**UNITED
STATES**
 **SECURITIES
AND EXCHANGE COMMISSION**
 Washington,
D.C. 20549
 
 **FORM
10-KSB**
 
 x
    **ANNUAL
      REPORT UNDER SECTION 13 OR 15(d) OF****THE
      SECURITIES EXCHANGE ACT OF 1934****FOR
      THE FISCAL YEAR ENDED: October 31, 2004**o
    **TRANSITION REPORT PURSUANT TO SECTION 13
      OR 15(d) OF**THE
      SECURITIES EXCHANGE ACT OF
    1934******FROM THE TRANSITION PERIOD FROM ______
      TO ______COMMISSION FILE NUMBER**:**333-65768**IJJ Corporation(Formerly
      Sun & Surf, Inc.)(Name of Small Business Issuer in Its
      Charter)
 
 **Delaware**
    **11-3619828**(State
      of incorporation)
    (I.R.S.
      Employer Identification No.)**8540
      Ashwood Drive, Capitol Heights, Maryland**
    **20743**(Address
      of principal executive offices)
    (Zip
      Code)
 **(301)
324-4992**
 (Issuer’s
telephone number, including area code)
 
 Securities
registered under Section 12(b) of the Exchange Act:
 None
 Securities
registered under Section 12(g) of the Exchange Act:
 Title
    
    Name
      of ExchangeCommon
      Stock, par value $0.001 per share
    
    None
  Check
whether the Issuer: (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. x
Yes o 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. x
  The
Issuer’s revenue for its most recent fiscal year was $8,035,694.
  As of
December 31, 2004, 21,530,000 shares of the Issuer’s $0.001 par value common
stock were outstanding and the aggregate market value of the shares held by
non-affiliates was approximately $1,076,500 based upon a closing bid price on
December 31, 2004 of $0.05 per share of common stock on the OTC Bulletin
Board.















**PART
      I**
    2ITEM
      1. BUSINESS
    2History
    2Description
      of Sun & Surf Inc.
    3Description
      of Business of MSSI
    3Employees
    4Business
      and Industry Overview
    4Competition
    4Government
      Regulation
    5Sources
      of Revenue
    5Service
      Contracts
    5Products
      Orders
    6Material
      Contracts Awarded to MSSI
    6Material
      Contracts Terminated by Our Customers
    7Substantial
      Customers
    7Future
      Commitments
    7Proprietary
      Products and Intellectual Property
    7Our
      Growth Strategy
    7Acquisition
      of Voyage Data Corporation
    8Other
      Material Agreements
    8RISK
      FACTORS
    9Business
      Risks
    9Risks
      Related to Our Common Stock
    10ITEM
      2. PROPERTIES
    12ITEM
      3. LEGAL PROCEEDINGS
    12ITEM
      4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    12**PART
      II**
    12ITEM
      5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
      MATTERS
    12ITEM
      6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
      OPERATIONS
    13Company
      and Industry Overview
    13Critical
      Accounting Policies
    14Results
      of Operations
    14Comparison
      of twelve-month period ended October 31, 2004 to twelve-month period ended
      October 31, 2003
    15Liquidity
      and Capital Resources
    16Subsequent
      Events
    18Use
      of Estimates and Certain Significant Estimates
    19Forward
      Looking Statements
    19ITEM
      7. FINANCIAL STATEMENTS
    19ITEM
      8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
      FINANCIAL DISCLOSURE
    19ITEM
      8A. CONTROLS AND PROCEDURES
    19**PART
      III**
    20ITEM
      9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
    20ITEM
      10. EXECUTIVE COMPENSATION
    20ITEM
      11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
      MANAGEMENT
    20ITEM
      12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
    20ITEM
      13. EXHIBITS AND REPORTS ON FORM 8-K
    20Statements
      filed as part of this Report:
    20Exhibits
    20Reports
      on Form 8-K
    20ITEM
      14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
    21


- i
-
  ****
 **PART I**
 **ITEM 1. BUSINESS**
 ****
 **History**
 
 Unless
otherwise indicated, or unless the context otherwise requires, all references in
this Annual Report on Form 10-KSB to the terms, “ *Company* ”, “IJJ”,
“ *SSI* ”,
“ *we* ”,
“ *our* ”, *or* “ *us* ” shall
mean IJJ Corporation, Sun & Surf, Inc. and our wholly-owned subsidiary,
Management Solutions and Systems, Inc. (“ *MSSI* ”).
  IJJ
Corporation’s (‘IJJ”) predecessor company was Sun & Surf Inc. (“SSI”), a
public corporation that was incorporated in the State of New York on November
30, 2000. SSI was a seller of sporting goods, apparel and accessories and a
consultant to retailers and wholesalers in the action sports
industry.
  Management
Solutions & Systems Incorporated (“MSSI”) is an information technology
consulting firm incorporated in the State of Maryland in 1997. Its principal
activities are the sale of computer products, design and development of computer
systems, and systems technical support.
  On
October 6, 2003, SSI entered into a Securities Exchange Agreement with MSSI (the
“Stock Exchange”). In exchange for the acquisition of the 100% interest in MSSI,
the shareholders of MSSI were issued a total of 15,000,000 common shares of SSI.
Following the share exchange, the former shareholders of MSSI hold 69.67% of the
21,530,000 shares of common stock of SSI. Consequently, even though SSI is the
legal acquirer, this transaction was treated as an acquisition of SSI by
MSSI.
  Upon the
effectiveness of the Stock Exchange, the sole remaining director of SSI, Jeffrey
Esposito, appointed Clifford Pope and Larry L. Brooks as members of our Board of
Directors and subsequently resigned. The remaining members of our Board of
Directors then appointed Larry Swinton to fill the vacancy created by the
resignation of Mr. Esposito. Our reconstituted Board of Directors then elected
Clifford Pope as our President, Chairman of the Board and Treasurer and Larry L.
Brooks as our Vice President and Secretary.
  Prior to
consummating the Stock Exchange, we effected a forward-split of our common stock
on the basis of ten shares for each share then issued and outstanding
and determined to change our business efforts. As part of the Stock Exchange,
43,072,500 shares owned by certain of our shareholders were redeemed by us and
then canceled following the closing of the Stock Exchange. As of January 31,
2004, there were 21,530,000 shares of common stock issued and outstanding. As a
result of the Stock Exchange, MSSI became our wholly-owned
subsidiary.
  Upon
completion of the Stock Exchange, we decided to cease SSI operations and only
carry on the business of MSSI. All of our business operations
are conducted through MSSI. Prior to the Stock Exchange, there were no material
relationships between SSI and MSSI, or any of the parties’ respective
affiliates, directors or officers, or any associates of their respective
officers or directors.
  There
were no preferred shares, warrants or options as of acquisition date.
  Recapitalization
costs of $120,454 and $453,600 consisting of legal and management consultancy
fees were incurred as of October 31, 2004 and 2003, respectively, relating to
the reverse acquisition.
  At the
Annual Meeting of Shareholders held on February 17, 2004, SSI’s shareholders
approved the change of company name to IJJ and reincorporation of the company in
the State of Delaware. IJJ was incorporated in the State of Delaware on December
17, 2003 with the intention of re-domiciling SSI from the State of New York to
the State of Delaware. The reincorporation is effected pursuant to an Agreement
and Plan of Merger (the “Merger Agreement”) entered into by SSI and IJJ on
December 18, 2003. The merger took effect upon the acceptance of the Certificate
of Merger by the Secretary of State of both the states of New York and Delaware
on February 18, 2004 and February 17, 2004, respectively. In accordance with the
Merger Agreement, SSI merged with and into IJJ and the latter became the
surviving entity resulting in the change of name from Sun & Surf Inc. to IJJ
Corporation.
   - 2
-




At the
Annual Meeting of Shareholders held on February 17, 2004, SSI’s shareholders
approved the adoption of a new stock option plan (the “Plan”). Eligible
participants under the Plan include key employees, directors and advisors of the
company and its subsidiaries. The options are not assignable or transferable and
will expire ten years after the grant date. The purchase price of the common
shares under the Plan must be equal to the fair market value of the company
common stock at the time the option is granted or higher as may be determined by
the Plan Committee or the Board of Directors at the time of grant. The maximum
aggregate number of shares of common stock that may be issued and sold under the
Plan is 10,000,000. The maximum aggregate number of shares issued under the Plan
during any given year must not exceed 10% of the total outstanding shares of the
company during such calendar year.





**Description of Sun & Surf
Inc.**





SSI was
incorporated as a New York corporation on November 30, 2000. SSI was a seller of
sporting goods, apparel and accessories retail/wholesale and a consultant
to retailers and wholesalers in the action sports industry. After the Stock
Exchange, SSI discontinued its previous business and carried on the business of
MSSI only. On August 27, 2003, SSI declared a dividend payable in shares of its
wholly owned subsidiary, Surf Franchise Inc., on the basis of one share of
common stock of the subsidiary in respect of each outstanding share of SSI,
adjusted to give effect to the ten-for-one split. The record date for
determining holders entitled to receive the dividend was September 8, 2003. As a
result of this dividend, we no longer have any ownership interest in Surf
Franchise Inc.




**Description
of Business of MSSI**




MSSI was
originally established in 1997, and presently provides information technology
(“ *IT* ”)
services and products, computer software and hardware sales, network
operation and design, systems analysis and deployment, and business process
consulting services to Federal, state and local governments, including military
and civil agencies. Our corporate headquarters is located in Capitol Heights,
Maryland.




We offer
IT services in the following areas:




·
    Enterprise
      Management Implementation and Sustainment services for Computer Associates
      (“*CA*”)
      Unicenter Suite of solutions




·
    Customer
      Relationship Management*(“CRM*”)
      and Call Center Management Services




·
    Customized
      Training solutions that can incorporate new technologies such as web
      broadcasting, virtual class rooms andmulti
      media




·
    IT
      Management Services such as Business Process Re-Engineering (“*BPR*”),
      Requirements Analysis, Strategic Planning, andIndependent
      Verification and Validation (“*IV&V*”)
      and other Pre-Implementation Services.




We are
also an authorized dealer of several brand-name IT products. We provide our
customers high-quality hardware and software, peripherals, office automation
products, desktop and laptop systems, and computer accessories. Our
long-established relationships with major IT equipment manufacturers and
distributors allow us to provide our customers with IT products at competitive
prices and expedited delivery times, often within 24 hours of the
order.




Our suite
of Enterprise Network solutions is comprised of a host of services, including
design, implementation, and maintenance, networked facilities
management, disaster recovery, security and helpdesk support. We analyze
enterprise networks and offer meaningful, cost effective solutions.




We focus
our business on providing necessary services and related equipment to Federal,
state and local governments. We generate revenue by reselling IT products or
providing services through consultative selling, which involves identifying
agencies that have IT problems,
developing a solution, and presenting the solution for customer approval. We use
teams of specialists assembled from our current staff and subscribe to
recruiting services over the Internet for additional personnel. Approximately
90% of our revenues were derived from sales to agencies of the Federal
government and approximately 10% was derived from sales to agencies of state and
local governments.






- 3
-


****


**Employees**




Currently,
our total employment is 78, which includes six contractors. We have a total of
50 employees/contractors, who provide technical support and operational services
at various contract sites principally in the Washington, D.C. area and in
locations around the United States. The remaining 28 employees/contractors
perform executive, business development and administrative functions. We are not
a party to any collective bargaining agreement with a labor union, and we
believe relations with our employees are good.




**Business
and Industry Overview**




According
to an initial analysis of President Bush’s Administration’s 2006 Budget to
Congress performed by FSI, a Washington, DC-area management consulting group,
President Bush’s proposed fiscal year 2006 Information Technology IT Budget of
$65.2 billion represents more than a 7% growth rate relative to the prior fiscal
year. A four year view shows that the Federal IT budget has experienced a
compound annual growth rate (“CAGR”) of 5.5% over four years (from FY2003
through FY2006). “This is not unexpected, and represents healthy growth for IT
for the Federal Government, considering that the top line budgets of many
agencies are dropping or funded below requested,” said Karen Wilson, vice
president, consulting for FSI. “The IT portions of this budget are growing,
which is good news for the industry.”




According
to INPUT, a provider of high quality and in-depth government market insight and
analysis based in Reston, Virginia, states in its recent “Federal IT Market
Forecast, FY 2004-FY 2009” report, that the Federal market demand for
vendor-furnished information systems and services will increase from $58.6
billion in FY 2004 to $80.7 billion in FY 2009 at a CAGR of 6.6%. INPUT’s
Federal Market Forecast, FY 2004-FY 2009 is a comprehensive analysis of the
Federal IT market for information technology. Produced by INPUT as a part of its
Federal Market Program, this report provides vendors and other interested
parties with a detailed view of Federal spending and market forecasts for the
next five years.




**Competition**




The
General Accounting Office in its report of February 2003, titled *Contracting
for Information Technology Services* ,
reported that the distribution of Federal spending for IT services in fiscal
year 2001 was to 2,167 small businesses, 635 medium companies, and 281 large
companies. We are considered a small business.




There are
approximately 14,000 IT companies in the United States with 50 or more
employees. The number of firms with less than 50 employees is estimated to be
even larger.




Many IT
firms are competing for government contracts. We believe that other IT companies
doing business with the government are positioning themselves for growing
opportunities in outsourcing, information assurance, modernization efforts, and
large systems integration projects.




The
larger IT firms doing business with the government have extensive resources to
pursue and obtain contracts. There are a large number of contracts, however,
being awarded by the Federal government. We believe that we have demonstrated
our ability to effectively bid and be awarded government awarded
contracts.




We
believe that government contractors tend to focus on bids with specific agencies
and become comfortable dealing within those agencies. We believe this tendency
means we will consistently encounter certain competitors at a given agency. For
these reasons, we do not expend much effort devising strategies against our
competitors.






