SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-KSB
(Mark one)
[X] Annual Report Under Section 13 or 15(d) of Securities Exchange Act of 1934

                  For the Fiscal Year ended September 30, 2002

[ ] Transition Report Under section 13 or 15(d) of the Securities Exchange
    Act of 1934

      for the transition period from ______________ to ___________________

                         Commission File Number 0-26839


                                SNAP2 CORPORATION
                 (Name of small business issuer in its charter)


       NEVADA                                             88-0407246
(State of Incorporation)                    (I.R.S. Employer Identification No.)


                    10641 JUSTIN DRIVE, URBANDALE, IOWA 50322
               (Address of Principal Executive Offices) (Zip Code)


                                 (515) 331-0560
              (Registrant's telephone number, including area code)

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

Securities  registered  under Section  12(g) of the Exchange  Act:  Common Stock
$0.001 par value

Check  whether  the issuer  (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. Yes [X] No [ ]

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

State registrant's revenues for its most recent fiscal year: $1,900,939

State the aggregate market value of the voting and non-voting common equity held
by  non-affiliates:  $269,425 as of December 31,2002.  The registrant's stock is
traded on the OTC Electronic  Bulletin  Board and the value of the  registrant's
stock for this  purpose has been based upon the average of the bid and ask price
on December 31,2002.

State the number of shares outstanding of each of the issuer's classes of common
stock at the latest practicable date:

As of December 31, 2002, the  registrant had 26,942,500  shares of common stock,
$.001 par value, issued and outstanding.

Transitional Small Business Disclosure Format (check one): Yes [ ] No [X]
<PAGE>
                      2002 FORM 10-KSB -- TABLE OF CONTENTS

                                                                            Page
                                                                            ----
PART I

         Item 1.  Description of Business......................................1
         Item 2.  Description of Property......................................8
         Item 3.  Legal Proceedings............................................8
         Item 4.  Submission of Matters to a Vote of Security Holders..........8

PART II

         Item 5.  Market for Common Equity and Related Stockholder Matters.....9
         Item 6.  Management's Discussion and Analysis or Plan of Operation...10
         Item 7.  Financial Statements-the required financial statements
                   begin on page F-1 of this document.........................15
         Item 8.  Changes In and Disagreements with Accountants on
                   Accounting and Financial Disclosure........................16

PART III

         Item 9.  Directors, Executive Officers, Promoters and Control
                   Persons; Compliance with Section 16(a) of the
                   Exchange Act...............................................17
         Item 10. Executive Compensation......................................18
         Item 11. Security Ownership of Certain Beneficial Owners and
                   Management.................................................19
         Item 12. Certain Relationships and Related Transactions..............19
         Item 13. Exhibits and Reports on Form 8-K............................20

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CAUTIONARY STATEMENT ON FORWARD-LOOKING STATEMENTS.

Certain  statements  contained  in  this  annual  filing,   including,   without
limitation, statements containing the words "believes", "anticipates", "expects"
and  words  of  similar  import,  constitute  forward-looking  statements.  Such
forward-looking  statements  involve known and unknown risks,  uncertainties and
other factors that may cause the actual results,  performance or achievements of
the Company,  or industry  results,  to be materially  different from any future
results,   performance   or   achievements   expressed   or   implied   by  such
forward-looking statements.

Such factors include, among others, the following:  international,  national and
local general economic and market conditions:  demographic  changes; the ability
of the Company to sustain,  manage or  forecast  its growth;  the ability of the
Company to successfully make and integrate acquisitions;  raw material costs and
availability;  new product  development and  introduction;  existing  government
regulations  and  changes  in,  or  the  failure  to  comply  with,   government
regulations;  adverse publicity;  competition; the loss of significant customers
or suppliers;  fluctuations  and  difficulty in forecasting  operating  results;
changes in business strategy or development  plans;  business  disruptions;  the
ability  to attract  and  retain  qualified  personnel;  the  ability to protect
technology; and other factors referenced in this and previous filings.

Given  these  uncertainties,  readers  of this Form  10-KSB  and  investors  are
cautioned not to place undue reliance on such  forward-looking  statements.  The
Company  disclaims  any  obligation  to update any such  factors or to  publicly
announce the result of any  revisions to any of the  forward-looking  statements
contained herein to reflect future events or developments.

                                     PART I

ITEM 1: DESCRIPTION OF BUSINESS

GENERAL. SNAP2 Corporation (f/k/a White Rock Enterprises,  Ltd.) (the "Company")
is a software  product  developer  and software  service  provider for in-flight
entertainment systems (IFE) for passenger aircraft and interactive set-top boxes
(STB) for  interactive  television.  The Company was  incorporated on October 8,
1998  under  the laws of the  State of  Nevada  originally  for the  purpose  of
developing  and marketing  its only product,  a boot dryer that dries both boots
and shoes for  commercial  and  consumer  use.  Effective  February 28, 2000 the
Company  merged  with  ISES   Corporation   (an  Iowa   corporation   originally
incorporated  on May 14, 1997) ("ISES") with the Company being the survivor.  In
connection  with the merger,  the Company  disposed of its boot dryer product to
the  original  owner.  The  Company's  name was  subsequently  changed  to SNAP2
Corporation pursuant to Articles of Amendment filed July 12, 2000.

The resulting Company's activities to date have consisted of:

     *    Developing  the Airsoft  Travel Kit software  product  which  includes
          destination   information,   language  training,   games  and  airline
          information for IFE systems.

     *    Licensing and installing the Airsoft Travel Kit Games on international
          and domestic airlines with IFE equipped aircraft.

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     *    Providing  interactive   television  set-top  box  manufacturers  with
          professional software design, programming and graphic design services.

     *    Research and  development  strategies to productize  the  intellectual
          property assets of ISES (now the Company) for interactive television.

     *    Contracting   with   interactive   television   suppliers  to  support
          promotional efforts of their related products.

     *    The Company is  registered  with the SEC as SNAP2  Corporation  and is
          traded on the over-the-counter bulletin board: OTCBB:SSNP.

On November 26, 2001 the Company entered into an Amended and  Substituted  Asset
Purchase  Agreement  ("Agreement")  with  Inflight  Digital  Limited,  a company
incorporated  under the laws of England and Wales ("Buyer") which  superceded an
earlier Asset Purchase  Agreement  between the parties dated  September 6, 2001.
Pursuant  to the  Agreement,  the  Company  agreed  to sell to the  Buyer all of
Company's IFE assets.  The IFE assets  include all of the  Company's  rights and
obligations  under its contracts with airline operators for the provision of IFE
products and services,  the Company's  rights and obligations  under license and
distribution agreements relating to its IFE business, Company's files, books and
records  relating to its IFE assets and other  tangible  property  and  physical
assets used by the Company solely in connection  with IFE business.  The Company
also granted Buyer a perpetual,  royalty free,  exclusive  worldwide  license to
use, for IFE business,  only,  the Company's  intangible  properties  and rights
relating to its IFE  business.  Terms of the IFE sale  include a total  purchase
price for the sale and  license  of the IFE  assets of  $300,000  plus (i) fifty
percent (50%) of all revenue received by Buyer from certain  existing  customers
for a period of three (3) years  after the  closing;  (ii)  twenty-five  percent
(25%) of all revenues received by Buyer under certain new business  generated by
Buyer;  (iii) an amount not to exceed  $100,000 of the  existing  contract  with
British  Airways as  assigned to Buyer plus fifty  percent  (50%) of all revenue
received by Buyer from British Airways during the three (3) years after closing;
and (iv) $75,000 upon receipt of the consent from Air France that it will expand
the  number of  aircraft  using the  software  and  fifty  percent  (50%) of the
revenues received from Air France during the three (3) years after closing.  The
transaction  is described in the Company's  Current Report on Amendment No. 1 to
Form 8-K which was filed with the Securities and Exchange Commission on December
10, 2001. In November  2001, the Company  received  $300,000 as a result of this
transaction,  which was  recorded  as a gain on sale.  Additional  amounts to be
received will be recorded as software  license fees.  The Company's fees related
to this  Agreement for the years ended  September 30, 2002 and 2001 were $67,956
and $496,260, respectively. Had the transaction occurred at the beginning of the
years  ended  September  30,  2002 and 2001,  license  fee  revenues  would have
approximated  $50,000  and  $345,000,   respectively.  The  Company's  operating
expenses will not be reduced as a result of this transaction.

The Company  continues  to develop  software and service the STB industry and to
explore emerging  markets for embedded  software  technologies.  The Company has
engaged with companies  creating embedded devices  technologies such as Internet
appliances,  personal  digital  assistants  and  wireless  devices.  The Company
believes that it can target these markets successfully with the technologies and
experience  from  the STB  and IFE  markets  as  well as the  skill  sets it has

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acquired  from its growth of  embedded  software  programmers.  The  Company may
pursue additional product and service opportunities in these markets if adequate
resources exist.

