---

---

**UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549**

---

**FORM 10-KSB**

---

(MARK ONE)

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

**For the fiscal year ended
December 31, 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 000-33033**

**PEOPLENET INTERNATIONAL CORPORATION**(Name of small business issuer in its charter)



|**Delaware**                                                   | **02-0575232**                         
|-------------------------------------------------------------- | ---------------------------------------
|(State or Other Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification Number)

**1600 Adams DriveMenlo
Park, California 94025**(Address of Principal Executive Offices including Zip Code)

**(650) 323-6688**(Registrant's Telephone Number, Including Area Code)

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

Securities registered pursuant to Section 12(g) of
the Act:**Title of the class**
    **Name of each exchange on which
      registered**Common Stock, $ .0001 par value
    None

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation
S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB, or any amendment to this Form 10-KSB.    [X]

Revenues for its most recent fiscal year: $

Aggregate market value of common stock held by
non-affiliates at March 31, 2004:  0

Number of shares of common stock outstanding
at March 31, 2004: 15,749,999

DOCUMENTS INCORPORATED BY REFERENCE:      None.

Transitional Small Business Disclosure Format (check one):    Yes [     ]    No     [X]

---

**PEOPLENET INTERNATIONAL  INCORPORATION2003 ANNUAL
REPORT ON FORM 10-KSB INDEX**



|Part I.        |                                                                                             | Page
|-------------- | ------------------------------------------------------------------------------------------- | ----
|Item 1.        | Descriptions of Business                                                                    | 4   
|Item 2.        | Descriptions of Property                                                                    | 6   
|Item 3.        | Legal Proceedings                                                                           | 6   
|Item 4.        | Submission of Matters to a Vote of Security Holders                                         | 6   
|Part II.       |                                                                                             |     
|Item 5.        | Market for the Registrant's Common Equity and Related Stockholder
      Matters             | 6   
|Item 6.        | Management's Discussion and Analysis of Financial Condition and Results
      of Operations | 6   
|Item 7.        | Financial Statements                                                                        | 10  
|Item 8.        | Changes in and Disagreements with Accountants on Accounting and
      Financial Disclosures | 10  
|Part III.      |                                                                                             |     
|Item 9.        | Directors and Executive Officers of the Registrant                                          | 11  
|Item 10.       | Executive Compensation                                                                      | 11  
|Item 11.       | Security Ownership of Certain Beneficial Owners and Management                              | 13  
|Item 12.       | Certain Relationships and Related Transactions                                              | 14  
|Part IV.       |                                                                                             |     
|Item 13.       | Exhibits and Reports on Form 8-K                                                            | 14  
|Item 14.       | Controls and Procedures                                                                     | 14  
|Signatures     |                                                                                             | 15  
|Certifications |                                                                                             | 15  
|Exhibits Index |                                                                                             | 33  



---

PART I

Our disclosure and analysis in this report contains forward-looking statements. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Item 1. Description of Business

General

PeopleNet, formerly known as American Champion Media, Inc., is a Delaware corporation headquartered in
Menlo Park,
California and incorporated on February 5, 1997. PeopleNet was formed by, and has been, a wholly owned subsidiary of
Pacific Systems Control Technology, Inc., formerly known as American Champion Entertainment, Inc., a Delaware corporation.
Pacific Systems Control Technology has been a publicly traded company since July 31, 1997, and its common stock currently
trades on the OTC Bulletin Board under the symbol PFSY.  Pacific Systems recently changed the focus of its business to
concentrate on the distribution and sale of remote access electric meters and related products.  Since this new line of
business is not complementary to the business conducted by PeopleNet, the board of directors of Pacific Systems
determined that it was in the shareholders' best interest to separate the two companies and allow them to operate
independently.  In particular, the boards of directors of both companies believes that matters related to public market
valuations, capital raising, public relations and marketing are better served when a company is focused on related business.
In addition, the boards believe that shareholder value would be increased by the ownership of two public companies rather than one.

On February 8, 2002, Pacific Systems distributed its shares of PeopleNet to the shareholders of Pacific Systems as of the record
date of January 16, 2002. The securities of PeopleNet are not currently traded on any market.

ChiBrow

In June 2001, we signed an agreement with ECapital Group, Inc. to purchase the exclusive licensing and marketing
rights to ChiBrow, a safe web browser software for children.  Under the terms of the agreement, upon the effectiveness
of the spin-off of PeopleNet from Pacific Systems, we issued 374,587 shares of our common stock on February 8, 2002
to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years.

On March 21, 2002, we purchased all rights relating to the intellectual property of ChiBrow, including the source codes,
trademarks, copyright, domain name and website, from ECapital. The total purchase price paid was the issuance to ECapital
of 3,799,999 shares of our common stock.

We evaluated the asset of ChiBrow at December 31, 2003 and determined that
this asset has been impaired and was of no value, based upon the fair market
value of similar assets.  We recorded an impairment expense equal to the
remaining book value of this asset.

PeopleNet Communication Solution

On March 21, 2002, we purchased all rights relating to the intellectual property of a communication software package from
PeopleNet Corporation, called the PeopleNet Communication Solution, in exchange for 9,620,000 shares of our common stock.

The PeopleNet Communication Solution is a scalable, robust, and fully
customizable communication infrastructure software. Its tightly integrated
platform offers users seamless access to their productivity and communication
tools, and the ability to actively engage in their interactive communication
functions. Multilingual support and theme options are built into all components,
so users can completely control language and theme preferences.

We evaluated the asset of the Communication Solution at December 31, 2003 and
determined that this asset has been impaired and was of no value, based upon the
fair market value of similar assets.  We recorded an impairment expense
equal to the remaining book value of this asset.

The Company is currently seeking merger opportunities with other software
companies.

Television Program

Between the years 1997 and 2000, we developed and produced 29 half-hour episodes of the Kanga Roddy series
which features a six-foot tall kangaroo character named Kanga Roddy who is a martial arts expert. Unlike other
martial arts programs which feature violent content, Kanga Roddy never fights because he understands that conflict
can always be resolved through traditional martial arts values such as knowledge, compassion, humility, discipline,
respect and an open mind. The show merges these values, which are the core subjects in the field of emotional
intelligence, with contemporary music, dance, vibrant colors and exciting movements designed to capture the attention
of its target audience consisting primarily of pre-school and primary school children.

From 1997 through 2000, we and KTEH, the public broadcasting station serving the San Jose, California area,
collaborated
on the production of 29 half-hour episodes of the Kanga Roddy series.  We funded the production costs of the series and
we own all of the intellectual property to the series.  KTEH was granted the exclusive domestic (U.S.) broadcasting rights
to the series, and KTEH, through their connection to the network of public television, caused the show to be aired by
public TV stations across the country.  The exclusive broadcasting rights granted to KTEH ended on April 1, 2001.

In December 2000, we signed a licensing agreement with World Channel, Inc. of South San Francisco, California,
for a five-year worldwide licensing and distribution of the Kanga Roddy TV program and its related video and audio
products.  Pursuant to terms of the agreement, World Channel has the exclusive right to license such products of the
Kanga Roddy program and shall pay PeopleNet $600,000 in licensing fees per year from 2001 through 2005, or a total of
$3 million.  Royalties under pre-existing agreements are assigned to World Channel.  In connection with the distribution of
our stock by Pacific Systems Control Technology, we entered into an agreement with Pacific Systems pursuant to which we agreed
that all future cashflow related to the Kanga Roddy series and its intellectual property that will be generated from the
licensing agreement with World Channel shall be allocated between the two companies on a 50/50 basis.  Pursuant to this agreement,
PeopleNet will pay Pacific Systems 50% of the cash we receive in the future from World Channel.  All revenue under this agreement
will be earned and recorded by PeopleNet, with 50% of the cash received used as repayment of the note payable to Pacific Systems.
Since only partial payment from World Channel was received during the year 2001 and that the collectibility of
additional payments are not assured, we have determined to record only $450,000 in revenues at that end of the year 2001 and we
may not recognized any additional revenues from this licensing agreement in the future until payments are actually received.

