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


                                   Form 10-KSB
              Annual report pursuant to Section 13 or 15(d) of the
                  Securities Exchange Act of 1934, as amended
                  For the fiscal year ended September 30, 2003

                         Commission File Number 0-27842

                                  Colmena Corp.
               (Name of Small Business Registrant in its charter)

     Delaware (State or other jurisdiction of incorporation or organization)

               54-1778587 (I.R.S. Employer Identification Number)

                  101 SW 11th Avenue; Boca Raton, Florida 33486
           (Address of principal executive offices including zip code)

                 (561) 392-6010 (Registrant's telephone number)

         2500 N. Military Trail, Suite 225-C; Boca Raton, Florida 33431
                        (Former address of our Company)

           Securities registered under Section 12(b) of the Act: None

    Title of each class: None Name of each exchange on which registered: None

              Securities Registered under Section 12(g) of the Act:
                 Common Stock, $0.01 par value (Title of Class)

     Check whether the Registrant (1) filed all reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934, as amended,  during
the past  twelve  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: All reports prior to report date  (September
30, 2003) have been filed. Yes [X] No []

     Check if there is no disclosure  of  delinquent  filers in response to Item
405 of  Regulation  S-B  contained  in  this  form,  and no  disclosure  will be
contained,  to the best of the  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]

     State Registrant's  revenues for its most recent fiscal year: $ 0 (for year
ended September 30, 2003)

     State the aggregate market value of the voting stock held by non-affiliates
computed by reference  to the price at which the stock was sold,  or the average
bid and asked  prices of such stock,  as of a specified  date within the past 60
days:  $412,305,  based on a last transaction price of $0.011 as of December 30,
2003, there being  40,822,254  shares of common stock held by persons other than
officers, directors or control persons of the Registrant on such date.

     State the number of shares outstanding of each of the Registrant's  classes
of  equity,  as of the latest  practicable  date:  124,145,663  shares of common
stock, as of December 30, 2003.

<PAGE>
                             Available Information.

     The public may read and copy any  materials  filed by Colmena  Corp.  ("our
Company") with the Securities and Exchange  Commission (the "Commission") at the
Commission's Public Reference Room at 450 Fifth Street,  Northwest,  Washington,
D.C.  20549.  The public may obtain  information  on the operation of the Public
Reference  Room by calling the  Commission  at  1-800-SEC-0330.  The  Commission
maintains  an  Internet  site  that  contains  reports,  proxy  and  information
statements,  and other information  regarding our Company and other issuers that
file reports electronically with the Commission, at http://www.sec.gov.

                 Caveat Pertaining to Forward Looking Statements

     The  Private  Securities  Litigation  Reform  Act of 1995  provides a "safe
harbor" for  forward-looking  statements.  Certain of the  statements  contained
herein,  which are not historical  facts,  are  forward-looking  statements with
respect to events,  the  occurrence of which  involve  risks and  uncertainties.
These  forward-looking   statements  may  be  affected,   either  positively  or
negatively,  by various factors.  Information  concerning potential factors that
could affect our Company is detailed from time to time in our Company's  reports
filed with the  Commission.  This  report  contains  forward-looking  statements
relating to our  Company's  current  expectations  and  beliefs.  These  include
statements   concerning   operations,   performance,   financial  condition  and
anticipated  growth.  For this purpose,  any  statements  contained in this Form
10-KSB  that  are  not  statements  of  historical   fact  are   forward-looking
statements.  Without  limiting the  generality of the  foregoing,  words such as
"may", "will", "expect", "believe", "anticipate", "intend", "could", "estimate",
or  "continue",  or the  negative  or  other  variation  thereof  or  comparable
terminology,   are  intended  to  identify  forward-looking  statements.   These
statements by their nature involve  substantial risks and uncertainties that are
beyond our Company's control. Should one or more of these risks or uncertainties
materialize  or should our Company's  underlying  assumptions  prove  incorrect,
actual outcomes and results could differ  materially from those indicated in the
forward-looking statements.


                                Table of Contents

Part     Item     Page
Number   Number   Number   Caption

I        1        3        Description of Business
         2        4        Description of Property
         3        4        Legal Proceedings
         4        4        Submission of Matters to a Vote of Security Holders

II       5        4        Market for Common  Equity and  Related
                           Stockholder Matters
         6        18       Management's   Discussion   and  Analysis  or  Plan
                           of Operations
         7        21       Financial Statements
         8        46       Changes  In  and  Disagreements  With Accountants  on
                           Accounting and Financial Disclosure
         8A       46        Controls & Procedures

III      9        46       Directors, Executive Officers, Promoters and Control
                           Persons; Compliance With Section 16(a) of the
                           Exchange Act
         10       50       Executive Compensation
         11       52       Security  Ownership  of Certain Beneficial Owners and
                           Management and Related Stockholder Matters
         12       55       Certain Relationships and Related Transactions
         13       56       Exhibits and Reports on Form 8-K

Signatures        57

Certifications    59-60

Additional Information  58

                                        2
<PAGE>

                                    PART I

ITEM 1.                    DESCRIPTION OF BUSINESS

     Pursuant  to  Rule  12b-23,  the  information  called  for  by  Item  1  is
incorporated by reference from the  corresponding  Item in our Company's  annual
reports to security  holders on Form 10-KSB for the years  ended  September  30,
2002 and September 30, 2001, and is supplemented as follows:

     In February 2003, our Company  settled an $14,132 claim by Citicorp  Diners
Club for $10,000. We also settled a $7,299 claim by Federal Express for $5,000.

     On August 25, 2003,  our Company  settled its remaining  debt with Deutsche
Financial Services Corporation (now known as GE Commercial  Distribution Finance
Corporation) ("Deutsche/GE").  Our company issued 4,000,000 shares of its common
stock to settle the balance on a  promissory  note in the amount of $68,750 plus
accrued  interest of $2,241,  making  Deutsche/GE  one of our Company's  largest
shareholders.  A copy of the  settlement  agreement was filed with our Company's
report on Form 8-K dated September 12, 2003.

     Our Company has now settled all outstanding claims with its creditors.

     Our Company no longer  maintains any agreements with The Yankees  Companies
or its  members  -- the Tucker  Family  Spendthrift  Trust and the Calvo  Family
Spendthrift  Trust -- and the Trusts ceased providing  funding to our Company as
of July 25, 2003. In order to fund short-term  capital  requirements  during the
report period, our Company concluded several private placements of shares of its
common stock. See Part II, Items 6 and 7 below, incorporated herein by reference
pursuant to Rule 12b-23.

     The Bernstein Project  (described in Part 1, Item 1 of our Company's report
on Form 10-KSB for the year ended  September  30, 2002,  incorporated  herein by
reference),  never  resulted  in a  letter  of  intent,  and  negotiations  were
discontinued  in January 2003. The subsidiary our Company formed for purposes of
this project was dissolved in September 2003.

     On February  21,  2003,  our Company  signed a letter of intent with Matrix
International,  Inc. and the Global Group. See our Company's report on Form 8-K,
filed on February 27, 2003,  incorporated  herein by reference  pursuant to Rule
12b-23.  The  letter  of  intent  never  resulted  in  a  signed  reorganization
agreement,  and the letter of intent  was  terminated  on May 5,  2003.  See our
Company's  report  on Form 8-K,  filed on May 8,  2003,  incorporated  herein by
reference pursuant to Rule 12b-23.

     Although our Company  discussed  providing  consulting  services to several
companies  during  the  report  period,  our  Company  did not  enter  into  any
consulting  agreements,  and there were no active discussions with any companies
concerning consulting activities as of the report date.

     As a material  subsequent  event, on October 15, 2003, our Company signed a
letter of intent with National  ComTel  Network  Inc., a California  corporation
engaged in the business of providing telecommunications services to business and
residential users (the "Letter" and "National ComTel," respectively).  A copy of
the Letter was filed as an exhibit to our report of Form 8-K filed  November  3,
2003, incorporated herein by reference. Pursuant to the terms of the Letter, our
Company  intends to acquire all of the securities of National ComTel in exchange
for  51% of the  outstanding  common  stock  of our  Company  as of the  date of
closing. As a result of this proposed transaction,  National ComTel would become
a wholly owned subsidiary of our Company.

                                       3
<PAGE>

     At the end of 12 months following  closing,  if National ComTel achieves at
least 90% of its profit  projections for that time period,  National ComTel will
receive  additional  shares of common stock so as to give National ComTel 70% of
our Company's outstanding common stock at that time. The proposed acquisition is
subject to the  condition  precedent  that all material  executive  officers and
directors  for  National  ComTel  will enter  into  employment  agreements  with
National ComTel on terms satisfactory to our Company.

     The parties hope to sign an  acquisition  agreement in early  February 2004
and complete  closing on the  transaction  sometime  during the first quarter of
2004.  See our  Company's  report  on Form  8-K  filed  December  29,  2003  and
incorporated  herein by reference  pursuant to Rule 12b-23. No assurances can be
provided,  however,  that the  proposed  transaction  will be  effected  or,  if
effected,  that the actual terms will not vary  materially  from those described
above.  If the  transaction  is  effected,  the Company  will  provide  detailed
information in a report on Form 8-K.

     Our  Company  has not been  involved  in any  bankruptcy,  receivership  or
similar proceeding.


ITEM 2.                    DESCRIPTION OF PROPERTY.

     Our Company's four part-time officers (President, Vice President/Secretary,
Chief Financial  Officer,  and Counsel) are all independent  contractors and, as
such, provide their own office  facilities.  Our Company maintains its executive
offices at the offices of our  Company's  President  (101 SW 11th  Avenue;  Boca
Raton,  Florida 33486).  Our Company  anticipates  that these facilities will be
adequate  for its  needs  unless  it  resumes  operations  under  the  BellSouth
Agreement  or engages in a material  acquisition,  in which case it  anticipates
that additional facilities would be obtained.

     Our Company  does not  maintain,  and has no  intention  to  maintain,  any
investment  policies  in real  estate as  described  in Item  102(b),  Reg.  ss.
228.102(b).

ITEM 3.                    LEGAL PROCEEDINGS.

     Our  Company  was not a party to any legal  proceedings  during  the report
period.

     On or about March 3, 2003, the Commission  notified our Company that it was
conducting an informal  investigation  into the trading of the securities of our
Company  by  unspecified  persons.  Our  Company  has not been  notified  of any
material developments in that informal investigation.


ITEM 4.                    SUBMISSION OF MATTERS TO SECURITY HOLDERS.

     No matter  was  submitted  during the  fourth  quarter  of the fiscal  year
covered by this report to a vote of security  holders,  through the solicitation
of proxies or otherwise.

                                       4
<PAGE>
                                     PART II

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

                  Market Information.

     During the report  period,  our  Company's  common  stock was traded in the
over-the-counter  market and quoted on the over-the-counter  electronic bulletin
board operated by NASD (the "OTC Bulletin  Board").  Bid, offer and  transaction
report  prices for our  Company's  common stock were  available  through the OTC
Bulletin Board under the symbol CLME.

     Because of the lack of readily available quotations and the limited trading
volume  frequently  associated  with  over-the-counter  securities,  there  is a
greater risk of market  volatility of such securities than for securities traded
on  national  exchanges.  The  following  over-the-counter   quotations  reflect
inter-dealer prices, without retail mark-up, mark-down, or commissions,  and may
not necessarily  represent actual  transactions.  The range of the reported high
and low bid quotations have been derived  primarily from  information  quoted on
the OTC Bulletin  Board.  The following  table sets forth the quarterly high and
low bid prices (to the nearest  $0.125) of our  Company's  common  stock for the
years ended September 30, 2002 and September 30, 2003.


Year Ended September 30, 2002
                                                         High              Low
                                                   Transaction       Transaction
                      High              Low              Price             Price

First Quarter         $0.24            $0.03              $0.24            $0.03
Second Quarter        $0.10            $0.03              $0.10            $0.03
Third Quarter         $0.12            $0.03              $0.12           $0.035
Fourth Quarter        $0.10            $0.01              $0.10            $0.01


Year Ended September 30, 2003
                                                          High              Low
                                                   Transaction       Transaction
                      High              Low              Price             Price

First Quarter         $0.04            $0.01              $0.04            $0.01
Second Quarter        $0.11            $0.02              $0.11            $0.02
Third Quarter         $0.03            $0.02              $0.03            $0.02
Fourth Quarter        $0.03            $0.02              $0.03            $0.02


     As of  September  30,  2003,  seven NASD member firms were listed as market
makers in our Company's  common stock:  Wien  Securities;  MH Meyerson;  Charles
Schwaab; Frankel; V Finance; GVRC; and Brokerage America. The transfer agent for
our Company's common stock is American Stock Transfer & Trust Company, 59 Maiden
Lane; New York, New York 10007.

                                       5
<PAGE>

Penny Stock Rules

     Our  Company's  securities  are, as of the date of this report,  subject to
regulation  as  "Penny  Stocks."  While  our  Company  hopes  that  its  planned
acquisition  program and funds from the sale of its  securities  will remove its
shares from such  category,  it can provide no assurances  that its efforts will
prove successful.

     Exchange  Act  Section  15(g)  requires  brokers  and  dealers to make risk
disclosures to customers before effecting any transactions in "penny stocks." It
also directs the  Commission to adopt rules setting forth  additional  standards
for disclosure of information concerning transactions in penny stocks.

     Penny stocks are low-priced,  over-the-counter securities that are prone to
manipulation  because of their price and a lack of reliable  market  information
regarding  them.  Under  Section  3(a)(51)(A)  of the  Exchange  Act, any equity
security is considered to be a "penny stock" unless that security is:


(i) registered and traded on a national  securities  exchange meeting  specified
Commission criteria:

(ii) authorized for quotation on the National Association of Securities Dealers,
Inc.'s ("NASD") automated inter-dealer quotation system ("NASDAQ"):

(iii) issued by a registered investment company:

(iv) excluded,  on the basis of price or the issuer's net tangible assets,  from
the definition of the term by Securities and Exchange Commission rule: or

(v) excluded from the definition by the Securities and Exchange Commission.

     Pursuant to Section  3(a)(51)(B),  securities  that  normally  would not be
considered penny stocks because they are registered on an exchange or authorized
for quotation on NASDAQ may be designated as penny stocks by the  Securities and
Exchange  Commission  if the  securities  are  traded  off  the  exchange  or if
transactions  in the  securities  are  effected  by market  makers  that are not
entering quotations in NASDAQ.

     Rule 3a51-1 was adopted by the Securities  and Exchange  Commission for the
purpose of  implementing  the  provisions  of  Section  3(a)(51).  Like  Section
3(a)(51),  it defines penny stocks by what they are not. Thus, the rule excludes
from the definition of penny stock any equity security that is:

         (A)    a "reported" security:

         (B)    issued by an investment company registered under the 1940 Act:

         (C)    a put or call option issued by the Options Clearing Corporation:

         (D)    priced at five dollars or more:

         (E)    subject to last sale reporting: or

         (F)    whose issuer has assets above a specified amount.

     Rule  3a51-1(a)  excludes  from the  definition  of penny  stock any equity
security that is a "reported security" as defined in Rule 11Aa3-1(a). A reported
security is any exchange-listed or NASDAQ security for which transaction reports
are  required  to  be  made  on a  real-time  basis  pursuant  to  an  effective
transaction  reporting  plan.  Securities  listed on the New York Stock Exchange
(the "NYSE"), certain regional exchange-listed securities that meet NYSE or Amex
criteria,   and  NASDAQ  National  Market  System  ("NMS")  securities  are  not
considered  penny  stocks.   (Release  No.  30608,  Part  III.A.1).   Generally,
securities  listed on the American Stock  Exchange (the "Amex")  pursuant to the
Amex's original and junior tier or its "Emerging  Company  Marketplace"  listing
criteria,  are not  considered  penny  stocks.  Securities  listed  on the  Amex
pursuant  to its  Emerging  Companies  Market  ("ECM")  criteria,  however,  are
considered to be "penny stock" solely for purposes of Exchange Act 15(b)(6).

                                       6
<PAGE>

     Rule 3a51-1(d) excludes securities that are priced at five dollars or more.
Price, in most cases, will be the price at which a security is purchased or sold
in  a  particular  transaction,  excluding  any  broker  commission,  commission
equivalent,  mark-up, or mark-down.  In the absence of a particular transaction,
the five dollar price may be based on the inside bid  quotation for the security
as displayed on a Qualifying  Electronic  Quotation  System [i.e.,  an automated
inter-dealer  quotation system as set forth in Exchange Act Section  17B(b)(2)].
"Inside bid  quotation" is the highest bid quotation for the security  displayed
by a market  maker in the  security on such a system.  If there is no inside bid
quotation,  the average of at least three inter-dealer bid quotations  displayed
by three  or more  market  makers  in the  security  must  meet the five  dollar
requirement.  Broker-dealers  may not rely on  quotations  if they know that the
quotations  have been  entered for the  purpose of  circumventing  the rule.  An
inter-dealer  quotation system is defined in Rule  15c2-7(c)(1) as any system of
general   circulation  to  brokers  and  dealers  that  regularly   disseminates
quotations of identified brokers or dealers.

     In the case of a unit composed of one or more securities, the price divided
by the number of shares of the unit that are not  warrants,  options,  or rights
must be five dollars or more.  Furthermore,  the exercise  price of any warrant,
option,  or  right,  or of the  conversion  price of any  convertible  security,
included in the unit must meet the five dollar requirement.  For example: a unit
composed  of five shares of common  stock and five  warrants  would  satisfy the
requirements of the rule only if the unit price was twenty-five dollars or more,
and the warrant  exercise price was five dollars or more. Once the components of
the unit begin trading  separately on the  secondary  market,  they must each be
separately priced at five dollars or more.

     Securities that are registered, or approved for registration upon notice of
issuance,  on  a  national  securities  exchange  are  also  excluded  from  the
definition of penny stock [Rule  3a51-1(e)].  The exchange must make transaction
reports  available  pursuant to Rule  11Aa3-1  for the  exclusion  to work.  The
exclusion is further  conditioned  on the current  price and volume  information
with respect to  transactions  in that security  being reported on a current and
continuing  basis  and made  available  to  vendors  of market  information.  In
addition,  the exclusion is limited to exchange-listed  securities that actually
are purchased or sold through the  facilities  of the exchange,  or as part of a
distribution.  Exchange-listed  securities satisfying Rule 3a51-1(e),  but which
are not otherwise excluded under Rule 3a51-1(a)-(d), continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).

     Securities that are registered, or approved for registration upon notice of
issuance,  on NASDAQ are  excluded  from the  definition  of penny  stock  [Rule
3a51-1(f)].  Similar to the exchange-registered exclusion of Rule 3a51-1(e), the
NASDAQ exclusion is conditioned on the current price and volume information with
respect  to  transactions  in that  security  being  reported  on a current  and
continuing basis and made available to vendors of market information pursuant to
the rules of NASD.  NASDAQ securities  satisfying Rule 3a51-1(e),  but which are
not otherwise  excluded  under Rule  3a51-1(a)-(d),  continue to be deemed penny
stocks for purposes of Exchange Act Section 15(b)(6).

     An exclusion is available  for the  securities of issuers that meet certain
financial standards. This exclusion pertains to:

(i)  issuers  that have been in  continuous  operation  for at least three years
having net tangible assets in excess of $2 million [Rule 3a51-1(g)(1)]:

(ii) issuers that have been in  continuous  operation  for less than three years
having net tangible assets in excess of $5 million [Rule 3a51-1(g)(1)]:

(iii)  issuers that have an average  revenue of at least $6 million for the last
three years [Rule 3a51-1(g)(2)].

                                       7
<PAGE>

     To satisfy this requirement,  an issuer must have had total revenues of $18
million by the end of a three-year  period.  For domestic issuers,  net tangible
assets or revenues must be demonstrated  by financial  statements that are dated
no less than fifteen  months prior to the date of the related  transaction.  The
statements  must have been audited and reported on by an independent  accountant
in accordance with Regulation  S-X. For foreign  private  issuers,  net tangible
assets or revenues must be demonstrated  by financial  statements that are dated
no less than fifteen  months prior to the date of the related  transaction.  The
statements must be filed with the Securities and Exchange Commission pursuant to
Rule  12g3-2(b).  If the  issuer  has not been  required  to  furnish  financial
statements  during the previous  fifteen months,  the statements may be prepared
and audited in compliance with generally accepted  accounting  principles of the
country of incorporation.

     Whether the issuer is domestic or foreign,  in all cases a broker or dealer
must review the financial  statements and have a reasonable  basis for believing
that they were  accurate as of the date they were made (Rule  3a51-1[g][3]).  In
most  cases a  broker-dealer  need not  inquire  about or  independently  verify
information contained in the statements. Brokers and dealers must keep copies of
the domestic or foreign issuer's  financial  statements for at least three years
following the date of the related transaction.