OPERATIONS.  The Company operates from its headquarters  located at 10641 Justin
Drive, Des Moines,  Iowa 50322. The Company was previously  located at 2600 72nd
Street and moved to its expanded  facilities on May 23, 2000 to accommodate  its
growth and development.

PRODUCTS.  Prior to the sale of the IFE assets,  the Company  marketed  software
applications for the IFE and interactive  television markets. Its Airsoft Travel
Kit software targeted IFE systems  manufactured by Rockwell Collins,  Matsushita
Avionics and Sony Trans Com. The Travel Kit is comprised of digital  information
and  entertainment  software  that  airline  passengers  can  access  from video
displays at their  passenger  seats while  traveling.  The  complete  Travel Kit
consists of destination information,  language training and games and customized
airline  information.  The  package  can be sold  as a  complete  package  or as
individual components.  The Company has sold packages of Travel Kit Games to Air
France,  Delta Air Lines,  LanChile,  , Aer Lingus and AOM French airlines.  The
Company has licensed  destination  information and language training from Lonely
Planet  Publishing  based in  Australia.  Airsoft  Travel Kit Games are created,
copyrighted,  owned and licensed by the Company.  The Company has also  licensed
Tetris(R) game content from Blue Planet Software, San Francisco,  California for
use in its In-Flight Tetris(TM) game for in-flight entertainment. The game suite
consists of 18  assorted  board,  card,  arcade,  children's  games and games of
chance. See Note L of the financial  statements for detailed  description of the
sale  of  IFE  assets.  Due to  continued  operating  losses,  the  Company  has
discontinued most of its research and development efforts related to products in
the STB and embedded software industries.

CONSULTING SERVICES.  The Company is staffed with software engineers experienced
in software design and programming for emerging  embedded  computer  systems and
digital graphic artists experienced in graphical user interfaces and display for
consumer  electronic  applications.  The Company has provided  embedded software
services to Microsoft,  Rockwell Collins and IBM for interactive  television and
Internet  appliances.  For IFE,  the Company has  provided  services to Rockwell
Collins and to the airlines that required graphics customization for their Snap2
Travel Kit Games.

The  Company  emphasizes  embedded  software  consulting  services  for  revenue
generation and strategic positioning of developing intellectual property for the
interactive television, Internet appliance and embedded systems markets.

REVENUES.  Through September 30, 2002, the Company's  revenues were derived from
software and engineering  consulting services provided to interactive television
equipment manufacturers and technology providers,  and software license fees and
renewals of its SNAP2 Travel Kit Games for the IFE market.  Consulting  services
are  recognized  using the  invoice  amount  for  labor  hours as  services  are
performed.  Consulting services are typically performed under contracts of up to
six months in duration and are renewable.  Software  license fees are recognized
as revenue upon  contract  signing and  shipment of the software  master copy or
download  of  software  by the  customers  since  the  Company  does  not  incur
significant  additional  support costs.  Software  maintenance  revenue from the
Company's  software  products  are  recognized  ratably  over  the  term  of the
maintenance contract, which is typically one year in duration.

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<PAGE>
The Company  intends to derive the primary portion of its revenue growth through
software  engineering  consulting  services  in the short term as it attempts to
grow the licensing of its products.  The Company intends to continue engaging in
consulting  services  with  original  equipment  manufacturers  (OEMs),  network
operators and technology providers. The service engagements are strategic to the
Company as it provides licensing  opportunities for software product and product
development.

On November 26, 2001 the Company sold its IFE assets;  however, during the three
years after the sale,  the Company will receive a certain  percentage of certain
revenues  collected by the Buyer. The initial $300,000  received was recorded as
gain on the sale and  additional  amounts  will be recorded as software  license
fees.

COST OF REVENUE.  Primarily  consists of payroll  and related  costs  (salaries,
payroll taxes, employee health insurance and employer 401(k) contributions), and
consulting expenses incurred in performing  software and engineering  consulting
services.  The Company  allocates certain research and development costs to cost
of revenue, based on utilization of its employees and consultants.

RESEARCH  AND  DEVELOPMENT.  Primarily  consists of payroll  and  related  costs
(salaries,   payroll  taxes,  employee  health  insurance  and  employer  401(k)
contributions) of engineering and software development staff, as well as amounts
paid to independent development consultants to develop software and graphic arts
owned and utilized by the Company. During the year ended September 30, 2002, the
Company increased the amount of time its product  development staff was utilized
on consulting  engagements.  The Company expects to continue using a significant
amount of its development  staff on consulting  projects during the next year as
it strives to achieve more revenues.  During the year ended  September 30, 2002,
the Company  reduced its  research and  development  and  consulting  staff by 9
employees, in an effort to reduce its operating loss. The affected employees are
not being paid through  September  2002, but the Company  continues to pay their
benefits.  The Company will assess the future  employment of these  employees in
the first quarter of fiscal year 2003 based on business conditions at that time.

SALES AND MARKETING.  Primarily consists of payroll and related costs (salaries,
payroll taxes,  employee health  insurance and employer  401(k)  contributions),
travel,  various marketing efforts,  promotional  materials and public relations
activities.  The Company put its vice president of Sales on unpaid leave,  under
the terms described under Research and Development above, in an effort to reduce
its  operating  loss.  The Company's  CEO has assumed this sales  function.  The
Company  will  assess  the  future  employment  of  this  employee  as  business
conditions  evolve. The Company has a commission plan available to this employee
under which he would  receive up to thirty  percent  (30%) of amounts  collected
from sales made during the period ending September 30, 2002.

GENERAL AND  ADMINISTRATIVE.  Primarily  consists  of payroll and related  costs
(salaries,   payroll  taxes,  employee  health  insurance  and  employer  401(k)
contributions),  legal fees, travel costs, facilities-related expenses, bad debt
expense,  depreciation  and other  administrative  costs.  During the year ended
September 30, 2002,  the Company  reduced the hours of its office  manager in an
effort to reduce its operating loss.

STOCK-BASED  COMPENSATION.  Effective September 30, 2002, the Company's Board of
Directors,  in conjunction with public opinion and new accounting  pronouncement
interpretations  which were  released in December  2002,  elected to expense the

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imputed  compensation  cost related to stock  options  repriced or newly granted
during the fiscal year ended  September 30, 2002. The  calculations  to estimate
the fair value of the options were made using the Black-Scholes pricing model.

RESULTS OF OPERATIONS

Since  inception,  the Company has been  engaged  primarily  in the  business of
developing  and  licensing  software  products  and  providing  engineering  and
software consulting services.  In an effort to increase revenues, as the Company
attempts to reduce its operating losses, the Company has increased the amount of
consulting services it performs and has utilized more of its product development
personnel to perform these  services.  During the year ended September 30, 2002,
the  Company  was not able to meet its  obligations  to make  payroll on several
occasions and has delayed paying vendors.

In an effort to  improve  its  liquidity,  the  Company  sold its IFE  assets on
November 26, 2001. The Company used the initial  proceeds from this  transaction
to become  current on its payroll  obligations  and become  more  current on its
vendor obligations.  Recently,  the Company reduced its workforce by 9 employees
in an effort to reduce its operating loss. See additional comments in "Liquidity
and Capital  Resources".  Accordingly,  historical results of operations are not
indicative  of  and  should  not  be  relied  upon  as an  indicator  of  future
performance.

EMPLOYEES.  At September 30, 2002, the Company had eight (8) full time employees
and one (1) part time  employee.  During the year ended  September  30,  2002the
Company reduced its work force by 9 employees.


RISK FACTORS THAT MAY AFFECT FUTURE  RESULTS OF  OPERATIONS.  In addition to the
other risk factors contained herein and within other filings with the Securities
and Exchange  Commission,  the Company  believes the following  additional  risk
factors should be taken into consideration in evaluating its business:


     *    ADDITIONAL FUNDING NEEDED. The Company needs additional funding to pay
          its  obligations  as they come due,  further  develop or  enhance  its
          products,  and take  advantage of future  opportunities  or respond to
          competitive pressures or unanticipated  requirements.  The Company was
          unable to meet  payroll  for several pay periods and was unable to pay
          vendors until it sold its IFE assets. The Company's original financing
          plans were to obtain funding of  approximately  $2,000,000 as a result
          of the  merger  with ISES  Corporation  on  February  28,  2000.  Only
          $615,650  of  funding  was  received.  As a  result  of  the  unfunded
          commitment,  the Company entered into a $200,000 line of credit with a
          bank, which is guaranteed by a stockholder,  and entered in other debt
          arrangements  of  approximately  $100,000.  Also, the Company  delayed
          paying vendors and employees.

