and  could  require  us to enter  into  royalty  and  licensing
agreements,  all of which could have a material  adverse effect on our business,
financial  condition,  and results of  operations.  These  royalty and licensing
agreements,  if required,  may not be available on terms  acceptable to us or at
all.  Such  litigation,  whether  successful  or  unsuccessful,  could result in
substantial  costs and  diversion of our  management's  attention  and our other
resources, which could have a material adverse effect on our business, financial
condition, and results of operations.

WE DO NOT PLAN TO PAY CASH DIVIDENDS.

     We have  never  paid any cash  dividends  on our  common  stock  and do not
currently  anticipate  that we will pay  dividends  in the  foreseeable  future.
Instead,  we intend to apply  earnings to the expansion and  development  of our
business.

                                       14
<PAGE>
THERE ARE BOTH GENERAL AND SPECIFIC  RISKS  INHERENT IN ANY BUSINESS,  INCLUDING
OURS.  AN  EXTENSIVE  DISCUSSIONS  OF RISKS WE FACE IS  CONTAINED IN THE SECTION
CAPTIONED  "RISK  FACTORS"  IN  AMENDMENT  NO. 1 TO OUR FORM  10-SB  FILED  WITH
SECURITIES AND EXCHANGE COMMISSION.  SOME SPECIFIC RISKS WE ARE CURRENTLY FACING
ARE SET FORTH BELOW,  AND EVEN THOUGH WE ARE NOT REQUIRED IN THIS FORM 10-KSB/A,
WE WISH TO DESCRIBE SOME OF THEM FOR YOU.

UNLESS WE RAISE ADDITIONAL CAPITAL TO EXPAND OUR BUSINESS, WE MAY NOT BE ABLE TO
CONTINUE  OPERATIONS AS A GOING CONCERN,  AND OUR INVESTORS MAY LOSE SOME OR ALL
OF THEIR INVESTMENT.

     We historically have secured  financing for operations,  the acquisition of
additional inventory and equipment,  and the development of our products through
private  placements  of equity  securities  and from loans.  We had  outstanding
short-term notes payable and capital lease  obligations  totaling  approximately
$223,893 on September  30, 1999,  $414,261 on September  30, 2000 and $82,008 on
September  30, 2001.  Each figure  includes  yearly leases of $82,008 for office
rent and office  equipment  leases We have  incurred  significant  losses  since
inception and will be required to seek  additional  equity or debt  financing to
further develop our products and to establish our manufacturing  operations,  to
finance future  acquisitions or develop new product lines,  to obtain  equipment
and inventory  necessary to expand our in-house production  capabilities,  or to
provide funds to take advantage of other business opportunities.  The timing and
amount of any such capital  requirements  cannot be  predicted at this time.  We
have from time to time encountered  difficulties in obtaining adequate financing
on acceptable  terms and there can be no assurance  that such  financing will be
available on acceptable terms in the future.  If such financing is not available
in  sufficient  amounts  or on  satisfactory  terms,  we may be  unable to repay
creditors or to continue as a going  concern.  Our inability to obtain  adequate
financing on a timely basis also could adversely  affect our operating  results,
may  require  us  to  restructure  our  business  and   operations,   and  could
significantly  interfere  with our efforts to expand our business at the desired
rate.  Debt  financing  increases  expenses  and must be  repaid  regardless  of
operating results.  Equity financing could result in additional  dilution to our
existing stockholders.

WE  HAVE  EXPERIENCED  LOSSES  FROM  OPERATIONS,  OUR  AUDITORS'  REPORT  ON OUR
FINANCIAL  STATEMENTS IS QUALIFIED  WITH RESPECT TO OUR ABILITY TO CONTINUE AS A
GOING CONCERN,  AND OUR FUTURE  PROFITABILITY  IS UNCERTAIN AND THIS COULD CAUSE
OUR CURRENT AND PAST INVESTORS TO LOSE SOME OR ALL OF THEIR INVESTMENT.

     We have incurred operating losses since inception,  and reported a net loss
of $918,233 for the year ended  September 30, 1999. For the year ended September
30, 2000 we had a deficit of $464,234.  For the year ended September 30, 2001 we
had a deficit of $523,003,  for a total  accumulated  deficit at  September  30,
20001  of  $14,853,371.   Losses  incurred  during  fiscal  2000  and  2001  are
attributable  primarily  to expenses we incurred to develop,  enhance and market
our DataHand(R)  Ergonomic Keyboard.  We cannot assure you that we will generate
sufficient  operating  revenue,  expand sales of our products and  services,  or
control  our  costs  sufficiently  to  achieve  or  sustain  profitability.  Our
financial  statements  for the years ended  September 30, 2001 and September 30,
2000 have been prepared  assuming that we will continue as a going concern.  The
report by our independent public accountants on our financial statements for the
year ended September 30, 2001 states that the significant losses and our working
capital  deficiency  as of that date make our  ability  to  continue  as a going
concern  uncertain.  Our financial  statements for the year ended  September 30,
2001 do not include any  adjustments  relating to the  realization of assets and
the  satisfaction  of liabilities  that might result in the event that we become
unable to continue as a going concern.

                                       15
<PAGE>
OUR LIMITED OPERATING HISTORY MAY CAUSE FUTURE INVESTORS A PROBLEM IN EVALUATING
OUR POTENTIAL FOR FUTURE  SUCCESS.  THIS IN TURN COULD CAUSE US  DIFFICULTIES IN
RAISING NEEDED CAPITAL

     We were  incorporated  in  1995  and we did not  commence  active  business
operations in the industry until 1996. Accordingly,  we have a limited operating
history and limited historical financial information upon which you can evaluate
our existing  business and our  potential for future  success.  We face numerous
risks,  expenses,  delays, and uncertainties  associated with establishing a new
business,  especially in the new and rapidly evolving computer technology.  Some
of these risks and uncertainties relate to our ability to

     *    develop brand awareness and brand loyalty,
     *    increase traffic to our web site;
     *    increase customer acceptance of our products and services,
     *    develop and renew strategic relationships,
     *    obtain  access to new product and service  offerings  or  distribution
          channels,
     *    anticipate and adapt to the changing market for computer equipment and
          electronic commerce,
     *    provide  or  contract  for  satisfactory  customer  service  and order
          fulfillment, and
     *    integrate any acquired businesses, technologies and services.

     We may not be successful in addressing these risks and  uncertainties.  The
failure to do so would materially and adversely affect our business.

     As a result of our limited  operating  history,  our plan for rapid growth,
the changing  nature of computer  technology  and the  increasingly  competitive
nature of the markets in which we compete,  our historical  financial data is of
limited value in anticipating  future  operating  expenses.  Our planned expense
levels  will be based in part on our  expectations  concerning  future  revenue,
which is difficult to forecast accurately based on our stage of development.  We
may be unable to  adjust  spending  in a timely  manner  to  compensate  for any
unexpected  shortfall in revenue.  Further,  business  development and marketing
expenses may increase significantly as we expand operations.  To the extent that
these expenses precede or are not rapidly  followed by a corresponding  increase
in revenue,  our  business,  operating  results and  financial  condition may be
materially and adversely affected.

WE MAY  NOT BE  COMPETITIVE  IF WE FAIL  TO  ENHANCE  OUR  PRODUCT  AND  SERVICE
OFFERINGS AND DISTRIBUTION CHANNELS.

     The  failure  to develop or acquire  new or  enhanced  products,  services,
distribution  channels and online  features and functions  could have a material
adverse effect on our business. To remain competitive, we must continue to

     *    expand our product and  service  offerings  and develop or acquire new
          distribution channels,
     *    enhance our  offerings of ergonomic  related  news,  information,  and
          features,
     *    enhance the ease of use, responsiveness,  functionality,  and features
          of DataHand(R) Ergonomic Keyboard,
     *    attract and retain additional staff, and
     *    improve  the  consumer  knowledge  and  purchasing  experience  on our
          planned network of Web sites.

                                       16
<PAGE>
     These  efforts  may require us to develop or license  increasingly  complex
technologies.  We  may  not be  successful  in  developing  or  introducing  new
products, services, distribution channels, and online features and functions and
the products,  services,  channels,  features, and functions that we develop may
not result in increased revenue. We also may not be able to develop, acquire, or
enter into alliances for Web sites  designed to attract  consumers and suppliers
of computer products.

     Developing,  launching,  and promoting new product and service offerings or
expanding  into new markets will require us to make  significant  investments of
financial,  management,  and  operational  resources.  These  efforts also could
strain our  ability to support  our  existing  business  and product and service
offerings  or to provide an  enjoyable  online  experience  to  visitors  to our
network.  Our business could be materially and adversely  affected if we fail to
achieve these goals.

CHANGES IN ECONOMIC  CONDITIONS AND CONSUMER  SPENDING MAY ADVERSELY  AFFECT OUR
BUSINESS.

     The  computer  industry  is subject to  cyclical  variations.  Declines  in
consumer   confidence  levels,   even  if  prevailing  economic  conditions  are
favorable,  can also adversely affect consumer spending on computers and related
technology.  Our  success  depends  in part  upon a number of  economic  factors
relating to discretionary  consumer and business spending,  including employment
rates,  business conditions,  future economic prospects,  interest rates and tax
rates.  We are unable to estimate  the impact,  if any, of the acts of terrorism
recently unleashed on the United States on our business.

IF WE ARE  UNABLE TO  SUPPORT  INCREASED  VOLUME ON OUR WEB SITE  SALES  WILL BE
ADVERSELY AFFECTED.

     Growth in the number of users  accessing  our Web site may strain or exceed
the capacity of the computer systems of our Internet hosting service and lead to
impaired  performance or system  failures.  The current  systems of our Internet
hosting  service may be inadequate to  accommodate  rapid traffic  growth on our
network.  If this occurs,  customer service and  satisfaction may suffer,  which
could lead to dissatisfied users,  reduced traffic, and an adverse impact on our
business.  Our Internet hosting service plans to upgrade and add to our existing
technology and network  infrastructure  and to implement new systems so that our
network can perform better and handle  increased  traffic.  Failure to implement
these  systems  effectively  or within a reasonable  period of time could have a
material  adverse  effect on our  business,  operating  results,  and  financial
condition.  We have completed a revision of our web site content so that surfing
the site is easier and requires  less computer  memory on the surfer's  computer
than  before.  While we  believe  that we have  substantially  reduced  the risk
associated  with the use and  availability  of our web site,  we wish to caution
that there  remains  risks over which we have no  control.  Our web site is very
important  to us because  ninety  percent  (90%) of the sales  generated in 2000
resulted from visits to our site.

WE FACE INTENSE COMPETITION.

     Our  ability to compete  successfully  depends on a number of factors  both
within and outside our control, including the following:

     *    the  quality,  features,  diversity,  and prices of our  products  and
          services,
     *    our ability to generate traffic to our  DataHand(R)Ergonomic  Keyboard
          brand,
     *    our  ability  to develop  new  products  and  technology  and  service
          offerings,
     *    our ability to develop and maintain effective marketing programs,

                                       17
<PAGE>
     *    the quality of our customer service and training,
     *    our ability to  recognize  industry  trends and  anticipate  shifts in
          consumer demands,
     *    product introductions by our competitors,
     *    the number,  nature, and success of our competitors in a given market,
          and
     *    general market conditions.

Because these factors change rapidly, customer demand also can shift quickly. We
could experience a material adverse effect on our business,  operating  results,
and financial condition if we are unable to respond quickly to market changes or
a slowdown in demand for the products we sell and services we provide.

SERVICE FAILURES OR INTERRUPTIONS COULD ADVERSELY AFFECT OUR BUSINESS.