Our Company's Common Stock


     The  authorized   capital  stock  of  our  Company  currently  consists  of
650,000,000  shares of common stock, $.01 par value. As of the close of business
on  September  30,  2003,  our Company had  120,438,976  shares of common  stock
outstanding  and  3,334,987  shares of  commo0n  stock  issuable.  As a material
subsequent  event, as of the close of business on December 30, 2003, our Company
had  124,145,663  shares  of  common  stock  outstanding  and held of  record by
approximately  751  persons.  Of  those,  approximately  214 were  holding  such
securities pursuant to depository arrangements with the actual beneficial owners
e.g., securities held in street name for their clients by securities brokers and
dealers). The total number of beneficial owners of more than 5% of our Company's
outstanding securities is 3.

     Each holder of shares of our Company's common stock is entitled to one vote
for  each  share  held on all  matters  to be  voted  upon  by the  stockholders
generally.  The shares do not have  cumulative  voting rights,  which means that
holders of more than 50% of the shares of our Company's  common stock voting for
the election of directors can elect all the directors, and that in such an event
the  holders  of the  remaining  shares  would  not be  able to  elect a  single
director.  The approval of  proposals  submitted  to  stockholders  at a meeting
requires the favorable  vote of a majority of the shares  voting,  except in the
case of certain  fundamental  matters where  Delaware law requires the favorable
vote of at least a majority of all outstanding shares.

     Shareholders are entitled to receive such dividends as may be declared from
time to time by the board of directors out of funds legally available  therefor,
and in the event of  liquidation,  dissolution  or winding up of our  Company to
share ratably in all assets remaining after payment of liabilities.  The holders
of shares of our  Company's  common  stock  have no  preemptive,  conversion  or
subscription rights.

     Our Company has not declared any dividends on its common stock and does not
expect to do so at any time in the  foreseeable  future.  There are currently no
restrictions on our Company's ability to declare dividends in the future,  other
than restrictions  applicable to all Delaware corporations  involving the source
of funds for payment of dividends and their  effects on our Company's  solvency.
In the  future,  our  Company  expects  that a  portion  of  its  expansion  and
development capital may be in the form of loans from financial institutions,  in
which case it is likely that such institutions would require restrictions on the
payment of dividends based on traditional  financial  ratios designed to predict
our Company's ability to repay such loans.  However, no specific  predictions as
to any such restrictions can be made at this time.

                                       8
<PAGE>

     If any  consulting  services are  rendered by our Company to third  parties
(see "Part I, Item 1"), it is possible  that shares of the capital  stock of our
Company's  clients will be registered with the Commission and issued directly to
our Company's stockholders, as a "de facto third party stock dividend"; however,
no assurances can be provided that any such  distribution  will ever take place,
or as to the actual economic benefits of any such distribution.

Amounts of Common Equity Subject to Outstanding Options or Warrants to Purchase,
or Securities  Convertible Into Common Equity of our Company

Common Stock Purchase Warrants

     For 2000 and 2001, our Company issued common stock purchase warrants to our
Company's  officers  and  directors,  in  lieu of cash  compensation  for  their
services.  Current  details  concerning  such warrants are provided  below under
"Additional Tabular  Information." As of September 30, 2003, 1,181,000 shares of
our Company's common stock were reserved for such purpose.

2002 Stock Option Plan

     On November 14, 2001,  the board of directors  approved a stock option plan
for 2002,  which was  approved  by the  stockholders  at the  annual  meeting of
stockholders  held on May 10,  2002.  The  plan  has a term of 10  years  unless
earlier terminated.  A copy of the plan was filed as an exhibit to our Company's
report on Form 10-KSB for year ended September 30, 2001.

         The following table illustrates the plan:

<TABLE>
<S>                                     <C>                     <C>                     <C>

Plan Category                       Number of                 Weighted average          Number of securities
                                    securities to be          exercise price of         remaining available for
                                    issued upon exercise of   outstanding options,      future issuance under
                                    outstanding options,      warrants and rights       equity compensation plans
                                    warrants and rights                                 (excluding securities
                                                                                        reflected in column (a))

                                        (a)                     (b)                     (c)
Equity compensation plans
approved by security holders        5,000,000                   (1)                     5,000,000

Equity compensation plans not
approved by security holders             0                       N/A                    0

Total                               5,000,000                   (1)                     5,000,000


</TABLE>
__________
(1) The  exercise  price  is to be  determined  by our  Company's  stock  option
committee on a case-by-case basis.

                                       9
<PAGE>

Additional Tabular Information

     As of  December  30,  2003,  our  Company  had  78,146,500  shares  of  its
authorized  common  stock  reserved  for  issuance in  conjunction  with current
obligations  to  issue  additional   shares  or  in  the  event  that  currently
outstanding  options or warrants are  exercised.  The following  table  provides
summary data concerning such reserved common stock:

Designation      Nature of            Exercise or               Number of Shares
or Holder        The Security         Conversion Price          To Be Reserved

(1)              Warrant              (1)                       1,095,000
(2)              (2)                  (2)                       5,000,000
(3)              (3)                  (3)                       70,251,500
(4)              (4)                  (4)                       1,800,000
------

(1)  Represents  the  shares  issuable  to  members  of our  Company's  board of
     directors  for  services  rendered  during  2000  and  2001 in lieu of cash
     compensation.  The exercise price for some warrants is $0.20 and for others
     $0.05.

(2)  Represents  the shares  authorized  pursuant  to our  Company's  2002 stock
     option plan, as disclosed above.

(3)  The Calvo  Family  Spendthrift  Trust holds  702,515  shares of  non-voting
     preferred  stock,  convertible  into shares of our Company's  common stock.
     Holders of non-voting preferred stock may never act as "control persons" of
     our Company and must always hold less than 5% of our Company's common stock
     at any given time.

(4)  Represents the approximate number of shares that may be issuable to members
     of our Company's board of directors and officers,  pursuant to the terms of
     their agreements, through September 30, 2004.

Amounts of Common Equity That Could Be Sold Pursuant to Rule 144 under the
Securities Act

Reporting Period

     As of September 30, 2003,  120,438,976 shares of our Company's common stock
were outstanding, of which approximately:

  *  14,192,560 are recognized as free trading by our Company;

  *  106,246,416  have been issued over the years  pursuant to  exemptions  from
     registration and are thus restricted securities, some of which are eligible
     for resale under Commission Rule 144 ("Rule 144").

     Of the shares that our Company has  instructed  its transfer agent to treat
as restricted:

  *  Approximately  91,648,644  were issued  prior to September  30,  2002,  and
     consequently,  may currently be sold under Rule 144,  subject to Rule 144's
     volume  limitations,   notice,   public  information  and  manner  of  sale
     conditions.  The volume  limitations  restrict  quantities sold over 90 day
     periods to 1% of the total outstanding common stock;

  *  Approximately  3,353,023  were  issued to persons  that do not appear to be
     affiliates of our Company prior to September 30, 2001, and consequently may
     be sold by  holders  that have not been  affiliates  of our  Company  for a
     period  of at least 90 days,  under  the more  liberal  provisions  of Rule
     144(k),  which dispenses with the volume,  public information and manner of
     sale conditions.

                                       10
<PAGE>

Rule 144

     Pursuant to the provisions of Rule 144(e),  permissible sales of securities
thereunder are determined as follows:

Sales by affiliates:

     If restricted or other  securities are sold for the account of an affiliate
     of our  Company  (officers,  directors,  other  control  persons  or  their
     affiliates,  and persons who have been  affiliates  within the preceding 90
     days), the amount of securities sold, together with all sales of restricted
     and other  securities  of the same  class for the  account  of such  person
     within the preceding three months, shall not exceed the greater of:

          * one percent of the shares or other units of the class outstanding as
          shown by the most recent report or statement published by our Company,
          or

          * the average weekly  reported volume of trading in such securities on
          all  national   securities   exchanges  and/or  reported  through  the
          automated  quotation  system of a  registered  securities  association
          during the four calendar weeks preceding the filing of notice required
          by Rule  144(h),  or if no such notice is required the date of receipt
          of the order to execute the  transaction  by the broker or the date of
          execution of the transaction directly with a market maker, or

          * the average  weekly  volume of trading in such  securities  reported
          through the consolidated  transaction reporting system contemplated by
          Rule  11Aa3-1  under the  Securities  Exchange  Act of 1934 during the
          four-week period specified above.

Sales by non-affiliates:

     The  amount of  restricted  securities  sold for the  account of any person
     other than an affiliate of our  Company,  together  with all other sales of
     restricted  securities  of the same class for the  account  of such  person
     within the preceding three months, shall not exceed the amount specified in
     paragraphs  above for affiliates,  unless the conditions in Rule 144(k) are
     satisfied (two, rather than a one year holding period).

Determination of Amount:

     For the purpose of  determining  the amount of securities  specified  above
     (the "Permitted Volume"), the following provisions apply:

          * Where both  convertible  securities and securities of the class into
          which  they are  convertible  are  sold,  the  amount  of  convertible
          securities  sold is deemed to be the amount of securities of the class
          into which they are  convertible  for the purpose of  determining  the
          aggregate amount of securities of both classes sold;

          * The amount of securities sold for the account of a pledgee  thereof,
          or for the account of a purchaser  of the pledged  securities,  during
          any  period of three  months  within  one year  after a default in the
          obligation  secured by the pledge,  and the amount of securities  sold
          during the same three-month  period for the account of the pledgor may
          not exceed, in the aggregate, the Permitted Volume.

          * The amount of  securities  sold for the  account of a donee  thereof
          during any period of three months  within one year after the donation,
          and the amount of securities sold during the same  three-month  period
          for the account of the donor, shall not exceed, in the aggregate,  the
          Permitted Volume.

          * Where  securities  were  acquired by a trust from the settlor of the
          trust, the amount of such securities sold for the account of the trust
          during  any  period  of  three  months   within  one  year  after  the
          acquisition  of the  securities  by  the  trust,  and  the  amount  of
          securities sold during the same three-month  period for the account of
          the settlor, shall not exceed, in the aggregate, the Permitted Volume.

          * The  amount of  securities  sold for the  account of the estate of a
          deceased  person,  or for the account of a beneficiary of such estate,
          during any period of three  months and the amount of  securities  sold
          during the same period for the account of the deceased person prior to
          his death shall not exceed,  in the aggregate,  the Permitted  Volume;
          provided  that no  limitation  on amount  shall apply if the estate or
          beneficiary thereof is not an affiliate of our Company;

          * When two or more affiliates or other persons agree to act in concert
          for the purpose of selling securities of a Registrant,  all securities
          of the same class sold for the account of all such persons  during any
          period  of  three  months  shall  be  aggregated  for the  purpose  of
          determining the limitation on the amount of securities sold;

                                       11
<PAGE>

Securities excluded:

     The following  sales of securities  need not be included in determining the
     amount of securities sold in reliance upon this section:

          *  Securities  sold  pursuant to an effective  registration  statement
          under the Securities Act;

          * Securities  sold  pursuant to an exemption  provided by Regulation A
          under the Securities Act; and

          * Securities sold in a transaction exempt pursuant to Section 4 of the
          Securities Act and not involving any public offering.

     Because a major theoretical component of securities pricing involves supply
and demand,  sales in reliance on Rule 144 will increase the supply and,  unless
there is a corresponding  increase in demand, can be expected to result in lower
prices.

Amount of Common  Equity  That Our  Company  Has  Agreed to  Register  Under the
Securities Act for Sale by Security Holders

     Our Company has not agreed to register  any of its common  stock  except in
conjunction  with the 2002  stock  option  plan,  as well as its  obligation  to
include the common stock purchase  warrants for its officers and directors,  the
Strategica  Shares,  and the  shares  issued  to  Deutsche/GE,  in  registration
statements  that  our  Company  may  otherwise  file  (commonly  referred  to as
"piggyback" registration rights).

Amounts of Common Equity That Our Company Is  Considering  Publicly  Offering or
Privately  Placing  Other  than  Shares to Be Issued  (Pursuant  to an  Employee
Benefit Plan or Dividend  Reinvestment Plan), the Offering of Which Could Have a
Material Effect on the Market Price of Our Company's Common Equity.

During the Year Following the Reporting Period

     During  the  year  following  the  report  period,   our  Company  will  be
considering  material  private  placements  in order to (1)  acquire  additional
funding for operations, or (2) engage in acquisitions.

                                       12
<PAGE>

Recent Sales of Unregistered Securities

During The Three Year Period Preceding Reporting Date

     During the three year period ended  September 30, 2003,  our Company issued
the  securities  listed  in the  tables  below  without  registration  under the
Securities  Act in  reliance on the  exemption  from  registration  requirements
cited. Footnotes for all tables follow the last table.

Common Stock:
<TABLE>
<S>                <C>          <C>                            <C>               <C>               <C>
                  Amount of                                   Total                          Registration
                  Securities                                Offering          Total          Exemption
Date              Sold       Subscriber                   Consideration     Discounts        Relied on
----              -----      ----------                   -------------     ---------        ---------
2000:
November 8        100,000    Patrick V. Graham                  (4)             None             (1)

2001:
May 31            1,844,444  SBV Holdings, Inc.                 (5)             None             (2)
June 30           21,055     Edward C. Dmytryk                  (6)             None             (2)
June 30           56,818     Kevin W. Dornan                    (7)             None             (2)
June 30           21,018     Vanessa H. Lindsey                 (8)             None             (2)
July 31           70,000     Edward C. Dmytryk                  (6)             None             (2)
July 31           31,250     Kevin W. Dornan                    (7)             None             (2)
July 31           58,360     Vanessa H. Lindsey                 (8)             None             (2)
November 15       24,788     Anthony Q. Joffe                   (9)             None             (2)

2002:
June 13           36,904     Adam Wasserman                     (10)            None             (2)
June 13           991,962    Edward C. Dmytryk                  (6)             None             (2)
June 13           175,212    Anthony Q. Joffe                   (9)             None             (2)
June 13           1,022,978  Vanessa H. Lindsey                 (8)             None             (2)
June 13           873,017    Kevin W. Dornan                    (7)             None             (2)
June 13           2,500,000  Deutsche Financial Services        (11)            None             (2)
June 13           1,000,000  Prime Source Leasing               (12)            None             (2)
June 13           1,039,045  Strategica Services Corp.          (13)            None             (2)
August 6          53,147     Vanessa H. Lindsey                 (8)             None             (2)
August 6          28,571     Kevin W. Dornan                    (7)             None             (2)
August 6          28,906     Adam Wasserman                     (10)            None             (2)
August 6          100,000    Anthony Q. Joffe                   (9)             None             (2)
August 21         52,547     Vanessa H. Lindsey                 (8)             None             (2)
August 21         8,333      Kevin W. Dornan                    (7)             None             (2)
August 21         11,111     Adam Wasserman                     (10)            None             (2)
August 21         50,000     Anthony Q. Joffe                   (9)             None             (2)
August 21         39,500     Lawrence R. Van Etten              (14)            None             (2)
August 21         51,500     Charles J. Champion                (14)            None             (2)
August 21         53,000     G. Richard Chamberlin              (14)            None             (2)
August 21         39,500     Edward C. Dmytryk                  (14)            None             (2)
August 21         47,000     Vanessa H. Lindsey                 (14)            None             (2)
August 21         53,000     Anthony Q. Joffe                   (14)            None             (2)
August 21         54,500     Robert S. Gigliotti                (14)            None             (2)
August 29         70,000     Charles J. Champion                (15)            None             (2)
August 29         55,058     Charles J. Champion                (15)            None             (2)
September 4       74,567     Vanessa H. Lindsey                 (8)             None             (2)
September 4       13,333     Kevin W. Dornan                    (7)             None             (2)
September 4       16,667     Adam Wasserman                     (10)            None             (2)
September 4       50,000     Anthony Q. Joffe                   (9)             None             (2)
September 4       15,500     Vanessa H. Lindsey                 (14)            None             (2)
September 4       17,500     Anthony Q. Joffe                   (14)            None             (2)
September 4       18,000     Robert Gigliotti                   (14)            None             (2)
September 4       13,000     Lawrence R. Van Etten              (14)            None             (2)
September 4       17,000     Charles J. Champion                (14)            None             (2)
September 4       17,500     G. Richard Chamberlin              (14)            None             (2)
September 4       10,500     Edward C. Dmytryk                  (14)            None             (2)
October 9         15,500     Lindsey Family Spendthrift Trust   (14)            None             (2)
October 9         17,500     Anthony Q. Joffe                   (14)            None             (2)
October 9         21,500     Robert Gigliotti                   (14)            None             (2)
October 9         13,000     Lawrence R. Van Etten              (14)            None             (2)
October 9         17,500     Charles J. Champion                (14)            None             (2)
October 9         20,000     G. Richard Chamberlin              (14)            None             (2)
October 9         10,500     Edward C. Dmytryk                  (14)            None             (2)
October 9         120,571    Lindsey Family Spendthrift Trust   (8)             None             (2)
October 9         23,143     Kevin W. Dornan                    (7)             None             (2)
October 9         28,571     Adam Wasserman                     (10)            None             (2)
October 9         50,000     Anthony Q. Joffe                   (9)             None             (2)
                                       13
<PAGE>

                  Amount of                                   Total                          Registration
                  Securities                                Offering          Total          Exemption
Date              Sold       Subscriber                   Consideration     Discounts        Relied on
----              -----      ----------                   -------------     ---------        ---------
November 19       15,500     Lindsey Family Spendthrift Trust   (14)            None             (2)
November 19       17,500     Anthony Q. Joffe                   (14)            None             (2)
November 19       21,500     Robert Gigliotti                   (14)            None             (2)
November 19       13,000     Lawrence R. Van Etten              (14)            None             (2)
November 19       17,500     Charles J. Champion                (14)            None             (2)
November 19       20,000     G. Richard Chamberlin              (14)            None             (2)
November 19       10,500     Edward C. Dmytryk                  (14)            None             (2)
November 19       226,350    Lindsey Family Spendthrift Trust   (8)             None             (2)
November 19       47,500     Kevin W. Dornan                    (7)             None             (2)
November 19       50,000     Adam Wasserman                     (10)            None             (2)
November 19       50,000     Anthony Q. Joffe                   (9)             None             (2)
December 6        15,500     Lindsey Family Spendthrift Trust   (14)            None             (2)
December 6        17,500     Anthony Q. Joffe                   (14)            None             (2)
December 6        21,500     Robert Gigliotti                   (14)            None             (2)
December 6        13,000     Lawrence R. Van Etten              (14)            None             (2)
December 6        17,000     Charles J. Champion                (14)            None             (2)
December 6        20,000     G. Richard Chamberlin              (14)            None             (2)
December 6        10,500     Edward C. Dmytryk                  (14)            None             (2)
December 6        153,200    Lindsey Family Spendthrift Trust   (8)             None             (2)
December 6        70,000     Kevin W. Dornan                    (7)             None             (2)
December 6        100,000    Adam Wasserman                     (10)            None             (2)
December 6        50,000     Anthony Q. Joffe                   (9)             None             (2)
December 23       52,019,977 Tucker Family Spenthrift Trust     (16)            None             (2)
December 23       6,289,449  Strategica Services Corporation    (17)            None             (2)
December 24       19,381,549 Tucker Family Spendthrift Trust    (18)            None             (2)
December 31        16,000    Lindsey Family Spendthrift Trust   (14)            None              (2)
December 31        18,000    Anthony Q. Joffe                   (14)            None              (2)
December 31        22,000    Robert Gigliotti                   (14)            None              (2)
December 31        13,500    Lawrence R. Van Etten              (14)            None             (2)
December 31        17,500    Charles J. Champion                (14)            None              (2)
December 31        20,500    G. Richard Chamberlin              (14)            None             (2)
December 31        10,500    Edward C. Dmytryk                  (14)            None              (2)
December 31        53,867    Lindsey Family Spendthrift Trust   (8)             None             (2)
December 31        24,333    Kevin W. Dornan                    (7)             None              (2)
December 31        33,333    Adam Wasserman                     (10)            None              (2)
December 31        50,000    Anthony Q. Joffe                   (9)             None              (2)

2003:

January 6        1,000,000   USA Boating Sales, Inc.            (19)            None              (1)
January 6        1,000,000   Team National, Inc.                (19)            None              (1)
January 6          180,000   G. Richard Chamberlin              (19)            None              (1)
January 6           70,000   Roxene Chamberlin                  (19)            None              (1)
January 6          500,000   Daniel J. Dugan                    (19)            None              (1)
January 31          15,500   Lindsey Family Spendthrift Trust   (14)            None              (2)
January 31          17,500   Anthony Q. Joffe                   (14)            None              (2)
January 31          18,000   Robert Gigliotti                   (14)            None              (2)
January 31          13,000   Lawrence R. Van Etten              (14)            None              (2)
January 31          18,000   Charles J. Champion                (14)            None              (2)
January 31          17,000   G. Richard Chamberlin              (14)            None              (2)
January 31          10,500   Edward C. Dmytryk                  (14)            None              (2)
January 31          81,454   Lindsey Family Spendthrift Trust    (8)            None              (2)
January 31          30,909   Kevin W. Dornan                     (7)            None              (2)
January 31          36,363   Adam Wasserman                     (10)            None              (2)
January 31          50,000   Anthony Q. Joffe                   (9)             None              (2)