          On November  26, 2001,  the Company sold its IFE assets for  $300,000,
          with additional  amounts due to the Company upon collection of certain
          revenues  by  the  Buyer  of the  IFE  assets.  The  Company  is  also
          investigating  several  other  financing  activities,  but there is no

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          assurance that any funding will be obtained, or if obtained, the terms
          thereof  may not be  favorable.  Also,  the  Company  has  focused its
          efforts on increasing revenues, primarily consulting revenues, but has
          been  unable to  consistently  generate  profitable  operations.  As a
          result of the continued losses, the Company is analyzing its costs and
          expenses and continues to seek and investigate transactions that would
          generate  cash;   however,   there  is  no  assurance  that  any  such
          transaction will be identified or successfully  closed.  If additional
          capital  cannot be obtained on acceptable  terms,  if and when needed,
          the  Company  may  not be able  to  further  develop  or  enhance  its
          products,  take  advantage  of  future  opportunities  or  respond  to
          competitive  pressures  or  unanticipated  requirements,  any of which
          could have a material adverse effect on the Company's business.

     *    THE COMPANY EXPECTS TO INCUR OPERATING AND NET LOSSES. The Company has
          a limited operating  history,  has incurred  significant losses in the
          past year and, at September 30, 2002,  had an  accumulated  deficit of
          $2,642,305 and a  stockholders'  deficit of  $1,184,607.  To date, the
          Company  has  recognized  growing  revenue,  however;  its  ability to
          generate revenue is subject to substantial uncertainty and it has been
          unable to generate profitable operations. The Company expects to incur
          significant sales and marketing,  research and development and general
          and  administrative  expenses.  The  Company  will  need  to  generate
          significant  revenues to achieve  profitability and positive operating
          cash  flows and  there are no  assurances  this  revenue  level can be
          obtained.  Even if profitability and positive  operating cash flow are
          achieved, the Company may not be able to achieve,  sustain or increase
          profitability or positive operating cash flow on a quarterly or annual
          basis.

     *    DEPENDENCE ON KEY  CUSTOMERS.  The  Company's  revenue is dependent on
          consulting  services  performed  for two key  customers.  For the year
          ended September 30, 2002, 84 % of the Company's  revenue was generated
          from  these  two  customers.  Due to the sale of the IFE  assets,  the
          Company will become more dependent on these customers.

     *    THE COMPANY'S  LIMITED  OPERATING  HISTORY AND THE EMERGING MARKET FOR
          INTERACTIVE    TELEVISION   MAKE   ITS   FUTURE   FINANCIAL    RESULTS
          UNPREDICTABLE.  The  Company's  business and  prospects  depend on the
          development  and market  acceptance  of  interactive  television.  The
          Company's  future  revenue  prospects  are subject to a high degree of
          uncertainty.  For the year  ended  September  30,  2002,  the  Company
          derived approximately 16% of its revenues from in-flight entertainment
          software license fees and 84% from interactive  television  consulting
          services. On November 26, 2001 the Company sold its IFE assets. In the
          future,  however,  the Company intends to generate  revenue  initially
          from  consulting   services  and  then  from  software   license  fees
          particularly  in the emerging  market of interactive  television.  The
          market  for  interactive  television  software  is new,  unproven  and
          subject to rapid technology  change.  This market may never develop or
          may  develop  at a slower  rate than  anticipated.  In  addition,  the
          Company's   success  in  marketing   the  Company  as  a  supplier  of
          interactive   television   application   software  is  dependent  upon
          developing  and  maintaining   relationships   with   industry-leading
          computer and consumer electronics manufacturers, network operators and
          Internet content providers. There is already competition in the market
          to  provide  interactive   television  software.   Companies  such  as

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          Liberate,  Intellocity,  Microsoft,  and AOL have established a market
          presence  and have  significantly  greater  financial,  marketing  and
          technical  resources  than the  Company.  These  companies  who  offer
          interactive  television  application  software  may  capture  a larger
          portion of the  market  than the  Company.  Any  failure to  establish
          relationships with interactive television equipment  manufacturers and
          network operators will have a material adverse effect on the Company's
          business and prospects.

     *    THE COMPANY'S BUSINESS IS DEPENDENT UPON THE SUCCESSFUL  DEPLOYMENT OF
          DIGITAL  SET TOP  BOXES FOR  INTERACTIVE  TELEVISION  TARGETED  BY THE
          COMPANY.  The Company's software products target specific  interactive
          television  systems and the  opportunity  to  generate  revenue can be
          directly related to the number and the timing of systems deployed.  It
          is the Company's  intent to pursue and support the most popular system
          platforms  for  these  markets.  If the  targeted  platforms  fail  to
          establish significant and timely deployment in the market it will have
          a material adverse effect on the Company's business and prospects.

     *    THE  COMPANY  FACES  COMPETITION  FROM  COMPANIES  WITH  SIGNIFICANTLY
          GREATER FINANCIAL, MARKETING, AND TECHNICAL RESOURCES. The markets for
          interactive   television  and  in-flight   entertainment  systems  are
          competitive.  Companies that offer competing software applications and
          services for interactive  television  include  Liberate,  Intellocity,
          Microsoft,  AOL and others. These entities each have a larger customer
          base, a greater number of applications, and greater brand recognition,
          market presence and financial,  marketing and  distribution  resources
          than the  Company.  Other  companies  that  offer  competing  software
          applications   and  services  for  in-flight   entertainment   include
          Nintendo,  Infogrames,  Tenzing,  and  Intergame  some of which have a
          larger  customer base, a greater number of  applications,  and greater
          brand  recognition,  market  presence  and  financial,  marketing  and
          distribution resources than the Company. As a result, the Company will
          have  difficulty  increasing  the  number  of  design  "wins"  for its
          products and services.

     *    THE  COMPANY  MAY NOT BE ABLE TO  RESPOND  TO THE RAPID  TECHNOLOGICAL
          CHANGE IN THE  MARKETS IN WHICH IT  COMPETES.  The  Company  currently
          participates in markets which are subject to:

          *    rapid technology change;
          *    frequent product upgrades and enhancements;
          *    changing customer requirements for new products and features; and
          *    multiple, competing and evolving industry standards.

          The introduction of the software  applications  targeting  interactive
          television and in-flight entertainment containing new technologies and
          the  emergence of new industry  standards  could render the  Company's
          products  less  desirable  or  obsolete.  In  particular,  the Company
          expects that changes in the  operating  system  environment  including
          client and server  middleware  will  require it to rapidly  evolve and
          adapt its products to be competitive.  As a result,  the life cycle of
          each release of the Company's products is difficult to estimate. To be
          competitive, the Company will need to develop and release new products

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          and  upgrades  that  respond  to  technological  changes  or  evolving
          industry standards on a timely and cost-effective  basis. There can be
          no  assurance  that the Company will  successfully  develop and market
          these types of products  and upgrades or that the  Company's  products
          will  achieve  market  acceptance.  If the  Company  fails to  produce
          technologically  competitive  products in a timely and  cost-effective
          manner,   its  business  and  results  of   operations   could  suffer
          materially.

          *    VOLATILITY  OF STOCK  PRICE.  The market  price of the  Company's
               common stock is likely to  fluctuate  in the future.  The Company
               believes that various factors,  including quarterly  fluctuations
               in  results  of  operations,  announcements  of new  products  or
               partners  by  the  Company  or by  its  competitors,  changes  in
               interactive  television markets in general,  or general economic,
               political  and market  conditions  may  significantly  affect the
               market price of its common stock.

ITEM 2: DESCRIPTION OF PROPERTY

MAIN OFFICE

The Company  leases 4,800  square feet of office  space  located at 10641 Justin
Drive,  Urbandale Iowa from Brad Johnson  Investments,  LC,  pursuant to a Lease
dated as of the 13th day of March  2000.  The  lease is for a period of five (5)
years and the base rent  thereunder  for the  year-ended  September  30, 2002 is
approximately  $60,000 per year.  Management  considers its current office space
arrangements to be adequate for its current needs and for its short-term  growth
objectives.

ITEM 3: LEGAL PROCEEDINGS

The Company  currently is not aware of any pending legal proceeding to which the
Company  is a party or to which  any of its  property  is  subject,  other  than
routine litigation that is incidental to its business.  The Company currently is
also not  aware  that any  governmental  authority  is  contemplating  any legal
proceeding against the Company or any of its property.

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

No matters were  submitted  to a vote of  shareholders  of the Company,  through
solicitation  of proxies or otherwise,  during the three months ended  September
30,2002.

                                       8
<PAGE>
                                     PART II

ITEM 5: MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company is  authorized  to issue  50,000,000  shares of its $0.001 par value
common stock and 20,000,000  shares of its $0.001 par value preferred  stock. As
of September 30, 2002, the Company had 26,942,500 issued and outstanding  shares
of common stock.