The investment in the Kanga Roddy series was fully reserved as of December
31, 2003, as management believes that this investment would not generate future
revenues for the Company.

Employees

As of March 31, 2004, we have no paid employees.

Item 2. Description of Property

We occupy approximately 1,200 square feet of space for our
Menlo Park, California, headquarters which is provided for our use without
charge by ECapital Group, Inc.

Item 3. Legal Proceedings

As of December 31, 2001, while PeopleNet International Corporation was still a subsidiary of Pacific Systems Control Technology,
the following case was either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the
defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and
all of its subsidiaries including PeopleNet as the defendants in the cross-complaint.  Pacific Systems has agreed to indemnify
all of its subsidiaries including PeopleNet from the liabilities of the following case including expenses, fees or judgment.

In October 2001, Pacific Systems filed a complaint against a
former employee in licensing and marketing activities for breach of contract,
breach of fiduciary duty and unjust enrichment, among other causes of action,
seeking declaratory relief from the court.  A counter claim from the
employee was filed in April 2002 against Pacific Systems and its subsidiaries.
On April 15, 2002, judgment was entered against Pacific Systems and its
subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was
still outstanding on the judgment. On February 11, 2003, Pacific Systems and its
subsidiaries entered into a global settlement and mutual release of all claims
with the former employee. Under the agreement, the cross-defendants, including
the Company, will pay to the former employee a total sum of $100,000 plus
interest at the rate of 10% per year, payable in installments at the rate of
$3,000 per month. As of December 31, 2003, the outstanding balance under the
settlement agreement was $72,000.

With the exception of the foregoing, no lawsuits or proceedings are currently
pending against PeopleNet International Corporation.

Item 4. Submission of Matters to Vote of Security Holders

Not applicable.

**PART II**

Item 5. Market for Common Equity and Related Stockholder Matters

Market for Securities

There is currently no active market for our securities.

Item 6. Management's Discussion and Analysis or Plan of Operation

The following section discusses the significant operating
changes, business trends, financial condition, earnings and liquidity that have
occurred in the one-year period ended December 31, 2003. This discussion should
be read in conjunction with the Company's consolidated financial statements and
notes appearing elsewhere in this report.

The following discussion may contain forward-looking statements that are
subject to risks and uncertainties. When used in this discussion, the words
"believes," "anticipates" and "intends" and similar expressions are intended to identify forward-looking statements, but the
absence of these words does not necessarily mean that a statement is not forward looking. Forward-looking statements include,
but are not limited to, statements about our expansion plans, objectives, expectations, intentions, and target markets, and
are subject to risks and uncertainties that could cause actual results to differ materially from those anticipated in these
forward-looking statements for may reasons, including the factors described under "Risk Factors Affecting Future Performance,"
"Description of Business" and elsewhere in this report. We undertake no obligation to publicly release any revisions to these
forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence
of anticipated events. Readers are urged, however, to review the factors and risks we describe in reports we file from time to
time with the Securities and Exchange Commission, which may be accessed at the Commission's website at www.sec.gov.

Recent Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 143, "Accounting for Asset Retirement Obligations".
SFAS 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 financial statements issued for fiscal years beginning after June 15, 2002.



SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets,"
was issued in August 2001. SFAS No. 144 is effective for fiscal years beginning after December 15,
2001, and addresses financial accounting and reporting for the impairment or disposal of long-lived
assets. This statement supersedes SFAS No. 121 "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to Be Disposed Of," and the accounting and reporting provisions of APB
Opinion 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.



The adoption of above pronouncements, did not materially impact the Company's
financial position or results of operations.



In May 2002, the Board issued SFAS No. 145, Rescission of FASB Statements No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections ("SFAS 145"). SFAS 145
rescinds the automatic treatment of gains or losses from extinguishments of debt as extraordinary
unless they meet the criteria for extraordinary items as outlined in APB Opinion 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. SFAS 145
also requires sale-leaseback accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions and makes various technical corrections
to existing pronouncements. The provisions of SFAS 145 related to the rescission of FASB
Statement 4 are effective for fiscal years beginning after May 15, 2002, with early adoption
encouraged. All other provisions of SFAS 145 are effective for transactions occurring after May
15, 2002, with early adoption encouraged. The Company does not anticipate that adoption of SFAS
145 will have a material effect on our earnings or financial position.



In June 2002, the FASB issued SFAS No. 146 "Accounting for Costs
Associated with exit or Disposal Activities." This Statement addresses financial accounting
and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues
Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a
Restructuring)." This Statement requires that a liability for a cost associated with an exit or
disposal activity be recognized when the liability is incurred. Under Issue 94-3 a liability for
an exit cost as defined, was recognized at the date of an entity's commitment to an exit plan.
This statement will not have a material impact on the Company's financial statements.



In October 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 removes the requirement in SFAS No. 72 and Interpretation 9
thereto, to recognize and amortize any excess of the fair value of liabilities assumed over the
fair value of tangible and identifiable intangible assets acquired as an unidentifiable
intangible asset. This statement requires that those transactions be accounted for in accordance
with SFAS No. 141, "Business Combinations," and SFAS No. 142, "Goodwill and Other Intangible
Assets."  In addition, this statement amends SFAS No. 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets," to include certain financial institution-related intangible
assets.  The Company does not expect adoption of SFAS No. 147 would have a material impact, if
any, on its financial position, results of operations or cash flows.



In November 2002, the FASB issued FASB Interpretation No. 45, "Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of
Indebtedness of Others" (FIN 45). FIN 45 requires that upon issuance of a guarantee, a guarantor
must recognize a liability for the fair value of an obligation assumed under a guarantee. FIN 45
also requires additional disclosures by a guarantor in its interim and annual financial
statements about the obligations associated with guarantees issued. The recognition provisions
of FIN 45 are effective for any guarantees issued or modified after December 31, 2002. The
disclosure requirements are effective for financial statements of interim or annual periods
ending after December 15, 2002. The adoption of FIN45 is not expected to have a material effect
on the Company's financial position, results of operations, or cash flows.



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", to provide alternative methods of transition for a voluntary change
to the fair value based method of accounting for stock-based employee compensation.  In addition,
this Statement amends the disclosure requirements of Statement 123 to require prominent
disclosures in both annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used, on reported results.  The
Statement is effective for the Companies' interim reporting period ending January 31, 2003.  The
Companies do not expect the adoption of SFAS No. 148 would have a material impact on its
financial position or results of operations or cash flows.

Critical Accounting Policies

In the ordinary course of business, the company has made a number of estimates and assumptions relating to the reporting of results of operations and financial condition in the preparation of its financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company believes that the following discussion addresses the Company's most critical accounting policies, which are those that are most important to the portrayal of the Company's financial condition and results. The Company constantly re-evaluates these significant factors and makes adjustments where facts and circumstances dictate. Although historically, actual results have not significantly deviated from those determined using the necessary estimates inherent in the preparation of financial statements, future actual results may vary significantly. Estimates and assumptions include, but are not limited to, customer receivables, long-term asset lives, contingencies and litigation. The Company has also chosen certain accounting policies when options were available, including:

- The intrinsic value method, or APB Opinion No. 25, to account for our common stock incentive awards; and
- We record an allowance for credit losses based on estimates of customers' ability to pay. If the financial condition of our customers were to deteriorate, additional allowances may be required.
- The Company expects to apply the provisions of Statement of Position 97-2 as well as SAB 101, to account for the sales of software and related services that may be bundled with the software license.

These accounting policies are applied consistently for all years presented. Our operating results would be affected if other alternatives were used. Information about the impact on our operating results is included in the footnotes to our consolidated financial statements.



Results of Operation

PeopleNet was formed in February 1997, under the name American Champion Media, as a wholly owned subsidiary of
Pacific Systems Control Technology, formerly known as American Champion Entertainment.

Revenues

During the year ended December 31, 2003, we recognized $148,511 from software
licensing, hosting and management activities.

