SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                   FORM 10-KSB


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

                     For the fiscal year ended June 30, 2003
                                       OR

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

         For the transition period from ________ to ________

                        COMMISSION FILE NUMBER 000-31779


                    SECURITY INTELLIGENCE TECHNOLOGIES, INC.
              Exact name of registrant as specified in its charter)



               Florida                                65-0928369
(State or other jurisdiction of formation)     (IRS Employer Identification No.)



                145 Huguenot Street, New Rochelle, New York 10801
               (Address of principal executive offices) (Zip Code)

        Registrant's telephone number, including area code (914) 654-8700


          (Former name or former address, if changes since last report)

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

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [ ]

The Registrant's revenues for the fiscal year ended June 30, 2003 were
$3,729,165.

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, was
$5,405,204 at September 24, 2003.

The number of shares of common stock $.0001 par value, of the Registrant issued
and outstanding as of September 24, 2003 was 19,309,389.


<PAGE>


                       DOCUMENTS INCORPORATED BY REFERENCE
None



                                TABLE OF CONTENTS


                                                                           Page
                                                                          Number


PART I                                                                    1

BUSINESS                                                                  1

PROPERTIES                                                                13

LEGAL PROCEEDINGS                                                         13

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS                        15

PART II                                                                   15

MARKET FOR RESISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
   MATTERS                                                                15

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
   RESULTS OF OPERATIONS                                                  17

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                               20

CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON
   ACCOUNTING AND FINANCIAL DISCLOSURE                                    20

PART III

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS;
   COMPLIANCE WITH SECTION 16 (a) OF THE EXCHANGE ACT OF THE REGRISTRANT  20

EXECUTIVE COMPENSATION                                                    23


SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT            25

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS                            26



                                       2
<PAGE>



Forward-Looking Statements

     Statements in this Form 10-KSB report may be "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements include, but are not limited to, statements that
express our intentions, beliefs, expectations, strategies, predictions or any
other statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may, and probably will, differ materially
from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those described above and those risks discussed from
time to time in this Form 10-KSB report, including the risks described under
"Risk Factors" and in other documents which we file with the Securities and
Exchange Commission. In addition, such statements could be affected by risks and
uncertainties related to our financial condition, factors which affect the
security industry, market and customer acceptance, competition, government
regulations and requirements and pricing, as well as general industry and market
conditions and growth rates, and general economic conditions. Any
forward-looking statements speak only as of the date on which they are made, and
we do not undertake any obligation to update any forward-looking statement to
reflect events or circumstances after the date of this Form 10-KSB.

                                     PART I

ITEM 1.  DESCRIPTION OF BUSINESS

COMPANY OVERVIEW

     We design, assemble, market and sell security products. Our products and
services are used throughout the world by military, law enforcement and security
personnel in the public and private sectors, as well as governmental agencies,
multinational corporations and non-governmental organizations. Our products
include a broad range of professional, branded law enforcement and consumer
equipment such as covert audio and video intercept, electronic countermeasures,
video, photo, and optical systems, radio communication, explosive contraband
detection, armored vehicles and clothing, nuclear, biological and chemical masks
and protective clothing, voice stress analysis lie detection, and global
positioning systems ("GPS"), used for tracking, locating and recovering vehicles
and fleet management.

     Our products are marketed under CCS International, Ltd. ("CCS"), G-Com
Technologies and The Counter Spy Shops of Mayfair, London(R) brand names and are
sold primarily through a worldwide network of sales agents, including four
retail stores in the United States and one in London.

     Our trained, multilingual and experienced security personnel work closely
with clients to create and implement solutions to complex security problems.
These services include security planning, advice and management, security
systems integration, intellectual property asset protection, due diligence
investigations and training programs in counterintelligence, counter
surveillance, advanced driving techniques and ballistics.

     During the year we entered into three joint Venture agreements with
technology companies. On July 2, 2002 we entered into a joint venture agreement
with MD Information Systems, a Russian company that develops, manufactures and
markets voice logging products and services. On October 30, 2002 we entered into
a joint venture agreement with Power Telecom Co., Ltd. a Korean company that
develops manufactures and markets GPS equipment and services. On April 12, 2003
we entered into a joint venture agreement with VTF Company a Russian company
that develops, manufactures and markets products designed to monitor, intercept
and jam radio frequency signals and other radio electronic devices. In
connection with these agreements we and our joint venture partners have formed
new entities, limited liability companies, where ownership and results of
operations are shared equally. The joint venture agreements grant the new
entities exclusive marketing rights to our joint venture partner's products,
except in the countries in which they are domiciled. As of June 30, 2003, the
joint ventures have not generated any revenues or other significant business
activity.



                                       3
<PAGE>

     We are a Florida corporation organized under the name Hipstyle.com, Inc. in
June 1999. Our principal executive offices are located at 145 Huguenot Street,
New Rochelle, New York 10801, telephone (914) 654-8700. Our website is
www.spyzone.com. Neither the information nor other statements contained in our
website nor the information contained in any other Internet website is a part of
this annual report on Form 10-KSB.


INDUSTRY OVERVIEW

     We design and assemble security products and market to military, law
enforcement, security and corrections agencies, by providing specialized
security services and products to multinational corporations and governmental
agencies. Increasingly, governments, including the military, businesses and
individuals have recognized the need for security products and services to
protect them from the risks associated with terrorism, physical attacks, threats
of violence, white-collar crime and fraud.

     The United States has been the target of several deadly terrorist attacks
directed towards its citizens and facilities around the world. As a result,
institutions, including the United States Department of Defense and other
government agencies and multinational corporations are redefining strategies to
protect against and combat terrorism.

     As a company in the security products industry, we market our products in
two markets - the law enforcement security market and the specialized security
services market.

     Law Enforcement Security Products Market. In response to an increased
emphasis on safety and protection, the number of active police officers has
increased significantly over the past several years. By 1999 there were more
than 900,000 law enforcement personnel in the United States. We expect an
increase in law enforcement personnel as a partial response to the September 11,
2001, attacks which, we believe, will lead to increased demand for security
products and we are seeking to participate in this demand.

     Specialized Security Services Market. Corporations are increasingly
contracting experienced private companies to handle all or a portion of their
security services. Industry studies reflect a growth rate in the market for
worldwide security services market at a rate of 8.0% annually from 1995 to 2000,
and we believe that the market is continuing to grow. We believe that demand by
multinational corporations and governmental agencies operating in developing
nations for security services such as risk assessment, crisis management, guard
force management, security force organization and executive protection is likely
to increase as these entities continue to establish operations and manufacturing
facilities in developed and developing countries. In addition, there are risks
related to white-collar crime and fraud. Demand for corporate investigative
services continues to grow as corporations react to the need to protect their
assets against the growing threat of fraud, counterfeiting and piracy of
intellectual property.


GROWTH STRATEGY

We believe that the following strengths are critical to our success as a
provider of surveillance and security products, and security risk management
services.

     Broad Portfolio of Products and Services. We believe that a broad range of
products, strong branding, a consistently growing customer base, and an
extensive distribution network is critical to our success as a provider of
security products and services. We are able to offer across-the-board security
consulting, services, equipment, and systems that enable us to provide
comprehensive solutions to our customers' security needs. Many who contact us
for answers to their security problems have neither the time nor the ability to
research solutions. Our clients anticipate and appreciate a one-stop-source of
expertise and product for a wide variety of categories that fall under the
umbrella of "security." Our goal is to strengthen our capabilities as a single
source provider of global security systems and services.


                                       4
<PAGE>

Our international infrastructure enables us to assist government buyers and
multinational corporate clients who are expanding their geographical spheres.
Similarly, our visibility is being enhanced through the expansion of our product
distribution network that in turn will expand our customer base.

     Strong and Recognized Brands. We believe that our brand names are
recognized in our markets and that our market recognition, combined with what we
believe is a high level of performance has contributed to our developing market
positions in a number of the product categories in which we compete.

     Strong Client Base and Extensive Distribution Network. We have a broad,
full-service network of sales representatives and international distributors to
sell and service our equipment. We serve a client base representing governmental
and non-governmental agencies as well as multinational corporations worldwide.
We believe that the diversity of our clients' end markets, the continued
globalization of our clients and the strength of our distribution relationships
minimize our dependence on any particular product, market, or customer.

     We believe that the demand for both security and surveillance products and
security risk management services will continue to grow. We will address this
growth by offering a comprehensive array of premium security risk management
products and services. By establishing a critical mass of products and services
and a broad base of customers, we believe that we have developed the capacity to
perform multiple aspects of our clients' threat analyses and security provisions
on a comprehensive basis. We will continue to seek to implement this growth
strategy primarily through internal expansion of our existing businesses and
through strategic acquisitions of businesses offering complementary services,
markets, and customer bases. However, because of our financial condition and the
low price of our stock, we may not be able to acquire any businesses or
implement our growth strategy.

The following elements define our growth strategy:

     Capitalize on Exposure to Military Programs. The events of September 11,
2001, have resulted in additional spending by the Department of Defense. We
expect several of our product categories may be positively affected. These
include our remote track, view and hear technologies, and voice, phone, cellular
and data interception. We are well positioned to participate in these programs.

     Expand Distribution Network and Product Offerings. We will continue to
leverage our distribution network by expanding our range of branded law
enforcement equipment by investing in the development of new and enhanced
products, which complement our existing offerings. If we are able to develop a
broader product line we believe that it will strengthen our relationships with
distributors, and allow us to add additional quality distributors, enhancing our
brand appeal with military, law enforcement and other end users.

     Capitalize on Increased Homeland Security Requirements. We believe that we
are well positioned to provide products, services and specialized training
essential to establishing a sustainable homeland security infrastructure. After
the September 11, 2001 terrorist attacks on the United States, the U.S.
government has created the Office of Homeland Security. We believe that we are
well equipped to provide products that additional military, law enforcement,
security and corrections personnel require to combat terrorism and threats to
our homeland.

     Increase Global Position in High Fright Areas. We expect to offer to
service the heightened security concerns of governments, agencies and
corporations in existing high fright areas and will seek to leverage our global
expertise and reputation for providing security products and services in newly
developing high fright areas. We target regions with economic and political
instability as well as regions with increased regulation. We will also grow the
scope of our existing product and service offerings by servicing existing
customers who expand geographically.

Products and Services

     We distribute a wide range of specialized products and systems covering
security, privacy, home and personal


                                       5
<PAGE>

protection, confidential business communications, lie detection, cellular phone
privacy, drug and bomb contraband detection, miniaturized covert audio and video
surveillance and protection, digital, the Internet, global systems for mobile
communications ("GSM"), personal communication systems ("PCS"), time division
mobile access ("TDMA") and code division multiple access ("CDMA") satellite
technologies and wireless communications.

Products

       We offer the following products.
    -  Covert audio and video logging systems to monitor employees and
       household surveillance.
    -  Scramblers, data and fax transmission systems to protect and secure
       communications.
    -  Fax managers that log the activities of outgoing and incoming faxes.
    -  Armored and bulletproof clothing and automobiles.
    -  Counter-surveillance, wiretap detection and electronic counter-measures.
    -  Night vision, electro-optic devices and infrared scopes and cameras.
    -  Anti-hacking and secure remote computing to protect computer networks.
    -  Bomb and weapons and other contraband detection for airport security,
       business, and home.
    -  Personal Protection Products
    -  Voice stress analyzers and lie detection to evaluate the honesty of
       employees or vendors - Tracking and recovery and fleet management systems
    -  Cellular telephone tracking systems for 911 emergency programs.

     We develop and market integrated systems for the surveillance of global
system for mobile communications and other communications. With the recent
explosion in communication technologies, there are numerous fundamental systems
underlying digital wireless communications throughout the world. Intelligence
professionals require the ability to monitor, intercept and block various global
systems for mobile communications, personal communication systems and other
systems using a variety of communications access and monitoring systems. Our
customers for our global systems for mobile communications usually request us to
custom design a system to meet their communications surveillance requirements
and are based on extensive engineering studies of the existing communications
systems in each customer's country, along with an in-depth analysis of the
various individual needs of the customer. Examples of our global systems for
mobile communications intercept systems are the GSM 2060, a passive off-the-air
intercept system which allows a user to target a specific cellular transmission
and listen to both incoming and outgoing conversations and the GSM 4000, which
was designed for an international west European security group and is a
multi-channel monitoring system capable of intercepting various band
transmissions simultaneously, while recording multiple conversations.

     In addition to our global system for mobile communications intercept
systems, we have developed and we market cellular interception for operation on
analog advanced mobile phone systems, digital advanced mobile phone system, and
time division multiple access systems, as well as various other equipment for
wireless and hard-wired communications surveillance for voice, fax and data. We
are currently involved in the development of new tracking technology for fleet
management. As we design new products based on our core technologies and enhance
existing products with new functionalities and performance, many of the older
systems, which can only be legally sold to government and law enforcement
agencies, may become available to business and private purchasers.

     We offer a configurable emergency rescue, theft recovery, fleet management
or freight management system. Our system uses the well-known global positioning
system ("GPS") satellite tracking system which can combine with an optional
sophisticated location prediction algorithm software package that takes over
position reporting functions whenever the vehicle enters a dead satellite access
zone. This unique and rugged system supplies real time position and status
information from the customer's location to one of several possible call center
configurations. The call center can track the location of a customer's vehicle
and has features to report theft, breakdowns, and rescue requests. Optional
configurations allow the end user to perform an analysis of driver's
performance, manage public transportation lines routes, perform automated fleet
and freight management for commercial trucking, and dispatch police, ambulance,
and


                                       6
<PAGE>

taxicabs.

Services

     We offer comprehensive security training programs in counterintelligence
and counter-surveillance in Miami, New York, Mexico, London and Hong Kong. This
training, offered to United States government agencies, friendly nations, and
clients in the private sector in the United States and in foreign countries,
includes methods of recognizing, deterring, and minimizing security risks. We
have conducted seminars for intelligence personnel, crime fighting associations
and their associated membership societies, from CIA to FBI to United States
Customs, United States Coast Guard, military branches, police departments from
New York City's strategic command to police chiefs from innumerable cities and
towns across the country.

     We intend to schedule a series of seminars to be held throughout the world
during the first half of fiscal 2004. These seminars will provide opportunities
for qualified and authorized buyers to learn about our basic global system for
mobile communications technology and our proposed solutions to intercepting and
monitoring these communications.

     We offer the design, integration, application analysis and technical
support of sophisticated electronic and computer driven surveillance,
monitoring, tracking and recovery and secure communication equipment. We offer
site surveys and security solutions that include consultations and law
enforcement training by experienced security personnel who act as advisors and
instructors. Our consultants oversee in-country installations and train the
client's personnel in the installation, use and maintenance of their security
equipment. These clients are from the corporate world as well as governmental,
public and private agencies.


Marketing and Distribution

     We have a network of sales representatives and international distributors
who sell and service our law enforcement equipment. Our distributors and we
currently operate in a number of countries and serve a client base representing
governmental and non-governmental agencies as well as multinational corporations
worldwide. However, during the past year we have been in litigation with five of
our distributors. See "Item 3. Legal Proceedings.

     When first entering a foreign market, we seek to promote a comprehensive
range of products and services by seeking qualified sales representatives with
local ties and existing relationships within the country's business and
governmental communities. We try to tailor our marketing strategy to each
geographic area of the world, and further to tailor our product offering by
country. There are opportunities for cross marketing of military and law
enforcement products, which strengthen the image of each product group and
further enhance our position as an integrated provider of a wide selection of
such products and services.

     We employ a variety of marketing programs in support of our reseller's
channels to make our target markets aware of the value of our integrated systems
and technology and to help create pre-sales demand for our resellers. These
programs include trade shows, advertising campaigns, seminars, direct mailings,
brochures and other promotional efforts designed to generate sales leads.
Training programs are an integral part of our customer service. In addition to
enhancing customer satisfaction, we believe that they also help breed customer
loyalty and brand awareness, so that we may sell additional products to the same
customer. We also use our website to generate brand awareness. However, because
of our limited resources, we have reduced our advertising and promotional
expense.

     Although we are focusing on clients in high growth industries where the
need for investigation, brand protection and other security services are
critical to success; we are also broadening our efforts to expand our end-user
marketplace. We are developing an additional website designed to market an
inexpensive line of security equipment that is not in competition with our
recognized brand products. However, we cannot assure you that we will be
successful in either developing the website or generating any significant sales
through the website.


                                       7
<PAGE>


Product Design and Installation

     Our engineering staff is involved in both developing new systems made
possible by the advances in technology and continually improving the production
process and reducing the cost of the products.

     Although our products come with operating instructions when applicable,
installation tasks are performed for the more sophisticated global system for
mobile communications systems. Installation phases may include site surveys,
identification of central command site location, supervision of the installation
of site interfaces, and training personnel to manage systems. We generally
provide maintenance and support services for the first three to twelve months
following installation of a system, depending on the terms of each particular
contract. Thereafter, long-term service is provided on a service-contract basis.

     Global system for mobile communications systems currently under development
will require differing levels of local, on-site installation. For example, one
system is largely a mobile communications intelligence gatherer requiring only
local training, while another might require construction of a central command
center, intercept towers and installation at remote sites. We do not install but
we provide supervisory assistance for a field installation crew comprised of
both employees and independent contractors, supplemented by local labor, for
on-site construction and installation. We also provide training for use and
maintenance of equipment, and subsequent hot-line assistance.

     We assemble our products from components that are readily available from a
number of suppliers. We do not have any long-term supply contracts.

Competition

     The security industry includes companies that offer a range of products and
services, such as access control, personnel protection, surveillance,
counter-surveillance, computer security, vehicular security, night vision, fiber
optics and communications. In order to meet the needs of a prospective customer,
we believe that it is necessary to offer integrated solutions across industry
lines rather than to offer a range of devices. Although there are a large number
of companies who offer products or services aimed at one or more segments of the
security industry. However, we believe that as the severity of the problem or
potential problem increases governments and major corporations, including
financial institutions, are less concerned with the price of the products than
with such factors as:

-  The perceived ability of the vendor to treat the identity of the client, the
scope of the work and the solution in confidence.

-  The ability of the vendor to offer an integrated approach that seeks to
address the problem by offering a wide range of products and services rather
than to offer solutions based on a small range of products and services.

-    On the other hand, major clients are concerned about the financial
condition of the vendor, and our financial condition, including our significant
working capital deficiency and our history of losses, may raise questions as to
our ability to perform under the purchase order and to provide the necessary
support following delivery. Competitors may use our financial condition and
their stronger financial condition, resources and relationships in marketing
their products and services regardless of whether their products and services
are better than ours. As discussed below, many of our competitors are
substantially stronger than we are financially and are very well known in the
industry and have significant government and industry contacts and
relationships.

     We seek to address the competition in the industry by a three-tiered
approach -- we offer a broad range of products and services, we offer what we
believe are strong brands and we have a strong client base with an extensive
distribution network.

     The marketplace for manufacturers and vendors for security and surveillance
products and systems is highly


                                       8
<PAGE>


competitive and consists of numerous organizations ranging from internet-based
mail-order firms to former military armament manufacturers such as, Lockheed,
Martin, Harris, and others. Other aerospace manufacturers have rushed into the
arena of bomb detection and other Explosive Ordinance Disposal ("EOD") products.
The security marketplace continues to favor the more established and reliable
manufacturers such as Nice (Israel) and Thompson C.S.F. now a part of Thales
Group (France) with proven technology, over newcomers with low cost innovations.
Siemens (Germany), and Rohde & Schwartz (Germany), are manufacturers of
"simulated" base stations.

     Currently there is growing competition in the cellular interception and
monitoring systems market. Although many competitors have greater financial,
technical and other resources, we believe that at present our technology gives
us a competitive advantage. In all of these areas, the major corporations have
the ability to develop competitive products and fund a marketing effort that
enable them to compete successfully against us regardless of whether their
products are superior.

Research and Development

     Because of our financial condition our research and development effort has
been limited to the development of certain new products and improvement of
existing products. Because of our working capital limitations, we have not been
able to expand our research and development effort. During the past two years we
did not expend any significant amount on research and development activities.


Intellectual Property Rights

     We have no patents or copyrights on our products, and we rely on
non-disclosure agreements with our employees. Since our business is dependent
upon our proprietary products, the unauthorized use or disclosure of this
information could harm our business. We currently own a number of United States
trademark registrations.

Government Regulation

     The United States and other governments have strict regulations concerning
the exporting and importing of certain security devices that may restrict sales
of certain products to bona fide law enforcement agencies or may restrict the
sale of products in or from the United States We are subject to federal
licensing requirements with respect to the sale in foreign countries of certain
of our products. In addition, we are obligated to comply with a variety of
federal, state, local and foreign regulations that govern our operations and the
workplace. We are also subject to certain regulations promulgated by, among
others, the United States Departments of Commerce and State.


