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

                                 --------------
                                   FORM 10-KSB
                                 --------------

                        FOR ANNUAL AND TRANSITION REPORT
                     PURSUANT TO SECTIONS 13 OF 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

|X|      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004
                                       OR
| |      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934
         FOR THE TRANSITION PERIOD FROM  ________    TO  ________

                        COMMISSION FILE NUMBER: 333-74846

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

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                 (NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)

             COLORADO                                  84-1573852
(STATE OR OTHER JURISDICTION OF                    (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION)                    IDENTIFICATION NO.)

        1241 E. DYER ROAD, SUITE 150                     92705
                SANTA ANA, CA
  (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)            (ZIP CODE)

       REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (949) 623-9300

                                 --------------
        SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT: NONE
           SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                         COMMON STOCK, $0.001 PAR VALUE
                                (TITLE OF CLASS)
                                 --------------

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

         Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

         Issuer's revenues for its most recent fiscal year were $54,040.

         The aggregate market value of the voting stock held by non-affiliates
computed by reference to the average bid and asked prices (as reported by Pink
Sheets, LLC) of $0.71 per share as of April 8, 2005 was $17,249,132. For the
purpose of this calculation, shares owned by officers, directors and 10%
stockholders known to the registrant have been deemed to be owned by affiliates.
This determination of affiliate status is not a determination for other
purposes.

         State the number of shares outstanding of each of the issuer's classes
of common equity outstanding as of the latest practicable date: 32,083,442
shares of Common Stock, $0.001 par value, as of April 11, 2005.

         Until December 2, 2003, the Registrant's common stock traded on the
Over-The-Counter Bulletin Board under the symbol "PFII". On December 3, 2003,
the Registrant's name was changed to "Raptor Networks Technology, Inc." and the
common stock began trading on the Over-The-Counter Bulletin Board under the
symbol "RPTN."

         Documents Incorporated by Reference:  None.

         Transitional Small Business Disclosure Format:        Yes [ ] No [X]



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                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----
                                     PART I

Item 1.         Business....................................................   2
Item 2.         Properties..................................................   9
Item 3.         Legal Proceedings...........................................   9
Item 4.         Submission of Matters to a Vote of Security Holders.........   9

                                     PART II

Item 5.         Market for Common Equity, Related Stockholder Matters
                and Small Business Issuer Purchases of Equity Securities....  10
Item 6.         Management's Discussion and Analysis of Financial
                Condition and Results of Operations.........................  10
Item 7.         Financial Statements........................................  15
Item 8.         Changes in and Disagreements with Accountants on
                Accounting and Financial Disclosure.........................  15
Item 8A.        Controls and Procedures.....................................  16
Item 8B.        Other Information...........................................  16

                                    PART III

Item 9.         Directors and Executive Officers of the Registrant..........  17
Item 10.        Executive Compensation......................................  19
Item 11.        Security Ownership of Certain Beneficial Owners and
                Management and Related Stockholder Matters..................  22
Item 12.        Certain Relationships and Related Transactions..............  23
Item 13.        Exhibits....................................................  24
Item 14.        Principal Accountant Fees and Services......................  26
Signatures..................................................................  27
Index to Financial Statements                                                F-1
Index to Exhibits


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                                     PART I

CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISIONS OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.

         When used in this report on Form 10-KSB, the words "expects,"
"anticipates," "estimates," "believes," "hopes," "intends," "forecasts" and
similar expressions are intended to identify "forward-looking statements." These
statements which are not historical or current facts are made pursuant to the
safe harbor provisions of Section 27a of the Securities Act of 1933, as amended
and Section 21e of the Securities Exchange Act of 1934, as amended, and the
Company intends that such forward-looking statements be subject to those safe
harbor provisions for such statements. The Company wishes to caution readers not
to place undue reliance on any such forward-looking statements, which speak only
as of the date of this report. While forward-looking statements represent
management's best judgment as to what may occur in the future, they are subject
to risks, uncertainties and important factors beyond the control of the Company
that could cause actual results and events to differ materially from historical
results of operations and events as well as those presently anticipated or
projected. These factors include, but are not limited to, adverse economic
conditions, entry of new and stronger competitors, capital availability,
unexpected costs, and failure to capitalize upon access to new customers. The
Company disclaims any obligations subsequently to revise any forward-looking
statements to reflect events or circumstances after the date of such statement
or to reflect the occurrence of anticipated or unanticipated events.

                                      -1-


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ITEM 1.  BUSINESS

COMPANY OVERVIEW

         Raptor Networks Technology, Inc. (the "Registrant" or "Company") was
organized under the laws of the State of Colorado on January 22, 2001. The
Company offered EDGAR filing services to companies outsourcing the formatting
and electronic filing of registration statements, periodic reports and other
forms with the U. S. Securities and Exchange Commission ("SEC") but generated
minimal revenues from its inception.

         On October 17, 2003, the Registrant completed a business combination
transaction with Raptor Networks Technology, Inc., a closely held California
corporation ("Raptor"). The Registrant acquired all of the issued and
outstanding capital stock of Raptor in a cashless common stock share-for-share
exchange in which Raptor became a wholly-owned subsidiary of the Company. With
completion of the acquisition transaction, the Company terminated its previous
operations and, by and through Raptor, became engaged in the data network
switching industry; including the design, production, sales and service of
standards-based and proprietary high speed switching technology applied to
sophisticated inter-networking systems, operating in a large variety of new and
existing government and private sector network systems.

         The Company continues to be in the earliest stages of commercial
operations and has realized minimal revenues as of April 1, 2005. It has
designed a series of related products branded the Ether-Raptor line, which
consists of a modular set of Ethernet switching components based on a common set
of proprietary hardware and software modules which can be produced with line
cards from base units. The Company believes that its Ether-Raptor family of
products have nearly universal application to a user's internetworking
requirements and can be utilized anywhere on an ethernet network where an
advanced switch is required.

         The Company's principal headquarters are located at 1241 E. Dyer Road,
Suite 150, Santa Ana, California 92705 and its phone number is 949-623-9300. The
Company's Internet address is www.raptor-networks.com. The Company's Code of
Ethics, Audit Committee Charter, Nominating and Governance Committee Charter,
and Compensation Committee Charter may be found on its website at the Internet
address set forth above. The Company's filings with the SEC may be read and
copied at the SEC's Public Reference Room at 450 Fifth Street, N.W., Washington,
D.C. 20549. You may obtain information on the operation of the Public Reference
Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site
that contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the SEC at www.sec.gov.

DESCRIPTION OF BUSINESS

         OVERVIEW

         Distributed computing and accelerated use of the Internet have driven
an exponential expansion in the use of internetworking for more than thirty
years. Today's networks were engineered based upon standards and technology
optimized for handling a single data type, character data, that was prevalent
thirty years ago. Today's sophisticated applications often require multiple data
types with speed and bandwidth requirements so high that prevailing network
technology is simply not up to the task and system upgrade is generally not cost
justifiable, thereby slowing the growth and utilization of advanced network
applications, or limiting the total available number of subscribers on a given
network.

         New applications such as video on demand, remote synchronous data
storage mirroring, global clustering, business continuance, disaster recovery
and distance learning are a few of the network applications types that have the
potential of generating increased and/or new revenue streams for any enterprise
offering them. But the cost to replace or upgrade existing networks with
requisite, efficient, high bandwidth infrastructure may cause these new
applications to be financially prohibitive. Government regulatory requirements
are also increasingly demanding system replacements and upgrades, regardless of
financial justification.

                                      -2-


<PAGE>

         The Company's switch technology provides Gigabit and 10 Gigabit
Ethernet communications at wire speed with Layer 2/3/4 Switching/Routing, and
excellent bandwidth/priority control. The Company's proprietary, patent pending
technologies allow stand alone high speed "smart" switches to be connected over
fiber to form a single "virtual switch."

         One of the most difficult types of data for networks to handle is Video
over Internet Protocol. By optimizing the handling of all data packets on a
network (treating them as though they were all video data), the Company's design
and equipment enables true wire speed networks and achieves two objectives for
the user community. First, it enables voice, video, storage, and other
sophisticated applications that enterprises will use to establish new revenue
streams at what the Company believes is a justifiable cost. Second, it augments,
rather than replaces, the existing internetworking infrastructure those
enterprises now use, leveraging the user's existing capital investment,
minimizing the additional capital expense required for supporting these new
applications and leading to increased user revenue opportunities.

         The Company recently completed a build of evaluation units of its
launch product, the Ether Raptor 1010 (ER-1010), and has placed these units at
high potential launch customers and integrators. In order to ensure a strong
focus on the ER-1010, development of other products was postponed. The Company
believes that selling cycles for its new technology will be longer than
anticipated.

         While the Company's product is being intensively tested in various
large accounts and is believed to be gaining acceptance by its users, the
Company, commencing with inception in July 2003 to the present, has operated and
is now operating at a significant loss and has realized only negligible
revenues. Although management is optimistic with regard to prospective business,
there can be no assurance that the Company will not encounter unforeseen and
unanticipated obstacles to near term revenue, or ultimately achieving
profitability.

         RELOCATION OF FACILITIES

         In August 2004, the Company relocated into a federal enterprise zone in
Santa Ana, California reducing its overhead expenses and creating a more
appropriate facility for its activities.

         COMPETITION

         The data networking switching industry is intensely competitive, and
the Company faces significant competition from a number of different sources.
Many of the Company's competitors have significantly greater name recognition
and market penetration, as well as substantially greater financial, technical,
product development and marketing resources than the Company.

         The Company competes in all of its markets with other major networking
switching related companies. Competitive pressures and other factors, such as
new product or new technology introductions by the Company or its competitors,
may result in price or market share erosion that could have a material adverse
effect on the Company's business, results of operations and financial condition.
Also, there can be no assurance that the Company's products and services will
achieve broad market acceptance or will successfully compete with other products
targeting the same customers.

         RESEARCH AND DEVELOPMENT

         During its first 18 months commencing with its transition into the data
network switching industry, the Company mainly conducted project specific
research. These projects were not customer specific and therefore the Company
did not bill any of its customers for non-recurring engineering expenses. In the
future, the Company expects that there will be periodic opportunities to engage
in customer specific projects for which it can bill a portion of its expenses to
such customers.

         The amount spent on research and development amounted to $127,262 in
2003 and $1,167,068 in 2004. The significant increase is attributable to the
fact that 2003 only includes six months of activities, whereas 2004 includes a
full year of activities. In addition, during 2004 the Company's product design
reached completion, necessitating the building of prototypes and the outsourcing
of certain activities such as industrial design and software development.

                                      -3-


<PAGE>

         In 2004, the Raptor engineering team completed a number of critical
design projects. During the first quarter of 2004, the Company finished design
of its first product, a copper based switch, the ER-1010, and in February 2004,
produced its first prototype of the ER-1010, seven months after the start of the
design work. In May 2004, a second version of this switch was produced and
evaluation units were placed with potential customers.

         During the third quarter of 2004, the Company's design team finalized
the design work on a fiber based RAST card. This card enables all Raptor systems
employed in a network connected through fiber to work as one system, even if
such systems are located up to 96 kilometers apart. In July and August 2004, a
new product, the ER-1808, was developed and a prototype of this design
manufactured. In order to ensure all the Company's resources were focused on the
ER-1010, however, the Company elected to halt, temporarily, design work on the
ER-1808. In September and October 2004, a 10-GigE-fiber card was developed and
made available to the market, which enables Raptor systems to communicate with
other brand network switches. Thereafter, the Company developed a new graphical
user interface (GUI) and other features were added to the ER-1010.

         During the fourth quarter of 2004, the engineering team was rebalanced,
decreasing hardware development resources substantially and increasing software
development resources. The Company believes that this will enable it to
substantially increase software related performance and product features during
2005.

         In 2005, the Company anticipates that its engineering team will
continue developing new product features as well as finalizing the design of the
ER-1808.

         SALES AND MARKETING

         The Company markets and sells products to customers through a
combination of direct sales to end users and sales through resellers. The
Company's sales offices are located in California. The Company has finder's fee
agreements in place with a number of independent third parties for the sale of
its products.

         The Company anticipates that original equipment manufacturers (OEMs)
may eventually constitute another important sales channel. Such OEMs may include
Raptor's product in their offerings to their end users and system integrators.
While the Company is currently pursuing multiple OEM relationships, at this
point, none have been secured and there can be no guarantee that the Company
will succeed in securing such relationships.

         SUPPLIERS

         The Company's success will depend on partnerships in both technology
and related support. The primary technology provider to Raptor is Broadcom
Corporation. Broadcom's 10 Gigabit Ethernet, Gigabit Ethernet and fast Ethernet
transceivers provides the Ethernet and 10Gigabit switching fabric in Raptor's
distributed architecture. Another major supplier to Raptor is Tyco Corporation,
which supplies PCB fabrication, optical components and PCB design and/analyses
support. Raptor's operating system is based on WindRiver's VxWorks, which is
widely used throughout the information technology industry.

         EMPLOYEES

         As of April 15, 2005, the Company had 25 employees. None of the
Company's employees are a party to any collective bargaining agreements with the
Company. The Company considers its relations with its employees to be good.

                                      -4-


<PAGE>

         PATENTS, TRADEMARKS, AND LICENSING AGREEMENTS

         The Company has filed a broad aspect patent for Ethernet Distributed
Switch Fabrics, which is currently in the application process. This patent
describes in detail the processes required to create an Ethernet distributed
switch fabric and is intended to protect the broad concept of the switch fabric.
The Ethernet Distributed Switch Fabrics patent application has been filed for
United States and worldwide (PCT) protection.

         While the Company believes that its use of the technology encompassed
in the Ethernet Distributed Switch Fabrics patent application is neither
infringed upon by any third party, nor infringes on any prior art of any third
party, the Company is unable to assess the validity, scope, or defensibility of
its patent application, and any challenge to or claim of infringement relating
to the patent application could materially and adversely affect the Company's
business and results of operations.

         The Company has not entered into any licensing or franchising
agreements for revenue generating purposes.

                                  RISK FACTORS

GOING CONCERN.

         The Company's accountants have qualified their opinion with respect to
the Company's financial statement to include an explanatory paragraph related to
the Company's ability to continue as a going concern in their report for each of
the fiscal years ended December 31, 2004 and 2003. Reports of independent
auditors questioning a company's ability to continue as a going concern
generally are viewed very unfavorably by analysts and investors. There are a
number of risks and challenges associated with such a qualified report
including, but not limited to, a significant impediment to the Company's ability
to raise additional capital or seek financing from entities that will not
conduct such transactions in the face of such increased level of risk of
insolvency and loss, increased difficulty in attracting talent, and the
diversion of the attention of executive officers and other key employees to
raising capital or financing rather than devoting time to the day-to-day
operations of the Company's business. The Company urges potential investors to
review the report of the Company's independent certified public accountants and
the Company's consolidated financial statements and seek advice concerning the
substantial risks related thereto before making a decision to invest in the
Company.

RECENTLY FORMED COMPANY; ACCUMULATED DEFICIT; WORKING CAPITAL; EXPECTATION OF
FUTURE LOSSES; NEED FOR ADDITIONAL FINANCING.