Costs and Expenses

Amortization of our intangible assets for the year ended December 31, 2003
was $480,266.  Such intangible assets include ChiBrow - the safe browser
for children and an office communication product that we acquired both in March
2002 with our common stock valued at $300,000 and $759,500 respectively. We
determined all the intangible assets have been impaired and were of no value,
based upon the fair market value of similar assets.  We recorded an
impairment expense equal to the remaining book value of the intangible assets
amounting to $125,514.

Our expenses for salaries and payroll taxes decreased to $5,210 for the year 2003,
and we had professional
fees of $92,685 and general and administrative expenses of $483,975. We had no
rent expenses for the year 2003 as our office space was provided without charge
by ECapital Group, Inc.

As a result of foregoing factors, our net loss was ($1,045,415) for the year ended December 31, 2003,
as compared to ($5,066,747) for the year ended December 31, 2002. Net loss per share decreased to ($0.07) in 2003
from ($0.40) in 2002, while weighted average number of shares outstanding
increase to 15,749,999 shares
from 12,745,561
in 2002.

Liquidity and Capital Resources

Cash flow from operations for the twelve months ended December 31, 2003 was a
negative ($81,486) which was offset by positive cash flow from
investing activities in the amount of $55,109 and financing activities in the amount of $25,754.

We historically financed our operating and capital outlays from funds received from our parent company
and from loans from shareholders. However, there is no assurance that we will be
successful in raising capital from private placement or continually from
shareholders. ECapital Group, Inc. has expressed the possibility of extending
loans to us for our operational needs if any private placement is not successful.  However, there are no assurances that such
debt financing from ECapital Group is available to us for our operational needs.  Management has a reasonable belief that
we can fund our operations by the above mentioned means through the end of year
2004.

The Company is currently seeking merger opportunities with other software
companies.  However, given our current financial status and also that our
securities are not currently traded on any exchange, there is no assurance that
we will be able to do so.

Item 7. Financial Statements

The financial statements of the Company and independent auditors' reports are
filed herewith on pages 18 through
33 of this report.

Item 8. Changes In and Disagreements with Accountants on Accounting and Financial Disclosure.

The Company dismissed its independent public accountant, Moss Adams LLP, effective
as of February 14, 2003.  The Company's Board of Directors approved such decision.  Moss Adams LLP's report for the 12-month
period ended December 31, 2001 did not contain any adverse opinion or disclaimer of opinion, except for going concern, nor
was it qualified or modified as to uncertainty, audit scope or accounting principles.  Furthermore, during such period and
the subsequent interim period preceding February 14, 2003, there were no disagreements with Moss Adams LLP within the meaning
of Instruction 4 to Item 304 of Regulation S-B under the Securities Exchange Act of 1934 on any matter of accounting principles
or practices, financial statement disclosure, or auditing scope or procedure, which disagreements, if not resolved to the
satisfaction of Moss Adams LLP, would have caused him to make reference in connection with his opinion to the subject matter
of the disagreement in connection with any report he might have issued.

On February 14, 2003, The Company engaged Kabani & Company, Inc. as its independent public accountants.
The Company has
not previously consulted with Kabani & Company, Inc. regarding any matter, including but not limited to:

* the application of accounting principles to a specified transaction, either completed or proposed; or the type of audit
opinion that might be rendered on the Company's financial statements; or

* any matter that was either the subject matter of a disagreement (as defined in Item 304(a)(1)(iv) of Regulation S-B and
the related instructions) or a reportable event (as defined in Item 304(a)(1)(v) of Regulation S-B).

PART III

Item 9. Directors, Executive Officers, Promoters and Control Person;
Compliance with Section 16 (a) of the Exchange Act

As of December 31, 2003 the directors, executive officers and
controlling persons of the Company are:



|Name         | Age | Position with the Company                      | Director Since
|------------ | --- | ---------------------------------------------- | --------------
|Benedict Van | 43  | Chief Executive Officer, Chairman and Director | 2002          

Benedict Van.

Former Director - Anthony K. Chan. Mr. Chan has served as President, Chief Operating
Officer and Director since February 2002, and has been serving as our Chairman and CEO since 1997. He also served as the CEO of
Pacific Systems Control Technology, the former parent company of PeopleNet International, from 1997 to February 2003.
From 1985 to 1990, Mr. Chan served as the Director of Chinese Affairs for the Eisenberg Group of Companies, a diversified
business enterprise, where Mr. Chan's principal duty was to negotiate contracts in the People's Republic of China.
Prior to 1985, Mr. Chan was employed by the Bank of America as an economic forecaster. Mr. Chan received his MBA from
the University of California at Berkeley. Mr. Chan resigned from our Board of
Directors and from his positions as our corporate officer as of July 2003.

Item 10. Executive Compensation

The following table sets forth certain summary information with respect to the compensation paid to our Chief Executive Officer and President, and our Chairman of the Board, for services rendered in all capacities for the period through December 31, 2003. We had no other executive officers whose total annual salary and bonus exceeded $100,000 for that fiscal year:





|Name         | Position                                                    | Year           | Salary            | Other Compensation | Bonus        | Long-Term Compensation       
|------------ | ----------------------------------------------------------- | -------------- | ----------------- | ------------------ | ------------ | -----------------------------
|             |                                                             |                |                   |                    |              | Awards                       
|             |                                                             |                |                   |                    |              | Restricted Stock Award(s) ($)
|Benedict Van | Chief Executive Officer &  Chairman of the Board & Director | 2003
2002
2001 | None$23,500n.a.   | NoneNonen.a.       | NoneNonen.a. | NoneNonen.a.                 
|Anthony Chan | President & Chief Operating Officer and Director            | 2003
2002
2001 | None
None
$12,350 | NoneNoneNone       | NoneNoneNone | None200,000None              









STOCK OPTIONS GRANTS AND EXERCISES

Option/SAR Grants within 2003

Option/SAR Grants in Last Fiscal Year

|Individual Grants
|-----------------
|Name             
|Benedict Van     
|Anthony Chan     







The following table shows the value at December
31, 2003 of unexercised options held by the
named executive officers:





|                                                                       |                                 |                    | Number of securities underlying unexercised options at fiscal year-end (#) | Value of unexercised in-the-money options at fiscal year-end ($)
|---------------------------------------------------------------------- | ------------------------------- | ------------------ | -------------------------------------------------------------------------- | ----------------------------------------------------------------
|Name                                                                   | Shares acquired on exercise (#) | Value Realized ($) | Exercisable/ unexercisable                                                 | Exercisable/ unexercisable                                      
|Benedict Van, Chief Executive Officer, Chair or the Board and
Director | None                            | None               | 2,699,999 / 0                                                              | 0 / 0                                                           



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

The compensation for our key management will be evaluated from time to time by the Board. The Board
may, in its discretion, award these individuals cash bonuses, options to purchase shares of common stock under our
Equity Incentive Plan and such other compensation, including equity-based compensation, as the Board, or a committee
thereof, shall approve from time to time.

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of December 31, 2003, certain information with respect to stock ownership of:

- all persons known by us to be beneficial owners of 5% or more of
our outstanding shares of Common Stock;
- each director and officer; and
- all directors and officers as a group.



|Name and Address of Beneficial Owner (1) | Number of Shares of Common Stock | Percentage of Common Stock Ownership*
|---------------------------------------- | -------------------------------- | -------------------------------------
|ECapital Group, Inc.                     | 4,869,999                        | 30.9%                                
|PeopleWeb Communications                 | 3,184,479                        | 20.2%                                
|Kevin Le                                 | 1,100,000                        | 7.0%                                 
|Norman Boether                           | 850,000                          | 5.4%                                 
|Anthony Chan                             | 249,146                          | 1.6%                                 
|Benedict Van (director and officer) *    | 186,359                          | 1.2%                                 
|All Directors and Officers as a group    | 186,359                          | 1.2%                                 

* Mr. Van is also the controlling
person of ECapital Group, Inc. and PeopleWeb Communications.

_______________________



1    The address for the directors and executive officers,
Mr. Le and Mr. Boether, is c/o PeopleNet International Corporation,
1600 Adams Drive, Menlo Park, California 94025.

The address for ECapital Group is
1600 Adams Drive, Menlo Park, CA 94025.

The address for PeopleWeb
Communications is 1600 Adams Drive, Menlo Park, CA 94025.