Business Combinations


     On April 17, 2002, pursuant to an agreement and plan of merger among us,
CCS International, Ltd., a Delaware corporation ("CCS"), and CCS Acquisition
Corp., a Delaware corporation ("Acquisition Corp"), Acquisition Corp. was merged
into CCS, with the result that CCS became our wholly-owned subsidiary. As a
result of the merger:

     o    We issued an aggregate of 11,900,000 shares of common stock, 3,500,000
          shares of series A preferred stock and 1,500,000 shares of series B
          preferred stock to the former stockholder of CCS, Ben Jamil, with each
          share of series A preferred stock and series B preferred stock being
          convertible into one share of common stock if the Company has either
          annual net revenue of $10,000,000 or net income of at least $1,000,000
          prior to October 25, 2008, each share of series A preferred stock
          having 15 votes per share, and each share of series B preferred stock
          having no voting rights except as required by law.


                                       9
<PAGE>

     o    Outstanding options and warrants to purchase a total of 1,800,500
          shares of CCS' common stock were converted into options and warrants
          to purchase an equal number of shares of our common stock at exercise
          prices of $.50 to $1.00 per share.

     o    Our corporate name was changed from HipStyle.com, Inc. to Security
          Intelligence Technologies, Inc.

     o    Our officers and directors resigned.

     o    Ben Y. Jamil, Menachem Cohen, Tom Felice and Nomi Om, who were officer
          of CCS prior to the merger, were elected as our directors and offices,
          and Sylvain Naar, who was a director of CCS, was elected as a
          director.

     o    We entered into a three-year employment agreement with Mr. Jamil and
          granted him a non-qualified stock option to purchase 1,000,000 shares
          of common stock at $2.00 per share pursuant to the employment
          agreement. The terms of Mr. Jamil's employment agreement are described
          under "Item 10. Executive Compensation."


Employees

     As of September 24, 2003, we had a total of approximately 50 employees, of
which approximately 25 were employed at our main office and 25 were employed at
our sales offices. None of our employees are represented by unions or covered by
any collective bargaining agreements. We have not experienced any work stoppages
or employee related slowdowns and believe our relationship with our employees is
good.


RISK FACTORS

     We require significant working capital in order to fund our operations. At
----------------------------------------------------------------------------
June 30, 2003, we had cash of approximately $22,000 and a working capital
deficit in excess of $5.9 million. In order to develop and market our products
and pay our current liabilities, we require additional working capital. In the
event that we are unable to raise the necessary funding we may be unable to
continue operations.

     Our accounts payable and accrued expenses increased from $2.1 million at
-----------------------------------------------------------------------------
June 30, 2002 to $3.7 million at June 30, 2003, reflecting our inability to pay
------------------------------------------------------------------------------
creditors currently. We also had customer deposits and related deferred revenue
--------------------
of $2.3 million, which relate to payments on orders which had not been filled at
that date. We have used our advance payments to continue our operations. If our
vendors do not extend us necessary credit we may not be able to fill current or
new orders, which may affect the willingness of our clients to continue to place
orders with us.

     Our bank credit line terminated on November 1, 2002. Our main source of
---------------------------------------------------------
financing other than advances from our chief executive officer was our bank
credit facility of $200,000 which was secured by all of our assets and
guaranteed by our chief executive officer. This facility terminated on November
1, 2002, and to date, we do not have any agreement with any replacement lender.
Our failure to obtain a credit facility with another lender could materially
impair our ability to continue in operation, and we cannot assure you that we
will be able to obtain the necessary financing.

     We have been operating at a loss, and our losses are continuing. We
---------------------------------------------------------------------
sustained losses of $3.8 million, or $.22 per share (basic and diluted), for the
fiscal year ended June 30, 2003, $2.4 million, or $.19 per share (basic and
diluted), for the fiscal year ended June 30, 2002, and our losses are
continuing. We cannot give any assurance that we can or will ever operate
profitably.

     Our independent auditors have included an explanatory paragraph in their
-----------------------------------------------------------------------------
report as to our ability to continue as a going concern. As a result of our
--------------------------------------------------------
continuing and significant losses and our working capital deficiency, our
independent


                                       10
<PAGE>

auditors have included in their report an explanatory paragraph as to our
ability to continue as a going concern.

     Because of our stock price and our history of losses, we may have
----------------------------------------------------------------------
difficulty in raising necessary funding for our business. Since the completion
---------------------------------------------------------
of the merger we have sought, and been unsuccessful, in our efforts to obtain
adequate funding for our business. Because of our losses, we are not able to
increase our borrowing. Because of both our low stock price and our losses, we
have not been able to raise adequate funds through the sale of our equity
securities. We may not be able to obtain any additional funding, and, if we are
not able to raise funding, we may be unable to continue in business.
Furthermore, if we are able to raise funding in the equity markets, our
stockholders will suffer significant dilution and the issuance of securities may
result in a change of control.

     If we do not have access to the most current technology, we may not be able
--------------------------------------------------------------------------------
to market our products and services. The security industry is constantly
-----------------------------------
changing to meet new requirements, which result from both new threats to
government and industry, both from potential threats to persons and property to
industrial and governmental espionage, as well as general concern about personal
and family safety. In order to meet these needs we will both have to anticipate
problems and develop methods or reducing the potential risk. Our failure to
anticipate our potential clients' requirements or to be able to provide them
with the most current technology may impair our ability to sell our products. If
we are unable to fund any significant research and development and product
development effort, we may not be able to offer products based on new and
developing technologies.

     Because of our limited resources, we may not be able to develop or
-----------------------------------------------------------------------
implement a successful marketing program. Our ability to implement an expanded
-----------------------------------------
marketing program is dependent upon our ability to fund the program. If we are
not able to obtain necessary financing, we may be unable to market our products.
Furthermore, our financial condition may inhibit potential customers from
purchasing our equipment and our competitors may use our financial condition in
marketing to the same customers.

     We are subject to government regulations, which if violated, could prohibit
--------------------------------------------------------------------------------
us from conducting a significant portion of our export business. The United
----------------------------------------------------------------
States and other governments have strict regulations concerning the exporting
and importing of security devices, which may restrict sales of certain products
to bona fide law enforcement agencies or may restrict the sale of certain
products from the United States. If we violate any of these laws, we may be
subject to civil or criminal prosecutions. If we are charged with any such
violations, regardless of whether we are ultimately cleared, we may be unable to
sell our products. During the fiscal years ended June 30, 2003 and June 30,
2002, we incurred significant expense and our reputation was impaired as a
result of charges against our employees, including one of our officers, even
though the charges were dismissed.

     Because we are dependent on our management, the loss of key executive
--------------------------------------------------------------------------
officers could harm our business. Our business is largely dependent upon our
---------------------------------
senior executive officers, Messrs. Ben Jamil, chief executive officer, Chris R.
Decker, chief financial officer, Menachem Cohen, vice president, Sylvain Naar,
vice president and Ms. Nomi On, vice president. Although we have an employment
agreement with Mr. Jamil, the employment agreement does not guarantee that he
will continue with us. Since we do not have an agreement with Messrs. Decker,
Cohen, Naar or Ms. Om, each of these officers has the right to terminate his or
her employment. Our business may be adversely affected if any of our key
management personnel or other key employees left our employ.

     Because we lack patent or copyright protection, we cannot assure you that
-------------------------------------------------------------------------------
others will not be able to use our proprietary information in competition with
-------------------------------------------------------------------------------
us. We have no patent or copyright protection for our proprietary software, and
---
we rely on non-disclosure agreements with our employees. Since our business is
dependent upon our proprietary products, the unauthorized use or disclosure of
this information could harm our business.

     Major corporations may be able to develop and fund marketing efforts that
could enable them to dominate the market. Because there are a number of major
companies that can both offer security products to governments and industry and
fund a product development and marketing program, these companies have the
financial ability to dominate the market, to effectively set a standard which
may be incompatible with our technology and to use their financial


                                       11
<PAGE>

resources and government and industry contacts to successfully compete against
us in all major markets, regardless of whether their technology is superior or
inferior to ours.

     Our growth may be limited if we cannot make acquisitions. A part of our
--------------------------------------------------------------
growth strategy is to acquire other businesses that are related to our current
business. Such acquisitions may be made with cash or our securities or a
combination of cash and securities. To the extent that we require cash, we may
have to borrow the funds or issue equity. Our stock price may adversely affect
our ability to make acquisitions for equity or to raise funds for acquisition
through the issues of equity securities. If we fail to make any acquisitions,
our future growth may be limited. Furthermore, because of our stock price, the
issuance of any stock or other equity securities in connection with any
acquisition may result is significant dilution to our stockholders and may
result in a change of control. As of the date of this report we do not have any
agreement or understanding, either formal or informal, as to any acquisition.

     If we make any acquisitions, they may disrupt or have a negative impact on
-------------------------------------------------------------------------------
our business. If we make acquisitions, we could have difficulty integrating the
-------------
acquired companies' personnel and operations with our own. In addition, the key
personnel of the acquired business may not be willing to work for us, and our
officers may exercise their rights to terminate their employment with us. We
cannot predict the affect expansion may have on our core business. Regardless of
whether we are successful in making an acquisition, the negotiations could
disrupt our ongoing business, distract our management and employees and increase
our expenses.

     We do not anticipate paying dividends on our common stock.
     ---------------------------------------------------------

     The rights of the holders of common stock may be impaired by the potential
--------------------------------------------------------------------------------
issuance of preferred stock. Our certificate of incorporation gives our board of
----------------------------
directors the right to create new series of preferred stock. As a result, the
board of directors may, without stockholder approval, issue preferred stock with
voting, dividend, conversion, liquidation or other rights which could adversely
affect the voting power and equity interest of the holders of common stock.
Preferred stock, which could be issued with the right to more than one vote per
share, could be utilized as a method of discouraging, delaying or preventing a
change of control. The possible impact on takeover attempts could adversely
affect the price of our common stock. Although we have no present intention to
issue any additional shares of preferred stock or to create any new series of
preferred stock, we may issue such shares in the future.

     Shares may be issued pursuant to our stock plans which may affect the
--------------------------------------------------------------------------
market price of our common stock. We may issue stock upon the exercise of
---------------------------------
options or pursuant to stock grants covering an aggregate of 2,000,000 shares of
common stock pursuant to our stock incentive plans, including options to
purchase 1,992,500 shares subject to options which were outstanding on June 30,
2003. The exercise of these options and the sale of the underlying shares of
common stock and the sale of stock issued pursuant to stock grants may have an
adverse effect upon the price of our stock.

     Because we are subject to the "penny stock" rules, stockholders may have
-----------------------------------------------------------------------------
difficulty in selling our common stock. Our common stock is presently subject to
---------------------------------------
the Securities and Exchange Commission's penny-stock regulations which impose
additional sales practice requirements on broker-dealers who sell such
securities to persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual income exceeding
$200,000, or $300,000 together with their spouse). For transactions covered by
these rules, the broker-dealer must make a special suitability determination for
the purchase of such securities and have received the purchaser's written
consent to the transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the rules require the
delivery, prior to the transaction, of a risk disclosure document mandated by
the Commission relating to the penny stock market. The broker-dealer must also
disclose the commission payable to both the broker-dealer and the registered
representative, current quotations for the securities and, if the broker-dealer
is the sole market maker, the broker-dealer must disclose this fact and the
broker-dealer's presumed control over the market. Finally, monthly statements
must be sent disclosing recent price information for the penny stock held in the
account and information on the limited market in penny stocks. Consequently, the
"penny stock" rules may restrict the ability of broker-dealers to sell our
common stock and may negatively affect the ability of purchasers of our common
stock to sell such securities.


                                       12
<PAGE>

     There may be claims that a third party owns stock which is held by our
---------------------------------------------------------------------------
chief executive officer. In connection with an agreement between Mr. Ben
------------------------
Jamil and two financial consultants entered into prior to the reverse merger,
the consultants or their designees were to purchase a 30% interest in five of
our subsidiaries, and that 30% was to have been exchanged for 1,500,000 shares
of series B preferred stock. Mr. Jamil has advised the consultants and their
designees that, as a result of their failure to pay the consideration for the
shares, the agreement is terminated and they have no interest in the series B
preferred stock or the stock in the five subsidiaries. It is possible that the
consultants or their designees may claim that they own the series B preferred
stock or the stock in the five subsidiaries and we can give no assurance that
their claim will not be upheld.

We May Not Be Able To Comply In A Timely Manner With All Of The Recently Enacted
--------------------------------------------------------------------------------
Or Proposed Corporate Governance Provisions. Beginning with the enactment of the
--------------------------------------------
Sarbanes-Oxley Act of 2002 in July 2002, a significant number of new corporate
governance requirements have been adopted or proposed. We believe that we
currently comply with all of the requirements that have become effective thus
far, and with many of the requirements that will become effective in the future.
Although we currently expect to comply with all current and future requirements,
we may not be successful in complying with these requirements at all times in
the future. In addition, certain of these requirements will require us to make
changes to our corporate governance practices. For example, one Nasdaq proposal
(which may become applicable to companies listed on the OTC Bulletin Board)
under review by the Securities and Exchange Commission will require that a
majority of our Board of Directors be composed of independent directors by our
2004 Annual Meeting of Stockholders. Currently, only one of the members of our
Board of Directors, Tom Felice, is considered to be independent. We may not be
able to attract a sufficient number of directors in the future to satisfy this
requirement, if enacted and if it becomes applicable to our Company.
Additionally, the Commission recently passed a final rule that requires
companies to disclose whether a member of their Audit Committee satisfies
certain criteria as a "financial expert." We currently do not have an Audit
Committee member that satisfies this requirement and, we may not be able to
satisfy this, or other, corporate governance requirements at all times in the
future, and our failure to do so could cause the Commission or Nasdaq to take
disciplinary actions against us, including an action to delist our stock from
the OTC Bulletin Board or any other exchange or electronic trading system where
our shares of common stock trade.



Item 2.  PROPERTIES

     We lease approximately 9,840 square feet of executive offices and warehouse
space at 145 Hugeunot Street, New Rochelle, NY 10801 under a lease that expires
on October 31, 2010. The annual rent is approximately $125,000, and is subject
to annual increases. We also lease approximately 6,000 square feet for four of
our sales offices and retail locations in Miami, Florida, New York City,
Washington, DC and Beverly Hills, CA under leases that expire from 2005 to 2010
at a current annual rent of $464,000, subject to annual increases. We believe
that our present facilities are adequate to meet our immediate requirements and
that any additional space we may require will be available on reasonable terms.

Item 3.  LEGAL PROCEEDINGS

     Because of our financial position, actions have been commenced or
threatened by creditors.

     On May 2, 2002, Menachem Cohen, vice president and a director, and two
other employees of one of the Company's subsidiaries were arrested pursuant to a
criminal complaint filed in the United States District Court of the Southern
District of Florida. The complaint alleged that such individuals violated
federal law in that they intentionally manufactured, assembled, possessed or
sold a device used for the surreptitious interception of electronic
communications and that the device was sent through the mail or transmitted in
intrastate or foreign commerce. On September 4, 2002, the United States District
Court of the Southern District of Florida entered an order dismissing all
charges against Menachem Cohen, vice president and director, and the two other
employees of one of the Company's subsidiaries.

     In June 1998, a photographer and model formerly retained by CCS filed suit
in U. S. District Court for the


                                       13
<PAGE>

Southern District of New York captioned Ross & Vassilkioti v. CCS International,
Ltd. seeking damages for alleged copyright infringement and other claims. The
judge in the case has granted the plaintiff partial summary judgment as to the
copyright infringement. On June 18, 2003, a jury awarded the plaintiffs $350,000
on the copyright infringement portion of the case. Under federal judicial rules,
the Company is unable to contest the granting of partial summary judgment until
a final judgment has been rendered. The Company believes that it has meritorious
and valid defenses against the additional claims asserted in the lawsuit and a
valid basis for appeal of the jury award of $350,000 and any additional adverse
verdicts that may occur in this case. A trial date for the remaining counts of
the action has been set for October 16, 2003.

     On November 1, 2002, a former Company supplier filed suit in the United
States District Court for the District of Maryland, captioned Micronel Safety,
Inc. v. CCS Internationnal Ltd. seeking damages of $242,400 for breach of
contract to purchase certain products. CCS has denied the material allegations
of the plaintiff's claim and has raised affirmative defenses thereto. We believe
that we have valid defenses to the claim.

     On or about March 13, 2003, an action was commenced against CCS and its
subsidiary in the Circuit Court of the 11th Judicial Circuit, Miami-Dade County,
FL captioned Welcome Publishing Company, Inc. v. CCS International, Ltd. and
Counter Spy Shop of Mayfair Ltd., Inc. seeking damages of $140,430 for an
alleged breach of an advertising contract. CCS has denied the material
allegations of the plaintiff's claim and has raised affirmative defenses
thereto. We believe that we have valid defenses to the claim. A non-binding
mediation took place on October 9, 2003 during which the parties discussed a
settlement but were unable to reach an agreement.

     On or about May 25, 2001, an action was commenced against CCS in the United
States District Court for the Southern District of New York, captioned Shenzen
Newtek v. CCS International Ltd. The plaintiff had sought to recover $91,500,
which was paid to CCS in connection with a distributorship agreement between the
parties, plus costs and interest. On July 10, 2002, the Company and Shenzhen
Newtek entered into a Settlement Agreement under which SIT issued 67,000 shares
of its common stock in full settlement, subject to certain terms, of the $67,000
claim. The Settlement Agreement granted Shenzhen Newtek a price guarantee upon
the sale of the shares and, alternatively, the option after July 10, 2003 to
return the 67,000 shares to the company in lieu of a cash payment of $35,000. In
August 2003 Shenzhen Newtek returned the 67,000 shares to the company however to
date, no cash payment has been made.

     In June 2001, a former product licensee of CCS brought suit in Circuit
Court, Palm Beach, Florida, captioned Dunterman v. CCS International Ltd. The
suit claimed that CCS engaged in breach of contract, among other allegations. On
October 21, 2002, the Company and Allan L. Dunterman Jr. entered into a
Settlement Agreement under which the Company issued 110,000 shares of its common
stock in full settlement, subject to certain terms, of an $88,750 claim.

     We are also the defendant in 3 pending actions arising out of our
distributor agreements. On or about May 11, 2000 an action was commenced against
CCS in the Supreme Court, New York County, captioned Ergonomic Systems
Philippines Inc. v. CCS International Ltd. The plaintiff seeks to recover
$81,000, which was paid to CCS in connection with a distributorship agreement
between the parties, plus costs and interest. CCS has denied the material
allegations of the claim and has raised affirmative defenses thereto. We believe
that we have valid defenses to the claim.

     On or about October 12, 2001, an action was commenced against CCS in the
United States District Court for the Southern District of New York, captioned
China Bohai Group Co. Ltd. and USA International Business Connections Corp. v.
CCS International, Ltd. The plaintiff seeks to recover $250,000 paid to CCS in
connection with a distributorship agreement between the parties, plus $5,000,000
of punitive damages and costs and interest. CCS has denied the material
allegations of the plaintiff's claim and has raised affirmative defenses
thereto. CCS has asserted a counterclaim seeking damages in the approximate
amount of $1,150,000 based upon the plaintiff's alleged breach of the parties'
distributorship agreement. The Company believes that it has valid defenses to
the claim.

     On December 3, 2002 EHS Elektronik Sistemleri ("EHS") submitted a demand
for arbitration to the American Arbitration Association in NY, NY claiming CCS
breached a joint venture agreement it had entered into with CCS in 1994 and
seeking a refund of the $200,000 it had paid to CCS. A hearing has been set for
October 23 and 24, 2003.

     On July 1, 2002, the Company's London subsidiary, Counter Spy Shop of
Mayfair Limited ("CSS"), entered into an agreement to assume the business
operations of another UK corporation ("Predecessor") for nominal consideration.
The Predecessor is a defendant in ongoing litigation brought by a former
customer, who has sued for breach of a contract executed in 1998 and is seeking
a refund of approximately $293,000 in products and services purchased from the
Predecessor. Due to the business transfer, there is a possibility that the
plaintiff could name CSS as a defendant in the case. The Company, in
consultation with counsel, believes that the Predecessor has valid defenses to
the claim, and that CSS has valid defenses against any action that may be
brought against it.

                                       14
<PAGE>

We believe that we have valid defenses to the claim.


Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.

Not applicable.

PART II


Item 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     Our common stock is traded on the OTC Bulletin Board under the symbol SITG.
The following table sets forth the range of high and low bid quotations for our
common stock from December 31, 2001, when trading in our stock commenced, until
June 30, 2003, as reported by OTC Bulletin Board. On April 17, 2002, we acquired
CCS, with the result that our business changed to the business of CCS, and the
business conducted by us under the name Hipstyle.com, Inc. was discontinued.
Accordingly, stock price information for periods prior to April 17, 2002 do not
reflect our present business.

     The quotes represent inter-dealer prices without adjustment or mark-ups,
markdowns or commissions and may not necessarily represent actual transactions.
The trading volume of our securities fluctuates and may be limited during
certain periods. As a result, the liquidity of an investment in the Company's
securities may be adversely affected. Because of our stock price, our common
stock is subject to the SEC's penny stock rules, which adversely affects the
ability of persons to purchase or sell our stock.