         The Company is a recently formed company and has had no significant
revenues from operations to date. As of December 31, 2004, the Company had an
accumulated deficit of $28,219,557 and a working capital deficit of $918,629.
The Company expects its accumulated deficit to increase for the quarters ending
March 31, 2005 and June 30, 2005 and possibly continue to grow beyond such
dates. The Company will be required to conduct product feature enhancement and
testing activities which, together with expenses to be incurred for the
establishment of a sustainable marketing and sales presence and other general
and administrative expenses, are expected to result in operating losses through
the remainder of 2005. Accordingly, there is a risk that the Company will not
achieve profitable operations in the near future, if at all. Although the
Company anticipates that the proceeds from its current capital raises, in
addition to cash on hand, will be sufficient to fund operations through fiscal
year 2005, there can be no assurance that sufficient revenues will be generated
thereafter to fund the Company's operating requirements. In such event, the
Company would be required to seek additional financing through borrowings, debt
or equity financing or otherwise. The Company has no commitments for any such
financing, and there can be no assurance that the Company will be able to obtain
any requisite financing on acceptable terms, if at all. Should the Company be
unable to raise additional capital, investors in the Company could lose their
entire investment.

NO SIGNIFICANT PROFITABLE PRIOR OPERATING HISTORY.

         The Company is a recently formed company and has an extremely limited
history of operations and has not generated meaningful revenues from operations
since its inception. The Company is faced with all of the risks associated with
a company in the early stages of development. The Company's business is subject
to numerous risks associated with a relatively new, low-capitalized company
engaged in the network switch industry. Such risks include, but are not limited
to, competition from well-established and well-capitalized companies,
technological obsolescence and unanticipated development, and marketing
difficulties. There can be no assurance that the Company will ever generate
significant commercial sales or achieve profitability. Should this be the case,
investors in the Company could lose their entire investment.

                                      -5-


<PAGE>

RESIDUAL LIABILITY FROM MERGER.

         The Company was organized on January 22, 2001. On October 17, 2003, the
Company acquired Raptor Networks Technology, Inc., a closely held California
corporation, in a cashless common stock share-for-share exchange. The
acquisition was treated as a merger with the Company as the surviving entity.
With the completion of the acquisition transaction, the Company terminated its
previous operations (consisting of the EDGARization of SEC securities filings)
and became engaged in the data network switching industry. There is a risk that
the Company may be subject to currently unknown liabilities resulting from the
operations of the Company prior to the merger. Should a claimed liability arise,
the Company could expend significant time and resources defending or satisfying
such claim, including without limitation the amount of any judgment or
settlement required to satisfy any such claim and the payment of attorneys' fees
and other costs incurred in defending any such claim.

NEED FOR MARKET ACCEPTANCE.

         No assurance can be given that the Company will be able to successfully
achieve sustainable market penetration with any of its products. The Company's
success in marketing its products will be substantially dependent on educating
its targeted markets as to the unique topologies as well as what the Company
believes are the performance and cost benefits of its distributed Ethernet
switch architecture. There can be no assurance that the Company's efforts or the
efforts of others will be successful in fostering acceptance of the Company's
technology among the targeted markets.

COMPETITION.

         The Company operates in a competitive industry with many established
and well-recognized competitors. Many of these competitors have substantially
greater resources, distribution networks, vendor relationships and industry
experience than the Company and can be expected to react strongly to the
Company's marketing efforts. In addition, many competitors exist who, because of
their substantial resources, distribution relationships and customer base could
temporarily drop prices to stave off a potential successful market launch by the
Company. Other competitive responses might include, without limitation, intense
and aggressive price competition and offers of employment to the Company's key
marketing or management personnel. Competitors include Cisco Systems, Foundry
Networks, Extreme Networks, Force10 Networks, Juniper Networks, and others.
There can be no assurance that the Company will be successful in the face of
increasing competition from existing or new competitors, or that competition
will not have a material adverse effect on the Company's business, financial
condition and results of operations.

LIMITED SALES AND MARKETING CAPABILITY.

         To date, the Company has only recently begun significant marketing
efforts and has booked sales of approximately $59,000 as of fiscal year ended
December 31, 2004. The Company believes it will have to significantly expand its
sales and marketing capabilities in order to establish sufficient awareness to
launch broader sales of its products. There can be no assurance that any efforts
undertaken will be successful in achieving substantial sales of the Company's
product or support service offerings.

TECHNOLOGICAL CHANGE AND RISK OF OBSOLESCENCE.

         Evolving technology, updated industry standards, and frequent new
product and service introductions characterize the network switching market. The
Company's products could become obsolete at any time. Competitors could develop
products similar to or better than the Company's, or finish development before
the Company, or be more successful marketers, any of which could hurt the
Company's success. The Company's future success depends in significant part on
its ability to evolve the performance and software feature sets of its existing
products and develop and introduce new products and technologies in response to
the evolving demands of the market and competitive product offerings.

                                      -6-


<PAGE>

INTELLECTUAL PROPERTY.

         The Company's success depends significantly on protecting its
proprietary technology. Despite the Company's efforts to protect its proprietary
rights, unauthorized parties may attempt to copy or otherwise obtain and use the
Company's products or technology. Monitoring unauthorized use of the Company's
technology is difficult, and the Company cannot be certain that the steps it has
taken will prevent misappropriation of its technology, particularly in foreign
countries where the laws may not protect its proprietary rights as fully as in
the U.S. The Company currently has patent pending protection for its proprietary
technology and plans to rely on non-disclosure agreements to further protect
this technology. There can be no assurance that these patents will be granted or
that nondisclosure agreements will provide meaningful protection to the Company.

         In addition, from time to time, third parties may assert patent,
copyright, trademark and other intellectual property rights claims against the
Company with respect to existing or future products or technology. If there is a
successful claim of infringement and the Company fails or is unable to develop
non-infringing technology or license the infringed or similar technology on a
timely basis, the Company's business and results of operations may be seriously
harmed.

LIMITED CAPITALIZATION OF THE COMPANY.

         The Company expects to continue to experience losses from its
operations for the foreseeable future. There is no assurance that such losses
will not be in an amount and for a duration that will exceed these projections.
In such case, the Company may require financing in addition to that currently
contemplated by the Company in order to continue its operations. Receipt of less
than the maximum proceeds in the Company's current capital raises may increase
the risk that additional financing will be required. Such financing, if
required, may not be available to the Company or may be available to it only on
unfavorable terms. Moreover, in the event the Company seeks to raise additional
funds through the sale of additional shares of Common Stock or other interests
in the Company, investors in the Company may experience significant dilution of
their equity invested in the Company.

DEPENDENCE ON KEY PERSONNEL.

         The Company's future success depends to a significant degree on the
continued service of its key personnel and on its ability to attract, motivate
and retain highly qualified employees. In particular, the Company is dependent
upon the management services of its founders and senior management: Chief
Executive Officer and President, Tom Wittenschlaeger, Chief Development Officer,
Edwin Hoffman and Chief Technical Officer, Ananda Perera. The loss of the
services of any of Mr. Wittenschlaeger, Mr. Hoffman or Mr. Perera would have a
material adverse effect on the Company's business, financial condition and
results of operations.

         In addition, there are a number of other key management, sales and
support positions (including many for which individuals have not yet been hired)
the loss of which (or the inability to recruit and retain) would have a material
adverse effect on the business of the Company. If the Company experiences the
rapid growth it hopes to achieve, its ability to operate successfully during
periods of rapid growth (if any) will depend on its ability to attract and
retain managers and develop adequate systems and procedures to manage such
growth. There can be no assurance that the Company will be able to attract and
retain additional key management personnel with the skills and expertise
necessary to manage the Company should any such period of rapid growth occur.

DILUTIVE AND OTHER ADVERSE EFFECTS OF OUTSTANDING WARRANTS AND OPTIONS.

         Under the terms of the existing warrants to purchase its common stock,
noncompensatory options , and other outstanding options to acquire Common Stock
issued to employees and others, the holders thereof are given an opportunity to
profit from a rise in the market price of the Common Stock with, upon the
exercise of such warrants and/or options, a resulting dilution in the interests
of the other shareholders. The terms on which the Company may obtain additional


                                      -7-


<PAGE>

financing may be adversely affected by the existence and potentially dilutive
impact of such options and warrants. In addition, holders of certain options and
warrants have registration rights with respect to such options and the
underlying securities, the exercise of which may involve substantial expense to
the Company.

PENNY STOCK REGULATION.

         The Company's stock is listed on the over the counter bulletin board
(OTCBB) and constitutes "Penny Stock." Broker-dealer practices in connection
with transactions in Penny Stocks are regulated by rules adopted by the SEC.
Penny Stocks are generally equity securities with a price per share of less than
$5.00 (other than securities registered on certain national exchanges or quoted
on the NASDAQ system). The Penny Stock rules require a broker-dealer, prior to a
transaction in Penny Stocks not exempt from the rules, to deliver a standardized
risk disclosure document that provides information about Penny Stocks and the
nature and level of risks in the Penny Stock Market. The broker-dealer must also
provide the customer with current bid and offer quotations for the Penny Stock,
the compensation of the broker-dealer and the salesperson in the transaction,
and monthly accounting statements showing the market value of each Penny Stock
held in the customer's account. In addition, the broker-dealer must make a
special written determination that the Penny Stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.

DEPENDENCE ON KEY VENDORS AND SUPPLIERS.

         The Company's switch products are architected and manufactured through
the use of third-party electronic components, device level software and
services. The Company is dependent on the services and products of other
companies, including Broadcom Corporation, Tyco Electronics, Inc., and Express
Manufacturing, Inc., among others. A discontinuance, disruption or other similar
occurrence to the services and products supplied by the Company's vendors and
suppliers could materially diminish the Company's ability to operate
efficiently.

GENERAL ECONOMIC CONDITIONS.

         The success of the Company's operations depends to a significant extent
upon a number of factors relating to business spending. These factors include
economic conditions such as employment, business conditions, interest rates and
taxation. The Company's business is affected by the general condition and
economic stability of its customers as well as its vendors and partners and
their continued willingness to work with the Company in the future. The
Company's business is also sensitive to information technology ("IT") spending
patterns and preferences. There can be no assurance that IT spending will not be
adversely affected by general business trends and economic conditions, thereby
impacting the Company's growth, net sales and profitability.

DIFFICULTY OF MANAGING GROWTH.

         In order for the Company to expand successfully, management will be
required to anticipate the changing demands of a growth in operations, should
such growth occur, and to adapt systems and procedures accordingly. There can be
no assurance that the Company will anticipate all of the changing demands that a
potential expansion operations might impose on such systems. If the Company were
to experience rapid growth, the Company might be required to hire and train a
large number of sales personnel and support personnel, and there can be no
assurance that the training and supervision of a large number of new employees
would not adversely affect the high standards that the Company seeks to
maintain. The future of the Company will depend, in part, on its ability to
integrate new individuals and capabilities into its operations, should such
operations expand in the future, and there can be no assurance that the Company
will be able to achieve such integration. The Company will also need to
continually evaluate the adequacy of its management information systems,
including its web site. Failure to upgrade its information systems or unexpected
difficulties encountered with these systems during an expansion of the Company
(should such an expansion occur) could adversely affect the Company's business,
financial condition and results of operations.

                                      -8-


<PAGE>

VOLATILITY OF MARKET; LACK OF LIQUIDITY OF SHARES.

         Investors in the Company should be aware that market prices for
securities of network product providers (such as the Company's) can be extremely
volatile. There can be no assurance that sufficient liquidity in the Company
will exist to provide ready liquidation of any shareholder's holdings. There can
be no guarantee of Company profits either in the near term or at all.

ITEM 2.  PROPERTIES

         In August 2004, the Company relocated into a federal enterprise zone in
Santa Ana, California, which reduced its overhead expenses and created a more
appropriate facility for its activities. The address of the Company's facilities
is 1241 E. Dyer Road, Suite 150, Santa Ana, California 92705. Those facilities,
consisting of 11,118 square feet, include the Company's executive offices and
research and development laboratory and are leased from an unrelated third
party. The term of the lease is 36 months commencing August 1, 2004, with a
scheduled termination date of July 31, 2007. The base rent for the first year of
occupancy is $16,677 per month ($1.50 per rentable square foot). Pursuant to the
terms of the lease, on August 1, 2005, the monthly rent will increase to
$17,232.90 ($1.55 per square foot) and on August 1, 2006 the monthly rent will
increase to $17,788.80 ($1.66 per square foot). The Company's suite is on the
first floor of a two-story multi-unit business complex and is in good condition.

         The Company's management believes that the monthly rental rates are
comparable to rents charged for comparable properties in the market area. The
Company believes that the current facilities are adequate for the expected needs
of the Company through at least the end of fiscal year 2006. The Company
requires full compliance by the lessor with applicable state and EPA
environmental standards at its facility.

ITEM 3.  LEGAL PROCEEDINGS

         All active litigation to which the Company was a party has been
settled. However, the Company is still discussing the resolution of a 19-month
old contract dispute with a service provider. No suit has been filed in
connection with such matter.

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

         No matter was submitted to a vote of the Company's shareholders during
the fourth quarter ended December 31, 2004.

                                      -9-


<PAGE>

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND SMALL
         BUSINESS ISSUER PURCHASES OF EQUITY SECURITIES

         For the Company's former fiscal year ending August 31, 2003 there was
no established public trading market for the Company's common stock. During such
period the shares were listed on the over the counter bulletin board (OTCBB)
under the Company's prior trading symbol "PFII." The Company's $0.001 par value
common stock commenced trading under the symbol "RPTN" on the OTCBB during
December 2003. The following table sets forth, for the quarters indicated, the
high and low bid information for the Company's common stock as reported by Pink
Sheets, LLC. The quotations reflect inter-dealer prices, without retail markup,
markdown, or commissions, and may not necessarily represent actual transactions.

                    QUARTER ENDED                  HIGH      LOW
                    -------------                  ----      ---

                    December 31, 2003              5.75     2.10
                    March 31, 2004                 4.65     3.20
                    June 30, 2004                  4.40     1.45
                    September 30, 2004             1.50     0.80
                    December 31, 2004              0.90     0.36

         On April 8, 2005, the average bid and ask price of the Company's common
stock as reported by Pink Sheets, LLC, was $0.71 per share.

HOLDERS

         On March 31, 2005, the Registrant had 32,083,442 shares of its common
stock outstanding held by approximately 340 record shareholders. This number of
shareholders does not include beneficial owners including holders whose shares
are held in nominee or "street" name.

DIVIDENDS

         The Company has not paid a cash dividend with respect to its common
stock, and has no present intention to pay cash dividends in the foreseeable
future. The current policy of the Company's Board of Directors is to retain
earnings to provide funds for the operation and expansion of its business. The
Board of Directors, in light of the circumstances then existing, including the
Company's earnings and financial requirements and general business conditions,
will determine the timing and amount of future dividends, if any.

SALES OF UNREGISTERED SECURITIES

         The Company engaged in several private placement offerings of its
securities during fiscal year ended December 31, 2004. All such sales previously
have been reported on the Company's Quarterly Reports on Form 10-QSB or on
Current Reports on Form 8-K. All such sales were made pursuant to the exemption
from registration set forth in Regulation D promulgated under the Securities Act
of 1933.