- 4
-


****


****


**Government
Regulation**




We are
subject to numerous Federal, state and local regulations. The most significant
source of regulations is the Federal Acquisition Regulation (“ *FAR* ”) which
defines the laws and regulations that we must observe applicable to the
formation, administration and performance of Federal government contracts. Any
company selling to the Federal government must comply with the FAR or may face
penalties or disbarment from doing business with the Federal
government.




**Sources
of Revenue**


**SALES
      FROM SERVICES****No.
      of Sales**
    **Total
      Value**
      **(in
      millions)**
    **%
      ofSales**
    **Largest
      Order**
      **Value**
    **Actual
      Receipts**
      **(in
      millions)**May
      1, 2002 - April 30, 2003
      Total
      Service Sales
    6
    $3.8
    44%
    $1,516,851
    $3.8May
      1, 2003 - October 31, 2003
      Total
      Service Sales
    3
    $2.7
    59%
    $586,560
    $2.7November
      1, 2003 - October 31,
      2004
      - Total Service Sales
    21
    $6.7
    83%
    $1,921,450
    $6.7


**SALES
      FROM PRODUCTS****No.
      of Sales**
    **Total
      Value**
      **(in
      millions)**
    **%
      of**
      **Sales**
    **Largest
      OrderValue**
    **Actual
      Receipts**
      **(in
      millions)**May
      1, 2002 - April 30, 2003
      Total
      Product Sales
    181
    $4.8
    56%
    $379,000
    $4.8May
      1, 2003 - October 31, 2003
      Total
      Product Sales
    68
    $1.9
    41%
    $299,475
    $1.9November
      1, 2003 - October 31,
      2004
      - Total Product Sales
    109
    $1.4
    17%
    $167,074
    $1.4


****


****


**Service
Contracts**




Our
contracts are primarily negotiated on either a fixed-price basis or a
time-and-materials basis. For our time-and-materials contracts we charge our
customers a fixed hourly rate for each hour of service provided. The skills and
rates used are similar to those established in our GSA Schedule Contract No.
GS-35F-5347H (the “ *GSA
Contract* ”) held
with the GSA. The GSA Schedule is a Federal government contract managed by GSA.
Any agency or department of the Federal government may purchase goods and
services by using this contract. Any vendor can apply for a GSA schedule, which
when awarded would allow publication of the vendor’s products and services
targeted for sale to agencies of Federal, state and local governments. Many
Federal agencies use this contract to purchase goods and services.




When
awarded a contract, we often recruit and hire additional employees. The term of
employment of these additional employees is usually for the duration of the
contract or task order received.







- 5
-




****


**Products
Orders**




We
provide products to our customers. We respond to requests for quotes initiated
by prospective customers. Our quoted prices include all estimated costs to
deliver the products, plus an overhead and profit amount. None of those amounts
include penalties to either party for early termination.




We
purchase the products we resell only after a valid order is received from an
ordering customer. We maintain no inventory.




**Material
Contracts Awarded to MSSI**




*Army
Medical Command - Walter Reed Army Medical Center - Directorate of Information
Management (“DOIM”)* - Our
projects under this work order include database administration,
Internet/intranet application development for Army medical support program
requiring the utilization of the Integrated Clinical Data Base (“ICDB”) and the
Composite Health Care System (“CHCS”) resources. Our on-site system development
team provides project research, data mining, data filtering, and the conversion
of legacy applications, which includes project management of task assignments
issued to the Directorate of Information Management (“DOIM”). The core
environment is Oracle WEB, Oracle DB, SQL-Server and Active Server Page
(“ASP”).




The
initial period of performance for this contract was from October 2002 to
September 2004, with a total contract value of $2,914,114.43. This contract was
modified and extended to reflect a period of performance of October 2004 to June
2005 with a value of $1,281,866.00. The total value of this contract is
$4,195,980.43.




*The
U.S. Department of Housing and Urban Development (“HUD”)* - We
designed, developed, and implemented a call center to provide a service desk
solution for HUD’s Office of Public and Indian Housing Authority (PIH). The call
center identifies, tracks and resolves issues associated with the Public and
Indian Housing Information Center (PIC) system. Our call center staff provides
support to a national user base. In addition to providing call center
implementation and management services, we provide project management
consulting, legislative compliance maintenance, and end-user training services
to HUD’s PIH personnel.





Totals for the HUD contracts are as
      follows:Start Date - July 2002Completed
      Portion - July 2002 to June 2003
    
    $
    1,182,669.48Current
      Portion - July 2004 to June 2005
    
    $
    1,829,712.00


This
contract called for a one-year base period running from July 2002 to June 2003,
with a series of two one-year extension options. HUD exercised each option, and
intends to re-compete the contract prior to the June 2005 completion. As the
incumbent contractor, we are confident of our prospects for retaining this
business.




*Anteon
Corporation (“Anteon”)* - We
provide hardware, operating systems and feature set licensing,
telecommunications infrastructure, engineering services, operations services,
planning services and management of delivery of application hosting, management
and deployment services to build out and operate one or more classified Data
Centers. The services we provide Anteon on this contract are in direct support
of the implementation of Data Centers for the United States Army Reserves. The
contract was awarded on September 1, 2003, included two option years and the
initial one-year period of performance was valued at $841,000. The second option
year was exercised in fiscal 2004. The total contract value, including the two
option years, is valued at $2,523,000.




*The
U.S. Department of Justice - Drug Enforcement Administration
(“DEA”)* - We are
providing a staff of 15 employees around DEA offices nationwide to provide
state-of-the-art inventory data control services. The DEA inventory support
tasks include analyzing and reconciling property records, editing data, making
corrections, keying into DEA’s Fixed Asset Subsystem (FAS), assisting with
inventory, and performing similar duties as assigned. This contract is valued at
$1,036,000 for a period of performance from January 2005 - December 2005. MSSI
was selected based on its considerable experience in staffing and managing
on-site functions at various Federal agencies across the United States.








- 6
-


****


**Material
Contract Terminations**




*Sergeant
at Arms of the* *United
States Senate* *(“SAA”)* - On
June 1, 2004, we were awarded a fixed-price contract by the SAA to design and
build a new software application referred to as Print Management and Accounting
System (“PMAS”). The SAA is responsible for providing a number of administrative
support services to the offices of the U.S. Senate. Many of these services are
regulated by statute and include the preparation of franked mail, printing and
graphic services and the storage and distribution of documents for official U.S.
Senate use. The period of performance was to be October 2004 to September 2005
with a contract value of $975,200.




On
February 10, 2005, the SAA exercised its option to terminate the contract. The
basis for their termination was that we did not make a satisfactory performance
of the initial deliverable as specified in the PMAS Preliminary Design and
Requirements Validation. We have ceased all work under the contract, and we are
in discussions with the SAA to be paid for the value of our services provided
which amounted to $75,612.80.




**Substantial
Customers**




During
the period November 1, 2003 through October 31, 2004, we derived a substantial
proportion of our sales from three agencies of the Federal government. Those
sales were generated through multiple contracts with each agency. Individually
these contracts do not represent significant business, but collectively they
make our relationship with each agency material. The chart below illustrates the
distribution.




**SUBSTANTIAL
      AGENCY CUSTOMERS****No.
      ofContracts**
    **TotalApproximateValue**
    **Largest
      Order**
    **%
      of 2004Business**Total
      Army Customers
    13
    $4,300,000
    $2,457,377
    54%Total
      HUD Customers
    15
    $2,025,000
    $1,921,450
    25%Total
      USAF Customers
    12
    $500,000
    $167,074
    6%


****


**Future
Commitments**




Our
contract backlog consists of contracts valuing approximately $5.5 million, which
is based on amounts actually obligated by a client for payment of goods and
services, and unfunded backlog, which is based upon management’s estimate of the
future potential of our existing contracts and task orders, including options,
to generate revenue. Our backlog may not result in actual revenue in any
particular period or at all.




In each
case, the customer may at any time modify these contracts to increase or
decrease the contract dollar value or terminate the contract.




**Proprietary
Products and Intellectual Property**




We own no
proprietary products. Any proprietary products that are developed are owned by
the customer and not us.




- 7
-


****


**Our
Growth Strategy**




Our goal
is to continue to grow as a provider of excellent IT services and quality
products. Our strategy to reach this goal concentrates on:




·
    Maintaining
      and growing our core business. We will achieve this through (i) continuing
      to build a sales and service organization; (ii) developing service
      offerings that have broad application across government agencies; (iii)
      establishing direct relationships with manufacturers to maintain pricing
      competitiveness; and (iv) improving our Human Resource recruiting
      processes and compensation plans, which will enhance our ability to
      compete.




·
    Seeking
      growth opportunities in new business verticals. This strategy will include
      the private sector as well as other government sectors which management
      believes represents a forward growth opportunity that is currently not
      being addressed.




·
    Strategic
      growth opportunities. This may include strategic partnerships, alliances
      and strategic acquisitions which would leverage our current relationships,
      and expand our offering with various government agencies. Currently, due
      to limited access to the capital markets, management has not yet executed
      a strategic acquisition.




**Intent
to Acquire Voyage Data Corporation** .




In June,
2004, the company’s Board of Directors approved the issuance of a definitive
letter of intent (“LOI”) to acquire Voyage Data Corporation ("Voyage Data"), a
Florida based systems integrator which specializes in wireless security,
management, and application development with a focus on healthcare. The company
would acquire all of the outstanding shares of Voyage Data for a value of
$2,000,000, which consideration shall be a combination of 2,175,000 of the
company's common stock and a $1,000,000 promissory note secured by the assets of
Voyage Data. The note would be payable in 20 quarterly installments of
$50,000.The LOI was issued June 1, 2004, and the closing date for the
transaction was anticipated to take place on or before September 30, 2004. Upon
completion of the transaction, Voyage Data would become a wholly-owned
subsidiary of the company. The company would use the acquisition to expand its
current systems management and application development practice to include the
fast growing wireless sector and to expand into the commercial healthcare
marketplace to complement the company's Federal systems integration activities.
As part of the purchase, the company will acquire Intellectual Property, Client
Reference Account, Exclusivity, and Strategic Alliances from Voyage Data.




On
October 18, 2004, the company’s Board of Directors approved a resolution calling
for a delay in making a decision as to proceed or not to proceed with the
transaction to allow more time to complete its due diligence process and to seek
terms and conditions in the deal that would be more favorable to the company.
The company would resume consideration of the transaction after March 31,
2005.




The costs
related to the acquisition that were incurred during the twelve-month period
ended October 31, 2004 totaled $107,000, and were comprised of a good faith
deposit of $50,000, legal fees of $40,000 and miscellaneous expenses of
$17,000.




**Other
Material Agreements**




We have a
$2.0 million financing facility with Action Capital Corporation of Atlanta,
Georgia. Under the terms of this facility we can sell accounts receivable up to
85% of their value in advance of payment from the customer. Interest on this
facility is calculated at prime rate plus one percent on the daily average
balance of unpaid accounts sold plus a 0.95% monthly fee on said balance. The
facility is secured by liens on MSSI’s accounts receivable and by personal
guarantees of its principals.




We issued
a promissory note to a corporation controlled by a minority shareholder for
receipt of $250,000. The loan proceeds were used for general corporate purposes
and the loan was restructured such that all remaining accrued and unpaid
interest and principal was to be paid in full on June 22, 2004. The interest
rate is 15% per annum, compounded annually. We were unable to fully repay the
loan on the due date, and the outstanding principal balance on the note was
$100,800 as of October 31, 2004. We are in discussions with the lender to
restructure an extension of the maturity date.








- 8
-







On
December 15, 2003, we signed a $250,000 Convertible Promissory Note payable to a
minority shareholder. The loan proceeds were to be delivered in installments,
the first of which was received on the same day for $25,000. On April 30, 2004
we received a second installment in the amount of $65,000. On June 22, 2004, we
received a third installment in the amount of $20,000. The total outstanding
loan balance as of October 31, 2004 was $110,000. The loan is payable on demand
anytime after December 30, 2005 (“demand date”). The interest rate is 6 percent
per annum, compounded annually. The conversion of the unpaid principal and
interest balance into our common stock shares is exercisable at our option at
any time during the period commencing 30 days prior to the demand date and based
on the closing price of the common stock on the date of conversion.




On April
30, 2004, we signed a $100,000 Convertible Promissory Note payable to a minority
shareholder. The loan proceeds were to be delivered in installments, the first
of which was received on the same day for $90,000. The loan is payable on demand
anytime after December 30, 2005 (“demand date”). The interest rate is 6 percent
per annum, compounded annually. The conversion of the unpaid principal and
interest balance into our common stock shares is exercisable at our option at
any time during the period commencing 30 days prior to the demand date and based
on the closing price of the common stock on the date of conversion.




****


**RISK
FACTORS**




The
Company operates in a competitive environment. Our business encounters, among
others, the following primary risk factors:




***Business
Risks***




**We
depend on contracts with the Federal government for a substantial majority of
our revenue, and our business could be seriously harmed if the Federal
government ceased doing business with us.**




The
Federal sector accounts for 90% of our income. Our Federal government contracts
may be terminated by the government at any time. We could be barred from doing
business with the Federal government or Federal government agencies could
exercise their right to terminate our contracts for budgetary reasons,
convenience of the government, or any other reason. In either case, we expect
that our revenues would decrease significantly. Should our largest Federal
government customer terminate its contract with us, our revenues could decrease
by as much as 20% per month.




**If
we fail to establish and maintain important relationships with government
entities and agencies, our ability to successfully bid for new business may be
adversely affected.**




To
facilitate our ability to prepare bids for new business, we rely in part on
establishing and maintaining relationships with officials of various government
entities and agencies. These relationships enable us to provide informal input
and advice to government entities and agencies prior to the development of a
formal bid. We may be unable to successfully maintain our relationships with
government entities and agencies, and any failure to do so may adversely affect
our ability to bid successfully for new business.