<TABLE>
<CAPTION>

                                  COMMON STOCK

                      High      Low                         High          Low
                    --------  -------                     --------      --------
     Fiscal 2003                        Fiscal 2002
-------------------                   ---------------

Quarter ended                          Quarter ended
<S>                 <C>       <C>      <C>                <C>           <C>
September 30, 2002  $   0.17  $  0.15  September 30, 2001 N/A           N/A

Quarter ended                          Quarter ended
December 31, 2002   $   0.18  $  0.16  December 31, 2001  $   0.35      $   0.15

Quarter ended                          Quarter ended
March 31, 2003      $   0.07  $  0.04  March 31, 2002     $   2.55      $   0.15

Quarter ended                          Quarter ended
June 30, 2003       $   0.12  $  0.10  June 30, 2002      $   2.05      $   0.30

</TABLE>


     On September 24, 2003, the final quoted price by the OTC Bulletin Board was
$.73 per share of common stock.

     As of September 24, 2003 there were 19,304,389 shares of Common Stock
outstanding, held of record by approximately 225 record holders and beneficial
owners.


                                       15
<PAGE>

     The following table sets forth information as to equity compensation plans
pursuant to which we may issue our equity securities.

<TABLE>
<CAPTION>

------------------------------------------------------------------------------------------------------------------------------
                                                                                           Number of securities
                                                                                           remaining available for
                                                                      Weighted average     future issuance under
                                           Number of securities to    exercise price of    equity compensation plans
                                           be issued upon exercise    outstanding          plans (excluding
                                           of outstanding options,    options, warrants    securities reflects in columns (a))
                                           warrants and rights        and rights           columns (a))
                                           (a)                        (b)                  (c)
------------------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                       <C>                       <C>
Equity compensation plans approved by
by security holders                                  -0-                    N.A.                      -0-
------------------------------------------------------------------------------------------------------------------------------
Equity compensation plans not approved by
approved by security holders                     3,400,000                 $.97                      7,500
------------------------------------------------------------------------------------------------------------------------------
       Total                                     3,400,000                 $.97                      7,500
------------------------------------------------------------------------------------------------------------------------------

</TABLE>

     As of January 21, 2002, our board of directors adopted the 2002 Stock Plan,
which provided for the grant of non-qualified stock options to purchase a
maximum of 2,000,000 shares of common stock. The 2002 Plan provides for the
grant of incentive stock options and nonqualified stock options to purchase
shares of common stock, to directors, employees, officers, agents, consultants
and independent contractors who perform services for the Company. Any incentive
stock options which may be granted pursuant to this plan are subject to
stockholder approval of the plan. As of the date of this annual report on Form
10-KSB, stockholder approval of the 2002 stock plan has not been obtained, and
all options granted under the plan are non-qualified stock options.

     On April 17, 2002 we granted a non-qualified stock option to Mr. Ben Jamil,
chief executive officer and a director, to purchase 1,000,000 shares of common
stock at $2.00 per share. Mr. Jamil's employment agreement is described under
"Item 10. Executive Compensation."

     During the fiscal year ended June 30, 2003, we issued the following
securities in transactions that were not registered pursuant to the Securities
Act of 1933, as amended:

On July 10, 2002, the Company and Shenzhen Newtek, a former product distributor
of the Company, entered into a Settlement Agreement under which the Company
issued 67,000 restricted shares of its common stock in full settlement, subject
to certain terms, of a $67,000 claim. If the market price of the Company's
common stock on July 10, 2003 is less than $1.00 per share, the Company is to
pay the plaintiff the difference between $67,000 and the value of the stock or
in the alternative the plaintiff can return the 67,000 shares to the Company in
return for a payment of $35,000. In August 2003 Shenzhen Newtek returned the
67,000 shares to the Company however to date, no cash payment has been made.

On October 21, 2002, the Company and Allan L. Dunterman Jr. entered into a
Settlement Agreement under which the Company issued 110,000 restricted shares of
its common stock in full settlement, subject to certain terms, of an $88,750
claim. If the market price of the Company's common stock on October 21, 2003 or
such later date that the plaintiff sells the shares is less than $.81 per share,
the Company is to pay the plaintiff the difference between $88,750 and the value
of the stock. At September 24, 2003, the closing price of the Company's common
stock was $.73 per share.

On October 7, 2002, the Company entered into an agreement with an investment
banking firm under which the Company issued 50,000 restricted shares of common
stock.

During the year the Company issued 112,043 restricted shares of common stock for
investor relations consulting services of $15,000.


                                       16
<PAGE>

During the year the Company issued 80,000 restricted shares of common stock in
full payment of trade payables of $18,267.

These issuances were exempt from the registration requirements of the Securities
Act pursuant to Section 4(2) of the Securities Act. No underwriting or other
compensation was paid in connection with these transactions.


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

GENERAL OVERVIEW.

     The following discussion should be read in conjunction with the financial
statements and notes thereto of the Company. Such financial statements and
information have been prepared to reflect the Company's financial position as of
June 30, 2003.
     Historical results and trends should not be taken as indicative of future
operations. Management's statements contained in this report that are not
historical facts are forward-looking statements within the meaning of Section
27A of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended. Actual results may differ materially from
those included in the forward-looking statements. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Litigation Reform
Act of 1995, and is including this statement for purposes of complying with
those safe harbor provisions. Forward-looking statements, which are based on
certain assumptions and describe future plans, strategies and expectations of
the Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," "prospects" or similar
expressions. The Company's ability to predict results or the actual effect of
future plans or strategies is inherently uncertain.

Critical accounting policies

         The Company prepares its financial statements in accordance with
accounting principles generally accepted in the United States of America.
Preparing financial statements in accordance with generally accepted accounting
principles requires the Company to make estimates and assumptions that affect
the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities as of the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period. The
following paragraphs include a discussion of some of the significant accounting
policies and methods applied to the preparation of the Company's consolidated
financial statements. Review Note 1 to the financial statements for further
discussion of significant accounting policies.

Use of estimates

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

Inventories

         Inventories are valued at the lower of cost (first-in, first-out) or
market.

Long-lived assets

         The Company records impairment losses on long-lived assets used in
operations when events and circumstances indicate that the assets may be
impaired and the undiscounted cash flows estimated to be generated by those
assets are less than their carrying amounts.

Revenue recognition

         The Company recognizes revenue from store sales upon the delivery of
merchandise to a customer. Non-refundable advance payments received under
marketing and distribution arrangements are deferred and either applied as
payments towards customer purchases made pursuant to the terms of the respective
agreements, or recognized as income at the termination of the agreement if
specified purchase quotas have not been met by the customer. Customer deposits
are initially recorded as liabilities and recognized as revenue when the related
goods are shipped.

Stock-based Compensation

             The Company periodically grants stock options to employees in
accordance with the provisions of its stock option plans, with the exercise
price of the stock options being set at the closing market price of the common
stock on the date of grant. The Company accounts for stock-based compensation
plans under Accounting Principles Board Opinion No. 25, "Accounting for Stock


                                       17
<PAGE>

Issued to Employees", and accordingly accounts for employee stock-based
compensation utilizing the intrinsic value method. FAS No. 123, "Accounting for
Stock-Based Compensation", establishes a fair value based method of accounting
for stock-based compensation plans. The Company has adopted the disclosure only
alternative under FAS No. 123, which requires disclosure of the pro forma
effects on earnings and earnings per share as if FAS No. 123 had been adopted as
well as certain other information. Stock options granted to non-employees are
recorded at their fair value, as determined in accordance with SFAS No. 123 and
Emerging Issues Task Force Consensus No. 96-18, and recognized over the related
service period. Deferred charges for options granted to non-employees are
periodically re-measured until the options vest.
         In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation - Transition and Disclosure. SFAS No. 148 amends SFAS
No. 123, Accounting for Stock-Based Compensation. Although it does not require
use of fair value method of accounting for stock-based employee compensation, it
does provide alternative methods of transition. It also amends the disclosure
provisions of SFAS No.123 and APB No. 28, Interim Financial Reporting, to
require disclosure in the summary of significant accounting policies of the
effects of an entity's accounting policy with respect to stock-based employee
compensation on reported net income and earnings per share in annual and interim
financial statements. SFAS No. 148's amendment of the transition and annual
disclosure requirements is effective for fiscal years ending after December 15,
2002. The amendment of disclosure requirements of APB No. 28 is effective for
interim periods beginning after December 15, 2002. We adopted SFAS No. 148 and
APB No.28 on January 1, 2003.

Income taxes

            The Company uses the liability method to determine its income tax
expense. Under this method, deferred tax assets and liabilities are computed
based on differences between financial reporting and tax basis of assets and
liabilities and are measured using the enacted rates and laws that will be in
effect when the differences are expected to reverse. Deferred tax assets are
reduced by a valuation allowance if, based on the weight of the available
evidence, it is more likely than not that all or some portion of the deferred
tax assets will not be realized. The ultimate realization of the deferred tax
asset depends on the Company's ability to generate sufficient taxable income in
the future.

Financial guarantees

         Certain shares issued by the Company to settle debt obligations contain
a price guarantee that requires the Company to settle in cash any difference
between the original face amount of the debt and proceeds from the creditor's
subsequent sale of the shares. The Company accounts for these transactions by
recording the debt at fair value with periodic mark-to-market adjustments until
the guarantee is settled. Unrealized gains or losses resulting from changes in
fair value are included in earnings and accrued expenses.

Fair Value of Financial Instruments

         The fair values of financial instruments recorded on the balance sheet
are not significantly different from their carrying amounts due to the
short-term nature of those instruments, or because they are accounted for at
fair value.

New accounting pronouncements


                                       18
<PAGE>

         In June 2001, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other
Intangible Assets. SFAS No. 141 requires that all business combinations
initiated after June 30, 2001 be accounted for under the purchase method and
addresses the initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. SFAS No. 142 addresses the
initial recognition and measurement of intangible assets acquired outside of a
business combination and the accounting for goodwill and other intangible assets
subsequent to their acquisition. SFAS No. 142 provides that intangible assets
with finite useful lives be amortized and that goodwill and intangible assets
with indefinite lives not be amortized, but will instead be tested at least
annually for impairment. We adopted SFAS No. 142 on July 1, 2002. We did not
carry any goodwill or other intangibles on our balance sheets as of June 30,
2003 or 2002, and therefore the adoption of SFAS No. 142 did not have a material
effect on our financial position or operating results.
         In June 2001, the FASB issued SFAS No. 143, Accounting for Asset
Retirement Obligations. SFAS No. 143 addresses financial accounting and
reporting for obligations associated with the retirement of tangible long-lived
assets and the associated asset retirement costs. This statement is effective
for fiscal years beginning after June 15, 2002, however earlier application is
permitted. We adopted SFAS No. 143 on July 1, 2002. The adoption of this
statement did not have a material effect on our financial position or operating
results.
         In August 2001, the FASB issued SFAS No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets, which addresses financial
accounting and reporting for the impairment or disposal of long-lived assets.
While SFAS No. 144 supersedes SFAS No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, it retains many
of the fundamental provisions of SFAS No. 121. SFAS No. 144 also supersedes the
accounting and reporting provisions of APB No. 30, Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. However, it retains the requirement in
APB No. 30 to report separately discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
We adopted SFAS No 144 on July 1, 2002. The adoption of SFAS No. 144 did not
have a material effect on our financial position or results of operations.
         In June 2002, the FASB issued SFAS No. 146, Accounting for Costs
Associated with Exit or Disposal Activities, which addresses accounting for
restructuring and similar costs. SFAS No. 146 supersedes previous accounting
guidance, principally Emerging Issues Task Force ("EITF") 94-3, Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit on
Activity (including Certain Costs Incurred in a Restructuring). We were required
to adopt SFAS No. 146 for restructuring activities initiated after December 31,
2002, and we adopted SFAS No. 146 on January 1, 2003. SFAS No. 146 requires that
the liability for costs associated with an exit or disposal activity be
recognized when the liability is incurred. Under EITF 94-3, a liability for an
exit cost was recognized at the date of our commitment to an exit plan. SFAS No.
146 also established that the liability should initially be measured and
recorded at fair value. The adoption of SFAS No. 146 did not have a material
effect on our financial position or results of operations.
         In November 2002, the FASB issued FIN No. 45, Guarantor's Accounting
and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. The interpretation elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such as standby
letters of credit. It also clarifies that at the time a company issues a
guarantee, the company must recognize an initial liability for the fair value,


                                       19
<PAGE>

or market value, of the obligations it assumes under the guarantee and must
disclose that information in its interim and annual financial statements. The
provisions related to recognizing a liability at inception of the guarantee for
the fair value of the guarantor's obligations do not apply to product warranties
or to guarantees accounted for as derivatives. The disclosure requirements are
effective for financial statements of interim or annual periods ending after
December 15, 2002, and the initial recognition and initial measurement
provisions apply on a prospective basis to guarantees issued or modified after
December 31, 2002. We adopted FIN No. 45 on January 1, 2003. The adoption of FIN
No. 45 did not have a material effect on our financial position or results of
operations.

         In January 2003, the FASB issued Interpretation No. 46, "Consolidation
of Variable Interest Entities," an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The adoption of this Interpretation did not
have a material effect on our consolidated financial statements.
         In May 2003, the FASB issued SFAS No. 150, Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity, which
requires mandatory redeemable financial instruments to be classified as
liabilities, the result of which requires related expense to be classified as
interest expense rather than minority interest on a prospective basis. SFAS No.
150 is effective in the three months ended June 30, 2003 for financial
instruments entered into or modified after May 31, 2003, and is otherwise
effective July 1, 2003 for previously issued instruments. SFAS No. 150 is not
expected to have a material impact on our financial position or results of
operations.

Joint Venture Agreements

         During the year the Company entered into three joint Venture agreements
with technology companies. On July 2, 2002 the Company entered into a joint
venture agreement with MD Information Systems, a Russian company that develops,
manufactures and markets voice logging products and services. On October 30,
2002 the Company entered into a joint venture agreement with Power Telecom Co.,
Ltd. a Korean company that develops manufactures and markets GPS equipment and
services. On April 12, 2003 the Company entered into a joint venture agreement
with VTF Company a Russian company that develops, manufactures and markets
products designed to monitor, intercept and jam radio frequency signals and
other radio electronic devices. In connection with these agreements the Company
and its joint venture partner have formed new entities, limited liability
companies, whose ownership and share of operating results are equally owned. The
joint venture agreements grant the new entities exclusive marketing rights to
the Company's joint venture partner's products, except in the countries in which
they are domiciled. The Company accounts for its investments in the joint
ventures using the equity method because its ownership is greater than 20% and
it has the ability to exercise significant influence over the operating,
investing and financing decisions of the joint venture entities. Under the
equity method, the Company will record its pro-rata share of joint venture
income or losses and adjust the basis of its investment accordingly. As of June
30, 2003, the joint ventures have not generated any revenues or other
significant business activity.

Foreign Currency Translation


                                       20
<PAGE>


         The functional currency of the Company's UK subsidiary is the local
currency. Accordingly, the Company translates all assets and liabilities into
U.S. dollars at current rates. Revenues, costs, and expenses are translated at
average rates during each reporting period. Gains and losses resulting from the
translation of the consolidated financial statements are excluded from results
of operations and are reflected as a translation adjustment and a separate
component of stockholders' deficit. Translation adjustments were immaterial as
of June 30, 2003. Gains and losses resulting from foreign currency transactions
are recognized in the consolidated statement of operations in the period they
occur.




RESULTS OF OPERATIONS - Year ended June 30, 2003 and year ended June 30, 2002

Revenues. Revenues for fiscal 2003 were $3,729,165 a decrease of $1,880,392 or
33.5%, from revenues of $5,609,557 in fiscal 2002. The decrease is primarily a
consequence of a decrease in advertising and promotional expenditures and
attendance at fewer international trade shows caused by limited resources. In
addition, our financial condition and losses may have affected the willingness
of customers to purchase products from us. The decrease resulting from these
factors was partially offset by sales in our new retail store in London that
commenced operations on July 1, 2002.

Cost of Sales. Cost of sales decreased by $403,924 or 18.1%, to $1,827,045 in
fiscal 2003 from $2,230,969 in fiscal 2002. Cost of sales as a percentage of
product sales increased to 49.3% in fiscal 2003 from 44.5% in fiscal 2002
primarily due to writing down the cost of obsolete or slow moving items in
Fiscal 2003.

Compensation and benefits. Compensation and benefits increased by $ 448,715, or
20.1% to $2,547,846 in fiscal 2003 from $2,236,191 in fiscal 2002 primarily due
to (i) an increase in amortization of deferred compensation relating to stock
options we have granted to consultants of 5,301, (ii) expense in our new
retail store in London that commenced operations on July 1, 2002 of $207,113 and
increased expenditures to enhance the infrastructure of the Company by adding
personnel to the marketing department and the sales department in anticipation
of increased sales which did not materialize. We anticipate this trend of
increased expenditures will continue in fiscal 2004 as we add additional
personnel to the sales department.

Professional fees and legal matters. Professional fees and legal matters
decreased by $194,227, or 17.2% to $936,621 in fiscal 2003 from $1,130,848 in
fiscal 2002. Based on a review of outstanding legal matters and unpaid
settlements, we have established, in consultation with outside counsel, reserves
for litigation costs that are probable and can be reasonably estimated. We can
provide no assurance, however, that such reserves will be sufficient to absorb
actual losses that may result from unfavorable outcomes. Moreover, it is
possible that the resolution of litigation contingencies will have a material
adverse impact on our consolidated financial condition, results of operations or
cash flows. We also expect that we will continue to incur attorney's fees and
the use of management resources to defend pending litigation and creditor
nonpayment claims during fiscal 2004.



                                       21
<PAGE>


Selling, general and administrative expenses. Selling, general and
administrative expenses decreased by $228,577, or 10.7% to $1,910,546 in fiscal
2003 from $2,139,123 in fiscal 2002. The significant changes were primarily due
to (i) a decrease in advertising expense of $114,201, or 33.5% to $226,694 in
fiscal 2003 from $340,895 in fiscal 2002, (ii) a decrease in telephone expense
of $74,578, or 33.5% to $148,108 in fiscal 2003 from $222,686 in fiscal 2002,
due to lower rates charged by new service providers and (iii) a decrease in
shipping costs of $41,626, or 45.6% to $49,924 in fiscal 2003 from $91,550 in
fiscal 2002 all partially offset by expenses in our new retail store in London
that commenced operations on July 1, 2002.

Unrealized loss on financial guarantees. Unrealized loss on financial guarantees
is attributable to the decrease in market value relating to our price guarantees
on common stock which we have issued in payment of trade payables. Unrealized
loss on financial guarantees decreased $4,513, or 3.0% to $146,440 in fiscal
2003 from $150,953 in fiscal 2002.

Depreciation and amortization. Depreciation and amortization increased by
$19,949, or 23.5% to $104,723 in fiscal 2003 from $84,774 in fiscal 2002
primarily as a consequence of expensing the net book value of leasehold
improvements in our Washington, DC store from where we have relocated before the
end of the depreciable life of the improvements.

Interest expense. Interest expense increased by $39,023, or 59.7% to $104,381 in
fiscal 2003 from $65,358 in fiscal 2002 as a result of a continued increase in
the ordinary course of business of the Company's outstanding debt obligations.

Income tax benefit. The income tax benefits of $29,000 in fiscal 2002
represented refundable taxes recovered through net operating loss carry-back
claims in January 2003. In January 2003, we received approximately $158,000 of
tax refunds from a federal loss carry-back refund claim. Since our carry-back
ability has been utilized and the future realization of our losses is uncertain,
no benefit resulting from our losses in fiscal 2003 has been provided.

As a result of the forgoing, our net loss increased by $1,448,778, or 60.0% to
$3,848,437, $.22 per share, in fiscal 2003 from $2,399,659, $.19 per share, in
fiscal 2002 as a result of the factors described above.


LIQUIDITY AND CAPITAL RESOURCES

We require significant working capital to fund our future operations. At June
30, 2003 we had cash of $21,638 and a working capital deficit of $5,805,771. The
aggregate amount of accounts payable and accrued expenses at June 30, 2003 was
$3,563,776. As a result of our continuing losses, our working capital deficiency
has increased.

We funded our losses through loans from our chief executive. At June 30, 2003,
we owed our chief executive officer $1,451,620, of which $575,066 was incurred
during fiscal 2003. We also utilized vendor credit and customer deposits and
deferred license fees. Because we have not been able to pay our trade creditors
in a timely manner, we have been subject to litigation and threats of litigation
from our trade creditors and we have used common stock to satisfy our
obligations to trade creditors. In many instances when we issue common stock, we
have provided that if the stock does not reach a specified price level one year
from issuance, we will pay the difference between that price level and the
actual price. As a result, we have contingent obligations to our some of these
creditors. With respect to 577,000 shares of common stock issued during fiscal
2003 and 2002, the market value of the common stock on June 30, 2003 was
approximately $297,393 less than the guaranteed prices.

Our accounts payable and accrued expenses increased from $2,079,121 at June 30,
2002 to $3,563,776 at June 30, 2003 reflecting our inability to pay creditors
currently. We also had customer deposits and deferred revenue of $2,312,769
which relate to payments on orders which had not been filled at that date. We
have used our advance payments to continue our operations. If our vendors do not
extend us necessary credit we may not be able to fill current or new orders,
which may affect the willingness of our clients to continue to place orders with
us.