The  Company's  common  stock is traded  on the OTC  Electronic  Bulletin  Board
sponsored by the National  Association  of Securities  Dealers under the trading
symbol  "SSNP." The Electronic  Bulletin Board is a network of security  dealers
who buy and sell stock.  The dealers are  connected by a computer  network which
provides information on current "bids" and "asks" as well as volume information.

As of  September  30,  2002  the  Company  had  approximately  45  common  stock
shareholders  of record and there has been only a limited  public market for the
Company's common stock.  The following table shows,  for the periods  indicated,
the high and low per share  prices  of  common  stock,  as  reported  on the OTC
Electronic  Bulletin Board. Such prices represent prices between dealers, do not
include retail mark-ups,  mark downs or conversions and may not represent actual
transactions. No information is provided for periods prior to the effective date
of the merger of ISES with and into the  Company,  which  merger  was  effective
February 28, 2000.

     Period Ended                              High                  Low
     ------------                              ----                  ---

     March 31, 2000 (one month)                $5.625               $3.937
     June 30, 2000                             $4.50                $1.875
     September 30, 2000                        $3.875               $0.937
     December 31, 2000                         $1.875               $0.375
     March 31, 2001                            $1.5625              $0.4688
     June 30, 2001                             $1.07                $0.35
     September 30, 2001                        $0.90                $0.40
     December 31, 2001                         $0.49                $0.17
     March 31, 2002                            $0.41                $0.20
     June 30, 2002                             $0.25                $0.09
     September 30, 2002                        $0.08                $0.03

On December  31,  2002,  the  closing bid and ask prices of the common  stock as
reported  on  the  OTC   Electronic   Bulletin   Board  were  $  0.01and  $0.01,
respectively.

The Company has never declared or paid cash  dividends on its capital stock.  It
is  anticipated  that the Company would retain its future  earnings,  if any, to
fund the  operation  and  expansion  of its  business  and  management  does not
anticipate paying any cash dividends in the foreseeable future.

Effective  February 28, 2000, SNAP2  Corporation  (f/k/a White Rock Enterprises,
Ltd.) (the Company) merged with ISES Corporation (ISES), with the Company as the
surviving  corporation.  At the date of the  merger,  the  Company  was a "shell
company" as the Company had no assets or liabilities,  had generated no revenues
since inception and had incurred total expenses of $6,100 since its inception on

                                       9
<PAGE>
October 8, 1998.  The merger  transaction  has been  accounted  for as a reverse
acquisition.  In  such  a  transaction,   the  operating  enterprise  (ISES)  is
determined to be the acquiring enterprise for financial reporting purposes.  The
historical  financial  statements  of  ISES  are  presented  as  the  historical
financial statements of the combined enterprise. The equity of ISES is presented
as the equity of the combined enterprise,  however, the capital stock account of
ISES is  adjusted  to  reflect  the par  value of the  outstanding  stock of the
Company  after  giving  effect to the  number of shares  issued in  merger.  For
periods  prior to the  merger,  the  equity of the  combined  enterprise  is the
historical equity of ISES prior to the merger retroactively  restated to reflect
the number of shares received in the merger.

In connection with the merger of ISES with and into the Company, the Acquisition
Agreement and Plan of Merger  (previously  filed as Exhibit 1.1 to the Company's
Current  Report on Form 8-K filed March 1, 2000)  provided  for the  issuance of
10,000,000  shares of common stock and 10,000  shares of  convertible  preferred
stock for 100% of the  outstanding  shares of ISES.  The  convertible  preferred
stock  automatically  converts to 10,000,000  shares of common stock on February
28, 2002. Also in connection with the merger, an additional  2,200,000 shares of
common  stock were issued to others in exchange  for  locating  investors  and a
commitment to raise  $2,000,000 to fund the Company's  working capital needs and
general corporate purposes. As of September 30, 2002, $615,650 of the $2,000,000
had been  received  and  recorded  as  additional  paid-in  capital.  Management
believes  that it is unlikely  that any  additional  capital will be provided by
those entities,  and is in the process of attempting to recover as many of those
shares as possible.  As of September 30, 2002,  approximately  1,221,000  shares
have  been  surrendered  by  these  entities  in  lieu  of  additional   capital
contributions. During the year ended September 30, 2002, the Company transferred
307,500 of these to a consultant  in lieu of cash  payment.  As of September 30,
2002, the 913,500 remaining shares were cancelled and returned to authorized but
unissued shares.

ITEM 6: MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This Item 6 should be read in conjunction with the discussion included in Item 1
above,  "Description  of Business" and the  financial  statements of the Company
included in Item 7 below.

REVENUES.  The  Company's  revenues  are derived from  software and  engineering
consulting services provided to interactive  television equipment  manufacturers
and technology  providers,  and software  license fees and renewals of its SNAP2
Travel Kit Games for the IFE market.  Consulting  services are recognized  using
the  invoice  amount  for labor  hours as  services  are  performed.  Consulting
services are typically performed under contracts of up to six months in duration
and may be  renewable,  at the option of the  customer.  There are no assurances
these  agreements will be renewed.  The Company's IFE revenues were comprised of
two types:  (i) software  license fees from airlines for Airsoft Travel Kit Game
products  previously  sold; and (ii) OEM initial  product sales to IFE equipment
manufacturers  for SNAP2  Travel Kit Game  products.  Software  license fees are
recognized as revenue upon contract  signing and shipment of the software master
copy or download of software by the  customers  since the company does not incur
significant  additional  support  costs.  Software  maintenance  fees  from  the
Company's  software  products  are  recognized  ratably  over  the  term  of the
maintenance contract, which is typically one year in duration.

The Company  intends to derive the primary  portion of its future revenue growth
through  Company  software  and  engineering  consulting  services.  The Company
intends to continue  engaging in consulting  services  with  original  equipment

                                       10
<PAGE>
manufacturers (OEMs),  network operators and technology  providers.  The service
engagements are strategic to the Company as it provides licensing  opportunities
for software product and product development.

On November 26, 2001 the Company sold its IFE assets;  however, during the three
years after the sale,  the Company will receive a certain  percentage of certain
revenues collected by the Buyer of the IFE Assets.

COST OF REVENUE.  Primarily  consists of payroll  and related  costs  (salaries,
payroll taxes, employee health insurance and employer 401(k) contributions), and
consulting expenses incurred in performing  software and engineering  consulting
services.  The Company  allocates certain research and development costs to cost
of revenue, based on utilization of its employees and consultants.

RESEARCH  AND  DEVELOPMENT.  Primarily  consists of payroll  and  related  costs
(salaries,   payroll  taxes,  employee  health  insurance  and  employer  401(k)
contributions)  of  engineering  and  software  development  staff,  as well as,
amounts paid to independent  development  consultants,  to develop  software and
graphic arts owned and utilized by the Company.  During the year ended September
30, 2002, the Company increased the amount of time its product development staff
was utilized on consulting engagements.  The Company expects to continue using a
significant  amount of its development  staff on consulting  projects during the
next  year  as  it  strives  to  achieve  more  revenues  and  IFE   development
requirements will be reduced due to the sale of the IFE assets.

SALES AND MARKETING.  Primarily consists of payroll and related costs (salaries,
payroll taxes,  employee health  insurance and employer  401(k)  contributions),
travel,  various marketing efforts,  promotional  materials and public relations
activities.  The Company  expects sales and marketing  costs will increase as it
continues to sell consulting  projects and analyzes various product  development
opportunities.

GENERAL AND  ADMINISTRATIVE.  Primarily  consists  of payroll and related  costs
(salaries,   payroll  taxes,  employee  health  insurance  and  employer  401(k)
contributions),  legal fees, travel costs, facilities-related expenses, bad debt
expense,  depreciation and other administrative  costs. The Company expects that
general and  administrative  expense will  decrease in the future as a result of
cost cutting.

STOCK-BASED  COMPENSATION.  Effective September 30, 2002, the Company's Board of
Directors,  in conjunction with public opinion and new accounting  pronouncement
interpretations  which were  released in December  2002,  elected to expense the
imputed  compensation  cost related to stock  options  repriced or newly granted
during the fiscal year ended  September 30, 2002. The  calculations  to estimate
the fair value of the options were made using the Black-Scholes pricing model.

RESULTS OF OPERATIONS

Since  inception,  the Company has been  engaged  primarily  in the  business of
developing  and  licensing  software  products  and  providing  engineering  and
software and software consulting services.  In an effort to increase revenues as
the Company attempts to reduce its operating  losses,  the Company has increased
the amount of  consulting  services it  performs  and has  utilized  more of its
product development  personnel to perform these services.  During the year ended
September  30,  2001 the Company  was not able to meet its  obligations  to make

                                       11
<PAGE>
payroll on several  occasions and has delayed  paying  vendors.  In an effort to
improve its liquidity,  the Company has increased its consulting  activities and
sold its IFE assets on November 26, 2001. The Company used the initial  proceeds
from this  transaction to become current on its payroll  obligations  and become
more current on its vendor  obligations.  See additional  comments in "Liquidity
and Capital  Resources".  Accordingly,  historical results of operations are not
indicative  of  and  should  not  be  relied  upon  as an  indicator  of  future
performance.