     Any sustained or repeated  failure or interruption in our computer  systems
or the  computer  systems or equipment of our  Internet  hosting  service  would
reduce  the  appeal  of our  Web  site to  customers  and  potential  customers.
Unanticipated  problems  affecting these systems may cause  interruptions in our
marketing  activities.  Interruptions  or  failures  could  result if we fail to
maintain  our  systems,  our  Internet  hosting  service  fails to maintain  its
computer   systems  and   equipment   in   effective   working   order,   or  if
telecommunications  providers  fail to provide  the  capacity  we  require.  Our
Internet  hosting service also must protect its computer  systems against damage
from fire, power loss, water, vandalism, terrorism and other malicious acts, and
similar unexpected adverse events. In addition,  our potential  customers depend
on  telecommunications   providers,  Internet  service  providers,  and  network
administrators  for access to our Web site.  The  systems and  equipment  of our
Internet  hosting  service  could   experience   outages,   delays,   and  other
difficulties  as a result of  system  failures  unrelated  to its  systems.  Any
damage, interruption,  or failure that interrupts or delays our operations could
cause users to stop using our services and have a material adverse effect on our
business.

AVAILABILITY OF MATERIALS FILED WITH THE SEC

     The  public  may read and copy any  materials  we file  with the SEC at the
SEC's Public Reference Room at 450 Fifth Street, N.W., Washington, DC 20549. The
public may obtain  information on the operation of the Public  Reference Room by
calling the SEC at 1-8900-SEC-0330.  We will be an electronic filer, and the SEC
maintains  an  Internet  site  that  contains  reports,  proxy  and  information
statements,  and other information  regarding issurers that file  electronically
with    the    SEC    at    http://www.sec.gov.    Our    Internet    site    is
http://www.datahand.com.

ITEM 2. DESCRIPTION OF PROPERTY.

Our  executive  offices and  production  facility are located at 3032 North 33rd
Avenue, Phoenix, Arizona 85017-5247, occupying 7,920 square feet of space leased
on a month to month basis.  This  facility is leased to Dale Retter,  one of our
founders and a principal stockholder.  Since 1998, we have been paying the lease
payments  under a verbal  agreement  with Mr.  Retter.  The lease provides for a
monthly  rental  payment of $4,740.  We believe our present  facility is in good
operating condition and is adequate for our present and future requirements.

ITEM 3. LEGAL PROCEEDINGS

None.

ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

                                       18
<PAGE>
                                     PART II

ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     During the fiscal year ended  September  30, 1999,  we sold an aggregate of
1,201,615 shares of common stock for a total purchase price of $162,460. We also
issued an  aggregate  of 230,715  shares to  employees  and vendors for services
rendered valued at a total of $231,315.

     During the fiscal year ended  September  30, 2000,  we sold an aggregate of
276,000 shares of stock for a total purchase price of $88,999.

     During the fiscal year ended September 30, 2001, we sold for cash 3,639,894
shares  of stock  for a total  purchase  price of  $745,246.  We also  issued an
aggregate of 798,913  shares of stock for services and debt for a total value of
$536,691.

     During  the  fiscal  year  ended  September  30,  1999,  we  granted to non
employees a total of 5,000 options to purchase our stock.  The exercise price is
$1.00 per share and the option is good for five years.  During the same year, we
granted to employees an aggregate of 47,500 options. These options have a period
of five years, are for $1.00 per share and were vested immediately.

     During the fiscal year ended September 30, 2000, we granted to employees an
aggregate of 97,455 stock options.  The exercise price on these options is $1.00
per share and carry a period of five years before expiration.

     During the fiscal year ended September 30, 2001, no additional options were
granted.

     During the previous two years and nine months,  we have issued  warrants to
purchase  common stock.  None of these warrants have been redeemed.  Outstanding
warrants have expiration dates through July 10, 2004 and certain warrants expire
at the date of an initial public  offering.  706,566 warrants were issued in the
fiscal year ended September 30, 2001,  153,283  warrants were issued in the year
ended  September 30, 2000 and  1,274,102  warrants were issued in the year ended
September 30, 1999.

     All securities during the past three years were pursuant to exemptions from
registration  provided by Sections  3(b),  4.2 and 4.6 of the  Securities Act of
1933, as amended, and the rules and regulations adopted thereunder.  During this
period  of  time,  sixteen  (16) of the  purchasers  of  common  stock  were new
shareholders and seven (7) of the purchasers were old shareholders.

     As of September 30, 2001, there were approximately 354 holders of record of
our common stock.

     Our policy is to retain  earnings to provide  funds for the  operation  and
expansion of our business.  We have not paid cash  dividends on our common stock
and do not anticipate that we will do so in the foreseeable  future. The payment
of dividends in the future will depend on our growth,  profitability,  financial
condition, and other factors that our board of directors may deem relevant.

                                       19
<PAGE>
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS.

                             SELECTED FINANCIAL DATA

     The following table summarizes certain selected consolidated financial data
and is  qualified in its entirety by the more  detailed  Consolidated  Financial
Statements and Notes thereto  appearing  elsewhere in this Report.  The data has
been  derived  from the  financial  statements  audited by Shelley  Intl.,  CPA,
independent certified public accountant.

                                      YEAR ENDED     YEAR ENDED     YEAR ENDED
                                     -------------  -------------  -------------
                                     SEPTEMBER 30,  SEPTEMBER 30,  SEPTEMBER 30,
                                         2001           2000           1999
                                     -------------  -------------  -------------
STATEMENTS OF OPERATIONS:

INCOME
     SALES OF PRODUCT                 $   162,317    $   151,466    $   194,789
     TRAINING REVENUE                      10,150          2,500          1,000
                                      -----------    -----------    -----------

TOTAL REVENUE                             172,467        153,966        195,789

COST OF SALES

     COSTS OF GOOD SOLD                   112,136        221,646        102,530
     COST OF TRAINING                      10,268         12,037         58,246

     TOTAL COST OF SALES                  112,404        233,683        160,776
                                      -----------    -----------    -----------

     GROSS PROFIT                          50,063        (79,717)        35,013

EXPENSES
     SALES AND MARKETING                  176,120         37,833        117,606
     GENERAL AND ADMINISTRATIVE           282,844        263,536        622,069
     RESEARCH AND DEVELOPMENT              10,531         17,520         77,895
     DEPRECIATION EXPENSE                  64,478         52,819        113,689
     INTEREST EXPENSE                      39,093         12,809         21,987

     TOTAL EXPENSE                        573,066        384,517        953,246

     LOSS BEFORE PROVISION FOR
     INCOME TAXES                        (523,003)      (464,234)      (918,233)

     PROVISION FOR INCOME TAXES                 0              0              0
                                      -----------    -----------    -----------

NET INCOME (LOSS)                        (523,003)      (464,234)      (918,233)
                                      ===========    ===========    ===========

BASIC AND DILUTED EARNINGS
     (LOSS) PER COMMON SHARE                (0.04)         (0.04)         (0.09)

BASIC AND DILUTED WEIGHTED AVERAGE
     NUMBER OF COMMON SHARES           13,535,120     11,209,996     10,242,374

The notes to the  financial  statements  attached  as an exhibit are an integral
part of this Comparative Statement of Operations.

                                       20
<PAGE>
MANAGEMENT'S  DISCUSSION  AND  ANALYSIS OF  FINANCIAL  CONDITION  AND RESULTS OF
OPERATIONS

OVERVIEW

     We are a Delaware corporation formed in November 1994. Our primary business
is the sale,  marketing,  manufacture,  licensing and development of innovative,
high-value  computer  data input  services.  On January 27, 1995, we merged with
Industrial Innovations, Inc., an Arizona corporation founded in October 1987. We
were the surviving  legal entity.  As a result of the merger,  each  outstanding
share of common stock held by the shareholders of Industrial Innovations,  Inc.,
was  exchanged for one share of our common  stock.  DataHand(R)  is a registered
trademark of ours.

     Our operations to date have included  assembling our management,  marketing
and sales, and product development  personnel,  forming strategic  relationships
with vendors, securing financing and launching the initial commercial production
of our DataHand(R) System.  Product  development,  testing and test marketing of
DataHand(R)  ergonomic  keyboards  have been  completed.  Full-scale  production
commenced in October 1998 with sales and marketing starting shortly thereafter.

     During fiscal 2000 we derived our revenue from the sales of our DataHand(R)
Ergonomic Keyboards.  Cost of sales includes raw materials and labor.  Operating
expenses include general corporate expenses, sales salaries, product development
costs,  taxes, and fringe  benefits,  as well as the cost of support services to
the continuing development of our technology and new products.

     Ninety  percent (90%) of our sales during  fiscal 2000 occurred  because of
our web site.  Although  most of these  sales  were  closed via  telephone,  the
initial  contact with us occurred  with the customer  visited our web site.  The
primary  method of  selling  has been to  "drive"  customers  to the web site by
listing it on several search  engines and with key words,  such as "hurt hands',
ergonomic  keyboards",  etc.  Sales terms  require  credit card  payment  before
delivery.  We deliver  within three days of receiving  payment for an order.  We
have a thirty day return  policy with a six percent  (6%)  restocking  fees as a
deduction from the sales price paid.

     Our training and system implementation have been offered on a fee basis for
the past five (5) years. Customers such as Citibank in North Dakota, M&I Bank in
Milwaukee, Sara Lee in Georgia and L.L. Bean in Maine have paid for and received
training from our training consultant Shelley Johnson.  Ms. Johnson, a certified
trainer with a Master Degree,  has consulted with our customers,  on our behalf,
in the past in the area of office productivity  improvement  associated with the
use of the DataHand(R) Ergonomic Keyboard in the customer's environment.

     All revenue is recognized  when billed.  We do not currently offer extended
terms on the sales of any of our products or training.

     There are no particular external business conditions that have affected our
business in the past. Sales have declined  year-to-year  since 1998 because of a
restructuring  that occurred at the end of 1998. Because of a lack of funding at
that time, our management agreed that we would layoff most of our work force and
concentrate  our efforts on raising  needed capital and completing the design of
the "ErgoHand" (the low cost DataHand(R) Ergonomic Keyboard) and the recruitment
of  needed,  experienced  personnel  for  the  future.  These  tasks  have  been
completed, and we anticipate that sales will show an increase beginning in 2001.
There are no seasonal or other aspects in our financial performance.

                                       21
<PAGE>
     Revenues have not been segmented by market segment in the past. However, it
is  anticipated  that revenues will be segmented in the future between at least:
web sales, resellers and corporate sales.

RESULTS OF OPERATIONS FOR THE FISCAL YEARS ENDING SEPTEMBER 30, 2001,  SEPTEMBER
30, 2000 AND SEPTEMBER 30, 1999

     REVENUE.  Total  revenue for the fiscal  years ending  September  30, 2001,
September 30, 2000 and September 30, 1999 were $172.467,  $153,966 and $195,789,
respectively.  The twelve month period  ending  September  30, 2001 saw sales of
keyboards of $162.317 and training  revenue of $10,150,  the twelve month period
ending  September  30,  2000 saw sales of  keyboards  of $151,466  and  training
revenue of $2,500,  and the twelve month period  ending  September  30, 1999 saw
sales of keyboards of $194,789  and  training  revenue of $1,000.  The change in
revenue  is  attributable  to  increase  sales  of  our  DataHand(R)   Ergonomic
Keyboards.