We require substantial funds to support our operations. Since the completion of
the merger we have sought, and been unsuccessful, in our efforts to obtain
funding for our business. Because of our losses, we are not able to increase our



                                       22
<PAGE>

borrowing. Our bank facility terminated on November 1, 2002. and to date, we do
not have any agreements with any replacement lender. Our failure to obtain a
credit facility with another lender could materially impair our ability to
continue in operation, and we cannot assure you that we will be able to obtain
the necessary financing. Our main source of funds other than the bank facility
has been from loans from our chief executive officer, customer deposits and
vendor credit. Because of both our low stock price and our losses, we were not
been able to raise funds through the sale of our equity securities in fiscal
2002 and 2003. During July, August and September 2003 our stock price increased
and we raised $525,000 resulting from the exercise of options to buy our common
stock. Management cannot provide any assurance that our stock price will
increase or remain at its current level or that we will be able to raise any
more money through the sale of our equity securities. We may not be able to
obtain any additional funding, and, if we are not able to raise funding, we may
be unable to continue in business. Furthermore, if we are able to raise funding
in the equity markets, our stockholders might suffer significant dilution and
the issuance of securities may result in a change of control. These factors
raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans with respect to these matters include its attempts
to settle vendor payables wherever possible, a reduction in operating expenses,
and financing from the chief executive officer in the absence of other sources
of funds. Management cannot provide any assurance that its plans will be
successful in alleviating its liquidity concerns and bringing the Company to the
point of sustained profitability. The accompanying financial statements do not
include any adjustments that might result from the outcome of these
uncertainties.




Item 7.  FINANCIAL STATEMENTS

         The financial statements begin on Page F-1.


Item 8.  CHANGES IN AND DISAGREEMENT WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE.

         On April 18, 2002, our board of directors dismissed Salibello & Broder
LLP as our independent public accountants and selected Schneider & Associates,
LLP to serve as our independent public accountant for the fiscal year ending
June 30, 2003. At no time since its engagement has Schneider & Associates LLP
had any direct or indirect financial interest in or any connection with us or
any of our subsidiaries other than as independent accountant.

         Our financial statements for the fiscal year ended June 30, 2001 were
audited by Salibello & Broder LLP, whose report on such financial statements did
not include any adverse opinion, or disclaimer of opinion, nor was the report
qualified or modified as to audit scope or accounting principles. The report
however was modified as to our ability to continue as a going concern. There
were no disagreements with Salibello & Broder LLP on any matter of accounting
principles or practices, financial statement disclosures, or auditing scope or
procedures in connection with the audit for the fiscal year ended June 30, 2001
and financial statements filed on Form 10-QSB for subsequent interim periods
preceding their dismissal on April 18, 2002


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

DIRECTORS, EXECUTIVE OFFICERS AND KEY PERSONNEL

         Set forth below is information concerning our directors and executive
officers.



                                       23
<PAGE>


           Name        Age       Position
           ----        ---       --------
Ben Jamil               70       Chairman of the board, chief executive officer
                                 and director
Chris R. Decker         56       Chief financial officer and director
Tom Felice              42       Director
Manchem Cohen           51       Vice president and director
Nomi Om                 42       Vice president and director
Sylvain Naar            62       Vice president and director


     Ben Jamil has been chairman of the board, president, chief executive
officer and a director of CCS since its organization in July 1992. He assumed
such positions with us upon completion of the merger. Mr. Jamil has more than 40
years experience in government, military, law enforcement and business security,
specializing in the design, and marketing of sophisticated, hi-tech systems for
communication, voice and data privacy, surveillance and monitoring.

     Chris R. Decker, a certified public accountant, joined us in April 2002 and
became chief financial officer in August 2002. Prior to that he was controller
for Trumarkets LLC, a broker dealer, from June 1, 2001 until April 2002, an
independent consultant from April 1999 until June 2001, was vice president
corporate controller for County Seat Stores, Inc., a retailer of specialty
apparel, from January 1998 until April 1999 and for three years prior thereto,
was executive vice president, chief financial officer of All American Food
Group, Inc. a franchising company in the specialty food sector.

     Tom Felice has been a director of CCS since October 2001 and became one of
our directors upon completion of the merger. He had been vice president sales
until May 2003 when he resigned that position to pursue other opportunities.

     Menachem Cohen has been vice president for Latin American sales and a
director of CCS since January 2002 and became our vice president and a director
upon completion of the merger. He was a consultant to CCS from its inception in
1992 until 2002.

     Nomi Om has been vice president of international marketing for CCS since
1995 and a director since January 2002. She became our vice president and a
director upon completion of the merger. Starting with CCS in 1992 as production
manager, Ms. Om became director of special projects as a sales engineer, and in
1995 was appointed Vice President of International Marketing and Director of our
Asian Market.

     Sylvain Naar has been a director of CCS since March 2002 and became one of
our directors upon completion of the merger. He became vice president in May of
2003. From 1990 to February 2002, Mr. Naar was vice president for product and
business development at Copytele, a developer of advanced flat panel displays
and secure communication products. With over 30 years experience in
telecommunications, Mr. Naar has held numerous executive positions at Hazeltine,
Thomson, CSF, and Alcatel.

Compliance with Section 16(a) of the Securities Exchange Act of 1934

     Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent
(10%) of a registered class of the Company's equity securities, to file with the
Securities and Exchange Commission ("SEC") initial reports of ownership and
reports of changes in ownership of common stock and other equity securities of
the Company. Officers, directors and greater than ten percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. To the Company's knowledge, based solely on its review of
the copies of such reports furnished to the Company during the year June 30,
2003, all Section 16(a) filing requirements applicable to its officers,
directors and greater than ten percent beneficial



                                       24
<PAGE>

owners were satisfied.

Director Compensation

     Directors who are also employees of the Company are not paid any fees or
other remuneration for service on the Board or any of its Committees.

Meetings and Committees of the Board of Directors.

     The Board of Directors met three (3) times during the fiscal year ended
June 30, 2003. The Board of Directors has a standing Audit Committee.

The Audit Committee

     Through May 1, 2003 the Audit Committee of the Board of Directors consisted
of two (2) individuals Chris R. Decker an officer and director and Sylvain Naar,
a director. On May 1, 2003 Tom Felice a director and previous officer replaced
Sylvain Naar. The Audit Committee met once (1) time during the fiscal year
ending June 30, 2003. The Audit Committee is primarily responsible for reviewing
the services performed by the Company's independent public accountants,
evaluating the Company's accounting policies and its system of internal
controls, and reviewing significant finance transactions.

     The functions of the Audit Committee are focused on three areas:

     o    the adequacy of the Company's internal controls and financial
          reporting process and the reliability of the Company's financial
          statements.

     o    the independence and performance of the Company's independent public
          accountants.

     o    the Company's compliance with legal and regulatory requirements.

     The Audit Committee meets with management periodically to consider the
adequacy of the Company's internal controls and the objectivity of its financial
reporting. The Audit Committee discusses these matters with the Company's
independent public accountants and with appropriate Company financial personnel.
Meetings are held with the independent public accountants who have unrestricted
access to the Audit Committee. The Audit Committee also appoints and engages the
independent public accountants and reviews periodically their performance and
independence from management. In addition, the Audit Committee reviews the
Company's financing plans and reports recommendations to the full Board of
Directors for approval and to authorize action.

         Management has primary responsibility for the Company's financial
statements and the overall reporting process, including the Company's system of
internal controls. The independent public accountants audit the annual financial
statements prepared by management, express an opinion as to whether those
financial statements present fairly the financial position, results of
operations and cash flows of the Company in conformity with generally accepted
accounting principles and discusses with the Audit Committee any issues they
believe should be raised with the Audit Committee.

     The Audit Committee reviews the Company's audited financial statements and
meets with both management and Schneider & Associates, LLP, the Company's
independent public accountants, to discuss such audited financial statements,
and financial statements included in quarterly reports on Form 10-QSB.
Management represents to the Audit Committee that the financial statements are
prepared in accordance with generally accepted accounting principles. The Audit
Committee receives from and discusses with Schneider & Associates, LLP the
written disclosure and the letter required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees). These items
relate to that firm's independence from the Company.




                                       25
<PAGE>


ITEM 10.  EXECUTIVE COMPENSATION

     Set forth below is information with respect to compensation paid or accrued
by us for fiscal years ended June 30, 2003 and 2002 to our chief executive
officer. No other officer received compensation of $100,000 during any of those
fiscal years.


SUMMARY COMPENSATION TABLE

                                                          Long-Term
                                                          Compensation (Adwards)
                               Fiscal                     Options, SARs
Name and Principal Position     Year    Salary      Bonus      (Number)
----------------------------- ------- ----------- -------------------------
Ben Jamil, chief executive       2003 $ 250,000      $ -       1,000,000
officer                          2002   172,799        -             -
                                 2001   135,200        -             -

Employment Agreement

     In April 2002, in connection with the completion of the reverse merger, we
entered into a three-year employment agreement with Ben Jamil pursuant to which
Mr. Jamil agreed to serve as our president and chief executive officer. The
agreement calls for an annual base compensation of $250,000 and may be increased
on each anniversary date commencing May 1, 2003 by 10% if we achieve certain
performance criteria. In addition to the base salary, Mr. Jamil is eligible to
receive an annual discretionary bonus commencing June 30, 2003, at the sole
discretion of the board of directors. Pursuant to the agreement, we granted Mr.
Jamil a non-qualified stock option to purchase 1,000,000 shares of common stock
at an exercise price of $2.00 per share. The option vests upon our attaining
$10,000,000 of annual revenue and expires on April 17, 2007.

Stock Options

     As of January 21, 2002, our board of directors adopted the 2002 Stock Plan,
which provided for the grant of non-qualified stock options to purchase a
maximum of 2,000,000 shares of common stock. The 2002 Plan provides for the
grant of incentive stock options and nonqualified stock options to purchase
shares of Common Stock, to directors, employees, officers, agents, consultants
and independent contractors who perform services for the Company. Any incentive
stock options which may be granted pursuant to this plan are subject to
stockholder approval of the plan. As of the date of this annual report on Form
10-KSB, stockholder approval of the 2002 stock plan has not been obtained, and
all options granted under the plan are non-qualified stock options.

Option Exercises and Outstanding Options

     The following table sets forth information concerning the exercise of
options during the fiscal year ended June 30, 2003 and the fiscal year-end value
of options held by our chief executive officer, who is the only officer named in
the summary compensation table. No stock appreciation rights have been granted.



                                       26
<PAGE>


 Aggregate Option Exercises in Last Fiscal Year and Fiscal Year-End Option Value

                                            Number of
                                            Securities         Value of
                                            Underlying         Unexercised In-
                                            Unexercised        the-Money
                                            Options at Fiscal  Options at Fiscal
                                            Year End           Year End

            Shares Acquired    Value        Exercisable/       Exercisable/
 Name       Upon Exercise      Realized     Unexercisable      Unexercisable
 ----       -------------      --------     -------------      -------------
Ben Jamil     --                 --         --/1,000,000       --/--


                Option Grants in Fiscal Year Ended June 30, 2003

There were no option grants in the fiscal year ended June 30, 2003 to any
officer named in the summary compensation table.


ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The following table and discussion provides information as to the shares of
common stock benefically owned on September 24, 2003 by:

     -    each director;

     -    each officer named in the executive compensation table;

     -    each person owning of record or known by us based on information
          provided to us by the persons named below, to own beneficially at
          least 5% of our common stock; and

     -    all officers and directors as a group.


                                       27
<PAGE>


                                        Shares of Common         Percentage of
                                        Stock Benefically        Outstanding
                   Name                       Owned              Common Stock
-----------------------------------   -----------------------    ---------------
Ben Jamil                                         11,900,000              61.6%
145 Huguenot Street
New Rochelle, NY 10801
Michael Farkas                                     1,695,100               8.8%
1221 Brickell Avenue
Miami, FL 33131

Chris R. Decker                                      300,000               1.5%
Menachem Cohen                                       300,000               1.5%
Tom Felice                                           250,000               1.3%
Nomi Om                                              250,000               1.3%
Sylvain Naar                                               -                  -
All directors and officers as a                   13,000,000              63.7%
group (6 individuals)



     Except as otherwise indicated each person has the sole power to vote and
dispose of all shares of common stock listed opposite his name. Stockholders are
deemed to own shares of common stock issuable upon the exercise of options or
upon conversion of convertible securities which are exercisable or convertible
within 60 days of September 24, 2003.

     The shares beneficially owned by Michael Farkas represents 1,641,100 shares
of common stock owned by him and 54,000 shares of common stock owned by Atlas
Equity, which is beneficially owned by Mr. Farkas.

Atlas Equity had agreed to pledge 1,500,000 shares of common stock, which shares
were to be released to Atlas Equity if we raise $925,000 by June 14, 2002. On
December 16, 2003 the Company and Atlas Equity and certain successor owners of
Atlas Equity's Pledged Shares entered into and agreement that reduced the number
of Pledged Shares to 750,000, restricted the number of Pledged Shares that could
be sold for a period of one year and extended the date to raise the $925,000 to
July 7, 2004. To date Atlas Equity has raised $525,000 of financing.

     The shares beneficially owned by Mr. Decker represent shares of common
stock issuable upon exercise of options held by him.

     The shares beneficially owned by Mr. Cohen represent shares of common stock
issuable upon exercise of options held by him.

     The shares beneficially owned by Ms. Om represent shares of common stock
issuable upon exercise of options held by him.

     The shares beneficially owned by Mr. Felice represent shares of common
stock issuable upon exercise of options held by him.

     In connection with an agreement between Mr. Ben Jamil and two financial
consultants entered into prior to the reverse merger, the consultants or their
designees were to purchase a 30% interest in five of our subsidiaries, and that
30% was to have been exchanged for 1,500,000 shares of series B preferred stock.
Mr. Jamil has advised the consultants and their designees that, as a result of
their failure to pay the consideration for the shares, the agreement is
terminated and they



                                       28
<PAGE>

have no interest in the series B preferred stock or the stock in the five
subsidiaries. It is possible that the consultants or their designees may claim
that they own the series B preferred stock or the stock in the five
subsidiaries.

Item 12.   Certain Relationships and Related Transactions

     On April 17, 2002, pursuant to an agreement and plan of merger among us,
CCS and our wholly-owned subsidiary, the subsidiary was merged into CCS, with
the result that CCS became our wholly-owned subsidiary. As a result of the
merger:

     o    We issued an aggregate of 11,900,000 shares of common stock, 3,500,000
          shares of series A preferred stock and 1,500,000 shares of series B
          preferred stock to the former stockholders of CCS, with each share of
          series A preferred stock and series B preferred stock being
          convertible into one share of common stock if the Company has either
          annual net revenue of $10,000,000 or net income of at least $1,000,000
          prior to October 25, 2008, each share of series A preferred stock
          having 15 votes per share, and each share of series B preferred stock
          having no voting rights except as required by law. The series A and B
          preferred stock was issued to Mr. Ben Jamil.

     o    Outstanding options and warrants to purchase a total of 1,800,500
          shares of CCS' common stock were converted into options and warrants
          to purchase an equal number of shares of our common stock at exercise
          prices of $.50 to $1.00 per share.

     o    Our officers and directors resigned.

     o    Ben Jamil, Menachem Cohen, Tom Felice and Nomi Om, who were officer of
          CCS prior to the merger, were elected as our directors and offices,
          and Sylvain Naar, who was a director of CCS, was elected as a
          director.

     o    We entered into a three-year employment agreement with Mr. Jamil and
          granted him a non-qualified stock option to purchase 1,000,000 shares
          of common stock at $2.00 per share pursuant to the employment
          agreement. The terms of Mr. Jamil's employment agreement are described
          under "Item 10. Executive Compensation."


Item 13.  EXHIBITS AND REPORTS ON FORM 8-KSB

(a) Reports on Form 8-KSB

(1)  Current Report on Form 8-K/A filed on July 1, 2002 with respect to Items 1,
     2 and 7.

(2)  Current Report on Form 8-K filed on October 24, 2002 with respect to Item
     4.

(3)  Current Report on Form 8-K filed on October 29, 2002 with respect to Item
     4.

(4)  Current Report on Form 8-K filed on June 27, 2003 with respect to Item 5.


(b) Exhibits

Exhibit
  No.     Description

2.1  Agreement and Plan of Merger dated as of February 28, 2002 among the
     Registrant, CCS International, Ltd., and


                                       29
<PAGE>

     CCS Merger Corp.(1)

3.1  Articles of incorporation (2)

3.1  Articles of Amendment to Articles of Incorporation (4)

3.2  By-laws (2)

10.1 Employment Agreement, dated as of April 17, 2002, by and between the
     Registrant and Ben Jamil. (3)

10.2 Form of pledge Agreement, dated as of April 17, 2002, by and between the
     Registrant and Atlas Equity (3)

10.3 Agreement dated as of December 16, 2002, by and between the Registrant and
     ATLAS EQUITY and successor owners of Atlas Equity's pledged shares.

10.3 2002 Stock Plan (4)

10.4 Lease dated June 1, 2000 between Rotterdam Ventures, Inc. d/b/a Galesi
     Enterprises and the Registrant. (4)

10.5 2003 Stock Incentive Plan

21.1 List of Subsidiaries

(1)  Filed as an exhibit to the Registrant's Form 8-K with a report date of
     February 28, 2002 and which was filed with the Commission on March 5, 2002,
     and incorporated herein by reference.

(2)  Filed as an exhibit to the Registrant's Form 10SB12G which was filed with
     the Commission on October 17, 2000, and incorporated herein by reference.

(3)  Filed as an exhibit to the Registrant's Form 8-K with a report date of
     April 17, 2002 and which was filed with the Commission on April 25, 2002,
     and incorporated herein by reference.

(4)  Filed as an exhibit to the Registrant's Form 10-KSB filed with the
     commission on November 6, 2002, and incorporated herein by reference.

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES

1.   Audit Fees. The aggregate fees billed for the audit of our financial
statements and review of financial statements included in our quarterly Form
10-QSB were $67,825 and $71,829 for the fiscal years ended June 30,
2003 and June 30, 2002 respectively.

2.   Audit-Related Fees. There were no audit-related fees billed for the
fiscal years ended June 30, 2003 and June 30, 2002.

3.   Tax Fees. Tax fees billed were $725 and $3,512 for the fiscal years
ended June 30, 2003 and June 30, 2002 respectively.


4.   All Other Fees. Fees related to the reverse merger were $19,950 for the
fiscal year ended June 30, 2002.


                                       30
<PAGE>


               INDEX TO FINANCIAL STATEMENTS

Independent Auditors Report                                              F - 1

Consolidated Balance Sheet June 30, 2003                                 F - 2

Consolidated Statements of Operations for the year ended June 30, 2003
   and June 30, 2002                                                     F - 3

Consolidated Statement of Stockholder's Deficit for the years ended June
   30, 2003 and June 30, 2002                                            F - 4

Consolidated Statements of Cash Flow for the years ended June 30, 2003
   and June 30, 2002                                                     F - 5

Notes to financial statements                                      F - 6 - F- 24


INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Security Intelligence Technologies, Inc.

     We have audited the accompanying consolidated balance sheet of Security
Intelligence Technologies, Inc. and subsidiaries as of June 30, 2003, and the
related statements of operations, changes in stockholders' deficit and cash
flows for the years ended June 30, 2003 and June 30, 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. Those 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 consolidated financial position of Security
Intelligence Technologies, Inc. and subsidiaries as of June 30, 2003, and the
results of their operations and their cash flows for the years ended June 30,
2003 and June 30, 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 more fully described in Note 1, the
Company has incurred operating losses in fiscal 2003 and 2002, negative cash
flows from operations, and has limited cash and other resources to fund future
operations. In addition, the Company is involved in material litigation, the
costs of which have significantly impacted liquidity. Management's plans
concerning these matters are also discussed in Note 1. The financial statements
do not include any adjustments that might result from the outcome of these
uncertainties.