YEAR ENDED SEPTEMBER 30, 2002 AND 2001

REVENUES

Total revenues increased 7% to $1,901,000 for the year ended September 30, 2002,
compared to $1,778,000  for the year ended  September 30, 2001. The increase was
related  primarily  to  an  increase  in  software  and  engineering  consulting
services.  Consulting services represented 84% and 69% of revenues for the years
ended September 30, 2002 and 2001, respectively. During the year ended September
30, 2002,  transactions  with Microsoft and Rockwell  accounted for 39% and 45%,
respectively, of the Company's total revenues.

COST OF REVENUE

Cost of revenue increased 58% to $903,000 for the year ended September 30, 2002,
compared to $570,000  for the year ended  September  30,2001.  The  increase was
related to the continued use of research and development personnel on consulting
projects.

RESEARCH AND DEVELOPMENT

Research and  development  expense  decreased69%  to $288,000 for the year ended
September 30, 2002,  compared to $921,000 for the year ended September  30,2001.
The decrease was related to the Company's continued focus on consulting services
and the decrease in the number of employees working on product development.

SALES AND MARKETING

Sales  and  marketing  expense  decreased  75% to  $157,000  for the year  ended
September 30, 2002,  compared to $636,000 for the year ended September  30,2001.
The  decrease  was related to the  reduction  of sales and  marketing  staff and
expenditures  in an effort to  streamline  the Company's  marketing  efforts and
reduce expenses

GENERAL AND ADMINISTRATIVE

General and  administrative  expense increased 4% to $539,000 for the year ended
September 30, 2002,  compared to $518,000 for the year ended September  30,2001.
The  increase  was due to costs and  expenses  needed to support  the  Company's
ongoing operations.

                                       12
<PAGE>
STOCK-BASED COMPENSATION

In May and June 2002,  the Company  transferred,  shares  recovered from venture
capital firms as noted in the  "Liquidity  and Capital  Resources"  section,  an
aggregate  of 307,500  shares of  restricted,  unregistered  common  stock to an
unrelated  entity  providing   various  financial   services.   These  aggregate
transactions  were  valued at $36,415,  which was below the "fair  value" of the
Company's common stock based on the quoted closing price of the Company's common
stock on the date of the respective  transactions.  The differential between the
"fair  value"  (approximately  $0.20 per  share)  and the value of the  services
rendered resulted in a charge to operations of $25,085 for compensation  expense
related to common stock issuances at less than "fair value".

Effective  September 30, 2002, the Company's Board of Directors,  in conjunction
with public opinion and new accounting pronouncement  interpretations which were
released in December  2002,  elected to expense  the imputed  compensation  cost
related to stock options  repriced or newly granted during the fiscal year ended
September 30, 2002. The  calculations  to estimate the fair value of the options
were made using the Black-Scholes pricing model.

INTEREST EXPENSE

Interest expense increased 32% to $44,000 for the year ended September 30, 2002,
compared to $34,000 for the year ended  September 30, 2001. The increase was due
to the increase of the accrued royalty payment.

GAIN ON SALE OF TECHNOLOGY ASSETS

Gain on sale of technology  assets represents the initial $300,000 payment under
the  terms of the  Agreement.  Additional  amounts  received  were  recorded  as
software license fees revenue.

NET LOSS

Net loss  decreased  50% to  $450,000  for the year ended  September  30,  2002,
compared to $901,000  for the year ended  September  30,2001.  The  decrease was
primarily  due to decrease in research and  development  and sales and marketing
expenses.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2002, the Company had cash of $47,000,  accounts  receivable of
$197,000 and current liabilities of $ 666,000. Of the current  liabilities,  the
Company is not paying the line of credit,  current  portion of  long-term  debt,
accrued  commissions (the largest portion of accrued  payroll),  accrued royalty
and accrued  interest  expense.  In order to continue  as a going  concern,  the
Company must continue to defer payment of its current  liabilities  and continue
delaying  payment to vendors.  The Company's  current  monthly  payroll is about
$54,000 per month, after the recent reduction in the workforce.

Since its  inception,  the Company has  experienced  losses from  operations and
negative  cash flows.  At  September  30, 2002,  the Company had an  accumulated
deficit of $2,642,305 and a stockholders' deficit of $1,184,607.  Recently,  the
Company  reduced its workforce from 18 to 9 employees in an effort to reduce its

                                       13
<PAGE>
operating  loss.  The Company will assess its  operations  in September  2002 to
determine if these  employees  will be put back on the payroll or if  additional
layoffs are required.  If business  conditions  warrant  putting these employees
back on the payroll, there are no assurances these employees will be available.

At its inception on February 28, 2000,  (the date of filing of a Certificate  of
Merger  with the  Nevada  Secretary  of State),  the  Company  merged  with ISES
Corporation  with the  Company  as the  surviving  corporation.  The  merger was
arranged for the Company by Investment  Capital  Corporation and Pursuit Capital
LLC,  venture capital firms located in Scottsdale,  Arizona,  in accordance with
understandings  these entities reached with ISES Corporation to raise capital in
private transactions. According to their agreement, these entities were to raise
$2,000,000 to fund the Company's post-merger research and development, marketing
and overall expansion.  Pursuant to and in consideration of this arrangement and
the  identification  of the potential merger as an investment  opportunity,  the
Company issued 2,200,000 shares of its $.001 par value per share common stock to
these entities and/or their designees. During the fiscal quarter ended March 31,
2000, these entities  conducted a private placement on behalf of the Company and
raised $760,000, the proceeds of which have been given to the Company. For these
funds,  the Company  issued an additional  760,000 shares of its $.001 per share
common  stock.  These  entities  are  obligated  to provide the Company  with an
additional  $2,000,000 in equity (without further issuance of equity  securities
by the  Company) of which  $615,650  was received  through  September  30, 2002,
leaving a balance of $1,384,350 to be provided by these  entities.  None of such
shares of common stock was or will be  registered  under the  Securities  Act of
1933, as amended.  Management  believes that it is unlikely that these  entities
will  provide  any  additional  capital to the  Company and is in the process of
attempting  to recover as many of such shares as possible.  As of September  30,
2002,  1,221,000shares  have  been  surrendered  by  those  entities  in lieu of
additional capital  contributions.  During the three months ended June 30, 2002,
the Company  transferred 307,500 of these shares to a consultant in lieu of cash
payment.  As of September 30, 2002, the 913,500  remaining shares were cancelled
and returned to authorized but unissued shares.

As a result of the unfunded commitment, the Company entered into a $200,000 line
of  credit  with  a  bank  on  November  10,  2000,  which  is  guaranteed  by a
stockholder. The Company renewed this line of credit on January 29, 2002 through
February 10, 2003.

On November 26, 2001, the Company entered into an Amended and Substituted  Asset
Purchase Agreement with Inflight Digital Limited,  a company  incorporated under
the laws of England and Wales  ("Buyer") which  superceded a previous  agreement
between the  parties  dated  September  6, 2001.  The  Company  used the initial
proceeds from this transaction to become current on its payroll  obligations and
become more current on its vendor  obligations.  Terms of the IFE sale include a
total purchase price for the sale and license of the IFE assets of $300,000 plus
(i) fifty percent (50%) of all revenue  received by Buyer from certain  existing
customers  for a period of three (3) years after the closing;  (ii)  twenty-five
percent  (25%) of all  revenues  received  by Buyer under  certain new  business
generated  by Buyer;  (iii) an amount  not to exceed  $100,000  of the  existing
contract  with British  Airways as assigned to Buyer plus fifty percent (50%) of
all revenue  received by Buyer from British  Airways  during the three (3) years
after  closing;  and (iv) $75,000 upon receipt of the consent of Air France that
it will expand the number of aircraft using the software and fifty percent (50%)
of the  revenues  received  from Air  France  during  the three (3) years  after
closing.  Air France has  indicated it will  terminate  its contract in favor of
another vendor.  Consequently,  future revenue from this customer,  if any, will
not be significant. British Airways has indicated they would begin installations

                                       14
<PAGE>
of the IFE  products on certain of its  airplanes;  however,  some or all of any
fees  received  from this  contract may be refunded if British  Airways does not
install or de-installs the IFE products.