**We
derive significant revenue from contracts and task orders awarded through a
competitive bidding process. If we are unable to consistently win new awards
over any extended period, our business and prospects will be adversely
affected.**




Substantially
all of our contracts and task orders with the Federal government are awarded
through a competitive bidding process. We expect that much of the business that
we will seek in the foreseeable future will continue to be awarded through
competitive bidding. However, there are no assurances that our bids will be
accepted, even if competitive, and as such if we are unable to gain new
contracts for any extended period, our business and prospects will be adversely
affected.






- 9
-


****


****


**Insufficient
positive cash flow could adversely impact our operating
results.**




We depend
on the collection of our receivables to generate cash flow, provide working
capital, pay debt and continue our business operations. If the Federal
government or any of our other customers fails to pay or delays the payment of
their outstanding invoices for any reason, our business and financial condition
may be materially adversely affected. The government may fail to pay outstanding
invoices for a number of reasons, including lack of appropriated funds or lack
of an approved budget.




**Competition
in the markets in which we compete may adversely affect our
business.**




Our
markets are highly competitive, and many of the companies we compete against
have substantially greater resources.




**Our
failure to attract and retain qualified employees, including our senior
management team, may adversely affect our business.**




Our
continued success depends to a substantial degree on our ability to recruit and
retain the technically skilled personnel we need to serve our clients
effectively. Our business involves the development of tailored solutions for our
clients, a process that relies heavily upon the expertise and services of our
employees. Accordingly, our employees are our most valuable resource.
Competition for skilled personnel in the IT services industry is intense, and
technology service companies often experience high attrition among their skilled
employees. There is a shortage of people capable of filling these positions and
they are likely to remain a limited resource for the foreseeable future.
Recruiting and training these personnel require substantial resources. Our
failure to attract and retain technical personnel could adversely affect our
business by increasing our costs of performing our contractual obligations,
reducing our ability to efficiently satisfy our clients’ needs, limiting our
ability to win new business and constraining our future growth.




***Risks
Related to Our Common Stock***




**The
liquidity of our common stock is affected by its limited trading
ability.**




Shares of
our common stock are traded on the OTC Bulletin Board under the symbol “IJJP.”
There is currently no broadly followed established trading market for our common
stock. An established trading market may never develop or be maintained. Active
trading markets generally result in lower price volatility and more efficient
execution of buy and sell orders. The absence of an active trading market
reduces the liquidity of our shares. The trading volume of our common stock
historically has been limited and sporadic. As a result of this trading
inactivity and the exchange, the quoted price for our common stock on the OTC
Bulletin Board is not necessarily a reliable indicator of its fair market value.
Further, if we cease to be quoted, holders would find it more difficult to
dispose of, or obtain accurate quotations as to the market value of our common
stock, and the market value of our common stock would likely
decline.




**Our
common stock may be subject to regulations prescribed by the Securities and
Exchange Commission relating to “penny stock.”**




The
Securities and Exchange Commission has adopted regulations that generally define
a “penny stock” to be any equity security that has a market price (as defined in
such regulations) of less than $5.00 per share, subject to certain exceptions.
Our common stock is currently subject to these regulations, which impose
additional sales practice requirements on broker-dealers who sell penny stocks
to persons other than established customers and accredited investors, which
generally include institutions with assets in excess of $5,000,000 and
individuals with a net worth in excess of $1,000,000 or annual income exceeding
$200,000 (individually) or $300,000 (jointly with their spouse).




**Our
common stock will likely be subject to substantial price and volume
fluctuations.**




The
market price of our common stock has been volatile and could fluctuate widely in
response to several factors, some of which are beyond our control,
including:








- 10
-






·
    our
      quarterly operating results;




·
    additions
      or departures of key personnel;




·
    changes
      in the business, earnings estimates or market perceptions of our
      competitors;




·
    our
      introduction of new facilities;




·
    future
      sales of our common stock by us or selling
stockholders;




·
    changes
      in general market or economic conditions;




·
    announcements
      of legislative or regulatory change; and




·
    potentially
      significant downward selling pressure on the stock price during the coming
      years as certain current and new stockholders seek to liquidate a portion
      or all of their holdings for various reasons subject to certain lock-up
      provisions where applicable.




The stock
market has experienced extreme price and volume fluctuations in recent years
that have significantly affected the quoted prices of the securities of many
companies, including companies in our industry. The changes often appear to
occur without regard to specific operating performance. In addition, there has
been a limited public market for our common stock. We cannot predict the extent
to which investor interest in us will be maintained. Such interest is necessary
for an active, liquid trading market for our common stock. Active trading
markets generally result in lower price volatility and more efficient execution
of buy and sell orders for investors. The price and trading volumes of our
common stock may fluctuate widely due to the limited public market for our
stock.




**A
significant number of our shares are eligible for sale and their sale could
depress the market price of our stock.**




Sales of
a significant number of shares of our common stock in the public market
following the merger and related transactions could harm the market price of our
common stock. Moreover, as additional shares of our common stock become
available for resale in the public market pursuant to the registration of the
sale of the shares, and otherwise, the supply of our common stock will increase,
which could decrease its price. Some or all of the shares of our common stock
may be offered from time to time in the open market pursuant to Rule 144, and
these sales may have a depressive effect on the market for shares of our common
stock. In general, a person who has held restricted shares for a period of one
year may, upon filing with the SEC a notification on Form 144, sell into the
market our common stock in an amount equal to the greater of one percent of the
outstanding shares or the average weekly number of shares sold in the last four
weeks prior to such sale. Such sales may be repeated once each three months. Any
of the restricted shares may be sold by a non-affiliate after such shares have
been held two years.




**After
giving effect to the Stock Exchange, certain of our principal stockholders will
continue to have significant voting power and may take actions that may not be
in the best interest of other stockholders.**




Certain
of our officers, directors and principal stockholders control and will continue
for the foreseeable future to control a significant percentage of our
outstanding common stock. If these stockholders act together, they will be able
to exert significant control over our management and affairs requiring
stockholder approval, including approval of significant corporate transactions.
This concentration of ownership may have the effect of delaying or preventing a
change in control and might adversely affect the market price of our common
stock. This concentration of ownership may not be in the best interests of all
of our stockholders.




**We
do not anticipate paying dividends in the foreseeable future, and the lack of
dividends may have a negative effect on the stock price.**




We have
never declared or paid any cash dividends or distributions on our common stock.
We currently intend to retain our future earnings to support operations and to
finance expansion and, therefore, do not anticipate paying any cash dividends on
our common stock in the foreseeable future. If we do not pay dividends, our
stock price may be negatively affected.




****


- 11
-





****


**We
are subject to critical accounting policies and actual results may vary from our
estimates.**




We follow
generally accepted accounting principles for the United States in preparing our
financial statements. As part of this work, we must make many estimates and
judgments about future events. These affect the value of the assets and
liabilities, contingent assets and liabilities, and revenue and expenses that we
report in our financial statements. We believe these estimates and judgments are
reasonable, and we make them in accordance with our accounting policies based on
information available at the time. However, actual results could differ from our
estimates, requiring us to record adjustments to expenses or revenues that could
be material to our financial position and results of operations in future
periods.




**ITEM
2. PROPERTIES**




We lease
our principal corporate office located at 8540 Ashwood Drive, Capitol Heights,
Maryland 20743. The lease expires February 28, 2007. We currently pay a base
rent of approximately $60,000 per year under the lease, which will increase to
approximately $63,000 per year during the final year of the lease
term.




**ITEM
3. LEGAL PROCEEDINGS**




As of the
date of this Annual Report on Form 10-KSB, there is no material proceeding as to
which any director, officer, affiliate or stockholder of the Company is a party
adverse to the Company.


****


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




No
matters were submitted to a vote of the holders of our common stock during the
fourth quarter of the fiscal year ended October 31, 2004.




**PART
II**




**ITEM
5. MARKET FOR THE REGISTRANT’S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS**




***Holders*** ***.*** As of
February 11, 2005 we had 24  stockholders
of record and our common stock had a closing bid price of $0.04 per share and a
closing ask price of $0.04 per share.





The
Company’s common stock is quoted on the OTC Bulletin Board under symbol “IJJP.”
The Company’s common stock was first quoted on the OTC Bulletin Board on June 5,
2003 under the symbol of its predecessor company “SSRF”. Prior to that time, no
trading in the Company’s common stock occurred. Therefore, historical price
information for the Company’s common stock for the fiscal year ended October 31,
2002 is not available. The chart below provides historical price information for
the fiscal year ended October 31, 2004:




Fiscal Year Ended
      October 31,
      2004
    
    Common StockHigh
    
    LowFirst
      Quarter
    
    $.70
    
    $.60Second
      Quarter
    
    $.50
    
    $1.24Third
      Quarter
    
    $.45
    
    $.32Fourth
      Quarter
    
    $.10
    
    $.23Subsequent
      Period(November 1, 2004through February 11, 2005)
    
    $.05
    
    $.04




- 12
-





The
source for the high and low closing bids quotations is http://finance.yahoo.com/ and does
not reflect inter-dealer prices. Such quotations are without retail mark-ups,
mark-downs or commissions, and may not represent actual transactions and have
not been adjusted for stock dividends or splits.




***Dividends*** ***.*** We have
never declared or paid any cash dividends, and except for the distribution of
the common capital stock of Surf Franchise, Inc., have made no distributions of
our or our subsidiaries’ common stock. We currently intend to retain our future
earnings to support operations and to finance expansion and, therefore, do not
anticipate paying any cash dividends on our common stock in the foreseeable
future.




**ITEM
6. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR PLAN OF
OPERATIONS**





The
following discussion should be read in conjunction with the financial statements
and related notes included elsewhere in this report. This discussion contains
forward-looking statements that involve risks and uncertainties. Our actual
results could differ materially from the results anticipated in these
forward-looking statements as a result of factors including, but not limited to,
those discussed under “Business -Risk Factors” and elsewhere in this
report.




**Overview**




*Company
Overview.* We are a
provider of Information Technology (“IT”) solutions to Federal, state and local
governments, including military and civil agencies. Our solutions are focused in
the areas of IT services and products. Our IT service-based offerings include
network operation and design, systems analysis and deployment, and business
process consulting services. Our IT products involve the reselling of brand-name
hardware and software such as peripherals, office automation products, desktop
and laptop systems, and computer accessories. Since our inception in 1997,
approximately 90% of our revenues were derived from sales to agencies of the
Federal government, and approximately 10% were derived from sales to agencies of
state and local governments.




Service
contracts are structured as multi-year arrangements that involve a base-year
period and option periods granted to our customers to renew the contracts that
range from one to four years. Our contracts are structured on a fixed-price time
and materials basis with the labor component based on our GSA Schedule Contract
(No. GS-35F-5347H).




Product
sales are generated from our customers through requests for quotes that include
the estimated cost of products from our suppliers. These products are resold to
our customers at a price that covers acquisition cost, shipping and handling,
and a targeted profit margin.




Our
growth strategy is to continue to be a provider of choice for our current base
of Federal, state and local customers. Maintaining and growing our core business
will be central to generating sustained profitability and adequate cash flow to
fund our operations. To attract new customers, we will expand our consultative
selling approach, which identifies agencies with business problems that could be
solved with our core capabilities. While we will continue to service our current
base of product sales customers, we will redirect more of our effort and
resources to increasing our share of service contract revenues. Service
contracts provide recurring, multiple-year revenues with attractive gross profit
margins.




Our
service contract backlog consists of existing contracts valued at approximately
$5 million and represents current work being performed and future options that
we anticipate will be exercised by our customers over the next two years.







- 13
-


****


****


**Critical
Accounting Policies**




In
preparing our financial statements, management makes several estimates and
assumptions that affect our reported amounts of assets, liabilities, revenues
and expenses. Those accounting estimates that have the most significant impact
on the Company’s operating results and place the most significant demands on
management’s judgment are discussed below. With regard to all of these policies,
management cautions that future events rarely develop as forecast, and the best
estimates may require adjustment.




*Revenue
Recognition on Long-Term Contracts.* We
provide various IT professional services to our Federal, state and local
government clients based on negotiated fixed-price, time and materials
contracts. Our customers are invoiced monthly at fixed hourly rates for each
hour of service provided by skill. These rates and skill sets are based on our
GSA Schedule Contract (No. GS-35F-5347H). We recognize services-based revenue
from each of our contracts when the service has been performed, the customer has
approved the timesheets for our employee or contractor providing the service and
an invoice has been generated and collectibility is reasonably assured. We
recognize materials-based revenue upon delivery, inspection and acceptance by
our customer.




*Sale
of Accounts Receivable.* We
adopted the provisions of Statement of Financial Accounting Standards No. 140,
“Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities”. Trade accounts receivable sold are removed from the balance
sheet at the time of sale. We entered into an accounts receivable credit
facility agreement with Action Capital Corporation (“Action Capital”) of
Atlanta, Georgia. Under this agreement, Action Capital provides advances of up
to 85% of our accepted accounts receivable that are sold and assigned to Action
Capital. These accounts receivable are sold with recourse against us.
Consequently, we have contingent liability for any amounts advanced by Action
Capital for accounts receivable sold and assigned that are subsequently
considered uncollectible. The financing facility is secured by liens on our
accounts receivable and by personal guarantees of our principal shareholders.
Interest is calculated at prime rate plus 1% on the daily average balance of
unpaid accounts sold and assigned plus a 0.95% monthly fee of such average
balance.




**Results
of Operations.**




The
following table sets forth the results of operations for the periods presented
expressed in U.S. dollars and as a percentage of total revenues.