Jericho, New York
October 10, 2003                                      Schneider & Associates LLP
                                       F-1


                                       31
<PAGE>
<TABLE>
<CAPTION>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 June 30, 2003

ASSETS
Current Assets:
<S>                                                                                                     <C>
      Cash                                                                                          $     21,638
     Inventory                                                                                         1,448,314
     Other current assets                                                                                 52,442
                                                                                                    -------------
        Total current assets                                                                           1,522,394

Property and Equipment, at cost less accumulated depreciation
   and amortization of $431,541                                                                          122,390

Other assets                                                                                              54,946
                                                                                                    -------------

 Total assets                                                                                       $  1,699,730
                                                                                                    =============



LIABILITIES AND STOCKHOLDER'S DEFICIT
Current liabilities:
     Accounts payable and accrued expenses                                                          $  3,563,776
     Note payable - CEO/stockholder                                                                    1,451,620
     Customer deposits                                                                                 1,277,695
     Deferred revenue                                                                                  1,035,074
                                                                                                    -------------
         Total current liabilities                                                                     7,328,165
                                                                                                    -------------

Commitments and contingencies - See Notes

Stockholders' deficit:
     Preferred stock, $.0001 par value, 10,000,000 shares authorized:
         Series A Convertible-$1.00 per share liquidation preference, 3,500,000 shares
            authorized, issued and outstanding                                                               350
         Series B Convertible-$1.00 per share liquidation preference, 1,500,000 shares
            authorized, issued and outstanding                                                               150
     Common stock, $.0001 par value, 100,000,000 shares authorized,
         17,411,389 shares issued and outstanding                                                          1,741
     Additional paid in capital                                                                          507,123
     Accumulated deficit                                                                              (6,137,799)
                                                                                                    -------------
       Total stockholders' deficit                                                                    (5,628,435)
                                                                                                    -------------

Total liabilities and stockholders' deficit                                                         $  1,699,730
                                                                                                    =============

   The accompanying notes are an integral part of these financial statements.
                                      F-2
</TABLE>


                                       32
<PAGE>
<TABLE>
<CAPTION>

          SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF OPERATIONS


                                                                                            Year Ended
                                                                                  -----------------------------------
                                                                                              June 30,
                                                                                  -----------------------------------
                                                                                      2003                2002
                                                                                  ---------------     ---------------
<S>                                                                                 <C>                 <C>
     Sales                                                                         $  3,729,165        $  5,609,557
                                                                                  ---------------     ---------------
Costs and expenses:
     Cost of sales                                                                    1,827,045           2,230,969
     Compensation and benefits                                                        2,547,846           2,236,191
     Professional fees and legal matters                                                936,621           1,130,848
     Selling, general and administrative expenses                                     1,910,546           2,139,123
     Unrealized loss on financial guarantees                                            146,440             150,953
     Depreciation and amortization                                                      104,723              84,774
                                                                                  ---------------     ---------------
                                                                                      7,473,221           7,972,858
                                                                                  ---------------     ---------------
Operating loss                                                                       (3,744,056)         (2,363,301)

Interest expense                                                                        104,381              65,358
                                                                                  ---------------     ---------------
Loss before income tax benefit                                                       (3,848,437)         (2,428,659)

Income tax benefit                                                                            -             (29,000)
                                                                                  ---------------     ---------------
Net loss                                                                           $ (3,848,437)       $ (2,399,659)
                                                                                  ===============     ===============

Loss per share, basic and diluted                                                  $      (0.22)       $      (0.19)
                                                                                  ===============     ===============

Weighted average number of shares                                                    17,278,269          12,896,403
                                                                                  ===============     ===============

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

                                      F-3
</TABLE>



                                       33
<PAGE>
<TABLE>
<CAPTION>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
                       YEARS ENDED JUNE 30, 2003 AND 2002

                                                                                                           Retained
                                             Convertible Preferred                           Additional    Earnings        Total
                                          Series A           Series B       Common Stock      Paid-in    (Accumulated  Stockholders'
                                     Shares    Amount   Shares    Amount  Shares     Amount   Capital      Deficit)       Deficit
                                     ------    ------   ------    ------  ------     ------   -------      --------       -------

<S>                                  <C>       <C>      <C>       <C>      <C>       <C>      <C>        <C>           <C>
Balances, July 1, 2001                 -       $ -        -       $ -          5,100 $5,100     -        $     110,297 $    115,397

Issuance of preferred stock to
  CEO/stockholder in exchange
  for common stock of affiliated
  companies                          3,500,000    350   1,500,000    150      (4,100) 4,100       3,600       -             -
11,900 for 1 forward common
  stock split and change in par value
  to $.0001 per share                  -         -        -         -     11,899,000    190        (190)      -             -
Sale of common stock                   -         -        -         -         75,000      7      74,993       -              75,000
Issuance of common stock
  to settle debt                       -         -        -         -        417,346     42     348,248                     348,290
Issuance of common stock and
  elimination of accumulated deficit
  of legal acquirer in reverse
  merger                               -         -        -         -      4,600,000    460     (44,814)      -             (44,354)
Amortization of deferred
  compensation                         -         -        -         -       -          -         36,580       -              36,580
Net loss                               -         -        -         -       -          -        -           (2,399,659)  (2,399,659)
                                    ------------------------------------------------------------------------------------------------
Balances, June 30, 2002              3,500,000    350   1,500,000    150  16,992,346   ,699     418,417     (2,289,362)  (1,868,746)
Issuance of common stock
  to settle debt                       -         -        -         -        419,043     42      83,405       -              83,447
Amortization of deferred
  compensation                         -         -        -         -       -          -          5,301       -               5,301
Net loss                               -         -        -         -       -          -        -           (3,848,437)  (3,848,437)
                                    ------------------------------------------------------------------------------------------------
                                     3,500,000 $  350   1,500,000 $  150  17,411,389 $1,741   $ 507,123  $  (6,137,799)$ (5,628,435)
                                    ================================================================================================

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

                                      F-4

</TABLE>

                                       34
<PAGE>
<TABLE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                                                                Year Ended
                                                                                      -------------------------------
                                                                                                 June 30,
                                                                                      -------------------------------
                                                                                         2003               2002
                                                                                      --------------    -------------
CASH FLOWS FROM OPERATING ACTIVITIES:
<S>                                                                                   <C>               <C>
    Net loss                                                                          $ (3,848,437)     $ (2,399,659)
    Adjustments to reconcile net loss to net cash used in operating activities:
      Depreciation and amortization                                                        104,723            84,774
      Unrealized loss on financial guarantees                                              146,440           150,953
      Amortization of deferred compensation                                                  5,301            36,580
      Noncash compensation - CEO/stockholder                                               139,976            18,423
      Noncash interest expense - CEO/stockholder                                            47,649            22,498
      CHANGES IN OPERATING ASSETS AND LIABILITIES:
        Decrease (Increase) in inventory                                                   741,873          (190,751)
        Decrease (Increase) in other current assets                                        133,073           (70,127)
        Increase in accounts payable and accrued expenses                                1,421,662         1,586,862
        Increase in customer deposits                                                      227,923           754,275
         Increase (Decrease) in deferred revenue                                           688,883          (258,673)
                                                                                      --------------    -------------
Net cash used in operating activities                                                     (190,934)         (264,845)
                                                                                      --------------    -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
    Purchase of property and equipment                                                           -            (2,166)
    (Increase) in other assets                                                              (7,213)          (10,500)
                                                                                      --------------    -------------
Net cash used in investing activities                                                       (7,213)          (12,666)
                                                                                      --------------    -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
    Proceeds from issuance of common stock                                                       -            75,000
    Repayments of note payable - bank                                                     (200,000)         (200,000)
    Borrowings under note payable - CEO/stockholder                                        387,441           566,633
    Repayments of note payable - CEO/stockholder                                                 -          (150,000)
                                                                                      --------------    -------------
Net cash provided by financing activities                                                  187,441           291,633
                                                                                      --------------    -------------
Net increase (decrease) in cash                                                            (10,706)           14,122

Cash, beginning of year                                                                     32,344            18,222
                                                                                      --------------    -------------
Cash, end of year                                                                      $    21,638      $     32,344
                                                                                      ==============    =============



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

                                     F - 5


</TABLE>


                                       35
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization and Nature of Business
-----------------------------------

Security Intelligence Technologies, Inc. (SIT"), a Florida Corporation and its
wholly owned subsidiaries ("collectively the "Company") are engaged in the
design, manufacture and sale of security and surveillance products and systems.
The Company purchases finished items for resale from independent manufacturers,
and also assembles off-the-shelf electronic devices and other components into
proprietary products and systems at its own facilities. The Company generally
sells to businesses, distributors, government agencies and consumers through
five retail outlets located in Miami, Florida; Beverly Hills, California;
Washington, DC; New York City, and London, England and from its showroom in New
Rochelle, New York. On April 17, 2002, CCS International, Ltd. ("CCS"), a
Delaware corporation, and its wholly-owned subsidiaries, merged with SIT and
became a wholly owned subsidiary of SIT. The merger has been accounted for as a
reverse acquisition, since the management and stockholder of CCS obtained
control of the merged entity after the transaction was completed. Under reverse
acquisition accounting, CCS is considered the accounting acquirer and SIT (then
known as Hipstyle.com, Inc.) is considered the acquired company. Inasmuch as SIT
had no substantive assets or operations at the date of the transaction, the
merger has been recorded as an issuance of CCS stock to acquire SIT, accompanied
by a recapitalization, rather than as a business combination.

Principles of Consolidation
---------------------------

The consolidated financial statements include the accounts of SIT and its
wholly-owned subsidiaries, CCS, Spy Shop, Ltd. d/b/a Counter Spy Shop of
Delaware, a Delaware corporation (retail store); Security Design Group, Inc., a
New York corporation (formerly a manufacturing operation, currently inactive);
Counter Spy Shop of Mayfair London, Ltd., a District of Columbia corporation
(retail store); CCS Counter Spy Shop of Mayfair London, Ltd., a California
corporation (retail store); and Counter Spy Shop of Mayfair, Ltd., a Florida
corporation (retail store). The financial statements for the year ended June 30,
2003 also include the operations of Counter Spy Shop of Mayfair Limited, a
wholly-owned United Kingdom corporation (retail store), that commenced
operations on July 1, 2002. All significant inter-company balances and
transactions have been eliminated in consolidation.

Basis of Financial Statement Presentation:
-----------------------------------------

The financial statements of the Company have been prepared assuming the Company
will continue as a going concern, which contemplates the realization of assets
and the satisfaction of liabilities in the normal course of business. The
Company incurred net losses of $3,848,437 and $2,399,659 for the years ended
June 30, 2003 and June 30, 2002 respectively. In addition, at June 30, 2003, the
Company had a working capital deficit of $5,805,771 and a deficiency in
stockholders' equity of $5,628,435. The Company is also a defendant in material
and costly litigation, which has significantly impacted liquidity. See Note 15.
The Company requires additional financing which may not be readily available.
The Company's bank facility has terminated, and the only source of funds other
than operations has been loans from the Company's chief executive officer and
customer deposits. See Notes 5 and 6. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's plans
with respect to these matters include to settle vendor payables wherever
possible, a reduction in operating expenses, and continued financing from the
chief executive officer in the absence of other sources of funds. Management
cannot provide any assurance that its plans will be successful in alleviating
its liquidity concerns and bringing the Company to the point of profitability.
The accompanying financial statements do not include any adjustments that might
result from the outcome of these uncertainties.

                                       F-6



                                       36
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



  1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Continued

Use of estimates
----------------

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

Inventories
-----------

Inventories are valued at the lower of cost (first-in, first-out) or market.

Property and equipment
----------------------

Assets are stated at cost. Depreciation is computed over the estimated useful
life of the assets generally using the straight-line method over periods ranging
from five to seven years. Additions and major renewals and betterments are
capitalized and depreciated over their estimated useful lives. Repairs and
maintenance are charged to operating expenses as incurred.

Long-lived assets
-----------------

The Company records impairment losses on long-lived assets used in operations
when events and circumstances indicate that the assets may be impaired and the
undiscounted cash flows estimated to be generated by those assets are less than
their carrying amounts.

Revenue recognition
-------------------

The Company recognizes revenue from store sales upon the delivery of merchandise
to a customer. Non-refundable advance payments received under marketing and
distribution arrangements are deferred and either applied as payments towards
customer purchases made pursuant to the terms of the respective agreements, or
recognized as income at the termination of the agreement if specified purchase
quotas have not been met by the customer. Customer deposits are initially
recorded as liabilities and recognized as revenue when the related goods are
shipped.


Stock-based Compensation
------------------------

     The Company periodically grants stock options to employees in accordance
with the provisions of its stock option plans, with the exercise price of the
stock options being set at the closing market price of the common stock on the
date of grant. The Company accounts for stock-based compensation plans under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to
Employees", and accordingly accounts for employee stock-based compensation
utilizing the intrinsic value method. FAS No. 123, "Accounting for Stock-Based
Compensation", establishes a fair value based method of accounting for
stock-based compensation plans. The Company has adopted the disclosure only
alternative under FAS No. 123, which requires disclosure of the pro forma
effects on earnings and earnings per share as if FAS No. 123 had been adopted as
well as certain other information.

                                      F-7



                                       37
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Stock-based Compensation - continued

 Stock options granted to non-employees are recorded at their fair value, as
determined in accordance with SFAS No. 123 and Emerging Issues Task Force
Consensus No. 96-18, and recognized over the related service period. Deferred
charges for options granted to non-employees are periodically re-measured until
the options vest.

     In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based
Compensation - Transition and Disclosure. SFAS No. 148 amends SFAS No. 123,
Accounting for Stock-Based Compensation. Although it does not require use of
fair value method of accounting for stock-based employee compensation, it does
provide alternative methods of transition. It also amends the disclosure
provisions of SFAS No.123 and APB No. 28, Interim Financial Reporting, to
require disclosure in the summary of significant accounting policies of the
effects of an entity's accounting policy with respect to stock-based employee
compensation on reported net income and earnings per share in annual and interim
financial statements. SFAS No. 148's amendment of the transition and annual
disclosure requirements is effective for fiscal years ending after December 15,
2002. The amendment of disclosure requirements of APB No. 28 is effective for
interim periods beginning after December 15, 2002. We adopted SFAS No. 148 and
APB No.28 on January 1, 2003. FASB Statement 123, "Accounting for Stock-Based
Compensation," requires the Company to provide pro forma information regarding
net income (loss) and income (loss) per share as if compensation cost for the
Company's stock option issuances had been determined in accordance with the fair
value based method prescribed in FASB Statement 123. The Company estimates the
fair value of each stock option at the grant date by using the Black-Scholes
option-pricing model with the following weighted-average assumptions used for
grants in fiscal 2003 and 2002: dividend yield of 0%, risk-free interest rate of
3.38%, expected lives of eight years, and expected volatility of 120%. Under the
accounting provisions of SFAS Statement 123, the Company's net loss and loss per
share for 2003 and 2002 would have been the pro forma amounts indicated below:

<TABLE>
<CAPTION>

                                                                                Year Ended June 30,
                                                                          -----------------------------------
                                                                              2003                 2002
Net loss:
<S>                                                                        <C>                  <C>
     As reported                                                           $ (3,848,437)        $ (2,399,659)
     Add: Stock based employee compensation expense
        included in reported net loss                                               -                    -
     Deduct: Total stock based employee compensation expense
        determined under the fair value based method for all awards            (310,041)            (510,443)
                                                                           -------------        -------------
                                                                           $ (4,158,478)        $ (2,910,102)
                                                                           =============        =============
Loss per share:
     As reported                                                           $      (0.22)        $      (0.19)
     Proforma                                                              $      (0.24)        $      (0.23)

</TABLE>

                                      F-8



                                       38
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Income taxes
------------

The Company uses the liability method to determine its income tax expense. Under
this method, deferred tax assets and liabilities are computed based on
differences between financial reporting and tax basis of assets and liabilities
and are measured using the enacted rates and laws that will be in effect when
the differences are expected to reverse. Deferred tax assets are reduced by a
valuation allowance if, based on the weight of the available evidence, it is
more likely than not that all or some portion of the deferred tax assets will
not be realized. The ultimate realization of the deferred tax asset depends on
the Company's ability to generate sufficient taxable income in the future.

Advertising
-----------

Advertising costs are expensed as incurred. The Company incurred advertising
expenses of approximately $227,000 and $341,000 during the years ended June 30,
2003 and 2002 respectively.

Financial guarantees
--------------------

Certain shares issued by the Company to settle debt obligations contain a price
guarantee that requires the Company to settle in cash any difference between the
original face amount of the debt and proceeds from the creditor's subsequent
sale of the shares. The Company accounts for these transactions by recording the
debt at fair value with periodic mark-to-market adjustments until the guarantee
is settled. Unrealized gains or losses resulting from changes in fair value are
included in earnings and accrued expenses. (See Note 4)

Fair Value of Financial Instruments
-----------------------------------

The fair values of financial instruments recorded on the balance sheet are not
significantly different from their carrying amounts due to the short-term nature
of those instruments, or because they are accounted for at fair value.

New accounting pronouncements
-----------------------------

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No.
141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 requires that all business combinations initiated after
June 30, 2001 be accounted for under the purchase method and addresses the
initial recognition and measurement of goodwill and other intangible assets
acquired in a business combination. SFAS No. 142 addresses the initial
recognition and measurement of intangible assets acquired outside of a business
combination and the accounting for goodwill and other intangible assets
subsequent to their acquisition. SFAS No. 142 provides that intangible assets
with finite useful lives be amortized and that goodwill and intangible assets
with indefinite lives not be amortized, but will instead be tested at least
annually for impairment. We adopted SFAS No. 142 on July 1, 2002. We did not
carry any goodwill or other intangibles on our balance sheets as of June 30,
2003 or 2002, and therefore the adoption of SFAS No. 142 did not have a material
effect on our financial position or operating results.




                                       F-9


                                       39
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

New accounting pronouncements - continued
-----------------------------------------

In June 2001, the FASB issued SFAS No. 143, Accounting for Asset Retirement
Obligations. SFAS No. 143 addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. This statement is effective for fiscal years
beginning after June 15, 2002, however earlier application is permitted. We
adopted SFAS No. 143 on July 1, 2002. The adoption of this statement did not
have a material effect on our financial position or operating results.

In August 2001, the FASB issued SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, which addresses financial accounting and
reporting for the impairment or disposal of long-lived assets. While SFAS No.
144 supersedes SFAS No. 121, Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of, it retains many of the fundamental
provisions of SFAS No. 121. SFAS No. 144 also supersedes the accounting and
reporting provisions of APB No. 30, Reporting the Results of
Operations--Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions, for
the disposal of a segment of a business. However, it retains the requirement in
APB No. 30 to report separately discontinued operations and extends that
reporting to a component of an entity that either has been disposed of (by sale,
abandonment, or in a distribution to owners) or is classified as held for sale.
We adopted SFAS No 144 on July 1, 2002. The adoption of SFAS No. 144 did not
have a material effect on our financial position or results of operations.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities, which addresses accounting for restructuring and
similar costs. SFAS No. 146 supersedes previous accounting guidance, principally
Emerging Issues Task Force ("EITF") 94-3, Liability Recognition for Certain
Employee Termination Benefits and Other Costs to Exit on Activity (including
Certain Costs Incurred in a Restructuring). We were required to adopt SFAS No.
146 for restructuring activities initiated after December 31, 2002, and we
adopted SFAS No. 146 on January 1, 2003. SFAS No. 146 requires that the
liability for costs associated with an exit or disposal activity be recognized
when the liability is incurred. Under EITF 94-3, a liability for an exit cost
was recognized at the date of our commitment to an exit plan. SFAS No. 146 also
established that the liability should initially be measured and recorded at fair
value. The adoption of SFAS No. 146 did not have a material effect on our
financial position or results of operations.

In November 2002, the FASB issued FIN No. 45, Guarantor's Accounting and
Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others. The interpretation elaborates on the existing disclosure
requirements for most guarantees, including loan guarantees such as standby
letters of credit. It also clarifies that at the time a company issues a
guarantee, the company must recognize an initial liability for the fair value,
or market value, of the obligations it assumes under the guarantee and must
disclose that information in its interim and annual financial statements. The
provisions related to recognizing a liability at inception of the guarantee for
the fair value of the guarantor's obligations do not apply to product warranties
or to guarantees accounted for as derivatives. The disclosure requirements are
effective for financial statements of interim or annual periods ending after
December 15, 2002, and the initial recognition and initial measurement
provisions apply on a prospective basis to guarantees issued or modified after
December 31, 2002. We adopted FIN No. 45 on January 1, 2003. The adoption of FIN
No. 45 did not have a material effect on our financial position or results of
operations.
                                      F-10



                                       40
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

New accounting pronouncements - continued
-----------------------------------------

In January 2003, the FASB issued Interpretation No. 46, "Consolidation of
Variable Interest Entities," an interpretation of ARB No. 51. This
Interpretation addresses the consolidation by business enterprises of variable
interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after
January 31, 2003, and to variable interests in variable interest entities
obtained after January 31, 2003. The adoption of this Interpretation did not
have a material effect on our consolidated financial statements.

In May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity, which requires
mandatorily redeemable financial instruments to be classified as liabilities,
the result of which requires related expense to be classified as interest
expense rather than minority interest on a prospective basis. SFAS No. 150 is
effective in the three months ended June 30, 2003 for financial instruments
entered into or modified after May 31, 2003, and is otherwise effective July 1,
2003 for previously issued instruments. SFAS No. 150 is not expected to have a
material impact on our financial position or results of operations.

Joint Venture Agreements
------------------------

     During the year the Company entered into three joint Venture agreements
with technology companies. On July 2, 2002 the Company entered into a joint
venture agreement with MD Information Systems, a Russian company that develops,
manufactures and markets voice logging products and services. On October 30,
2002 the Company entered into a joint venture agreement with Power Telecom Co.,
Ltd. a Korean company that develops manufactures and markets GPS equipment and
services. On April 12, 2003 the Company entered into a joint venture agreement
with VTF Company a Russian company that develops, manufactures and markets
products designed to monitor, intercept and jam radio frequency signals and
other radio electronic devices. In connection with these agreements the Company
and its joint venture partners have formed new entities, limited liability
companies, whose ownership and share of operating results are equally owned. The
joint venture agreements grant the new entities exclusive marketing rights to
the Company's joint venture partner's products, except in the countries in which
they are domiciled.