                                       14
<PAGE>
                  Amount of                                   Total                          Registration
                  Securities                                Offering          Total          Exemption
Date              Sold       Subscriber                   Consideration     Discounts        Relied on
----              -----      ----------                   -------------     ---------        ---------

February 12      300,000     Robert Gigliotti                   (19)            None              (1)
February 14      795,000     Tucker Family Spendthrift Trust    (19)            None              (1)
February 14        5,000     Tina Dixon-Stokes                  (19)            None              (1)
February 20    4,856,300     Calvo Family Spendthrift Trust     (20)            None
February 24      100,000     Coast to Coast Financial Group, Inc.(3)            None              (1)
February 28       15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
February 28       17,500     Anthony Q. Joffe                   (14)            None              (2)
February 28       25,000     Robert Gigliotti                   (14)            None              (2)
February 28       13,000     Lawrence R. Van Etten              (14)            None              (2)
February 28       17,500     Charles J. Champion                (14)            None              (2)
February 28       22,000     G. Richard Chamberlin              (14)            None              (2)
February 28       10,500     Edward C. Dmytryk                  (14)            None              (2)
February 28       25,250     Lindsey Family Spendthrift Trust    (8)            None              (2)
February 28       18,750     Kevin W. Dornan                    (7)             None              (2)
February 28       25,000     Adam Wasserman                     (10)            None              (2)
February 28       50,000     Anthony Q. Joffe                   (9)             None              (2)
March 10           5,000     Tina Dixon-Stokes                  (19)            None              (1)
March 20          90,666     Charles Champion                   (15)            None              (2)
March 31          15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
March 31          17,500     Anthony Q. Joffe                   (14)            None              (2)
March 31          21,500     Robert Gigliotti                   (14)            None              (2)
March 31          13,000     Lawrence R. Van Etten              (14)            None              (2)
March 31          17,500     Charles J. Champion                (14)            None              (2)
March 31          20,000     G. Richard Chamberlin              (14)            None              (2)
March 31          10,500     Edward C. Dmytryk                  (14)            None              (2)
March 31          19,800     Lindsey Family Spendthrift Trust    (8)            None              (2)
March 31          37,750     Kevin W. Dornan                     (7)            None              (2)
March 31          25,000     Adam Wasserman                     (10)            None              (2)
March 31          50,000     Anthony Q. Joffe                    (9)            None              (2)
April 14          35,891     Tucker Family Spendthrift Trust    (19)            None              (1)
April 30          15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
April 30          17,500     Anthony Q. Joffe                   (14)            None              (2)
April 30          19,000     Robert Gigliotti                   (14)            None              (2)
April 30          13,000     Lawrence R. Van Etten              (14)            None              (2)
April 30          17,500     Charles J. Champion                (14)            None              (2)
April 30          16,500     G. Richard Chamberlin              (14)            None              (2)
April 30          10,500     Edward C. Dmytryk                  (14)            None              (2)
April 30          15,466     Lindsey Family Spendthrift Trust    (8)            None              (2)
April 30          22,222     Kevin W. Dornan                    (7)             None              (2)
April 30          22,222     Adam Wasserman                     (10)            None              (2)
April 30          50,000     Anthony Q. Joffe                   (9)             None              (2)
May 6            495,000     Tucker Family Spendthrift Trust    (19)            None              (2)
May 31            15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
May 31            17,500     Anthony Q. Joffe                   (14)            None              (2)
May 31            21,500     Robert Gigliotti                   (14)            None              (2)
May 31            18,000     Lawrence R. Van Etten              (14)            None              (2)
May 31            16,500     G. Richard Chamberlin              (14)            None              (2)
May 31            10,500     Edward C. Dmytryk                  (14)            None              (2)
May 31            16,800     Lindsey Family Spendthrift Trust    (8)            None              (2)
May 31            32,400     Kevin W. Dornan                    (7)             None              (2)
May 31            40,000     Adam Wasserman                     (10)            None              (2)
May 31            50,000     Anthony Q. Joffe                   (9)             None              (2)

                                       15
<PAGE>

                  Amount of                                   Total                          Registration
                  Securities                                Offering          Total          Exemption
Date              Sold       Subscriber                   Consideration     Discounts        Relied on
----              -----      ----------                   -------------     ---------        ---------

June 30           15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
June 30           17,500     Anthony Q. Joffe                   (14)            None              (2)
June 30           21,500     Robert Gigliotti                   (14)            None              (2)
June 30           18,000     Lawrence R. Van Etten              (14)            None              (2)
June 30           16,500     G. Richard Chamberlin              (14)            None              (2)
June 30           10,500     Edward C. Dmytryk                  (14)            None              (2)
June 30           28,400     Kevin W. Dornan                    (7)             None              (2)
June 30           40,000     Adam Wasserman                     (10)            None              (2)
June 30           50,000     Anthony Q. Joffe                   (9)             None              (2)
July 3           445,000     Tucker Family Spendthrift Trust    (19)            None              (1)
July 3           105,000     Blue Lake Capital Corp.            (19)            None              (1)
July 31          110,000     Tucker Family Spendthrift Trust    (19)            None              (1)
July 31           15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
July 31           17,500     Anthony Q. Joffe                   (14)            None              (2)
July 31           21,500     Robert Gigliotti                   (14)            None              (2)
July 31           18,000     Lawrence R. Van Etten              (14)            None              (2)
July 31           16,500     G. Richard Chamberlin              (14)            None              (2)
July 31           10,500     Edward C. Dmytryk                  (14)            None              (2)
July 31           49,334     Kevin W. Dornan                    (7)             None              (2)
July 31           66,667     Adam Wasserman                     (10)            None              (2)
July 31           50,000     Anthony Q. Joffe                   (9)             None              (2)
August 11      4,000,000     GE Commercial Distrib. Fin. Corp.  (16)            None              (1)
August 31         15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
August 31         17,500     Anthony Q. Joffe                   (14)            None              (2)
August 31         21,500     Robert Gigliotti                   (14)            None              (2)
August 31         18,000     Lawrence R. Van Etten              (14)            None              (2)
August 31         10,500     Edward C. Dmytryk                  (14)            None              (2)
August 31         40,000     Kevin W. Dornan                     (7)            None              (2)
August 31         66,667     Adam Wasserman                     (10)            None              (2)
August 31         50,000     Anthony Q. Joffe                    (9)            None              (2)
September 26   2,500,000     Edith Shugarman Family Trust       (19)            None              (1)
September 30      15,500     Lindsey Family Spendthrift Trust   (14)            None              (2)
September 30      17,500     Anthony Q. Joffe                   (14)            None              (2)
September 30      21,500     Robert Gigliotti                   (14)            None              (2)
September 30      18,000     Lawrence R. Van Etten              (14)            None              (2)
September 30      10,500     Edward C. Dmytryk                  (14)            None              (2)
September 30      17,455     Kevin W. Dornan                     (7)            None              (2)
September 30      36,364     Adam Wasserman                     (10)            None              (2)
September 30      50,000     Anthony Q. Joffe                    (9)            None              (2)

                                       16
<PAGE>

     As a  material  subsequent  event,  as of the  filing of this  report,  our
Company issued the following shares:

Common Stock:

                  Amount of                                   Total                          Registration
                  Securities                                Offering          Total          Exemption
Date              Sold       Subscriber                   Consideration     Discounts        Relied on
----              -----      ----------                   -------------     ---------        ---------
2003:

October  31       15,500     Lindsey Family Spendthrift Trust   (14)            None             (2)
October  31       17,500     Anthony Q. Joffe                   (14)            None             (2)
October  31       21,500     Robert Gigliotti                   (14)            None             (2)
October  31       18,000     Lawrence R. Van Etten              (14)            None             (2)
October  31       10,500     Edward C. Dmytryk                  (14)            None             (2)
October  31       35,200     Kevin W. Dornan                    (7)             None             (2)
October  31       40,000     Adam Wasserman                     (10)            None             (2)
October  31       50,000     Anthony Q. Joffe                   (9)             None             (2)
November 30       15,500     Lindsey Family Spendthrift Trust   (14)            None             (2)
November 30       17,500     Anthony Q. Joffe                   (14)            None             (2)
November 30       21,500     Robert Gigliotti                   (14)            None             (2)
November 30       18,000     Lawrence R. Van Etten              (14)            None             (2)
November 30       10,000     Edward C. Dmytryk                  (14)            None             (2)
November 30       24,000     Kevin W. Dornan                     (7)            None             (2)
November 30       40,000     Adam Wasserman                     (10)            None             (2)
November 30       50,000     Anthony Q. Joffe                    (9)            None             (2)
--------------
</TABLE>

(1)  Section  4(2) of the  Securities  Act.  In each case,  the  subscriber  was
     required  to  represent  that the  shares  were  purchased  for  investment
     purposes only, the certificates were legended to prevent transfer except in
     compliance with applicable  laws, and the transfer agent was instructed not
     to permit transfers unless directed to do so by our Company, after approval
     by its legal counsel.  In addition,  each subscriber was directed to review
     our Company's  filings with the  Commission  under the Exchange Act and was
     provided  with  access  to our  Company's  officers,  directors,  books and
     records, in order to obtain required information.

(2)  Section  4(6) of the  Securities  Act.  In each case,  the  subscriber  was
     required  to  represent  that the  shares  were  purchased  for  investment
     purposes only, the certificates were legended to prevent transfer except in
     compliance  with  applicable laws and the transfer agent was instructed not
     to permit transfers unless directed to do so by our Company, after approval
     by its legal counsel.  Each subscriber was directed to review our Company's
     filings with the  Commission  under the Exchange Act and was provided  with
     access to our Company's officers, directors, books and records, in order to
     obtain  required  information;  and a Form D reporting the  transaction was
     filed with the Commission.

                                       17
<PAGE>

(3)  Shares issued pursuant to a 60-day contract for investor relations services
     rendered to our Company.

(4)  Shares issued pursuant to the settlement agreement approved by the court in
     the case of Patrick Graham vs. Five Star Cigar, Inc. and others,  including
     Colmena  Corp.,  case no.  99-121194,  Circuit  Court for  Broward  County,
     Florida, involving a defaulted promissory note in the amount of $40,000.

(5)  On May 31, 2001, our Company entered into a settlement  agreement with SBV.
     Our Company issued  1,844,444 shares of its common stock to SBV to settle a
     defaulted  promissory note in the amount of $100,000 plus accrued  interest
     of $38,333.

(6)  Shares issued for his services as president and chief executive  officer of
     our Company from May 2001 to May 2002.  The shares  issued on June 13, 2002
     were accrued for 10 months pending  shareholder  approval in May 2002 of an
     increase in capitalization.


(7)  Shares  issued for his services as counsel of our Company,  pursuant to the
     terms of his employment  agreement as discussed below at Part III, Item 10,
     Executive Compensation. The shares issued on June 13, 2002 were accrued for
     10  months  pending  shareholder  approval  in May 2002 of an  increase  in
     capitalization.

(8)  Shares  issued for  Vanessa  H.  Lindsey  services  as vice  president  and
     secretary of our Company, pursuant to the terms of her employment agreement
     as discussed below at Part III, Item 10, Executive Compensation. The shares
     issued on June 13,  2002 were  accrued  for 10 months  pending  shareholder
     approval in May 2002 of an increase in capitalization.

(9)  Shares issued for his services as president of our Company, pursuant to the
     terms of his employment agreements as discussed below at Part III, Item 10,
     Executive Compensation.

(10) Shares issued for his services as chief financial officer and controller of
     our Company, pursuant to the terms of his employment agreement as discussed
     below at Part III, Item 10, Executive Compensation.

(11) Shares issued to settle a claim  against our Company,  as discussed in Part
     I, Item 1.

(12) Shares issued to settle a claim  against our Company,  as discussed in Part
     I, Item 1.

(13) Shares issued to settle a claim against our Company.

(14) Shares issued for monthly  services as a board member and a board committee
     chair or member.

(15) Shares issued upon exercise of warrants held by Mr. Champion.

(16) Shares issued upon conversion of Class A bonds.

(17) Shares issued  pursuant to the  anti-dilutive  provisions  contained in the
     December 31, 2001 Settlement Agreement with Strategica, a copy of which was
     filed  with  our  Company's  report  on Form  10-KSB  for the  year  ending
     September 30, 2001.

(18) Shares issued upon conversion of loans.

(19) Shares issued pursuant to a private placement at $0.01 per share.

(20) Shares issued upon conversion of 48,563 shares of preferred stock.

                                       18
<PAGE>

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

OVERVIEW

     During  November  1997,  our  Company  became  engaged in the  business  of
marketing and distributing  long-distance telephone service calling cards and in
the manufacture and  distribution of premium  hand-rolled  cigars,  in each case
through wholly owned  subsidiaries.  In September  1998,  following a default in
payment  obligations  totaling  approximately  $5.6  million by the company that
handled the billing and  collection  for our Company's  long-distance  telephone
services, our Company and its subsidiaries were forced to discontinue day-to-day
business  operations.  During  March  1999,  our  Company's  board of  directors
concluded  negotiations  to  divest  our  Company  of all of  its  wholly  owned
subsidiaries,  positioning our Company to undertake new business endeavors or to
become a more attractive acquisition candidate.

     On February 21, 2003, our Company signed a letter of intent with The Global
Group  ("Global")  and Matrix  International,  Inc.  ("Matrix")  to acquire  the
business plan and operations of Global and Matrix.  Definitive  agreements  were
drafted and due  diligence was underway  when Global and Matrix  terminated  the
letter of intent on May 2, 2003.  Our Company has  currently  signed a letter to
acquire National ComTel (see Part I, Item I). Our Company continues to negotiate
with  other  companies  concerning  potential  acquisitions  and  will  promptly
announce any developments that result in a letter of intent.

PLAN OF OPERATIONS

     Our Company  currently has no  day-to-day  business  operations  other than
those pertaining to the maintenance of our corporate existence and the filing of
reports  required by the Commission and our efforts to become an active reseller
of BellSouth telecommunications services.

Consulting Activities

     During  March  and  April  2003,  our  Company   negotiated   with  Corblet
Corporation,  a Florida corporation,  to provide consulting services and a draft
consulting agreement was prepared. Corblet terminated these discussions on April
28, 2003.

     The foregoing plan of operation  contains  forward-looking  statements that
are subject to risks and  uncertainties,  which could  cause  actual  results to
differ materially from those,  discussed in the  forward-looking  statements and
from historical results of operations. Among the risks and uncertainties,  which
could cause such a difference,  are those  relating to our Company's  dependence
upon  certain key  personnel,  our ability to manage our growth,  our  Company's
success  in  implementing  our  business  strategy,  our  success  in  arranging
financing where required,  and the risk of economic and market factors affecting
our Company or our  customers.  Many of such risk factors are beyond the control
of our Company and its management.

YEAR ENDED SEPTEMBER 30, 2003 COMPARED TO YEAR ENDED SEPTEMBER 30, 2002

     Our Company  reported a net loss for the year ended  September  30, 2003 of
$164,240 and net income for the year ended September 30, 2002 of $105,624.  This
translates  to per-share  loss of $(0.00) for the year ended  September 30, 2003
and per share income of $0.00 for the year ended September 30, 2002.

     Our  Company had no revenues  for the years  ended  September  30, 2003 and
2002, respectively.

                                       19
<PAGE>

     Overall,  operating  expenses  decreased  to  $172,755  for the year  ended
September  30, 2003 as compared to  $182,596  for the year ended  September  30,
2002.

     Compensation expense decreased to $124,640 for the year ended September 30,
2003 as compared  $246,457 for the year ended  September 30, 2002.  The decrease
was  due to a  decrease  in  director  and  officer  activities  related  to the
restructuring of the Company and the issuance of common stock for services.

     Consulting  expenses  were $2,667 for the year ended  September 30, 2003 as
compared to consulting income of $137,846 for the year ended September 30, 2002.
The 2002 income  resulted  from the  variable  accounting  treatment of warrants
granted for services.

     Professional  fees were  $23,456 for the year ended  September  30, 2003 as
compared to $40,991  for the year ended  September  30, 2002 and were  primarily
attributable  to  fees  associated  with  the  Company's  SEC  filings  and  the
settlement of certain lawsuits and claims.

     For the year ended September 30, 2003, general and administrative  expenses
were $21,992 as compared to $32,994 for the year ended September 30, 2002.

     For the year ended  September  30, 2003,  our Company  recorded  settlement
income of $18,442 attributable to the settlement of certain lawsuits and claims.
During the year ended  September  30,  2002,  we recorded  settlement  income of
$295,483 in connection with the settlement of certain lawsuits and claims.

     For the  year  ended  September  30,  2003,  interest  expense  was $ 9,907
compared to $37,263 for the year ended  September 30, 2002  attributable  to the
Company's borrowings. The reduction in 2003 is a result of reduced debt.

     No  additional  meaningful  comparisons  can be  made  for the  year  ended
September 30, 2003 as compared to the year ended September 30, 2002.

                                       20

<PAGE>

LIQUIDITY AND CAPITAL RESOURCES

     As of  September  30,  2003,  our  Company  had $19,912 in cash to meet our
outstanding  obligations.  During the reporting period, the Company financed our
operating  activities  through loans and advances from certain  shareholders and
from sales of securities.

     At  September  30,  2003,  our  Company  had  a  stockholders'  deficit  of
$18,476,594.  Our Company's  future  operations  and growth are dependent on our
ability to raise capital for expansion and to implement our strategic plan.

     On May 1, 2002,  our  Company  entered  into a  settlement  agreement  with
Deutsche Financial Services Corporation  ("Deutsche").  Deutsche's claim was for
$331,000  plus interest at the per annum rate of prime plus 6.5% since August 1,
1998,  and was based on a guaranty by our Company of a promissory  note executed
by one of our  divested  subsidiaries.  In  exchange  for the  parties'  general
release of all claims and obligations up to the date of the agreement,  Deutsche
received an initial payment of $20,000,  and was to receive an additional $2,500
(plus  interest  at the per annum  rate of U.S.  prime)  per month for 32 months
beginning  June 15, 2002 and ending  January 15, 2005 (an  aggregate  additional
amount of $80,000 plus  interest).  Deutsche also received  2,500,000  shares of
restricted  common  stock.  As of August 11, 2003,  our loan payable to Deutsche
amounted to $68,750 and had accrued  interest due Deutsche of $3,241.  On August
11, 2003, we entered into a second settlement agreement with Deutsche. We issued
4,000,000  shares of our common stock in settlement  of the  remaining  debt and
accrued interest. We recognized a gain on settlement of this debt of $11,991.

     Net cash used in operations was ($92,549) for the year ended  September 30,
2003 as compared to ($199,125)  for the year ended  September 30, 2002.  For the
year  ended   September  30,  2003,   cash  used  in  operations  was  primarily
attributable  to our net  loss of  ($164,240),  non-cash  settlement  income  of
$18,422,  and a decrease  in accounts  payable  and  accrued  expenses of ($171)
offset by non-cash  consulting  and  compensation  expense  from the issuance of
common  stock  $90,284.  For the year ended  September  30,  2002,  cash used in
operations of $(199,125) was  attributable to our net income of $105,624,  stock
based  compensation of $112,123 and in increase in accounts  payable and accrued
expenses  of  $66,333   offset  by,  stock  options  and  warrants   issued  for
compensation  and stock based  settlement  income of $(192,816) and  $(290,389),
respectively.

     Net cash provided by financing  activities for the year ended September 30,
2003 was $112,344 as compared to net cash  provided by financing  activities  of
$199,220 for the year ended  September 30, 2002.  The  difference  was primarily
attributable  to the decrease in funding from a related party and to payments on
a  settlement  loan  payable to Deutche Bank as well as proceeds of $94,600 from
the sale of common and preferred stock.

     We currently have no material commitments for capital  expenditures.  Other
than advances  received in the past from the Trusts, we have no external sources
of liquidity.  Additionally, as a material event, the Trusts stopped funding our
Company at the end of July 2003. Accordingly, we are seeking alternative funding
sources. No assurances can be provided,  however,  that such alternative funding
sources will be located.  Due to the anticipated lack of funding,  we may not be
able to  compensate  our  professionals  to allow us to continue our  compliance
under the Exchange Act of 1934,  which may cause us to lose our quotation on the
Over the Counter  Bulletin Board (OTCBB).  We may not have  sufficient cash flow
from operations to sufficiently  meet all of our cash  requirements for the next
12 months.  Our  Company's  future  operations  and growth are  dependent on our
ability to raise capital for expansion,  and to seek additional revenue sources.
If our  Company  decides  to  pursue  any  acquisition  opportunities  or  other
expansion opportunities, we may need to raise additional capital, although there
can be no assurance such capital-raising activities would be successful.