     Fiscal year 2000 was a rebuilding year for us. In December of 2000 we hired
a President with experience in marketing and sales of computer equipment through
dealers and distributors.  Prior to the hiring, most sales were made as a result
of our web site.  Upon the hiring of the new  President in Fiscal 2001,  our web
site was completely revised. During these revisions,  the site was down at times
for  periods of up to two weeks at a time.  Our web site  designer  necessitated
this because we could not incur the cost of running two sites  simultaneously  -
the old site and the new site.  During  the  times the web site was down,  there
were, in effect, no sales.

     COST OF GOODS SOLD;  GROSS  PROFIT.  Cost of goods sold for the fiscal year
ending  September  30,  2001,  September  30, 2000 and  September  30, 1999 were
$122,404,  $233,683 and $160,776  respectively.  The twelve month period  ending
September  30, 2001 saw cost of keyboards  sold of $112,136 and cost of training
of  $10,268,  the twelve  month  period  ending  September  30, 2000 saw cost of
keyboards  sold of $221,646  and cost of  training of $12,037,  while the twelve
month period ending  September  30, 1999 saw cost of keyboards  sold of $102,530
and cost of training of $58,246.  Cost of goods sold for the fiscal years ending
September  30, 2001,  September 30, 2000 and September 30, 1999 were $122,404 or
approximately  71% of total  revenue,  233,683  or  approximately  152% of total
revenue and $160,776 or approximately  82% of total revenue,  respectively.  The
decrease in cost of goods sold of $111,279 or approximately 65% of total revenue
of fiscal year ending September 30, 2001 is primarily  attributable to decreased
supervisory expenses.

     Gross  profit for the fiscal year ended  September  30, 2001 was $50,063 or
approximately  29% of total  revenue,  gross  profit for the  fiscal  year ended
September 30, 2000 was ($79,717) or approximately 52% of total revenue and gross
profit for the fiscal year ended September 30, 1999 was $35,013 or approximately
18% of total revenue.  The 75% in gross profit in fiscal year 2001as compared to
fiscal year 2000 is primarily  attributable to decreases in supervisory expenses
during the twelve month period ending September 30, 2001.

     The negative gross profits  incurred during fiscal 2000 were the results of
the down or limited web site during much of the year. It should be noted that we
began fiscal 2000 with limited staff, especially in marketing and sales and that
we had no plans for making a profit in fiscal 2000. Our limited production staff
is meeting our needs  currently,  but as sales  improve  increases in production
staff will be addressed and revised as required.

     SALES AND MARKETING  EXPENSES.  Sales and marketing expenses for the fiscal
years  September  30,  2001,  September  30,  2000 and  September  30, 1999 were
$176,120, $37,833 and $117,606,  respectively.  The approximate 366% increase in

                                       22
<PAGE>
sales and  marketing  expense  over  fiscal  year 2000 is  representative  of us
shifting from a development mode to a sale mode.

     GENERAL AND ADMINISTRATIVE  EXPENSES.  General and administrative  expenses
for the fiscal  years  ending  September  30,  2001 and  September  30, 2000 and
September  30, 1999 were  $282,844,  $263,536 and  $622,069,  respectively.  The
increase  of  $19,308  or  approximately  7% in fiscal  year  2001 is  primarily
attributable to a slight increase in administrative personnel.

     RESEARCH AND PRODUCT DEVELOPMENT EXPENSES. Research and product development
expenses for the fiscal years ended  September 30, 2001,  September 30, 2000 and
September 30, 1999 were $10,531, $17,520 and $77,895, respectively. The decrease
of research and product  development  expenses is  representative of us shifting
from a development mode to a sales mode over the three year period. The research
and product  development  expenses were  primarily  salary and  consulting  fees
incurred,  and although the expenses have been reduced  during the periods since
1998,  additional research and product development  expenses are expected as our
products'  market will require  improvements to remain a competitive  electronic
device and as we continue development of the ErgoHand(R).

     DEPRECIATION  AND  AMORTIZATION  EXPENSES.  Depreciation  and  amortization
expenses for the fiscal year ended  September  30, 2001,  September 30, 2000 and
September  30,  1999  were  $64,478,  $52,819  and  $113,689,  respectively.  We
anticipate that  depreciation  expense will increase as we expand our operations
by purchasing additional property, plant and equipment in subsequent years.

     INTEREST EXPENSE. Interest expense for the fiscal years ended September 30,
2001,  September  30,  2000 and  September  30, 1999 were  $39,093,  $12,809 and
$21,987,  respectively.  New  financing  placed  during  the  fiscal  year ended
September  30,  2001 were the  sources of the  increase  of $26,284 in  interest
expense over fiscal year 2000.

     NET LOSS BEFORE INCOME  TAXES.  Net loss before income taxes for the fiscal
year ended  September  30, 2001,  September 30, 2000 and  September  1999,  were
$523,003,  $464,234  and  $918,233,  respectively.  The  increase  of $58,769 or
approximately  13% in fiscal 2001 as compared  to fiscal 2000 is  primarily  the
result of the increase in sale and marketing expenses during the fiscal years.

     PROVISION  FOR  INCOME  TAXES.  As of  September  30,  2001,  we  had a net
operating loss  carryforward  balance of  approximately  $11,698,061 from losses
incurred through that date.

LIQUIDITY AND CAPITAL RESOURCES

     Our working  capital has  fluctuated  greatly in the previous  periods.  At
September 30, 2001, we had a positive working capital of $113,784.  At September
30, 2000, we had a negative  working  capital of $801,610,  and at September 30,
1999, we had a negative working capital of $461,461. Current assets increased to
$292,336 at the twelve months ended September 30, 2001 from $56,612 at September
30, 2000.  Current  assets were $117,930 at September 30, 1999. The changes were
due primarily to changes in cash, inventory and non-trade receivables.

     Our operating  activities used net cash during the year ended September 30,
2001 of  $456,196,  as compared  to net cash used during the fiscal  years ended
September 30, 2000 of $276,956 and $391,239  during the year ended September 30,
1999.  The major element  contributing  to net operating cash flow was cash paid
for general and administrative and marketing expense.

                                       23
<PAGE>
     At the end of the fiscal  year ended  September  30,  1998,  we had current
notes payable outstanding of $22,500.  During the period from September 30, 1998
through  September 30, 1999, we borrowed an  additional  $193,992,  bringing the
total due on current  notes  payable on September  30, 1999 of $216,492.  In the
fiscal year ended  September  30,  2000,  we borrowed  an  additional  $197,849,
bringing the total due on current notes payable to $414,341. As of September 30,
2001,  we owed $60,943.  The current notes payable  during those periods of time
bore interest at rates between 0% and 10% per annum.

     At the end of the fiscal year ended  September  30, 1998,  we had long term
notes payable outstanding of $116,363. During the period from September 30, 1998
through  September  30, 1999, we borrowed an  additional  $39,039,  bringing the
total due on long term notes payable on September  30, 1999 of $155,402.  In the
fiscal year ended  September 30, 2000, we reduced our debt by $11,068,  bringing
the total due on long term notes payable to $144,334.  As of September 30, 2001,
we had  eliminated  our long term debt to anyone  outside our  company,  and, as
such, we had no long term note holders at such fiscal year end to third parties.

     The long term debt still on the balance  sheet as of September 30, 2001 was
for past pay owed to two officers - Dennis Monroe, Vice President of Operations,
and James Cole,  Chairman and CEO. Both  officers  agreed to the booking of this
back pay as a long term debt, not due until after October 2002.

     Our capital  lease  obligations  ended in fiscal year 2000.  In fiscal year
ended September 30, 1999, we made capital lease payments of $7,401 and in fiscal
year ended  September 30, 1999, we made capital  lease  payments of $19,997.  In
fiscal year ended September 30, 2001, we made no capital lease payments since we
had no capital lease obligations in fiscal year 2001.

     We have managed to raise enough financing from either loans or infusions of
equity  to  continue  the  development  of our  products.  We have a very  loyal
shareholder  base that has  continued  to  support  our  efforts  and to provide
additional  fundings over the years.  In the past,  the liquidity  needs that we
experienced  were due to the product  development  and testing  phase of the our
history.  As we are now entering into the marketing  phase of our existence,  we
have  determined  that 64 units sold per month will place us in a positive  cash
flow environment. We are adding to our marketing and sales force to reach the 64
keyboards  sold per month goal as early as the spring of 2002.  In the meantime,
we have a line  of  credit  available  to us  from a  major  shareholder.  It is
management's  belief that this line of credit and  continued  support from other
major shareholders that operations will continue into the foreseeable future.

     We believe that our short term liquidity needs can be achieved  through our
current group of investors.  These  investors  have supported us during the past
two years and continue to do so. For  example,  during the past six months these
investors have furnished us with $250,000 in working capital.  In the long term,
we have a need to raise  additional  capital to expand our  marketing  and sales
activities and to complete the development,  testing and marketing of our newest
product, the low-cost DataHand(R) Ergonomic Keyboard named ErgoHand(R).

     We are  currently  negotiating  with Bank of America for a $250,000 line of
credit.  This line will be  guaranteed by two of our  shareholders.  Our current
line of credit is for $30,000 from Textron  Financial,  with a variable interest
rate that is currently 13.75%. The Textron line of credit is guaranteed by James
Cole, our Chairman and CEO. In the past, the $30,000 line of credit has been all

                                       24
<PAGE>
that was needed as a supplement  on which we could  operate.  This is because of
the  support  from  our  shareholders.  The  $250,000  line of  credit  is being
established as a fail safe for us during the period prior to the registration of
our stock of the SEC in an initial public  offering.  All funds are only for the
use by us.  Both  lines of credit  are set up  whereby  payments  can be made to
reduce  the  outstanding  balances  on the  lines  from  time  to  time  with no
penalties.

     We have been able to generate sufficient amounts of cash from our investors
during the past seven years and we know of no reason why this support should not
continue  during the next twelve month period.  We remain a viable going concern
because of this support and plan to increase sales and profits,  even though our
auditor has issued a  going-concern  opinion in connection with his audit of us.
Please refer back to the paragraphs in Part I above that is captioned  UNLESS WE
RAISE ADDITIONAL CAPITAL TO EXPAND OUR BUSINESS,  WE MAY NOT BE ABLE TO CONTINUE
OPERATIONS AS A GOING  CONCERN,  AND OUR INVESTORS MAY LOSE SOME OR ALL OF THEIR
INVESTMENT" and WE HAVE EXPERIENCED LOSSES FROM OPERATIONS, OUR AUDITORS' REPORT
ON OUR FINANCIAL STATEMENTS IS QUALIFIED WITH RESPECT TO OUR ABILITY TO CONTINUE
AS A GOING  CONCERN,  AND OUR FUTURE  PROFITABILITY  IS UNCERTAIN AND THIS COULD
CAUSE OUR CURRENT AND PAST INVESTORS TO LOSE SOME OR ALL OF THEIR INVESTMENT.

     Sales, and resulting profits,  should increase because of our new marketing
and sales team has recently contracted with 52 distributors, is negotiating with
companies  such as Gateway,  Dell and Compaq and  Microsoft  to  distribute  our
products,  is  instituting  a program to attend both  Workers  Compensation  and
Ergonomic Products  conferences and has plans in place to increase sales through
our web site.

     The  following  are the number of units sold for each of the  periods  from
October 1998 through September 2001.

                            Year Ended       Year Ended       Year Ended
                           September 30,    September 30,    September 30,
                               2001             2000             1999
                           -------------    -------------    -------------
     Monthly Range             30-2             20-6             40-4
     Total for Year             171              130              172

ROYALTY AGREEMENTS

     As a means to raise  capital,  our  predecessors  in  interest  initiated a
program  whereby they sold or granted the right to receive  future  royalties on
the sale of certain  DataHand(R)  family  products.  The Fixed Royalty  Override
Agreements (Royalty  Agreements)  originally called for total royalties of $5.91
for each  DataHand(R)  device  we sold,  and for  which  any  party  sold  under
sublicense  from us. The Royalty  Agreements  expire through March 31, 2007. The
royalty payments are not a material amount.  Royalty payments accrued during the
past five year are less than $2,000. These payments are an insignificant portion
of our  expenses  and  are  fully  discussed  in  the  notes  to  our  financial
statements.