     The Company accounts for its investments in the joint ventures using the
equity method because its ownership is greater than 20% and it has the ability
to exercise significant influence over the operating, investing and financing
decisions of the joint venture entities. Under the equity method, the Company
will record its pro-rata share of joint venture income or losses and adjust the
basis of its investment accordingly. As of June 30, 2003, the joint ventures
have not generated any revenues or other significant business activity.


                                      F-11



                                       41
<PAGE>

           SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Foreign Currency Translation
----------------------------

The functional currency of the Company's UK subsidiary is the local currency.
Accordingly, the Company translates all assets and liabilities into U.S. dollars
at current rates. Revenues, costs, and expenses are translated at average rates
during each reporting period. Gains and losses resulting from the translation of
the consolidated financial statements are excluded from results of operations
and are reflected as a translation adjustment and a separate component of
stockholders' deficit. Translation adjustments were immaterial as of June 30,
2003.

Gains and losses resulting from foreign currency transactions are recognized in
the consolidated statement of operations in the period they occur.

Concentration of credit risk
----------------------------

Financial instruments that potentially subject the Company to concentrations of
credit risk consist principally of cash balances. The Company limits the amount
of credit exposure to any one financial institution. The Company generally does
not grant credit to domestic or foreign customers.

Research and development costs
------------------------------

Research and development costs are charged to expense as incurred.

Loss Per Share
--------------

The Company calculates earnings per share in accordance with SFAS No. 128,
Earnings Per Share, and SEC Staff Accounting Bulletin No. 98. Accordingly, basic
and diluted loss per share is computed using the weighted average number of
shares of common stock outstanding and excludes all common stock equivalents
outstanding during the period. Common stock equivalents consist of shares
issuable upon the exercise of stock options and warrants using the treasury
stock method. Stock options and preferred stock that are convertible into common
stock based on the Company's attainment of performance goals are not includible
in the calculation of earnings per share until the specified targets are met.
The following securities have been excluded from the diluted computation for
fiscal 2003 and 2002 because they are contingently issuable and/or antidilutive:

                                                    Year Ended June 30,
                                                    --------------------------
                                                        2003              2002
                                                    ---------        ---------

Series A Convertible Preferred Stock                3,500,000        3,500,000
Series B Convertible Preferred Stock                1,500,000        1,500,000
Stock options                                       1,992,500        1,783,000
Warrants                                              400,000          400,000



                                      F-12


                                       42
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002

1. NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -
Continued:

Reclassifications
-----------------

Certain reclassifications have been made to the prior year financial statements
in order to conform to the current year presentation.


2.  INVENTORY

Inventories consist of the following at June 30, 2003:

Small components and supplies                                   $     238,180
Finished goods                                                      1,210,134
                                                               ---------------
                                                                $   1,448,314
                                                               ===============
3. PROPERTY AND EQUIPMENT

Property and equipment consists of the following at June 30, 2003:

Office furniture and equipment                           $     206,973
Leasehold improvements                                         346,958
                                                        ---------------
                                                               553,931
Accumulated depreciation and amortization                     (431,541)
                                                        ---------------
                                                         $     122,390
                                                        ===============

Depreciation and amortization expense was $104,723 and $84,774 for the years
ended June 30, 2003 and 2002, respectively.











                                      F-13


                                       43
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002




4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses at June 30, 2003 consisted of the
following:

Accounts payable - trade                                       $1,648,216
Professional fees and legal matters                             1,373,966
Common shares subject to financial guarantees                     297,393
Payroll liabilities                                               185,879
Deferred rent payable                                              58,322
                                                              -----------
                                                               $3,563,776
                                                              ===========

As of June 30, 2003 Company creditors have initiated lawsuits for nonpayment of
accrued liabilities totaling approximately $ 368,241.

As of June 30, 2003 there were 577,000 shares of common stock subject to
financial guarantees with a maximum liability of $366,633.


5. NOTE PAYABLE - BANK

Prior to June 1, 2002, the Company had a bank credit agreement pursuant to which
it could borrow up to $400,000 with interest at the bank's price plus 1%. On
June 1, 2002, the available credit was reduced to $200,000 and the interest rate
was increased to the bank's prime rate plus 2.5%. The Note is secured by
substantially all of the assets of the Company, and personal assets and a
guaranty of the chief executive officer. The bank also requires the Company to
maintain average monthly compensating balances of $60,000 and will assess
additional interest at the prime rate plus 2.5% (7.25% at June 30, 2002) on any
shortfall. The credit facility expires on November 1, 2002, when all unpaid
principal and interest became due in full. The unpaid principal and interest was
paid in December 2002. To date, management has been unable to renew or to
replace the line with alternative financing on similar terms.

6. NOTE PAYABLE - CEO/STOCKHOLDER

This amount represents a note payable to the Company's chief executive officer
and includes accrued interest of $47,649 based on an interest rate of 5% per
annum and deferred salary of $158,399. The Note is secured by substantially all
of the assets of the Company and is due on demand.


7. STOCKHOLDERS' DEFICIT- REVERSE MERGER

Corporate recapitalization and reorganization

On February 28, 2002. CCS completed a recapitalization and entered into an
agreement of merger with a publicly- traded company, as described below.
Effective February 28, 2002, CCS amended and restated its certificate of
incorporation, increasing the number of authorized shares of common stock from
1,500 shares, no par value to 50,000,000 shares, par value $.0001 per share, and
created a class of 10,000,000 shares of preferred stock, par value $.0001 per
share. CCS directors have the right to determine the rights, preferences and
privileges and restrictions and limitations of the preferred shares.


                                      F-14



                                       44
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



7. STOCKHOLDERS' DEFICIT-; REVERSE MERGER (continued)

Corporate recapitalization and reorganization (continued)


The board of directors has authorized two series of preferred stock, the Series
A Preferred stock, consisting of 3,500,000 shares, and the Series B Preferred
stock, consisting of 1,500,000 shares. Both Series A and Series B preferred
shares have a liquidation preference of $1.00 per share and are each convertible
into one share of common stock if CCS has either consolidated annual net revenue
of at least $10,000,000 or annual consolidated net income of at least $1,000,000
prior to October 15, 2008. Each share of Series A Preferred stock has 15 votes
per share; Series B Preferred stock is nonvoting except as required by law.

On February 28, 2002, pursuant to an Exchange Agreement dated February 25, 2002,
Mr. Jamil exchanged all of his shares in the Affiliated Companies for 3,500,000
shares of CCS Series A Preferred stock and 1,500,000 shares of CCS Series B
Preferred stock. See Note 15 with respect to a potential claim relating to the
shares of Series B Preferred Stock that were issued to Mr. Jamil. Also on
February 28, 2002, the CCS Board of Directors approved an 11,900 for 1 forward
stock split of common stock.

Reverse Merger

As of February 28, 2002, CCS, SIT (then known as HipStyle.Com, Inc.), a Florida
corporation, and CCS Acquisition Co., a Delaware corporation ("MergerSub"),
entered into an Agreement and Plan of Merger, as amended (the "Merger
Agreement"), pursuant to which on April 17, 2002 (the "Effective Date"),
MergerSub was merged with and into CCS, and CCS became a wholly-owned subsidiary
of SIT. Pursuant to the merger, on the Effective Date, Mr. Jamil, as holder of
3,500,000 shares of Series A Preferred stock, 1,500,000 shares of Series B
Preferred stock and 11,900,000 shares of CCS common stock, received an equal
number of SIT shares, respectively. In addition, outstanding CCS options to
purchase 1,800,500 shares of common stock and warrants to purchase 400,000
shares of common stock were exchanged for similar SIT securities. Further, the
existing board of directors and officers of SIT resigned and were replaced by
the board of directors and officers of CCS. Following the merger, Mr. Jamil
owned approximately 72% of the 16,575,000 shares of SIT common stock then
outstanding, and 100% of the outstanding shares of Series A and Series B
Preferred Stock. The merger transaction has been accounted for as a reverse
acquisition, since the management and stockholder of CCS obtained control of the
merged entity after the transaction was completed. Inasmuch as SIT had no
substantive assets or operations at the date of the transaction, the merger has
been recorded as an issuance of CCS stock to acquire SIT, accompanied by a
recapitalization, rather than as a business combination.



                                      F-15



                                       45
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


8. STOCK OPTIONS

2002 Stock Option Plan

As of January 21, 2002, the board of directors of the Company adopted the 2002
Stock Plan, which provided for the grant of incentive and non-qualified stock
options to purchase a maximum of 2,000,000 shares of common stock to directors,
employees, officers, agents, consultants and independent contractors who perform
services for the Company. In connection with the reverse merger outstanding
options to purchase a total of 1,800,500 shares of CCS' common stock were
converted into options to purchase an equal number of shares of the Company's
common stock at exercise prices of $.50 to $1.00 per share, which were the
same exercise prices as the options under the CCS plan.

A summary of changes in common stock options during fiscal 2003 and 2002
follows:

                                Number of      Weighted Average
                                  Shares         Exercise Price
                               --------------  -----------------

Outstanding at June 30, 2001               -                $ -
      Granted                      1,850,500               0.60
      Cancelled                      (67,500)              1.18
      Exercised                            -
                               --------------
Outstanding at June 30, 2002       1,783,000               0.58

      Granted                        300,000               0.08
      Cancelled                      (90,500)              1.73
      Exercised                            -
                               --------------
Outstanding at June 30, 2003       1,992,500             $ 0.45
                               ==============  =================

The following table summarizes information about stock options outstanding at
June 30, 2003,

                                      Weighted
                                      Average
                    Number            Remaining           Number
       Exercise     Outstanding       Contractual         Exercisable
        Price       6/30/2003         Life (Months)       6/30/2003
      -----------  --------------  ------------------  --------------
          $ 0.08         300,000                110          300,000
          $ 0.50       1,620,500                104        1,397,750
          $ 1.00          72,000                102           45,750
                   --------------  ------------------  --------------
                       1,992,500                104        1,743,500
                   ==============  ==================  ==============

At June 30, 2003 there were 7,500 options available for future grant under the
2002 Stock Plan.

                                      F-16


                                       46
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


8. STOCK OPTIONS (continued)

Other Option Grant

Pursuant to the chief executive officer's employment agreement, the Company
granted him a non-qualified stock option to purchase 1,000,000 shares of common
stock at an exercise price of $2.00 per share. These options vest upon
achievement by the Company of $10,000,000 of annual revenues. Due to the
uncertainty of reaching the stipulated performance target, the Company has not
established a measurement date for the option. Upon determination that the
achievement of the revenue threshold is probable, the Company will value the
option on the measurement date using the intrinsic value method, and will record
the resulting charge, if any, over the remaining vesting period.

Common Stock Purchase Warrants

In connection with the reverse merger, warrants to purchase a total of 400,000
shares of CCS common stock issued to a consultant were converted into warrants
to purchase an equal number of shares of the Company's common at an exercise
price of $.50 per share, subject to an anti-dilution provision, as defined. The
warrants vested on April 17, 2003. The Company has valued the warrants at
$22,770 using the Black-Scholes option pricing model.

9. PLEDGE AGREEMENT

The merger agreement relating to the reverse merger provided, as a condition to
CCS' obligation to close, that the Company closed on a private sale from which
the Company realized proceeds of $1,000,000. This condition was not met at
closing, and CCS completed the reverse merger without the Company having
received any proceeds from a public offering. At the closing of the reverse
merger, the Company entered into a stock pledge agreement ("Pledge Agreement")
with Atlas Equity Group, Inc. ("Atlas Equity"), a Florida corporation
beneficially owned by Michael Farkas who is a stockholder of the Company
pursuant to which Atlas Equity was to have pledged 1,500,000 shares of
common stock of the Company (the "Pledged Shares"). Atlas Equity never delivered
the shares to be held pursuant to the pledge agreement. The Pledge Agreement
stipulated the pledged shares were to be returned to Atlas Equity if the Company
sold shares of its unregistered common stock sufficient to generate net cash
proceeds of $925,000 to the Company prior to June 1, 2002, subsequently extended
to June 14, 2002. On December 16, 2002 the Company and Atlas Equity and certain
successor owners of Atlas Equity's Pledged Shares entered into an agreement
that reduced the number of Pledged Shares to 750,000, restricted the number of
Pledged Shares that could be sold for a period of one year, and extended the
date to raise the $925,000 to July 7, 2004.

10. RECENT ISSUANCES OF UNREGISTERED SECURITIES

On July 10, 2002, the Company and Shenzhen Newtek, a former product distributor
of the Company, entered into a Settlement Agreement under which the Company
issued 67,000 restricted shares of its common stock in full settlement, subject
to certain terms, of a $67,000 claim. If the market price of the Company's
common stock on July 10, 2003 is less than $1.00 per share, the Company is to
pay the plaintiff the difference between $67,000 and the value of the stock or
in the alternative the plaintiff can return the 67,000 shares to the Company in
return for a payment of $35,000. In August 2003 Shenzhen Newtek returned the
67,000 shares to the Company; however, to date, no cash payment has been made.



                                      F-17



                                       47
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


10. RECENT ISSUANCES OF UNREGISTERED SECURITIES - continued

On October 21, 2002, the Company and Allan L. Dunterman Jr. entered into a
Settlement Agreement under which the Company issued 110,000 restricted shares of
its common stock in full settlement, subject to certain terms, of an $88,750
claim. If the market price of the Company's common stock on October 21, 2003 or
such later date that the plaintiff sells the shares is less than $.81 per share,
the Company is to pay the plaintiff the difference between $88,750 and the value
of the stock. At September 24, 2003, the closing price of the Company's common
stock was $.73 per share.

During fiscal 2003 the Company issued 112,043 restricted shares of common stock
for investor relations consulting services of $15,000 and issued 80,000
restricted shares of common stock in full payment of trade payables of $18,267.

On October 7, 2002, the Company entered into an agreement with an investment
banking firm under which the Company issued 50,000 restricted shares of common
stock valued at $6,500.

11. INCOME TAXES

Income taxes (tax benefit) consists of the following:

                                                      June 30,
                                             ---------------------------
                                                2003             2002
                                             ------------   ------------

    Currently payable (refundable):
       Federal                                 $     -        $ (33,000)
       State and local                               -            4,000
                                             ------------   ------------
                                                     -          (29,000)
                                             ------------   ------------
    Deferred:
       Federal                                       -               -
       State and local                               -               -
                                             ------------   ------------
                                                     -               -
                                             ------------   ------------
    Income taxes (tax benefit)                 $     -        $ (29,000)
                                             ============   ============


There was no income tax expense in fiscal 2003 due to operating losses. In
January 2003 the Company received approximately $158,000 of tax refunds from a
federal loss carry-back refund claim.








                                      F-18



                                       48
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


11. INCOME TAXES - continued
<TABLE>
<CAPTION>


    Following is a reconciliation of the provision for income taxes (tax benefit)
    with income taxes on the federal statutory rate:
                                                                                   June 30,
                                                                        -------------------------------
                                                                              2003             2002
                                                                        --------------     ------------
<S>                                                                      <C>                <C>
    Federal tax at statutory rate                                        $ (1,355,000)      $ (826,000)
    State and local taxes, net of federal effect                             (159,000)         (92,500)
    Nondeductible items                                                        93,000           50,500
    Change in valuation allowance                                           1,421,000          839,000
                                                                        --------------     ------------
    Income taxes (tax benefit)                                           $        -         $  (29,000)
                                                                        ==============     ============

</TABLE>

    Components of deferred taxes at June 30, 2003 are as follows:
    Deferred tax assets:
       Net operating losses                                       $ 1,798,000
       Deferred rent payable                                           22,000
       Reserves and allowances                                        480,000
       Stock based compensation                                        16,000
                                                               ---------------
                                                                    2,316,000
    Deferred tax liability:
       Property and equipment                                           6,000
                                                               ---------------
                                                                    2,310,000
    Less valuation allowance                                       (2,310,000)
                                                               ---------------
    Net deferred taxes                                            $       -
                                                               ===============

The Company files a consolidated federal return with its U.S. subsidiaries and
combined state tax returns where permitted.

The Company has recorded valuation allowances to offset tax benefits arising
from deferred tax items because their realization is uncertain. The Company has
federal net operating loss carry-forwards of approximately $4,600,000 available
to offset future federal taxable income. These losses expire in 2021, 2022 and
2023.

12. 401(K) SAVINGS PLAN

  The Company maintains a qualified deferred compensation plan under section
401(k) of the Internal Revenue Code. Under the plan, employees may elect to
defer up to 15% of their salary, subject to the Internal Revenue Service limits.
The Company may make a discretionary match as well as a discretionary
contribution. The Company did not make any contributions to the plan for the
years ended June 30, 2003 and 2002.


                                      F-19



                                       49
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


13. RELATED PARTY TRANSACTIONS

Employment Agreement

In April 2002, in connection with the completion of the merger, the Company
entered into a three-year employment agreement with Mr. Jamil pursuant to which
he agreed to serve as the Company's president and chief executive officer. The
agreement calls for an annual base compensation of $250,000 and may be increased
on each anniversary date commencing May 1, 2003 by 10% if the Company achieves
certain performance criteria. In addition to the base salary, the chief
executive officer is eligible to receive an annual discretionary bonus
commencing June 30, 2003, at the sole discretion of the board of directors.
Pursuant to the agreement, the Company granted the chief executive officer a
non-qualified stock option to purchase 1,000,000 shares of common stock at an
exercise price of $2.00 per share. These options vest upon achievement by the
Company of $10,000,000 of annual revenues.


14. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
                                                              Year Ended
                                                         -----------------------
                                                                June 30,
                                                         -----------------------
                                                           2003         2002
                                                         ----------   ----------

Cash paid during the period for:
     Interest                                            $   9,085     $  38,484
                                                         ==========   ==========
     Income taxes                                        $(153,307)    $  23,296
                                                         ==========   ==========

Non-cash financing and investing activities:
     Common stock issued to settle accounts payable      $  83,447     $ 348,290
                                                         ==========   ==========
     Accrued liabilities assumed in reverse merger       $    -        $  44,354
                                                         ==========   ==========

     Accrued interest and deferred salary
      credited to loan payable-CEO/stockholder           $ 187,625     $  40,921
                                                         ==========   ==========



                                      F-20



                                       50
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


15. COMMITMENTS AND CONTINGENCIES

Litigation
----------

Settled matters
---------------

On or about May 25, 2001, an action was commenced against CCS in the United
States District Court for the Southern District of New York, captioned Shenzen
Newtek v. CCS International Ltd. The plaintiff had sought to recover $91,500,
which was paid to CCS in connection with a distributorship agreement between the
parties, plus costs and interest. On July 10, 2002, the Company and Shenzhen
Newtek entered into a Settlement Agreement under which SIT issued 67,000 shares
of its common stock in full settlement, subject to certain terms, of the $67,000
claim. The Settlement Agreement granted Shenzhen Newtek a price guarantee upon
sale of the shares and, alternatively, the option after July 10, 2003 to return
the 67,000 shares to the Company in lieu of a cash payment of $35,000. In August
2003 Shenzhen Newtek returned the 67,000 shares to the Company however to date,
no cash payment has been made.

     On May 2, 2002, Menachem Cohen, vice president and a director, and two
other employees of one of the Company's subsidiaries were arrested pursuant to a
criminal complaint filed in the United States District Court of the Southern
District of Florida. The complaint alleged that such individuals violated
federal law in that they intentionally manufactured, assembled, possessed or
sold a device used for the surreptitious interception of electronic
communications and that the device was sent through the mail or transmitted in
intrastate or foreign commerce. On September 4, 2002, the United States District
Court of the Southern District of Florida entered an order dismissing all
charges against Menachem Cohen, vice president and director, and the two other
employees of one of the Company's subsidiaries.

     In June 2001, a former product licensee of CCS brought suit in Circuit
Court, Palm Beach, Florida, captioned Dunterman v. CCS International Ltd. The
suit claimed that CCS engaged in breach of contract, among other allegations. On
October 21, 2002, the Company and Allan L. Dunterman Jr. entered into a
Settlement Agreement under which the Company issued 110,000 shares of its common
stock in full settlement, subject to certain terms, of an $88,750 claim.

Pending Matters
---------------

     In June 1998, a photographer and model formerly retained by CCS filed suit
in U. S. District Court for the Southern District of New York captioned Ross &
Vassilkioti v. CCS International, Ltd. seeking damages for alleged copyright
infringement and other claims. The judge in the case has granted the plaintiff
partial summary judgment as to the copyright infringement. On June 18, 2003, a
jury awarded the plaintiffs $350,000 on the copyright infringement portion of
the case. Under federal judicial rules, the Company is unable to contest the
granting of partial summary judgment until a final judgment has been rendered.
The Company believes that it has meritorious and substantial defenses against
the additional claims asserted in the lawsuit and a valid basis for appeal of
the jury award of $350,000 and any additional adverse verdicts that may occur in
this case. A trial date for the remaining counts in the case has been set for
October 16, 2003.