The  Company  is  investigating   several  other  business   opportunities  with
companies,   but  there  is  no  assurance  any  of  these   opportunities  will
materialize, or if they materialize, that the terms will be favorable. Also, the
Company has focused its efforts on  increasing  revenues,  primarily  consulting
revenues,  in an effort to generate positive cash flow. The Company is dependent
on two (2) key  customers and the related  contracts  with these  customers.  If
these customers do not renew,  there would be an adverse effect on the Company's
operations.  Due to the  continued  losses and the inability to pay its debts as
they come due,  the Company has  recently  adjusted its costs and expenses in an
effort to fund payroll and minimize  overhead.  Also,  the Company  continues to
seek and investigate  potential  transactions  that may generate cash;  however,
there  are no  assurances  that  any such  transactions  will be  identified  or
successfully closed.

Since incorporation, ISES (the Company's predecessor in interest pursuant to the
merger) and the Company after the merger,  have  experienced  various  levels of
losses and negative cash flow from  operations and  notwithstanding  the merger,
expects  to  experience  negative  cash  flows in the  foreseeable  future..  In
addition,  the Company needs to raise additional capital to meet its obligations
and to continue product development  efforts,  and there can be no assurance the
Company will be able to obtain  additional  financing on favorable  terms, if at
all. If additional  capital cannot be obtained on acceptable  terms, if and when
needed,  the Company may not be able to  continue  as a going  concern,  further
develop or enhance its  products,  take  advantage  of future  opportunities  or
respond to competitive  pressures or  unanticipated  requirements,  any of which
could have a material adverse effect on the Company's business.

ITEM 7: FINANCIAL STATEMENTS

The required financial statements begin on page F-1 of this document.

                                       15
<PAGE>
ITEM 8: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

The  Company  is the  resulting  corporation  of a  merger  between  White  Rock
Enterprises,  Ltd. (the Company,  n/k/a SNAP2 Corporation) and ISES Corporation,
an Iowa corporation which was effective on February 28, 2000. Prior to that time
the Company was a "shell"  corporation  and ISES  Corporation  was an  operating
company.  The  Company  was  the  surviving  corporation  of  the  merger.  ISES
Corporation  (as a  predecessor  to the  Company)  has not had any change in its
accountants during the last three years or any disagreement with its accountants
during that period which are the type required to be disclosed  under this Item.
However,  on December 15, 2000, the Board of Directors of SNAP2 Corporation (the
"Company")  approved the hiring of KPMG LLP (KPMG) as the Company's  independent
accountants  for the audit of the  financial  statements  of the Company for the
year ended September 30, 2000. The Company's  previous  accountant (prior to the
merger) was Barry L. Friedman, P.C., Las Vegas, Nevada, ("Friedman").

The audit report of Friedman on the financial  statements of the Company for the
period ended September 30, 1999 did not contain an adverse opinion or disclaimer
of opinion,  nor was the report  qualified or modified as to uncertainty,  audit
scope,  or  accounting  principles,  except as to an  uncertainty  regarding the
Company's ability to continue as a going concern due to recurring losses and the
absence of sources of revenue.

To the knowledge of management,  during the audit of the period ended  September
30, 1999, there were no disagreements  with Friedman on any matter of accounting
principles or practices,  financial statement  disclosure,  or auditing scope or
procedure.

The change in the Company's accountants was previously reported on the Company's
Current Report on Form 8-K filed with the SEC on December 20, 2000.

On  December  4,  2002,  the  Board of  Directors  approved  the  hiring of S.W.
Hatfield,  CPA as the  Company's  independent  accountants  for the audit of the
financial  statements of the Company for the year ended  September 30, 2002. The
Company's previous accountant as discussed above was KPMG.

The audit  reports of KPMG on the  financial  statements  of the Company for the
periods  ended  September  30,  2001 and  September  30, 2000 did not contain an
adverse  opinion or  disclaimer  of  opinion,  nor was the report  qualified  or
modified as to uncertainty,  audit scope, or accounting principles, except as to
an  uncertainty  regarding the Company's  ability to continue as a going concern
due to recurring losses and the absence of sources of revenue.

To the knowledge of management, during the audits of the periods ended September
30, 2001 and September 30, 2000,  there were no  disagreements  with KPMG on any
matter of accounting principles or practices, financial statement disclosure, or
auditing scope or procedure.

The change in the Company's accountants was previously reported on the Company's
Current Report on Form 8-K filed with the SEC on December 13, 2002.

                                       16
<PAGE>
                                    PART III

ITEM 9: DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSON; COMPLIANCE
        WITH SECTION 16(a) OF THE EXCHANGE ACT

DIRECTORS AND OFFICERS.

The Company's directors and executive officers are as follows:

            Name                      Age                   Positions
            ----                      ---                   ---------
     Dean R.("Rick") Grewell III      44             President, CEO and Director
     Stephen Dukes                    48             Director

The terms of each director of the Company will expire in January 2003 or at such
time as their successors shall have been elected and qualified.

Rick Grewell has been the President, CEO and a Director of the Company since the
merger with ISES Corporation.  Prior to merger Mr. Grewell was President and CEO
of ISES Corporation  since September 7, 1996. Prior to that time Mr. Grewell was
employed by Microware  Systems  Corporation,  in Clive,  Iowa  ("Microware") for
approximately 12 years.

Stephen  Dukes has been a Director of the Company since  February 15, 2001.  Mr.
Dukes is a former  Vice-President  of Technology at TCI Technology  Ventures and
Media One.

Steve Johnson,  Anthony Hoffman and Mark Malinak, former employees and directors
of the Company  resigned as directors as well as their  positions in the Company
in May 2002.  Mike Hennel and Sheldon  Ohringer  resigned  as  directors  of the
Company in August 2002.

The number of directors for the Company is currently set at two by action of the
remaining  members of the Board.  The Bylaws  permit the Board of  Directors  to
establish the number of directors at not less than one (1) nor more than fifteen
(15). Each of Company's directors is elected to a one year term and until his or
her successor is elected.  Directors need not be  shareholders of the Company or
residents of any particular jurisdiction.

The officers of the Company are to be elected annually by the board of directors
at its annual  meeting,  and hold office  until the next  annual  meeting of the
board of directors and until their  successors are chosen.  Officers may also be
removed by the board of directors at any time,  with or without cause.  Officers
need not be a director or a shareholder of the Company.

No  executive  officer or  director  of the  Company has been the subject of any
order,  judgment,  or decree of any court of competent  jurisdiction,  or of any
regulatory   agency  enjoining  him  from  acting  as  an  investment   advisor,
underwriter,  broker or dealer in the securities  industry,  or as an affiliated
person,  director or employee of an investment  company,  bank, savings and loan
association,  or insurance company or from engaging in or continuing any conduct
or practice in  connection  with any such  activity  or in  connection  with the
purchase or sale of any  securities  nor has any such person been the subject of

                                       17
<PAGE>
any order of a state  authority  barring or suspending  for more than sixty (60)
days,  the  right of such a person to be  engaged  in such  activities  or to be
associated with such activities.

No  executive  officer or  director of the  Company  has been  convicted  in any
criminal  proceeding  (excluding  traffic  violations)  or is the  subject  of a
criminal proceeding which is currently pending.

No  executive  officer or  director of the Company is the subject of any pending
legal proceedings.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Former directors and officers Steven L. Johnson and Antony Hoffman filed form 3s
on December  14, 2000 to disclose  options  given to them in February  1999 with
respect to an aggregate (as adjusted for stock splits and shares issued pursuant
to the merger) of 1,734,450  shares each of Company common stock currently owned
by Director and  President  Dean R. Grewell  III. Mr.  Grewell's  related Form 4
disclosing these options was also filed on December 14, 2000. These options were
cancelled upon the  resignation  of these persons.  Mr. Grewell has not filed an
update Form 4 to reflect these changes.

Stephen  Dukes was granted  options  pursuant to the Company's  Incentive  Stock
Option Plan as follows:

          Name                  Date of Grant               No. of Shares
          ----                  -------------               -------------
     Stephen Dukes             January 15, 2001                100,000
     Stephen Dukes             March 31, 2002                  100,000

Neither Mr. Dukes nor other  directors,  who have  subsequently  resigned,  have
filed Form 3s with respect to their grants due to the Company's inability to pay
certain of its vendors to prepare and file the necessary forms.

ITEM 10: EXECUTIVE COMPENSATION

                           SUMMARY COMPENSATION TABLE

The following  summary  compensation  table shows the  compensation  paid by the
Company to its chief executive officer and each of its executive  officers whose
salary and bonus for the year ended  September  30,  2002  exceeded  one hundred
thousand dollars ($100,000).

                           SUMMARY COMPENSATION TABLE

           Name and              Fiscal Year
           Position         Ended September 30,        Salary          Bonus
           --------         -------------------        ------          -----
     Dean R. Grewell, III          2002               $129,288          $0
     President and CEO             2001               $124,500          $0
                                   2000               $138,866          $0

                                       18
<PAGE>

DIRECTOR COMPENSATION

The Company at this time only reimburses travel and  communication  expenses for
board  meetings.  The Company  believes in the future outside  directors will be
compensated with money and stock options.  The Company has included directors in
the current Stock Incentive Plan.