     Option A. Holders of Royalty Agreements  representing $.30 of royalties for
each  DataHand(R)  device sold  agreed to change each $.01 of the royalty  under
such agreement to a percentage of revenue from the sales of DataHand(R)  Systems
of .000333% for direct sales and .0333% for sublicense and royalty revenue.

                                       25
<PAGE>
     Option B. Holders of Royalty Agreements representing $1.42 of royalties for
each  DataHand(R)  device sold  agreed to change each $.01 of the royalty  under
such agreement for direct sales to the lesser of the existing  royalty under the
agreement of .00333% for such revenue and for sublicense and royalty  revenue to
..0333% of such revenue.

     Option C. Holders of Royalty Agreements representing $3.89 of royalties for
each  DataHand(R)  device sold agreed to exchange each $.01 of royalty for 1,500
shares of our common stock.

     After the Options A, B and C  conversions,  there  remains a fixed  royalty
obligation  of $0.25 per unit and a  percentage-of-sales  royalty,  based on the
average  sales price of a  DataHand(R)  Professional  II as of June 30, 2001, of
approximately $1.00.

CAPITAL STOCK

     We have  total  authorized  capital  of  35,000,000  shares  consisting  of
30,000,000 shares of common stock, $.001 par value per share and 5,000,000 share
of preferred stock, $.001 par value per share.

Options

Option agreements are granted at the discretion of the Board of Directors.

Schedule of Options Granted
                                9/30/01      9/30/00      9/30/99      9/30/98
                                --------     --------     --------     --------
Beginning Balance                689,758      592,303      539,803      964,461
Employee/director granted                      97,455       47,500      354,878
Non-employee granted                                         5,000       32,167
Employee expired                                                       (811,703)

Ending Balance                   689,758      689,758      592,303      539,803

Expiration Date of the
Options Granted                                8/1/05       7/1/04       2/1/03

Option Price                                     1.00         1.00         1.00

Weighted average fair value
Of Options Granted                                .32          .27          .65

     We account for our employee  stock option plans based on the  provisions of
APB No. 25, under which no compensation cost has been recognized.  If the option
costs had been calculated under provisions of SFAC 123, our loss would have been
the following.

Amount reported                 (523,003)    (464,234)    (918,233)  (2,137,329)
Proforma                        (577,939)    (519,170)    (966,932)  (2,183,463)

     A copy of our stock  option is  attached  as an  exhibit  to our Form 10-SB
filed on October 9, 2001 with the SEC. It is  available  on-line on EDGAR at the
SEC's web site.

                                       26
<PAGE>
Warrants

     We have  outstanding  warrants to purchase shares of common stock at prices
ranging  from  $1.00 to $5.00  per  share.  Certain  outstanding  warrants  have
expiration  dates through July 10, 2004 and certain  warrants expire at the date
of an initial public offering.  Below lists the warrants  outstanding at the end
of each period.

                              9/30/01       9/30/00       9/30/99       9/30/98
                             ---------     ---------     ---------     ---------
Beginning Balance            2,608,696     2,455,413     1,181,311     1,146,100
Warrants Issued                706,566       153,283     1,274,102       101,701
Warrants Expired               506,283             0             0        66,500
                             ---------     ---------     ---------     ---------

Ending Balance               2,808,979     2,608,696     2,455,413     1,181,311
                             ---------     ---------     ---------     ---------

     As of  September  30,  2001,  we had 39 holders of warrants  for  2,808,979
shares of common stock.

     We currently are seeking additional sources of financing, which may include
one or more private placements of debt or equity  securities.  We can provide no
assurance  that any  additional  financing  will be  available on terms that are
acceptable to us, if at all. Our inability to obtain such financing could result
in our  inability  to  continue as a going  concern.  If such  financing  is not
available in sufficient amounts or on satisfactory  terms, we also may be unable
to expand our business or to develop new customers at the rate desired,  and the
lack of capital could have a material adverse effect on our business.

     A copy of our  warrant is  attached  is attached to our Form 10-SB filed on
October 9, 2001 with the SEC. It is available  on-line on EDGAR at the SEC's web
site.

ECONOMIC CHANGES DUE TO INCREASED SECURITY MEASURERS

     Since the  terrorist  attack of September  11, 2001,  we have  reviewed our
company  for any impact that this might  bring on our  business.  Until the U.S.
Government fully outlines its plans for a response,  and that response impact is
integrated into the U.S. economy, we cannot make a judgment on its impact on our
business.

     We do, however, feel that freight cost will increase.

                                       27
<PAGE>
ITEM 7. FINANCIAL STATEMENTS

                             DATAHAND SYSTEMS, INC.


                              FINANCIAL STATEMENTS


                               September 30, 2001
                               September 30, 2000










                                       F-1
<PAGE>
                                TABLE OF CONTENTS

                                                                            PAGE

COVER SHEET .................................................................F-1

TABLE OF CONTENTS ...........................................................F-2

INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS' REPORT ............................F-3

BALANCE SHEET, ASSETS .......................................................F-4

BALANCE SHEET, LIABILITIES AND STOCKHOLDERS' EQUITY .........................F-5

STATEMENT OF OPERATIONS .....................................................F-6

STATEMENT OF STOCKHOLDERS' EQUITY ...........................................F-7

STATEMENT OF CASH FLOWS .....................................................F-8

NOTES TO FINANCIAL STATEMENTS ............................................F-9-21

                                       F-2
<PAGE>
                               SHELLEY INTL., CPA
                                443 E. 10TH AVE.
                                 MESA, AZ 85204
                                 (480) 461-8301


                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT

To the Board of Directors/Audit Committee
Datahand Systems, Inc.

     I have audited the  accompanying  consolidated  balance  sheets of Datahand
Systems,  Inc. as of September  30, 2001 and 2000 and the related  statements of
operations,  stockholders'  equity, and cash flows for the years ended September
30, 2001, 2000 and 1999. These financial  statements are the  responsibility  of
the Company's  management.  My  responsibility is to express an opinion on these
financial statements based on my audit.

     I  conducted  my audit  in  accordance  with  generally  accepted  auditing
standards.  Those standards  require that I 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.
I believe that my audit provides a reasonable basis for my opinion.

     In my opinion,  the financial  statements referred to above present fairly,
in all material respects, the financial position of Datahand Systems, Inc. as of
September  30,  2001  and  2000  and  the  related   statements  of  operations,
stockholders'  equity,  and cash flows for years ended  September 30, 2001, 2000
and 1999 in conformity with generally accepted accounting principles.

     The accompanying  financial statements have been prepared assuming that the
Company will continue as a going  concern.  The Company has  experienced  losses
since inception,  covering over five years. This factor raises substantial doubt
about the  Company's  ability to  continue as a going  concern.  This factor and
others are  detailed in Note 7 along with  management's  plans for the  Company.
These  financial  statements  do not  include  any  adjustments  relating to the
recoverability  and  classification  of asset carrying amounts or the amount and
classification  of liabilities that might result should the Company be unable to
continue as a going concern.


                                        Shelley Intl., CPA


November 20, 2001

                                       F-3
<PAGE>
                             DATAHAND SYSTEMS, INC.

                                  BALANCE SHEET
                        as of September 30, 2001 and 2000

                                     ASSETS

                                                September 30,      September 30,
                                                    2001               2000
                                                 -----------        -----------
CURRENT ASSETS
  Cash                                                56,966
  Trade Receivables                                    1,054              1,567
  Inventory                                           84,316             55,045
                                                 -----------        -----------

  Total Current Assets                               142,336             56,612
                                                 -----------        -----------

EQUIPMENT, net                                       103,092             94,267
                                                 -----------        -----------

OTHER ASSETS                                                              2,600
                                                 -----------        -----------


TOTAL ASSETS                                         245,428            153,479
                                                 ===========        ===========

The accompanying notes are an integral part of these statements

                                      F-4
<PAGE>
                             DATAHAND SYSTEMS, INC.

                                  BALANCE SHEET
                        as of September 30, 2001 and 2000

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                September 30,      September 30,
                                                    2001               2000
                                                 -----------        -----------
CURRENT LIABILITIES
  Bank Overdraft                                                          8,136
  Payables                                           110,081            122,414
  Accrued Payroll                                                       307,019
  Royalty Payable                                      2,789              2,352
  Warranty Payable                                     4,739              3,960
  Notes Payable                                       60,943            414,341
                                                 -----------        -----------

  Total Current Liabilities                          178,552            858,222
                                                 -----------        -----------

LONG TERM NOTES PAYABLE                              307,019            144,334
                                                 -----------        -----------

  Total Liabilities                                  485,571          1,002,556
                                                 -----------        -----------

STOCKHOLDERS' EQUITY

  Preferred Stock, authorized
    5,000,000 shares, par $0.001,
    no shares outstanding
    Common Stock, authorized
    30,000,000 shares of stock,
    15,786,425, 11,347,618 and
    shares issued and at
    September 30, 2001 and 2000
    par value $0.001 per share                        15,786             11,348

  Additional Paid in Capital                      14,747,442         13,469,943

  Stock Subscribed                                                     (150,000)

  Retained Earnings (Loss)                       (14,853,371)       (14,330,368)
                                                 -----------        -----------

  Total Stockholders' Equity                        (240,143)          (849,077)
                                                 -----------        -----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY           245,428            153,479
                                                 ===========        ===========

The accompanying notes are an integral part of these statements

                                       F-5
<PAGE>
                             DATAHAND SYSTEMS, INC.

                             STATEMENT OF OPERATIONS
                the years ended September 30, 2001, 2000 and 1999

                                      Year Ended     Year Ended     Year Ended
                                     September 30,  September 30,  September 30,
                                         2001           2000           1999
                                      -----------    -----------    -----------
INCOME
  Sales of Product                        162,317        151,466        194,789
  Training Revenue                         10,150          2,500          1,000
                                      -----------    -----------    -----------

  Total Revenue                           172,467        153,966        195,789
                                      -----------    -----------    -----------

COST OF SALES
  Costs of Goods Sold                     112,136        221,646        102,530
  Cost of Training                         10,268         12,037         58,246
                                      -----------    -----------    -----------

  Total Cost of Sales                     122,404        233,683        160,776
                                      -----------    -----------    -----------

  Gross Profit                             50,063        (79,717)        35,013
                                      -----------    -----------    -----------

EXPENSES
  Sales and Marketing                     176,120         37,833        117,606
  General and Administrative              282,844        263,536        622,069
  Research and Development                 10,531         17,520         77,895
  Depreciation Expense                     64,478         52,819        113,689
  Interest Expense                         39,093         12,809         21,987
                                      -----------    -----------    -----------

  Total Expense                           573,066        384,517        953,246
                                      -----------    -----------    -----------

  Loss before Provision for
    Income Taxes                         (523,003)      (464,234)      (918,233)

  Provision for Income Taxes                    0              0              0
                                      -----------    -----------    -----------

NET INCOME (LOSS)                        (523,003)      (464,234)      (918,233)
                                      ===========    ===========    ===========

Basic and Diluted Earnings
  (Loss) per Common Share                   (0.04)         (0.04)         (0.09)
                                      -----------    -----------    -----------

Basic and Diluted Weighted Average
  Number of Common Shares              13,535,120     11,209,996     10,242,374
                                      -----------    -----------    -----------

The accompanying notes are an integral part of these statements

                                       F-6
<PAGE>
                             DATAHAND SYSTEMS, INC.