                                       21
<PAGE>

CRITICAL ACCOUNTING POLICIES

     A summary of significant  accounting  policies is included in Note 1 to the
audited  financial  statements  included in our Annual Report on Form 10-KSB for
the year ended  September 30, 2003 contained in this Annual  Report.  We believe
that the  application  of these  policies on a  consistent  basis  enables us to
provide useful and reliable  financial  information  about our operating results
and financial condition.

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

GOING CONCERN

     The accompanying  financial statements have been prepared assuming that our
Company  will  continue  as a going  concern.  Except  for  possible  consulting
activities,  the Company has no other active business operations,  has recurring
losses,  had cash used in operations of $92,549 for the year ended September 30,
2003,  and  an  accumulated  deficit  of  $18,476,594  at  September  30,  2003.
Additionally, as a material event, the Trusts stopped funding our Company at the
end of July 2003.  Accordingly,  we are seeking  alternative funding sources. No
assurances can be provided,  however, that such alternative funding sources will
be  located.  Due to the  anticipated  lack  of  funding,  we may not be able to
compensate our  professionals  to allow us to continue our compliance  under the
Exchange Act of 1934,  which may cause us to lose our  quotation on the Over the
Counter Bulletin Board (OTCBB).  These conditions raise  substantial doubt about
our Company's ability to continue as a going concern.

     Our  Company  is  taking  steps to  address  this  situation.  Our  Company
maintains an agreement  as a telephone  service  reseller  with  BellSouth,  our
application for an ALEC license in Florida  received final approval in May 2002,
and management looks to expand on such operations if funding becomes  available,
or locate a merger/acquisition  candidate.  We currently have a letter of intent
to acquire  National  ComTel during the first  calendar  quarter of 2004. In the
meantime, management will continue to seek sources of funding until other income
is derived from an acquisition, consulting activities, or our telecommunications
resale license and agreements.  Through September 30, 2003, the Company received
proceeds of $94,600  from sale of common  stock and  preferred  stock to certain
officers,  directors  and  affiliates  of the Company,  and others.  We are also
seeking new sources of funding.  No assurances  can be provided,  however,  that
such alternative funding sources will be located.

Audit Committee Report

     Our Company's Audit Committee (the  "Committee") has certified that (1) the
Committee  has reviewed and  discussed  with  management  the audited  financial
statements  for the  year  ended  September  30,  2003;  (2) the  Committee  has
discussed with the independent  auditors the matters required to be discussed by
SAS 61, as may be modified or  supplemented;  (3) the Committee has received the
written disclosures and the letter from the independent  accountants required by
Independence Standards Board Standard No. 1 (Independent  Discussions with Audit
Committees),  as may be modified or  supplemented,  and has  discussed  with the
independent accountants the independent accountant's independence; and (4) based
on the review and  discussion  referred to in paragraphs  (1) through (3) above,
the  Committee has  recommended  to our  Company's  board of directors  that the
audited financial  statements for the year ended September 30, 2003, be included
in this report.  The members of the Committee are Charles J.  Champion,  Jr. and
Robert S. Gigliotti. A copy of the Audit Committee letter is filed as an exhibit
to this report as required by Item 601(b)(13) of Regulation S-B.


                                       22
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS.

Index to Financial Statements and Financial Statement Schedules.

     The auditor's  report and audited balance sheet of our Company at September
30,  2003,  and  related  statements  of  operations,  changes in  stockholder's
equity,  and cash flows for the years  ended  September  30,  2003 and 2002 and
notes to financial statements for such years, including indexes therefor, follow
in sequentially numbered pages numbered @ through @


                                  COLMENA CORP.
                              FINANCIAL STATEMENTS
                           SEPTEMBER 30, 2003 AND 2002

                                  Colmena Corp.


Contents
                                                                       Page(s)

Independent Auditors' Report                                            24

Balance Sheet                                                           25

Statements of Operations                                                26

Statements of Changes in Stockholders' Deficiency                       27

Statements of Cash Flows                                                28

Notes to Financial Statements                                           29-45

                                       23
<PAGE>

                          Independent Auditors' Report


To the Board of Directors of:
Colmena Corp.

We have audited the accompanying  balance sheet of Colmena Corp. as of September
30, 2003 and the related  statements  of  operations,  changes in  stockholders'
equity and cash flows for the years ended  September  30,  2003 and 2002.  These
financial  statements are the  responsibility of the Company's  management.  Our
responsibility  is to express an opinion on these financial  statements based on
our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial position of Colmena Corp. as of September
30,  2003 and the  results  of its  operations  and its cash flows for the years
ended  September  30, 2003 and 2002 in  conformity  with  accounting  principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note 9 to the
financial  statements,  the Company  has no active  business  operations,  has a
stockholders'  deficiency and working  capital  deficiency at September 30, 2003
and has cash used in operations in 2003. These factors raise  substantial  doubt
about its ability to continue as a going concern.  Management's plans in regards
to these matters are also  described in Note 9. The financial  statements do not
include any adjustments that might result from the outcome of this uncertainty.


SALBERG & COMPANY, P.A.
Boca Raton, FL
January 6, 2004

                                       24

<PAGE>

                                             COLMENA CORP.
                                             BALANCE SHEET
                                           September 30, 2003

                                                 ASSETS
<TABLE>
<S>                                                                                  <C>
CURRENT ASSETS:

     Cash                                                                           $ 19,912
                                                                                -------------
      Total Assets                                                                  $ 19,912
                                                                                =============
                                  LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:

    Accounts Payable and Accrued Expenses                                           $ 6,205
    Loans Payable - Related Parties                                                   2,769
    Loan Payable                                                                          -
                                                                                -------------
        Total Current Liabilities                                                     8,974
                                                                                -------------
STOCKHOLDERS' EQUITY:

    Preferred Stock ($.001 Par Value; 10,000,000 Shares Authorized ;
        No Shares Issued and Outstanding)                                                 -
    Convertible Preferred Stock ($.001 Par Value; 2,000,000 Shares Authorized ;
        702,515 Shares Issued and Outstanding)                                          702
    Common Stock ($.01 Par Value; 650,000,000 Shares Authorized;
        120,438,976 Shares Issued and Outstanding)                                1,204,390
    Common Stock Issuable, $.01 Par Value (3,334,987 Shares)                         33,350
    Additional Paid-in Capital                                                   17,249,090
    Accumulated Deficit                                                         (18,476,594)
                                                                                --------------
        Total Stockholders' Equity                                                   10,938
                                                                                --------------
        Total Liabilities and Stockholders' Equity                                 $ 19,912
                                                                                ==============
</TABLE>

The accompanying notes are an integral part of these financial statements
                                       25
<PAGE>


                                      COLMENA CORP.
                                STATEMENTS OF OPERATIONS
<TABLE>
<S>                                                                                         <C>                    <C>

                                                                                                             For the Years
                                                                                                          Ended September 30,
                                                                                                   2003                    2002

REVENUES                                                                                      $       -                    $ -
                                                                                        ----------------        ----------------
OPERATING EXPENSES:
    Compensation Expense                                                                        124,640                246,457
    Consulting                                                                                    2,667               (137,846)
    Professional and Legal Fees                                                                  23,456                 40,991
    Selling, General and Administrative                                                          21,992                 32,994
                                                                                        ----------------        ---------------
        Total Operating Expenses                                                                172,755                182,596
                                                                                        ----------------        ---------------
LOSS FROM OPERATIONS                                                                           (172,755)              (182,596)
                                                                                        ----------------        ---------------
OTHER INCOME (EXPENSES):
    Settlement Income (Expense), net                                                             18,422                295,483
    Gain on Agreement Rescission                                                                      -                 30,000
    Interest Expense, net                                                                        (9,907)               (37,263)
                                                                                        ----------------        ---------------
TOTAL OTHER INCOME (EXPENSES)                                                                     8,515                288,220
                                                                                        ----------------        ---------------
NET INCOME (LOSS)                                                                            $ (164,240)            $  105,624
                                                                                        =================       ===============
BASIC AND DILUTED:

      Net Income (Loss) Per Common Share - Basic                                             $ (0.00)               $ 0.00
                                                                                        ================        ===============
      Net Income (Loss) Per Common Share - Diluted                                           $ (0.00)               $ 0.00
                                                                                        ================        ===============
      Weighted Common Shares Outstanding - Basic                                            103,295,923             34,191,555
                                                                                        =================       ===============
      Weighted Common Shares Outstanding - Diluted                                          103,295,923            117,346,507
                                                                                        =================       ===============

 </TABLE>
  The accompanying notes are an integral part of these financial statements
                                     26

<PAGE>
                                  COLMENA CORP.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 For the Years Ended September 30, 2002 and 2003
<TABLE>
<S>                                                                <C>        <C>         <C>      <C>          <C>          <C>
                                                                                        Preferred Stock
                                                                Preferred Stock $.001   Issuable              Common Stock $.01 Par
                                                                Shares       Amount     Shares      Amount      Shares       Amount

Balance at September 30, 2001                                   -         $     -       -        $     -     19,975,204   $  199,752

Stock warrants issued under consulting agreement and effect of
       variable accounting method                               -               -       -              -              -            -

Common stock previously issuable as compensation                -               -       -              -        200,000        2,000

Stock issuable pursuant to anti-dilutive rights                 -               -       260,100       2,601          -            -

Common stock issued for debt and debt-related settlements       -               -       -              -      6,424,869       64,249

Common stock issued for services                                -               -       -              -      1,263,157       12,632

Common stock issued for non-debt related settlements            -               -       -              -      1,030,495       10,305

Stock Warrants issued to Directors'                             -               -       -              -          -            -

Common stock converted to preferred stock                   27,563              28      -              -    (2,756,251)     (27,563)

Common stock issued upon warrant exercise                       -               -       -              -        125,058        1,250

Net loss for the year ended September 30, 2002                  -               -       -              -          -            -
                                                          --------------------------------------------------------------------------
Balance at September 30, 2002                               27,563              28      260,100       2,601  26,262,532      262,625

Common stock issued or issuable for services                    -               -       -              -      2,834,183       28,343

Common stock returned for services                              -               -       -              -    (1,195,681)     (11,957)

Common stock issued for warrants                                -               -       -              -         90,666          907

Stock issued for in connection with conversion of bond payable 520,200          520    (260,100)     (2,601)  52,019,978     520,200

Stock issued pursuant to anti-dilutive rights,
                                        previously issable     -                -       -               -     6,289,449       62,894

Stock issued or issuable for debt                           193,815             194     -                -   19,381,549      193,815

Common stock issued or issuable in connection with
                                         private placement     -                -       -                -    4,895,000       48,950

Conversion of Series A Preferred Stock into common          (48,613)            (49)    -                -    4,861,300       48,613

Preferred shares exchanged for common                       (10,000)            (10)                          1,000,000       10,000

Preferred stock issued in connection with private placem     19,550              19     -                -          -            -

Common stock issued in settlement of guaranteed loan           -                -       -                -    4,000,000       40,000

Net loss for the year ended September 30, 2003                 -                -       -                -          -            -
                                                         ---------------------------------------------------------------------------
Balance at September 30, 2003                               702,515            $ 702    -              $ -   120,438,976  $1,204,390
                                                         ===========================================================================
</TABLE>
The accompanying notes are an integral part of these financial statements
                                       27

<PAGE>

                                 COLMENA CORP.

                  STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

                 For the Years Ended September 30, 2002 and 2003
<TABLE>
<S>                                                                   <C>       <C>         <C>            <C>            <C>
                                                                     Common Stock           Additional                     Total
                                                                       Issuable             Paid-in      Accumulated   Stockholders'
                                                                    Shares     Amount       Capital       Deficit         Equity

Balance at September 30, 2001                                    10,474,970  $ 104,749   $ 17,182,541  $ (18,417,978)    $ (930,936)
Stock warrants issued under consulting agreement and effect of
       variable accounting method                                         -          -      (197,846)             -        (197,846)

Common stock previously issuable as compensation                   (200,000)    (2,000)          -              -               -

Stock issuable pursuant to anti-dilutive rights                   22,024,466    220,245      (97,701)             -         125,145

Common stock issued for debt and debt-related settlements                 -          -       219,217              -         283,466

Common stock issued for services                                          -          -        68,575              -          81,207

Common stock issued for non-debt related settlements                      -          -        20,610              -          30,915

Stock Warrants issued to Directors'                                       -          -         5,030              -           5,030

Common stock converted to preferred stock                                 -          -        27,535              -               -

Common stock issued upon warrant exercise                                 -          -        (1,250)             -               -

Net loss for the year ended September 30, 2002                            -          -             -         105,624         105,624
                                                        ---------------------------------------------------------------------------
Balance at September 30, 2002                                     32,299,436    322,994    17,226,711    (18,312,354)      (497,395)

Common stock issued or issuable for services                         724,987      7,250        54,691              -          90,284

Common stock returned for services                                   (11,957)                                 11,957              -

Common stock issued for warrants                                         907          -          -              (907)             -

Stock issued for in connection with conversion of bond           (26,009,987)  (260,100)     (220,360)            -           37,659

Stock issued pursuant to anti-dilutive rights, previously issuable (6,289,449)   (62,894)          -              -               -

Stock issued or issuable for debt                                         -          -         196,021            -         390,030

Common stock issued or issuable in connection with
                                               private placement     2,610,000     26,100           -              -          75,050

Conversion of Series A Preferred Stock into common                        -          -         (48,564)            -               -

Preferred shares exchanged for common                                     -          -          (9,990)            -               -

Preferred stock issued in connection with private placem                  -          -          19,531             -          19,550

Common stock issued in settlement of guaranteed loan                      -          -          20,000             -          60,000

Net loss for the year ended September 30, 2003                            -          -              -        (164,240)     (164,240)
                                                              ----------------------------------------------------------------------
Balance at September 30, 2003                                        3,334,987   $ 33,350   $ 17,249,090  $ (18,476,594)    $ 10,938
                                                              ======================================================================

</TABLE>
The accompanying notes are an integral part of these financial statements
                                      27a
<PAGE>

                                  COLMENA CORP.
                            STATEMENTS OF CASH FLOWS
<TABLE>
<S>                                                                                    <C>                 <C>

                                                                                     For the Year Ended September 30,
                                                                                 ------------------------------------------
                                                                                     2003                  2002
                                                                                 ---------------------  --------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Income (Loss)                                                              $ (164,240)            $ 105,624
    Adjustments to Reconcile Net Income (Loss) To Net Cash Used in Operations

           Stock Based Compensation                                                    90,284               112,123
           Stock Options and Warrants Issued to Consultants, Employees and Directors        -              (192,816)
           Stock Based Settlement Expense                                                   -                     -
           Settlement Income                                                          (18,422)             (290,389)

           Decrease in:
              Accounts Payable and Accrued Expenses                                      (171)              66,333

Net Cash Flows Used in Operating Activities                                           (92,549)             (199,125)


CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from Loans Payable - Related Party                                         9,369                24,000
    Payments on Loan Payable                                                           (3,750)               (7,500)
    Proceeds from Sale of Common Stock                                                 75,050                     -
    Proceeds from Sale of Preferred Stock                                              19,550                     -
    Due to Related Party                                                               12,125               182,720

Net Cash Flows Provided by Financing Activities                                       112,344               199,220

Net Increase (Decrease) in Cash                                                        19,795                    95

Cash - Beginning of Year                                                                  117                    22

Cash - End of Year                                                                   $ 19,912                 $ 117

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the year for:
   Interest                                                                             $ 272                 $ 898
   Income Taxes                                                                           $ -                   $ -

NON-CASH INVESTING AND FINANCING ACTIVITIES:
    Note Payable - Related Party Reclassified to Convertible Bond                         $ -              $ 40,000
    Issuance of Common Stock for Settlement of Debt                                  $ 71,991             $ 283,466
    Note Payable - Related Party Reclassified to Convertible Bond                         $ -                   $ -
    Issuance of Common Stock for Debt and Bonds payable                             $ 430,030                   $ -
    Conversion of Series A Preferred Stock to Common Stock                          $  48,613                   $ -
    Cashless Exercise of Warrants                                                       $ 907                   $ -

</TABLE>

                                       28
<PAGE>

                                  Colmena Corp.
                          Notes to Financial Statements
                               September 30, 2003


Note 1   Nature of Operations and Summary of Significant Accounting Policies

(A) Nature of Operations

Colmena Corp. (the "Company"), a Delaware corporation,  was formerly involved in
the   telecommunications   industry  and  other  industries   through  operating
subsidiaries  which were sold in fiscal 1999. The Company currently seeks to act
as a consultant in the telecommunications industry or seek other opportunities.

 (B) Use of Estimates

In preparing the financial  statements in conformity with accounting  principles
generally  accepted  in the  United  States,  management  is  required  to  make
estimates  and  assumptions  that  affect  the  reported  amounts  of assets and
liabilities and the disclosure of contingent  assets and liabilities at the date
of the  financial  statements  and  revenues  and  expenses  during the reported
period. Actual results could differ from those estimates.  Significant estimates
in 2003 and 2002  include  valuation of non-cash  capital  stock  issuances  and
valuation of the deferred tax asset.

(C) Cash and Cash Equivalents

For purpose of the cash flow statements, the Company considers all highly liquid
investments with original maturities of three months or less at time of purchase
to be cash equivalents.

(D) Stock Based Compensation

Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation"  ("SFAS  123"),  encourages,  but does not  require,  companies to
record  compensation cost for stock-based  employee  compensation  plans at fair
value. The Company has chosen 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 estimated  fair market value of the  Company's  stock at the date of
the grant over the amount an employee must pay to acquire the stock. The Company
has adopted the "disclosure only" alternative described in SFAS 123 and SFAS 148
(See Recent Accounting  Pronouncements),  which require pro forma disclosures of
net income and earnings per share as if the fair value method of accounting  had
been applied.

(E) Income Taxes

The Company accounts for income taxes under the Financial  Accounting  Standards
Board Statement of Financial  Accounting  Standards Number 109,  "Accounting for
Income Taxes"  ("Statement  No.  109").  Under  Statement No. 109,  deferred tax
assets  and  liabilities   are  recognized  for  the  future  tax   consequences
attributable to differences  between the financial statement carrying amounts of
existing  assets and liabilities  and their  respective tax basis.  Deferred tax
assets and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those assets or liabilities are expected to
be recovered or settled.  Under Statement 109, the effect on deferred tax assets
and  liabilities  of a change in tax rates is recognized in income in the period
that includes the enactment date.

                                       29
<PAGE>

Note 1 Nature of  Operations  and  Summary of  Significant  Accounting  Policies
(Continued)

(F) Loss per Share

Net income  (loss) per common  share for the year ended  September  30,  2002 is
based  upon the  weighted  average  common  shares  and  dilutive  common  stock
equivalents  outstanding  during the year as defined by  Statement  of Financial
Accounting  Standards,  Number 128 "Earnings Per Share." The assumed exercise of
common  stock  equivalents  was  not  utilized  in 2003  since  the  effect  was
anti-dilutive due to the net loss.

The following table presents a reconciliation  of basic and diluted earnings per
share for fiscal year 2002:


Net income                                           $          105,624
Adjustment to net income                                              -
                                                         -----------------
Income available to common shares                    $          105,624
                                                         =================
Weighted average shares outstanding - basic                  34,191,555
                                                         =================
EPS - Basic                                          $             -
                                                         =================

Income available to common shares                    $          105,624
                                                         =================

Weighted average shares outstanding - basic                  34,191,555
Effect of dilutive securities:

     Employee Stock options                                     332,091

     Convertible preferred stock                             26,802,883

     Convertible bonds                                       56,019,978
                                                         -----------------
Weighted average shares outstanding - diluted               117,346,507
                                                         =================
EPS - Diluted                                         $                 -
                                                         =================

                                       30
<PAGE>

(G) Recent Accounting Pronouncements

The  Financial  Accounting  Standards  Board has  recently  issued  several  new
accounting pronouncements:

Statement No. 146,  "Accounting  for Exit or Disposal  Activities"  ("SFAS 146")
addresses  the  recognition,  measurement,  and  reporting  of  costs  that  are
associated with exit and disposal  activities  that are currently  accounted for
pursuant to the guidelines set forth in EITF 94-3,  "Liability  Recognition  for
Certain  Employee  Termination  Benefits  and  Other  Costs to exit an  Activity
(including  Certain  Cost  Incurred  in  a  Restructuring),"   cost  related  to
terminating  a  contract  that  is not a  capital  lease  and  one-time  benefit
arrangements received by employees who are involuntarily terminated - nullifying
the guidance under EITF 94-3.  Under SFAS 146, the cost  associated with an exit
or disposal activity is recognized in the periods in which it is incurred rather
than at the date the  Company  committed  to the exit plan.  This  statement  is
effective for exit or disposal activities initiated after December 31, 2002 with
earlier application encouraged. The adoption of SFAS 146 did not have a material
impact on the Company's financial position, results of operations or liquidity.