Item 12. Certain Relationships and Related Transactions

We had an unsecured loan in the amount of $54,000 from our previous director and Chief Executive Officer,
Anthony Chan.  On February 8, 2002 the entire amount of this loan was converted
into 27,000 shares of our common stock.  Mr. Chan resigned from the Company
as of July 2003.

On June 20, 2001, we acquired the exclusive marketing rights to ChiBrow from ECapital and issued 374,587 shares of the Company's common stock to ECapital.
On March 21, 2002, we entered into an Agreement For Sale of Assets with ECapital for the purchase by the Company from ECapital of the
entire intellectual property to ChiBrow.  As consideration for the purchase,
we issued 3,799,999 shares of our common stock to ECapital.

On March 21, 2002, we entered into an Agreement For Sale of Assets with PeopleNet Corporation ("PC") for the purchase by the Company from PC of the intellectual property rights for a software bundle including web-based email and office
communication solutions.  As consideration for the purchase, we issued 9,620,000 shares of
our common stock to PC.

Item 13. Exhibits and Reports on Form 8-K

(a) Exhibits

See Index to Exhibits on pages 33 to 34 of this Form 10-KSB.

(b) Reports on Form 8-K

The Company filed on Form 8-K, dated February 19, 2003, to report on the change of independent auditors.

Item 14. Controls and Procedures

Based on their most recent review, which was completed within 90 days of the filing of this report, the Company's principal
executive officer and principal financial officer has concluded that the Company's disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in the reports that it files or submits under the
Securities Exchange Act of 1934, as amended, is accumulated and communicated to the Company's management, including its
principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required
disclosure and are effective to ensure that such information is recorded, processed, summarized and reported within the time
periods specified in the SEC's rules and forms.  There were no significant changes in the Company's internal controls or in other
factors that could significantly affect those controls subsequent to the date of their evaluation.

---

**SIGNATURES**

In accordance with Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has caused this Report to be signed on its
behalf by the undersigned, thereunto duly authorized.

Dated: April 9, 2004

In accordance with the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.



|Signature                             | Title                                                                    | Date         
|------------------------------------- | ------------------------------------------------------------------------ | -------------
|By: /s/ Benedict Van
    Benedict Van | Chief Executive Officer
      (Principal Executive Officer) and Director | April 9, 2004

---

CERTIFICATIONS

I, Benedict Van, Chief Executive Officer and  Chief Financial Officer of PeopleNet
International Corporation, certify that:

1. I have reviewed this annual report on Form 10-KSB of PeopleNet
International Corporation;

2. Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary 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 this
annual report;

3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material
respects the financial condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this annual report;

4. The registrant's other certifying Officers and I, are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have;

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this
annual report is being prepared;

b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as pf the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent function);

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

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and

6. The registrant's other certifying officers and I have indicated in this
annual 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 our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

Date: April 9, 2004

/s/ Benedict Van
Benedict Van
Chief Executive Officer

---

INDEPENDENT AUDITORS' REPORT

To the Stockholders and Board of Directors
PeopleNet International Corporation

We have audited the accompanying balance sheet of PeopleNet International Corporation, a Delaware
Corporation (the "Company") as of December 31, 2003 and the related statements of operations, stockholders' deficit and
cash flows for the two years period then ended. 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 audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used
and significant estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.

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

The Company's financial statements are prepared using the generally accepted accounting principles
applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the
normal course of business. The Company has accumulated deficit of $18,912,157 and the Company's total liabilities
exceeded the total assets by $723,188 as of December 31, 2003. These factors as discussed in Note 14 to the financial
statements raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in
regard to these matters are also described in Note 14. The financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

KABANI & COMPANY, INC.
CERTIFIED PUBLIC ACCOUNTANTS

Fountain Valley, California
March 23, 2004

---

PEOPLENET INTERNATIONAL CORPORATIONBALANCE SHEET

`December 31
                                              -----------
                                                  2003
                                              -----------
ASSETS
  Cash                                        $       771
                                              -----------
    Total assets                              $       771
                                              ===========

LIABILITIES
  Accounts payable and accrued expenses       $   380,656
  Payroll taxes payable                            11,979
  Advances from related parties                   271,254
  Notes payable - related party                    60,000
                                              -----------
    Total current liabilities                     723,889
                                              -----------

COMMITMENTS & CONTINGENCIES

STOCKHOLDERS' EQUITY
  Preferred stock, $0.0001 par value;
    10,000,000 shares authorized              $       -
  Common stock, $0.0001 par value;
    100,000,000 shares authorized;
    15,749,999 shares issued and
    outstanding at December 31, 2003                1,575
  Additional paid-in capital                   19,080,371
  Deferred compensation charges                  (632,225)
  Related party receivable                       (260,682)
  Accumulated deficit                         (18,912,157)
                                              -----------
    Total stockholders' equity                   (723,118)
                                              -----------
                                              $       771
                                              ===========`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF OPERATIONS

`Year Ended December 31,
                                              -------------------------
                                                  2003          2002
                                              -----------   -----------
REVENUE
  Licensing fee - Software                    $     2,870           -
  Management fees                                 137,300        14,060
  Hosting & other                                   8,341        27,804
                                              -----------   -----------
    Total revenue                                 148,511        41,864
                                              -----------   -----------

COSTS AND EXPENSES
  Amortization of intangibles                     480,266       454,750
  Bad debts                                           -         137,990
  Loss on investment                                  -          10,000
  Rent                                                -          47,100
  Impairment of intangible assets                 125,514           -
  Salaries and payroll taxes                        5,210       296,910
  Professional fees                                92,685       546,362
  General and administrative                      483,975     3,585,660
                                              -----------   -----------
    Total costs and expenses                    1,187,650     5,078,772

                                              -----------   -----------
LOSS FROM OPERATIONS                           (1,039,139)   (5,036,908)

OTHER INCOME (EXPENSE)
  Loss on sale of equipment                           -         (12,731)
  Interest expense                                 (5,476)      (16,208)
                                              -----------   -----------
                                                   (5,476)      (28,939)

LOSS BEFORE INCOME TAXES                       (1,044,615)   (5,065,847)

PROVISION FOR INCOME TAXES                            800           900
                                              -----------   -----------
NET LOSS                                      $(1,045,415)   (5,066,747)
                                              ===========   ===========

Basic & diluted weighted average number
  of common stock outstanding                  15,749,999    12,745,561
                                              ===========   ===========

Basic and diluted net loss per share          $     (0.07)  $     (0.40)
                                              ===========   ===========`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF STOCKHOLDERS' EQUITY

`Common Stock
                                ------------------                   Deferred      Related                       Total
                                 Number                Paid-In     Compensation     Party       Accumulated    Stockholders'
                                of shares   Amount     Capital       Charges      Receivable      Deficit        Equity
                                ---------   ------   -----------   ------------   ----------   -------------   -------------

Balance,
December 31, 1999               2,010,000   $  201   $   678,680   $       -      $     -      $ (1,701,615)   $ (1,022,734)

Net loss                              -        -             -             -            -        (6,719,478)     (6,719,478)
                                ---------   ------   -----------   ------------   ----------   -------------   -------------
Balance,
December 31, 2000               2,010,000      201       678,680           -            -        (8,421,093)     (7,742,212)

Net loss                              -        -             -             -            -        (4,378,902)     (4,378,902)
                                ---------   ------   -----------   ------------   ---------    -------------   -------------
Balance,
December 31, 2001               2,010,000      201       678,680           -            -       (12,799,995)    (12,121,114)
                                ---------   ------   -----------   ------------   ---------    -------------   -------------
Conversion of related party
  balances to equity upon
  spin-off                            -        -      12,238,785           -            -               -        12,238,785

Issuance of common stock
  for cash                        120,000       12       119,988           -            -               -           120,000

Issuance of common stock options
  for compensation                    -        -       4,484,048    (1,053,060)         -               -         3,430,988

Issuance of common stock options
  for services                        -        -         484,942           -            -               -           484,942

Issuance of common stock
  for services                    200,000       20        15,770           -            -               -            15,790

Issuance of common stock for
  acquisition of intangibles   13,419,999    1,342     1,058,158           -            -               -         1,059,500

Related party receivable              -        -             -             -       (315,791)            -          (315,791)

Net loss for the year                 -        -             -             -            -        (5,066,747)     (5,066,747)
                               ----------   ------   -----------   ------------   ----------   -------------   -------------
Balance,
December 31, 2002              15,749,999   $1,575   $19,080,371   $(1,053,060)   $(315,791)   $(17,866,742)   $   (153,647)
                               ----------   ------   -----------   ------------   ----------   -------------   -------------
Amortization of deferred
  compensation charges                -        -             -         420,835          -               -           420,835

Payment on related party
  receivable                          -        -             -             -         55,109             -            55,109

Net loss for the year                 -        -             -             -            -        (1,045,415)     (1,045,415)
                               ----------   ------   -----------   ------------   ----------   -------------   -------------
Balance,
December 31, 2003              15,749,999   $1,575   $19,080,371   $   (632,225)  $(260,682)   $(18,912,157)   $   (723,118)
                               ==========   ======   ===========   ============   ==========   =============   =============`

See accompanying notes.