                        STATEMENT OF STOCKHOLDERS' EQUITY
                  for the three years ended September 30, 2001

<TABLE>
<CAPTION>
                                                Common Stock          Additional
                                          -------------------------     Paid in       Stock        Accumulated      Total
                                            Shares        Amount        Capital     Subscribed       Deficit        Equity
                                          -----------   -----------   -----------   -----------    -----------    -----------
<S>                                       <C>           <C>           <C>           <C>            <C>            <C>
Balance, September 30, 1998                 9,639,288         9,639    12,987,528                  (12,947,901)        49,266

Sales of Common Stock                       1,201,615         1,202       161,258                                     162,460
Stock Issued for Services                     230,715           231       231,084                                     231,315
Stock Options Granted                                                       1,350                                       1,350
Deficit for year                                                                                      (918,233)      (918,233)
                                          -----------   -----------   -----------   -----------    -----------    -----------

Balance, September 30, 1999                11,071,618        11,072    13,381,220                  (13,866,134)      (473,842)

Sales of Common Stock                         276,000           276        88,723                                      88,999
Deficit for year                                                                                      (464,234)      (464,234)
                                          -----------   -----------   -----------   -----------    -----------    -----------

Balance, September 30, 2000                11,347,618        11,348    13,469,943                  (14,330,368)      (849,077)

Sales of Common Stock                       3,639,894         3,639       741,607                                     745,246
Stock Issued for Services                     278,756           279        17,754                                      18,033
Conversion of Debt, Interest, Royalties       520,157           520       518,138                                     518,658
Stock Subscribed                                                                       (150,000)                     (150,000)
Deficit for year                                                                                      (523,003)      (523,003)
                                          -----------   -----------   -----------   -----------    -----------    -----------

Balance, September 30, 2001                15,786,425        15,786    14,747,442      (150,000)   (14,853,371)      (240,143)
                                          ===========   ===========   ===========   ===========    ===========    ===========
</TABLE>

The accompanying notes are an integral part of these statements

                                       F-7
<PAGE>
                             DATAHAND SYSTEMS, INC.

                             STATEMENT OF CASH FLOWS
               the years ended September 30, 2001, 2000, and 1999

<TABLE>
<CAPTION>
                                              Year Ended     Year Ended     Year Ended
                                             September 30,  September 30,  September 30,
                                                 2001           2000           1999
                                             -------------  -------------  -------------
<S>                                          <C>            <C>            <C>
Cash Flows from Operating Activities
  Net Loss                                     (523,003)      (464,234)      (918,233)
  Accounts Receivable                               513         14,110        (11,160)
  Inventory                                     (29,271)        39,367         53,164
  Prepaids
  Deposits                                        2,600
  Accounts Payable                              (20,469)       (72,972)        32,263
  Depreciation Expense                           64,478         52,819        113,689
  Stock for services                             18,033                       231,315
  Stock Issued for Accrued Interest              29,707
  Stock Options Granted                                                         1,350
  Accrued Payroll                                              155,748        101,361
  Accrued Warranty and Royalty                    1,216         (1,794)         5,012
                                               --------       --------       --------

Net Cash Provided by Operations                (456,196)      (276,956)      (391,239)
                                               --------       --------       --------

Cash Flows Used in Investing Activities
  Fixed Asset Purchase                           73,303          6,665          3,675
                                               --------       --------       --------

Net Cash Used for Investing                      73,303          6,665          3,675
                                               --------       --------       --------

Cash Flows from Financing
  Note Payable Issued                            45,825        186,781        233,031
  Payment on Notes Payable                      (54,606)
  Stock Purchase Receivable                    (150,000)
  Sales of Stock                                745,246         88,999        162,460
                                               --------       --------       --------

Cash Flows from Financing                       586,465        275,780        395,491
                                               --------       --------       --------

Net Increase (Decrease) in Cash                  56,966         (7,841)           577

Cash, Beginning of Period                            --          7,841          7,264
                                               --------       --------       --------

Cash, End of Period                              56,966             --          7,841
                                               ========       ========       ========
</TABLE>

The accompanying notes are an integral part of these statements

                                      F-8A
<PAGE>
                             DATAHAND SYSTEMS, INC.

                             STATEMENT OF CASH FLOWS


Supplemental Disclosures of Cash Flows       9/30/2001    9/30/2000    9/30/1999
  Amount Paid for Income Taxes                       0            0            0
  Amount Paid for Interest                      39,093       12,809       21,987

Schedule of Significant Non-Cash Transactions

Year Ended September 30, 2001

  278,756 shares issued for services rendered valued at $18,033
  518,657 shares issued for conversion of $488,591 of debt and $29,707
    of interest expense
  1,500 shares issued for royalty rights, no value assigned
  Conversion of $307,019 of current accrued payroll to long term debt
  706,566 warrants issued for conversions, valued at $0.00

Year Ended September 30, 2000

  153,283 warrants issued, valued at $0.00

Year Ended September 30, 1999

  230,715 shares issued for services rendered, valued at $231,315
  5,000 stock options granted for non employee services rendered,
    valued at $1,350
  1,274,102 warrants issued, valued at $0.00

For a more detailed explanation of stock options and warrants see Note 4

The accompanying notes are an integral part of these statements

                                      F-8B
<PAGE>
                            DATAHAND(R) SYSTEMS, INC.

                          NOTES TO FINANCIAL STATEMENTS
                           September 30, 2001 and 2000


NOTE 1. OVERVIEW OF OPERATIONS AND ACCOUNTING POLICIES

DataHand(R)Systems,  Inc.  (the  Company)  is a Delaware  corporation  formed in
November  1994.  The  Company's   primary  business  is  the  sale,   marketing,
manufacture,  licensing and development of innovative,  high-value computer data
input  services.  On January  27,  1995,  the  Company  merged  with  Industrial
Innovations,  Inc., an Arizona  corporation  founded in October  1987.  Datahand
Systems,  Inc. was the surviving legal entity.  As a result of the merger,  each
outstanding  share  of  common  stock  held by the  shareholders  of  Industrial
Innovations,  Inc.  was  exchanged  for one  share  of the  common  stock of the
Company. DataHand(R)is a registered trademark of the Company.

The  Company's  operations  to date have  included  assembling  its  management,
marketing  and sales,  and  product  development  personnel,  forming  strategic
relationships  with  vendors,  securing  financing  and  launching  the  initial
commercial production of the DataHand(R) System.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  As  reflected  in the  accompanying
financial  statements,  the Company had negative cash flow from  operations  and
incurred a net loss during the previous three years. The financial statements do
not include any adjustments relating to the recoverability and classification of
recorded asset amounts or the amounts and  classification  of  liabilities  that
might be necessary should the Company be unable to achieve  sufficient cash flow
from operations or secure adequate future  financing and be therefore  unable to
continue as a going concern.

Product Development

During  fiscal  1993  and  1994,  the  Company  procured  the  tooling  for  the
manufacture of components for the DataHand(R) DH 200 product.  The Company began
shipping DataHand(R) DH 200 product during November 1993. As a result of ongoing
research and development  efforts,  the Company developed an upgraded data input
device,  the  Professional  II. The Professional II includes various upgrades to
the DH 200,  including  incorporations of the hardware  interface switch and the
power supply  converter into the keyboard.  The tooling for the  Professional II
was acquired during fiscal 1996.  Production and shipment of the Professional II
commenced  during fiscal 1996.  The negative  gross margins  experienced  during
fiscal 1996 and 1997 are due primarily to relatively  low  production  and sales
volumes  which  were  inadequate  to fully  absorb  fixed  manufacturing  costs.
However,  management  believes these volumes will increase  significantly in the
future and be sufficient to cover the Company's  fixed  manufacturing  costs and
generate gross margins.

                                       F-9
<PAGE>
Marketing Strategy

Future  operating  results will depend on the  Company's  ability to attract new
customers  to  generate  sufficient  volume  to fund  operations.  During  1996,
management of the Company  changed its  marketing  strategy to focus on sales of
large quantities of the Company's products to corporate entities. The Company no
longer directs its marketing efforts solely to individual users. During the year
2000 the marketing strategy was modified to include selling through distributors
and  resellers.  As of September 30, 2001 the Company had 42  distributors.  The
company's new president has been  developing an  experienced  sales team. He has
also begun to establish relationships with large retailers.

Revenue Recognition

Datahand unit system

The Company  generally  recognizes  revenue  upon the  shipment of its  DataHand
system.

Training Program

The training program is only for corporate clients and involves training someone
inside the client company to train his or her own people.  The training  program
lasts five days and is scheduled  immediately after the purchase of the DataHand
system.  The training  program is billed as a fixed fee.  Revenue is  recognized
when the client is billed which is at the same time as the training takes place.

Product Research and Development

The Company expenses product research and development costs as incurred.

Advertising

Advertising costs are expensed as incurred.  Advertising expense totaled $11,686
for year ended September 30, 2001, $10,692 for the year ended September 30, 2000
and $2,500 for the year ended September 30, 1999.

Inventory

Inventory is stated at the lower of cost (first-in, first-out) or net realizable
value. Inventory consists of the following:


                                        9/30/01       9/30/00       9/30/99
                                        -------       -------       -------
              Raw materials               51882        14,654        57,909
              Work-in-Process             7,250        35,117        35,117
              Finished goods             25,183         5,275         3,943
                                        -------       -------       -------
                                         84,315        55,045        94,412
                                        -------       -------       -------

                                      F-10
<PAGE>
Property, Equipment and Patents

Equipment  is  depreciated  using the  straight-line  method over the  estimated
useful lives, which range from two to seven years. Patents are recorded at their
cost and amortized using the  straight-line  method over their estimated  useful
lives of seventeen  years.  Costs related to patents pending are capitalized and
amortization begins when the patent is issued.

Fixed assets and patents consist of the following:

                                                      9/01          9/00
                                                    --------      --------
     Tooling and Jigs                                163,205       391,273
     Machinery and Equipment                          31,700        32,250
     Office Equipment                                 46,997        73,415
     Equipment under capital lease                    39,874        39,874
     DataHand(R) Systems units held for
         rental and promotion                         48,705        76,037
     Tenant improvements and other                    17,430        21,181
     Patents                                          89,279        91,629
              Total fixed assets                     437,190       725,659
     Less: Accumulated depreciation
       and Amortization                             (334,098)     (631,392)
                                                    --------      --------
                                                     103,092        94,267
                                                    --------      --------

Patents

Patent costs include direct costs of obtaining,  developing and  maintaining the
patents.  Costs for new patents are capitalized and amortized over the estimated
useful  lives  of  seventeen  years.   Costs  related  to  patents  pending  are
capitalized and amortization  begins when the patent is issued.  Currently,  the
Company has no patents pending. The increase in patent capitalized costs relates
to the  maintenance of the current  patents.  Amortization  expense for the year
ended  September  30, 2001 was $6,750 for the year ended  September 30, 2000 was
$4,765,  and for the year  ended  September  30,  1999 was  $4,179.  Accumulated
amortization as of September 30, 2001 was $44,139.

Use of Estimates

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect  the  reported  amounts  of assets  and  liabilities  and  disclosure  of
contingent  assets and  liabilities at the date of the financial  statements and
the reported amounts of revenue and expenses during the reporting period. Actual
results could differ from those estimates.