In December 2002, the FASB issued  Statement of Financial  Accounting  Standards
No. 148,  Accounting for  Stock-Based  Compensation - Transition and Disclosure.
Statement 148 provides alternative methods of transition to Statement 123's fair
value method of accounting for stock-based employee compensation. It also amends
the  disclosure  provisions  of  Statement  123 and APB Opinion No. 28,  Interim
Financial  Reporting,  to  require  disclosure  in the  summary  of  significant
accounting  policies of the effects of an entity's  accounting  with  respect to
stock-based employee  compensation on reported net income and earnings per share
in annual and interim  financial  statements.  Statement  148's amendment of the
transition and annual  disclosure  requirements of Statement's 123 are effective
for fiscal years ending after December 15, 2002.  Statement  148's  amendment of
the  disclosure  requirements  of Opinion 28 is  effective  for interim  periods
beginning after December 15, 2002. The adoption of the disclosure  provisions of
Statement  148 as of  December  31,  2002 did not have a material  impact on the
Company's financial condition or results of operations.

In May 2003,  the FASB issued 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. This
statement is effective for financial  instruments entered into or modified after
May 31, 2003, and otherwise is effective for the first interim period  beginning
after June 15, 2003, with certain  exceptions.  We plan to adopt SFAS No. 150 in
the second quarter of Fiscal 2004. We do not expect the adoption of SFAS No. 150
to have a significant  impact on our consolidated  financial position or results
of operations.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others"  (FIN 45).  FIN 45  requires  that upon
issuance of a guarantee,  a guarantor  must  recognize a liability  for the fair
value  of an  obligation  assumed  under  a  guarantee.  FIN  45  also  requires
additional  disclosures  by a  guarantor  in its  interim  and annual  financial
statements  about  the  obligations   associated  with  guarantees  issued.  The
recognition  provisions  of FIN 45 are effective  for any  guarantees  issued or
modified after December 31, 2002. The disclosure  requirements are effective for
financial  statements  of interim or annual  periods  ending after  December 15,
2002. The adoption of this  pronouncement does not have a material effect on the
earnings or financial position of the Company.

                                       31

<PAGE>

(G) Recent Accounting Pronouncements  (continued)

In  January   2003,   the  FASB  issued   Interpretation   No.  46  ("FIN  46"),
"Consolidation of Variable Interest Entities." FIN 46 requires that if an entity
has a controlling  financial interest in a variable interest entity, the assets,
liabilities and results of activities of the variable  interest entity should be
included in the consolidated financial statements of the entity. FIN 46 requires
that its provisions are effective  immediately for all arrangements entered into
after January 31, 2003. The Company does not have any variable interest entities
created after  January 31, 2003.  For those  arrangements  entered into prior to
January  31,  2003,  the FIN 46  provisions  are  required  to be adopted at the
beginning of the first interim or annual period  beginning  after June 15, 2003.
The Company has not identified any variable  interest  entities to date and will
continue to evaluate whether it has variable  interest entities that will have a
significant impact on its consolidated balance sheet and results of operations.

Note 2   Settlement Agreements

On December 31, 2001, the Company's board of directors determined that it was in
the best  interests  of the Company to enter into a  settlement  agreement  with
Strategica  Services  Corporation (the "Settlement  Agreement" and "Strategica,"
respectively).  In exchange for the cancellation of any and all prior agreements
between  the  parties  and their  affiliates,  including  but not  limited to an
"Investment  Banking and  Advisory  Services  Agreement"  dated May 7, 1998 (the
"1998  Services  Agreement,"  discussed  more fully below),  the Company  issued
Strategica  1,030,495 shares of its common stock,  which represented 4.9% of the
common stock outstanding immediately after such issuance based on the 20,000,000
shares  outstanding as of the date of the Settlement  Agreement (the "Strategica
Shares").  The Strategica Shares have anti-dilution  rights tied proportionately
only to the class A convertible bond held by the Yankee  Companies,  LLC members
(the  "Class  A  Bond"  and  "Yankees  members,"   respectively)  upon  complete
conversion  of the Class A Bond.  The  $80,000  Class A Bond,  with a  remaining
principal  amount of $40,000 plus accrued  interest,  gives Yankees  members the
right to acquire up to 75% of the Company's authorized and reserved common stock
(the "Yankees Member Shares"),  and the Strategica  Shares will be reduced below
4.9% only to the extent the Yankees Members Shares are reduced below 75%, and in
direct proportion thereto.

The  Settlement  Agreement's  anti-dilution  terms  further  provide  that  upon
complete conversion of the Class A Bond and the payment of specified liabilities
of the  Company,  the  Strategica  Shares will not be diluted  below 2.5% of the
Company's then-outstanding common stock but that Strategica will have no further
anti-dilutive  rights thereafter.  Settlement expense of $153,719 was recognized
in fiscal year 2002 based on the  variable  accounting  method  pursuant to EITF
96-18.  The above  aggregate  settlement  expense  related to the  anti-dilutive
provisions  of this  settlement  agreement  may  increase or decrease  under the
variable  accounting  method  until  such  time as the  anti-dilutive  provision
expires and the final shares issued to Strategica  are  determined.  In December
2002, the Company issued  6,289,449 shares of its common stock relating to these
anti-dilutive provisions. (see Note 6 (B))

On March 6, 2002, the Company entered into a settlement  agreement with a vendor
and paid $2,750 in full settlement of debt. In connection with this  settlement,
the Company recorded settlement income of $25,094 on March 6, 2002.

                                       32
<PAGE>


Note 2   Settlement Agreements (continued)

On May 13, 2002, the Company settled the claims asserted by Prime Source Leasing
Inc. ("Prime Source") and General  Electric Capital Corp.  ("GE").  Prime Source
had sued GE for, among other things, $80,000 on a stop-payment check, and GE had
asserted a contingent  third-party claim against our Company for that amount. In
addition, Prime Source had asserted a direct claim against the Company, alleging
failure to pay a promissory  note for $85,606,  plus interest since November 30,
1998 and attorney's  fees.  Prime Source and GE settled their primary claim, and
so the  contingent  third-party  claim  against our Company  was  dismissed.  In
addition,  the Company settled its direct dispute with Prime Source. In exchange
for a general  release,  the Company  issued  Prime Source  1,000,000  shares of
restricted  common stock,  to be held in escrow  pending the receipt of a signed
general  release from Prime  Source.  These shares are included in the 6,424,869
shares in the statement of Changes in Stockholders'  Equity.  In connection with
this settlement,  the Company recorded  settlement income of $100,606 on May 13,
2002.

On May 1, 2002,  the Company  entered into a settlement  agreement with Deutsche
Financial Services Corporation  ("Deutsche").  Deutsche's claim was for $331,000
plus interest at the per annum rate of prime plus 6.5% since August 1, 1998, and
was based on a guaranty by the Company of a promissory  note  executed by one of
our divested  subsidiaries.  In exchange for the parties' general release of all
claims and  obligations  up to the date of the agreement,  Deutsche  received an
initial payment of $20,000 as of the filing of this report,  and is receiving an
additional  $2,500 (plus interest at the per annum rate of U.S. prime) per month
for 32 months  beginning June 15, 2002 and ending January 15, 2005 (an aggregate
additional  amount of $80,000 plus interest).  Additionally,  the Company issued
2,500,000  common shares in connection with this settlement (see Note 6 and Note
8).  These  shares are  included in the  6,424,869  shares in the  statement  of
Changes in Stockholders'  Equity. In connection with this settlement  agreement,
the Company  recorded  settlement  income of $323,502.  On August 11, 2003,  the
Company entered into a second  settlement  agreement and issued 4,000,000 shares
of its common stock in full  settlement of the remaining debt of $71,991,  which
included  outstanding  accrued interest of $3,241. The Company recognized a gain
on settlement of $11,991 relating to this settlement.(see Note 6)

In February 2003, the Company reached a settlement with two vendors for $15,000.
This resulted in a settlement gain of $6,431.

Note 3   Convertible Bonds Payable - Related Parties

On  December  31,  2001 (the  "Exchange  Date"),  the  Company  issued a Class A
Convertible  Bond to Yankee Companies LLC ("Yankees") in exchange for 19,820,712
unexercised  warrants and a series of matured and past-due promissory notes held
by Yankees.  The exchange was an exempt transaction  pursuant to Section 3(a)(9)
of the  Securities Act of 1933, as amended,  and  essentially  consolidated  the
warrants and promissory notes into the Class A Bond. The Class A Bond was in the
original  principal amount of $80,000 and had a term of one-year,  with interest
payable upon maturity at the  annualized  rate of 2% over the prime rate charged
during the Class A Bond's term by Citibank, N.A. (New York City).

                                       33
<PAGE>


Note 3   Convertible Bonds Payable - Related Parties (continued)

The Class A Bond was  convertible,  at the holder's  option,  into shares of the
Company's securities such that, upon complete  conversion,  the number of shares
owned by the  holder  would be equal  to 75% of the  Company's  outstanding  and
reserved capital stock, as defined in the bond document,  at the time conversion
was  completed,  subject to  anti-dilutive  rights for three months  thereafter.
Conversion  could be effected in whole or in part, and as of September 30, 2002,
had converted $40,000 in principal of the Class A Bond into the Company's stock.
At the Exchange  Date,  the fair market value of the  conversion  feature of the
Bond was equal to the fair market value of the warrants cancelled and therefore,
there was no charge or credit to  operations  for the  exchange.  In  substance,
anti-dilutive  changes in the  conversion  ratio were  considered  a  consulting
expense pursuant to the consulting  agreement on which the issuance of the prior
warrants was based.

On May 31,  2002,  the  bond  was  assigned  by  Yankees  to the  Tucker  Family
Spendthrift  Trust ("TFST") and the Calvo Family  Spendthrift  Trust ("CFST") in
equal shares.

On December 18, 2002,  at the request of the Company,  the holders of all of the
Company's Class A Bonds, converted the bonds into shares of the Company's common
stock and into non-voting  preferred stock. The Company  converted the Bonds and
issued  52,019,978  shares of its common stock and 520,200  shares of non-voting
preferred stock. (See Notes 4 and 6)

Note 4   Loans Payable - Related Parties

On September  24, 2001,  the Company  entered into a $150,000  revolving  credit
agreement with Yankee Companies,  Inc. Each loan under the agreement will be due
one year from the date of the loan and bears  interest at an annualized  rate of
2% over the prime  rate  charged  during  the period by  Citibank,  N.A.  and is
payable upon demand after the one year term. The line of credit was cancelled on
December 31, 2001. A new revolving credit agreement was entered into with Yankee
Companies,  LLC  containing  terms  identical  to  the  agreement  with  Yankees
Companies,  Inc. The revolving credit agreement expires in January 2004, subject
to automatic  annual  renewal,  and is secured by all of the  Company's  assets;
however,  due to changes in the  management  of  Yankees,  the Company no longer
considers these funds available and deems the line of credit  terminated.  As of
December 18,  2002,  the Company  entered into several  loans under these credit
agreements.   Borrowings  under  the  revolving  credit  agreements   aggregated
$363,630,  of which all were  assigned to Tucker  Family  Spendthrift  Trust and
Calvo Family Spendthrift Trust in equal amounts.  On March 28, 2002, the Company
borrowed an aggregate of $24,000 from Tucker Family  Spendthrift Trust and Calvo
Family  Spendthrift  Trust  (the  "Trusts")  under the same  terms as above.  On
December  19, 2002,  the Company  issued  19,381,549  shares of common stock and
193,815  shares  of  preferred  stock in full  satisfaction  of  these  loans of
$387,630  and $2,400 in accrued  interest  (based on a  contemporaneous  trading
price of $0.01 per common  share and a fair value of $1.00 per  preferred  share
(based on a conversion  ratio equal to 1/100th the number of shares of Preferred
Stock as the number of shares of common stock exchanged),  respectively, thereby
eliminating substantially all of its debts.

As of September 30, 2003,  the Company had received  advances of $2,769 from two
related  parties,  these  advances  bear  interest  at the  prime  rate plus two
percentage points. These advances are due upon demand.

                                       34
<PAGE>

Note 5   Commitments and Contingencies

(A) Consulting Agreement with Related Party

Under a consulting agreement with Yankee Companies, Inc. (the "Consultant"), who
became a principal  stockholder by virtue of the consulting agreements discussed
herein,  as consideration  for the first 200 hours of services provided (in lieu
of document  license fees and required  cash  payments  valued at $20,000),  the
Company agreed to issue within the first 365 days of the agreement (the "Initial
Term") to the  Consultant  options  designated  as Class A options  to  purchase
shares of the Company's common stock at an aggregate  exercise price of $40,000,
in an amount equal to 51% of the Company's common stock at the time exercise was
completed.

At the date of the consulting agreement,  8,066,326 shares of common stock would
have been issuable, had the Class A options been exercised in full on such date.
Any increase or decrease in the outstanding or reserved shares would result in a
corresponding  adjustment of the options' quantity and exercise price per share.
The options were exercisable from the 10th day until the 365th day following the
effective  date.  The term of Class A options  was amended in January 2, 2000 to
extend the term for  exercise to the later of December 31, 2002 or the 100th day
following  the date the Company  becomes  current in its SEC  filings  under the
Exchange Act.

On January 4, 2000, the Agreement was amended to modify the required payments to
the Consultant  based on the  Consultant's  standard hourly rates, by permitting
the Consultant to accept payment in capital stock at the conversion  rate of 50%
of the fair market  value of such stock;  increase  the  Consultant's  ownership
after exercise of the warrants to 75% from 51% and the aggregate  exercise price
to $80,000 from $40,000 and to clarify the Consultant's  preferential  rights to
subscribe  for  additional  securities  at a  purchase  price of 50% of the fair
market value. The term of the warrants was extended to the later of December 31,
2002 or the 100th  day after the  Company  registers  the stock  underlying  any
unexercised warrants.

On January 4, 2001,  an  additional  amendment  changed  the  consulting  fee to
$10,000 per month,  eliminating  hourly and document  licensing fees and changed
the  discounts  as noted in item  (a)(ii)  above to a  discount  of 10% from the
lowest  price at which  such  services  are  offered  to any other  person,  and
eliminated  the 5%  introduction  fee.  During the quarter  ended June 30, 2002,
Yankees and the Company  mutually  agreed to terminate the  Agreement  effective
December 31, 2001. In connection  with this  amendment,  the Company  recorded a
gain from the agreement  rescission of $30,000 during the quarter ended June 30,
2002.

In connection with the consulting  agreement between the Company and Yankees, an
additional  3,091,484  shares of common  stock  became  subject to the  Yankees'
warrants  during  the  year  ended  September  30,  2002 as a  result  of  their
anti-dilutive  provisions.   Accordingly,  consulting  expense  of  $86,963  was
recognized  during the year ended September 30, 2002.  Since Yankees  previously
paid for 50% of these shares,  the Company  included  1,545,742 shares in common
stock issuable as of September 30, 2002. The consulting  agreement was cancelled
on December 31, 2001 upon  conversion of all the warrants to a convertible  bond
(see Note 3).

See Note 6(D) for warrant grants and exercise under these agreements.

                                       35
<PAGE>

(B) Employment Agreements

Effective May 10, 2002, the Company entered into an employment agreement with an
individual  (the  "President")  pursuant to which he is engaged as the Company's
president and chief  executive  officer.  The agreement has a initial term of 30
days and then  continues on a  month-to-month  basis until the next  election of
Company  officers by the board of directors  or unless  terminated  earlier.  As
consideration for the President's services, the President receives 50,000 shares
of common stock per month for services  rendered.  This  compensation is paid at
the end of each  month in shares of the  Company's  common  stock.  Compensation
expense is recorded  monthly  and is  calculated  by using the  average  closing
transaction  price of the common  stock for the month then ended.  See note 6(b)
for stock issuances.

Effective June 14, 2001, the Company  entered into an employment  agreement with
its vice president and secretary.  The agreement is for a term of one year, with
renewal  thereafter from year to year unless either the Company or the Secretary
gives at least 60 days notice  prior to the end of the then  current  term of an
intention  not  to  renew,  and  contains  confidentiality  and  non-competition
clauses. As consideration for the Secretary's  services,  the Company has agreed
to compensate her according to the Company's pro rata share  (assuming a 40 hour
work week) of a base salary of $5,000 per month,  for time  actually  devoted to
her duties on behalf of the  Company.  This  compensation  is paid at the end of
each month,  and is paid partly in cash and partly in an amount of the Company's
common stock  calculated by using the average closing  transaction  price of the
stock for the month then ended. The agreement was orally amended as of September
1, 2003, to provide that it was terminable upon 30 days notice and to change the
compensation to a flat hourly rate of $10 in cash plus $20 in common stock.

Effective  June  18,  2001,  the  Company  engaged  its  general   counsel.   As
consideration  for his  services,  the  Company  has  agreed to  compensate  him
according  to the  Company's  pro rata share (based on the number of clients for
whom he is providing  legal  services) of (1) his current base salary of $40,000
per year and (2) $2,500 per month in common stock.  The stock portion is paid at
the end of each  month,  and is paid by an  equivalent  amount of the  Company's
common stock  calculated by using the average closing  transaction  price of the
stock for the month then ended.  Effective July 1, 2002, the Company amended its
engagement agreement with Kevin W. Dornan, Esquire, who will henceforth serve as
the Company's  part-time  securities counsel. As consideration for his services,
the Company has agreed to  compensate  him  according to the  Company's pro rata
share  (which is  currently  50%,  based on the number of clients for whom he is
providing  legal  services)  of (1) his current  base salary of $700 per week in
cash and (2) $400 per week in common  stock.  The equity  portion is paid at the
end of the month, and is paid by equivalent amount of the Company's common stock
calculated  by using the average  closing  transaction  price for the month then
ended. The agreement was orally amended as of September 1, 2003, to provide that
it was terminable  upon 30 days notice and to change the  compensation to a flat
hourly rate of $40 in cash plus $20 in common stock.

In July 2002, the Company engaged its Chief Financial Officer and Controller who
is paid hourly for services  performed  and $1,000 worth of common shares of the
Company  per month  computed  based on the average  closing  price for the month
ended. The engagement agreement is terminable upon 30 days notice.

                                       36
<PAGE>

(C) Director Agreements

Effective May 9, 2002, the Company  entered into  agreements  with 7 individuals
(the "Directors") pursuant to which they will serve as Directors. The agreements
are  for a term  of  one  year,  the  term  is  automatically  renewable  unless
superceded.  As consideration  for the Director's  services,  the members of the
Company's  board of directors  will each receive  10,000 shares per month of the
Company's common stock plus 5,000 additional shares for service on the audit and
executive committee,  2,500 shares for each additional committee of the board of
directors on which they serve,  2,000 additional shares for service on the audit
or  executive  committee of the board of directors on which they serve as chair,
and 1,000  additional  shares for each  committee  of the board of  directors on
which they serve as chair plus shares for attending meetings. (See Note 6)

(D) BellSouth Agreement

In November 1999, the Company  entered into a two-year  agreement with BellSouth
Telecommunications,    Inc.   to   become   an   alternative    local   exchange
telecommunications  company ("CLEC") in stipulated  states.  The Company has not
activated  its service and has no  obligation  under the  agreement  until usage
begins. The agreement's  initial term ended November 22, 2001 and then continued
from month to month.  In May 2002, the Company  renewed this agreement until May
2005.

Note 6   Stockholders' Equity

(A)      Preferred Stock

On May 14, 2002,  the  Company's  board of directors  adopted a  certificate  of
designation  for 1,000,000  shares of the 10,000,000  shares of preferred  stock
authorized  by the  shareholders  at the Annual  Meeting  (the  "Certificate  of
Designation").  The Certificate of Designation  designated  1,000,000  shares as
"Class A Non-Voting,  Convertible  Preferred Stock" (the "Preferred Stock"). The
holder  of shares of the  Preferred  Stock  will be  entitled  to all  dividends
declared by the board of  directors  at a rate per share 100 times that paid per
share of common  stock,  and will be entitled to convert each share of Preferred
Stock for 100 shares of common stock (subject to adjustment  upon the occurrence
of certain events as specified in the Certificate of  Designation),  but only to
the  extent  that the  aggregate  number of shares of common  stock  held by the
holder  (and any other  person with whom the holder  must  aggregate  shares for
purposes of Commission  Rule 144) is less than 5% of our  Company's  outstanding
common stock so that the holder will not be deemed to have "control"  within the
meaning of Commission Rule 405. The Certificate of Designation further provides:
(1) for liquidation rights that treat one share of Preferred Stock as if it were
100  shares of  common  stock in the event of the  liquidation,  dissolution  or
winding  up of our  Company;  (2) that the  Preferred  Stock will have no voting
rights;  and (3) that no holder of  Preferred  Stock may serve as an  officer or
director of our Company,  or serve in any  capacity  with our Company that would
render such person a "control  person"  within the meaning of the Securities Act
or the Exchange  Act. On April 17, 2003,  the  Certificate  of  Designation  was
amended to designate a total of 2,000,000 shares of Preferred Stock.