REPURCHASES

         No repurchases were made by the Company of its securities during the
fourth quarter ended December 31, 2004.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

         The following discussion and analysis provides information that the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition for the period ended
December 31, 2003 and the year ended December 31, 2004, respectively. This
discussion should be read in conjunction with the Consolidated Financial
Statements and the Notes thereto included elsewhere in this Report. This Report


                                      -10-


<PAGE>

contains certain forward-looking statements and information. The cautionary
statements included herein should be read as being applicable to all
forward-looking statements wherever they may appear. The Company's actual future
results could differ materially from those discussed herein. The Company's
critical accounting policies relate to inventory valuation, license fees, and
recoverability of deferred income taxes.

CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

         The Company's consolidated financial statements are prepared in
accordance with accounting principles generally accepted in the United States
(GAAP). The preparation of the Company's financial statements requires
management to make estimates and judgments that affect the reported amounts of
assets, liabilities, revenues, expenses and related disclosures. The Company
bases its estimates on historical experience and various other assumptions that
are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions. The
significant accounting policies that are believed to be the most critical to aid
in fully understanding and evaluating the reported financial results include
inventory valuations, license fees and the recovery of deferred income tax
assets.

         The Company determines its inventory value at the average cost or
market. When required, a provision is made to reduce excess and obsolete
inventory to estimated net realizable value.

         The Company has paid $260,000 to a supplier for a software platform
related to the Raptor ER-1010 product. This license fee will be amortized and
charged to cost of sales over the sale of 1,000 ER-1010 systems, which
approximates the number of systems expected to be sold using the platform. In
2004, the Company amortized $520 for the sale of two (2) ER-1010 systems.

         The Company reviews its long-lived assets and certain related
intangibles for impairment periodically, and whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be fully
recoverable. When necessary, impaired assets are written down to estimated fair
value based on the best information available. Estimated fair value is generally
based on either appraised value or measured by discounting estimated future cash
flows. Considerable management judgment is necessary to estimate discounted
future cash flows. Accordingly, actual results could vary significantly from
such estimates. No assets were considered impaired for the period ended December
31, 2003 or the year ended December 31, 2004.

         As part of the process of preparing the Company's consolidated
financial statements, the Company is required to estimate its income taxes in
each of the jurisdictions in which it operates. This process involves the
Company estimating the actual current tax liabilities together with assessing
temporary differences resulting from differing treatment of items for tax and
accounting purposes. The Company recognizes deferred tax assets and liabilities
based on differences between the financial reporting and tax bases of assets and
liabilities using the enacted federal, state, and local income tax rates and
laws that are expected to be in effect when the differences reverse.

SELECTED FINANCIAL DATA

         The following table sets forth selected financial data regarding the
Company's financial position and operating results. This data should be read in
conjunction with the Company's Consolidated Financial Statements and the Notes
thereto.

                                      -11-


<PAGE>

 RESULTS OF OPERATIONS FOR THE PERIOD ENDED JULY 24, 2003 TO DECEMBER 31, 2003,
         COMPARED TO FISCAL YEAR ENDED DECEMBER 31, 2004 (IN THOUSANDS)

                                            July 24, 2003 to
                                            December 31, 2003  December 31, 2004
                                             ---------------     ---------------
Net Sales                                    $            5      $           54
Cost of Sales                                            --                  27
                                             ---------------     ---------------

Gross Profit                                              5                  27

Operating expenses
   Consulting                                           363               1,591
   Stock for services (non cash)                      5,753              11,209
   Salary expense                                       698               3,032
   Marketing expense                                      1                 190
   Research and Development Costs                       127               1,167
   Selling, general and administrative                  661               3,305
                                             ---------------     ---------------
Total operating expenses                              7,603              20,494

  Net Other Income (loss)                                --                (108)
Loss before Income tax provision                     (7,598)            (20,575)
  Income tax provision                                   --                  --
                                             ---------------     ---------------
Net loss                                     $       (7,598)     $      (20,575)
                                             ===============     ===============

NET SALES

         For the period from inception, July 24, 2003, through December 31, 2003
and for the fiscal year ended December 31, 2004, the Company realized only
minimal revenues of $5,000 and $54,040, respectively. Product development on the
ER-1010 switch product has been completed, initial sales have been achieved and
the Company is ready for deployment and expanded commercial sales in 2005.
Approximately $1.25 million in saleable inventory currently exists. With no
further product development other than the customary merchant silicon upgrades
required, the pacing items to spur new product sales are: (i) generating
awareness in the marketplace and (ii) augmenting the number of deployed sales
professionals.

         The Company's financial projections for 2005 will be based on four
potential sources of revenue: direct sales, OEM sales, channel/VAR sales, and
licensing. During 2005, the Company expects that 85% of its sales will come from
direct sales and OEM sales. By the end of 2005 and beyond, it is anticipated
that VAR sales and licensing will play a much larger role in the total sales
mix.

OPERATING EXPENSES

         On an overall basis, the results of operations includes six months of
activities in 2003, during which period the Company's number of employees
increased from 3 to 20. During 2004, the Company's number of employees increased
from 20 to 25. As revenues were immaterial in both years, the result of the
foregoing increase in personnel and operating activity resulted in a 2004 loss
substantially in excess of the loss incurred during the six months of
operational activities in 2003. An expense analysis follows:

         CONSULTING EXPENSES

         Consulting expenses increased from $363,000 to $1,590,000 during fiscal
2004 compared to fiscal 2003. The increase was primarily the result of the
payment of $876,000 in finder's fees for two capital raises (through which $6.8
million was raised). In 2003, only $100,000 was paid for finder's fees. The
remaining increase was due to investor relations (IR) support of $228,000. No
costs for IR were incurred in 2003.

                                      -12-


<PAGE>

         STOCK FOR SERVICES

         Stock for services in 2004 increased substantially due to the issuance
of three million shares of common stock to the Company's newly appointed
President and Chief Executive Officer and 400,000 shares of common stock to it's
Chief Financial Officer. In addition, one key employee received 100,000 shares
of common stock and eight service providers received 2,420,600 shares of common
stock for various consulting services and other service assistance provided to
the Company. The total charge to stock for services for the foregoing issuance
of common stock was $9.3 million. The remaining charge to stock for services was
$1.9 million which related to (i) stock issued to certain shareholders in
connection with a required "lock up" agreement and (ii) stock for services
charged in 2004 for agreements concluded in 2003. All of the aforementioned
consulting agreements and other stock for service agreements were terminated on
or before December 31, 2004.

         SALARY EXPENSES

         Salary expenses increased from $698,000 in 2003 to $3,032,000 in 2004
in connection with increased levels of personnel. The average number of
employees in 2003 was 10 (for a period of six months), while the average number
of employees in 2004 was 23 (for a period of 12 months).

         MARKETING EXPENSES

         During the 2003 period, there were no marketing expenses as there was
no product available. In 2004, marketing activities commenced with a resulting
expenditure for such activities of $189,000. The primary marketing expenditures
for 2004 consisted of the Company's attendance at various conferences, a product
launch, development of the Company's website, and production of promotional
materials and brochures.

         RESEARCH AND DEVELOPMENT

         Total research and development (R&D) expenses increased by $1 million
in 2004 as compared to 2003. In 2003, R&D expenses mainly consisted of design
tool rentals and a very limited level of subcontracted engineering support. When
product development neared completion in the first quarter of 2004, engineering
support from outside sources increased substantially and expense categories such
as prototype expenses, consumables, test boards, and the like were added. A
summary of these expenditures indicating such increases is as follows:

                                               2003 (6 months only)     2004
                                                   -----------       -----------
         Outside Engineering Support               $   70,000        $  295,000
         Tool Rentals                                  32,000           130,000
         Consumables                                   25,000           178,000
         Prototypes (including scrap)                       0           272,000
         Support Charges                                    0           135,000
         Other                                              0           157,000
                                                   -----------       -----------
         TOTAL                                     $  127,000        $1,167,000
                                                   ===========       ===========

         SELLING, GENERAL AND ADMINISTRATIVE

         Selling, general and administrative (SG&A) expenses increased
substantially from $661,000 in 2003 to $3,305,000 in 2004, mainly due to
increased business activity levels and a greater number of employees in 2004
compared to 2003. In addition, the Company incurred nonrecurring expenses such
as employee relocation expenses ($97,000), litigation fees ($250,000), and
settlement expenses in connection with legal actions ($751,000 - which includes
stock issuance charges of $541,000 as well as $210,000 in cash payments).

                                      -13-


<PAGE>

         SG&A expenditures are summarized below :

                                                 2003 (6 months only)   2004
                                                    -----------      -----------
         Legal Fees (including litigation in 2004)  $  150,000       $  580,000
         Settlement Charges for lawsuits                    --          751,000
         Relocation expenses                            10,000           97,000
         IT Services                                    30,000           95,000
         Rent                                           85,000          208,000
         Investor Relations                             22,000           84,000
         Finders Fees                                       --          110,000
         Travel                                        131,000          190,000
         Audit                                          20,000           30,000
         Directors Fees                                     --           12,000
         Business Insurance                                 --           94,000
         Depreciation                                   20,000          180,000
         Office Expenses                                25,000           99,000
         HR and Operations                                  --           64,000
         Telephone                                      27,000           64,000
         Payroll taxes                                  62,000          200,000
         Other employee benefits                        34,000          216,000
         Other                                          45,000          231,000
                                                    -----------      -----------
         TOTAL                                      $  661,000       $3,305,000
                                                    ===========      ===========

         OTHER INCOME/(LOSS)

         Other income (loss), which amounts to a loss of $107,433 during 2004,
consists of $7,681 in interest income and $115,114 of interest expense on
outstanding loans. There was no corresponding entry for 2003.

LIQUIDITY AND CAPITAL RESOURCES

         The Company's accountants have qualified their opinion with respect to
the Company's financial statement to include an explanatory paragraph related to
the Company's ability to continue as a going concern in their report for each of
the fiscal years ended December 31, 2004 and 2003. Reports of independent
auditors questioning a company's ability to continue as a going concern
generally are viewed very unfavorably by analysts and investors. There are a
number of risks and challenges associated with such a qualified report
including, but not limited to, a significant impediment to the Company's ability
to raise additional capital or seek financing from entities that will not
conduct such transactions in the face of such increased level of risk of
insolvency and loss, increased difficulty in attracting talent, and the
diversion of the attention of executive officers and other key employees to
raising capital or financing rather than devoting time to the day-to-day
operations of the Company's business. The Company urges potential investors to
review the report of the Company's independent certified public accountants and
the Company's consolidated financial statements and seek advice concerning the
substantial risks related thereto before making a decision to invest in the
Company.

         The Company has a working capital deficit of ($918,629). Management is
addressing this condition by raising capital using a combination of convertible
debt and warrants.

         In the period from December 2003 through April 2004, the Company
obtained convertible loans totaling $1,214,290. Interest on these loans accrues
at an annual rate of 8%. The loans are convertible into restricted common stock
at any time during the three year period following initial funding of the loans.
The conversion rate is $3.50 per share. The total amount owed shall be converted
into common stock at $3.50 per share on April 15, 2007.

         In April 2004, the Company closed an equity based financing for gross
proceeds of $5,600,000. The financing involved the purchase of 3,200,000 shares
of the Company's common stock, 3,200,000 Series A Warrants and 3,200,000 Series
B Warrants. The Series A Warrants expired on September 30, 2004 and no such
warrants were exercised prior to their expiration. The Series B Warrants expire
on the fifth anniversary of the date of issuance and have an exercise price of
$3.50 per share.

                                      -14-


<PAGE>

         In June 2004, the Company closed an equity based financing for gross
proceeds of $1,750,000. The financing involved the purchase of 972,223 shares of
the Company's common stock, 972,223 Series C Warrants and 972,223 Series D
Warrants. The Series C Warrants expire two months after the effective date of a
registration statement filed in conjunction with the common shares sold in the
June 2004 financing. Such a registration statement has not been filed with the
SEC as of April 8, 2005. The Series C Warrants had an original exercise price of
$3.00 per share. On August 13, 2004, the Company amended the terms of the Series
C Warrants to have an exercise price of $1.25 per share. The Series D Warrants
expire on the fifth anniversary of the date of issuance and have an exercise
price of $3.50 per share.

         On November 5, 2004 the Company secured interim financing of
$1,000,000. This financing consists of a convertible loan which bears interest
at a rate of 10% per annum. The outstanding principal amount of this loan,
together with all accrued but unpaid interest thereunder shall automatically
convert into shares issued in an equity based financing with gross proceeds of
at least $4,000,000, if any, of the sale of the Company's common stock or other
equity based equivalent, at a price per share not to exceed $0.50; provided,
however, that for purposes of determining the number of shares and warrants to
be received by the holder of the indebtedness upon such conversion, the holder
shall be deemed to have tendered 120% of the outstanding balance of the note. In
addition, the lender was issued 600,000 Series E Warrants. The Series E Warrants
expire on the fifth anniversary of the date of issuance and have an exercise
price of $0.60 per share.

         The foregoing capital raises during fiscal year ended December 31, 2004
have enabled the Company to further enhance and stabilize product performance,
reduce cost of manufacturing by redesign, build an inventory of finished
products and connect with a large number of end users.

         During the first quarter of 2005, the Company secured interim financing
though convertible bridge loans, totaling $1,831,000. Of these, there were four
bridge loans for total gross proceeds of $471,000, which bear an interest rate
of 8% per annum and which will convert to common stock of the Company issued in
a future financing, if any, with gross proceeds of at least $3,000,000. For
purposes of such a conversion, the conversion price will reflect a 20% discount
from the purchase price in any such future financing. It is anticipated that
another $129,000 of bridge loan funding from this source will be received around
mid-April 2005.

         The remaining bridge loans, for total gross proceeds of $1,360,000,
bear an interest rate of 10% per annum and will convert to common stock of the
Company issued in any financing with gross proceeds of at least $4,000,000, if
any, of the sale of the Company's common stock at a price per share not to
exceed $0.50; provided, however, that for the purpose of determining the number
of shares and warrants to be received by the holder upon such conversion, the
holder shall be deemed to have tendered 120% of the outstanding balance of the
bridge note. In addition, the lenders were also issued Series E Warrants at a
rate of 60,000 warrants per $100,000 in principal bridge loan funding. The
Series E Warrants have an exercise price of $0.60 per share and expire five
years from the issuance date.

ITEM 7.  FINANCIAL STATEMENTS

         The financial statements and corresponding notes to the financial
statements called for by this item appear under the caption "Index to Financial
Statements" beginning on Page F-1 of this Annual Report on Form 10-KSB.

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

         The Company has had no change of, nor disagreements with, its
accountants since the Company's inception.

                                      -15-


<PAGE>

ITEM 8A. CONTROLS AND PROCEDURES.

         The Chief Executive Officer and Chief Financial Officer (the principal
executive officer and principal financial officer, respectively) have concluded,
based on their evaluation as of December 31, 2004 ("Evaluation Date"), that the
design and operation of the Company's "disclosure controls and procedures" (as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of
1934, as amended ("Exchange Act")) are effective to ensure that information
required to be disclosed by the Company in the reports filed or submitted by the
Company under the Exchange Act is accumulated, recorded, processed, summarized
and reported to its management, including its principal executive officer and
its principal financial officer, as appropriate to allow timely decisions
regarding whether or not disclosure is required.

         During the quarter ended December 31, 2004, there were no changes in
the Company's internal controls over financial reporting (as defined in Rule
13a-15(f) and 15d-15(f) under the Exchange Act) that have materially affected,
or are reasonably likely to materially affect, the Company's internal controls
over financial reporting.