---

PEOPLENET INTERNATIONAL CORPORATIONSTATEMENT OF CASH FLOWS

`Year Ended December 31,
                                                           ---------------------------
                                                               2003           2002
                                                           ------------   ------------
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                 $ (1,045,415)  $(5,066,747)
  Adjustments to reconcile net loss to net cash
    used in operating activities
      Bad debts                                                    -          137,990
      Depreciation and amortization                            495,580        512,913
      Impairment of intangible assets                          125,514            -
      Loss on sale of equipment                                    -           12,731
      Common stock issued in lieu of compensation                  -           15,790
      Common stock options issued in lieu of services              -          484,942
      Common stock options issued in lieu of compensation          -        3,092,405
      Amortization of deferred compensation charges            420,835        338,482
      (Increase) / decrease in current assets:
          Accounts receivable                                      -           (4,990)
      Increase / (decrease) in current liabilities:
          Accrued expenses                                     (78,000)       162,964
          Other                                                    -          (72,628)
                                                           ------------   ------------
      Net cash used in operating activities                    (81,486)      (386,148)
                                                           ------------   ------------

CASH FLOWS FROM INVESTING ACTIVITIES
  Purchase of property & equipment                                 -           (2,647)
  (Increase) decrease of notes receivable                       55,109            -
                                                           ------------   ------------
  Net cash provided by (used in) investing activities           55,109         (2,647)
                                                           ------------   ------------

CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from issuance of common stock                           -          120,000
  Proceeds on notes payable                                        -           10,000
  Proceeds of loans from related parties                        25,754        260,189
                                                           ------------   ------------
      Net cash provided by financing activities                 25,754        390,189
                                                           ------------   ------------

NET INCREASE (DECREASE) IN CASH & CASH EQUIVALENTS                (623)         1,394

CASH & CASH EQUIVALENTS, beginning balance                       1,394            -
                                                           ------------   ------------
CASH & CASH EQUIVALENTS, end balance                       $       771          1,394
                                                           ============   ============

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
  Cash paid during the period for
    Foreign and state income taxes                         $       800    $       900
                                                           ============   ============`

See accompanying notes.

---

NOTES TO FINANCIAL STATEMENTSFOR THE YEAR ENDEDDECEMBER 31, 2003

Note 1 - Nature of Operations, Stock Split, and Spin-off

Nature of Operations - PeopleNet International Corporation (the "Company") was incorporated on February 5, 1997in the state of Delaware. The Company focuses on development and sales of communication software solutions and management of media-related programs. The software solutions include a controlled and safe Internet browser for children and a multiple-module web-based email and office automation bundle. The Company had been a wholly owned subsidiary of Pacific Systems Control Technology, Inc. ("PSCT") until February 8, 2002 when the Company completed its spin-off transaction from PSCT and became an independent entity.

Spin-off agreement - On June 22, 2001, PSCT approved a plan to spin-off the Company to the shareholders as a tax-free distribution. Under the plan, each stockholder of PSCT received one share of PeopleNet stock for every 17 shares of PSCT stock held as of the record date of January 16, 2002. Subsequent to and as part of the spin-off, the Company issued 374,587 shares of common stock, with registration rights to ECapital, in exchange for the worldwide exclusive rights to market and distribute ChiBrow, a safe web browser software for children for three years. The related party note payable was converted to common stock. The spin-off became effective in January 2002 and all shares were distributed to the above parties on February 8, 2002.

As part of this plan, inter-company advances were offset against the amounts due to PSCT and the net amount was converted to additional paid-in-capital. Also, as a part of the transaction, Pacific agreed to pay to the Company $314,000 in 2002, since liabilities incurred by Pacific for the same amount, were recorded by the Company.

Note 2 - Summary of Significant Accounting Policies

Use of Estimates, Risks and Uncertainties - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Actual results could differ from the estimates. Significant estimates used in these financial statements include the recovery of intangible assets and film costs, which have a direct relationship to the net realizable value of the related asset. It is at least reasonably possible that management's estimate of revenue from licensing and films could change in the near term, which could have a material adverse effect on the Company's financial condition and results of operations.

Cash and cash equivalents - The Company considers all liquid investments with a maturity of three months or less from the date of purchase that are readily convertible into cash to be cash equivalents.

Property and Equipment - Property and equipment is stated at cost. Depreciation for property and equipment is computed using the straight-line method over an estimated useful life of five years.

Long-lived assets - Effective January 1, 2002, the Company adopted Statement of Financial Accounting Standards No.  144,  "Accounting  for  the Impairment or Disposal of Long-Lived Assets" ("SFAS 144"), which addresses financial accounting and reporting for the impairment  or  disposal  of  long-lived  assets  and  supersedes  SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be  Disposed Of," and the accounting and reporting provisions of APB Opinion No. 30,  "Reporting  the  Results  of  Operations  for  a Disposal of a Segment of a Business."  The Company periodically evaluates the carrying value of long-lived assets to be held and used in accordance with SFAS 144.  SFAS 144 requires impairment losses to be recorded on long-lived assets used in operations when indicators of impairment are present and the undiscounted cash flows estimated to be generated by those assets are less than the assets' carrying amounts.  In that  event,  a  loss  is  recognized  based on the amount by which the carrying amount  exceeds  the  fair  market  value  of  the  long-lived  assets.  Loss on long-lived assets to be disposed of is determined in a similar manner, except that fair market values are reduced for the cost of disposal.  Based on its review,  the Company  believes  that,  as  of  December 31,  2003,  there  was  no significant impairments  of  its  long-lived  assets.

Intangible Assets - Intangible assets consisted of two intellectual properties: "The Children's Browser" and an office communication program & associates modules. The Company evaluates intangible assets for impairment, at least on an annual basis and whenever events or changes in circumstances indicate that the carrying value may not be recoverable from its estimated future cash flows.  Recoverability of intangible assets, other long-lived assets and, goodwill is measured by comparing their net book value to the related projected undiscounted cash flows from these assets, considering a number of factors including past operating results, budgets, economic projections, market trends and product development cycles. If the net book value of the asset exceeds the related undiscounted cash flows, the asset is considered impaired, and a second test is performed to measure the amount of impairment loss. The Company evaluated valuation of the Company's property and equipment at December 31, 2003 and determined all the non-current assets have been impaired and were of zero value.

Film Costs - Film costs consist of the capitalized costs related to the production of original film masters for videos and television programs. Film costs are amortized using the individual-film-forecast-computation method. The net film costs are presented on the balance sheet at the net realizable value for each master. During 2001 the Company established a reserve against the capitalized film costs to reduce the carrying amount to the estimated net realizable value, which is zero.

Software development costs - The Company has adopted Statement of Position 98-1 ("SOP 98-1") "Accounting for the Costs of Computer Software Developed or Obtained for Internal Use", as its accounting policy for internally developed computer software costs.  Under SOP 98-1, computer software costs incurred in the preliminary development stage are expensed as incurred.  Computer software costs incurred during the application development stage are capitalized and amortized over the software's estimated useful life.