     On November 1, 2002, a former Company supplier filed suit in the United
States District Court for the District of Maryland, captioned Micronel Safety,
Inc. v. CCS International Ltd. seeking damages of $242,400 for breach of
contract to purchase certain products. CCS has denied the material allegations
of the plaintiff's claim and has raised affirmative defenses thereto. The
Company believes that it has valid defenses to the claim.

                                      F-21



                                       51
<PAGE>


            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002


15. COMMITMENTS AND CONTINGENCIES

Litigation
----------

Pending Matters - continued
---------------------------

     On or about March 13, 2003, an action was commenced against CCS and its
subsidiary in the Circuit Court of the 11th Judicial Circuit, Miami-Dade County,
FL captioned Welcome Publishing Company, Inc. v. CCS International, Ltd. and
Counter Spy Shop of Mayfair Ltd., Inc. seeking damages of $140,430 for an
alleged breach of an advertising contract. CCS has denied the material
allegations of the plaintiff's claim and has raised affirmative defenses
thereto. The Company believes that it has valid defenses to the claim. A
non-binding mediation took place on October 9, 2003 during which the parties
discussed a settlement but were unable to reach an agreement.

     The Company is also the defendant in 3 actions arising out of our
distributor agreements. On or about May 11, 2000 an action was commenced against
CCS in the Supreme Court, New York County, captioned Ergonomic Systems
Philippines Inc. v. CCS International Ltd. The plaintiff seeks to recover
$81,000, which was paid to CCS in connection with a distributorship agreement
between the parties, plus costs and interest. CCS has denied the material
allegations of the claim and has raised affirmative defenses thereto. The
Company believes that it has valid defenses to the claim.

     On or about October 12, 2001, an action was commenced against CCS in the
United States District Court for the Southern District of New York, captioned
China Bohai Group Co., Ltd. and USA International Business Connections Corp. v.
CCS International, Ltd. The plaintiff seeks to recover $250,000 paid to CCS in
connection with a distributorship agreement between the parties, plus $5,000,000
of punitive damages and costs and interest. CCS has denied the material
allegations of the plaintiff's claim and has raised affirmative defenses
thereto. CCS has asserted a counterclaim seeking damages in the approximate
amount of $1,150,000 based upon the plaintiff's alleged breach of the parties'
distributorship agreement. The Company believes that it has valid defenses to
the claim.

     On July 1, 2002, the Company's London subsidiary, Counter Spy Shop of
Mayfair Limited ("CSS"), entered into an agreement to assume the business
operations of another UK corporation ("Predecessor") for nominal consideration.
The Predecessor is a defendant in ongoing litigation brought by a former
customer, who has sued for breach of a contract executed in 1998 and is seeking
a refund of approximately $293,000 in products and services purchased from the
Predecessor. Due to the business transfer, there is a possibility that the
plaintiff could name CSS as a defendant in the case. The Company, in
consultation with counsel, believes that the Predecessor has valid defenses to
the claim, and that CSS has valid defenses against any action that may be
brought against it.

     Given that litigation is subject to many uncertainties, it is not possible
to predict the outcome of the litigation pending against the Company. However,
it is possible that the Company's business, results of operations, cash flows or
financial position could be materially affected by an unfavorable outcome of
certain pending litigation in amounts in excess of those that the Company has
recognized. All such cases are being, and will continue to be vigorously
defended, and the Company believes that it has meritorious and valid defenses
against all such litigation, as well as a valid basis for appeal of any adverse
verdicts, should they result.








                                      F-22



                                       52
<PAGE>

            SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



15. COMMITMENTS AND CONTINGENCIES - Continued


Stock Purchase Agreements

On January 31, 2002, Mr. Jamil entered into an understanding with two financial
consulting companies to sell to them 30% of his interest in the common stock of
CCS's subsidiaries, excluding Security Design, Inc., for nominal consideration.
Mr. Jamil has advised the Company that neither the two financial consultants nor
their designees have paid the required consideration for the shares, and that he
has never formally transferred any stock ownership in the subsidiaries to the
financial consultants or their designees. Further, a total of 1,500,000 shares
of the Company's Series B Preferred Stock were issued to the chief executive
officer in partial exchange for his shares in the subsidiaries, and not to the
financial consultants or their designees as had been contemplated by agreements
between the chief executive officer and the financial consultants or their
designees. The Company cannot give any assurance that the financial consultants
will not claim that they are entitled to the Series B shares.

Operating Leases

The Company leases office space, retail stores and sales offices and office
equipment under non-cancelable operating leases that expire over various periods
through 2010. Rent expense is being recognized on a straight-line basis to
account for rent concessions and graduated charges during the lease term,
resulting in deferred rent payable of $58,322. Total rent expense for the years
ended June 30, 2003 and 2002 was approximately $632,288 and $486,195
respectively.

Operating Leases - continued

The approximate future minimum rental commitments for all long-term
non-cancelable operating leases are as follows:

  Year ending
    June 30,                 Amount
-----------------        ---------------

      2004                  $   504,735
      2005                      467,898
      2006                      234,114
      2007                      233,793
      2008                      240,623
Thereafter                      413,651
                         ---------------
                            $ 2,094,814
                         ===============

                                      F-23



                                       53
<PAGE>

 SECURITY INTELLIGENCE TECHNOLOGIES, INC. AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                   FOR THE YEARS ENDED JUNE 30, 2003 AND 2002



 16. SUBSEQUENT EVENTS

Consulting Agreements
---------------------

In July 2003 the Company formalized consulting contracts with Michael Farkas and
two additional financial consultants relating to acquisition services, financial
public relations and operational performance services. In connection therewith
the Company granted a total of 2,600,000 fully vested options, including
1,700,000 options granted to Michael Farkas, to purchase shares of common stock
at prices ranging from $.10 per share to $1.00 per share. The consultants
subsequently have exercised 1,960,000 options for a total amount of $525,000,
including 1,700,000 options exercised by Michael Farkas for $400,000.

2003 Stock Incentive Plan
-------------------------

     As of July 3, 2003 our board of directors adopted the 2003 Stock Incentive
Plan (the "2003 Plan"), which provided for the grant of non-qualified stock
options to purchase a maximum of 320,000 shares of common stock or the grant of
shares, to directors, employees, officers, agents, consultants and independent
contractors who perform services for the Company. As of the date of this annual
report on Form 10-KSB, stockholder approval of the 2003 stock plan has not been
obtained.




                                      F-24






                                       54
<PAGE>



                                   SIGNATURES

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

SECURITY INTELLIGENCE TECHNOLOGIES, INC.


                                           /s/ Ben Jamil
                                           ------------------------------------
                                           Ben Jamil
                                           Chairman of the Board of Directors,
                                           President and Chief Executive Officer
                                           Dated:  October 14, 2003


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


/s/ Ben Jamil                               /s/ Chris R. Decker
--------------------------------------      ------------------------------------
Ben Jamil                                  Chief Financial Officer and Director
Chairman of the Board of Directors,         Dated:  October 14, 2003
President and Chief Executive Officer
Dated:  October 14, 2003



/s/ Menachem Cohen                          /s/ Sylvain Naar
--------------------------------------      ------------------------------------
Menachem Cohen                              Sylvain Naar
Vice President and Director                 Vice President and Director
Dated: October 14, 2003                     Dated: October 14, 2003


/s/ Nomi Om                                 /s/ Tom Felice
--------------------------------------      ------------------------------------
Nomi Om                                     Tom Felice
Vice President and Director                 Director
Dated: October 14, 2003                     Dated: October 14, 2003



                                       55
<PAGE>

CERTIFICATION OF CHIEF EXECUTIVE AND FINANCIAL OFFICERS

         The undersigned chief executive officer and chief financial officer of
the Registrant do hereby certify that this Annual Report of Form 10-KSB fully
complies with the requirements of Section 13(a) or 15(d) of the Securities Act
of 1934, as amended, and that the information contained in this report fairly
presents, in all material respects, the financial condition and results of
operations of the issuer at the dates and for the periods shown in such report.

                                      /s/ Ben Jamil
                                      ------------------------------------------
                                      Ben Jamil, Chief Executive Officer


                                      /s/ Chris R. Decker
                                      ------------------------------------------
                                      Chris R. Decker, Chief Financial Officer



     Ben Jamil does hereby certify that he is the duly elected and incumbent
     chief executive officer and Chris R. Decker does hereby certify that he is
     the duly elected and incumbent chief financial officer of Security
     Intelligence Technologies, Inc. (the "issuer") and each of them does hereby
     certify, with respect to the issuer's Form 10-KSB for the fiscal year ended
     June 30, 2003 (the "report") as follows:

1.   He or she has reviewed the report;

2.   Based on his or her  knowledge,  the  report  does not  contain  any untrue
     statement of a material fact or omit to state a material fact  necessary in
     order to make the  statements  made,  in light of the  circumstances  under
     which such  statements were made, not misleading with respect to the period
     covered by the report;

3.   Based  on  his  or her  knowledge,  the  financial  statements,  and  other
     financial  information  included  in  the  report,  fairly  present  in all
     material respects the financial  condition,  results of operations and cash
     flows of the issuer as of, and for, the periods presented in the report;

4.   He  or  she  and  the  other   certifying   officers  are  responsible  for
     establishing and maintaining disclosure controls and procedures, as defined
     in Rule 13a-14(c) of the Securities  Exchange Act of 1934, as amended,  for
     the issuer and have:

     i.   Designed  such  disclosure  controls  and  procedures  to ensure  that
          material   information   relating   to  the  issuer,   including   its
          consolidated  subsidiaries,  is made  known to them by  others  within
          those entities,  particularly  during the period in which the periodic
          reports are being prepared;

     ii.  Evaluated the  effectiveness of the issuer's  disclosure  controls and
          procedures as of a date within 90 days prior to the filing date of the
          report (the "Evaluation Date"); and

     iii. Presented in the report their  conclusions  about the effectiveness of
          the  disclosure   controls  and  procedures   based  on  the  required
          evaluation as of the Evaluation Date

5.   He or she and the other certifying  officers have disclosed to the issuer's
     auditors and to the audit  committee of the board of directors  (or persons
     fulfilling the equivalent function):

     i.   All  significant  deficiencies  in the design or operation of internal
          controls which could adversely  affect the issuer's ability to record,
          process,  summarize and report  financial data and have identified for
          the issuer's  auditors any material  weaknesses in internal  controls;
          and


                                       56
<PAGE>

     ii.  Any fraud, whether or not material,  that involves management or other
          employees  who  have  a  significant  role  in the  issuer's  internal
          controls; and

6.   He or she and the other  certifying  officers have  indicated in the report
     whether or not there were  significant  changes in internal  controls or in
     other factors that could significantly  affect internal controls subsequent
     to the date of their  most  recent  evaluation,  including  any  corrective
     actions with regard to significant deficiencies and material weaknesses.


                                                     /s/ Ben Jamil
                                                     ---------------------------
                                                     Ben Jamil
                                                     Chief Executive Officer


                                                     /s/ Chris R. Decker
                                                     ---------------------------
                                                     Chris R. Decker
                                                     Chief Financial Officer



                                       57
<PAGE>


                                                                    Exhibit 10.2


                                    AGREEMENT
                                    ---------

                  This Agreement (this "Agreement") dated as of December 16,
2002 between the Shareholders set forth in Schedule A hereto (the
"Shareholders") and Security Intelligence Technologies, Inc. ("SITG"), a
Delaware corporation with offices located at 145 Huguenot Street; Suite 310, New
Rochelle, New York 10801.

                                   WITNESSETH:
                                   -----------

                  WHEREAS, on or about April 17, 2002, (the "Closing") SITG and
its wholly-owned subsidiary CCS Acquisition Corp., a Delaware corporation and
wholly-owned subsidiary of SITG ("MergerSub") engaged in a reverse merger
transaction with CCS International, Inc., whereby MergerSub merged with and into
CCS, with CCS being the surviving entity and becoming a wholly-owned subsidiary
of SITG.

                  WHEREAS, pursuant to the merger agreement, Atlas Equity Group,
Inc. ("Atlas Equity"), agreed to enter into a pledge agreement (the "Pledge
Agreement") with SITG, pursuant to which, Atlas Equity agreed to pledge
1,500,000 shares of common stock of SITG (the "Pledged Shares") until the
Company raised net financing of $925,000 ("Financing"). The Pledge Agreement was
amended in June 2002.

                  WHEREAS, pursuant to the merger agreement, Atlas Equity agreed
to pay each of the liabilities of SITG incurred prior to April 17, 2002 as set
forth in Schedule B,

                  WHEREAS, also at the Closing, Atlas Equity purchased 75,000
shares (the "Purchased Shares") of common stock of SITG for $1.00 per share.

                  WHEREAS, SITG has claimed that Atlas Equity should return the
Pledged Shares to SITG because the Financing was not raised in the time periods
provided by the Pledge Agreement, as amended, and to pay-off certain liabilities
of SITG set forth in Schedule B hereto ("Liabilities").



                                       58
<PAGE>





                  WHEREAS, Atlas Equity denied that it was in violation of its
obligations under the Pledge Agreement and the Merger Agreement.

                  WHEREAS, subject to the terms set forth below, the parties
desire to resolve the disputes between the parties relating to the foregoing.

                  NOW THEREFORE, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:

         1. Transfer of Shares to SITG. Subject to the terms and conditions
stated herein, Atlas Equity hereby agrees to return to SITG 750,000 of the
Pledged Shares (the "Transferred Shares"). The Transferred Shares shall be held
in escrow by the attorney for Atlas Equity who shall release said Transferred
Shares to SITG or their attorney as they may direct, on the 12 month anniversary
date of this Agreement unless: (i) said attorney receives joint written
notification from Atlas Equity and SITG instructing it to release the
Transferred Shares to SITG prior to that time; or (ii) said attorney receives
written notification from Atlas Equity that states with specificity that full
compliance with this Agreement has not been complied with and instructing the
attorney not to release the Transferred Shares. Atlas Equity represents and
warrants that it owns the Transferred Shares and has not transferred, pledged,
encumbered or otherwise made subject to any option, right or other interest of
any kind.

         2. Bleed-Out. Subject to the terms and conditions stated herein, the
Shareholders agree that for a period commencing upon the date of this Agreement
and ending on the twelve (12) month anniversary date of the date of this
Agreement (the "Bleed Out Period"), the Shareholders will not, directly or
indirectly, sell or otherwise dispose of ("Transfer") more than 20% of the
average monthly trading volume based upon the previous month's trading activity
("Bleed-Out Amount"). Notwithstanding the foregoing and in addition to the
Transfer of the Bleed-Out Amount, during the Bleed-Out Period the Shareholders
shall be permitted to Transfer such Shares (i) as set forth in Section 3 below,
(ii) to satisfy the Liabilities as set forth in Schedule B, (iii) for the
aggregate amount of seventy-five thousand dollars ($75,000), and (iv) in the
event that Ben Jamil shall sell any of the 11,900,000 shares of common stock
owned by him or any of the 5,000,000 shares of preferred stock owned by him, the
Shareholders may sell, such number of shares as equals the percentage of Shares
owned by the Shareholders and any permitted transferees which the number of
shares sold by Ben Jamil bears to 16,900,000

         3. Permitted Transfers. In addition to the foregoing, the restrictions
contained in Section 2 above will not apply with respect to any of the following
transactions (each a "Permitted Transfer"), provided the applicable conditions
set forth below in Section 3.2 are satisfied:

                  3.1 The Shareholder who is a natural person may Transfer the
Shares to (a) his or her spouse, children of a spouse, siblings, parents or any
natural or adopted children or other descendants or to any personal trust in
which such family members or such Shareholder retain the entire beneficial
interest or to any charitable trust in which such family members or Shareholder
has some beneficial interest or (b) one or more entities that are wholly owned
and controlled, legally and beneficially, by such Shareholder and/or any persons
or entities referred to in clause (a).

                  (i) The Shareholder that is a corporation, partnership or
other business entity may Transfer the Shares (a) to one or more other entities
that are wholly owned by a Person or Persons that directly or indirectly wholly
owns and controls such Shareholder, or (b) by distributing such Shares in a
liquidation, winding up or otherwise without consideration to the equity owners
of such corporation, partnership or business entity or any other corporation,
partnership or business entity that is wholly owned by such equity owners.


                                       59
<PAGE>


                  (ii) The Shareholder who is a natural person may Transfer the
Shares on his or her death to such Shareholder's estate, executor, administrator
or personal representative or to such Shareholder's beneficiaries, including
charitable beneficiaries, pursuant to devise or bequest or by the laws of
descent and distribution.

                  (iii) The Shareholder who is a natural person may Transfer the
Shares either as a bona fide inter vivos gift or bequest to any charity, to any
public or private charitable foundation, or to any trust for the benefit of
charity such as a charitable remainder of charitable lead trust.

                  (iv) The Shareholder may Transfer the Shares pursuant to a
pledge, grant of security interest or other encumbrance effected in a bona fide
transaction with an unrelated and unaffiliated institutional lender.

                  (v) The Shareholder may Transfer the Shares to any current
holder of the common stock of SITG who has signed a bleed-out agreement similar
to this Agreement.

         3.2 The Shareholder may Transfer the Shares as set forth above, which
transfer will qualify as a Permitted Transfer provided the following conditions
are met: (a) the Shares, as applicable, subject to such transfer remain subject
to this Agreement; and (b) the transferee (and any pledgee or other Person that
acquires the Shares upon foreclosure thereof) executes and delivers to SITG a
counterpart of this Agreement, whereby such transferee shall be deemed to be a
Shareholder for purposes of this Agreement. In such counterpart, the transferee
shall specifically agree in writing that they are bound by all of the terms and
conditions of this Agreement.

         4. Brokerage Account. In order to facilitate the maintenance of the
above Bleed-Out restrictions, the Shareholders and each transferee with respect
to a Permitted Transfer shall open and maintain brokerage accounts at Wien
Securities Corp., and shall deposit all of the Shares remaining after the
transfer of the Transferred Shares to SITG into said brokerage accounts at Wien
Securities Corp., unless sooner terminated as provided herein. During the term
of the Bleed-Out period, Shareholders agree to open new brokerage accounts at a
different broker and transfer all Shares to the new brokerage accounts within
fifteen (15) days after receipt of a written request to make such transfer from
SITG, and Shareholders agree to execute all forms necessary to allow the broker
to send to SITG duplicate monthly statements of Shareholder's accounts; provided
however, the new brokerage firm must be a nationally recognized broker-dealer
and SITG pays the costs and expenses associated with such transfer.

         5. Termination of Bleed-Out. Notwithstanding the foregoing, the Bleed
Out restrictions shall terminate in their entirety (i) in the event SITG fails
to timely file its Quarterly Reports on Form 10-Q or Year End Reports on Form
10K, and fails to cure same within Thirty (30) days; (ii) SITG fails to trade on
either the OTC:BB or other National Exchange for a period of Thirty (30) days;
(iii) upon a Sale Transaction; or (iv) any other event that would trigger a
termination of this Bleed Out under this Settlement Agreement.


          5.1 A "Sale Transaction" shall be deemed to have occurred upon the
happening of any of the following events:


                           (i) a merger or consolidation of SITG with or into
another issuer; or (ii) the exchange or sale of all or
a portion of the outstanding shares of SITG for securities of another issuer, or
other consideration provided by such issuer or another party to such
transaction; and in the case of either (i) or (ii), SITG's shareholders prior to
the transaction, do not possess, immediately after such transaction, more than
50% of the voting power of the securities issued and outstanding of any one or
more of the following: (x) SITG; (y) such other issuer; or (z) such other
constituent party to the transaction; or (iii) a sale (other than in the
ordinary course of business) of more than 90% of SITG's assets to a third party
not an affiliate of SITG immediately prior to such transaction.



                                       60
<PAGE>

         6. Release of Shareholders. Subject to full compliance with the terms
and conditions stated herein and subject to the payment of the Liabilities in
Schedule B, SITG hereby releases and forever discharges, the Shareholders
appearing on Schedule A, their shareholders, affiliates, officers, directors,
employees, agents, advisors representatives, heirs, executors, administrators,
successors, assigns, attorneys, and representatives including without any
limitation, Michael D. Farkas and Rebecca J. Farkas (collectively the
"Shareholder Releasees"), from all actions, causes of action, suits, debts,
dues, sums of money, accounts, reckonings, bonds, bills, specialties, covenants,
contracts, controversies, agreements, promises, variances, trespasses, damages,
judgments, extents, executions, claims and demands whatsoever, in law, in
admiralty, or in equity, which against the Shareholder Releasees or any of them,
SITG its heirs, executors, administrators, successors or assigns, ever had, now
have or hereafter can, shall or may, have for, upon or by reason of any matter,
cause or thing whatsoever from the beginning of the world to the date hereof,
including without limitation the Pledge Agreement; provided, that this Section 6
does not release any Shareholder Releasee from any obligations of such
Shareholder Releasee pursuant to this Agreement. Pursuant to the terms of this
Section 6, upon the execution of this Agreement, SITG shall execute a Release or
Releases which shall contain the terms provided for in this Section 6. Said
Release(s) shall be held in escrow by the attorney of SITG who shall release
said Release(s) and deliver said Release(s) to the Shareholders or their
attorney as they may direct, on the 12 month anniversary date of this Agreement
unless: (i) said attorney receives joint written notification from SITG and the
Shareholders instructing it to release the Release(s) prior to that time, or
(ii) said attorney receives written notification from SITG that states with
specificity that full compliance with this Agreement has not been complied with
and instructing the attorney not to release the Release(s) to the respective
Shareholders.