****For
      the Twelve-MonthPeriod
      Ended**10/31/2004**
    
    **For the
      Twelve-Month****Period
      Ended****10/31/2003****$**
    
    
    **%
      of Rev.**
    
    
    **$**
    
    
    **%
      of Rev.**Revenue
      from product sales
    
    $
    $1,352,252
    
    
    16.8
    %
    $
    4,771,162
    
    
    49.0
    %Revenue
      from service contracts
    
    
    6,683,442
    
    
    83.2
    %
    
    4,963,283
    
    
    51.0
    %Total
      revenues
    
    
    8,035,694
    
    
    100.0
    %
    
    9,734,445
    
    
    100.0
    %Costs
      of revenue
    
    
    5,389,635
    
    
    67.1
    %
    
    6,617,377
    
    
    68.0
    %Gross
      profit
    
    
    2,646,059
    
    
    32.9
    %
    
    3,117,068
    
    
    32.0
    %Operating
      expenses:Selling,
      general and administrative
    
    
    3,590,320
    
    
    44.7
    %
    
    2,459,029
    
    
    25.3
    %Interest
      and bank charges
    
    
    267,737
    
    
    3.3
    %
    
    142,538
    
    
    1.5
    %Depreciation
    
    
    55,545
    
    
    0.7
    %
    
    46,158
    
    
    0.5
    %Total
      operating expenses
    
    
    3,913,602
    
    
    48.7
    %
    
    2,647,725
    
    
    27.2
    %Net
      (Loss) Income From Operations
    
    
    (1,267,543
    )
    
    (15.8
    )%
    
    469,343
    
    
    4.8
    %Recapitalization
      costs
    
    
    (120,454
    )
    
    (1.5
    )%
    
    (453,606
    )
    
    (4.7
    )%Net
      income (loss) before income taxes
    
    
    (1,387,997
    )
    
    (17.3
    )%
    
    15,737
    
    
    0.1
    %Provision
      for (benefit from) income taxes
    
    
    152,625
    
    
    1.9
    %
    
    (13,950
    )
    
    (0.1
    )%Net
      income (loss) after income taxes
    
    $
    (1,235,372
    )
    
    (15.4
    )%
    $
    1,787
    
    
    -
    %





14


****


**Comparison
of twelve-month period ended October 31, 2004 to twelve-month period ended
October 31, 2003.**




*Revenues.* Our
total revenues for the twelve-month period ended October 31, 2004 were
$8,035,694, a decrease of 17% or $1,698,751, over the same period last year. Our
revenue from service contracts increased 35% or $1,720,159 from last year, while
our revenue from product sales decreased 72% or $3,418,910 from last year. Our
revenue results for the total year of 2004 reflect our decreased emphasis on
product sales and our strategy to concentrate primarily on growing our
network-based service contract revenue base. Our service contracts provide
multi-year recurring revenues at higher gross profit margins than those realized
for product sales.




*Gross
Profit.* Our
gross profit for the twelve-month period ended October 31, 2004 totaled
$2,646,059, a decrease of 15% or $471,009 over the same period last year. The
decrease in our gross profit was driven by lower revenues from our product
sales, and was offset partially by the increase profit margin on our increased
service revenues.




*Selling,
General and Administrative (“SG&A”) Expenses.* Our
SG&A expenses for the twelve-month period ended October 31, 2004 totaled
$3,590,320 an increase of 46% or $1,131,291, over the twelve-month period ended
October 31, 2003. The increase in our G&A was caused primarily by several
factors: 1. increased compensation and benefits of approximately $536,000 for an
increase of four employees in our sales and business development staff, as well
as an increase in four employees serving a general and administrative function,
and an increase in employee benefits paid due to an increase in our employee
health insurance co-pay rates from 20% to 80%; 2. increased cost for accounting,
tax, legal and other outside professionals of approximately $272,000 associated
with our increased financial reporting requirements, corporate governance
compliance, and our acquisition and capital fundraising activities; 3. an
increase of travel and living of approximately $212,000 associated with
primarily our sales and marketing programs, 4. an increase in our reserve for
bad debts totaling $92,000 associated principally with one of our service
contract customers for $75,000 and other miscellaneous uncollectible accounts of
$17,000, and 5. an increase in our all other general and administrative costs of
approximately $19,000 associated with office related expenses and other
administrative costs.




*Interest
and Bank Charges.* Our
interest and bank charges for the twelve-month period ended October 31, 2004
totaled $267,737, an increase of 88% or $125,199 over the twelve-month period
ended October 31, 2003. The increase of $125,199 was caused primarily from our
increased accounts receivable financing costs and interest expense payments
associated with our notes payable.




*Depreciation
and Amortization.* Our
depreciation expense for the twelve-month period ended October 31, 2004 amounted
to $55,545, an increase of 20% or $9,387 over the same period last year. Our
depreciation expense increased due to purchases of furniture, computer hardware
and software, and office equipment to handle our increased employment of
staff.




*Net
(Loss) Income from Operations.* We had
an operating loss of $1,267,543 for the twelve-month period ended October 31,
2004, as compared with operating income of $469,343 during the same period last
year. Our operating loss of $1,267,543 for the twelve-month period ended October
31, 2004 represented a decrease in profitability of $1,736,886 from the same
period last year and was attributable principally to our higher SG&A
expenses of $1,131,291, our lower gross profit margin of $471,009, our increased
interest expense and bank charges of $125,199, and our increased depreciation
expense of $9,387.




*Recapitalization
Costs.* We
incurred recapitalization costs of $120,454, or about two percent of our
revenue, during the twelve-month period ended October 31, 2004. These costs were
associated primarily with legal and other professional services performed to
effect the stock exchange transaction with the shareholders of MSSI on October
6, 2003. During the twelve-month period ended October 31, 2003, we incurred
recapitalization costs of $453,606 or five percent of our revenue, and was also
due to our stock exchange transaction completed with the shareholders of MSSI on
October 6, 2003. A total of $415,000 was paid for management advisory services
and $38,606 was paid for legal and other professional services.







15






*Provision
for Income Taxes.* For the
twelve-month period ended October 31, 2004, we recorded a benefit from income
taxes of $152,625 as compared with a provision for income taxes of $13,950 for
the same period last year.




**Liquidity
and Capital Resources**




**Analysis
of the twelve-month period ended October 31, 2004**




Our
Consolidated Statements of Cash Flows detail the cash flows from operating,
investing and financing activities. Primary sources of funding for our
operations and growth have been cash generated from current operations and the
use of accounts receivable financing. As of October 31, 2004, we had cash and
cash equivalents of $171,972, a decrease of $83,206 for the period. The decrease
in cash of $83,206 resulted primarily from net cash used in operations of
$305,878, and was offset partially by net cash provided by financing activities
of $219,028 and net cash provided by investing activities of
$3,644.




*Cash
Flows Used in Operating Activities.* Our net
cash used in operating activities was $305,878 for the twelve-month period ended
October 31, 2004. The
decrease was caused primarily by our operating loss for the period of $1,235,372
and a decrease in our income tax liabilities of $164,427; offset partially
by decreases in accounts receivable and factor’s holdback accounts
receivable of $691,867, increases in trade accounts payable and accrued
liabilities of $286,695 and the increase of cash provided by the net of all
other operating items of $115,359.




*Cash
From Investing Activities.* Net cash
provided by our investing activities for the twelve-month period ended October
31, 2004 was $3,644 and resulted from the net liquidation of marketable
securities in the amount of $30,115, offset partially by purchases of new fixed
assets in the amount of $26,471. We realized a loss in the amount of $6,035 from
the liquidation of our marketable securities.




*Cash
Provided by Financing Activities.* Net cash
provided in our financing activities for the twelve-month period ended October
31, 2004 was $219,028 and resulted from borrowings of $200,000 from two minority
shareholders, and the issuances of promissory notes in the amount of $168,228 to
two of our trade suppliers; offset partially by repayments on our note payable
to another minority shareholder of $149,200.




*Management’s
Plan to mitigate certain adverse financial conditions* .  As
described in Note 2. to our financial statements for the twelve-month period
ended October 31, 2004, our financial condition was adversely affected by three
key business issues: 1. our SG&A increased by $1,131,291 or 46% for the
period as we invested in new business development resources and the
infrastructure necessary to handle the requirements of a publicly-held reporting
entity; 2. our revenues decreased $1,698,751 or 17% for the period as we were
unable to offset the decline in our product revenues with new service contract
revenues; and 3. our interest expenses were up $125,199 or 88% as we increased
our reliance on expensive accounts receivable factoring as our primary source of
working capital.




As a
result of these adverse impacts, our financial condition at October 31, 2004
resulted in a net loss from operations, a deficiency in our working capital and
a deficit in our shareholder’s equity.




To
address our adverse financial condition, we have begun a major restructuring of
our operations which includes the followings key actions:





*1.* *Reductions
in SG&A* . We have
announced a 25% reduction (7 employees) in our SG&A staff who are not
directly billable to our service contracts. Following these reductions, our
non-billable staff will be 21 employees. Additionally, effective March 1, 2005
we have put in place a 90-day reduction in salaries of 20% for our remaining 21
non-billable staff. Lastly, we have put in place reductions in our recurring
expenses such as telephone, office supplies, consulting services, travel and
living and other discretionary costs.





*2.* *Payment
plans for our creditors.* Our
reductions in SG&A costs are ** anticipated
to generate positive cash flow of approximately $75,000 per month that will be
used to satisfy payment plans that we have negotiated with our
creditors.





*3.* *Focus
on generating new revenues.* We have
put in place a new capture management program for our business development staff
that would facilitate the planning, management and tracking of our sales and
business development processes. We are confident that this process will help
identify pipeline opportunities for revenue growth that would be in line with
our core capabilities and competencies.





*4.* *Less
costly working capital financing.* We plan
to identify and secure financing arrangements for our accounts receivable and
general and corporate purposes that are lower in cost and have more attractive
terms than our current arrangements.





*5.* *Conversion
of debt to equity.* We plan
to pursue the conversion to equity of approximately $200,000 in notes payable to
two of our minority shareholders. The Company has the option to convert the
unpaid principal and interest into shares of the Company’s common
stock.





*6.* *Acquisition
of new capital.* We seek
to raise additional capital through private placements of debt and equity
financing. We are in discussion with various parties who have expressed an
interest in providing capital to the company through convertible debt
financings.






16








We
currently believe that our financial condition will improve substantially as a
result of implementing these actions. Over the next twelve months, we believe
that our internally generated cash flow, in combination with our planned actions
previously mentioned, will be sufficient to meet our anticipated cash
requirements.




*Credit
Facilities.* We have
a $2.0 million accounts receivable financing facility with Action Capital. This
facility was increased by $0.5 million in March 2004 to handle our increased
accounts receivable financing needs. Under the terms of this facility, we can
sell up to 85% of the value of accounts receivable in advance of payment from
the customer. Interest on this facility is calculated at the prevailing bank
prime rate plus 1.0% on the average daily balance of accounts receivable sold,
plus 0.95% monthly fee of the said balance. The facility is secured by liens on
our accounts receivable and by personal guarantees of our principals. Accounts
receivable sold and assigned under this facility amounted to $1,283,666 and
$1,242,963 as of October 31, 2004 and October 31, 2003,
respectively.




We issued
a promissory note to a corporation controlled by a minority shareholder for
receipt of $250,000. The loan proceeds were used for general corporate purposes
and the loan was restructured such that all remaining accrued and unpaid
interest and principal was to be paid in full on June 22, 2004. The interest
rate is 15% per annum, compounded annually. We were unable to fully repay the
loan on the due date, and the outstanding principal balance on the note was
$100,800 as of October 31, 2004. We are in discussions with the lender to
restructure an extension of the maturity date.




On
December 15, 2003, we signed a $250,000 Convertible Promissory Note payable to a
minority shareholder. The loan proceeds were to be delivered in installments,
the first of which was received on the same day for $25,000. On April 30, 2004
we received a second installment in the amount of $65,000. On June 22, 2004, we
received a third installment in the amount of $20,000. The total outstanding
loan balance as of October 31, 2004 was $110,000. The loan is payable on demand
anytime after December 30, 2005 (“demand date”). The interest rate is 6 percent
per annum, compounded annually. The conversion of the unpaid principal and
interest balance into our common stock shares is exercisable at our option at
any time during the period commencing 30 days prior to the demand date and based
on the closing price of the common stock on the date of conversion.




On April
30, 2004, we signed a $100,000 Convertible Promissory Note payable to a minority
shareholder. The loan proceeds were to be delivered in installments, the first
of which was received on the same day for $90,000. The loan is payable on demand
anytime after December 30, 2005 (“demand date”). The interest rate is 6 percent
per annum, compounded annually. The conversion of the unpaid principal and
interest balance into our common stock shares is exercisable at our option at
any time during the period commencing 30 days prior to the demand date and based
on the closing price of the common stock on the date of conversion.








17







On March
1, 2004, we issued a promissory note to one our suppliers in the amount of
$113,188 to cover our past due accounts payable balance. The note bears no
interest. As of October 31, 2004, the outstanding balance on this note was
$63,188. We have presented the lender with a revised payment plan that would
that fully repay the outstanding balance by February 2006. We are in
negotiations with the lender to finalize the revised payment plan.




As
referred to in Note 9 to our consolidated financial statements, on June 1, 2004,
we entered into a definitive letter of intent to acquire Voyage Data Corporation
(“Voyage Data”), a Florida-based systems integrator which specializes in
wireless security, management, and application development with a focus on
healthcare. The terms of the transaction involve the acquisition of all of the
outstanding shares of Voyage Data for a value of $2.1 million in a combination
of stock and debt. Upon completion of the transaction, Voyage Data will become a
wholly-owned subsidiary of IJJ Corporation (“IJJ”). IJJ also owns a Federal
systems integrator, Management Solutions and Systems, and will use the
acquisition to expand its current systems management and development practice to
include the fast growing wireless sector and to expand into the commercial
healthcare marketplace. On October 18, 2004, the company’s Board of Directors
approved a resolution calling for a delay in making a decision as to proceed or
not to proceed with the transaction to allow more time to complete its due
diligence process and to seek terms and conditions in the deal that would be
more favorable to the company. The company would resume consideration of the
transaction after March 31, 2005.