Revenue Recognition - Revenue from certain licensing programs is recorded when license agreement has been executed, the software has been delivered or shipped, the fee is determined and the customer is invoiced. The Company has adopted the provisions of Statements of Position 97-2 and 98-4 and SEC Staff Accounting Bulletin 104. Revenue from licensing agreements is not significant for the year ended December 31, 2003 and 2002.

Revenue from films is recognized on delivery of each master. Film costs are amortized using the individual-film-forecast-computation method, which amortizes costs in the ratio that current gross revenues bear to anticipated total gross revenues from all sources. Management periodically reviews its estimates of future revenues for each master and if necessary a revision is made to amortization rates and a write down to net realizable value may occur. There is no revenue from films for the year ended December 31, 2002.

Revenue from hosting services is recognized in the period in which the service is provided when the amount of revenue is determinable and collectability is reasonably assured. Subsequent to the year ended December 31, 2002, the Company discontinued the hosting operations.

The Company provides management services to two companies related through a common officer. Through the year ended December 31, 2003, the Company has provided services amounting $122,300 to the two entities. Revenue is recognized when the services are rendered.

Research and Development - Expenditures for software development costs during the preliminary stage and research are expensed as incurred. Such costs are required to be expensed until the point that technological feasibility is established. The period between achieving technological feasibility and the general availability of such software has been short. Consequently, costs otherwise capitalizable after technological feasibility is achieved are generally expensed because they are insignificant.

Advertising Costs - The Company expenses the cost of advertising as incurred or, as appropriate, the first time the advertising takes place. Advertising costs for the years ended December 31, 2003 and 2002 were insignificant.

Income Taxes - Income taxes are accounted for using an asset and liability approach, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of temporary differences between financial statement and tax basis of assets and liabilities at the applicable enacted tax rates. Accounting principles generally accepted in the United States of America require a valuation allowance against deferred tax assets if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

Stock-based compensation - SFAS No. 123 prescribes accounting and reporting standards for all stock-based compensation plans, including employee stock options, restricted stock, employee stock purchase plans and stock appreciation rights. SFAS No. 123 requires compensation expense to be recorded (i) using the new fair value method or (ii) using the existing accounting rules prescribed by Accounting Principles Board Opinion No. 25, "Accounting for stock issued to employees" (APB 25) and related interpretations with proforma disclosure of what net income and earnings per share would have been had the Company adopted the new fair value method. The Company has chosen to account for stock-based compensation using Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees" and has adopted the disclosure only provisions of SFAS 123.  Accordingly, compensation cost for stock options is measured as the excess, if any, of the quoted market price of the Company's stock at the date of the grant over the amount an employee is required to pay for the stock.

The Company accounts for stock-based compensation issued to non-employees and consultants in accordance with the provisions of SFAS 123 and the Emerging Issues Task Force consensus in Issue No. 96-18 ("EITF 96-18"), "Accounting for Equity Instruments that are Issued to Other Than Employees for Acquiring or in Conjunction with Selling, Goods or Services". Valuation of shares for services is based on the estimated fair market value of the services performed.

Basic and diluted net loss per share - Net loss per share is calculated in accordance with the Statement of financial accounting standards No. 128 (SFAS No. 128), "Earnings per share". SFAS No. 128 superseded Accounting Principles Board Opinion No.15 (APB 15). Net loss per share for all periods presented has been restated to reflect the adoption of SFAS No. 128. Basic net loss per share is based upon the weighted average number of common shares outstanding. Diluted net loss per share is based on the assumption that all dilutive convertible shares and stock options were converted or exercised. Dilution is computed by applying the treasury stock method. Under this method, options and warrants are assumed to be exercised at the beginning of the period (or at the time of issuance, if later), and as if funds obtained thereby were used to purchase common stock at the average market price during the period.

Fair value of financial instruments - Statement of financial accounting standard No. 107, Disclosures about fair value of financial instruments, requires that the Company disclose estimated fair values of financial instruments. The carrying amounts reported in the statements of financial position for current assets and current liabilities qualifying as financial instruments are a reasonable estimate of fair value.

Segment Reporting - Statement of Financial Accounting Standards No. 131 ("SFAS 131"), "Disclosure About Segments of an Enterprise and Related Information" requires use of the "management approach" model for segment reporting. The management approach model is based on the way a company's management organizes segments within the company for making operating decisions and assessing performance. Reportable segments are based on products and services, geography, legal structure, management structure, or any other manner in which management disaggregates a company. Currently, SFAS 131 has no effect on the Company's consolidated financial statements as substantially all of the Company's operations are conducted in one industry segment.

Concentrations of Risk - Financial instruments which potentially subject the Company to concentrations of credit risk are cash and accounts receivable. The Company places its cash with financial institutions deemed by management to be of high credit quality. The amount on deposit in any one institution that exceeds federally insured limits is subject to credit risk.

Recent pronouncements - On April 30, 2003, the FASB issued FASB Statement No. 149 ("SFAS 149"), "Amendment of Statement 133 on Derivative Instruments and Hedging Activities". FAS 149 amends and clarifies the accounting guidance on (1) derivative instruments (including certain derivative instruments embedded in other contracts) and (2) hedging activities that fall within the scope of FASB Statement No. 133 ("SFAS 133"), Accounting for Derivative Instruments and Hedging Activities. SFAS 149 also amends certain other existing pronouncements, which will result in more consistent reporting of contracts that are derivatives in their entirety or that contain embedded derivatives that warrant separate accounting. SFAS 149 is effective (1) for contracts entered into or modified after June 30, 2003, with certain exceptions, and (2) for hedging relationships designated after June 30, 2003. The guidance is to be applied prospectively. The adoption of SFAS No. 149 does not have a material impact on the Company's financial position or results of operations or cash flows.

On May 15 2003, the FASB issued FASB Statement No. 150 ("SFAS 150"), Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity. SFAS 150 changes the accounting for certain financial instruments that, under previous guidance, could be classified as equity or "mezzanine" equity, by now requiring those instruments to be classified as liabilities (or assets in some circumstances) in the statement of financial position. Further, SFAS 150 requires disclosure regarding the terms of those instruments and settlement alternatives. SFAS 150 affects an entity's classification of the following freestanding instruments: a) Mandatorily redeemable instruments b) Financial instruments to repurchase an entity's own equity instruments c) Financial instruments embodying obligations that the issuer must or could choose to settle by issuing a variable number of its shares or other equity instruments based solely on (i) a fixed monetary amount known at inception or (ii) something other than changes in its own equity instruments d) SFAS 150 does not apply to features embedded in a financial instrument that is not a derivative in its entirety. The guidance in SFAS 150 is generally effective for all financial instruments entered into or modified after May 31, 2003, and is otherwise effective at the beginning of the first interim period beginning after June 15, 2003. For private companies, mandatorily redeemable financial instruments are subject to the provisions of SFAS 150 for the fiscal period beginning after December 15, 2003. The adoption of SFAS No. 149 does not have a material impact on the Company's financial position or results of operations or cash flows.

In December 2003, the Financial Accounting Standards Board (FASB) issued a revised Interpretation No. 46, "Consolidation of Variable Interest Entities" (FIN 46R). FIN 46R addresses consolidation by business enterprises of variable interest entities and significantly changes the consolidation application of consolidation policies to variable interest entities and, thus improves comparability between enterprises engaged in similar activities when those activities are conducted through variable interest entities. The Company does not hold any variable interest entities.

Reclassifications - Certain comparative amounts have been reclassified to conform to the current year's presentation.

Note 3 - Property and Equipment

The property & equipment comprised of the following at December 31, 2003:

`Equipment                                         $  49,820
     Production equipment                                290,389
                                                       ---------
                                                         340,209

     Less accumulated depreciation and amortization      340,209
                                                       ---------
                                                       $     -
                                                       =========`

Depreciation expense was $15,314 and $58,316 for the years ended December 31, 2003 and 2002, respectively.