ITEM 8B.   OTHER INFORMATION.

         None.

                                      -16-


<PAGE>

                                    PART III

ITEM 9.    DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND EXECUTIVE OFFICERS

         Set forth below is certain information with respect to the Company's
directors and executive officers.

       NAME                          AGE   POSITION WITH COMPANY
       ----                          ---   ---------------------
       Thomas M. Wittenschlaeger      47   Chief Executive Officer, President,
                                           Director and Chairman of the Board
       Bob van Leyen                  61   Chief Financial Officer and Secretary
       Edwin Hoffman                  52   Chief Development Officer
       Ananda Perera                  48   Chief Technology Officer
       Ken Bramlett                   45   Director (1)
       Larry Enterline                52   Director (1)
       Albert Wong                    56   Director (1)

(1)      Member of the Audit, Nominating and Governance, and Compensation
         Committees.

         TOM WITTENSCHLAEGER, (age 47), is the Company's Chief Executive
Officer, President, a director and Chairman of the Board. Mr. Wittenschlaeger
has accumulated more than twenty-two years of experience in the high
technology products and services area, much of it in general management with
leadership positions in operating units ranging in size from $3 million to $500
million in annual revenues. From 2002 to 2004, he was Senior Vice President of
Corporate Development and Chief Technical Officer at Venturi Partners, Inc., a
leading provider of information technology and professional staffing services
nationwide. From 2000 to 2002, he was Senior Vice President and General Manager
of ViaSat Satellite Networks, the commercial arm of ViaSat, Inc. He is a 1979
graduate of the U.S. Naval Academy in Annapolis, Maryland with a B.S. in
electrical engineering and post-graduate work in nuclear engineering. He is also
a graduate of the UCLA Executive Program in Business and co-founder of UCLA's
Executive Program in Marketing. Mr. Wittenschlaeger has been the Chairman of the
Board, President and Chief Executive Officer since March 15, 2004.

         LARRY ENTERLINE, (age 52), is one of the Company's directors. From 2000
to 2004, Mr. Enterline served as Chief Executive Officer and as a director of
Venturi Partners, Inc., a leading provider of information technology and
professional staffing services nationwide. From 1989 to 2000, Mr Enterline
served in various management roles with Scientific Atlanta, Inc., a leading
national global manufacturer and supplier of cable network products. Mr.
Enterline brings decades of market-defining successes to the Company's Board.
Mr. Enterline is also a member of the board of directors of Comsys IT Partners,
Inc., where he has served as director since January 2001. Mr. Enterline has been
a director of the Company since October 18, 2004.

         KEN BRAMLETT, (age 45), is one of the Company's directors. Mr. Bramlett
has served as a partner with the Charlotte, North Carolina law firm of Kennedy
Covington Lobdell & Hickman, L.L.P. since March 2005. Mr. Bramlett is also a
director of World Acceptance Corporation, where he has served on the board of
directors since 1994. From 1996 to 2004, Mr. Bramlett served as Senior Vice
President and General Counsel of Venturi Partners, Inc., a leading national
provider of information technology and professional staffing services and from
1990 to 1996 as a partner with the law firm of Robinson, Bradshaw and Hinson,
P.A. Mr. Bramlett brings 20 years of experience in corporate law and governance,
public and private equity, and mergers and acquisitions to the Company's Board.
Mr. Bramlett has been a director of the Company since December 2, 2004.

         ALBERT WONG, (age 56), is one of the Company's directors. Mr. Wong has
more than twenty years of experience in the high-tech industry, from start-up
phase to executive management. He is a co-founder of AST Research, a world class
PC manufacturer founded in 1980, where he served as director, Chief Technology
Officer & Executive Vice President from 1980 to 1989. Later, he founded AMKLY
Systems, a producer of high performance PC and network servers. He was President
& CEO of AMKLY through 1996. In October 1998, Mr. Wong was recruited by Clarion
Co., Ltd. to start a North America research and development center. He served as
director, President & CEO of Clarion Advanced Technology (later as Zandiant
Technologies) until June 2003. Mr. Wong has also served as a member of board of
directors with Printrak International, a leading fingerprint identification
company, Netsoft and InfoGation Corporation. He is an advisor to Express
Manufacturing, Inc., a leading contract manufacturing company, where he has
served as an advisor to the board since May, 2002. Mr. Wong has been a director
of the Company since May 17, 2004.

                                      -17-


<PAGE>

         BOB VAN LEYEN, (age 61), is the Company's Chief Financial Officer and
Secretary. Mr. van Leyen has more than twenty-four years of experience working
in the high-tech industry, holding various executive positions in finance,
operations and general management. From 2002 to 2003, Mr. van Leyen served as a
partner with Tatum CFO, L.L.C.  From 1999 to 2001, he was a divisional Chief
Financial Officer at Wyle Electronics.  During his twenty-four years of
employment, Mr. van Leyen has managed extensive financial operations
organizations in Europe, Asia, and the United States, providing financial
support to operations. Mr. van Leyen attended the Dutch Institute of Chartered
Auditors and holds a Dutch degree equivalent to a U.S. Bachelor's degree in
Business Administration. Mr. van Leyen has served as the Company's Chief
Financial Officer and Secretary since September 29, 2003.

         EDWIN HOFFMAN, (age 52), is the Company's Chief Development Officer.
Mr. Hoffman has extensive engineering and sales experience with companies such
as Reuters, Alcatel, Digital Equipment Corporation (DEC), Cabletron, Marconi,
and MTI. He has managed various mixed technology projects with individual
project revenues of more than $80 million and total revenues in excess of $100
million annually. In the last five years he has held various sales, engineering,
account management, and executive positions. From March 1997 to October 1999,
Mr. Hoffman was a Senior Sales Engineer and Technical Account Manager at DEC
(later a division of Cabletron). During the period of October 2000 to September
2002, Mr. Hoffman was employed at Anritsu in the capacity of National Sales
Engineering Manager. Mr. Hoffman obtained a diploma, and earned an achievement
award, in computer engineering science at the Control Data Institute in London,
England. Mr. Hoffman has served as the Company's Chief Development Officer since
May 2004. Prior to May 2004, Mr. Hoffman had served as the Company's Chief
Technology Officer since August 11, 2003.

         ANANDA PERERA, (age 48), is the Company's Chief Technology Officer. Mr.
Perera has worked in the high-tech industry for more than 28 years. Mr. Perera
managed system engineering groups in various technology manufacturing companies,
including Amdahl and Fujitsu. From April 2000 to April 2002, Mr. Perera was
employed by Network Storage Solutions as its Senior Systems Architect. During
the period of January 1998 to April 2000, Mr. Perera worked at Amdahl
Corporation where he was the Director of Consulting. He has also gained industry
experience working as a consultant for various Internet based companies. Mr.
Perera also previously served as Director of Quality and Technology for Viacom.
Mr. Perera holds an Engineering degree from the University of Colombo in Sri
Lanka, as well as other credentials in the area of networking and storage
technology. Mr. Perera has served as the Company's Chief Technology Officer
since May 2004. Prior to May 2004, Mr. Perera had served as the Company's Vice
President of Engineering since July 1, 2003.

         All directors hold office until the next annual meeting of shareholders
or until their respective successors are elected or until their earlier death,
resignation or removal. Executive officers are appointed by and serve at the
discretion of the board of directors.

AUDIT COMMITTEE FINANCIAL EXPERT

         On April 7, 2005, the Board of Directors formed an Audit Committee that
consists of three Board members, Larry Enterline, Albert Wong and Ken Bramlett.
The Audit Committee is comprised entirely of non-employee, "independent" (as
defined in Rule 4200(a)(15) of the NASD listing standards) directors and
operates under a written charter adopted by the Board of Directors. A copy of
the Audit Committee's current charter may be found at the Company's website at
www.raptor-networks.com. The Audit Committee and Board of Directors have
confirmed that Mr. Enterline and Mr. Bramlett meet applicable NASD listing
standards for designation as an "Audit Committee Financial Expert" based on
their experience and background.

CODE OF ETHICS

         A copy of the Company's code of ethics may be found at the Company's
website at www.raptor-networks.com. The Company intends to provide disclosure of
amendments and waivers of its code of ethics by posting on the Company's
website.

                                      -18-


<PAGE>

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's executive officers and directors, and
persons who beneficially own more than 10% of the Company's common stock to file
initial reports of ownership and reports of changes in ownership with the SEC.
These officers, directors and shareholders are required by SEC regulations to
furnish the Company with copies of all such reports that they file.

         The Company has conducted a review of its process and procedures
concerning possible deficiencies in its monitoring of, and assuring compliance
with, SEC reporting requirements concerning changes in beneficial ownership of
the Company's securities. In connection with such efforts, the Company reviewed
copies of such reports furnished to the Company during the fiscal year ended
December 31, 2004 and thereafter, and written representations received by the
Company from the Company's directors and officers and the certain beneficial
owners of more than 10% of the Company's common stock concerning their
compliance with Section 16(a) of the Exchange Act. Based on this review, the
Company believes that during the 2004 fiscal year, administrative errors caused
the following deficiencies: (i) a late filing of a Form 3 Initial Statement of
Beneficial Ownership of Securities by director Ken Bramlett, (ii) a late filing
of a Form 3 Initial Statement of Beneficial Ownership of Securities by director
Larry L. Enterline, (iii) a late filing of a Form 3 Initial Statement of
Beneficial Ownership of Securities by director Albert Wong, (iv) a late filing
of a Form 3 Initial Statement of Beneficial Ownership of Securities by
President, CEO and Chairman of the Board Thomas M. Wittenschlaeger, (v) a late
filing of a Form 3 Initial Statement of Beneficial Ownership of Securities by
CFO and Secretary Bob van Leyen, (vi) a late filing of a Form 4 Statement of
Changes in Beneficial Ownership of Securities by director Ken Bramlett,
consisting of one transaction that was not reported on a timely basis for fiscal
year 2004, (vii) a late filing of a Form 4 Statement of Changes in Beneficial
Ownership of Securities by director Larry L. Enterline, consisting of one
transaction that was not reported on a timely basis for fiscal year 2004, (viii)
a late filing of a Form 4 Statement of Changes in Beneficial Ownership of
Securities by director Albert Wong, consisting of five transactions that were
not reported on a timely basis for fiscal year 2004, (ix) a late filing of a
Form 4 Statement of Changes in Beneficial Ownership of Securities by President,
CEO and Chairman of the Board Thomas M. Wittenschlaeger, consisting of one
transaction that was not reported on a timely basis for fiscal year 2004, and
(x) a late filing of a Form 4 Statement of Changes in Beneficial Ownership of
Securities by CFO and Secretary Bob van Leyen, consisting of two transactions
that were not reported on a timely basis for fiscal years 2003 and 2004. These
filings have now been made and improved processes are in place to assist in
assuring future compliance.

ITEM 10. EXECUTIVE COMPENSATION

COMPENSATION OF EXECUTIVE OFFICERS AND MANAGEMENT

         The summary compensation table below shows certain compensation
information for services rendered in all capacities to the Company by the
Company's Chief Executive Officer and by each other executive officer whose
total annual salary and bonus exceeded $100,000 during the fiscal years ended
December 31, 2004 and 2003 (the "Named Executive Officers"). Other than as set
forth below, no executive officer's total annual salary and bonus exceeded
$100,000 during the Company's last fiscal year.

                                      -19-


<PAGE>

<TABLE>
                           SUMMARY COMPENSATION TABLE
                           --------------------------
                                                                                                     LONG TERM
                                                          ANNUAL COMPENSATION                      COMPENSATION
                                               ----------------------------------------------      -------------
                                                                                                     SECURITIES
             NAME AND              FISCAL                                       ALL OTHER            UNDERLYING
       PRINCIPAL POSITION           YEAR       SALARY           BONUS        COMPENSATION (1)      STOCK OPTIONS
       ------------------           ----       ------           -----        ----------------      -------------

<S>                                 <C>        <C>            <C>                   <C>                  <C>
Thomas M. Wittenschlaeger (2)       2004       $148,458       $4,740,000(3)         $94,694              350,000
President, CEO and Chairman of      2003             --               --                 --                   --
Board.

Bob van Leyen                       2004       $183,750         $632,000(4)         $14,761                   --
CFO and Secretary                   2003        $41,045               $0                 $0              300,000

Edwin Hoffman                       2004       $187,083               $0            $21,192                   --
Chief Development Officer           2003        $63,125               $0                 $0                   --

Ananda Perera                       2004       $178,333          $60,000(5)          $2,798                   --
Chief Technical Officer             2003        $65,833               $0                 $0                   --

Lyle Pearson (6)                    2004        $62,500               $0             $2,272                   --
Former CEO and Chairman of Board    2003        $87,500               $0                 $0                   --
</TABLE>
__________________________

(1)      Consists of: for Mr. Wittenschlaeger, $86,064 in reimbursement for
         expenses incurred by Mr. Wittenschlaeger in relocating from Atlanta,
         GA, to Southern California, and $8,592 in health insurance premiums and
         $38 in life insurance premiums for the fiscal year 2004; for Mr. van
         Leyen, $14,642 in health insurance premiums and $119 in life insurance
         premiums for the fiscal year 2004; for Mr. Hoffman, $12,000 in
         reimbursement for expenses incurred by Mr. Hoffman in relocating from
         England to Southern California, and $9,079 in health insurance premiums
         and $113 in life insurance premiums for the fiscal year 2004; for Mr.
         Perera, $2,760 in health insurance premiums and $38 in life insurance
         premiums for the fiscal year 2004; for Mr. Pearson, $2,262 in health
         insurance premiums and $9 in life insurance premiums for the fiscal
         year 2004.
(2)      Mr. Wittenschlaeger commenced employment with the Company on March 15,
         2004 and was named President and Chief Executive Officer as of March
         15, 2004.
(3)      Mr. Wittenschlaeger was granted 3,000,000 shares of the Company's
         common stock in conjunction with the commencement of his employment
         with the Company. The value of the shares, issued to Mr.
         Wittenschlaeger on March 17, 2004, is calculated based upon a $1.58 per
         share valuation as determined by the Company and agreed upon by the
         Company's independent auditors, Comiskey & Company, P.C. The shares
         were issued to Mr. Wittenschlaeger as "restricted securities" and are
         not the subject of a registration statement filed with the SEC or any
         state securities authority.
(4)      Mr. van Leyen was granted 400,000 shares of the Company's common stock
         as a retention incentive bonus on April 15, 2004. The value of the
         shares is calculated based upon a $1.58 per share valuation as
         determined by the Company and agreed upon by the Company's independent
         auditors, Comiskey & Company, P.C. The shares were issued to Mr. Van
         Leyen as "restricted securities" and are not the subject of a
         registration statement filed with the SEC or any state securities
         authority.
(5)      Represents amounts earned in prior year and paid in year reported.
(6)      Mr. Pearson resigned as an officer and director of the Company on March
         12, 2004.

                                      -20-


<PAGE>

STOCK OPTIONS GRANTED TO EXECUTIVE OFFICERS DURING FISCAL 2004

         The following table summarizes options to purchase shares of the
Company's common stock granted by the Company during the fiscal year ended
December 31, 2004, to each of the Named Executive Officers.