On August
31, 2004, we entered into a settlement agreement regarding a past due accounts
payable balance with another of our trade suppliers, whereby we issued a
promissory note requiring payments totaling $152,040. The note is unsecured, had
no interest rate and was to become fully due on December 15, 2004. On January
31, 2005 we restructured the note with our creditor to provide a payment plan
more in line with our ability to make timely payments. As of February 11, 2005,
we agreed to make interest payments at the rate of 18 percent, per annum. The
outstanding principal and interest balance is $117,770 and the entire
outstanding balance is scheduled to be repaid on or before December 31,
2005.




***Subsequent
Events*** **.**




On
November 24, 2004, we issued a promissory note to one our trade suppliers in the
amount of $64,136 to cover our past due accounts payable balance. The note bears
interest at the rate of seven percent per annum and calls for payments beginning
December 30, 2004 and ending November 30, 2008.




On
December 15, 2004, we issued a promissory note to one our trade suppliers in the
amount of $11,310 to cover our past due accounts payable balance. The note bears
interest at the rate of fifteen percent, per annum, and calls for payments
beginning January 1, 2005 and ending August 1, 2005.




On
December 28, 2004, we issued a promissory note to one our trade suppliers in the
amount of $91,247 to cover our past due accounts payable balance. The note bears
interest at the rate of eighteen percent, per annum, and calls for payments
beginning January 18, 2005 and ending September 18, 2005.




On
January 27, 2005, we issued a promissory note to one our professional services
suppliers in the amount of $123,855 to cover our past due accounts payable
balance. The note bears no interest and calls for payments beginning February
28, 2005 and ending December 31, 2006.




*Other.* The
following table summarizes our contractual cash obligations at October 31, 2004
and the effect these obligations are expected to have on our liquidity and cash
flow in future periods:


****


**Payments Due by Period (in
      dollars)****Contractual
      Cash**
      **Obligations**
    
    **Total**
    
    **Less
      than**
      **1
      Year**
    
    **1-3
      Years**
    
    **4-5
      Years**
    
    **After**
      **5
      Years****Short-term
      debt**
    
    $
    363,835
    
    $
    163,835
    
    $
    200,000
    
    $
    0
    
    $
    0**Operating
      Leases**
    
    
    163,800
    
    
    42,600
    
    
    121,200
    
    $
    0
    
    $
    0**Total
      Contractual Cash**
      **Obligations**
    
    $
    527,635
    
    $
    206,435
    
    $
    321,200
    
    $
    0
    
    $
    0




18




****


**Use
of Estimates and Certain Significant Estimates**




The
preparation of financial statements in conformity with generally accepted
accounting principles for the United States 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.


****


**Forward
Looking Statements**





Some of
the statements under “Business and Industry Overview”, “Our Growth Strategy” and
elsewhere in this Annual Report on Form 10-KSB constitute forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors that may cause actual results, levels of activity, performance or
achievements to be materially different from any future results, levels of
activity, performance, or achievements expressed or implied by such
forward-looking statements.




Such
factors include, among other things, those described in this Annual Report on
Form 10-KSB. In some cases, you can identify forward-looking statements by
terminology such as “may,” “will,” “should,” “could,” “expects,” “plans,”
“intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or
“continue” or the negative of such terms or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance, or achievements. Moreover, neither any other person nor
we assumes responsibility for the accuracy and completeness of such statements.
We are under no duty to update any of the forward-looking statements after the
date of this Annual Report on Form 10-KSB.


****


****


**ITEM
7. FINANCIAL STATEMENTS** ****





Reference
is made to page F-1 herein for the Index to the Consolidated Financial
Statements.


****


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





There
were no reportable matters, as defined in Item 304(a) (1)(iv) of Regulation S-B,
during the twelve month period ended October 31, 2004


****


****


**ITEM
8A. CONTROLS AND PROCEDURES**




We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our Exchange Act reports is recorded,
processed, summarized and reported within the time periods specified in the
SEC’s rules and forms, and that such information is accumulated and communicated
to our management, including our Chief Executive Officer and Chief Financial
Officer, as appropriate, to allow timely decisions regarding required
disclosure. Such controls and procedures, by their nature, can provide only
reasonable assurance regarding management’s control objectives.




We
carried out an evaluation, under the supervision and with the participation of
our management, including our Chief Executive Officer and Chief Financial
Officer, on the effectiveness of the design and operation of our disclosure
controls and procedures pursuant to Exchange Act Rules 13a-15 and 15d-15 as of
October 31, 2003. Based upon that evaluation, our Chief Executive Officer and
Chief Financial Officer concluded that our disclosure controls and procedures
are effective in timely alerting them to material information relating to us
(including our consolidated subsidiaries) required to be included in our
Exchange Act reports.








19






While we
believe that our existing disclosure controls and procedures have been effective
to accomplish their objectives, we intend to continue to examine, refine and
formulize our disclosure controls and procedures and to monitor ongoing
developments in this area.




**PART
III**




**ITEM
9. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT**




The
information called for by Item 9 with respect to identification of our directors
will be included under the captions “Proposal 3: Election of Directors” and
“Section 16(a) Beneficial Ownership Reporting Compliance” in the proxy statement
for our 2005 Annual Meeting of Stockholders which is expected to be filed with
the Securities and Exchange Commission on or
about March 1, 2005 (the “2004 Proxy Statement”).




**ITEM
10. EXECUTIVE COMPENSATION**




The
information called for by Item 10 with respect to management remuneration and
transactions is incorporated herein by reference to the material under the
caption “Executive Officers and Compensation” in the 2005 Proxy
Statement.




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




The
information called for by Item 11 with respect to security ownership of certain
beneficial owners and management is incorporated herein by reference to the
material under the caption “Security Ownership of Certain Beneficial Owners and
Management” in our 2005 Proxy Statement.




**ITEM
12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS**




The
information called for by Item 12 with respect to transactions between us and
certain related entities is incorporated herein by reference to the material
under the caption “Certain Relationships and Related Transactions” in our 2004
Proxy Statement.




**ITEM
13. EXHIBITS AND REPORTS ON FORM 8-K**




**Statements
filed as part of this Report:**




1.
Consolidated Financial Statements




See the
Consolidated Financial Statements that follow the signature pages to this Annual
Report.




**Exhibits**




The
following documents are filed as exhibits herewith, unless otherwise specified,
and are incorporated herein by this reference:




**Exhibit**
      **Number**
    
    **Description
      of Exhibit**2.1#
    
    Securities
      Exchange Agreement dated October 6, 2003, by and among Sun & Surf,
      Inc., Jeffrey R. Esposito, Management Solutions & Systems, Inc. and
      the shareholders of Management Solutions & Systems,
    Inc.3.1*
    
    Articles
      of Incorporation of Sun & Surf, Inc.3.2*
    
    Bylaws
      of Sun & Surf, Inc.10.1#
    
    Promissory
      Note dated September 10, 2003, issued by Management Solutions &
      Systems, Inc. in favor of Tazbaz Holdings Limited for the sum of
      $250,00010.2#
    
    Financing
      and Security Agreement by and between Management Solutions & Systems,
      Inc. and Action Capital Corporation, dated June 14,
200110.3#
    
    Agreement
      by and between Management Solutions & Systems, Inc. and Department of
      Housing and Urban Development, Office of Public and Indian Housing, dated
      July 1, 200210.4#
    
    Modification
      of Contract by and between Management Solutions & Systems, Inc. and
      Department of Housing and Urban Development, dated July 1,
      200310.5#
    
    Modification
      of Cost Proposal by and between Management Solutions & Systems, Inc.
      and Department of Housing and Urban Development, dated August 25,
      200310.6#
    
    Order
      for Supplies and Services by and between Management Solutions &
      Systems, Inc. and GSA Region 6, dated September 30,
200210.7#
    
    Modification
      of Contract by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated November 20, 200210.8#
    
    Modification
      of Contract by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated April 28, 200310.9#
    
    Modification
      of Contract by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated April 29, 200310.10#
    
    Order
      Modification by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated September 12, 200310.11#
    
    Order
      Modification by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated September 23, 200310.12#
    
    Order
      Modification by and between Management Solutions & Systems, Inc. and
      GSA Region 6, dated October 17, 200316.1#
    
    Letter
      of Stewart H. Benjamin, CPA, P.C., dated October 21,
  200321.1+
    
    Subsidiaries
      of the registrant.31.1+
    
    Statement
      of Chief Executive Officer Furnished Pursuant To Section 302 Of The
      Sarbanes-Oxley Act Of 200231.2+
    
    Statement
      of Chief Financial Officer Furnished Pursuant To Section 302 Of The
      Sarbanes-Oxley Act Of 200232.1+
    
    Statement
      of Chief Executive Officer Furnished Pursuant To Section 906 Of The
      Sarbanes-Oxley Act Of 200232.2+
    
    Statement
      of Chief Financial Officer Furnished Pursuant To Section 906 Of The
      Sarbanes-Oxley Act Of 2002


________________




**+** Previously filed as an exhibit to Form 10-KSB as filed with the Commission on
February 9, 2004, and incorporated herein by reference.




***** Previously filed as an exhibit to Form 10-KSB as filed with the Commission on
January 21, 2003, and incorporated herein by reference.




**#** Previously filed as an exhibit to the Company’s Current Report on Form 8-K as
filed with the Commission on October 21, 2003, and is incorporated herein by
reference.






20




**Reports
on Form 8-K**




The
Company filed a Current Report on Form 8-K with the SEC on February 17, 2005
reporting, (i) the Change in Management of the Company; (ii) Termination of
Material Contracts; (iii) Award if Definitive Material Contract; and, (iv)
Financial Statements, and Exhibits filed as part of the Current
Report.




The
Company filed a Current
Report on Form 8-K with the SEC o n
September 28, 2004 reporting the Company received notification from the General
Service Administration’s FTS
Kansas City procurement and contract office that two
existing awarded contracts for which its operating division, MSSI, currently
provides service at Walter Reed Army Medical Command will
terminate effective March 31 and June 30, 2005.




The
Company filed a Current Report on Form 8-K with the SEC on June 4, 2004
reporting the Company had entered into a definitive letter of intent to acquire
Voyage Data Corporation (“Voyage Data”), a Florida based systems integrator
which specializes in wireless security, management, and application development
with a focus on healthcare. IJJ will acquire all of the outstanding shares of
Voyage Data for a value of $2.1 million, which is a combination of stock and
debt.




There
were no other reports on Form 8-K filed with the SEC during the last quarter of
fiscal year ended October 31, 2004.




**ITEM
14. PRINCIPAL ACCOUNTANT FEES AND SERVICES**




The
information called for by Item 14 with respect to principal accountant fees and
services is incorporated herein by reference to the material under the caption
“Relationship with Independent Auditors” in our 2004 Proxy
Statement.





21





**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.




**Sun
      & Surf, Inc.****Dated:**February
      24, 2005
    By:
    /s/  Clifford
  PopeClifford PopePresident








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





**Dated:******February
      24, 2005
    By:
    /s/  Clifford
  PopeClifford PopePresidentDirector




**Dated:******February
      24, 2005
    By:
    /s/  Larry L.
  BrooksLarry L. BrooksVice PresidentDirector




**Dated:******February
      24, 2005
    By:
    /s/  Larry
  SwintonLarry SwintonDirector





22





IJJ
CORPORATION


(Formerly
Sun & Surf, Inc.)
 
 CONSOLIDATED
FINANCIAL STATEMENTS TOGETHER
WITH REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM OCTOBER
31, 2004 AND 2003
  **TABLE
OF CONTENTS**
 
 Report
      of Independent Registered Public Accounting Firm
    1Consolidated
      Balance Sheets as of October 31, 2004 and 2003
    2-3Consolidated
      Statements of Operations for the Years ended October 31, 2004 and
      2003
    4Consolidated
      Statements of Changes in Stockholders' Deficiency for the Years ended
      October 31, 2004 and 2003
    5Consolidated
      Statements of Cash Flows for the Years ended October 31, 2004 and
      2003
    6Notes
      to Consolidated Financial Statements
    7-18





****Schwartz
Levitsky Feldman llp**
CHARTERED
ACCOUNTANTS
TORONTO,
MONTREAL, OTTAWA**


REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the
Board of Directors and Stockholders of
IJJ
Corporation

We have
audited the accompanying consolidated balance sheets of IJJ Corporation as at
October 31, 2004 and 2003 and the related consolidated statements of operations,
cash flows and changes in stockholders’ equity for the years then ended. These
consolidated financial statements are the responsibility of the management of
IJJ Corporation. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our
opinion, these consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IJJ Corporation as
of October 31, 2004 and 2003 and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted accounting
principles in the United States of America.

The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 4(a) to the
consolidated financial statements, the Company has suffered significant losses
from operations and has recurring negative working capital that raise
substantial doubt about its ability to continue as a going concern. Management's
plans in regard to these matters are described in Note 2(b). The consolidated
financial statements do not include any adjustments that might result from the
outcome of this uncertainty. Should the company be unable to continue as a goingconcern,
certain assets and liabilities will have to be adjusted to their liquidated
values.