Note 4 - Film Costs

Film costs consist of the capitalized costs related to the production of programs for television and videos as follows at December 31, 2003:

`Television program
        The Adventures With Kanga Roddy, net of
           reserve of $7,032,260 at December 31, 2002           $1,165,557
     Videos
        Montana Exercise Video, net of
           reserves of $148,253 at December 31, 2001                   -
        Strong Mind Fit Body, net of
           reserves of $18,042 at December 31, 2001                    -
                                                                ----------
                                                                 1,165,557

     Less accumulated amortization                               1,165,557
                                                                ----------
                                                                $      -
                                                                ==========`

All three investments:The Adventures With Kanga Roddy,Montana Exercise Video and the videos of the Strong Mind Fit Body were fully reserved, as management believes these investments would not generate future revenues for the Company. (See Note 10)

Note 5 - Intangible Assets

Intangible assets include two intellectual properties: "The Children's Browser" and an office communication program and associates modules. Acquired in March 2002, a total of 13,419,999 shares of common stock were issued for the acquisition. Intangible assets are amortized on a straight-line basis over the estimated economic life which is 36 and 18 months. Amortization expenses for the year ended December 31, 2003 was $480,266. Intangible assets and their related accumulated amortization as of December 31, 2003 are as follows:

`ChiBrow                                  $  300,000
     Office Communication                        759,500
     Domain name                                   1,030
                                              ----------
                                               1,060,530

     Less accumulated amortization               935,016
                                              ----------
                                                 125,514

     Impairment of intangible assets             125,514
                                              ----------
                                              $      -
                                              ==========`

ChiBrow was acquired from ECapital Group, Inc., a related party who owns approximately 19% of our Company prior to the acquisitions. The office communication software was acquired from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc. The values of the acquisitions were determined by mutually agreed prices of the software products from the sellers and the value of our common stock at $0.08 per share.

The Company evaluated valuation of the Company's intangible assets at December 31, 2003 and determined all the intangible assets have been impaired and were of no value, based upon the fair market value of similar assets. The Company recorded an impairment expense equal to the book value of the intangible assets amounting
to $125,514 in the accompanying financial statements

Note 6 - Investment

In October 2002, the Company acquired certain assets including an Internet web site and copyrights and trademark attached to the site for $10,000. The Company sold the right to use the assets to the seller for 13,900,000 shares of common stock of $.0001 par value of the seller. At December 31, 2002, the Company wrote off the value of the assets and the shares to zero since the viability of the assets was not certain through December 31, 2002.

Note 7 - Advances from Related Parties

The advances from related parties are due on demand, non-interest bearing and unsecured.

Note 8 - Notes Payable - related party

At December 31, 2003, the Company has an unsecured note payable of $60,000 from a related party, related through president of the Company. The note is due on demand and bears interest at 9% per annum. Interest for the year ended December 31, 2003 and 2002 amounted $9,000.

Note 9 - Income Taxes

Reconciliation of the federal statutory tax rate of 34% and state tax rate of 8.8% to the recorded amounts are as follows:

`2003              2002
                                                      --------          --------

     Federal tax benefit at statutory rates       $   (355,000)      $(1,722,400)
     State tax benefit at statutory rates              (62,000)         (445,795)
     Increase in valuation allowance                   417,800         2,169,095
                                                  -------------      ------------
                                                  $        800       $       900
                                                  =============      ============`

The Company used to file a consolidated income tax return with PSCT. The Company had net operating loss (NOL) carry forwards for federal income tax purposes of approximately $18,900,000, the benefits of which is to expire in 2012 through 2020 for federal purposes. Because of changes in ownership of the Company and PSCT, the utilization of NOLs in any one-year will be limited by Section 382 of the Internal Revenue Code.

Through December 31, 2003, the Company incurred net operating losses, after spin-off, for income tax purposes of $5,900,000. The net operating loss carryforward may be used to reduce taxable income through the year 2017. The provision for income tax consists of the state minimum taxes imposed on corporations.

Significant components of the Company's deferred tax assets and liabilities as of December 31, 2003 are as follows:

`DEFERRED TAX ASSETS
     NOL carryforward                     $ 10,395,000
     Valuation allowance                   (10,380,000)
                                          -------------
                                                15,000
                                          -------------

     DEFERRED TAX LIABILITIES
     Depreciation                              (15,000)
                                          -------------
                                               (15,000)
                                          -------------
                                          $        -
                                          =============`

Due to the uncertainty of future taxable income and limitations related to Section 382 of the Internal Revenue Code, a valuation allowance for the net amount of the deferred tax assets and liabilities before the spin off has been recorded at December 31, 2003.

Note 10 - Commitments and Contingencies

In September 1999 the Company signed a licensing agreement with Brighter Child of Westerville, Ohio, for the licensing of the Kanga Roddy story and all related characters for use in interactive CD-Rom games. In October 1999, the Company signed a licensing agreement with Prestige Toys of New York, New York, for the licensing of the Kanga Roddy character and all related characters for use and manufacturing of plush toy items in all sizes. The agreement with Brighter Child expired on December 31, 2002.

On December 27, 2000, the Company entered into a worldwide distribution agreement with respect to The Adventures with Kanga Roddytelevision program with World Channel, Inc. Under the agreement, World Channel will have the exclusive rights for exhibition, distribution, process and reproduction and all commercial exploitation of the program for a period of five years. The agreement requires World Channel to make five annual installments of $600,000 on or before the end of each of the years 2001 through 2005. For the year ended December 31, 2001, the Company recognized $450,000 film income in relation to this distribution agreement, $193,000 of which was collected before year-end. The Company did not earn any revenue from the films in 2002. A 100% reserve on the remaining receivable was also established as of June 30, 2002. Because collection activity through December 31, 2001 raises substantial doubt with respect to amounts due in future years under this agreement and because there are currently no other agreements in place, the Company has reserved the remaining unamortized film costs for "The Adventures With Kanga Roddy" television program.

In June 2001 the Company signed an agreement with ECapital Group, Inc. ("ECapital") to purchase the exclusive licensing and marketing rights to ChiBrow, a safe web browser software for children. Under the terms of the agreement and upon the effectiveness of the spin-off of the Company from PSCT, the Company issued 374,587 shares of common stock, with registration rights, to ECapital in exchange for the worldwide exclusive rights to market and distribute ChiBrow for three years (see Note 1). The Company intends to file a registration statement for such shares immediately after the effectiveness of the spin-off transaction. Pursuant to the terms of the agreement, the Company shall retain 35% of all revenues generated from such marketing efforts and the balance shall be paid to ECapital. The registration for the 374,587 shares of PeopleNet common stock issued to ECapital has not yet been filed as of December 31, 2003.

Through December 31, 2001, the Company was still a subsidiary of Pacific Systems Control Technology, the following cases were either filed against Pacific Systems naming all of its subsidiaries including PeopleNet as the defendants, or Pacific Systems' initiated complaint resulted in a cross-complaint by the defendant naming Pacific Systems and all of its subsidiaries including PeopleNet as the defendants in the cross-complaint. Pacific Systems has agreed to indemnify all of its subsidiaries including PeopleNet from the liabilities of the following cases including expenses, fees or judgment.

As of December 31, 2001, while still a wholly owned subsidiary of Pacific Systems Control Technology, Inc., the Company accrued approximately $57,000 in payroll taxes payable. Such taxes are still outstanding as of December 31, 2003 and Pacific Systems Control Technology agrees to be responsible for such taxes and will make arrangement for payment with the tax authority.

In October 2001, Pacific Systems filed a complaint against a former employee in licensing and marketing activities for breach of contract, breach of fiduciary duty and unjust enrichment, among other causes of action, seeking declaratory relief from the court.  A counter claim from the employee was filed in April 2002 against Pacific Systems and its subsidiaries. On April 15, 2002, judgment was entered against Pacific Systems and its subsidiaries in the amount of $70,527. As of December 31, 2002, $56,727 was still outstanding on the judgment. On February 11, 2003, Pacific Systems and its subsidiaries entered into a global settlement and mutual release of all claims with the former employee. Under the agreement, the defendants, including the Company, will pay to the former employee a total sum of $100,000 plus interest at the rate of 10% per year, payable in installments through August 15, 2003.
However, as of December 31, 2003 the outstanding balance under the settlement
agreement was $72,000.