                                       37
<PAGE>

(B) Stock Issuances

On June 18, 2002, the CFST exchanged  2,756,251 common shares for 27,563 Class A
Non-Voting,  Convertible  Preferred Shares,  which is an amount equal to 1/100th
the number of shares of Preferred  Stock as the number of shares of common stock
exchanged.  The purpose of the exchange was to reduce the  stockholder's  common
stock holdings so that stockholder will not be considered a control person under
Item 403(d) of  Regulation  SB. The exchange was  transacted  at the fair market
value so that there was no gain or loss on the transaction.

As of May 2001,  the Company was  obligated to issue  200,000  common  shares to
Anthony Q. Joffe, a former  president and current  chairman of the board,  under
his employment  agreement at that time,  which has  terminated.  On November 15,
2001,  24,788 of the shares issuable under this agreement were issued,  with the
remaining 175,212 shares issued in June 2002.

During 2003 and 2002,  nil and 3,091,484  common  shares,  respectively,  became
subject to the consultant  warrants and subject to anti-dilutive  rights related
to the  convertible  bonds  payable  (Note 3). Of the total  112,039,951  common
shares  underlying the warrants and convertible  bonds payable with an aggregate
exercise  price of $80,000,  34,009,988  common  shares and 260,100  convertible
preferred  shares were  considered  as having been  issuable  based on a $40,000
payment for exercise  made  through  September  30, 2002.  The fair value of the
warrants and the  anti-dilutive  convertible bonds common stock equivalents were
estimated on the dates of grant using the variable accounting method pursuant to
EITF 96-18.  Accordingly,  consulting (income) expense of nil and $(197,846) was
recognized during the years ended September 30, 2003 and 2002, respectively.

On December 31, 2001, the Company's board of directors determined that it was in
the best  interests  of the Company to enter into a  settlement  agreement  with
Strategica  Services  Corporation (the "Settlement  Agreement" and "Strategica,"
respectively)  (See note 2). In  exchange  for the  cancellation  of any and all
prior  agreements  between the parties and their  affiliates,  including but not
limited to an "Investment  Banking and Advisory Services Agreement" dated May 7,
1998,   and  subject  to  the   effectiveness   of  a  sufficient   increase  in
capitalization  by the Company's  stockholders,  the Company  issued  Strategica
1,030,495 shares of its common stock on June 13, 2002, which will represent 4.9%
of the common stock  outstanding  immediately  after such issuance  based on the
20,000,000  shares  outstanding as of the date of the Settlement  Agreement (the
"Strategica  Shares").  The  Strategica  Shares have  anti-dilution  rights tied
proportionately  only to the Class A Bond held by the Yankee Companies,  LLC (or
any successor  instrument thereto) upon complete conversion of the Class A Bond.
The Class A Bond,  in the  original  principal  amount of $80,000  plus  accrued
interest,  gives  Yankees  the  right  to  acquire  up to 75%  of the  Company's
authorized and reserved common stock (the "Yankees Shares"),  and the Strategica
Shares  will be reduced  below 4.9% only to the  extent the  Yankees  Shares are
reduced below 75%, and in direct proportion thereto. The Settlement  Agreement's
anti-dilution terms further provide that upon complete conversion of the Class A
Bond and the payment of specified  liabilities  of the Company,  the  Strategica
Shares will not be diluted below 2.5% of the Company's  then-outstanding  common
stock but that Strategica will have no further  anti-dilutive rights thereafter.
In  December  2002,  the Company  issued  6,289,449  shares of its common  stock
pursuant to these anti-dilutive rights. (see Note 6 (B))

                                       38
<PAGE>

In connection with the above Strategica shares, the Company recorded  settlement
expense of $30,915 or $.03 per share  during the year ended  September  30, 2002
which  represents  the fair market value of the common  shares  issued as of the
date of the agreement.  Additional settlement expense of $122,804 was recognized
in fiscal year 2002 based on the  variable  accounting  method  pursuant to EITF
96-18. The above aggregate  settlement  expense of $153,719 based on a September
30, 2002 trading price of $.021 related to the anti-dilutive  provisions of this
Settlement  Agreement  may increase or decrease  under the  variable  accounting
method  until such time as the  anti-dilutive  provision  expires  and the final
quantity of shares to be issued as settlement is known.

On May 1, 2002,  the Company  entered into a settlement  agreement with Deutsche
Financial Services  Corporation  ("Deutsche") (See Note 2). Deutsche's claim was
for $331,000 plus interest at the per annum rate of prime plus 6.5% since August
1,  1998,  and was based on a  guaranty  by the  Company  of a  promissory  note
executed  by one of our  divested  subsidiaries.  In exchange  for the  parties'
general  release of all claims and  obligations up to the date of the agreement,
Deutsche  has  received  an initial  payment of $20,000 as of the filing of this
report,  and is to receive an additional  $2,500 (plus interest at the per annum
rate of U.S.  prime) per month for 32 months  beginning June 15, 2002 and ending
January 15, 2005 (an  aggregate  additional  amount of $80,000  plus  interest).
Deutsche received 2,500,000 shares of restricted common stock,  issued within 10
business days of the effectiveness of the increase in capitalization approved by
the Company's  shareholders  at its recent Annual  Meeting.  The Company  valued
these shares at $87,500 or $.035 per share during the year ended  September  30,
2002 which  represents the fair market value of the common shares issued,  based
on the quoted trading price, as of the date of the agreement. In connection with
this settlement  agreement,  the Company recorded settlement income of $323,502.
On August 11, 2003, the Company entered into a second settlement  agreement with
Deustche  and issued  4,000,000  shares of its  restricted  common stock in full
settlement  the  remaining  debt of  $71,991.  These  shares  were  valued  at a
contemporaneous  trading  price of $0.015 per share or  $60,000,  according  the
Company recognized a gain on settlement of $11,991. (See Note 2)

On May 10, 2002,  the Company  ratified a series of  amendments to the Company's
certificate of incorporation, which included the following:

(a) Increased the authorized  common stock from 20,000,000 shares to 650,000,000
shares, with a par value of $0.01 per share

(b) Authorized 10,000,000 additional shares as preferred stock, with a par value
of $0.001, and with all the preferences and  characteristics to be determined by
the board of directors on a case-by-case basis prior to issuance.

On May 13, 2002, the Company settled the claims asserted by Prime Source Leasing
Inc. ("Prime Source") and General  Electric Capital Corp.  ("GE").  Prime Source
had sued GE for, among other things, $80,000 on a stop-payment check, and GE has
asserted a contingent  third-party claim against our Company for that amount. In
addition, Prime Source had asserted a direct claim against the Company, alleging
failure to pay a promissory  note for $85,606,  plus interest since November 30,
1998 and attorney's  fees.  Prime Source and GE settled their primary claim, and
so the  contingent  third-party  claim  against our Company  was  dismissed.  In
addition,  the Company settled its direct dispute with Prime Source. In exchange
for a general  release,  the Company  issued  Prime Source  1,000,000  shares of
restricted  common stock,  to be held in escrow  pending the receipt of a signed
general  release from Prime Source.  In  connection  with this  settlement,  the
Company  recorded  settlement  income of $100,606.  On June 18,  2002,  the CFST
exchanged  2,756,251  common shares for 27,563 Class A  Non-Voting,  Convertible
Preferred  Shares,  which is an amount  equal to 1/100th the number of shares of
Preferred Stock as the number of shares of common stock  exchanged.  The purpose
of the exchange was to reduce the stockholders common stock holdings so that the
stockholder  will not be  considered  a  control  person  under  Item  403(d) of
Regulation  SB. The  exchange  was  transacted  at the fair market value so that
there was no gain or loss on the transaction.

                                       39
<PAGE>


In June 2002,  the Company issued  2,924,869  common shares for debt of $130,966
related to accrued officer and director compensation.  These shares are included
in the 6,424,869 shares in the statement of Changes in Stockholders' Equity.

In June 2002, in connection with the cashless exercise of 242,000 warrants,  the
Company issued 125,058 shares of common stock.

During the year ended September 30, 2002, the Company issued 1,263,157 shares of
common stock to directors  and employees  for services  rendered.  In connection
with these shares, the Company recorded compensation expense of $81,207.

During the year ended September 30, 2003, the Company issued 3,459,170 shares of
common stock to directors  and employees  for services  rendered.  In connection
with these shares, the Company recorded compensation expense of $86,284 based on
the average monthly closing price of the Company's common stock in the month the
services were performed.  As of September 30, 2003, 724,987 of these shares were
issuable.

In order  to fund  short  term  capital  requirements,  during  the  year  ended
September  30, 2003,  the Company  raised funds  through a private  placement of
7,505,000 shares of its common stock to directors of the Company, their families
and friends and affiliated entities,  at $0.01 per share, which provided $75,050
in working  capital for the year ended  September  30, 2003. As of September 30,
2003, 2,610,000 shares sold in this private placement were issuable. The private
placement was effected without registration under the Securities Act in reliance
on the  exemption  provided by Section 4(2) thereof.  Additionally,  the Company
raised funds  through a private  placement of 19,550  shares of its  convertible
preferred stock to CFST, at $1.00 per share,  which provided  $19,550 in working
capital during the year ended September 30, 2003.

On December 19, 2002, the Company issued  19,381,549  shares of common stock and
193,815 shares of preferred  stock in full  satisfaction  of related party loans
totaling  $387,630 and accrued  interest of $2,400  (based on a  contemporaneous
trading  price of $0.01 per common share and a fair value of $1.00 per preferred
share  (based on a  conversion  ratio  equal to 1/100th  the number of shares of
Preferred Stock as the number of shares of common stock exchanged). (See Note 4)

On December 18, 2002,  at the request of the Company,  the holders of all of the
Company's Class A Bonds, converted the bonds into shares of the Company's common
stock and into non-voting  preferred stock. The Company  converted the Bonds and
issued  52,019,978  shares of its common stock and 520,200  shares of non-voting
preferred stock. (See Note 3)

In February 2003,  112,000 warrants were exercised and the Company issued 90,666
shares of the Company's common stock under a cashless exercise of warrants.

In  February  2003,  holders  of  the  Company's  convertible  preferred  stock;
exchanged 48,613 shares of preferred stock for 4,861,300 shares of the Company's
common stock.

In April 2003,  1,195,681  shares of the Company's common stock were returned by
an employee due to an over issuance for services rendered. The Company accounted
for this as a capital contribution against additional paid-in capital at the par
value ($.001) of the Company's common stock or $11,957.

During the quarter ended March 31, 2003,  the Company  issued  100,000 shares of
its common stock to a public relations  consultant (see Note 5) which vests over
the term of the contract or sixty days.  In connection  with these  shares,  the
Company recorded consulting expense of $4,000 based on the average closing price
of the Company's common stock over the vesting period or $0.04 per share.

                                       40
<PAGE>

In December 2002, the Company  exchanged 10,000 shares of convertible  preferred
stock into 1,000,000 common shares.

In December 2002, the Company issued 6,289,449 shares of common stock previously
reflected as issuable.

(C) Stock Option Plan

Effective  January 1, 2002,  the Board of Directors  of the Company  adopted the
2002  Non-Qualified  Stock Option and Stock  Incentive Plan (the "2002 Plan") to
provide added  incentive for high levels of performance to officers,  directors,
employees,  consultants,  and  independent  contractors of the Company.  Options
granted under the 2002 Plan are designed either as incentive stock options or as
non-qualified  stock  options.  The 2002 Plan will terminate on January 1, 2012,
unless earlier terminated.  The 2002 Plan authorizes options for the purchase of
up to an  aggregate of  5,000,000  shares of the  Company's  common  stock.  The
Company grants non-qualified and incentive stock options.  Non-qualified options
may be granted  to  officers,  employees,  directors,  consultants,  independent
contractors,  or other  service  providers  of the Company at an exercise  price
determined  by the  Stock  Option  Plan  Committee  of the  Company's  Board  of
Directors  (the  "Committee")  which shall be at least equal to 100% of the fair
market  value of the  common  stock at the date of the  grant.  Incentive  stock
options may only be granted to officers,  employees, and directors, who are also
employees of the Company at an exercise price determined by the Committee, which
shall not be less than 100% of the fair market  value of the common stock at the
date of grant  and may not be less  than  110% of the fair  market  value of the
common stock at the date of grant if granted to an  individual  owning more than
ten (10) percent of the total combined voting power.  Options are exercisable at
dates and conditions  determined by the Committee at the time of grant. However,
an option may not be exercised after the expiration of 10 years from the date it
is granted.  In the case of incentive stock options the term may not exceed five
years if granted to an option  holder  owning more than ten (10)  percent of the
total combined voting power.  Through the date of the accompanying audit report,
no stock options have been granted under the plan.

(D) Warrants and Options

The  Company  granted  options to  purchase  503,000  shares of common  stock to
directors and officers in April 2002,  at an exercise  price of $0.02 per share,
for services.  These  warrants were scheduled to expire on December 31, 2002. An
expense of $5,030 was recognized immediately based in the intrinsic value method
under APB 25.

The Company issued warrants for the purchase of 3,091,484 shares of common stock
to a consultant in fiscal year 2002. Based on the fair value method of SFAS 123,
a consulting  expense of $86,963 was recognized in fiscal year 2002, (See note 3
for  reversal of certain  consulting  expenses in fiscal 2002 under the variable
accounting  method),  respectively,  based  on the  variable  accounting  method
pursuant to EITF 96-18.  The above  aggregate  consulting  expense for all years
relating  to  these  warrants  may  increase  or  decrease  under  the  variable
accounting method as described in Note 3.

                                       41
<PAGE>

A summary of the options issued under the  employment and consulting  agreements
as of  September  30,  2003 and 2002 and changes  during the years is  presented
below:

<TABLE>
<S>                                          <C>                    <C>               <C>                      <C>
                                                         2003                                       2002
                                                                   Weighted                                   Weighted
                                            Number of               Average           Number of               Average
                                           Options and             Exercise          Options and              Exercise
                                            Warrants                 Price             Warrants                Price
                                       ----------------- ----- --------------- -- ---------------- ----- ----------------
    Stock Options
    Balance at beginning of year             1,293,000      $        0.03              1,102,000      $        0.04
    Granted                                          -               0.00                503,000               0.02
    Exercised                                 (112,000)              0.02               (242,000)              0.04


    Forfeited                                   -                    0.00                (70,000)              0.05
                                       ----------------- ----- --------------- -- ---------------- ----- ----------------
    Balance at end of year                   1,181,000      $        0.03              1,293,000      $        0.03
                                       ================= ===== =============== == ================ ===== ================
    Options exercisable at end of
      period                                 1,181,000      $        0.03              1,293,000      $        0.03
                                       ================= ===== =============== == ================ ===== ================
    Weighted average fair value of                          $        0.00                             $        0.02
      options granted during the
      period
</TABLE>

The following  table  summarizes  information  about  employee stock options and
consultant warrants outstanding at September 30, 2003:
<TABLE>
<S>                     <C>               <C>              <C>                   <C>                 <C>
                   Options and Warrants Outstanding                          Options and Warrants Exercisable
--------------------------------------------------------------------------    ----------------------------------
                                             Weighted
                          Number             Average          Weighted            Number            Weighted
      Range of        Outstanding at        Remaining          Average        Exercisable at         Average
     Exercise         September 30,       Contractual        Exercise         September 30,        Exercise
      Price              2003                Life             Price              2003               Price
  ------------    ------------------    -------------     ------------    ------------------    ------------
$   0.02 -0.05        1,181,000         0.75 Years       $    0.03             1,181,000        $    0.03
                  ==================    =============     ============    ==================    ============

</TABLE>

On  December  19,  2002,  the  Company  extended  the  expiration  date  of  all
outstanding  options  and  warrants  through  January  1,  2004.  There  was  no
accounting effect for this modification of the warrants.

In  December  2003,  the  Company  again  extended  the  expiration  date of all
remaining options and warrants  outstanding through June 30, 2004. There was no
accounting effect for this modification of the warrants.

(E) Pro Forma Disclosures

In accordance with Statement of Financial  Accounting Standards 123, for options
issued to employees, the Company has elected to apply the intrinsic value method
of Accounting  Principles  Board Opinion Number 25 and related  interpretations.
Accordingly,  there  was  no  charge  to  compensation  during  2003  and  2002,
respectively,  since the fair  market  value of the common  stock based upon the
trading price at the grant date exceeded the exercise  price.  Had  compensation
cost been recognized  based on the fair market value of the options on the grant
date  consistent  with  Statement of  Financial  Accounting  Standards  123, the
Company's change in net income (loss) for the years ended September 30, 2003 and
2002 would not have been material.

The effect of applying  Statement of Financial  Accounting  Standards 123 is not
likely to be  representative  of the effects on reported  net income  (loss) for
future years due to, among other things, the effects of vesting.

                                       42
<PAGE>

Note 7   Income Taxes

     There was no current income tax provision for the years ended September 30,
2003 and 2002 due to the Company's net taxable loss.

     The Company's tax expense  differs from the  "expected" tax expense for the
years ended  September  30,  2003 and 2002  (computed  by  applying  the Federal
Corporate tax rate of 34 percent to loss before taxes), as follows:

<TABLE>
<S>                                                             <C>             <C>
                                                              2003               2002
                                                         ---------------     --------------
Computed "expected" tax expense (benefit)             $        (55,842)   $         35,912
Non-deductible stock based compensation                          30,696                  -
Recharacterization of temporary differences
relating to stock based compensation                          5,113,736
Change in valuation allowance                              (5,088,590)           (35,912)
                                                         ---------------     --------------
                                                      $           -       $          -
                                                         ===============     ==============

</TABLE>

The tax effects of temporary  differences that give rise to significant portions
of deferred tax assets and  liabilities  at  September  30, 2003 and 2002 are as
follows:

<TABLE>
<S>                                                       <C>                   <C>
                                                             2003               2002
                                                        ---------------    ---------------
Deferred tax assets:
Net operating loss carryforward                      $      1,137,610   $      1,112,465
Stock based compensation                                            -          5,113,736
                                                        ---------------    ---------------
Total gross deferred tax assets                             1,137,610          6,226,201
Less valuation allowance                                   (1,137,610)        (6,226,201)
                                                        ---------------    ---------------
Net deferred tax assets                              $           -      $           -
                                                        ===============    ===============
</TABLE>

The net change in the valuation  allowance  during the year ended  September 30,
2003 was an decrease of $5,088,591.

At September  30, 2003,  the Company had net  operating  loss carry  forwards of
approximately  $3,345,911  for income tax  purposes,  available to offset future
taxable  income  expiring  on  various  dates  through  2023.  Usage  of the net
operating  losses may be limited if the Company  undergoes a change in ownership
or change in business, or by the alternative minimum tax.

In assessing the realizability of the deferred tax assets,  management considers
whether it is more likely than not that some portions or all of the deferred tax
assets will not be realized.  The ultimate realization of deferred tax assets is
dependent  upon the  generation of future taxable income or changes in ownership
or  business  during  the  periods  in which the  temporary  differences  become
deductible.  Due  to  the  Company's  reorganization  and  the  ceasing  of  all
operations,  except for possible consulting  activities,  it is more likely than
not that the deferred tax assets will not be realized.

                                       43
<PAGE>

Note 8   Legal Matters

(A) The Company versus ITA

In September  1998,  ITA defaulted in its payments to T2U Co., doing business as
RCP, for services  rendered to third parties,  payment of which was collected by
ITA. Thereafter, RCP and two other corporations, Psychic Discovery Network, Inc.
("PDN"),  a Delaware  corporation  affiliated  with the Company  through  common
ownership by the principal shareholder of PDN's parent,  Viatech  Communications
Group, Inc. and BLJ Communications,  Inc., a Florida corporation,  all creditors
of ITA,  filed a petition  seeking  ITA'S  involuntary  bankruptcy  pursuant  to
Chapter 7 of the United States  Bankruptcy  Code. It is  management's  assertion
that a favorable outcome for the Company is not likely.

(B) Ziff Davis, Inc. vs. BTS

On February  12,  1999,  Ziff-Davis  filed an action for damages  against BTS. A
material  judgment was entered  against BTS on July 26, 1999 for  $133,348  plus
interest  at 10%  through  December  31,  1999  and at the  Florida  legal  rate
thereafter.  At the time of the judgment,  BTS was no longer a subsidiary of the
Company.  Management  of the  Company and its  counsel  believe  that absent the
ability to "pierce  the  corporate  veil," no  liabilities  attributable  to BTS
should affect the Company.

Note 9  Going Concern

The  accompanying  financial  statements  have been  prepared  assuming that the
Company will  continue as a going  concern.  The Company has no active  business
operations, has recurring losses including the net loss in 2003 of $164,240, had
cash used in  operations  of  $92,549  in 2003,  had an  accumulated  deficit of
$18,476,594 at September 30, 2003.  These  conditions  raise  substantial  doubt
about the Company's ability to continue as a going concern.

The  Company  maintains  an  agreement  as a  telephone  service  reseller  with
BellSouth  and  management  looks to  expand  on such  operations,  or  locate a
merger/acquisition candidate.