                                      F-11
<PAGE>
Earnings per Share

The basic earnings  (loss) per share is calculated by dividing the Company's net
income available to common shareholders by the weighted average number of common
shares during the year. The diluted  earnings  (loss) per share is calculated by
dividing the Company's net income (loss) available to common shareholders by the
diluted  weighted  average  number of shares  outstanding  during the year.  The
diluted  weighted  average  number of shares  outstanding  is the basic weighted
number  of  shares  adjusted  as of the  first of the  year for any  potentially
dilutive debt or equity.

The Company has no potentially dilutive securities outstanding at the end of the
statement  periods.  Therefore,  the basic and diluted earnings (loss) per share
are presented on the face of the statement of operations as the same number.

Options and warrants to purchase  common stock shares  outstanding as of the end
of the  statement  periods  are  shown in the table  below.  These  options  and
warrants were not included in the  computation  of the diluted net income (loss)
per  share  because  of the net  loss in each of the  periods  and  because  the
exercise  price of the options and warrants was greater than the average  market
price of the common shares and, therefore, the effect would be anti-dilutive.

                                             9/30/01      9/30/00      9/30/99
                                            ----------   ----------   ----------
Weighted average shares                     13,535,120   11,209,996   10,242,374
Anti-dilutive Options                          689,758      689,758      592,303
Anti-dilutive Warrants                       2,808,979    2,608,696    2,455,413

Stock Based Compensation

The Company accounts for its stock based  compensation  based upon provisions in
SFAS No. 123, Accounting for Stock-Based  Compensation.  In this statement stock
based  compensation is divided into two general  categories,  based upon who the
stock receiver is, namely, employees/directors and non-employees/directors.  The
employees/directors  category is further divided based upon the particular stock
issuance plan, namely compensatory and non-compensatory. Each of these divisions
treats the stock issuance for accounting purposes in a specific manner.

Non employees/directors           the security is recorded at its fair value

Employees/directors

  Non-compensatory                No security value is booked until the stock is
                                  actually paid for

  Compensatory                    The Company may select between two methods,
                                  compensation is calculated and recorded at the
                                  securities' fair value, or intrinsic value

                                      F-12
<PAGE>
The Company has selected to utilize the latter  measurement option for employee/
directors  stock  option  plans,  (which  follows APB 25  guidelines).  The note
regarding Stockholders' Equity gives more information about the options.

Details of Current Accounts Receivable

                                                           9/30/01      9/30/00
                                                          ---------    ---------
Trade Accounts Receivable                                     1,054        1,567
Allowance for doubtful accounts                                   0            0
                                                          ---------    ---------

Net Accounts Receivable                                       1,054        1,567
                                                          ---------    ---------

Most of the sales to date of the Company are through  credit  card,  which means
that the Company does not normally have trade accounts receivable.

Warranty and Right of Return

Upon the sale of a  system,  the  Company  normally  gives a 30 day  money  back
guarantee  less a 6% restocking  charge.  After the 30 days the Company gives an
additional eleven months warranty on replacement of parts. This warranty payable
calculation is based upon historical data and is shown as a current liability on
the balance sheet with an amount of $4,739.

The returns  during the year which  availed  themselves  of the 30 trial  period
return  policy was $34,884 for 2001 and $51,807  for 2000.  These  amounts  were
netted  against  the sales for the years.  The  returns  which were  experienced
during the 30 day trial  period  after the year end  (October 1, 2001 to October
3-0, 2001) were zero. Therefore, no allowance for returns was set up.

NOTE 2. NOTES PAYABLE AND CAPITAL LEASE OBLIGATIONS:

Notes payable and capital lease obligations consist of the following:

                                                           9/30/01      9/30/00
                                                          ---------    ---------
Demand Notes to:
Officers 0% interest,                                        55,746            0
Employees 0% interest                                         5,197        3,080
Investors 10% interest payments
paid yearly                                                       0      411,261
                                                          ---------    ---------

Total Current Notes                                          60,943      414,341
                                                          ---------    ---------

Long Term Notes Payable

Officer Note, 10% int. paid annually                                     109,728
Officer Notes, no interest stated,
This was converted from a short term
Demand note on 9/30/01                                      307,019

                                      F-13
<PAGE>
Line of credit, 14.5 % plus 2%
of principal paid monthly for 2000,
and variable interest plus 2%
principal monthly for 2001, credit line
as of 9/30/2001 was $30,000 with no
balance as of 9/30/01                                                     34,606
                                                          ---------    ---------

Total Long Term Notes Payable                               307,019      144,334
                                                          ---------    ---------

NOTE 3. FIXED ROYALTY OVERRIDE AGREEMENTS:

Beginning in 1987, as a means to raise capital,  the Company initiated a program
whereby they sold or granted the right to receive  future  royalties on the sale
of certain  DataHand(R)  family products.  During 1995 and 1996 these agreements
were modified to the three following plans.

Option A. Holders of Royalty Agreements  representing $.30 of royalties for each
DataHand(R)  device sold  agreed to change  each $.01 of the royalty  under such
agreement to a percentage  of revenue from the sales of  DataHand(R)  Systems of
..000333% for direct sales and .0333% for sublicense and royalty revenue.

Option B. Holders of Royalty Agreements representing $1.42 of royalties for each
DataHand(R)  device sold  agreed to change  each $.01 of the royalty  under such
agreement  for direct  sales to the  lesser of the  existing  royalty  under the
agreement of .00333% for such revenue and for sublicense and royalty  revenue to
..0333% of such revenue.

Option C. Holders of Royalty Agreements representing $3.89 of royalties for each
DataHand(R) device sold agreed to exchange each $.01 of royalty for 1,500 shares
of the Company's common stock.

After  the  Options  A,B,  and C  conversions,  there  remains  a fixed  royalty
obligation of $0.25 per unit and a percentage-of-sales  royalty,  based upon the
average sales price of a Professional II as of September 30th, of  approximately
$1.00 per unit.  There were 583,000  shares  issued for the  conversion of fixed
royalties held within the Option C Program.  The shares were valued at $0.75 per
share and were issued prior to September 30, 1997.

As of September 30, 1997 the Company had recorded on its balance sheet  deferred
revenue of  $51,971.  this  amount  was  recognized  as revenue  during the year
September 30, 1998 due to changes in projected sales.

NOTE 4. STOCKHOLDERS' EQUITY

Authorized Capital Stock

The Company has total  authorized  capital of  35,000,000  shares  consisting of
30,000,000 shares of common stock, $.001 par value per share and 5,000,000 share
of preferred stock, $.001 par value per share.

                                      F-14
<PAGE>
1993 Long-Term Incentive Plan

The 1993 Long-Term  Incentive Plan (Incentive  Plan) was adopted by the Board of
Directors in July 1994, and approved by the  shareholders  in November 1994. The
Incentive  Plan provides for the granting of options to acquire  common stock of
the  Company,  the granting of stock  appreciation  rights,  direct  granting of
common  stock of the  Company or the  granting of other cash  awards.  Under the
Incentive  Plan,  as of  September  30,  1997 and 1996,  a total of 700,000  and
350,000  shares of common  stock are  reserved  for  awards of  incentive  stock
options,  performance  shares  or  restricted  stock to  officers  or other  key
employees of the Company.  Non officers' options generally expire within 90 days
after the participant's  termination of employment.  Officers' options generally
do not expire upon termination.

The expiration date and the other  provisions of the options will be established
at the time of grant.  Options  may be granted for terms of up to five years and
become  exercisable in whole or in one or more  installments at such time as may
be determined by the Board of Directors upon grant of the options.  The exercise
price of options will be determined  by the Board of  Directors,  but may not be
less than 100% (110% if the option is granted to a  stockholder  who at the date
the option is granted owns stock  possessing more than 10% of the total combined
voting power of all classes of stock of the Company) of the fair market value of
the common stock at the date of the grant.

1993 Director Stock Plan

The 1993  Director  Stock  Plan  (Director  Plan)  was  adopted  by the Board of
Directors in July 1994 and approved by the  shareholders  in November  1994. The
Director Plan authorizes  awards of stock options to non-employee  Directors.  A
total of 300,000 shares of common stock have been reserved and are available for
grant under the Director Plan.

The exercise  price per share of stock for any option granted under the Director
Plan shall be equal to the fair market value of such share on the date of grant.
The grant date,  as defined,  shall be October 1 of year for options to purchase
7,500 shares of common stock to each non-employee  director and 15,000 shares to
the Chairman of the Board. The options become  exercisable  after six months and
must be exercised  within five years of the date of grant.  Any options  granted
under the Director Plan, which terminates, expires or lapses for any reason will
again be available for grant.

Other

Other option agreements are granted at the discretion of the Board of Directors.

                                      F-15
<PAGE>
Schedule of Options Granted

                                             9/30/01       9/30/00       9/30/99
                                             -------       -------       -------
Beginning Balance                            689,758       592,303       539,803
Employee/director granted                                   97,455        47,500
Non-employee granted                                                       5,000
Employee expired

Ending Balance                               689,758       689,758       592,303

Expiration Date of the
Options Granted                                             8/1/05        7/1/04

Option Price                                                  1.00          1.00

Fair value
Of Options Granted                                            0.00          0.00

The fair value of the options granted to employees/directors is estimated on the
date of the  grant  using  the  Black-Scholes  option  pricing  model  with  the
following  assumptions  for grants in 1999 and 2000:  average  stock  price 1999
$0.32,  2000 $0.20,  risk-free  interest rate of 6%, expected dividend yields of
zero, expected lives of five years and expected volatility of zero.

Schedule  of  options  outstanding  and the  dates  they are  exercisable  as of
September 30, 2001

                                              Exercise     Exercise    Remaining
Period                              Number      Price         Date       months
------                              ------      -----         ----       ------
September 30, 2000                  97,455       1.00        8/1/05          46
September 30, 1999                  52,500       1.00        7/1/04          33
September 30, 1998                 387,045       1.00        2/1/03          16
September 30, 1997                  22,500       3.00       10/1/01     one day
September 30, 1997                   5,258       3.00       3/12/02           6
September 30, 1997                  25,000       3.00       9/30/02          12
September 30, 1997                 100,000       1.00       9/30/02          12
                                   -------

Total                              689,758
                                   -------

Average Price and Remaining Life                 1.09                   20 mths

                                      F-16
<PAGE>
As discussed in Note 1, the Company accounts for its employee stock option plans
based on the provisions of APB No. 25, under which no compensation cost has been
recognized.  If the  option  costs  had  been  calculated  under  the  preferred
provisions of SFAC 123 the Company's loss would have been the following.

                                       9/30/01         9/30/00         9/30/99
                                       -------         -------         -------
Amount reported                       (523,003)       (464,234)       (918,233)
Proforma loss                         (523,003)       (464,234)       (918,233)
EPS as reported                           (.04)           (.04)           (.09)
Proforma EPS                              (.04)           (.04)           (.09)

Warrants

The Company had  outstanding  warrants  to  purchase  shares of common  stock at
prices  ranging  from $1.00 to $5.00 per  share.  No value was  assigned  to the
warrants.  The warrants were issued as part of the sale of common stock. Certain
outstanding  warrants  have  expiration  dates through July 10, 2004 and 818,394
warrants expire at the date of an initial public  offering (IPO).  Excluding the
IPO expiring  warrants,  the average  expiration date is October 18, 2003. Below
lists the warrants outstanding at the end of each period.

                                        9/30/01         9/30/00         9/30/99
                                       ---------       ---------       ---------
Beginning Balance                      2,608,696       2,455,413       1,181,311
Warrants Issued                          706,566         153,283       1,274,102
Warrants Expired                         506,283               0               0
                                       ---------       ---------       ---------

Ending Balance                         2,808,979       2,608,696       2,455,413
                                       ---------       ---------       ---------

Stock Based Compensation Paid for Services of Non Employees

SFAS 123 provides that stock compensation paid to non employees be recorded with
a value which is based upon the fair value of the services.  Below is a schedule
which  shows the number of shares of common  stock  issued and the fair value of
those shares for each of the periods.