<TABLE>
                               NUMBER OF        PERCENT OF TOTAL
                               SECURITIES      OPTIONS GRANTED TO   EXERCISE OF
                               UNDERLYING     EMPLOYEES IN FISCAL   BASE PRICE     EXPIRATION
           NAME                 OPTIONS               YEAR             ($/SH)          DATE
           ----                 -------               ----             ------          ----

<S>                             <C>                  <C>               <C>          <C>
     Tom Wittenschlaeger(1)     350,000              26.8%             $1.75        7/15/2012
     Bob van Leyen                   0                   0
     Edwin Hoffman                   0                   0
     Ananda Perera                   0                   0
</TABLE>
__________________________

(1)      The option to purchase 350,000 shares of the Company's common stock
         vests in three equal annual installments commencing on July 15, 2005.

AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR END OPTION VALUES

         The following table summarizes exercises of stock options during the
fiscal year ended December 31, 2004 by each of the Named Executive Officers and
the year-end value of unexercised options for the Named Executive Officers.

<TABLE>
                                                               NUMBER OF                VALUE OF UNEXERCISED
                                                        UNEXERCISED SECURITIES          IN-THE-MONEY OPTIONS
                          SHARES          VALUE           UNDERLYING OPTIONS                  AT FISCAL YEAR
                         ACQUIRED        REALIZED            AT FISCAL YEAR END                 END
        NAME            ON EXERCISE          ($)       EXERCISABLE/UNEXERCISABLE     EXERCISABLE/UNEXERCISABLE
        ----            -----------          ---       -------------------------     -------------------------

<S>                          <C>           <C>              <C>                                <C>
Tom Wittenschlaeger          0             N/A                 0/350,000                       N/A(1)
Bob van Leyen                0             N/A              100,000/200,000                    N/A(1)
Edwin Hoffman                0             N/A                    0/0                          N/A
Ananda Perera                0             N/A                    0/0                          N/A
</TABLE>
__________________________


(1)      As of April 7, 2005, none of the options held by the Named Executive
         Officers were in-the-money.

DIRECTOR'S COMPENSATION

         Each of the Company's non-employee directors currently receive cash
compensation in the amount of $15,000 per year for service on the Company's
board of directors and all directors are reimbursed for reasonable expenses in
connection with attendance at board meetings. The directors fees paid in the
fiscal year ended December 31, 2004 are as follows:

                                          DIRECTOR'S FEES RECEIVED IN THE FISCAL
                      DIRECTOR                YEAR ENDING DECEMBER 31, 2004
                      --------                -----------------------------

                      Larry Enterline                  $3,750
                      Ken Bramlett                     $1,345
                      Albert Wong                      $9,375

         The Board of Directors previously adopted a policy to grant each
non-employee director an initial option to purchase shares of the Company's
common stock on the date of his/her commencement of service as a director.
Pursuant to this policy, non-employee directors were granted options to purchase
shares of the Company's common stock in fiscal year 2004 as follows: Mr. Wong,


                                      -21-


<PAGE>

100,000 shares on May 17, 2004, exercisable at $3.50 per share. Mr. Enterline,
75,000 shares on October 18, 2004, exercisable at $1.50 per share. Mr. Bramlett,
100,000 shares on December 2, 2004, exercisable at $1.00 per share. The options
granted to Messrs. Wong, Enterline and Bramlett vest in three equal annual
installments commencing on the first anniversary of the date of grant and expire
on the eight-year anniversary of the date of grant.

EMPLOYMENT AGREEMENTS

         There are no employment contracts, termination agreements, or
change-in-control arrangements between the Company and any of its Named
Executive Officers.

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

         The following table sets forth, as of March 25, 2005, certain
information with respect to the beneficial ownership of the Company's stock by
(i) each of the Company's Named Executive Officers, (ii) each of the Company's
directors, (iii) each person known to the Company to be the beneficial owner of
more than 5% of each class of the Company's outstanding voting securities, and
(iv) all of the Company's directors and executive officers as a group.

<TABLE>
                                                  NUMBER OF SHARES OF COMMON     PERCENT OF COMMON STOCK
NAME OF BENEFICIAL OWNER(1)                      STOCK BENEFICIALLY OWNED(2)      BENEFICIALLY OWNED(3)
---------------------------                      ---------------------------      ---------------------
<S>                                                      <C>                              <C>
Thomas M. Wittenschlaeger                                3,000,000                        9.4

Bob van Leyen                                              500,000(4)                     1.6

Edwin Hoffman                                            2,125,000                        6.6

Ananda Perera                                            2,125,000                        6.6

Tarek Obaid
Fininfor Conseil
11 rue du General-Du-Four                                3,099,919 (5)                    9.7
1204 Geneve, Switzerland

Palisades Capital
2224 Main Street
Santa Monica, CA  90405                                  2,744,231                        8.6

Marc Shapiro
735 Center St
El Segundo, CA  90245                                    1,750,000                        5.5

Albert Wong
14 Morning Dove
Laguna Niguel, CA 92677                                    416,667(6)                     1.3

Ken Bramlett
3203 Wynington Drive
Charlotte, NC 28226                                              0                          *

Larry L. Enterline
2699 Buford Highway
Buford, GA 30518                                                 0                          *



All executive officers and directors as a group
(7 persons)                                              8,166,667(4)                    25.4

* Less than 1%.
</TABLE>
__________________________

(1)      Unless otherwise indicated, the address is c/o Raptor Networks
         Technology, Inc., 1241 E. Dyer Road, Suite 150, Santa Ana, California
         92705.

                                      -22-


<PAGE>

(2)      Unless otherwise indicated, to the Company's knowledge, the persons
         named in the table have sole voting and sole investment power with
         respect to all shares beneficially owned, subject to community property
         and similar laws, where applicable.

(3)      Applicable percentage ownership is based on 32,083,442 shares of the
         Company's common stock outstanding as of March 25, 2005. Any securities
         not outstanding but subject to options exercisable as of March 25, 2005
         or exercisable within 60 days after such date are deemed to be
         outstanding for the purpose of computing the percentage of outstanding
         common stock beneficially owned by the person holding such options but
         are not deemed to be outstanding for the purpose of computing the
         percentage of common stock beneficially owned by any other person.

(4)      Includes shares of common stock subject to options which were
         exercisable as of March 25, 2005 or exercisable within 60 days after
         March 25, 2005, as follows: Mr. van Leyen, 100,000 shares; and all
         directors and executive officers as a group, 100,000 shares.

(5)      Includes 683,463 shares of common stock directly owned by Tarek Obaid
         and an additional 2,416,456 shares of common stock which the Company is
         informed and believes are indirectly beneficially owned by Tarek Obaid
         as follows: 1,072,456 shares owned by Turki bin Abdullah, 672,000
         shares owned by Almamlaka, Ltd., and 672,000 shares owned by The
         Leopard-Alliance.

(6)      DMK Investments, LLC, holds 138,889 shares of common stock, 138,889
         Series C Warrants and 138,889 Series D Warrants. Albert Wong is Manager
         and controlling shareholder of DMK Investments, LLC.

EQUITY COMPENSATION PLAN INFORMATION

         The following table sets forth information about the Company's common
stock that may be issued upon the exercise of options under all of the Company's
equity compensation plans as of April 12, 2005.


<TABLE>
                                  Number of Shares to be  Weighted Average   Number of Securities
Plan Category                      Issued Upon Exercise    Exercise Price   Available for Issuance
------------------------------    ----------------------  ----------------  ----------------------
<S>                                      <C>                   <C>                 <C>
Plans Approved by Stockholders             N/A                  N/A                  N/A
Plans Not Approved by Stockholders       2,002,500             $1.09               997,500
Total                                    2,002,500             $1.09               997,500
</TABLE>

         On July 15, 2004 the Company's Board of Directors approved a formal
stock option plan, subject to shareholder approval which, on April 7, 2005, was
superceded by a Board approved 2005 Stock Plan. The 2005 Stock Plan is subject
to shareholder approval. Under the 2005 Stock Plan, options to purchase up to
3,000,000 shares of the Company's Common Stock may be granted.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         On November 7, 2003, the Company entered into an agreement with Express
Manufacturing, Inc. ("Express Manufacturing") to provide contract manufacturing
services to the Company. Express Manufacturing is owned by director Albert
Wong's in-laws. Express Manufacturing manufactures printed board assemblies for
the Company in quantities and prices as set forth in quotations delivered to the
Company for review and acceptance. Under this arrangement, the Company made no
payments to Express Manufacturing in the fiscal year ended December 31, 2003 and
approximately $183,000 in fiscal year ended December 31, 2004.

         The Company previously entered into a consulting agreement with Alchemy
Advisors, LLC and Atlantic Communications, Inc., entities under the common
control of shareholder Mr. Micro Teta, who as of December 31, 2003, owned,
directly or indirectly, 17.73% of the Company's common stock. This shareholder
subsequently informed the Company's Chief Financial Officer that he had reduced
his shareholdings to one million shares (or 3.2% of shares outstanding) as of
December 31, 2004, although the Company is unable to verify the amount of such


                                      -23-


<PAGE>

holdings. The consulting agreement was for a two-year period beginning July 1,
2003 and included payment of $180,000 and the issuance of 3,136,100 shares of
the Company's common stock (valued at $1,568,050 at the time of issuance). The
consulting agreement was terminated by mutual consent of the parties as of
December 31, 2004, prior to its scheduled expiration.

         Director Albert Wong is Manager and controlling shareholder of DMK
Investments, LLC ("DMK"). In June 2004, DMK purchased 138,889 shares of the
Company's common stock, 138,889 Series C Warrants and 138,889 Series D Warrants.
DMK purchased the common stock and warrants at the same price ($1.80) and on the
same terms and conditions as all other investors in the Company's June 2004
financing. The Series C Warrants expire two months after the effective date of a
registration statement filed in conjunction with the common shares sold in the
June 2004 financing. Such a registration statement has not been filed with the
SEC as of April 8, 2005. The Series C Warrants had an original exercise price of
$3.00 per share. On August 13, 2004, the Company's Board of Directors amended
the terms of the Series C Warrants to have an exercise price of $1.25 per share.
The Series D Warrants expire on the fifth anniversary of the date of issuance
and have an exercise price of $3.50 per share.

ITEM 13.   EXHIBITS

         The following documents are filed as part of this Annual Report on Form
10-KSB.

                  (1) FINANCIAL STATEMENTS. The following Financial Statements
         and the Reports of Independent Registered Public Accounting Firms are
         on page F-1 through F-15 hereof.

                       Reports of Independent Registered Public Accounting Firms

                        Balance Sheets

                        Statements of Operations

                        Statements of Stockholders' Equity

                        Statements of Cash Flows

                        Notes to Financial Statements

                  (2)   FINANCIAL STATEMENT SCHEDULES. All Financial Statement
         Schedules have been omitted because they are not applicable or because
         the applicable disclosures have been included in the Financial
         Statements or in the Notes thereto.

                  (3)   EXHIBITS.

                                      -24-


<PAGE>

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

     2.1       Agreement and Plan of Merger dated August 23, 2003 between
               Pacific InterMedia, Inc., and Raptor Networks Technology, Inc.
               (incorporated herein by reference to Exhibit 2.1 to the Company's
               Form 8-K filed on October 22, 2003)
     2.2       Amendment to Agreement and Plan of Merger dated October 15, 2003
               between Pacific InterMedia, Inc., and Raptor Networks Technology,
               Inc. (incorporated herein by reference to Exhibit 2.2 to the
               Company's Form 8-K filed on October 22, 2003)
     3.1x      Articles of Incorporation, as amended
     3.2       Bylaws (incorporated herein by reference to Exhibit 3.2 to
               Registration Statement No. 333-74846 filed on December 10, 2001)
     3.3x      Amendment to Bylaws - Article II, Section 1
    10.1x      Full Service Lease dated May 3, 2004 between PS Business Parks,
               L.P., and Raptor Networks Technology, Inc.
    10.2       Form of Security Purchase Agreement in conjunction with April
               2004 equity funding (incorporated herein by reference to Exhibit
               10.1 to the Company's 10-KSB for fiscal year ended December 31,
               2003, filed on April 14, 2004)
    10.3       Form of Registration Rights Agreement in conjunction with April
               2004 equity funding (incorporated herein by reference to Exhibit
               10.2 to the Company's 10-KSB for fiscal year ended December 31,
               2003, filed on April 14, 2004)
    10.4x      Form of Series A Warrant
    10.5x      Form of Series B Warrant
    10.6x      Form of Series C Warrant
    10.7x      Form of Letter Amendment to Series C Warrant reducing exercise
               price to $1.25 per share
    10.8x      Form of Series D Warrant
    10.9x      Form of Series E Warrant
    10.10x     Form of Convertible Loan Letter Agreement (8% interest) issued in
               conjunction with bridge loan financing between December 2003 and
               April 2004
    10.11x     Form of Convertible Bridge Note (10% interest) issued in
               conjunction with bridge loan financing between November 2004 and
               March 2005
    10.12x     Form of 8% Convertible Note (8% interest) issued in conjunction
               with bridge loan financing between February 2005 and April 2005
    10.13x     Form of Subscription Agreement entered into in conjunction with
               8% Convertible Note
    10.14x     Form of Securities Purchase Agreement in conjunction with June
               2004 equity funding
    10.15x     Form of Registration Rights Agreement in conjunction with June
               2004 equity funding
    10.16x     Managing Dealer Agreement dated March 22, 2005 between
               Brookstreet Securities Corporation and Raptor Networks
               Technology, Inc., in conjunction with the Company's current
               private placement
     21x       Subsidiaries of the Registrant
     31.1x     Certification of the Chief Executive Officer Required by Rule
               13a-14(a) of the Securities Exchange Act of 1934, as amended, as
               Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     31.2x     Certification of the Chief Financial Officer Required by Rule
               13a-14(a) of the Securities Exchange Act of 1934, as amended, as
               Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
     32.1x     Certification of the Chief Executive Officer Pursuant to 18
               U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
     32.2x     Certification of the Chief Financial Officer Pursuant to 18
               U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002

x Filed Herewith

                                      -25-


<PAGE>

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

         The Board of Directors recently adopted a policy to pre-approve all
auditing services and permitted non-audit services (including the fees and
terms thereof) to be performed for the Company by its independent auditor,
subject to the de minimis exceptions for non-audit services described in
Section 10A(i)(1)(B) of the Securities Exchange Act of 1934, which shall be
approved by the Audit Committee prior to the completion of the audit. The
Board of Directors will consider whether the performance of any service by
the Company's independent auditors is compatible with maintaining such
auditor's independence.  For fiscal year ended December 31, 2004, the auditing
services, permitted non-auditing services, fees and a determination of
Comiskey & Company's independence, were ratified by the Company's Audit
Committee and the full Board of Directors on April 11, 2005.

         The following table sets forth the aggregate fees billed to the Company
for the fiscal years ended December 31, 2004 and December 31, 2003 by the
Company's auditors, Comiskey & Company, P.C. ("Comiskey & Company").

                                     FISCAL 2004          FISCAL 2003
                                     -----------          -----------

             Audit Fees(1)            $ 18,431             $ 18,039

             Audit-Related Fees(2)    $      0             $      0

             Tax Fees(3)              $  3,000             $  3,119

             All Other Fees(4)        $      0             $      0
---------------

(1)      AUDIT FEES consist of fees billed for professional services rendered
         for the audit of the Company's consolidated annual financial statements
         and review of the interim consolidated financial statements included in
         quarterly reports and services that are normally provided by Comiskey &
         Company in connection with statutory and regulatory filings or
         engagements.