         7. Release of the Company. Subject to full compliance with the terms
and conditions stated herein, the Shareholders hereby jointly and severally
release and forever discharge, SITG, its shareholders, affiliates, officers,
directors, employees, agents, advisors representatives, heirs, executors,
administrators, successors, assigns, attorneys, and representatives including
without any limitations Ben Jamil (collectively the "Company Releasees"), from
all actions, causes of action, suits, debts, dues, sums of money, accounts,
reckonings, bonds, bills, specialties, covenants, contracts, controversies,
agreements, promises, variances, trespasses, damages, judgments, extents,
executions, claims and demands whatsoever, in law, in admiralty, or in equity,
which against the Company Releasees or any of them, the Shareholders, and their
respective heirs, executors, administrators, successors or assigns, ever had,
now have or hereafter can, shall or may, have for, upon or by reason of any
matter, cause or thing whatsoever from the beginning of the world to the date
hereof; provided, that this Section 7 does not release any Company Releasee from
any obligations of such Company Releasee pursuant to this Agreement. Pursuant to
the terms of this Section 7, upon the execution of this Agreement by the
parties, the Shareholders shall execute a Release or Releases in favor of SITG
and its principal Shareholder and chief executive officer, Ben Jamil. Said
Release(s) shall contain all of the terms provided for in this Section 7. Said
Release(s) shall be held in escrow by the attorney for the Shareholders. Said
attorney shall immediately release said Release(s) to SITG and Ben Jamil or
their attorney in accordance with their directions, on the 12 month anniversary
date of this Agreement unless: (i) said attorney receives joint written
notification from the Shareholders and SITG instructing it to release the
Releases prior to that time, or (ii) said attorney receives written notification
from the Shareholders that states with specificity that full compliance with
this Agreement has not been complied with and instructing the attorney not to
release the Release to SITG. .


         8. Amendment and Modification. This Agreement may not be amended,
modified or changed except by a writing which expressly refers to this
Agreement, states that it is a modification and is signed by the parties.



                                       61
<PAGE>

         9. Waiver of Compliance; Consents. Any failure of either of the parties
to comply with any obligation, covenant, agreement or condition herein may be
waived by the party entitled to the benefit thereof only by written instrument
signed by the party granting such waiver, but such waiver or failure to insist
upon strict compliance with such obligation, covenant, agreement or condition
shall not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits consent by or on
behalf of a party, such consent shall be given in writing.

         10. Notices. All notices and other communications hereunder shall be
deemed given upon (a) the recipient's confirmation of receipt of a facsimile
transmission to the recipient's facsimile number, (b) confirmed delivery by a
standard overnight carrier to the recipient's address, (c) delivery by hand to
the recipient's address or (c) upon receipt if mailed by certified or registered
mail, postage prepaid, return receipt requested, addressed to the recipient's
addresses (or, in each case, to or at such other facsimile number or address for
a party as such party may specify by notice given in accordance with this
Section 10):

          (a)  If to Shareholders, to the address set forth under their names on
               Schedule A hereto:

          (b)  If to SITG, at the address set forth at the beginning of this
               Agreement, attention of Mr. Ben Jamil, Chief Executive Officer,
               or by telecopier at (914) 654-1302.


If any party refuses to accept delivery (other than by telecopier), notice shall
be deemed given on the date of the refusal to accept delivery.

         11. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the Shareholders and SITG and their heirs, legal representatives,
successors and assigns.

         12. Governing Law. This Agreement shall be deemed to have been made,
drafted, negotiated and the transactions contemplated hereby consummated and
fully performed in the State of New York, and shall be governed by and construed
in accordance with the internal laws of the State of New York without regard to
the conflicts of laws rules thereof. Each of the parties hereby (a) irrevocably
consents and agrees that any legal or equitable action or proceeding arising
under or in connection with this Agreement may be brought in the federal or
state courts located in the County of New York or Westchester in the State of
New York, (b) by execution and delivery of this Agreement, irrevocably submits
to and accepts the jurisdiction of said courts, (c) waives any defense that such
court is not a convenient forum, and (d) consents that any service of process
may be made (x) in the manner set forth in Paragraph 12 of this Agreement (other
than by telecopier), or (y) by any other method of service permitted by law.

         13. Assignment. Neither this Agreement nor any of the parties' rights,
powers, duties or obligations hereunder may be assigned by the parties without
the prior written consent of the other party.

         14. Severability. If any provision of this Agreement shall be
unenforceable under any applicable law, then notwithstanding such
unenforceability the remainder of this Agreement shall continue in full force
and effect.

         15. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the matters set forth
herein and supersedes all prior agreements and understandings between the
parties with respect to those matters. There are no promises, representations,
warranties, covenants or undertakings other than those set forth herein.



                                       62
<PAGE>

         16. Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original and both of which taken together shall
constitute one and the same document.

         17. Survival. To the extent required to give effect to the intent of
the parties to this Agreement, the provisions of this Agreement shall survive
any termination hereof.

        IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.

SHAREHOLDERS:                                              THE COMPANY:

ATLAS EQUITY GROUP, INC.                                   SECURITY INTELLIGENCE
                                                           TECHNOLOGIES, INC.

By: /s/ Michael D. Farkas                      By: /s/ Ben Jamil
-------------------------------                    -----------------------------
Name:   Michael D. Farkas                     Name: Ben Jamil
Title:  Chief Executive Officer              Title: Chief Executive Officer


/s/ Michael D. Farkas
----------------------
    Michael D. Farkas


/s/ Rebecca Farkas
----------------------
    Rebecca Farkas


TITAN CORPORATION LTD.

By: /s/ Brendan Hayes
----------------------
Name:   Brendan Hayes
Title:  Director

OSTONIAN SECURITIES LTD.

By:/s/ Barbara Anderson
----------------------
Name:  Barbara Anderson
Title:



                                       63
<PAGE>

                                   SCHEDULE A

                                  SHAREHOLDERS


                                                           Number of
                                                           Shares of
                                                           Common
                                                           Stock, Par
Name and Address                                           Value $.0001
------------------------------                             ------------

Atlas Equity Group, Inc.                                     750,000
1680 Michigan Ave, Suite 1000
Miami Beach, FL 33139

Michael D. Farkas                                             75,000
1680 Michigan Ave, Suite 1000
Miami Beach, FL 33139

Rebecca J. Farkas                                            468,000
1680 Michigan Ave, Suite 1000
Miami Beach, FL 33139

Titan Corporation Limited                                    750,000
PO Box 118 Chesterfield House
11-13 Victoria Street

Douglas, Isle of Man IM1 2LR
Ostonian Securities Limited                                  750,000
60 James Street, 1st Flr.
London, England SW1 ALE
                                                           ---------
Total shares                                               2,793,000
                                                           =========



                                       64
<PAGE>


                                   SCHEDULE B

                                   LIABILITIES


Name and Address                                              Amount
-----------------------------                                --------
ADP Investor Services                                          $ 815
PO Box 23487
Newark, NJ 07189

Anslow & Jaclin LLP                                           27,106
4400 Route 9 South, 2nd Floor
Freehold, NJ 07728

Business Wire                                                    970
44 Montgomery St., 39th Floor
San Francisco, CA 94104

Salibello & Broder LLP                                        17,288
633 Third Avenue
NY, NY 10017

Atlas Equity Group, Inc.                                      37,199
1680 Michagan Ave., Suite 1000
Miami Beach, FL 33139
                                                            --------
Total                                                       $ 83,378
                                                            ========



                                       65
<PAGE>

                                                                   Exhibit 10.5


                    SECURITY INTELLIGENCE TECHNOLOGIES, INC.

                            2003 Stock Incentive Plan

1.       Purpose; Definitions.

         The purpose of the Security Intelligence Technologies, Inc. 2003 Stock
Incentive Plan (the "Plan") is to enable Security Intelligence Technologies,
Inc. (the "Company") to attract, retain and reward the key employees, director
and consultants as hereinafter set forth.

         For purposes of the Plan, the following terms shall be defined as set
forth below:

     (a) "Affiliate" means any corporation, partnership, limited liability
company, joint venture or other entity, other than the Company and its
Subsidiaries, that is designated by the Board as a participating employer under
the Plan, provided that the Company directly or indirectly owns at least 20% of
the combined voting power of all classes of stock of such entity or at least 20%
of the ownership interests in such entity.

     (b) "Board" means the Board of Directors of the Company.

     (c) "Code" means the Internal Revenue Code of 1986, as amended from time to
time, and any successor thereto.

     (d) "Commission" means the Securities and Exchange Commission or any
successor thereto.

     (e) "Common Stock" means the Common Stock, par value $.0001 per share, of
the Company or any class of common stock into which such common stock may
hereafter be converted or for which such common stock may be exchanged pursuant
to the Company's certificate of incorporation or as part of a recapitalization,
reorganization or similar transaction.

     (f) "Company" means Security Intelligence Technologies, Inc., a Florida
corporation, or any successor corporation.

     (g) "Eligible Persons" means persons who are natural persons and whose
services to the Company are not in connection with the offer or sale of
securities in a capital-raising transactions and do not directly or indirectly
promote or maintain a market for the Company's securities.

     (h) "Exchange Act" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor thereto.

     (i) "Non-Qualified Stock Option" means any Stock Option that is not an
incentive stock option as defined in Section 422 of the Code.

     (j) "Plan" means this Security Intelligence Technologies, Inc. 2003 Stock
Incentive Plan, as hereinafter amended from time to time.

     (k) "Stock Grant" means an award of shares of Stock that is subject to
restrictions under Section 6 of the Plan.

     (l) "Stock Option" or "Option" means any option to purchase shares of
Common Stock as set forth in Section 5 of the Plan.



                                       66
<PAGE>

     (m) "Subsidiary" means any corporation or other business association,
including a partnership or limited liability company (other than the Company),
in an unbroken chain of corporations or other business associations beginning
with the Company if each of the corporations or other business associations
(other than the last corporation in the unbroken chain) owns equity interests
(including stock, partnership interests or membership interests in limited
liability companies) possessing 50% or more of the total combined voting power
of all classes of equity in one of the other corporations or other business
associations in the chain.

2. Administration.

         The Plan shall be administered by a Committee of not less than two
directors of the Company who shall be appointed by the Board and who shall serve
at the pleasure of the Board. If, and to the extent that, no Committee exists
which has the authority to so administer the Plan, the functions of the
Committee specified in the Plan shall be exercised by the Board.

3. Common Stock Subject to Plan.

     (a) The total number of shares of Common Stock reserved and available for
issuance under the Plan shall be three hundred twenty thousand (320,000) shares
of Common Stock. In the event that Options granted pursuant to said Section 4
shall for any reason terminate or expire unexercised or Stock Grants granted
pursuant to Section 6 shall be forfeited, such number of shares of Common Stock
shall be available for the registrant pursuant to Stock Options or Stock Grants
pursuant to the Plan.

     (b) In the event of any merger, reorganization, consolidation,
recapitalization, stock dividend, stock split, stock distribution, reverse
split, combination of shares or other change in corporate structure affecting
the Common Stock, such substitution or adjustment shall be made in the aggregate
number of shares reserved for issuance under the Plan and the Options, in the
number and option price of shares of Common Stock subject to outstanding
Options, as may be determined to be appropriate by the Committee, in its
reasonable discretion and consistent with generally accepted accounting
principles consistently applied, provided that the number of shares subject to
any Option shall always be a whole number.

4. Grant of Options. The Committee may grant Non-Qualified Stock Options under
the Plan to Eligible Persons. Options granted under the Plan shall be at such
exercise price, not less than the par value per share, and shall have such term
and shall be exercisable in such installments as the Committee shall, in its
sole discretion, determine.

5. Exercise of Options.

     (a) The Options may be exercised by payment of cash or of shares of Common
Stock having a value equal to the exercise price. The value of the Common Stock
shall mean the closing price of the Common Stock on the date the Option is
exercised.

     (b) The Committee may at any time offer to buy out for a payment in cash or
Common Stock, any Option in whole or in part and without regard to whether the
Option is then exercisable on such terms and conditions as the Committee shall
establish and communicate to the Option Holder at the time that such offer is
made. Nothing in this Paragraph 5(b) shall require any Option Holder to accept
such offer.



                                       67
<PAGE>

6. Stock Grants.

     (a) Administration. Shares of Stock Grant may be issued to Eligible Persons
either alone, in addition to or in tandem with other awards granted under the
Plan and/or cash awards made outside of the Plan. The Committee shall determine
the Eligible Persons to whom, and the time or times at which, Stock Grants will
be made, the number of shares to be awarded, the price (if any) to be paid by
the recipient of a Stock Grant, subject to Paragraph 6(b) of the Plan, the time
or times within which such awards may be subject to forfeiture, and all other
terms and conditions of the awards. The Committee may condition the grant of
Stock Grant upon the attainment of specified performance goals or such other
factors as the Committee may, in its sole discretion, determine. The provisions
of Stock Grant awards need not be the same with respect to each recipient.

     (b) Awards and Certificates.

          (i) The prospective recipient of a Stock Grant shall have such rights
     with respect to such award as are determined by the Committee, and, if
     requested by the Committee, unless and until such recipient has executed an
     agreement evidencing the award and has delivered a fully executed copy
     thereof to the Company, and has otherwise complied with the applicable
     terms and conditions of such award.

          (ii) The purchase price for shares of Stock Grant may be equal to or
     less than their par value and may be zero. Stock Grants may be issued to
     Eligible Persons in consideration for services rendered.

          (iii) Awards of Stock Grant must be accepted within a period of 60
     days (or such shorter period as the Committee may specify at grant) after
     the award date, by executing a Stock Grant Award Agreement (if required by
     the Committee) and paying the price, if any, required under Paragraph
     6(b)(ii).

          (iv) Each participant receiving a Stock Grant shall be issued a stock
     certificate in respect of such shares of Stock Grant. Such certificate
     shall be registered in the name of such participant, and shall bear an
     appropriate legend referring to the terms, conditions, and restrictions
     applicable to such award; provided, however, that if such Stock Grant is
     not subject to restrictions, the certificate shall only have such legends,
     if any, as may be required by applicable federal securities laws.

          (v) If the Stock Grant is subject to restrictions, the Committee shall
     require that (A) the stock certificates evidencing shares of Stock Grant be
     held in the custody of the Company until the restrictions thereon shall
     have lapsed, and (B) as a condition of any Stock Grant award, the
     participant shall have delivered a stock power, endorsed in blank, relating
     to the Stock Grant covered by such award.

     (c) Restrictions and Conditions. The shares of Stock Grant awarded pursuant
to this Section 6 may, in the discretion of the Committee, be subject to any one
or more of the following restrictions and conditions:

          (i) Subject to the provisions of the Plan and the award agreement,
     during a period set by the Committee commencing with the date of such award
     (the "Restriction Period"), the participant shall not be permitted to sell,
     transfer, pledge or assign shares of Stock Grant awarded under the Plan.
     Within these limits, the Committee, in its sole discretion, may provide for
     the lapse of such restrictions in installments and may accelerate or waive
     such restrictions in whole or in part, based on service, performance and/or
     such other factors or criteria as the Committee may determine, in its sole
     discretion.

          (ii) Except as provided in this Paragraph 6(c)(ii) and Paragraph
     6(c)(i) of the Plan, the participant shall have, with respect to the shares
     of Stock Grant, all of the rights of a stockholder of the Company,
     including the right to vote the shares and the right to receive any regular
     cash dividends paid out of current earnings. The Committee, in its sole
     discretion, as determined at the time of award, may permit or require the
     payment of cash dividends to be deferred and, if the Committee so
     determines, reinvested, subject to Paragraph 6(c)(v) of the Plan, in
     additional Stock Grant to the extent shares are available under Section 3
     of the Plan, or otherwise reinvested. Stock dividends, splits and
     distributions issued with respect to Stock Grant shall be treated as
     additional shares of Stock Grant that are subject to the same restrictions
     and other terms and conditions that apply to the shares with respect to
     which such dividends are issued, and the Committee may require the
     participant to deliver an additional stock power covering the shares
     issuable pursuant to such stock dividend, split or distribution. Any other
     dividends or property distributed with regard to Stock Grant, other than
     regular dividends payable and paid out of current earnings, shall be held
     by the Company subject to the same restrictions as the Stock Grant.



                                       68
<PAGE>

          (iii) Subject to the applicable provisions of the award agreement and
     this Section 6, upon termination of a participant's employment with the
     Company and any Subsidiary or Affiliate for any reason during the
     Restriction Period, all shares still subject to restriction will vest, or
     be forfeited, in accordance with the terms and conditions established by
     the Committee at or after grant.

          (iv) If and when the Restriction Period expires without a prior
     forfeiture of the Stock Grant subject to such Restriction Period,
     certificates for an appropriate number of unrestricted shares, and other
     property held by the Company with respect to such Restricted Shares, shall
     be delivered to the participant promptly.

          (v) The actual or deemed reinvestment of dividends or dividend
     equivalents in additional Stock Grant at the time of any dividend payment
     shall only be permissible if sufficient shares of Stock are available under
     the Plan for such reinvestment (taking into account then outstanding Stock
     Options, Stock Purchase Rights and other Plan awards).

7. Amendments. Neither this Plan nor the Options or Stock Grants granted
pursuant to this Plan may be amended, altered or discontinued as to any Option
Holder without the approval of the Option Holder or the holder of the Stock
Grant.

8. General Provisions.

     (a) The Committee may require each person purchasing shares pursuant to an
Option to represent to and agree with the Company in writing that the optionee
or participant is acquiring the shares without a view to distribution thereof.
The certificates for such shares may include any legend which the Committee
deems appropriate to reflect any restrictions on transfer. All certificates or
shares of Common Stock or other securities delivered under the Plan shall be
subject to such stock-transfer orders and other restrictions as the Committee
may deem advisable under the rules, regulations, and other requirements of the
Commission, any stock exchange upon which the Common Stock is then listed, and
any applicable Federal or state securities law, and the Committee may cause a
legend or legends to be put on any such certificates to make appropriate
reference to such restrictions.

     (b) Nothing contained in this Plan shall prevent the Board from adopting
other or additional compensation arrangements, subject to stockholder approval
if such approval is required; and such arrangements may be either generally
applicable or applicable only in specific cases.

     (c) Neither the adoption of the Plan nor the grant of any award pursuant to
the Plan shall confer upon any employee of the Company or any Subsidiary or
Affiliate any right to continued employment with the Company or a Subsidiary or
Affiliate, as the case may be, nor shall it interfere in any way with the right
of the Company or a Subsidiary or Affiliate to terminate the employment of any
of its employees at any time.

     (d) No later than the date as of which an amount first becomes includible
in the gross income of an Option Holder for Federal income tax purposes with
respect to any Option, the Option Holder shall pay to the Company, or make
arrangements satisfactory to the Committee regarding the payment of, any
Federal, state, or local taxes of any kind required by law to be withheld with
respect to such amount. Unless otherwise determined by the Committee,


                                       69
<PAGE>


withholding obligations may be settled with Common Stock, including Common Stock
that is part of the award that gives rise to the withholding requirement. The
obligations of the Company under the Plan shall be conditional on such payment
or arrangements and the Company and its Subsidiaries or Affiliates shall, to the
extent permitted by law, have the right to deduct any such taxes from any
payment of any kind otherwise due to the participant.



9.  Effective Date of Plan.  The Plan shall be effective as of July 3, 2003 the
    date the Plan was approved by the Board.










                                       70
<PAGE>

<TABLE>
<CAPTION>

                                                                   Exhibit 21.1


                              List of Subsidiaries
                              --------------------



                                                  State of
Subsidiary                                        Incorporation     Doing Business AS
---------------------------                       ---------------   ---------------------------------------
<S>                                              <C>               <C>
Hipstyle.com, Inc.                                Delaware          Hipstyle.com, Inc.
CCS International, Ltd.                           Delaware          CCS International, Ltd.
Counter Spy Shop of Mayfair London, Ltd.          DC                Counter Spy Shop of Mayfair London, Ltd.
Counter Spy Shop of Mayfair London, Ltd., Inc.    Florida           Counter Spy Shop of Mayfair London, Ltd
Counter Spy Shop of Mayfair London, Ltd.          CA                Counter Spy Shop of Mayfair London, Ltd.
Spy Shop Ltd.                                     NY                Counter Spy Shop of Delaware
Security Design Group, Inc.                       NY                Security Design Group, Inc.
Counter Spy Shop of Mayfair, Ltd.                 London, UK        Counter Spy Shop of Mayfair, Ltd.
</TABLE>




                                       71