Period Ended                                      Shares Issued           Value
------------                                      -------------          -------
September 30, 2001                                   278,756              18,033
September 30, 2000                                         0                   0
September 30, 1999                                   230,715             231,315

                                      F-17
<PAGE>
NOTE 5. INCOME TAXES:

The Company  provides for income taxes under  Statement of Financial  Accounting
Standards No. 109, ACCOUNTING FOR INCOME TAXES. SFAS No. 109 requires the use of
an asset and  liability  approach in accounting  for income taxes.  Deferred tax
assets  and  liabilities  are  recorded  based on the  differences  between  the
financial statement and tax bases of assets and liabilities and the tax rates in
effect when these differences are expected to reverse.

SFAS No. 109  requires  the  reduction  of  deferred  tax assets by a  valuation
allowance if, based on the weight of available evidence,  it is more likely than
not that some or all of the  deferred  tax assets will not be  realized.  In the
Company's opinion, it is uncertain whether they will generate sufficient taxable
income in the future to fully utilize the net deferred tax asset. Accordingly, a
valuation allowance equal to the deferred tax asset has been recorded. The total
deferred tax asset is  $4,679,224,  which is  calculated  by  multiplying  a 40%
estimated tax rate by the cumulative  NOL of  $11,698,061.  The total  valuation
allowance is a comparable $4,679,224.

The provision for income taxes is comprised of the net change in deferred  taxes
less the valuation  account plus the current taxes payable as shown in the chart
below.

                                                  2001      2000      1999
                                                 ------    ------    ------
     Net change in deferred taxes                     0         0         0
     Current taxes payable                            0         0         0
                                                 ------    ------    ------
     Provision for Income Taxes                       0         0         0
                                                 ------    ------    ------

Below is a chart showing the federal net operating losses and the years in which
they will expire.

     Year                                        Amount        Expiration
     ----                                      ----------      ----------
     1989                                          87,945         2004
     1990                                         101,036         2005
     1991                                         300,723         2006
     1992                                         229,131         2007
     1993                                         641,247         2008
     1994                                       1,179,831         2009
     1995                                       1,081,466         2010
     1996                                       1,940,165         2011
     1997                                       2,049,650         2012
     1998                                       2,101,421         2013
     1999                                         920,253         2014
     2000                                         542,190         2015
     2001 estimated                               523,003         2016
                                               ----------

     Total NOL                                 11,698,061
                                               ----------

                                      F-18
<PAGE>
NOTE 6. LEASES AND OTHER COMMITMENTS:

The  following is a listing of the  operating  leases that the Company had as of
the period end and the monthly charges associated with those leases.

                                                 9/30/01     9/30/00     9/30/99
                                                 -------     -------     -------
Office rent                                        4,740       4,627       4,455
Storage                                              136         136         116
Apartment rent                                       915         906         878
Office Equipment                                   1,043       1,036       1,890
                                                 -------     -------     -------
Total Monthly                                      6,834       6,705       7,339
                                                 -------     -------     -------

The monthly  operating  leases as of 9/30/01  projected into the future for five
years shows the following commitments. The apartment and storage are rented on a
yearly  basis.  The office is month to month.  Management  feels that the office
space is adequate  for future  growth of the  Company.  The numbers  shown below
assume that the Company will remain in its current office space.

                                  Year 1    Year 2    Year 3    Year 4    Year 5
                                  ------    ------    ------    ------    ------
Office Equipment                  12,516    12,516    12,516    12,516    12,516
Real Estate                       69,492    69,492    69,492    69,492    69,492
                                  ------    ------    ------    ------    ------

Total Yearly Leases               82,008    82,008    82,008    82,008    82,008
                                  ------    ------    ------    ------    ------

Other Contingencies

Year 2000 Compliance

We  experienced  no  interruptions  of our  manufacturing  or  sales  due to the
potential computer malfunctions for the year 2000. We do not feel that this will
be a factor in the future.

Economic Impact of Increased Security Measures

Since the  terrorist  attack of September  11, 2001 we have reviewed our Company
for any impact that this might have brought our  business.  Our analysis is that
our sales have been reduced  because of peoples lack of buying during  September
and also for the  slowdown or actual  stoppage  of mails for some  corporations.
According to the FASB guidelines for this economic impact we have not quantified
the negative impact.  This impact will show up as a slow down of business in our
standard statements.

NOTE 7: GOING CONCERN

Listed  below are some of the  challenges  which the Company is facing,  and why
these  raise a  question  as to the  Company's  ability to  continue  as a going
concern.  Afterward the explanation of the going concern problems,  management's
plans to turn the Company around are described.

                                      F-19
<PAGE>
Company's Challenges

Since  inception in 1994, the Company has not been able to generate enough sales
to cover costs and expenses and has accumulated a deficit of $14,853,371 For the
last three years  revenues have been only $522,222  versus  $2,427,692 for costs
and expenses.

The Company has survived  only by raising  funds.  The Company must  continue to
raise funds in the near future to survive. Management has been successful in the
past is raising these funds.  There is no assurance that management can continue
to find investors to cover the losses generated.

Management's Plans

Management has specific plans to improve the  performance of the Company.  These
include the following items.

A new  president and vice  president of sales were hired who have  experience in
marketing technology products through resellers and large retailers.

General overhead has been reduced to lower the breakeven amount.

An increased  emphasis on  marketing  has begun with  mailings,  trade shows and
phone solicitation.

Management  expects these plans to allow the Company to become profitable in one
of the latter  quarters of the upcoming  fiscal year.  No assurance  can be made
however that these plans will be successful.

NOTE 8. THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS

Below is a listing of the most  recent  accounting  standards  SFAS  141-144 and
their effect on the Company.

SFAS 141 Business Combinations

This  Statement  addresses  financial  accounting  and  reporting  for  business
combinations and supersedes APB 16 and SFAS 38. All business combinations in the
scope of this  Statement are to be accounted for using one method,  the purchase
method. The effective date for this Statement is June 30, 2001 and thereafter.

SFAS 142 Goodwill and Other Intangibles Assets

This  Statement  addresses  financial  accounting  and  reporting  for  acquired
goodwill and other  intangible  assets and  supersedes  APB 17. It addresses how
intangible assets that are acquired  individually or with a group (but not those
acquired  in a  business  combination)  should  be  accounted  for in  financial
statements  upon their  acquisition.  This Statement also addresses how goodwill
and other  intangible  assets  should  be  accounted  for  after  they have been
initially  recognized in the financial  statements.  The effective date for this
Statement is December 15, 2001.

                                      F-20
<PAGE>
SFAS 143 Accounting for Asset Retirement Obligations

This Statement  addresses  financial  accounting  and reporting for  obligations
associated with the retirement of tangible  long-lived assets and the associated
asset retirement costs.  This Statement  applies to all entities.  It applies to
legal  obligations  associated  with the  retirement of  long-lived  assets that
result  from the  acquisition,  construction,  development  and (or) the  normal
operation of a long-lived asset,  except for certain obligations of leases. This
Statement  amends SFAS 19. The  effective  date for this  Statement  is June 15,
2002.

SFAS 144 Accounting for the Impairment or Disposal of Long-Lived Assets

This Statement addresses  financial  accounting and reporting for the impairment
or disposal of  long-lived  assets.  This  statement  supersedes  SFAS 121,  the
accounting  and reporting  provisions of APB 30 and amends ARB 51. The effective
date of this Statement is December 15, 2001.

The adoption of these new  Statements is not expected to have a material  effect
on the Company's financial position, results or operations, or cash flows.

NOTE 9. RELATED PARTY

The company  rents its offices on a month to month basis.  During the signing of
the first lease a former officer and  shareholder was also included on the lease
as well as the Company, and is therefore a guarantor.

                                      F-21
<PAGE>
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     Prior to fiscal year ended  September  30, 1997,  our auditors  were Arthur
Andersen LLP, and their last audit was of fiscal years ended  September 30, 1996
and September 30, 1997. Arthur  Anderson's  report on our financial  statements,
which are not included in this Report,  for the fiscal years ended September 30,
1996 and September 30, 1997, were prepared assuming we would continue as a going
concern  and raised  substantial  doubt about our ability to continue as a going
concern.  In connection with that audit,  and subsequently to November 25, 1997,
there were no disagreements on any matter of accounting principles or practices,
financial  statement   disclosure,   or  auditing  scope  or  procedure,   which
disagreement, if not resolved to the satisfaction of Arthur Anderson, would have
caused  it to make  reference  to the  subject  matter  of the  disagreement  in
connection with its report.

     We decided not to have audits performed during fiscal years ended September
30, 1998,  1999 and 2000 so that the funds which would have been spent on audits
for those years could be spent on product  development  and marketing.  Thus, we
terminated our relationship  with Arthur Anderson LLP. We retained Mark Shelley,
CPA, of Shelley Intl.,  CPA,  independent  certified public accountant in May of
2001 to prepare the audits for those fiscal years,  and such audits are included
in this Report.  Shelley Intl., CPA, report on our financial  statements for the
fiscal  years ended  September  30,  2001,  2000,  1999 and 1998,  was  prepared
assuming we would continue as a going concern and raised substantial doubt about
our ability to continue as a going concern.  In connection with this audit,  and
subsequently  to the  present,  there  were no  disagreements  on any  matter of
accounting principles or practices,  financial statement disclosure, or auditing
scope or procedure,  which disagreement,  if not resolved to the satisfaction of
Shelley Intl., CPA, would have caused it to make reference to the subject matter
of the  disagreement in connection with its report.  Prior to retaining  Shelley
Intl.,  CPA, no  discussions  took place between our company and Shelley  Intl.,
CPA,  regarding the application of accounting  principles or the type of opinion
that  might be  rendered  on our  financial  statements.  We  authorized  Arthur
Anderson LLP to respond fully to inquiries from Shelley Intl., CPA.

                                    PART III

ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
        WITH SECTIONS 16(a) OF THE EXCHANGE ACT.

     The following table sets forth certain information regarding our directors,
executive officers, and certain key employees:

NAME                  AGE      POSITION
----                  ---      --------
James A. Cole          56      Chief Executive Officer and Chairman of the Board
Marvin Altman          75      Member of the Board
Scott R. Scartozzi     40      President
Dennis J. Monroe       61      Vice President of Operations
Dale Retter            53      Director of Research and Development and Member
                                of the Board
Robert Caplan          56      Vice President of Sales
Dan Kass               51      Vice President of Sales-Midwest Division

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<PAGE>
James A. Cole, BS, MBA, is our Chief Executive Officer,  Chief Financial Officer
and  Chairman of the Board.  Mr. Cole is President  of  Applebee's  of Texas and
Financial Consultant to Applebee's International, Inc., is Chairman of the Board
and Chief Executive Officer of CoilWells, Inc., an environmentally friendly coal
mining company, was President of Tri-Steel  Structures,  a manufacturer of steel
frames  for  residential  buildings,  was Chief  Financial  Officer  of  Stevens
Graphics  Corporation and Didde Graphic Systems  Corporation,  manufacturers  of
printing  presses  and  was  Manager  of  Planning  and  Analysis  for  Rockwell
International.  Mr. Cole has an  undergraduate  degree in Accounting and Finance
and graduate degrees in Business  Administration  (Marketing) and  International
Finance.  Mr. Cole has taken three companies through the initial public offering
process.