(2)      AUDIT-RELATED FEES consist of fees billed for assurance and related
         services that are reasonably related to the performance of the audit or
         review of the Company's consolidated financial statements and are not
         reported under "Audit Fees." This category includes fees related to due
         diligence services pertaining to potential business
         acquisitions/disposition; and consultation regarding accounting or
         disclosure treatment of transactions or events and/or the actual or
         potential impact of final or proposed rules, standard or interpretation
         by the SEC, FASB or other regulatory or standard-setting bodies as well
         as general assistance with implementation of the requirements of SEC
         rules or listing standards promulgated pursuant to the Sarbanes-Oxley
         Act of 2002.

(3)      TAX FEES consist of fees billed for professional services rendered for
         tax compliance, tax advice and tax planning. These services include
         assistance regarding federal, state and local tax compliance, planning
         and advice.

(4)      ALL OTHER FEES consist of fees for products and services other than the
         services reported above.

         In ratifying the selection of Comiskey & Company, the Board of
Directors considered Comiskey & Company's qualifications as independent public
accountants. This included a review of the qualifications of the engagement
team, the quality control procedures the firm has established, any issues raised
by the most recent quality control review of the firm, as well as its
reputations for integrity and competence in the fields of accounting and
auditing. The Board of Director's review also included matters required to be
considered under the SEC's rules on auditor independence, including the nature
and extent of non-audit services, to ensure that the auditor's independence will
not be impaired. The Board of Directors has considered and determined that
Comiskey & Company's provision of non-audit services to the Company during 2004
is compatible with and did not impair Comiskey & Company's independence.

                                      -26-


<PAGE>

                                   SIGNATURES

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

Dated: April 15, 2005                         RAPTOR NETWORKS TECHNOLOGY, INC.


                                              By:  /s/ Thomas M. Wittenschlaeger
                                                   -----------------------------
                                                   Thomas M. Wittenschlaeger,
                                                   Chief Executive Officer

Dated: April 15, 2005                          RAPTOR NETWORKS TECHNOLOGY, INC.


                                              By:  /s/ Bob van Leyen
                                                   -----------------------------
                                                   Bob van Leyen,
                                                   Chief Financial Officer

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

            Signature                    Capacity                    Date
            ---------                    --------                    ----
/s/ Thomas M. Wittenschlaeger            Director                April 15, 2005
------------------------------------
     Thomas M. Wittenschlaeger

/s/ Ken Bramlett                         Director                April 15, 2005
------------------------------------
     Ken Bramlett

/s/ Larry L. Enterline                   Director                April 15, 2005
------------------------------------
     Larry L. Enterline

/s/ Albert Wong                          Director                April 15, 2005
------------------------------------
     Albert Wong

                                      -27-


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.

                          INDEX TO FINANCIAL STATEMENTS



Report of Independent Registered Public Accounting Firm .....................F-2

Financial Statements

     Consolidated Balance Sheets.............................................F-3

     Consolidated Statements of Operations...................................F-4

     Consolidated Statements of Stockholders' Equity (Deficit)...............F-5

     Consolidated Statements of Cash Flows...................................F-6

     Notes to Consolidated Financial Statements..............................F-7


                                      F-1



<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


The Board of Directors
Raptor Networks Technology, Inc.


We have audited the accompanying consolidated balance sheets of Raptor Networks
Technology, Inc. as of December 31, 2003 and 2004, and the related consolidated
statements of operations, stockholders' equity (deficit), and cash flows for the
initial period ended December 31, 2003 and the year ended December 31, 2004.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (U.S.). Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Raptor Networks
Technology, Inc. as of December 31, 2004, and the consolidated results of its
operations, changes in stockholders' equity (deficit) and cash flows for the
initial period ended December 31, 2003 and the year ended December 31, 2004 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying financial statements are presented assuming the company will
continue as a going concern. As more fully described in Note 1 to the financial
statements, the Company has sustained accumulated losses from operations
totaling more than $28,000,000 at December 31, 2004, and has a deficit in
working capital and stockholders' equity. These conditions, and the fact that
the Company has had no significant sales of its products to date, raise
substantial doubt about its ability to continue as a going concern. Management's
plans to address these conditions are also set forth in Note 1 to the financial
statements. The accompanying financial statements do not include any adjustments
which might be necessary if the Company is unable to continue.


Denver, Colorado
March 28, 2005

                                                          /s/ COMISKEY & COMPANY
                                                        PROFESSIONAL CORPORATION

                                      F-2


<PAGE>

<TABLE>
                                 RAPTOR NETWORKS TECHNOLOGY, INC.
                                    CONSOLIDATED BALANCE SHEETS

                                                               December 31,      December 31,
                                                                  2003               2004
                                                              -------------     -------------
                                              ASSETS

<S>                                                           <C>               <C>
CURRENT ASSETS
     Cash and cash equivalents                                $    316,747      $     39,213
     Inventory, net                                                229,074         1,212,290
     Prepaid expenses                                              338,406           260,297
     Note receivable                                                60,000                --
     License Fees                                                   86,000           259,480
     Other current assets                                           35,317             9,633
                                                              -------------     -------------

     Total current assets                                        1,065,544         1,780,913

PROPERTY AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION            297,229           770,446

OTHER ASSETS
     Prepaid expenses, less current portion                         45,000                --
     Debt issue cost                                                38,514            25,676
     Deposits                                                       24,920           104,333
                                                              -------------     -------------

     TOTAL ASSETS                                             $  1,471,207      $  2,681,368
                                                              =============     =============

                          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
     Accounts payable                                         $    444,964      $    418,320
     Accrued payroll and payroll taxes                             129,024                --
     Deferred Revenue                                                   --            44,000
     Accrued expenses                                               34,054         1,097,686
     Short-term debt                                                    --            87,817
     Short-term convertible debt                                   200,000         1,000,000
     Accrued interest payable                                           --            51,719
                                                              -------------     -------------

     Total current liabilities                                     808,042         2,699,542

     Convertible debt                                                   --         1,214,290

STOCKHOLDERS' EQUITY (DEFICIT):
     Preferred stock, no par value; 5,000,000 shares
      authorized                                                        --                --
     Common stock, $0.001 par value; 50,000,000 shares
      authorized; 20,556,719 and 30,845,942 shares
      issued and outstanding at December 31, 2003
      and 2004, respectively                                        20,557            30,846
     Stock subscription receivable                                    (500)               --
     Additional paid-in capital                                  9,831,677        26,956,247
     Stock issued for prepaid services                          (1,543,996)               --
     Accumulated deficit                                        (7,644,573)      (28,219,557)
                                                              -------------     -------------

     Total Stockholders' Equity (deficit)                          663,165        (1,232,464)

     TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)     $  1,471,207      $  2,681,368
                                                              =============     =============


       The accompanying notes are an integral part of the consolidated financial statements.
</TABLE>

                                               F-3


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                 July 24, 2003
                                                to December 31,     December 31,
                                                      2003             2004
                                                 -------------     -------------
REVENUE
     Product sales                               $         --      $     54,040
     Service fees                                       5,000                --
         Total revenue                                  5,000            54,040
                                                 -------------     -------------

COST OF SALES                                               0            27,330
                                                 -------------     -------------

     GROSS PROFIT                                       5,000            26,710
                                                 -------------     -------------

OPERATING EXPENSES
     Consulting                                       362,514         1,590,792
     Stock for services                             5,753,554        11,208,856
     Salary expense                                   698,029         3,032,400
     Marketing expense                                    833           189,843
     Research & Development                           127,262         1,167,068
     Selling, general and administrative              661,243         3,305,302
                                                 -------------     -------------

         Total operating expenses                   7,603,435        20,494,261
                                                 -------------     -------------

     Loss from operations                          (7,598,435)      (20,467,551)
                                                 -------------     -------------

OTHER INCOME (EXPENSE)
   Interest income                                         --             7,681
   Interest expense                                        --          (115,114)
                                                 -------------     -------------

         Total other income (loss)                         --          (107,433)
                                                 -------------     -------------

Loss before income taxes                           (7,598,435)      (20,574,984)
                                                 -------------     -------------

Income tax benefit                                         --                --

NET LOSS                                         $ (7,598,435)     $(20,574,984)
                                                 =============     =============

BASIC AND DILUTED NET
LOSS PER SHARE                                   $      (0.42)     $      (0.73)
                                                 =============     =============

BASIC AND DILUTED WEIGHTED
 AVERAGE NUMBER OF SHARES
 OUTSTANDING                                       18,288,344        28,364,188
                                                 =============     =============


                 The accompanying notes are an integral part of
                     the consolidated financial statements.

                                      F-4


<PAGE>

<TABLE>
                                 RAPTOR NETWORKS TECHNOLOGY, INC.
                     CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)


                                               Common Stock
                                      -------------------------------                        Additional
                                        Number of                                             Paid-in
                                         shares            Amount         Subscribed          Capital
                                      -------------------------------------------------------------------
<S>                                     <C>             <C>               <C>               <C>
Common stock issued for services,       14,545,100      $  7,272,550      $         --      $         --
July - September 2003 $0.50 per
share
Common stock issued for cash,
July - September 2003 $0.50 per
share                                    4,216,156         2,108,078                --                --
Common stock issued for cash,
July  -September 2003, $0.50 per
share                                      400,000           200,000          (200,000)               --
Common stock warrants issued for
services, September 2003                        --                --                --                --
Collection on common stock
subscribed, October 2003                        --                --           200,000                --
Recapitalization of private
company                                  1,034,000        (9,560,433)               --         9,615,283
Common stock issued for services,
December 2003 $0.50 per share               50,000                50                --            24,950
Common stock issued for cash,
December 2003 $0.50 per share               11,463                12                --             5,720
Common stock issued upon exercise
of warrants, December 2003                 250,000               250                --           122,675
Common stock issued upon exercise
of warrants, December 2003                  50,000                50              (500)           24,535
Beneficial conversion privilege                 --                --                --            38,514
Net loss for the period ended
December 31, 2003                               --                --                --                --
                                      -------------------------------------------------------------------
Balance, December 31, 2003              20,556,719            20,557              (500)        9,831,677
                                      -------------------------------------------------------------------
Common stock issued for services,        5,920,600             5,921                --         9,348,627
March 17, 2004 $1.58 per share
Common stock issued for cash,
April 2, 2004 $1.75 per share            3,200,000             3,200                --         5,596,800
Common stock issued for cash,
April-June $1.80 per share                 972,223               973                --         1,749,029
Common stock issued for services,
April-June 2004 $1.58 per share            200,000               200                --           315,800
Write-off of common stock
subscribed, May 2004                            --                --               500                --
Common stock retired                        (3,600)               (5)               --            (5,686)
Valuation conversion related to
issuance of warrants                            --                --                --                --
Net loss for the period ended
December 31, 2004                               --                --                --                --
                                      -------------------------------------------------------------------
Balance, December 31, 2004              30,845,942            30,846                --        26,836,247
                                      -------------------------------------------------------------------
(CONTINUED)




                                       Additional                                              Total
                                        Paid-in                                            stockholders'
                                        Capital-          Deferred        Accumulated         equity
                                        Warrants        Compensation        Deficit          (deficit)
                                      -------------------------------------------------------------------
Common stock issued for services,     $         --      $ (1,838,002)     $         --      $  5,434,548
July - September 2003 $0.50 per
share
Common stock issued for cash,
July - September 2003 $0.50 per
share                                           --                --                --         2,108,078
Common stock issued for cash,
July  -September 2003, $0.50 per
share                                           --                --                --                --
Common stock warrants issued for
services, September 2003                   144,510                --                --           144,510
Collection on common stock
subscribed, October 2003                        --                --                --           200,000
Recapitalization of private
company                                         --                --           (46,138)            8,712
Common stock issued for services,
December 2003 $0.50 per share                   --                --                --            25,000
Common stock issued for cash,
December 2003 $0.50 per share                   --                --                --             5,732
Common stock issued upon exercise
of warrants, December 2003                (120,425)               --                --             2,500
Common stock issued upon exercise
of warrants, December 2003                 (24,085)               --                --                --
Beneficial conversion privilege                 --                --                --            38,514
Net loss for the period ended
December 31, 2003                               --           294,006        (7,598,435)       (7,304,429)
                                      -------------------------------------------------------------------
Balance, December 31, 2003                      --        (1,543,996)       (7,644,573)          663,165
                                      -------------------------------------------------------------------
Common stock issued for services,               --                --                --         9,354,548
March 17, 2004 $1.58 per share
Common stock issued for cash,
April 2, 2004 $1.75 per share                   --                --                --         5,600,000
Common stock issued for cash,
April-June $1.80 per share                      --                --                --         1,750,002
Common stock issued for services,
April-June 2004 $1.58 per share                 --                --                --           316,000
Write-off of common stock
subscribed, May 2004                            --                --                --               500
Common stock retired                            --                --                --            (5,691)
Valuation conversion related to
issuance of warrants                       120,000                --                --           120,000
Net loss for the period ended
December 31, 2004                               --         1,543,996       (20,574,984)      (19,030,988)
                                      -------------------------------------------------------------------
Balance, December 31, 2004                 120,000                --       (28,219,557)       (1,232,464)
                                      -------------------------------------------------------------------


          The accompanying notes are an integral part of the consolidated financial statements.


                                                F-5
</TABLE>


<PAGE>

<TABLE>
                                 RAPTOR NETWORKS TECHNOLOGY, INC.
                               CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                         July 24, 2003
                                                          December 31,      December 31,
                                                              2003              2004
                                                          -------------     -------------
<S>                                                       <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net loss                                             $ (7,598,435)     $(20,574,984)
     Adjustments to reconcile net loss to net cash
     flows from operating activities:
         Depreciation                                           19,035           180,387
         Amortization                                        1,556,834
         Common stock issued for services                    7,297,550         9,670,548
         Common stock issued for prepaid services           (1,543,996)               --
         Recapitalization of private company                     8,712                --
         Warrants issued                                       144,510           120,000
         Forgiveness of Stock receivable                            --               500
     Gain on disposal of property and equipment                     --            (1,271)
     Changes in operating assets
         and liabilities:
          Other current assets                                 (20,442)           28,472
          Note receivable                                      (60,000)           60,000
          Deposits                                             (24,920)          (79,413)
          Prepaid assets                                      (398,281)          123,109
          License fees                                         (86,000)         (173,480)
          Inventories                                         (229,074)         (983,216)
          Accounts payable                                     444,964           (26,644)
          Interest payable                                      51,719
          Other accrued liabilities                             34,054         1,063,632
          Deferred Revenue                                          --            44,000
          Accrued payroll and payroll taxes                    129,024          (129,024)
                                                          -------------     -------------
     Net cash flows from operating activities               (1,883,299)       (9,068,831)
                                                          -------------     -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
         Proceeds from sale of property and equipment               --             2,410
         Property and equipment purchases                     (316,264)         (569,714)
                                                          -------------     -------------
     Net cash flows from investing activities                 (316,264)         (567,304)
                                                          -------------     -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
         Issuance of Common Stock                            2,316,310         7,350,002
         Retirement of shares                                       --            (5,691)
         Proceeds from convertible Debt                        200,000         2,014,290
                                                          -------------     -------------
     Net cash flows from investing activities                2,516,310         9,358,601
                                                          -------------     -------------

NET INCREASE (DECREASE) IN CASH
 AND CASH EQUIVALENTS                                          316,747          (277,534)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                    --           316,747
                                                          -------------     -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                $    316,747      $     39,213
                                                          =============     =============

SUPPLEMENTAL DISCLOSURE OF NONCASH INVESTING AND FINANCING ACTIVITY

Property and equipment acquired by short term note                  --            87,817
Interest paid                                                       --            50,543
Taxes paid                                                          --             2,400

        The accompanying notes are an integral part of the consolidated financial statements.