Toronto, Ontario,
Canada
    
    
    “SCHWARTZ LEVITSKY FELDMAN
    LLP”December
      10, 2004, except for note 12which
      is as of January 27, 2005
    
    Chartered Accountants


F-1
 **IJJ
CORPORATION**
 **(Formerly
Sun & Surf, Inc.)**
 
 **Consolidated
Balance Sheets**
 **(Amounts
expressed in US Dollars)**




****


At
      October
      31,2004
    
    At
      October
      31,2003CURRENT
      ASSETSCash
      and cash equivalent
    
    $
    171,972
    
    $
    255,178Investments
    
    
    3,098
    
    
    39,248Accounts
      receivable net of allowance for doubtful accounts (note 5)
    
    
    11,338
    
    
    605,255Factor's
      holdback receivable (note 5)
    
    
    3,956
    
    
    101,906Prepaid
      expenses
    
    
    16,750
    
    
    -0-Deferred
      income tax assets net of valuation allowances
    
    
    -0-
    
    
    1,976TOTAL
      CURRENT ASSETS
    
    
    207,114
    
    
    1,003,563PROPERTY
      AND EQUIPMENTFurniture
      and fixtures
    
    
    66,152
    
    
    62,603Equipment
    
    
    187,218
    
    
    182,557Software
    
    
    14,261
    
    
    -0-Leasehold
      improvements
    
    
    45,638
    
    
    41,638Accumulated
      depreciation
    
    
    (137,461
    )
    
    (81,917
    )NET
      PROPERTY AND EQUIPMENT
    
    
    175,808
    
    
    204,881OTHER
      ASSETSSecurity
      deposit
    
    
    9,500
    
    
    9,500Deferred
      income tax assets - long term (note 6)
    
    
    -0-
    
    
    17,605TOTAL
      OTHER ASSETS
    
    
    9,500
    
    
    27,105TOTAL
      ASSETS
    
    $
    392,422
    
    $
    1,235,549


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


F-2




IJJ
CORPORATION


(Formerly
Sun & Surf, Inc.)
 
 Consolidated
Balance Sheets
 (Amounts
expressed in US Dollars)
 AtOctober
      31, 2004
    
    
    AtOctober
      31, 2003LIABILITIESCURRENT
      LIABILITIESAccounts
      payable-trade
    
    $
    698,920
    
    $
    558,186Accrued
      liabilities
    
    
    505,419
    
    
    359,458Income
      tax liabilities
    
    
    24,728
    
    
    197,936Notes
      payable-current
    
    
    269,028
    
    
    250,000Deferred
      revenues
    
    
    59,730
    
    
    -0-TOTAL
      CURRENT LIABILITIES
    
    
    1,557,825
    
    
    1,365,580NOTES
      PAYABLE - LONG TERM (note 7)
    
    
    200,000
    
    
    -0-TOTAL
      LIABILITIES
    
    
    1,757,825
    
    
    1,365,580SHAREHOLDERS'
      DEFICIENCYCommon
      stock, $0.001 par value, 100,000,000 shares authorized, 21,530,000
      shares issued and outstanding
    
    
    21,530
    
    
    21,530Preferred
      stock, $0.001 par value, 10,000,000 shares authorized, no shares
      issued and outstanding
    
    
    -0-
    
    
    -0-Discount
      on common stock
    
    
    (18,830
    )
    
    (18,830
    )Accumulated
      deficit
    
    
    (1,368,103
    )
    
    (132,731
    )TOTAL
      SHAREHOLDERS' DEFICIT
    
    
    (1,365,403
    )
    
    (130,031
    )TOTAL
      LIABILITIES AND SHAREHOLDERS' DEFICIT
    
    $
    392,422
    
    $
    1,235,549
  ****


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


F-3




IJJ
CORPORATION
 (Formerly
Sun & Surf, Inc.)
 
 Consolidated
Statements of Operations
 (Amounts
expressed in US Dollars)


YEAR
      ENDED
      OCTOBER
      31, 2004
    
    YEAR
      ENDED
      OCTOBER
      31, 2003REVENUESales
    
    $
    1,352,252
    
    $
    4,771,162Services
    
    
    6,683,442
    
    
    4,963,283TOTAL
      REVENUE
    
    
    8,035,694
    
    
    9,734,445COSTS
      OF REVENUE
    
    
    5,389,635
    
    
    6,617,377GROSS
      PROFIT
    
    
    2,646,059
    
    
    3,117,068OPERATING
      EXPENSESSelling,
      general and administrative
    
    
    3,590,320
    
    
    2,459,029Interest
      and finance charges
    
    
    267,737
    
    
    142,538Depreciation
    
    
    55,545
    
    
    46,158TOTAL
      OPERATING EXPENSES
    
    
    3,913,602
    
    
    2,647,725NET
      (LOSS) INCOME FROM OPERATIONS
    
    
    (1,267,543
    )
    
    469,343OTHER
      EXPENSERecapitalization
      Costs (Note 1)
    
    
    (120,454
    )
    
    (453,606
    )TOTAL
      OTHER EXPENSE
    
    
    (120,454
    )
    
    (453,606
    )NET
      (LOSS) INCOME BEFORE INCOME TAXES
    
    
    (1,387,997
    )
    
    15,737Income
      taxes recovery (provision)
    
    
    152,625
    
    
    (13,950
    )NET
      (LOSS) INCOME AFTER INCOME TAXES
    
    $
    (1,235,372
    )
    $
    1,787WEIGHTED-AVERAGE
      COMMON SHARES OUTSTANDING
    
    
    21,530,000
    
    
    15,887,228(LOSS)
      EARNING PER SHARE
    
    $
    (0.06
    )
    $
    0.00





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




F-4




IJJ
CORPORATION
 (Formerly
Sun & Surf, Inc.)
 
 Consolidated
Statements of Changes in Shareholders' Deficiency
 (Amounts
expressed in US Dollars)
 YEAR
      ENDED
      OCTOBER
      31, 2004
    
    YEAR
      ENDED
      OCTOBER
      31, 2003COMMON
      STOCKOUTSTANDING
      SHARES NUMBERBeginning
      outstanding shares number
    
    
    21,530,000
    
    
    1,000Recapitalization
      pursuant to reverse acquisition
    
    
    
    
    
    21,529,000Ending
      outstanding shares number
    
    
    21,530,000
    
    
    21,530,000OUTSTANDING
      SHARES VALUE, par $0.001Beginning
      outstanding shares balance
    
    $
    21,530
    
    $
    1,000Recapitalization
      pursuant to reverse acquisition
    
    
    
    
    
    20,530Ending
      outstanding shares balance
    
    
    21,530
    
    
    21,530PAID-IN
      CAPITAL (DISCOUNT)Beginning
      paid-in capital (discount) balance
    
    $
    (18,830
    )
    $
    1,700Recapitalization
      pursuant to reverse acquisition
    
    
    
    
    
    (20,530
    )Ending
      paid-in capital (discount) balance
    
    $
    (18,830
    )
    $
    (18,830
    )ACCUMULATED
      DEFICITBeginning
      balance
    
    
    (132,731
    )
    
    (134,518
    )Net
      (loss) income
    
    
    (1,235,372
    )
    
    1,787Ending
      balance
    
    
    (1,368,103
    )
    
    (132,731
    )TOTAL
      SHAREHOLDERS' DEFICIT
    
    $
    (1,365,403
    )
    $
    (130,031
    )


The accompanying notes are an integral part of
these consolidated financial statements.
  F-5




IJJ
CORPORATION
 (Formerly
Sun & Surf, Inc.)
 
 Consolidated
Statements of Cash Flows
 (Amounts
expressed in US Dollars)
 YEAR
      ENDED
      OCTOBER
      31, 2004
    
    YEAR
      ENDED
      OCTOBER
      31, 2003CASH
      FLOWS FROM OPERATING ACTIVITIESNet
      (loss) income
    
    $
    (1,235,372
    )
    $
    1,787Adjustments
      to reconcile net (loss) to net cash (used) by operating
      activities:Depreciation
    
    
    55,545
    
    
    46,158Loss
      on sales of marketable securities
    
    
    6,035
    
    
    —Decrease
      in accounts receivable - trade
    
    
    593,917
    
    
    49,279Decrease
      (Increase) in factor's holdback receivable
    
    
    97,950
    
    
    (22,658
    )(Increase)
      in prepaid expenses
    
    
    (16,751
    )
    
    —Decrease
      (Increase) in net deferred income tax assets
    
    
    19,581
    
    
    (19,581
    )Increase
      (Decrease) in accounts payable - trade
    
    
    140,734
    
    
    (377,889
    )Increase
      in accrued liabilities
    
    
    145,961
    
    
    172,419(Decrease)
      (Increase) in income tax liabilities
    
    
    (173,208
    )
    
    30,495Increase
      in deferred revenue
    
    
    59,730
    
    
    —Net
      cash used by operating activities
    
    
    (305,878
    )
    
    (119,990
    )CASH
      FLOWS FROM INVESTING ACTIVITIESProceeds
      on sale of marketable securities
    
    
    39,362
    
    
    —Purchase
      of marketable securities
    
    
    (9,247
    )
    
    (988
    )Purchases
      of property and equipment
    
    
    (26,471
    )
    
    (45,186
    )Net
      cash provided by investing activities
    
    
    3,644
    
    
    (46,174
    )CASH
      FLOWS FROM FINANCING ACTIVITIESProceeds
      from notes payable
    
    
    465,228
    
    
    250,000Repayments
      of notes payable
    
    
    (246,200
    )Net
      cash provided by financing activities
    
    
    219,028
    
    
    250,000NET
      DECREASE IN CASH
    
    
    (83,206
    )
    
    83,836BEGINNING
      CASH - 10/31/2003
    
    
    255,178
    
    
    171,342ENDING
      CASH - 10/31/2004
    
    $
    171,972
    
    $
    255,178Income
      taxes paid
    
    
    —
    
    
    —Interest
      paid
    
    $
    222,870
    
    $
    133,376


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




F-6






**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**




1.
    NATURE
      OF BUSINESS AND BASIS OF PRESENTATIONA)
    Nature
      of Business




Sun &
Surf Inc. (“SSI”), a public corporation, was incorporated in the State of New
York on November 30, 2000.




At the
Annual Meeting of Shareholders held on February 17, 2004, SSI’s shareholders
approved the change of company name to IJJ Corporation (“IJJ”) and the
reincorporation of the company in the State of Delaware. IJJ was incorporated in
the State of Delaware on December 17, 2003 with the intention of reincorporating
SSI from the State of New York to the State of Delaware. The reincorporation is
effected pursuant to an Agreement and Plan of Merger (the “Merger Agreement”)
entered into by the company and IJJ on December 18, 2003. The merger took effect
upon the acceptance of the Certificate of Merger by the Secretary of State of
both the states of New York and Delaware on February 18, 2004 and February 17,
2004, respectively. In accordance with the Merger Agreement, SSI merged with and
into IJJ and the latter became the surviving entity resulting in the change of
name from Sun & Surf Inc. to IJJ Corporation.




Upon
completion of the reincorporation, each of the company’s shareholders as of the
record date of December 19, 2003 received one share of IJJ common stock for each
issued and outstanding  share of
SSI’s common stock. Each share of IJJ common stock owned by SSI was cancelled.




Each
share of SSI common stock issued and outstanding immediately prior to the merger
was cancelled without any merger consideration. All liabilities and obligations
of SSI that were not discharged became the liabilities and obligations of
IJJ.




As a
result of the reincorporation, SSI ceased its corporate existence in the State
of New York.




Management
Solutions & Systems Incorporated (“MSSI”) is an information technology
consulting firm incorporated in the State of Maryland in 1997. Its principal
activities are the sale of computer products, design and development of computer
systems, and systems technical support.




On
October 6, 2003, SSI entered into a Securities Exchange Agreement with MSSI. In
exchange for the acquisition of the 100% interest in MSSI, the shareholders of
MSSI were issued a total of 15,000,000 common shares of SSI. Following the share
exchange, the former shareholders of MSSI hold 69.67% of the 21,530,000 shares
of common stock of SSI. Consequently, even though SSI is the legal acquirer,
this transaction was treated as an acquisition of SSI by MSSI.




There
were no preferred shares, warrants or options as of acquisition
date.




After the
Securities Exchange Agreement was effected, SSI ceased its prior business
operations and only carries on the business of MSSI.




For
accounting purposes, the acquisition has been treated as a recapitalization of
SSI with MSSI as the acquirer. No goodwill or other intangibles were recognized
in connection with the acquisition.




Transaction
costs of $453,606 consisting of legal and management consultancy fees were
incurred as of October 31, 2003 relating to the reverse acquisition. During the
twelve-month period ended October 31, 2004, we incurred additional
recapitalization costs of $120,454.





The
consolidated financial statements as of October 31, 2004 and October 31, 2003
include the accounts of IJJ (formerly SSI and only from the date of the reverse
merger) and MSSI.






F-7





****


**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**




1.
    NATURE
      OF BUSINESS AND BASIS OF PRESENTATION (cont’d)B)
    Basis
      of Presentation2.
    GOING
      CONCERN ISSUES AND MANAGEMENT’S PLANS TO MITIGATEA)
    Going
      Concern Issues





Certain
principal conditions and events are prevalent which indicate that there could be
substantial doubt about the company’s ability to continue as a going concern for
a reasonable period of time. The Company’s financial condition for the
twelve-month period ended was adversely affected by three key factors: 1. its
selling, general and administrative expenses (“SG&A) increased by $1,131,291
or 46% for the period as the Company invested in new business development
resources and the infrastructure necessary to handle the requirements of a
publicly-held reporting entity; 2. its revenues decreased $1,698,751 or 17% for
the period as the Company was unable to offset the decline in its product
revenues with new service contract revenues; and 3. interest and finance
expenses were up $125,199 or 88% as the Company increased its reliance on
expensive accounts receivable factoring as its primary source of working
capital. As a result of these adverse impacts, the Company’s operations resulted
in a net loss, a deficiency in its working capital and a deficit in its
shareholders’ equity.




In the
current year, the Company recognized a deferred tax asset in the amount of
$456,592 for future income tax reductions resulting from current operating
losses available as carry-forwards to reduce future taxable income. However, a
valuation allowance of $476,173, reducing the expected benefit to $-0-, was
taken in this period because of uncertainty, resulting from the going concern
issues, that all or some portion of the deferred asset will be realized by
reduction of taxes payable on taxable income during the carry-forward
period.