On April 9, 2002, the Company entered into a stock exchange agreement with MarketRoot Corporation where the Company intends to acquire all of the outstanding shares of MarketRoot for 1,740,000 shares of the Company's common stock.  MarketRoot has developed and owned an e-commerce software product.  The agreement is subject to the submission of audited financial statements of MarketRoot for the years ended December 31, 2001 and 2000 and the acceptance of such financial statements by the Company. As of December 31, 2003, audited financial statements of MarketRoot have not yet been submitted to the Company.

Note 11 - Related Party Transactions

In March 2002, the Company acquired ChiBrow from ECapital Group, Inc., which is a related party who owns approximately 19% of our Company prior to the acquisition. The Company also acquired an office communication software from PeopleNet Corporation whose certain owners indirectly own our shares through their ownership of ECapital Group, Inc. These intangible assets were evaluated as fully impaired by the Company's management on December 31, 2003 (note 5).

The Company provides management services to two companies related through a common officer. Through the year ended December 31, 2003, the Company has provided services amounting $137,300 to the two entities, out of which $61,000 was outstanding at September 30, 2003.

Note 12 - Common Stock / Options

Between April and May 2002, the Company issued a total of 6,680,620 stock options with exercise prices ranging from $0.08 to $0.12 per share and with gradual vesting arrangements. Due to the difference in valuation between certain intangible assets the Company acquired in March 2002 with the Company's common stock at $0.08 per share and common stock the Company sold to an investor in June 2002 at the price of $1.00 per share, the Company valued these options at a total of approximately $4.5 million. During the year ended December 31, 2003 and 2002, the Company recognized $353,095 and $3,915,930, respectively, in non-cash expenses for the stock options vested as of December 31, 2003. The remaining unvested options are deferred and will be amortized over the vesting period.

During the year ended December 31, 2002, the Company issued 200,000 shares of common stock against services amounting $15,790.

On March 21, 2002, the Company entered into an asset purchase agreement with a company to acquire an intellectual property known as "The Children's Browser" in exchange for 3,799,999 shares of the Company's common stock, which was valued at $300,000. On March 21, 2002, the Company entered into an asset purchase agreement with a company to acquire an office communication program and associated modules in exchange for 9,620,000 shares of the Company's common stock, which was valued at $759,500.

During the year ended December 31, 2002, the Company issued 120,000 shares of common stock for cash amounting $120,000.

Stock Options

The Company applies the intrinsic value based method prescribed by Accounting Principals Board Opinion No. 25 "Accounting for Stock Issued to Employees," in accounting for employee stock options and non-employee directors. Accordingly, compensation expense is recognized only when options are granted with a discounted exercise price. Any such compensation expense is recognized ratably over the associated service period, which is generally the vesting term.

Stock options granted to employees for services provided to the Company are accounted for under Statement of Financial Accounting Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." During the year ended December 31, 2002, the Company granted 6,680,620 options and recorded compensation expense of $ 3,915,930.

Pro forma net earnings and earnings per share information, as required by SFAS 123, has been determined as if the Company had accounted for employee and non-employee director stock options under SFAS 123's fair value method. The fair value of these options was estimated at grant date using a Black-Scholes option pricing model with the following weighted average assumptions for fiscal 2002: risk free interest rate of 5.00%; dividend yield of 0%; expected weighted average option life of 4.47 years; and volatility of 0%.

The weighted average grant date fair value and the weighted average exercise price of options issued during the year were $0.95 and $0.10, respectively, all of which were issued at an exercise price below the stock price at the grant date.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. Adjustments are made for options forfeited prior to vesting. The effects on compensation expense and net income had compensation costs for the Company's stock option plans been determined based on a fair value at the date of grant consistent with the provisions of SFAS 123, for the year ended December 31, 2002 are as follows:

`2002
                                                                     --------

     Net loss, as reported                                         $(5,066,747)
       Adjustment to compensation expense
       under SFAS 123:
         Recorded by the Company under the
           provision of APB 25                          3,915,930
         Based on a fair value at the date of grant
           consistent with the provisions of SFAS 123   4,877,122      961,192
                                                        ---------  ------------
     Net loss, pro forma                                           $(6,027,939)
                                                                   ============

     Loss per share, pro forma                                     $      (.47)
                                                                   ============`

The following summary presents the incentive and non-qualified options under the plan granted, exercised, expired and outstanding at December 31, 2003 and 2002:

`Weighted
                                                              Average
                                                             Exercise
                                          Under Plan            Price
                                         -----------         --------
          Balance, December 31, 2001          -                  -
               Granted                    6,680,620            $0.10
                                         -----------         --------
          Balance, December 31, 2002      6,680,620             0.10
               Granted                          -                -
               Exercised or lapsed              -                -
                                         -----------          -------
          Balance, December 31, 2003      6,680,620            $0.10
                                         ===========          =======`

The following summary presents the weighted average exercise prices, number of options outstanding and exercisable, and the remaining contractual lives of the Company's stock options at December 31, 2003:

`Options Outstanding                Options Exercisable
          ------------------------------------     -----------------------
                          Weighted
                          Average     Weighted                    Weighted
                         Remaining    Average                     Average
            Number      Contractual   Exercise       Number       Exercise
          Outstanding      Life        Price       Exercisable     Price
          -----------   -----------   --------     -----------   ---------
2002:
Options     6,680,620       3.47        $0.10        4,903,063     $0.10`

The Company did not grant any options in the year 2003.

Note 13 - Supplemental disclosure of cash flows

The Company prepares its statements of cash flows using the indirect method as defined under the Financial Accounting Standard No. 95.

The Company paid $900 for income taxes in the years ended December 31, 2003 and 2002. The Company paid $0 for interest during the year ended December 31, 2003 and 2002.

The Cash flow statements do not include effect of the non-cash investing and financing activities of issuance of 13,419,999 shares of common stock for acquisition of intangible assets amounting $1,059,500 in 2002.

Note 14 - Going concern

The Company's consolidated financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. However, the Company has accumulated deficit of $18,912,157 at December 31, 2003. The Company's total liabilities exceeded the total assets by $723,188 as of December 31, 2003. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheets is dependent upon continued operations of the Company, which in turn is dependent upon the Company's ability to raise additional capital, obtain financing and to succeed in its future operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

Management's plans and the ongoing operations of the Company are expected to require additional working capital in year 2004. The Company is attempting to raise additional capital through a private placement. However, there can be no assurance that this placement could be successfully executed due to the current adverse investment climate. During each of the quarters going forward, the Company intends to make smaller private sale of stock to accredited individuals and to obtain loans from ECapital Group, Inc. or other individuals for operation cash needs.

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INDEX TO EXHIBITS

Exhibit No.       Exhibit Description

3.1(1)     Certificate of Incorporation, as amended on July 24, 2001
3.2(1)     By-laws
4.1(1)     2001 Stock Option Plan
4.2(1)     2001 Non-Employee Director Stock Option Plan
4.3(1)     2001 Stock Incentive Plan
10.1(1)   Agreement between American Champion Media & American Champion Entertainment dated as of July 10, 2001
10.2(1)   Agreement among ACEI, American Champion Media, ECapital Group & Anthony Chan, dated as
of June 20, 2001
10.3(1)   Agreement between American Champion Media & World Channel dated as of December 27, 2000
10.4(1)   Agreement between American Champion Media & Brighter Child Interactive dated as of September 30, 1999
10.5(1)   Agreement between American Champion Media & Prestige Toys Corp dated as of October 13, 1999
10.6(2)   Agreement - Sale of Assets between ECapital Group & PeopleNet International dated March 21, 2002
10.7(2)   Agreement - Sale of Assets between PeopleNet Corporation & PeopleNet International dated March 21, 2002
23.1        Consent of Independent Auditors
99.1        Certification pursuant to the Sarbanes-Oxley Act of 2002

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1. Filed as an exhibit to the Company's Form 10-SB/A dated as of December 3,
2001
2. Filed as an exhibit to the Company's Form 8-K dated as of March 21, 2002

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