Note 10  Related Parties

During  2002,  the Company  recorded  $30,000  (net of $30,000 gain on agreement
rescission)  in  consulting  fees  payable to a  principal  stockholder  under a
consulting agreement. (See Note 5(A))

The  Company  is  employing  its  corporate  counsel  under a shared  employment
agreement with the Company's  principal  stockholder  and consultant  (see Notes
5(A) and 5(B)).  In the event of any conflict of interest,  under the agreement,
the corporate counsel represents the principal stockholder only.

The Company is a subsidiary of the TFST who controls 60.5% of our common stock.

                                       44
<PAGE>

Note 10  Related Parties (continued)

The Company  maintains  its  corporate  offices at the offices of the  Company's
president.  As all officers are independent  contractors  and, as such,  provide
their own offices,  no substantive work is done out of the corporate offices and
thus no rent is charged to the Company and no rent expense is  recognized in the
accompanying financial statements.

The Company's Chief Financial Officer also serves as the Chief Financial Officer
of a publicly traded affiliate of the Company.

Note 11  Concentration of Credit Risk

Currently, the Company has no source of funding.

Note 12 Subsequent Events

In October 2003,  the Company issued  2,610,000  shares of its common stock that
were  considered  issuable  pursuant  to the sale of such stock  under a private
placement as of September 30, 2003.

In October 2003,  the Company  issued  691,987  shares of its common stock,  for
services  rendered during the period July though September 2003, to its officers
and directors. These shares were recorded as issuable as of September 30, 2003.

For the period  October 1, 2003 through  November 30, 2003,  the Company  issued
404,700  shares of its  common  stock to  officer  and  directors  for  services
rendered  valued at the average trading price during month in which the services
are provided.

                                       45
<PAGE>

ITEM 8.        CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     During our Company's last two fiscal years, there have been no change in or
disagreements with our principal independent accountants.

ITEM 8A.       CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.

     Our management,  under the supervision  and with the  participation  of our
chief  executive  officer  and  principal   financial  and  accounting  officer,
conducted an evaluation of our "disclosure  controls and procedures" (as defined
in ss.ss.  240.13a-14(c) and 240.15d-14(c)) within 90 days of the filing date of
this  Annual  Report on Form  10-KSB  (the  "Evaluation  Date").  Based on their
evaluation,  our chief executive officer and principal  financial and accounting
officer have concluded that as of the Evaluation  Date, our disclosure  controls
and procedures are effective to ensure that all material information required to
be filed in this report has been made known to them in a timely fashion.

Changes in Internal Controls.

     There have been no significant  changes (including  corrective actions with
regard to  significant  deficiencies  or material  weaknesses)  in our  internal
controls or in other  factors that could  significantly  affect  these  controls
subsequent to the Evaluation Date set forth above.

                                    PART III

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

Directors and Executive Officers

     As of September  30, 2003,  the following  persons  served as our Company's
directors and executive officers:

Name                      Age (1)    Term(2)   Positions
Anthony Q. Joffe          61         (3)       President,Chief Executive Officer
                                               Director, Chairman of the board
                                               of directors
Robert S. Gigliotti       54         (6)       Director,  chair  of the audit
                                               committee
Lawrence R. Van Etten     66         (5)       Director,  member of the audit
                                               committee
Vanessa H. Lindsey        32         (4)       Vice-President, Secretary and
                                               Director
Edward C. Dmytryk         58         (8)       Director
Adam Wasserman            39         (9)       Chief Financial Officer and
                                               Controller
Kevin W. Dornan           51         (7)       Counsel

     As a material  subsequent  event,  effective  January 21,  2004,  Edward C.
Dmytryk  resigned as a director in accordance  with Article XIV of our Company's
articles of  incorporation.  This  resignation did not involve any  disagreement
with our Company's policies or procedures.

(1)  As of September 30, 2003.
(2)  All  directors  were  elected  for a term ending at such time as his or her
     successor  is  elected  at  the  next  annual   meeting  of  our  Company's
     stockholders  and is  qualified in office,  and all  officers  serve at the
     pleasure of the board of directors,  subject to any  contractual  rights to
     compensation that may survive their termination.
(3)  Mr.  Joffe was elected as a member of our  Company's  board of directors on
     January 12, 1999,  as the chairman of our  Company's  board of directors in
     March 1999,  and as our Company's  President on May 4, 1999. He resigned as
     President and Chief Executive  Officer on May 14, 2001, but remained as its
     Chairman  and a  director.  On May 10,  2002,  he was again  elected as our
     Company's President and Chief Executive Officer.
(4)  Mrs. Lindsey was elected as our Company's secretary on January 12, 1999, as
     a member of our Company's  board of directors  effective  February 1, 2000,
     and as our Company's Vice-President on June 14, 2001.
(5)  Mr. Van Etten was elected as a member of our  Company's  board of directors
     on May 31, 2000, and a member of the audit committee on May 6, 2003.
(6)  Mr.  Gigliotti was elected as a member of our Company's  board of directors
     on December  11,  1997,  as a member of the audit  committee on October 27,
     2000, and as chair of the audit committee of May 6, 2003.
(7)  Mr. Dornan was elected as our Company's counsel effective June 18, 2001.
(8)  Mr. Dmytryk was elected as a member of our Company's  board of directors on
     May 14, 2001, and served as its President and Chief Executive  Officer from
     May 14, 2001 to May 10, 2002. As noted above, he resigned effective January
     21, 2004.
(9)  Mr.  Wasserman was elected as our  Company's  Chief  Financial  Officer and
     Controller on March 26, 2002.

                                       46
<PAGE>

Biographies of Directors and Executive Officers

Anthony Q. Joffe, Director and Chairman, President and Chief Executive Officer.


     Anthony Q. Joffe,  age 61, has served as a member of our Company's board of
directors  since  January  12,  1999.  In March 1999,  Mr.  Joffe was elected as
chairman  of the board of  directors  and in May  1999,  he was  elected  as our
Company's president. He resigned as president and chief executive officer on May
14, 2001, but remained as chairman of the board and a director. On May 10, 2002,
he was re-elected as our Company's  President and Chief Executive  Officer.  Mr.
Joffe  holds  a  degree  in  Aeronautical  Engineering  Management  from  Boston
University, Boston, Massachusetts.  During the past five years, he has served as
Managing Director of NorthStar Capital,  an investment banking firm with offices
in Stamford,  Connecticut and Boca Raton,  Florida that specializes in assisting
small to mid-size  private and  publicly  traded  companies  with  business  and
financial planning, acquisition and divestiture,  financial public relations and
market  position  advice,  and  treasury  services.  He has also  founded a boat
financing company,  currently known as USA Boating. Mr. Joffe served as a member
of the Board of  Directors  of AmeriNet  Group.com,  Inc.  (currently  Park City
Group,  Inc.), a publicly held Delaware  corporation  from November 1998 to June
2001.

Robert S. Gigliotti, Director, chair of the audit committee.

     Robert  S.  Gigliotti,  age 54,  served  as our  Company's  secretary  from
November  10,  1997 until  January 12,  1999,  and has served as a member of our
board of directors  since  December 11, 1997,  and as a member of our  Company's
audit committee since May 30, 2000. In 1970, Mr. Gigliotti received a bachelor's
degree in business from Alma College, Alma, Michigan, and received his certified
public  accountant  license  in 1972.  Mr.  Gigliotti  currently  serves  as the
managing  tax  partner  of  Perrin,  Fordree & Company  (with  which he has been
associated since 1976). Mr. Gigliotti's specialties include estate and financial
planning, franchising and corporate taxation.

Lawrence R. Van Etten, Director, member of the audit committee

     Mr. Van  Etten,  age 66, was  elected as member of our  Company's  board of
directors  on May 31,  2000.  He  graduated  from  New  York  Military  Academy,
Cornwall-On-Hudson,   New  York  in  1954  and  attended   Gettysburg   College,
Gettysburg, Pennsylvania from 1954 to 1956 and Marist College, Poughkeepsie, New
York from 1981 to 1982.  During the past five years, Mr. Van Etten has served as
an  executive  with  several  companies  in the United  States and Canada  (Vice
President,  International Digital Communications  Systems, Inc., Miami, Florida,
Telecommunications  Sales, 1996-1998;  President TechTel  Communications,  Inc.,
Pompano  Beach,  Florida,  CLEC Service  Provider,  1998-1999;  and he owned and
managed his own  consulting  company LVE &  Associates,  US & Canada,  including
several long-term contracts with Toyada Gosei, Best Glove Canada,  Remtec, Inc.,
Prestige Auto and Strategic  Health  Development  Corporation).  Much of Mr. Van
Etten's  recent work  experience  has dealt with  business  management  systems,
materials  management,  management  development,  personal computer  application
software and the Internet.  From May 22, 2000 until  December 22, 2000,  Mr. Van
Etten served as acting president and chief operating officer, and until June 13,
2001 as a  member  of the  board  of  directors,  of  AmeriNet  Group.com,  Inc.
(currently Park City Group, Inc.), a publicly held Delaware corporation.

Edward C. Dmytryk, Director.

     Mr. Dmytryk, age 58, serves as a member of our Company's board of directors
and served as the president and chief executive officer from May 14, 2001 to May
10, 2002. He graduated summa cum laude from The Citadel, The Military College of
South  Carolina,  in  1968  with  a  bachelor  of  science  degree  in  business
administration.  From 1968 until 1973,  Mr.  Dmytryk served in the United States
Air Force as a fighter  and  instructor  pilot,  attaining  the rank of  captain
(regular  United States Air Force).  During the past five years, he has been the
owner and  chief  executive  officer  of  Benchmark  Industries,  Inc.,  a metal
fabrications  company  headquartered in Fort Worth, Texas. Since September 1999,
he has also served as the  president  of GNR Health  Systems,  Inc.,  a physical
therapy  products  sales  company  located in Ocala,  Florida.  In addition,  he
currently serves as president and chief financial officer of Sohn, Inc., located
in Roswell, Georgia, a company specializing in marketing,  sales, and installing
fitness  products in the  hospitality and apartment  market (fitness  centers in
hotels,  condominium  complexes,  and apartments  throughout the United States).
From  December  2000 to June 2001,  he served as president  and chief  executive
officer of  AmeriNet  Group.com,  Inc.  (currently  Park City  Group,  Inc.),  a
publicly held Delaware  corporation,  as a member of its board of directors from
1999 to the present, and as its acting chief financial officer from October 2002
through June 2003.

                                       47
<PAGE>

Vanessa H. Lindsey, Vice-President, secretary and director.

     Vanessa H. Lindsey,  age 32, was elected  vice-president  of our Company on
June 14, 2001,  has served as our Company's  secretary and chief  administrative
officer since January 1999 and was elected as a member of the board of directors
effective  February  1, 2000.  From 1995 to 2001 she was  employed  as the chief
administrative  officer of Diversified  Corporate  Consulting  Group,  L.L.C., a
Delaware limited liability company engaged in providing  diversified  consulting
services and in filing  EDGARized  documents  for clients  with the  Commission.
Since 1996 she has been  employed by the  Southeast  Companies,  Inc., a Florida
corporation,  involved in the entertainment  industry, in business and political
consulting  and  as  a  licensed  mortgage  brokerage  company,   as  its  chief
administrative officer and currently serves as its vice president and secretary.
She is also the  secretary  and  chief  administrative  officer  for The  Yankee
Companies  ("Yankees"),  which serves as a strategic  consultant to our Company.
Mrs.  Lindsey held the position of  secretary of the Marion  County  Libertarian
Party  and was the  campaign  treasurer  for the Cyndi  Calvo for State  Senate,
District 8 Campaign from 1998 to 2000.  From November 11, 1999 to June 13, 2001,
she served as secretary for AmeriNet Group.com,  Inc.(currently Park City Group,
Inc.), a publicly held Delaware corporation, and served as a member of its board
of directors  from April 6, 2000 to June 13, 2001.  Since January 2001,  she has
also  served as the  secretary  and as a member of the  board of  directors  for
Explorations Group, Inc., a publicly held Delaware corporation.

Adam Wasserman, Chief Financial Office & Controller

     Adam Wasserman, age 39 was elected as our Company's chief financial officer
and controller on March 26, 2002. Mr.  Wasserman holds the degree of Bachelor of
Administration  from  the  State  University  of New  York  at  Albany.  He is a
Certified Public  Accountant (New York), and a member of The American  Institute
of Certified  Public  Accountants and the Florida  Institute of Certified Public
Accountants.  Mr. Wasserman  currently serves as the chief executive officer and
director  of CFO Oncall,  Inc.,  a firm  specializing  in  financial  consulting
services that he founded in 1999, which is located in Weston, Florida. From 1991
to 1999,  he was an audit  manager at  American  Express  Tax & Business in Fort
Lauderdale,  Florida,  where he served as an  outsourced  CFO and  advisor  to a
diversified clientele in the technology, medical, retail, and service industries
in both the  private  and public  sectors.  Mr.  Wasserman  has also served with
Deloitte & Touche, LLP in New York City, where he conducted audits of public and
private  companies,  tax preparation and planning,  management  consulting,  and
systems  design.  .He  currently  serves as the  Treasurer of Gold Coast Venture
Capital  Club,  was a former  officer of  Toastmasters  International,  and is a
member of the Florida  Venture  Forum,  Weston  Chamber of Commerce  and Broward
County Chamber of Commerce. Since June 14, 2002, he has also served as the chief
financial officer and controller for Explorations  Group,  Inc., a publicly held
Delaware corporation.

Kevin W. Dornan, Esquire, Counsel

     Kevin W. Dornan,  age 51, was engaged as our  Company's  counsel as of June
18, 2001.  He is a graduate of the Johns Hopkins  University  (Bachelor of Arts,
philosophy,  1973);  the  University of North Carolina at Chapel Hill (Master of
Arts,  philosophy,  1975);  the Catholic  University of America (Master of Arts,
religious  studies,  1979);  and the University of Maryland School of Law (Juris
Doctor,  1987),  where he served as  editor-in-chief of the 1986-87 Maryland Law
Review. During law school, he also served as a judicial intern for The Honorable
James R. Miller,  Jr., of the U.S.  District Court for the District of Maryland.
In  1997,   Mr.   Dornan   became  the  general   counsel   for  DWA  Corp.,   a
telecommunications company in St. Augustine,  Florida. From June 2001 until July
2003, he served as counsel for The Yankee  Companies,  a privately owned Florida
limited liability  company.  From June 2001 until August 2003, he also served as
counsel for Explorations Group, Inc., a publicly held Delaware  corporation.  He
is admitted to practice before the Court of Appeals of Maryland; the District of
Columbia  Court of Appeals;  the Supreme  Court of Florida;  the U.S.  Courts of
Appeals for the District of Columbia, Second, Fourth, and Eleventh Circuits; and
the U.S.  District Courts for the District of Maryland,  the Eastern and Western
Districts of Arkansas,  the  District of  Columbia,  and the Middle  District of
Florida. Mr. Dornan has served as senior adjunct professor of business ethics at
Saint  Leo   University  in  Saint  Leo,  St.   Augustine  and  Ocala,   Florida
(1996-present),  and as an adjunct  professor of business  ethics and  corporate
social   responsibility   at  Eckerd   College   in  St.   Petersburg,   Florida
(1996-present). In 1998, he was named to Who's Who in American Law.

                                       48
<PAGE>

Other Significant Personnel

     In addition to our Company's directors and executive officers,  during part
of the report  period  William A.  Calvo,  III and  Leonard M.  Tucker  provided
material  services to our Company  through The Yankee  Companies,  in which they
served as members and/or executive officers and which their family trusts owned.
The Yankees Companies no longer operates.  Because of the number of shares owned
by the Tucker Family  Spendthrift Trust, it should be deemed a control person of
our Company.

Family Relationships.

     There are no family  relationships among the current officers and directors
of our Company.

Involvement in Certain Legal Proceedings.

     Based on information  provided in response to our Company's  legal counsel,
except as otherwise disclosed in this report, during the five year period ending
on  September  30,  2003,  no current  director,  person  nominated  to become a
director or executive officer,  and no promoter or control person of our Company
has been a party to or the subject of:

(1)  Any  bankruptcy  petition  filed by or against  any  business of which such
     person was a general partner or executive officer either at the time of the
     bankruptcy or within two years prior to that time;

(2)  Any  conviction  in a criminal  proceeding or has been subject to a pending
     criminal   proceeding   (excluding   traffic  violations  and  other  minor
     offenses);


(3)  Any order,  judgment,  or decree, not subsequently  reversed,  suspended or
     vacated, of any court of competent jurisdiction, permanently or temporarily
     enjoining, barring, suspending or otherwise limiting his or her involvement
     in any type of business, securities or banking activities; and

(4)  Been found by a court of competent  jurisdiction  (in a civil action),  the
     Commission or the Commodity  Futures Trading  Commission to have violated a
     federal or state  securities or  commodities  law, and the judgment has not
     been reversed, suspended, or vacated.

Audit Committee Financial Expert

     Our  Company's  board of directors has  determined  that our Company has at
least one audit committee financial expert serving on its audit committee. He is
Robert  Gigliotti,  CPA,  and he is  "independent"  within  the  meaning of Item
7(d)(3)(iv) of Schedule 14A under the Exchange Act.

Compliance with Section 16(a) of the Exchange Act

     Based solely upon a review of any Forms 3, 4 and 5, and amendments thereto,
furnished to our Company during and with respect to its most recent fiscal year,
no person who, at any time during the fiscal year, was a director,  officer,  or
beneficial  owner of more than ten percent of our  Company's  common  stock (its
only  class of  equity  securities  registered  pursuant  to  Section  12 of the
Exchange  Act),  failed to file on a timely  basis,  as  disclosed  in the above
Forms, reports required by Section 16(a) of the Exchange Act for the most recent
fiscal year or prior fiscal years.

Code of Ethics.

     Our  Company  is still in the  process of  adopting  a code of ethics  that
applies to our Company's  principal  executive  officer and principle  financial
officer, but expects to adopt such a code within the next 60 days.

                                       49
<PAGE>

ITEM 10.          EXECUTIVE COMPENSATION.

Summary Compensation Table
<TABLE>
<S>                <C>      <C>     <C>     <C>       <C>             <C>              <C>               <C>
                                                     Long Term Compensation

                  Annual Compensation                Awards                                      Payouts
                                                                       Securities
                                                     Other             Underlying       Long              All
Name &                                      Annual   Restricted        Options &        Term              Other
Principal                                   Compen Stock               Stock Apprecia-  Incentive         Compen
Position          Year     Salary   Bonus   sation   Awards            tion Rights      Payouts           sation
--------          ----     ------   -----   ------   ------            -----------      -------           ------
Mr. Joffe (1)     2001     *        *       *        $1,735            *                *                 *
Mr. Dmytryk (2)   2001     *        *       *        $21,175           *                *                 *
Mrs. Lindsey (3)  2001     $2,442   *       *        $16,098           *                *                 *
Mr. Dornan (4)    2001     $7,692   *       *        $8,750            *                *                 *
Mr. Dmytryk(5)    2002     *        *       *        $30,*67           *                *
Mr. Joffe(1)      2002     *        *       *        $16,625           *                *                 *
Mrs. Lindsey (3)  2002     $2,115   *       *        $53,624           *                *                 *
Mr. Dornan(4)     2002     $4,196   *       *        $32,360           *                *                 *
Mr. Wasserman(5)  2002     $3,858   *       *        $6,250            *                *                 *
Mr. Joffe(1)      2003     *        *       *        $21,042           *                *                 *
Mrs. Lindsey (3)  2003     $3,654   *       *        $7,308            *                *                 *
Mr. Dornan(4)     2003     $17,860  *       *        $8,140            *                *                 *
Mr. Wasserman(5)  2003     $3,858   *       *        $12,000           *                *                 *
----------
</TABLE>
(1)   For services as our Company's president and chief executive officer.
(2)   For services as our Company's president and chief executive officer
      (May 2001- May 2002).
(3)   For services as our  Company's  vice  president  and  secretary.  The
      salary  figure for 2003 is a  reasonable,  best estimate because of some
      missing records;  if additional records show a material  difference  from
      this figure,  an amendment will be filed.
(4)   For services as our  Company's  counsel.  The salary figure for 2003 is a
      reasonable,  best estimate  because of some missing records; if additional
      records show a material difference from this figure, an amendment will be
      filed.
(5)   For services as our Company's controller and chief financial officer
*     Not Applicable

Options and Stock Appreciation Rights (SAR) Grants Table

For Fiscal Year Ended September 30, 2003:

              Quantity of               Percentage of Total
              Securities                Options or Stock
              Underlying                Appreciation      Exercise
              Options & Stock           Rights Granted    or Base
              Appreciation              to Employees      Price Per   Expiration
Name          Rights Granted            In Fiscal Year    Share       Date
--------------------------------------------------------------------------------
None (see "Compensation of Directors" below; no executive officer was granted
such options or SARs)

Aggregated  Option & Stock  Appreciation  Right  Exercises  and Fiscal  Year-End
Options & Stock Appreciation Rights Value Table

                                             Number of
                                             Securities
                                             Underlying
                                             Options &        Value of
                                             Stock            Unexercised
                                             Appreciation     In-the-Money
            Shares                           Rights at        Options & Stock
            Acquired         Value           Fiscal          Appreciation Rights
Name        On Exercise      Realized        Year End         at Fiscal Year End
-------     -----------      --------         --------         -----------------
None

Long Term Incentive Plan Awards Table

Long Term Incentive Plans - Awards in Last Fiscal Year

                                         Performance
                        Number or Other
Name                    of Units         Period Until
of                      or Other         Maturation
Executive Officer       Rights          or Payout     Threshold  Target  Maximum
--------------------------------------------------------------------------------
Not Applicable

                                       50
<PAGE>

Compensation of Directors

Standard Arrangements.