B)
    Management’s
      Plan to Mitigate





To
address its adverse financial condition, the Company has begun a major
restructuring of operations which includes the followings actions: 1. decreasing
its SG&A through staff reductions, temporary salary cuts and reductions in
discretionary overhead costs; 2. putting in place payment plans with its
creditors to ensure timely payment of monthly obligations; 3. increasing its
emphasis on generating new revenues through a new capture management program; 4.
seeking less costly financing for its working capital; 5. converting two notes
payable to equity held by two of its minority shareholders; and 6. acquiring new
capital through debt and equity financings. The Company believes that its
financial condition will improve substantially as a result of implementing these
actions. Over the next twelve months, the Company believes that its internally
generated cash flow, in combination with said planned actions, will be
sufficient to meet its anticipated cash requirements and return the Company to
profitability. A successful turn-around leading to profits would allow for
realization of tax savings from carry-forward of net operating losses since the
Company’s deferred tax benefits do not expire until 2024, a period of twenty
years.





3.
    INTENT
      TO ACQUIRE VOYAGE DATA CORPORATION





On June
17, 2004, the company’s Board of Directors approved the issuance of a definitive
letter of intent (“LOI”) to acquire Voyage Data Corporation ("Voyage Data"), a
Florida based systems integrator which specializes in wireless security,
management, and application development with a focus on healthcare. The company
would acquire all of the outstanding shares of Voyage Data for a value of
$2,000,000, which consideration shall be a combination of 2,175,000 of
the company's common stock and a $1,000,000 promissory note secured by the
assets of Voyage Data. The note would be payable in 20 quarterly installments of
$50,000. Upon completion of the transaction, Voyage Data would become a
wholly-owned subsidiary of the company. The company would use the acquisition to
expand its current systems management and application development practice to
include the fast growing wireless sector and to expand into the commercial
healthcare marketplace to complement the company's Federal systems integration
activities. As part of the purchase, the company will acquire intellectual
property, client reference account, exclusivity, and strategic alliances from
Voyage Data.


F-8






**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**




On
October 18, 2004, the company’s Board of Directors approved a resolution calling
for a delay in making a decision as to proceed or not to proceed with the
transaction to allow more time to complete its due diligence process and to seek
terms and conditions in the deal that would be more favorable to the company.
The company would resume consideration of the transaction after March 31,
2005.




The costs
related to the acquisition that were incurred during the twelve-month period
ended October 31, 2004 totaled $106,490, and were comprised of a good faith
deposit of $50,000, legal fees of approximately $40,000 and miscellaneous
expenses of $16,490.





4.
    SUMMARY
      OF SIGNIFICANT ACCOUNTING
POLICIES





*A)*
    *GOING
      CONCERN*


**


These
consolidated financial statements have been prepared on the going concern basis,
which assumes the realization of assets and liquidation of liabilities and
commitments in the normal course of business. The application of the going
concern concept is dependent on the Company's ability to generate sufficient
working capital from operations and external investors. These consolidated
financial statements do not give effect to any adjustments should the Company be
unable to continue as a going concern and, therefore, be required to realize its
assets and discharge its liabilities in other than the normal course of business
and at amounts differing from those reflected in the consolidated financial
statements. Management plans to obtain sufficient working capital from
operations and external financing to meet the Company's liabilities and
commitments as they become payable over the next twelve months. There can be no
assurance that management's
plans will be successful. Failure to obtain sufficient working capital from
operations and external financing will cause the Company to curtail operations.
These consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.




*B)*
    *CASH
      AND CASH EQUIVALENTS*


Cash and
cash equivalents include cash on hand, amounts from and to banks, and any other
highly liquid investments purchased with a maturity of three months or less. The
carrying amount approximates fair value because of the short maturity of those
instruments.




*C)*
    *MARKETABLE
      AND OTHER SECURITIES*





F-9






**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**





4.
    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)





Marketable
securities consist principally of investments in shares of publicly traded
corporations and mutual funds. At October 31, 2004 and 2003, all of the
company’s investment in marketable securities were classified as
available-for-sale and were carried at fair market value, which approximated
cost. Fair market value is based on quoted market prices on the last day of the
year. The cost of the security is based upon the specific identification
method.






*D)*
    *SALE
      OF ACCOUNTS RECEIVABLE*




The
company adopted the provisions of Statement of Financial Accounting Standards
No. 140 “Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities”. Trade accounts receivable sold are removed from
the balance sheet at the time of sale.




*E)*
    *PROPERTY
      AND EQUIPMENT*




Property
and equipment are recorded at cost and are depreciated over their estimated
useful lives at the under-noted rates and methods:




Furniture
      and fixtures
    7
      years
    Straight-lineEquipment
    5
      years
    Straight-lineSoftware
    5
      years
    Straight
      lineLeasehold
      improvements
    5
      years
    Straight-line


Depreciation
for assets acquired during the year is recorded at one-half of the indicated
rates, which approximates when they were put into use.




*F)*
    *LONG-LIVED
      ASSETS*


The
Company adopted the provisions of SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of which has been
superseded by SFAS No. 144 [note 3 (k)]. SFAS No. 144 requires that long-lived
assets to be held and used by an entity be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset
may not be recoverable. Management used its best estimate of the undiscounted
cash flows to evaluate the carrying amount and have determined that no
impairment has occurred.




*G)*
    *LONG-TERM
      FINANCIAL INSTRUMENTS*


The fair
value of each of the company’s long-term financial assets and debt instruments
is based on the amount of future cash flows associated with each instrument
discounted using an estimate of what the company’s current borrowing rate for
similar instruments of comparable maturity would be.






F-10


****


****


**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**





4.
    SUMMARY
      OF SIGNIFICANT ACCOUNTING POLICIES
(cont’d)




*H)*
    *REVENUE
      RECOGNITION*





Revenues
are recognized when realized or realizable and earned. The company generates two
revenue streams: 1. sale of computer products, and 2. design and development of
network-based computer software applications and systems technical support and
call center management services. The company’s customer base is comprised of
U.S.-based Federal, state and local governments, including military and civil
agencies.




*1)* Computer
Product Sales
  The
company is an authorized reseller of brand-name IT products including hardware
and software, peripherals, office automation products, desktop and laptop
systems, and computer accessories. Revenue is recognized from the sale of these
products upon delivery, inspection and formal acceptance by customers. The
company’s customers formally acknowledge the acceptance of product deliveries by
completion of a form that acknowledges inspection and acceptance of the
shipment.
  *2)
Information Technology (“IT”) Services*
  Design
and Development of Network-based Computer Software Applications and Systems
Technical Support
  The
Company provides various IT professional services to its customers based on
negotiated fixed-price time and materials contracts. Customers are invoiced
monthly at fixed hourly rates for each hour of service provided. The company
recognizes services-based revenue from all of its contracts when the service has
been performed, the customer has approved the timesheets for the company’s
employee or contractor providing the service and an invoice has been generated
and collectibility is reasonably assured. For materials, the company recognizes
revenue upon delivery, inspection and acceptance by the customer.
  *Call
Center Management Services*
  The
Company provides call center management services to its customers on a firm
fixed-price basis. Customers are invoiced monthly at the contractual monthly
price. The company recognizes services-based revenue from its firm fixed-price
contracts when the service has been performed, an invoice has been generated and
collectibility is reasonably assured.
  ***i*** **)**  **Income
Taxes**
 The
company accounts for income taxes under the provisions of Statement of Financial
Accounting Standards No. 109, which requires recognition of deferred tax assets
and liabilities for the future tax consequences of events that have been
included in the financial statements or tax returns. Deferred income taxes are
provided using the liability method. Under the liability method, deferred income
taxes are recognized for all significant temporary differences between the tax
and financial statement bases of assets and liabilities.
  Current
income tax expense (recovery) is the amount of income taxes expected to be
payable (recoverable) for the current year. A deferred tax asset and/or
liability is computed for both the expected future impact of differences between
the financial statement and tax bases of assets and liabilities and for the
expected future tax benefit to be derived from tax losses. Valuation allowances
are established when necessary to reduce deferred tax asset to the amount
expected to be “more likely than not” realized in future returns. Tax law and
rate changes are reflected in income in the period such changes are
enacted.


F-11







**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**





4.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)
  **j)**  **Stock
Based Compensation**
 
 The
Company has adopted SFAS No. 123, Accounting for Stock-Based Compensation, as
amended by SFAS No. 148 which introduced the use of a fair value-based method of
accounting for stock-based compensation. It encourages, but does not require,
companies to recognize compensation expenses for stock-based compensation to
employees based on the new fair value accounting rules. The Company chose to
continue to account for stock-based compensation using the intrinsic value
method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for
Stock Issued to Employees”, and related interpretations. Accordingly,
compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company’s stock at the measurement date over the
amount an employee must pay to acquire the stock.
 
 In
December 2004, the FASB issued SFAS No. 123 (revised 2004) (SFAS 123R), *Share-Based
Payment.* The
company is currently evaluating SFAS 123R to determine which fair-value-based
model and transitional provision it will follow upon adoption. SFAS 123R will be
effective for the company beginning in its first quarter of fiscal 2006.
Although the company will continue to evaluate the application of SFAS 123R, the
company expects that adoption would not have a material impact on its results of
operation.
 
 **k** **)**  **Net
loss per share**
  Basic net
loss per share is computed by dividing the net loss applicable to common
stockholders by the weighted-average number of shares of common stock
outstanding for the year. Diluted earning (loss) per share reflects the
potential dilution that could occur if potentially dilutive securities were
exercised or converted to common stock. Diluted net loss per share for the year
was the same as the basic net loss per share as the company did not enter into
any transactions that resulted in dilution.
  ***l*** **)**  **Use
of Estimates**
  The
preparation of financial statements in conformity with generally accepted
accounting principles in the United States of America requires management to
make estimates and assumptions that affect certain reported amounts of assets
and liabilities and disclosures of contingent assets and liabilities at the date
of the revised financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates. These estimates are reviewed periodically and as adjustments become
necessary, they are reported in earnings in the period in which they become
known.
  ***m*** **)**  **Fair
Value of Financial Instruments**
  The
company’s financial instruments consist of cash, investments, accounts
receivable, accounts payable and accrued liabilities, and income taxes
recoverable/payable. Unless otherwise indicated, it is management’s opinion that
the Corporation is not exposed to significant interest rate or credit risk
arising from these financial instruments. The fair value of these financial
instruments approximates their carrying values.





F-12




**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**




4.  SUMMARY
OF SIGNIFICANT ACCOUNTING POLICIES (cont’d)


***n)***  ***Recent
Pronouncements (cont’)***
  SFAS No.
123 - Share-Based Payment. This Statement is a revision of FASB Statement No.
123, *Accounting
for Stock-Based Compensation* and ** supersedes
APB Opinion No. 25, *Accounting
for Stock Issued to Employees,* and its
related implementation guidance. This Statement focuses primarily on accounting
for transactions in which an entity obtains employee services in share-based
payment transactions.
  SFAS No.
123R - Share-Based Payment (revised 2004). SFAS 123R addresses the accounting
for share-based payment transactions in which an enterprise receives employee
services in exchange for (a) equity instruments of the enterprise or (b)
liabilities that are based on the fair value of the enterprise’s equity
instruments or that may be settled by the issuance of such equity instruments.
SFAS 123R eliminates the ability to account for share-based compensation
transactions using the intrinsic value method under APB Opinion No.
25, *Accounting for Stock Issued to Employees,* and
generally would require instead that such transactions be accounted for using a
fair-value-based method.
  SFAS No.
146 - Accounting for Cost Associated with Exit or Disposal Activities. SFAS 146
requires companies to recognize costs associated with exit or disposal
activities when they are incurred rather than at the date of a commitment to an
exit or disposal plan. Previous accounting guidance was provided by Emerging
Issues Task Force (“EITF”) Issue No. 94-3. SFAS 146 replaces EITF94-3. The
Statement is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002.
  SFAS
No.147 - Acquisition of certain Financial Institutions, an amendment of SFAS 72
and 144 and SFAS interpretation number 9 issued October 2002 and relates to
acquisitions of financial institutions.
  SFAS No.
148 - Accounting for Stock Based Compensation-Transition and Disclosure, an
amendment of SFAS 123 issued December 2002 and permits two additional transition
methods for entities that adopt the fair value based method of accounting for
stock based employee compensation to avoid the ramp-up effect arising from
prospective application. This statement also improves the prominence and clarity
of the pro-forma disclosures required by SFAS 123.
  SFAS No.
149 - Amendment of Statement 133 on derivative instruments and hedging
activities. This statement amends and clarifies financial accounting and
reporting for derivative instruments embedded in other contracts (collectively
referred to as derivatives) and for hedging activities under FASB 133 accounting
for derivative instruments and hedging activities.
  SFAS No.
150 - Accounting for certain financial instruments with characteristics of both
liabilities and equity. This statement establishes standards for how an issuer
classifies and measures certain financial instruments with characteristics of
both liabilities and equity.
  SFAS 151
- Inventory Costs. This Statement is effective for inventory costs incurred
during fiscal years beginning after June 15, 2005. Earlier application is
permitted for inventory costs incurred during fiscal years beginning after
November 24, 2004. The provisions of this Statement should be applied
prospectively.
 
 SFAS 152
- Accounting for Real Estate Time-Sharing Transactions. This Statement is
effective for financial statements for fiscal years beginning after June 15,
2005. Restatement of previously issued financial statements is not
permitted.
 
 SFAS 153
- Exchanges of Non-monetary Assets. The provisions of this Statement are
effective for non-monetary asset exchanges occurring in fiscal periods beginning
after June 15, 2005. Earlier application is permitted for non-monetary asset
exchanges occurring in fiscal periods beginning after December 16, 2004. The
provisions of this Statement should be applied prospectively.
 
 IJJ
believes that the above standards, except for SFAS No. 123R (see Note 4 j) would
not have a material impact on its financial position, results of operations or
cash flows.