ITEM 11: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The  following  table sets forth  information  on the ownership of the Company's
equity securities by each of the Company's  directors and executive officers and
each person  known by the Company to be the  beneficial  owner of more than five
percent (5%) of the Company's voting securities.

                            Security Ownership Table

           Name and Address of                      Number of       Percentage
              Beneficial Owner                      Shares(1)      Ownership(1)
              ----------------                      ---------      ------------
Dean R. Grewell, III
1032 54th, West Des Moines, Iowa 50266           17,015,550(2)(3)   62.46%(2)(3)

Stephen Dukes
206 Amanda Lane, Camano Island, Washington 98282    200,000(3)        .73%(3)

All executive officers and directors
 as Group (2 persons)                            17,215,550(2)(3)   63.19%(2)(3)

----------
(1)  Ownership totals and percentages are computed based on the actual number of
     shares of Company common stock issued and outstanding (26,942,500) plus the
     exercise by the  executive  officers  and  directors of options for 300,000
     shares of common stock  pursuant to the  Company's  Incentive  Stock Option
     Plan.  The totals and  percentages  do not include  options  for  1,165,000
     shares of common stock  granted to  non-executive  employees of the Company
     under the  Company's  Incentive  Stock Option  Plan,  880,000 of which were
     exercisable at September  30,2002.  The totals and percentages also include
     options granted by Mr. Grewell.

(2)  Assumes  exercise of all options granted by Mr. Grewell,  1,734,450  shares
     total,  all of which,  subject  to  vesting  requirements  are  exercisable
     immediately.

(3)  Assumes exercise of outstanding options.

Other than Alex Resh,  an  employee  of the  Company  who has  options  from Mr.
Grewell with respect to 1,734,450 shares of common stock (6.37%) of the Company,
if  exercised  management  of the  Company  is not aware of any person or entity
beneficially  owning in  excess of five  percent  (5%) of the  Company's  common
stock.

ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

With the  exception  of (i) a loan to the  Company  from  Dean R.  Grewell,  Jr.
(father of Dean R. Grewell III) and (ii) payments for services  rendered by ISES
Canada,  as  described  in Note J and  Note P,  respectively,  to the  Company's
audited financial  statements included in Item 7 above, the Company has not been
a party to any transaction  during the last two years, or proposed  transaction,
of the type required to be disclosed under this Item. The  transactions to which

                                       19
<PAGE>
this Item applies are transactions involving the Company and in which any of the
following  types of  persons  had or is to have a direct  or  indirect  material
interest:

     *    any director or officer of the Company,

     *    any nominee for election as a director of the Company,

     *    any beneficial owner of more than 5% of the Company's common stock, or

     *    any member of the immediate family of any person referred to above.

ITEM 13:  EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

     The following are the exhibits to this annual report.

       Exhibit No.                      Description of Exhibit
       -----------                      ----------------------

          2        Amended and Restated Asset Purchase  Agreement dated November
                   26, 2001 by and among Company and ISES Canada (a wholly-owned
                   subsidiary  of  Company),  as Sellers  and  Inflight  Digital
                   Entertainment Ltd. as Buyer (Incorporated by reference to the
                   Company's  Form 8-K/A filed on December 10, 2001 with respect
                   to an event which occurred November 26, 2001)
          3.1      Articles  of  Incorporation,   as  amended  (Incorporated  by
                   reference to the  Company's  10-KSB for the fiscal year ended
                   September 30, 2000)
          3.2      Bylaws,   as  amended   (Incorporated  by  reference  to  the
                   Company's  10-KSB for the fiscal  year  ended  September  30,
                   2000)
          10.4     Investment Capital  Corporation - Letter agreement  regarding
                   Merger of White Rock  Enterprises,  Ltd. and ISES Corporation
                   (Incorporated  by reference to the  Company's  10-QSB for the
                   period ended March 31, 2000)
          10.5     Investment Capital  Corporation - Memo regarding proposed new
                   capital structure of White Rock Enterprises,  Ltd. reflecting
                   the merger (Incorporated by reference to the Company's 10-QSB
                   for the period ended March 31, 2000)
          10.8     License  and  Distribution  Agreement  dated  October 1, 1999
                   pursuant to which ISES Corporation appoints Licensee Rockwell
                   Collins,  Inc.  and End  User  Air  France  (Incorporated  by
                   reference to the Company's  10-QSB for the period ended March
                   31, 2000)
          10.12    First  Amendment  to  SNAP2  Corporation  Stock  Option  Plan
                   (Amending Stock Option Plan previously filed as Exhibit 10.12
                   to the Company's 10-QSB for the period ended June 30, 2000)
          10.21    Master Consulting  Agreement  effective as of August 1, 2001,
                   as  amended  effective  as of August 1, 2001,  together  with
                   related Work Plans  between SNAP2  Corporation  and Microsoft
                   Corporation  (Incorporated  by  reference  to  the  Company's
                   10-KSB for the fiscal year ended September 30, 2001)
          10.23    Support  Services  Agreement  No.  4500601442  with  Rockwell
                   Collins  dated  November  2,  2001,   together  with  related
                   Statement of Work (Incorporated by reference to the Company's
                   10-QSB for the period ended December 31, 2001)

                                       20
<PAGE>
          10.24    Support  Services  Agreement  No.  4500601445  with  Rockwell
                   Collins,  dated  November  7,  2001,  together  with  related
                   Statement of Work (Incorporated by reference to the Company's
                   10-QSB for the period ended December 31, 2001)
          10.25    Support  Services  Agreement  No.  4500549310  with  Rockwell
                   Collins  dated  December  6,  2001,   together  with  related
                   Statement of Work (Incorporated by reference to the Company's
                   10-QSB for the period ended December 31, 2001)
          10.26    Support  Services  Agreement  No.  4500667599  with  Rockwell
                   Collins  dated  February  14,  2002,  together  with  related
                   Statement  of  Work.   (Incorporated   by  reference  to  the
                   Company's 10-QSB for the period ended March 31, 2002)
          *99      Certification of Financial Information
----------
     * Filed herewith

(b) Reports on Form 8-K

On December 13, 2002 the Company filed a Current Report on Form 8-K with respect
to its decision on December 4, 2002 to replace its existing independent auditors
KPMG, LLC and to utilize the services of S.W.  Hatfield,  CPA, Dallas,  Texas as
its independent auditors for fiscal year-ended September 30, 2002.

ITEM 14:  CONTROLS AND PROCEDURES

As required by Rule 13a-15 under the Exchange  Act,  within the 90 days prior to
the filing date of this report,  the Company  carried out an  evaluation  of the
effectiveness of the design and operation of the Company's  disclosure  controls
and  procedures.  This evaluation was carried out under the supervision and with
the  participation  of  the  Company's   management,   including  the  Company's
President,  Chief Executive Officer and Chief Financial Officer. Based upon that
evaluation, the Company's President, Chief Executive Officer and Chief Financial
Officer  concluded  that the Company's  disclosure  controls and  procedures are
effective.  There have been no  significant  changes in the  Company's  internal
controls or in other factors, which could significantly affect internal controls
subsequent to the date the Company carried out its evaluation.

Disclosure  controls and procedures are controls and other  procedures  that are
designed to ensure that information  required to be disclosed in Company reports
filed or submitted under the Exchange Act is recorded, processed, summarized and
reported,  within the time  periods  specified  in the  Securities  and Exchange
Commission's  rules and  forms.  Disclosure  controls  and  procedures  include,
without limitation,  controls and procedures designed to ensure that information
required to be  disclosed  in Company  reports  filed under the  Exchange Act is
accumulated  and  communicated  to  management,  including the  Company's  Chief
Executive  Officer and Chief Financial  Officer as appropriate,  to allow timely
decisions regarding required disclosure.

                                       21
<PAGE>
                                   SIGNATURES

In accordance with the  requirements of the Exchange Act, the registrant  caused
this  report to be  signed on its  behalf  by the  undersigned,  thereunto  duly
authorized.