     Since 2002, the board of directors has been  compensated on a monthly basis
with our Company's  common stock, in accordance with the terms of their director
agreements as approved by the shareholders. As consideration for their services,
the members of the Company's  board of directors  each receive 10,000 shares per
month of the Company's common stock plus 5,000 additional  shares for service on
the audit or executive committee,  2,500 shares for each additional committee of
the board of directors on which they serve,  2,000 additional shares for service
as chair of the audit or executive  committee,  and 1,000 additional  shares for
each committee of the board of directors on which they serve as chair,  plus 500
shares for each meeting attended.

Employment   Contracts,   Termination   of  Employment  and  Change  in  Control
Arrangements.

     During  the  fiscal  year  that  started  on  October  1, 2002 and ended on
September 30, 2003,  our Company had no  employment  contracts,  termination  of
employment or change in control arrangements with any of its executive officers,
except the following independent contractor agreements:

Mr. Joffe

     On May 10, 2002,  Mr. Joffe was elected as  president  and chief  executive
officer of our Company.  The agreement was for an initial term of one year, with
renewal  thereafter  from month to month unless  either our Company or Mr. Joffe
gives at least 30 days' notice prior to the end of the  then-current  term of an
intention  not  to  renew,  and  contains  confidentiality  and  non-competition
clauses.  As consideration for Mr. Joffe's  services,  our Company has agreed to
compensate him with 50,000 shares of common stock per month of services, payable
at the end of each month.  The  agreement  remains in effect as of the filing of
this report.

Mrs. Lindsey

     Effective  June 14, 2001,  our Company  entered into an agreement with Mrs.
Lindsey  pursuant to which she is engaged as our  Company's  vice  president and
secretary.  The  agreement  was for an initial  term of one year,  with  renewal
thereafter  from month to month unless either our Company or Mrs.  Lindsey gives
at  least  30  days'  notice  prior  to the end of the  then-current  term of an
intention  not  to  renew,  and  contains  confidentiality  and  non-competition
clauses.  The  agreement  was orally  amended as of  September  1, 2003,  and is
terminable upon 30 days' prior written notice by either party.. As consideration
for Mrs.  Lindsey's  services,  our Company has agreed to compensate  her at the
hourly rates of $10 in cash and $20 in common  stock.  The stock  portion of the
compensation  is paid at the end of each month,  and is  calculated by using the
average closing transaction price of the stock for the month then-ended.

Mr. Dornan

     Effective June 18, 2001, our Company engaged Kevin W. Dornan,  Esquire,  as
its counsel.  The agreement was orally  amended as of September 1, 2003,  and is
terminable upon 30 days' prior written notice by either party. As  consideration
for his services,  our Company has agreed to compensate  him at the hourly rates
of $40 in cash and $20 in stock.  The stock  portion  is paid at the end of each
month,  and is  paid by an  equivalent  amount  of our  Company's  common  stock
calculated by using the average closing  transaction  price of the stock for the
month then-ended.

Mr. Wasserman

     Effective  July 1, 2002,  our Company  engaged Adam  Wasserman as its Chief
Financial  Officer and  Controller.  The agreement is  terminable  upon 30 days'
prior written notice by either party.  As  consideration  for his services,  our
Company  has  agreed  to  compensate  him $85 per hour for  accounting  services
performed and $1,000 per month in our Company's common stock calculated by using
the average closing transaction price of the stock for the month then-ended.

                                       51
<PAGE>

Report of Re-Pricing of Options or Stock Appreciation Rights

     During  the  report  period,  to the best  knowledge  of our  Company,  the
management did not re-price any options or stock appreciation  rights previously
granted  to any of our  Company's  executive  officers,  whether  by  amendment,
cancellation or replacement grants, or any other means. Our Company has also not
adjusted or amended the exercise  price of stock  options or stock  appreciation
rights previously  awarded to any of the named directors or executive  officers,
whether  through  amendment,  cancellation or replacement  grants,  or any other
means, nor are any such adjustments or amendments currently  contemplated.  As a
material subsequent event, on or about December 17, 2003, the expiration date of
the  options  granted to the members of our  Company's  board of  directors  who
assumed  office  between  January 1999 and May 2002, was extended until June 30,
2004, at which time they will conclusively expire unless fully exercised by that
time.

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

As of the end of the Report Period

     As of September 30, 2003, our Company's only currently  outstanding  voting
securities  were  120,438,976  shares of common  stock,  $0.01 par  value.  As a
material subsequent event, as of the close of business on December 30, 2003, our
Company had 124,145,665 shares of common stock outstanding. The following tables
disclose  information  concerning  ownership  of our  Company's  common stock by
officers,  directors and principal  stockholders (holders of more than 5% of our
Company's  common  stock) as of December  30,  2003.  The  following  two tables
include persons who currently have the right to acquire additional securities of
our Company within sixty days as specified in Commission Rule 13(d)(1), in which
case the total number of outstanding would be approximately 125,508,663.

     All footnotes to the tables follow the second table.

     Security Ownership of Certain Beneficial Owners

     As of December 30, 2003 (and taking into account any shares issuable within
60 days thereafter),  the following persons are, based on information  available
to our Company,  beneficial  owners of more than five  percent of our  Company's
common stock (its only class of voting securities).

<TABLE>
<S>                                                                <C>           <C>

                                                                   Amount
                                                                   and Nature    Percent
                                                                   Of Beneficial  of
Name and Address of Beneficial Owner (1)                           Ownership (2) Class
----------------------------------------                           -------------  -----
Tucker Family Spendthrift Trust (3)                                76,024,233     60.5%
1801 Clint Moore Rd. # 108; Boca Raton, Florida 33487

GE Commercial Distribution Financial Corp
f/k/a Deutsche Financial Services                                  6,500,000       5.2%
655 Maryville Center Drive; Saint Louis, Missouri 63141

Strategica Services Corp.
701 Brickell Ave. # 2500; Miami, Florida 33131                     7,319,944       5.8%

</TABLE>
                                       52
<PAGE>

                        Security Ownership of Management

     As of December 30, 2003 (and taking into account the shares issuable within
60 days  thereafter),  the following Table discloses our Company's  common stock
(the only outstanding class of equity securities for our Company, its parents or
subsidiaries  held by persons  other  than our  Company)  other than  directors'
qualifying shares, beneficially owned by all directors and nominees, naming them
each;  each of the  named  executive  officers  as  defined  in Item  402(a)  of
Commission  Regulation  S-B; and all  directors  and  executive  officers of our
Company as a group,  without  naming them.  The table shows in the second column
the total number of shares owned and in the third column the percent owned.


<TABLE>
<S>                                                                    <C>               <C>               <C>

Name and Address of                                                    Amount           Nature of         Percent
Beneficial                                                             Of Equity        Beneficial        of
Owner (1)                                                              Owned            Ownership         Class
---------                                                              -----            ------------      -----

Robert S. Gigliotti                                                    1,123,000         (4)               0.9
901 Wilshire Drive, Suite 400; Troy, Michigan 48084

Anthony Q. Joffe                                                       1,958,500         (5)               1.5
101 Southwest 11th Avenue; Boca Raton, Florida 33486

Edward C. Dmytryk                                                      1,308,017         (6)               1.0
315 Premier Vista Way; St. Augustine, Florida 32080

Kevin W. Dornan, Esquire                                               1,612,718         (7)               1.3
5001 Southwest 20th Street; Ocala, Florida 34474

Vanessa H. Lindsey                                                     1,430,964         (8)               1.1
340 Southeast 55th Avenue; Ocala, Florida 34471

Lawrence R. Van Etten                                                  536,147           (9)               0.4
1601 North 15th Terrace; Hollywood, Florida 33020

Adam Wasserman                                                         842,965           (10)              0.7
1643 Royal Grove Way, Weston, Florida 33327

All officers and directors as a group                                  8,812,041         (2)               7%

</TABLE>

                                       53
<PAGE>

     Footnotes  to Tables of  Principal  Stockholders  and  Tables of  Executive
Officers and Directors

         The following footnotes apply to the preceding two tables:

(1)  This table pertains to common stock.
(2)  Beneficial and record.
(3)  The Tucker family is comprised of Leonard M. Tucker;  Michelle Tucker,  his
     wife;  and Shayna and Montana,  their minor  daughters.  A custodian  holds
     440,000  shares in trust for  Shayna  and  Montana,  and holds  voting  and
     investment  power over those shares;  205,000  shares are held by Blue Lake
     Capital Corp., a Florida corporation owned by Mrs. Tucker, who holds voting
     and investment power over those shares;  and 75,379,233  shares are held by
     the Tucker Family  Spendthrift Trust (the "Tucker Trust") for which Leonard
     and  Michelle  Tucker serve as the trustees and who jointly hold voting and
     investment power over those shares.
(4)  Mr.  Gigliotti has served as a member of our  Company's  board of directors
     since December 11, 1997, as a member of the audit  committee since November
     4, 1999,  and as its  secretary  from  November 10, 1997 until  January 12,
     1999. Mr. Gigliotti has the right to acquire approximately 30,000 shares in
     the next 60 days pursuant to his director's  agreement and currently  holds
     warrants to acquire 310,000 shares.
(5)  Mr. Joffe has served as a member of our Company's  board of directors since
     January 12, 1999, and as its president and chief executive officer from May
     4, 1999 to May 14, 2001.  Mr. Joffe has the right to acquire  approximately
     121,000  shares in the next 60 days  pursuant to his  officer and  director
     agreements and currently holds warrants to acquire 354,000 shares.
(6)  Mr. Dmytryk was elected as a member of our Company's board of directors and
     served as its  president and chief  executive  officer from May 14, 2001 to
     May 10, 2002.  Mr.  Dmytryk has the right to acquire  approximately  21,000
     shares  in the  next 60  days  pursuant  to his  director's  agreement  and
     currently holds warrants to acquire 55,000 shares.
(7)  Mr. Dornan was elected as our Company's  counsel  effective  June 18, 2001,
     and has the right to acquire  approximately  100,000  shares in the next 60
     days pursuant to his officer's agreement.
(8)  Mrs. Lindsey was elected as our Company's secretary on January 12, 1999, as
     a member of our Company's  board of directors  effective  February 1, 2000,
     and as its  Vice-President  on June 14, 2001. Mrs. Lindsey has the right to
     acquire  approximately  21,000  shares in the next 60 days  pursuant to her
     director's  agreement  and  currently  holds  warrants  to acquire  284,000
     shares.
(9)  Mr. Van Etten was elected as a member of our  Company's  board of directors
     on May 31,  2000.  Mr.  Van Etten has the  right to  acquire  approximately
     25,000 shares in the next 60 days pursuant to his director's  agreement and
     currently holds warrants to acquire 92,000 shares.
(10) Mr.  Wasserman was elected as our  Company's  Chief  Financial  Officer and
     Controller  on March 26, 2002,  and has the right to acquire  approximately
     100,000 shares in the next 60 days pursuant to his officer's agreement.

                                       54
<PAGE>

Changes in Control

     Based on the Tucker Family  Spendthrift  Trust's ownership of our Company's
common  stock,  it should be deemed a control  person of our Company and to have
the capacity to pass matters to be acted on at stockholders meetings. Except for
the  foregoing,  to the best  knowledge and belief of our Company,  there are no
arrangements,  understandings,  or agreements relative to the disposition of our
Company's  securities,  the operation of which would at a subsequent date result
in a change in control of our Company.

Parents of our Company


     As  defined  in  Rule  405 of  Commission  Regulation  C, a  "parent"  of a
specified person is an affiliate  controlling such person directly or indirectly
through one or more  intermediaries.  The same rule  defines an  affiliate  as a
person that directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, the person specified.

     The following  table  discloses all persons who were parents of our Company
as of December 30, 2003, showing the basis of control and as to each parent, the
percentage of voting securities owned or other basis of control by its immediate
parent if any.


                                          Basis for         Percentage of Voting
Name                                      Control           Securities  Owned
--------------------------------------------------------------------------------

Tucker Family Spendthrift Trust (1)      Stock ownership           60.5%
_________
(1)  See footnote 3 in the chart immediately above.

ITEM 12.          CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Materially Adverse Proceedings

     Our  Company  is not  aware  of any  proceedings  involving  its  executive
officers or directors adverse to our Company's interests.

Certain Business Relationships

     During the last two years,  our Company engaged in a series of transactions
with The Yankee  Companies and its members as discussed in Part 1, Item 1 and as
incorporated  herein by reference as permitted by  Commission  Rule 12b-23.  Our
Company no longer maintains any agreements with Yankees or its members.

                                       55
<PAGE>

ITEM 13.        EXHIBITS, FINANCIAL STATEMENTS AND REPORTS ON FORM 8-K.

Exhibits Required by Item 601of Regulation S-B

     The  response to this Item as  contained  in our  Company's  report on Form
10-KSB for the years ended  September 30, 1998,  1999,  2000,  2001 and 2002, is
hereby incorporated by reference, as permitted by Commission Rule 12b-23, except
as modified by the disclosure  contained in our Company's  subsequent reports on
Form 10-QSB and the current reports on Forms 8-K filed with the Commission,  and
for the following additional exhibits filed herewith.  The exhibits listed below
and designated as filed herewith (rather than  incorporated by reference) follow
the signature page in sequential order.

Designation       Page
of Exhibit        Number
as Set Forth      or Source of
in Item 601 of    Incorporation
Regulation S-B    By Reference  Description

(3)   (i)  Articles of incorporation:

         3.3      (4)           Certificate  of  Renewal and Revival of Charter,
                                dated August 13, 2001.

(4)     Instruments defining the rights of holders, including indentures:
         4.5      (2)           Yankees Warrant Agreement, effective January 5,
                                1999
         4.7      (2)           Yankees Amended Warrant Agreement, dated
                                December 30, 1999
         4.10     (5)           Class A, Series A, Convertible Bond, dated
                                December 31, 2001
         4.11     (7)           Our  Company's  2002  Non-qualified  Stock
                                Option & Stock  Incentive  Plan,  dated
                                February 15, 2002.

(10)     Material Contracts:

         10.23    (2)           Yankees Amended Consulting Agreement, dated
                                January 2, 2000.
         10.24    (2)           Agreement  to  Serve  as  Corporate  Secretary
                                between  Vanessa  Lindsey  and our Company,
                                dated January 3, 2000.
         10.25    (2)           Employment  agreement  between Anthony Q. Joffe
                                and our Company,  dated January 3, 2000.
         10.29    (1)           Strategic Consulting Agreement with Yankees,
                                dated January 4, 2001.
         10.31    (3)           Clarification  Agreement,  dated July 6,  2001,
                                to the Reorganization Agreement with Richard C.
                                Peplin, Jr., signed on March 25, 1999
         10.35    (3)           Employment agreement  between  Edward C. Dmytryk
                                and our Company,  dated July 19,  2001.
         10.36    (3)           Employment agreement  between Vanessa H. Lindsey
                                and our Company,  dated July 19, 2001.
         10.37    (3)           Engagement  agreement  between  Kevin W.  Dornan
                                and our  Company,  dated July 19, 2001.
         10.38    (4)           Loan  Agreement, Security  Agreement, Promissory
                                Note  between  our Company and Yankees, dated
                                September 24, 2001
         10.39    (5)           Settlement  Agreement  with  Strategica Services
                                Corporation dated December 31, 2001
         10.40    (6)           Loan  Agreement,  Security Agreement, Promissory
                                Note between our Company and Yankees LLC.,
                                dated January 2, 2002.

                                       56
<PAGE>

(99)     Additional Exhibits:

         99.8                   Audit Committee Report
         99.9                   Sarbanes-Oxley CEO Certification
         99.10                  Sarbanes-Oxley CFO Certification
_______

(1) Filed as an exhibit to our  Company's  Report on Form 10-QSB for the quarter
ended  December 31, 1998,  bearing the exhibit  designation  number shown above;
incorporated by reference herein as permitted by Commission Rule 12b-23.

(2) Filed as an exhibit to our  Company's  Report on Form  10-KSB for the fiscal
year ended  September  30, 1998,  bearing the exhibit  designation  number shown
above; incorporated by reference herein as permitted by Commission Rule 12b-23.


(3) Filed as an exhibit to our  Company's  Report on Form  10-KSB for the fiscal
year ended  September  30, 1999,  bearing the exhibit  designation  number shown
above; incorporated by reference herein as permitted by Commission Rule 12b-23.

(4) Filed as an exhibit to our  Company's  Report on Form  10-KSB for the fiscal
year ended  September  30, 2001,  bearing the exhibit  designation  number shown
above; incorporated by reference herein as permitted by Commission Rule 12b-23.

(5) Filed as an exhibit to our  Company's  Report on Form 8-K dated  January 15,
2002,  bearing the exhibit  designation  number  shown  above;  incorporated  by
reference herein as permitted by Commission Rule 12b-23.

(6) Filed as an exhibit to our  Company's  Report on Form 10-QSB for the quarter
ended  December 31, 2001,  bearing the exhibit  designation  number shown above;
incorporated by reference herein as permitted by Commission Rule 12b-23.

(7) Filed as an exhibit to our Company's  Report on Form 10-KSB/A for the fiscal
year ended  September  30, 2001,  bearing the exhibit  designation  number shown
above; incorporated by reference herein as permitted by Commission Rule 12b-23.

Reports on Form 8-K Filed During Quarter Ended September 30, 2003

     One (1) report on Form 8-K was filed  during the last quarter of the period
covered by this report.

                                   Signatures

     In accordance with Section 13 or 15(d) of the Exchange Act, as amended, our
Company  has  duly  caused  this  report  to be  signed  on  its  behalf  by the
undersigned hereunto duly authorized.

Dated:    February 9, 2004

                                  Colmena Corp.

                          By: /s/ Anthony Q. Joffe /s/
                       President & Chief Executive Officer

                           By: /s/ Adam Wasserman /s/
                      Chief Financial Officer & Controller

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

Signature                        Date        Title

/s/ Anthony Q. Joffe /s/         2/9/04      President, Chief Executive Officer,
                                             Director, Chairman of the Board
/s/ Vanessa H. Lindsey /s/       2/9/04      Vice  President,  Secretary &
                                             Director
/s/ Adam Wasserman /s/           2/9/04      Chief  Financial   Officer  &
                                             Controller
/s/ Robert S. Gigliotti /s/      2/9/04      Director & Audit Committee Chair
/s/ Lawrence R. Van Etten /s/    2/9/04      Director & Audit Committee Member

                                       57
<PAGE>

                             Additional Information

                                  Colmena Corp.
                                   Registrant

                  101 SW 11th Avenue; Boca Raton, Florida 33486
          Telephone Number: (561) 392-6010; E-mail joffe@bellsouth.net
                             Corporate Headquarters

Anthony Q. Joffe, President & Chief Executive Officer;  Vanessa H. Lindsey, Vice
President & Secretary  Adam  Wasserman,  Chief  Financial  Officer & Controller;
                       Kevin W. Dornan, Esquire, Counsel
                                     ______
                                    Officers


          Anthony Q. Joffe, Chairman of the Board; Robert S. Gigliotti;
                  Vanessa H. Lindsey; and Lawrence R. Van Etten
                                     ______
                               Board of Directors


Salberg & Company, P.A. Certified Public Accountants and Consultants 20283 State
Road 7, Suite 300 Boca Raton, Florida 33498 Telephone (561) 995-8270:  Facsimile
Transmission  (561)  995-1920;  E-mail  info@salbergco.com   Independent  Public
Accountants


                     American Stock Transfer & Trust Company
                    59 Maiden Lane; New York, New York 10007
        Telephone (212) 936-5100: Facsimile Transmission (718) 921-8326;
                            E-mail info@amstock.com
                                 Transfer Agent


     Exhibits to this Form 10-KSB are  available  on the  Commission's  web site
located at  www.sec.gov  in the EDGAR  archives,  and will be  provided  without
charge to stockholders of our Company upon written request  addressed to Vanessa
H. Lindsey, Secretary; Colmena Corp.; 5185 Southeast 20th Street; Ocala, Florida
34471.

     The  Commission  has not  approved or  disapproved  of this Form 10-KSB and
Annual Report to Stockholders nor has it passed upon its accuracy or adequacy.

                                       58
<PAGE>