F-13





**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**





5.
    ACCOUNTS
      RECEIVABLE




2004$
    
    
    2003$Accounts
      receivable, gross
    
    
    1,441,375
    
    
    1,848,217Less:
      Allowance for doubtful accounts
    
    
    142,415
    
    
    -Less:
      Invoices sold and assigned
    
    
    1,287,622
    
    
    1,242,962Accounts
      receivable, net
    
    
    11,338
    
    
    605,255





The
company carries accounts receivable at the amount it deems to be collectible.
Accordingly, the company provides allowances for accounts receivable it deems to
be uncollectible based on management’s best estimates. Recoveries are recognized
in the period they are received. The ultimate amount of accounts receivable that
becomes uncollectible could differ from those estimated.




The
company has an existing $2,000,000 credit facility agreement with a financial
institution. Under this agreement, the financing source provides advances of up
to 85% of the company’s acceptable accounts receivable that are sold and
assigned. These accounts receivables are sold with recourse against the company.
Consequently, the company is contingently liable for any amounts advanced for
accounts receivable sold and assigned that are subsequently considered
uncollectible. The company has not historically experienced significant credit
losses with respect to receivables sold and, as such, no liability was
recognized.




The
financing facility is secured by liens on company’s accounts receivable and by
personal guarantees of its principal shareholders. Interest is calculated at
prime rate plus 1% on the daily average balance of unpaid accounts sold plus a
0.95% monthly fee of such average balance.




Costs
related to accounts receivable sold amounted to $222,870 and $133,376 in 2004
and 2003, respectively.







F-14









**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**







6.
    DEFERRED
      TAX ASSETS AND LIABILITIES





Deferred
income tax assets or liabilities reflect the estimated future tax effects
attributable to temporary differences between amounts reported in the financial
statements and those reported in the tax returns and carry-forwards of certain
amounts deductible in future tax returns and credits against future tax
liabilities. A valuation allowance is used to reduce the carrying value of
deferred tax assets when it is uncertain that all or a portion of such asset
will be realized by a reduction of taxes payable on taxable income in the
periods available for carry-forward of  tax
return net operating losses.




Temporary
differences and carry-forwards that give rise to the deferred tax assets and
liabilities at October 31, and the related allowance for uncertainty are as
follows:





2004
    
    2003$
    
    $Deferred
      tax assets:Intangible
      assets deductions
    
    
    17,538
    
    
    21,850Plant
      & equipment deductions
    
    
    4,351Tax
      loss carry-forwards
    
    
    454,264Total
      deferred tax assets
    
    
    476,153
    
    
    21,850Deferred
      tax liabilities:Plant
      and equipment deductions
    
    
    0
    
    
    2,269Total
      deferred tax liabilities
    
    
    0
    
    
    2,269Deferred
      tax asset net before allowance
    
    
    476,153
    
    
    19,581Less:
      Allowance for uncertain realization
    
    
    (476,173
    )
    
    0Total
      deferred tax asset net
    
    
    0
    
    
    19,581Classification
      in the consolidated balance sheets:Deferred
      income tax benefit - current
    
    
    0
    
    
    1,976Deferred
      income tax benefit - non-current
    
    
    0
    
    
    17,605Total
      deferred tax asset
    
    
    0
    
    
    19,581


****








F-15


****


**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**





The
Company has approximately $987,529 of operating loss carry-forwards, arising
from the current and prior fiscal years, remaining to offset future taxable
income. Of that amount, $299,427 expires in fiscal year 2024 and $688,102
expires in fiscal year 2025.




7.
    NOTES
      PAYABLE


At October 31, 2004
    
    At October 31, 2003An
      unsecured note with interest rate of 15%, per annum (5% prior to October
      31, 2003) payable to a corporation controlled by a minority shareholder
      and is payable on demand. The Company is in the process of renegotiating
      this note with the lender to restructure an extension of the maturity
      date.
    
    $
    100,800
    
    $
    250,000Partial
      advances of a $250,000 convertible promissory note payable to a minority
      shareholder. The note bears interest rate at 6%, per annum and payable on
      demand after December 30, 2005. Conversion of the unpaid principal and
      interest balances into the Company's common stock shares is exercisable at
      the option of the Company during the period commencing 30 days prior to
      the demand date and based on the closing price of the common stock on that
      conversion date.
    
    
    110,000
    
    
    -0-A
      convertible promissory note payable to a minority shareholder with a
      maturity date of December 30, 2005, with an interest rate of 6%, per
      annum. Conversion of the unpaid principal and interest balances into the
      Company's common stock shares is exercisable at the option of the Company
      anytime during the period commencing 30 days prior to the demand date and
      based on the closing price of the common stock on that conversion
      date.
    
    
    90,000
    
    
    -0-A
      note payable to a trade supplier, non-interest bearing, payable in monthly
      installments of $20,000 with a final payment of $23,188 on August 19,
      2004. The note resulted from a conversion of accounts payable totaling
      $113,188. The Company is in the process of renegotiating this note for an
      extension of maturity date.
    
    
    63,188
    
    
    -0-A
      note payable to a trade supplier, non-interest bearing, payable in monthly
      installments of $32,000 each beginning August 15, 2004 to December 15,
      2004. The note resulted from a conversion of accounts payable totaling
      $152,040.
    
    
    105,040
    
    
    -0-TOTAL
      NOTES PAYABLE
    
    
    469,028
    
    
    250,000LESS:
      CURRENT PORTION
    
    
    269,028
    
    
    250,000NOTES
      PAYABLE - LONG TERM
    
    $
    200,000
    
    $
    —All
      of the long term portion becomes payable in December 2005.Interest
      expense related to these notes were $27,661 and nil for the year ended
      2004 and 2003, respectively.


8.  SEGMENTED
INFORMATION
 
 IJJ
Corporation has two reportable segments: product sales and information
technology (“IT”) services, which include the design and development of
network-based computer software applications, systems technical support and call
center management. All sales are generated in the United States and 90% of its
sales are to Federal, state and local governments while the 10% of sales are to
commercial customers. The product sales segment includes revenues from the
company’s activities as a reseller of computer products to customers in Federal,
state and local governments. Such products include workstations, laptop and
desktop computing devices, printers, peripherals and a host of other products
used in network-based systems. The company purchases its products for resale
from distributors and manufacturers, and the company arranges for shipment of
products directly from its suppliers to its customers so as to eliminate the
need to maintain an inventory. The services segment provides network-based IT
support, software development and management of call center operations. The
company’s services revenue are generated principally through sales to Federal,
state and local customers, and the associated revenues are structured as service
contracts that are based on either fixed pricing or time and materials pricing.
The company’s service contracts are generally for an initial one-year period of
performance and include option years (up to four years) that are exercisable by
its customers.
 
 The
company’s accounts receivable are maintained on a segmented basis. At October
31, 2004 accounts receivable on a gross basis were $1,441,375, of which, product
sales represented $12,569 or approximately one percent and services represented
$1,428,806 or approximately 99%.. At October 31, 2003, accounts receivable on a
gross basis were $1,848,217 and product sales totaled $1,174,791 or
approximately 64% and services totaled $673,426 or approximately 36%. All other
assets for the company are reported at the corporate level.
 
 The
accounting policies of the segments are the same as those described in Note 4 -
Summary of Significant Accounting Policies. The company evaluates performance
based on profit or loss from operations to arrive at net income or loss for the
reportable segments. The company does not allocate income taxes or extraordinary
items in its segments.
 
 The
company accounts for inter-segment sales and transfers as if the sales or
transfers were to third parties, that is, at current market prices. For the
periods covered in this report, the company had no inter-segment
sales.
 
 The
company’s reportable segments are strategic business units that offer different
products and services. They are managed separately because each business require
different technology and marketing strategies. All of the businesses were
acquired as part of the stock exchange transaction with the shareholders of
Management Solutions and Systems, Inc (refer to Note 1. a) - Nature of
Business


F-16


**IJJ
CORPORATION**
 **(Formerly
Sun & Surf Inc.)**
 **Notes
to Consolidated Financial Statements**
  **October
31, 2004 and 2003**
  **(Amounts
expressed in US Dollars)**


8.  SEGMENTED
INFORMATION (Cont’d)
 
 Year
      2004Product

      Sales
    
    
    Services
    
    
    CorporateItems
    
    
    IJJConsolidatedRevenue
    
    
    1,352,252
    
    
    6,683,442
    
    
    -
    
    
    8,035,694Costs
      of Revenue
    
    
    1,280,799
    
    
    4,108,836
    
    
    -
    
    
    5,389,635Gross
      Profit
    
    
    71,453
    
    
    2,574,606
    
    
    -
    
    
    2,646,059Operating
      Expenses:Selling,
      general & administrative
    
    
    198,050
    
    
    3,325,490
    
    
    66,780
    
    
    3,590,320Interest
      and finance charges
    
    
    7,230
    
    
    260,507
    
    
    -
    
    
    267,737Depreciation
    
    
    1,500
    
    
    54,045
    
    
    -
    
    
    55,545Total
      Operating Expenses
    
    
    206,781
    
    
    3,640,042
    
    
    66,780
    
    
    3,913,602Net
      (Loss) Income From Operations
    
    
    (135,327
    )
    
    (1,065,436
    )
    
    (66,780
    )
    
    (1,267,543
    )Other
      ExpenseRecapitalization
      Costs
    
    
    -
    
    
    -
    
    
    120,454
    
    
    120,454Total
      Other Expense
    
    
    -
    
    
    -
    
    
    120,454
    
    
    120,454Net
      (Loss) Income Before Income Taxes
    
    
    (135,327
    )
    
    (1,065,436
    )
    
    (187,234
    )
    
    (1,387,997
    )
  F-17
  **IJJ
CORPORATION**
 **(Formerly
Sun & Surf Inc.)**
 **Notes
to Consolidated Financial Statements**
  **October
31, 2004 and 2003**
  **(Amounts
expressed in US Dollars)**
   8.  SEGMENTED
INFORMATION (Cont’d)
 Year
      2003Product

      Sales
    
    
    Services
    
    
    CorporateItems
    
    
    IJJConsolidatedRevenue
    
    
    4,771,162
    
    
    4,963,283
    
    
    -
    
    
    9,734,445Costs
      of Revenue
    
    
    3,752,966
    
    
    2,864,411
    
    
    -
    
    
    6,617,377Gross
      Profit
    
    
    1,018,196
    
    
    2,098,872
    
    
    -
    
    
    3,117,068Operating
      Expenses:Selling,
      general & administrative
    
    
    692,789
    
    
    1,766,240
    
    
    -
    
    
    2,459,029Interest
      and finance charges
    
    
    46,560
    
    
    95,978
    
    
    -
    
    
    142,538Depreciation
    
    
    15,078
    
    
    31,080
    
    
    -
    
    
    46,158Total
      Operating Expenses
    
    
    754,427
    
    
    1,893,298
    
    
    -
    
    
    2,647,725Net
      (Loss) Income From Operations
    
    
    263,769
    
    
    205,574
    
    
    -
    
    
    469,343Other
      ExpenseRecapitalization
      Costs
    
    
    -
    
    
    -
    
    
    453,606
    
    
    453,606Total
      Other Expense
    
    
    -
    
    
    -
    
    
    453,606
    
    
    453,606Net
      (Loss) Income Before Income Taxes
    
    
    263,769
    
    
    205,574
    
    
    (453,606
    )
    
    15,737




F-18




**IJJ
CORPORATION**


**(Formerly
Sun & Surf Inc.)**


**Notes
to Consolidated Financial Statements**




**October
31, 2004 and 2003**




**(Amounts
expressed in US Dollars)**




9.
    LEASE
      COMMITMENT


Rental of
office space under operating lease amounted to approximately $60,000 in 2004 and
$63,000 in 2003.




The
approximate minimum rental payments required under the lease agreement that
expires in February 2007 are as follows:




Payable
during the following periods:


Within
      one year
    
    $
    60,300Over
      one year but not exceeding two years
    
    
    62,100Over
      two years but not exceeding three years
    
    
    26,300$
    148,700


10.
    ECONOMIC
      DEPENDENCE AND CONCENTRATION OF CREDIT
  RISKS


The
company’s revenues are derived from sales of goods and services to the different
departments of the various government agencies. The loss of these customers
could have a material adverse effect on operations. The majority of the
company’s receivables as of October 31, 2004 and October 31, 2003 represents
sales to these customers. The company’s receivables are unsecured and are
generally due in 30 days.


11.
    STOCK
      OPTION PLAN


At the
Annual Meeting of shareholders held on February 17, 2004, the Company's
shareholders approved the adoption of the IJJ Corporation 2004 Stock Option
Plan. Eligible participants under the plan include key employees, directors and
advisors of the Company and its subsidiaries. The options are not assignable or
transferable and will expire ten years after the grant date. The purchase price
of the common shares under the plan must be equal to the fair market value of
the Company common stock at the time the option is granted or higher as may be
determined by the Plan Committee or the Board of Directors at the time of grant.
The maximum aggregate number of shares of common stock that may be issued and
sold under the plan is 10,000,000. The maximum aggregate number of shares issued
under the plan during any given year must not exceed 10% of the total
outstanding shares of the company during such calendar year. As of October 31,
2004, no options have been granted.


12.
    SUBSEQUENT
      EVENTS

On
November 24, 2004 the company issued a promissory note to a trade supplier in
the amount of $64,136 to cover our past due accounts payable balance. The note
bears interest at the rate of seven percent, per annum, and calls for payments
beginning December 30, 2004 and ending November 30,
2008.





On
December 15, 2004 the company issued a promissory note to a trade supplier in
the amount of $11,310 to cover our past due accounts payable balance. The note
bears interest at the rate of fifteen percent, per annum, and calls for payments
beginning January 1, 2005 and ending August 1, 2005.




On
December 28, 2004 the company issued a promissory note to a trade supplier in
the amount of $91,247 to cover our past due accounts payable balance. The note
bears interest at the rate of eighteen percent, per annum, and calls for
payments beginning January 18, 2005 and ending September 18, 2005.





On
January 27, 2005 the company issued a promissory note to a professional services
supplier in the amount of $123,855 to cover our past due accounts payable
balance. The note bears no interest and calls for payments beginning February
28, 2005 and ending December 31, 2006.






F-18