                                               F-6
</TABLE>


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


1.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
         ------------------------------------------

DESCRIPTION
-----------
The Company is a provider of integrated high-speed Ethernet switching systems
which enable new emerging high bandwidth critical applications. The data network
market areas that the Company is targeting include video, storage, Internet
Protocol telephony, and technology refresh. The Company is currently focusing on
the United States market. The Company was previously in the development stage.
Principal operations have commenced, although minimal revenues have been
recognized to date.

The Company was incorporated under the laws of the state of Colorado on January
22, 2001 under the name Pacific InterMedia, Inc. ("Pacific"). The principal
office of the corporation is 1241 E. Dyer Rd, Suite 150, Santa Ana, California
92705.

On October 17, 2003, Pacific completed a business combination transaction with
Raptor Networks Technology, Inc. ("Raptor"), a closely-held California
corporation, through acquisition of all of the issued and outstanding common
stock of Raptor in exchange for authorized but previously unissued restricted
Common Stock of Pacific. Immediately prior to completion of the acquisition
transaction, Pacific had a total of 4,034,000 shares of its Common Stock issued
and outstanding comprised of 1,034,000 registered shares held by approximately
25 stockholders and 3,000,000 shares of restricted stock held by Pacific's
founder and sole officer and director.

As a material aspect of the acquisition, Pacific re-acquired and cancelled the
3,000,000 restricted shares as consideration for transfer of its remaining
assets consisting of cash and office equipment to the officer and director,
leaving only the registered common stock, 1,034,000 shares, as all of its issued
and outstanding capital stock prior to completion of the Raptor acquisition.

Pursuant to terms of the acquisition agreement, all of the issued and
outstanding common stock of Raptor, 19,161,256 shares, was acquired by Pacific,
share-for-share, in exchange for its authorized but previously unissued
restricted common stock. Upon completion of the acquisition, Raptor became a
wholly owned subsidiary of Pacific and the Raptor shareholders became
shareholders of Pacific. Unless otherwise indicated, all references in these
financial statements to "the Company" include Pacific and its wholly owned
subsidiary, Raptor. All intercompany transactions have been eliminated. On
December 3, 2003, Pacific changed its name to Raptor Networks Technology, Inc.

The acquisition transaction has been treated as a reverse merger, with Raptor
considered the accounting acquirer. The Company's reporting year end was
subsequently changed from August 31 to December 31.

REVENUE
-------
The Company records revenues when the services are performed or the products are
shipped and title and risk of loss have passed to the customer. The Company
recognizes revenue from distribution sales when all contingencies are satisfied
and upon persuasive evidence of a sale to end users until such time that
historical sell through ratios have been developed.

CASH AND CASH EQUIVALENTS
-------------------------
The Company considers all short-term marketable securities with a maturity of
three months or less to be cash equivalents.

PREPAID EXPENSES
----------------
Prepaid expenses represent amounts paid in advance for contracts extending past
the period end date.

                                      F-7


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------

INVENTORY
---------
Inventory is recorded at average cost or market. When required, a provision is
made to reduce excess and obsolete inventory to estimated net realizable value.
Inventory at December 31, 2004 consists of raw materials and finished goods.

LICENSE FEES
------------
The Company has paid an amount of $260,000 to a supplier for a software platform
related to the Raptor ER-1010 product. This license fee will be amortized and
charged to cost of sales over the sale of 1,000 systems, which approximates the
number of systems expected to be sold using the platform. In 2004, the Company
amortized $520 for the sale of two (2) ER-1010 systems.

PROPERTY AND EQUIPMENT
----------------------
Property and equipment are recorded at cost less accumulated depreciation.
Depreciation is computed using the straight-line method over the assets'
estimated useful lives as follows: computer equipment, office equipment,
furniture and fixtures and testing equipment are depreciated over three years,
and leasehold improvements are depreciated over the term of the lease.

REPAIRS AND MAINTENANCE
-----------------------
Repairs and maintenance of a routine nature are charged as incurred, while those
which extend or improve the life of existing assets are capitalized.

MARKETING COSTS
---------------
Advertising costs are expensed as incurred. For the years ended December 31,
2003 and 2004, advertising costs were $1,000 and $189,843 respectively.

RESEARCH AND DEVELOPMENT COSTS
------------------------------
Research and development costs, which are expensed as incurred, are comprised of
the following costs incurred in performing R&D activities: product design cost
including rental of design tools, consumables, outsourced mechanical design
work, costs of prototypes, contract services for board and software design and
other outside costs.

IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS
-------------------------------------------
The Company reviews its long-lived assets and certain related intangibles for
impairment periodically, and whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be fully recoverable. When
necessary, impaired assets are written down to estimated fair value based on the
best information available. Estimated fair value is generally based on either
appraised value or measured by discounting estimated future cash flows.
Considerable management judgment is necessary to estimate discounted future cash
flows. Accordingly, actual results could vary significantly from such estimates.
No assets were considered impaired for the period ended December 31, 2003 and
the year ended December 31, 2004.

DEPOSITS
--------
Deposits represent amounts paid under the Company's office space lease and
various other arrangements with state agencies.

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

                                      F-8


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------

INCOME TAXES
------------
The Company recognizes deferred tax assets and liabilities based on differences
between the financial reporting and tax bases of assets and liabilities using
the enacted federal, state, and local income tax rates and laws that are
expected to be in effect when the differences reverse.

FAIR VALUE OF FINANCIAL INSTRUMENTS
-----------------------------------
Unless otherwise indicated, the fair value of all reported assets and
liabilities which represent financial instruments (none of which are held for
trading purposes) approximate the carrying values of such instruments.

RECLASSIFICATIONS
-----------------
Certain previous year amounts have been reclassified to conform to the current
year presentation. These reclassifications had no impact on net earnings,
financial position or cash flows.

STOCK-BASED COMPENSATION
------------------------

FThe Financial Accounting Standards Board has issued
"Accounting for Stock-Based Compensation" ("SFAS 123"). SFAS 123 requires that
an entity account for employee stock-based compensation under a fair value base
method. However, SFAS 123 also allows an entity to continue to measure
compensation cost for employee stock-based compensation using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, "Accounting
for Stock Issued to Employees" ("Opinion 25"). Entities electing to remain with
the accounting under Opinion 25 are required to make pro forma disclosures of
net loss and loss per share as if the fair value based method of accounting
under SFAS 123 had been applied.

As permitted by SFAS 123, the Company has elected to account for stock-based
compensation using the intrinsic value method. Accordingly, no compensation cost
has been recognized for stock options granted at or above market value. Had the
fair value method of accounting been applied to all of the Company's stock
option grants, which requires recognition of compensation cost ratably over the
vesting period of the underlying equity instruments, the net loss would have
been increased by $67,955 ($0.00 per share) and $619,995 ($0.02 per share) for
the periods ended December 31, 2003 and December 31, 2004, respectively. This
pro forma impact is likely to increase in future years as additional options are
granted and amortized ratably over the vesting period. The average fair value of
options granted during the period ended December 31, 2003 and December 31, 2004
was $0.1451 and $0.48 to $3.55, respectively.

The Company continues to account for employee stock-based compensation under
Opinion 25. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition
provisions of SFAS 123 to stock-based employee compensation:

                                                   December 31,     December 31,
                                                       2003             2004
                                                   ------------    -------------
     Net Income (loss)
         As reported .........................     $(7,598,435)    $(20,574,984)
                                                   ============    =============
          Pro forma ..........................     $(7,666,390)    $(21,194,979)
                                                   ============    =============

     Basic net loss per share
         As reported .........................     $     (0.42)    $      (0.73)
                                                   ============    =============
         Pro forma ...........................     $     (0.42)    $      (0.75)
                                                   ============    =============

                                      F-9


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------

STOCK-BASED COMPENSATION (CONTINUED)
------------------------------------

The pro forma amounts were estimated using the Black-Scholes option-pricing
model with the following assumptions:

                                                    December 31,    December 31,
                                                       2003            2004
                                                    ------------    ------------

      Dividend Yield...........................         0%              0%
      Risk-Free Interest Rate..................         6.0%            6.0%
      Expected Life............................       3 years         3 years
      Expected Volatility......................        79.53%        131-531%

CONSIDERATION OF OTHER COMPREHENSIVE INCOME ITEMS
-------------------------------------------------
The Financial Accounting Standards Board has issued "Reporting Comprehensive
Income" ("SFAS 130"). SFAS 130 requires companies to present comprehensive
income (consisting primarily of net income plus other direct equity changes and
credits) and its components as part of the basic financial statements. For the
period ended December 31, 2003 and the year ended December 31, 2004, the
Company's financial statements do not contain any changes in equity that are
required to be reported separately in comprehensive income.

CONCENTRATION OF RISK
---------------------
From time-to-time, the Company maintains cash balances in excess of FDIC insured
limits. At December 31, 2004, there was no amount in excess of the FDIC insured
limits.

LOSS PER SHARE
--------------
Loss per share was computed using the weighted average number of shares of
common stock and common stock equivalents outstanding during the period.

STOCK BASIS
-----------
Shares of common stock issued for services were valued on the same level as
shares sold for cash through a private placement earlier in the second quarter
of 2004 minus a discount of 10% for anticipated stock price movements in the
open market.

COMPENSATED ABSENCES
--------------------
During the current year the Company implemented a personal time off policy.
Employees of the Company are entitled to compensated absences depending on their
length of service to a maximum of 25 days. At December 31, 2004 the balance owed
for compensated absences was $73,470.

NEW ACCOUNTING PRONOUNCEMENTS
-----------------------------
In November 2004, the FASB issued SFAS No. 151, "Inventory Costs - an amendment
of ARB No. 43, Chapter 4." This Statement clarifies the accounting for abnormal
amounts of idle facility expense, freight, handling costs, and wasted materials.
This Statement is effective for inventory costs incurred during fiscal years
beginning after June 15, 2005. The initial application of SFAS No. 151 will have
no impact on the Company's financial statements.

In December 2004, the FASB issued SFAS No. 152, "Accounting for Real Estate
Time-Sharing Transactions - an amendment of FASB Statements No. 66 and 67." This
Statement references the financial accounting and reporting guidance for real
estate time-sharing transactions that is provided in AICPA Statement of Position
04-2, "Accounting for Real Estate Time-Sharing Transactions." This Statement
also states that the guidance for incidental operations and costs incurred to
sell real estate projects does not apply to real estate time-sharing
transactions. This Statement is effective for financial statements for fiscal
years beginning after June 15, 2005. The initial application of SFAS No. 152
will have no impact on the Company's financial statements.

                                      F-10


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------

NEW ACCOUNTING PRONOUNCEMENTS (CONTINUED)
-----------------------------------------

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary Assets
- an amendment of APB Opinion No. 29." This Statement eliminates the exception
for nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This Statement is effective for nonmonetary asset exchanges
occurring in fiscal periods beginning after June 15, 2005. The Company does not
expect application of SFAS No. 153 to have a material affect on its financial
statements.

In December 2004, the FASB issued a revision to SFAS No. 123, "Share-Based
Payment." This Statement supersedes APB Opinion No. 25, "Accounting for Stock
Issued to Employees" and its related implementation guidance. It establishes
standards for the accounting for transactions in which an entity exchanges its
equity instruments for goods or services. It also addresses transactions in
which an entity incurs liabilities in exchange for goods or services that are
based on the fair value of the entity's equity instruments or that may be
settled by the issuance of those equity instruments. This Statement does not
change the accounting guidance for share-based payment transactions with parties
other than employees provided in Statement No. 123 as originally issued and EITF
Issue No. 96-18. This Statement is effective for public entities that file as
small business issuers as of the beginning of the first fiscal period that
begins after December 15, 2005. The Company anticipates to early adopt in the
first quarter of 2005 but has not yet determined the impact of SFAS No. 123
(revised) on its financial statements.

PRESENTATION AS A GOING CONCERN
-------------------------------
The Company has had only a limited operating history with minimal sales, and has
sustained operating losses of $7,598,435 in 2003 and $20,574,984 in 2004. At
December 31, 2004, the Company had a deficit in working capital of $(918,629)
and a stockholders' deficit of $(1,232,464). These conditions raise substantial
doubt about the Company's ability to continue as a going concern.

Management is addressing these conditions by raising capital for expansion using
a combination of convertible debt, options and warrants, sales of stock for
cash, and the use of shares to compensate for services. During the first quarter
of 2005, the Company raised $1,831,000 through the issuance of convertible
bridge loans. In addition, a private placement of common stock at $0.50 per
share is planned for later in 2005, and is expected to raise a minimum of
$500,000 and a maximum of $6,500,000. However, there can be no assurance that
the Company will be able to continue to use these same financing strategies in
the future, or that it will be successful in raising sufficient equity in its
private placement to sustain its business plan until it achieves profitability.
The accompanying financial statements do not reflect any adjustments which might
be necessary if the Company is unable to continue.

2.   NOTE RECEIVABLE
     ---------------

A note receivable at December 31, 2003 consisted of a $60,000 unsecured loan,
related to a joint marketing agreement, due on or before December 31, 2003,
bearing interest at 1/5% per month. The company forgave interest due in order to
facilitate the receipt of payment in April of 2004.

                                      F-11


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


3.   PROPERTY AND EQUIPMENT
     ----------------------

Property and equipment consisted of the following:

                                                  December 31,      December 31,
                                                      2003              2004
                                                  ------------      ------------

         Furniture and Office equipment           $     1,976       $   136,350
         Computer equipment                            79,346           167,048
         Testing equipment                            234,942           537,314
         Leasehold Improvements                            --           127,924
                                                  ------------      ------------

                                                      316,264           968,636
         Less: Accumulated depreciation               (19,035)         (198,190)
                                                  ------------      ------------

                                                  $   297,229       $   770,446
                                                  ============      ============

4.   SHORT-TERM DEBT
     ---------------

In September 2004, the Company entered into a short term loan agreement for the
purpose of purchasing test equipment in the amount of $166,518. The outstanding
balance at December 31, 2004 is $87,817 and due in January 2005.

5.   CONVERTIBLE DEBT
     ----------------

                                                  December 31,      December 31,
                                                      2003              2004
                                                  ------------      ------------

Convertible note, interest rate 8%                $   200,000       $ 1,214,290
Convertible note, interest rate 10%                        --         1,000,000
                                                  ------------      ------------

                                                  $   200,000       $ 2,214,290
                                                  ============      ============


In the period from December 31, 2003 to April 16, 2004, the Company secured
loans for a total amount of $1,214,290. Interest on these loans accrues at an
annual rate of 8%. The loans are convertible into restricted common stock at any
time during the three year period following initial funding of the loans. The
conversion rate is $3.50 per share. The total amount owed shall be converted
into common stock at $3.50 per share on April 15, 2007.