Marvin  Altman,  one of our  directors,  is a retired  insurance  executive from
Alexander & Alexander. Mr. Altman, an attorney by formal education,  entered the
insurance business in 1949 and was president of Altman Bros. Insurance Agency in
Kansas City,  Missouri until its merger with R.B.  Jones in 1971.  R.B. Jones in
turn merged into  Alexander & Alexander  in 1979.  Mr.  Altman  served as a vice
president of Alexander & Alexander  until his promotion to Senior Vice President
in 1989. He retired in 1997.

Scott R.  Scartozzi,  BA, is our President.  Mr.  Scartozzi has over 16 years of
experience  of senior  management  in the  computer and  information  technology
industry.  Mr. Scartozzi has served as president of RNI Resource Network,  Inc.,
President of Resource Network  Services,  Inc.,  operations  manager of Computer
Town, Inc., and vice president of sales and marketing for Broker Publishing.  He
has an undergraduate degree in Electrical Engineering.

Dennis J. Monroe,  BS, MS, is our Vice President of  Operations.  Mr. Monroe has
over 20 years of United States and International  business experience with three
leading capital goods manufacturers specializing in innovating and utilizing new
technologies and organizational  development. He has served at the officer level
with  Ferrofluidics as vice president of operations,  Vitronics  Corporations as
vice  president  of  manufacturing  and  Harris  Graphics  Corporation  as  vice
president of manufacturing  and operations.  He has also served as plant manager
for Van Dorn  Plastic  Machinery.  His  undergraduate  degree  is in  Industrial
Engineering,  and his graduate degree is in Industrial Administration,  Managing
Engineering,  Product  Development  and  Operations  to provide  profitable  and
commercial  products  utilizing  design  and  manufacturing  processes  in  many
international locations

Dale Retter, BGS, JD, is our Director of Research and Development. Mr. Retter is
the  founder  of our  company  and the  co-inventor  of the  DataHand  Ergonomic
Keyboard. Currently, Mr. Retter serves as President of Fabuluss Software, Inc.

Robert Caplan is our Vice President of Sales.  Mr. Caplan has more than 30 years
of experience  as a sales  professional  in all aspects of sales and  marketing,
including  marketing  strategy  and  implementation  of  wholesale,  retail  and
distributors,  mass merchants,  direct and relationship  sales. Mr. Caplan was a
communications specialist for Eschelon Telecom, Inc., a marketing consultant for
Broker Publishing,  corporate accounting representative for Computer Town, Inc.,
western  territory  manager  for Kroy,  Inc.,  and vice  president  of sales and
marketing  for  Computer  Pro,  Inc.  His  undergraduate  degree is in  Business
Administration and his graduate degree is in Communications.

Dan Kass, BS, MBA, is our Vice President of Sales-Midwest Division. Mr. Kass has
over 14 years of  experience  in office  supply as a sales  representative  with
Stanley-Sargent  Co. and  furniture  sales as a  department  manager  for Sanger

                                       29
<PAGE>
Harris/Sakowitz  and five years  experience as a commercial  banking officer for
United Missouri Bank. Mr. Kass has owned and operated his own company,  Conserve
America, in the computer supplies industry manufacturing toner cartridges.

ITEM 10. EXECUTIVE COMPENSATION.

     The following  table shows for the fiscal year ended September 30, 2001 the
cash  compensation  paid by us, as well as certain  other  compensation  paid or
accrued by us, to our Chief  Executive  Officer and our  President.  None of our
executive  officers  received  aggregate  compensation of more than $100,000 for
fiscal years 2000 and 1999.

                                               ANNUAL COMPENSATION
                                      ------------------------------------------
                                                 SALARY($)          ALL OTHER
NAME AND PRINCIPAL POSITION           YEAR       BONUS($)        COMPENSATION($)
---------------------------           ----       --------        ---------------
James A. Cole (1)                     2001        $41,538                 -0-
Scott R. Scartozzi, President(2)      2001        $72,917           $152,188

----------
(1)  James A. Cole has  served as our  Chairman  of the Board,  Chief  Executive
     Officer and Chief  Financial  Officer.  James A. Cole has stock  options to
     purchase  37,500 shares of common stock.  Mr. Cole's  compensation  for the
     year 2001 has been accrued at $62,462 on our books.
(2)  Scott R.  Scartozzi has served as our President  from December 6, 2000. All
     of Mr. Scartozzi  compensation is paid pursuant to his contract,  a copy of
     which is attached as an exhibit.  Currently,  Mr.  Scartozzi is paid at the
     rate of  $125,000  per year for 2001 in base  salary  plus a bonus of up to
     $125,000 per year. For the year ended September 30, 2001, Mr. Scartozzi was
     compensated  with 152,188 shares of common stock in lieu of accumulated and
     accrued salary and bonus.

     We do not offer  medical  insurance  or other  benefits  to our  employees,
including executive officers and directors who also are our employees.

1993 LONG-TERM INCENTIVE PLAN

     The 1993 Long-Term Incentive Plan (Incentive Plan) was adopted by the Board
of Directors in July 1994,  and approved by the  shareholders  in November 1994.
The  Incentive  Plan  provides for the granting of options to acquire our common
stock, the granting of stock appreciation rights,  direct granting of our common
stock or the  granting of other cash awards.  Under the  Incentive  Plan,  as of
September  30, 1997 and 1996,  a total of 700,000  and 350,000  shares of common
stock are reserved for awards of incentive stock options,  performance shares or
restricted  stock to  officers  or other  key  employees  of our.  Non-officers'
options generally expire within 90 days after the  participant's  termination of
employment. Officers' options generally do not expire upon termination.

     The  expiration  date  and the  other  provisions  of the  options  will be
established at the time of grant. Options may be granted for terms of up to five
years and become  exercisable  in whole or in one or more  installments  at such
time as may be determined  by the Board of Directors  upon grant of the options.
The exercise price of options will be determined by the Board of Directors,  but
may not be less than 100% (110% if the option is granted to a stockholder who at

                                       30
<PAGE>
the date the option is granted owns stock  possessing more than 10% of the total
combined  voting  power of all classes of our stock) of the fair market value of
the common stock at the date of the grant.

1993 DIRECTOR STOCK PLAN

     The 1993 Director  Stock Plan  (Director  Plan) was adopted by the Board of
Directors in July 1994 and approved by the  shareholders  in November  1994. The
Director Plan authorizes  awards of stock options to non-employee  Directors.  A
total of 300,000 shares of common stock have been reserved and are available for
grant under the Director Plan.

     The  exercise  price per share of stock for any  option  granted  under the
Director  Plan shall be equal to the fair market value of such share on the date
of grant. The grant date, as defined,  shall be October 1 of year for options to
purchase 7,500 shares of common stock to each  non-employee  director and 15,000
shares to the Chairman of the Board.  The options become  exercisable  after six
months and must be exercised within five years of the date of grant. Any options
granted under the Director  Plan,  which  terminates,  expires or lapses for any
reason will again be available for grant.

DIRECTORS' COMPENSATION

     We currently do not compensate our employee directors for their services to
us other than by awards of stock options.  The directors as a group hold 277,197
stock  options as of September  30, 2001.  We may  reimburse  our  directors for
certain expenses in connection with attendance at board and committee meetings.

EMPLOYMENT AGREEMENTS

     We  entered  into a  consulting  agreement  with  our  President  Scott  R.
Scartozzi  on December 6, 2000.  Mr.  Scartozzi  undertook  to create and manage
sales and  marketing  plans to create  sales of  products  and  training  and to
implement those services for us. Mr. Scartozzi's annual salary is $125,000,  and
he shall receive cash bonuses of not less than $125,000,  payable quarterly,  to
be negotiated each year based upon successful completion of goals as established
by the board of directors and Mr.  Scartozzi.  Mr.  Scartozzi was granted 25,000
stock options on the signing of his consulting agreement.

ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The  following  table  sets  forth  certain  information  with  respect  to
beneficial ownership of our common stock as of September 30, 2001 by (i) each of
our directors and  executive  officers,  (ii) all of our directors and executive
officers as a group and (iii) each other person known by us to be the beneficial
owner of more than five percent of our common stock:

                                       31
<PAGE>
                                                       SHARES BENEFICIALLY OWNED
                                                       -------------------------
                                                           (1)            (2)
NAME AND ADDRESS OF BENEFICIAL OWNER                     NUMBER         PERCENT
------------------------------------                    ---------       -------
DIRECTORS AND EXECUTIVE OFFICERS
James A. Cole .......................................     795,643        5.04%
Marvin Altman .......................................     128,784        0.82%
Scott R. Scartozzi ..................................     152,188        0.96%
Dennis J. Monroe ....................................     139,208        0.88%
Dale J. Retter ......................................   1,241,243        7.86%
Robert Caplan
Dan Kass
All directors and officers as a group (7 persons) ...   1,468,968        9.31%

NON-MANAGEMENT 5% STOCKHOLDER (5)

Saul D. Kass, Saul D. Kass Revocable Trust ..........   1,895,000       12.00%
R.L. & S.L. Middleton Trust(3) ......................   1,354,667        8.58%
Lyle D. Middleton(4) ................................   1,475,066        9.34%
Charles Oswald(5) ...................................   2,527,500       16.01%
Rotherwood Corporation(6) ...........................     910,000        5.76%

----------
(1)  Except  as  indicated,   and  subject  to  community   property  laws  when
     applicable,  the persons  named in the table have sole voting and investing
     power  with  respect to all shares of common  stock  shown as  beneficially
     owned by them. Except as otherwise  indicated,  each of such persons may be
     reached through us at 3032 North 33rd Avenue, Phoenix, Arizona 85017-5247.
(2)  The number and  percentage  shown  include  37,500  shares of common  stock
     issued  to Mr.  Cole.  See  Part  I,  Item  6,  "Executive  Compensation  -
     Employment  Agreements"  and Part I,  Item 7,  "Certain  Relationships  and
     Related  Transactions."  In calculating  the percentage of ownership,  such
     shares are  deemed to be  outstanding  for the  purpose  of  computing  the
     percentage of shares of common stock owned by Mr. Cole and by all directors
     and  officers  as a group,  but are not  deemed to be  outstanding  for the
     purpose of computing the  percentage of shares of common stock owned by any
     other person.
(3)  R.L. & S.L.  Middleton Trust holds warrants  expiring on August 12, 2002 to
     purchase 100,000 shares of common stock. Robert L. Middleton holds warrants
     expiring September 30, 2002 to purchase 343,383 shares of common stock.
(4)  Lyle D. Middleton  holds  warrants  expiring in January of 2003 to purchase
     513,283 shares of common stock.
(5)  Charles Oswald holds warrants expiring on June 30, 2002 to purchase 350,000
     shares of common stock.
(6)  Rotherwood Corporation holds warrants expiring on June 30, 2002 to purchase
     500,000 shares of common stock.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

     We lease our offices on a month to month  basis.  During the signing of the
first lease, an officer and shareholder,  Dale Retter,  was also included on the
lease as well as us, and is therefore a guarantor.

ITEM 13. EXHIBITS AND REPORTS ON FORM 8-K

     None.

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<PAGE>
                                   SIGNATURES

     In accordance  with Section 12 of the Securities  Exchange Act of 1934, the
registrant caused this registration  statement to be signed on its behalf by the
undersigned, thereunto duly authorized.


                                                  DataHand Systems, Inc.
                                        ----------------------------------------
                                                       (Registrant)


Date: 4/22/2002                         By: /s/ James A. Cole
                                            ------------------------------------
                                                        (Signature)
                                            Name: James A. Cole
                                            Title: Chairman

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