On November 5, 2004, the Company secured interim financing of $1,000,000. This
financing consists of a convertible loan which will bear interest at a rate of
10% per annum. The outstanding principal amount of this loan, together with all
accrued but unpaid interest thereunder shall automatically convert into shares
issued in an equity based financing with gross proceeds of at least $4,000,000
(the "Closing"), if any, of the sale of the Company's common stock or other
equity based equivalent, at a price per share not to exceed $0.50; provided,
however, that for purposes of determining the number of shares and warrants to
be received by the holder of the indebtedness upon such conversion, the holder
shall be deemed to have tendered 120% of the outstanding balance of the note
resulting in an effective conversion price of $0.4167 per share. In addition,
the lender was issued a total amount of 600,000 Series E Warrants. These Series
E Warrants entitle the holder to subscribe for and purchase up to 600,000 shares
at an initial exercise price per share of $0.60. In the event that the warrants
offered in the Closing, if any, are at an exercise price per share that is less
than $0.60, then the Series E Warrant exercise price shall be reduced to the
lowest exercise price of the warrants issued in the Closing. The term of the
Series E Warrants is five years from the note issuance date.

                                      F-12


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


5.   CONVERTIBLE DEBT (CONTINUED)
     ----------------------------

Inasmuch as the conversion is contingent on the fact that an equity based
financing of at least $4,000,000 can be obtained, the total charge was measured
as per the date of issuance of this note; however, this charge will not be
recognized until the "contingency" (a minimum raise of $4,000,000, see before)
has been removed as allowed under paragraph 13 of EITF 98-5. For the valuation
of the conversion feature of the note, an effective conversion price was assumed
of $0.4167 per share (based on an offering price of $0.50); using the fair
market value of $0.80 as per November 5, 2004, the total charge will amount to
$919,920 and be charged to operations after a minimum raise of $4,000,000 has
been obtained.

With respect to the valuation of the 600,000 warrants it is considered
reasonable to assume that the warrants will be settled in shares. With a
volatility of 516% on November 5, 2004, a strike price of $0.60, an option value
of $0.80 and using the Black-Scholes model, an additional expense of financing
of $120,000 has been recognized in the fourth quarter of 2004 as prescribed by
the provisions of EITF 96-13.

Interest expenses for these loans amounted to $0 in 2003 and $102,172 in 2004.
Interest payable at December 31, 2004 was $36,418 and $15,301 for the $1,214,290
and $1,000,000 convertible notes, respectively.

6.   STOCKHOLDERS' EQUITY
     --------------------

As of December 31, 2004, 30,845,942 shares of the Company's $0.001 par value
common stock were issued and outstanding. Of these, 20,712,100 shares had been
issued for services, 4,627,619 shares had been issued at $0.50 per share for
total proceeds of $2,313,810, 3,200,000 shares were issued at $1.75 per share
for total proceeds of $5,600,000, 972,223 shares were issued at $1.80 per share
for total proceeds of $1,750,000, 300,000 shares had been issued at $0.01 per
share for total proceeds of $3,000, and 1,034,000 shares remain from the reverse
merger described in the audited financial statements at December 31, 2003.

In the fourth quarter of 2004, the Company retired a total of 3,600 shares.
These shares were initially issued in connection with an agreed upon contract
with a provider of investment relations (IR) services. The parties agreed on a
change of contract conditions and the shares were no longer required. The IR
firm never received the shares and the Company returned these shares to the
transfer agent for retirement.

During 2003 the Company's former corporate lawyer was granted 50,000 shares at
$0.01. Based on this grant a stock subscription receivable of $500 was booked.
In connection with the non-renewal of the contract with the Company's former
corporate lawyer, the Company considered it appropriate to write off the
subscription receivable.

                                      F-13


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


7.   STOCK OPTIONS AND WARRANTS
     --------------------------

On July 15, 2004 the Company's Board of Directors approved a formal stock option
plan, subject to shareholder approval which, on April 7, 2005, was superceded by
a Board approved 2005 Stock Plan. Until the 2005 Stock Plan has been approved by
the shareholders, all stock options have been committed outside of the plan.
Committed options between September 2003 and March 2004 had an exercise price of
$1.50 per share. During the period between July and December 2004, 1,287,500
options were committed with an exercise price of $1.75, 100,000 options were
committed at $3.50, 70,000 options were committed at $1.15, 100,000 options were
committed at $1.00 and 132,500 options were committed at $0.50. Options and
warrants are summarized as follows:

                                                               Weighted Average
                                                Shares          Exercise Price
                                             ------------       -------------
Outstanding at July 24, 2003                          --        $         --
   Granted                                     1,720,000                1.23
   Cancelled                                     (15,000)               1.50
   Exercised                                    (300,000)               0.01
                                             ------------       -------------
Outstanding at December 31, 2003               1,405,000        $       1.50

   Granted                                    12,609,468                2.29
   Cancelled                                  (4,875,000)               1.32
   Exercised                                          --                  --
                                             ------------       -------------
Outstanding at December 31, 2004               9,139,468        $       2.67
                                             ============       =============

The following table summarizes options and warrants outstanding at December 31,
2004:

<TABLE>
         Range             Number        Wtd. Ave. Life        Wtd. Ave. Price        Exercisable
         -----             ------        --------------        ---------------        -----------
<S>      <C>              <C>              <C>                      <C>                <C>
         .50-3.50         9,139,468        2.02 years               $2.62              7,196,968
</TABLE>

8.    LEASES
      ------

 As of December 31, 2004, the Company leases for its own use office space and
workstations under a non-cancelable operating lease expiring in 2007. In
addition, the Company leases a copier through 2008 and has agreements related to
inventory purchase commitments requiring future payments through 2005.

Future minimum payments for commitments over the next five years are as follows:

                                     For the year ended
                                        December 31,             Amount
                                        ------------             ------

                                           2005                $  210,512
                                           2006                   217,182
                                           2007                   132,130
                                           2008                     6,340
                                                               -----------

                                          Total                $  566,164
                                                               ===========

At December 31, 2004, the Company has $788,843 in inventory purchase order
commitments. Rent expense for the period ended December 31, 2003 and the year
ended December 31, 2004 was $78,877 and $207,892, respectively.


                                      F-14


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


9.    INCOME TAXES
      ------------

The Company computes and records taxes payable based upon determination of
taxable income which is different from pre-tax financial statement income. Such
differences arise from the reporting of financial statement amounts in different
periods for tax purposes. The timing differences are a result of different
accounting methods being used for financial and tax reporting.

The Company's total deferred tax assets and deferred tax liabilities at December
31, 2004 are as follows:

                                                    December 31,   December 31,
                                                        2003           2004
                                                    ------------   ------------
      Deferred tax assets
            Deferred compensation costs             $ 1,821,000    $        --
            Non-benefited tax losses and credits        519,000      8,778,000
                                                    ------------   ------------
                     Total deferred tax assets        2,340,000      8,778,000
      Deferred tax liabilities
           Net book value of assets                          --        132,000
                                                    ------------   ------------
                    Total deferred tax liabilities           --        132,000
                                                    ------------   ------------
                    Total net deferred tax assets            --      8,646,000
           Valuation allowance                       (2,340,000)    (8,646,000)
                                                    ------------   ------------
                    Net deferred tax assets         $        --    $        --
                                                    ============   ============


A valuation allowance has been established against the realization of the
deferred tax assets since the Company has determined that the operating loss
carryforwards may not be realized.

The Company has federal and state net operating loss carryforwards of
approximately $8,737,000 expiring between 2023 and 2024.

10.   RELATED PARTY TRANSACTIONS
      --------------------------

On November 7, 2003, the Company entered into an agreement with Express
Manufacturing, Inc. ("Express Manufacturing") to provide contract manufacturing
services to the Company. Express Manufacturing is owned by director Albert
Wong's in-laws. Express Manufacturing manufactures printed board assemblies for
the Company in quantities and prices as set forth in quotations delivered to the
Company for review and acceptance. Under this arrangement, the Company paid $0
to Express Manufacturing in the fiscal year ended December 31, 2003 and
approximately $183,000 in fiscal year ended December 31, 2004.

The Company previously entered into a consulting agreement with Alchemy
Advisors, LLC and Atlantic Communications, Inc., entities under the common
control of shareholder Mr. Micro Teta, who as of December 31, 2003, owned,
directly or indirectly, 17.73% of the Company's common stock. This shareholder
subsequently informed the Company's Chief Financial Officer that he had reduced
his shareholdings to one million shares (or 3.2% of shares outstanding) as of
December 31, 2004, although the Company is unable to verify the amount of such
holdings. The consulting agreement was for a two-year period beginning July 1,
2003 and included payment of $180,000 and the issuance of 3,136,100 shares of
the Company's common stock then valued at $1,568,050. The consulting agreement
was terminated as of December 31, 2004, prior to its scheduled expiration.

                                      F-15


<PAGE>

                        RAPTOR NETWORKS TECHNOLOGY, INC.
                        --------------------------------
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------
                           DECEMBER 31, 2003 AND 2004
                           --------------------------


11.  SUBSEQUENT EVENTS
     -----------------

BRIDGE LOAN
-----------
During the first quarter of 2005, the Company secured interim financing through
forty-five (45) convertible bridge loans, totaling $1,831,000. Of these, there
were four bridge loans for total gross proceeds of $471,000, which bear an
interest rate of 8% per annum and which will convert to common stock of the
Company issued in a future financing, if any, with gross proceeds of at least
$3,000,000. For purposes of such a conversion, the conversion price will reflect
a 20% discount from the purchase price in any such future financing. It is
anticipated that another $129,000 of bridge loan funding from this source will
be received around mid-April 2005.

The remaining forty-one bridge loans, for total gross proceeds of $1,360,000,
bear an interest rate of 10% per annum and will convert to common stock of the
Company issued in any financing with gross proceeds of at least $4,000,000, if
any, of the sale of the Company's common stock at a price per share not to
exceed $0.50; provided, however, that for the purpose of determining the number
of shares and warrants to be received by the holder upon such conversion, the
holder shall be deemed to have tendered 120% of the outstanding balance of the
bridge note. In addition, the lenders were also issued Series E Warrants at a
rate of 60,000 warrants per $100,000 in principal bridge loan funding. The
Series E Warrants have an exercise price of $0.60 per share and expire five
years from the issuance date.

STOCK ISSUED IN SETTLEMENT OF LITIGATION
----------------------------------------
In January 2005, the Company issued 975,000 shares to Palisades Capital, LLC, in
connection with the settlement of a lawsuit (as more fully described in the
Company's Form 8-K filed with the SEC on January 24, 2005). The Company accrued
for this issuance of shares in the 2004 income statement.

In March 2005 the Company issued 262,500 shares to various parties in the
Hemstreet, Weiner and Kelly lawsuit (as more fully described in the Company's
Form 8-K filed with the SEC February 22, 2005). The Company accrued for this
issuance of shares in the 2004 income statement along with a note for $150,000
payable from the proceeds of the next public offering.

OPTIONS ISSUED
--------------
Subsequent to December 31, 2004, the Company awarded a total of 50,000 common
stock purchase options to certain employees which are exercisable during a
three-year period, following the respective option grant dates at an option
exercise or purchase price of $0.50 per share of the Company's restricted common
stock. Also, subsequent to December 31, 2004, the Company cancelled 265,000
options granted in 2004. Effective January 4, 2005, the Company re-priced
895,000 already committed stock options ($1.50 - $1.75) to $1.00.

EQUITY OFFERING
---------------
On March 22, 2005, the Company signed an agreement for the private placement of
common stock and warrants to purchase common stock, on a "best efforts" basis.
The common stock and warrants will be sold as "units," each unit consisting of
four shares of common stock and one warrant. The price per unit is $2.00.
Pursuant to the terms of the agreement, the minimum amount to be raised in the
private placement is $500,000 and the maximum is $6,500,000 (with an option to
increase the offering size by up to twenty percent). The warrants offered in
this private placement have an exercise price of $2.50 and expire on the fifth
anniversary of the date of issuance.


                                      F-16


<PAGE>


                                INDEX TO EXHIBITS
   EXHIBIT
   NUMBER                          DESCRIPTION
   ------                          -----------

     2.1       Agreement and Plan of Merger dated August 23, 2003 between
               Pacific InterMedia, Inc., and Raptor Networks Technology, Inc.
               (incorporated herein by reference to Exhibit 2.1 to the Company's
               Form 8-K filed on October 22, 2003)
     2.2       Amendment to Agreement and Plan of Merger dated October 15, 2003
               between Pacific InterMedia, Inc., and Raptor Networks Technology,
               Inc. (incorporated herein by reference to Exhibit 2.2 to the
               Company's Form 8-K filed on October 22, 2003)
     3.1x      Articles of Incorporation, as amended
     3.2       Bylaws (incorporated herein by reference to Exhibit 3.2 to
               Registration Statement No. 333-74846 filed on December 10, 2001)
     3.3x      Amendment to Bylaws - Article II, Section 1
    10.1x      Full Service Lease dated May 3, 2004 between PS Business Parks,
               L.P., and Raptor Networks Technology, Inc.
    10.2       Form of Security Purchase Agreement in conjunction with April
               2004 equity funding (incorporated herein by reference to Exhibit
               10.1 to the Company's 10-KSB for fiscal year ended December 31,
               2003, filed on April 14, 2004)
    10.3       Form of Registration Rights Agreement in conjunction with April
               2004 equity funding (incorporated herein by reference to Exhibit
               10.2 to the Company's 10-KSB for fiscal year ended December 31,
               2003, filed on April 14, 2004)
    10.4x      Form of Series A Warrant
    10.5x      Form of Series B Warrant
    10.6x      Form of Series C Warrant
    10.7x      Form of Letter Amendment to Series C Warrant reducing exercise
               price to $1.25 per share
    10.8x      Form of Series D Warrant
    10.9x      Form of Series E Warrant
    10.10x     Form of Convertible Loan Letter Agreement (8% interest) issued in
               conjunction with bridge loan financing between December 2003 and
               April 2004
    10.11x     Form of Convertible Bridge Note (10% interest) issued in
               conjunction with bridge loan financing between November 2004 and
               March 2005
    10.12x     Form of 8% Convertible Note (8% interest) issued in conjunction
               with bridge loan financing between February 2005 and April 2005
    10.13x     Form of Subscription Agreement entered into in conjunction with
               8% Convertible Note
    10.14x     Form of Securities Purchase Agreement in conjunction with June
               2004 equity funding
    10.15x     Form of Registration Rights Agreement in conjunction with June
               2004 equity funding
    10.16x     Managing Dealer Agreement dated March 22, 2005 between
               Brookstreet Securities Corporation and Raptor Networks
               Technology, Inc., in conjunction with the Company's current
               private placement
    21x        Subsidiaries of the Registrant
    31.1x      Certification of the Chief Executive Officer Required by Rule
               13a-14(a) of the Securities Exchange Act of 1934, as amended, as
               Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    31.2x      Certification of the Chief Financial Officer Required by Rule
               13a-14(a) of the Securities Exchange Act of 1934, as amended, as
               Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
    32.1x      Certification of the Chief Executive Officer Pursuant to 18
               U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002
    32.2x      Certification of the Chief Financial Officer Pursuant to 18
               U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
               Sarbanes-Oxley Act of 2002

x Filed Herewith