                                             SNAP2 CORPORATION


Date: February 18, 2003                      By: /s/ Dean R. Grewell
                                                 -------------------------------
                                                 Dean R. Grewell, III, President

                                       22
<PAGE>
                                  CERTIFICATION

     I, Dean R. ("Rick") Grewell III, certify that:

     1. I have reviewed this annual report on Form 10-KSB of SNAP2 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. I am responsible for  establishing and maintaining  disclosure  controls
and  procedures  (as  defined in Exchange  Act Rules  13a-14 and 15d-14) for the
registrant and 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 of the Evaluation Date;

     5.  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 functions):

          (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. 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: February 18, 2003.
                                       /s/ Dean R. Grewell
                                       -----------------------------------------
                                       Dean R. ("Rick") Grewell III, President,
                                       President and Chief Executive Officer and
                                       Treasurer and Chief Financial Officer

                                       23
<PAGE>
                                SNAP2 CORPORATION

                                    CONTENTS


                                                                        Page
                                                                        ----

REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS                       F-2

FINANCIAL STATEMENTS

   Balance Sheets
     as of September 30, 2002 and 2001                                   F-3

   Statements of Operations and Comprehensive Income
     for the years ended September 30, 2002 and 2001                     F-5

   Statement of Changes in Shareholders' Equity
     for the years ended September 30, 2002 and 2001                     F-6

   Statements of Cash Flows
     for the years ended September 30, 2002 and 2001                     F-7

   Notes to Financial Statements                                         F-9


                                       F-1
<PAGE>
S. W. HATFIELD, CPA
certified public accountants

Member: Texas Society of Certified Public Accountants
        Press Club of Dallas


               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors and Stockholders
SNAP2 Corporation

We have audited the  accompanying  balance sheet of SNAP2  Corporation (a Nevada
corporation)  as of September 30, 2002 and the related  statements of operations
and comprehensive  loss, changes in shareholders'  equity and cash flows for the
year 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.  The  financial  statements of SNAP2
Corporation  as of and for the year ended  September  30,  2001 were  audited by
other auditors whose report was dated December 14, 2001 and included a paragraph
expressing  substantial doubt about SNAP2 Corporation's ability to continue as a
going concern.

We conducted our audit 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  audit  provides  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 SNAP2  Corporation  as of
September 30, 2002 and the results of its operations and cash flows for the year
then  ended,  in  conformity  with  generally  accepted  accounting   principles
generally accepted in the United States of America.

The  accompanying  financial  statements  have been  prepared  assuming that the
Company  will  continue  as a  going  concern.  As  discussed  in  Note C to the
financial  statements,  the  Company  is  dependent  upon  cash  flows  from the
licensing of technology  products  sold during  Fiscal 2002 and has  significant
debt and other liabilities.  These circumstances  create substantial doubt about
the  Company's  ability to continue as a going concern and are discussed in Note
C. The  financial  statements do not contain any  adjustments  that might result
from the outcome of these uncertainties.


                                         /s/ S. W. HATFIELD, CPA
Dallas, Texas
January 17, 2003


                     Use our past to assist your future (sm)
(secure mailing address)                   (overnight delivery/shipping address)
P. O. Box 820395                               9002 Green Oaks Circle, 2nd Floor
Dallas, Texas  75382-0395                               Dallas, Texas 75243-7212
214-342-9635 (voice)                                          (fax) 214-342-9601
800-244-0639                                                      SWHCPA@aol.com

                                       F-2
<PAGE>
                                SNAP2 CORPORATION
                                 BALANCE SHEETS
                           September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                                    September 30,      September 30,
                                                                        2002               2001
                                                                      ---------          ---------
<S>                                                                   <C>                <C>
                                     ASSETS
CURRENT ASSETS
  Cash on hand and in bank                                            $  47,107          $  10,792
  Accounts receivable - trade, net of allowance
    for doubtful accounts of approximately $-0-, respectively           196,729            143,794
  Prepaid expenses                                                        8,058                 --
                                                                      ---------          ---------

     TOTAL CURRENT ASSETS                                               251,894            154,586
                                                                      ---------          ---------

PROPERTY AND EQUIPMENT - AT COST
  Computer equipment                                                     65,832             62,092
  Office furniture, fixtures and equipment                               47,047             49,952
                                                                      ---------          ---------
                                                                        112,879            112,044
  Accumulated deprecation                                               (77,228)           (56,464)
                                                                      ---------          ---------

     NET PROPERTY AND EQUIPMENT                                          35,651             55,580
                                                                      ---------          ---------

OTHER ASSETS                                                                300                300
                                                                      ---------          ---------

TOTAL ASSETS                                                          $ 287,845          $ 210,466
                                                                      =========          =========
</TABLE>

                                  - CONTINUED -

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

                                       F-3
<PAGE>
                                SNAP2 CORPORATION
                           BALANCE SHEETS - CONTINUED
                           September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                         September 30,        September 30,
                                                             2002                 2001
                                                          -----------          -----------
<S>                                                       <C>                  <C>
                      LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES
  Line of credit payable to a bank                        $   160,000          $   200,000
  Current maturities of long-term debt                        113,000               66,000
  Accounts payable - trade                                     69,014              205,312
  Accrued payroll and related liabilities                     238,752              310,358
  Accrued royalty payable                                      33,000               12,750
  Accrued interest payable                                     21,465               14,209
  Deferred revenues                                            31,031               46,809
                                                          -----------          -----------

      TOTAL CURRENT LIABILITIES                               666,262              855,438
                                                          -----------          -----------

LONG-TERM LIABILITIES
  Long-term Debt, net of current maturities                   111,615              158,615
  Deferred compensation - fair
   value of vested stock options                              694,575                   --
                                                          -----------          -----------

      TOTAL LIABILITIES                                     1,472,452            1,014,053
                                                          -----------          -----------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY
  Preferred stock - $0.001 par value. 20,000,000
   shares authorized -0- and 10,000 shares issued
   and outstanding, respectively                                   --                   10
  Common stock - $0.001 par value. 50,000,000
   shares authorized. 26,942,500 and 17,856,000
   shares issued and outstanding, respectively                 26,943               17,856
  Additional paid-in capital                                1,450,239            1,417,528
  Unearned compensation                                       (19,484)             (46,400)
  Accumulated deficit                                      (2,642,305)          (2,192,581)
                                                          -----------          -----------

      TOTAL SHAREHOLDERS' EQUITY                           (1,184,607)            (803,587)
                                                          -----------          -----------

      TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY          $   287,845          $   210,466
                                                          ===========          ===========
</TABLE>

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

                                       F-4
<PAGE>
                                SNAP2 CORPORATION
                 STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
                     Years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                        Year ended            Year ended
                                                       September 30,         September 30,
                                                           2002                  2001
                                                       ------------          ------------
<S>                                                    <C>                   <C>
REVENUES
  Consulting                                           $  1,598,633          $  1,229,708
  Software license fees                                     220,775               496,260
  Software maintenance and other                             81,531                52,468
                                                       ------------          ------------
      TOTAL REVENUES                                      1,900,939             1,778,436

COSTS OF REVENUE                                            902,952               569,972
                                                       ------------          ------------

GROSS PROFIT                                                997,987             1,208,464
                                                       ------------          ------------
OPERATING EXPENSES
  Research and development expenses                         288,387               921,127
  Sales and marketing costs                                 156,589               636,086
  General and administrative expenses                       539,613               518,430
  Compensation expense related to common
   stock issuances at less than "fair value"                 25,085                    --
  Compensation expense related to fair
   value of granted and repriced stock options              694,575                    --
                                                       ------------          ------------

      TOTAL OPERATING EXPENSES                            1,704,249             2,075,643
                                                       ------------          ------------

LOSS FROM OPERATIONS                                       (706,262)             (867,179)

OTHER INCOME
  Interest expense                                          (44,460)              (33,719)
  Gain on sale of property and equipment                        998                    --
  Gain on sale of technology assets                         300,000                    --
                                                       ------------          ------------
NET INCOME (LOSS) BEFORE PROVISION FOR
 INCOME TAXES                                              (449,724)             (900,898)

PROVISION FOR INCOME TAXES                                       --                    --
                                                       ------------          ------------

NET LOSS                                                   (449,724)             (900,898)

OTHER COMPREHENSIVE INCOME                                       --                    --
                                                       ------------          ------------

COMPREHENSIVE LOSS                                     $   (449,724)         $   (900,898)
                                                       ============          ============
Earnings per share of common stock
 outstanding computed on net income
 (loss), principally from discontinued
 operations - basic and fully diluted                  $      (0.02)         $      (0.05)
                                                       ============          ============
Weighted-average number of shares
 outstanding - basic and fully diluted                   23,378,508            17,856,000
                                                       ============          ============
</TABLE>

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

                                       F-5
<PAGE>
                               SNAP 2 CORPORATION
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
                     Years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                 Convertible
                                               Preferred Stock           Common Stock            Additional
                                              ------------------       --------------------        paid-in
                                              Shares      Amount       Shares        Amount        capital
                                              ------      ------       ------        ------        -------
<S>                                           <C>         <C>       <C>            <C>          <C>
BALANCES AT OCTOBER 1, 2001                    10,000      $ 10      17,856,000     $ 17,856     $ 1,188,858

Capital contribution                               --        --              --           --         188,790
Stock options issued to employees
 at below fair value                               --        --              --           --          39,880
Amortization of unearned compensation              --        --              --           --              --
Net loss for the year                              --        --              --           --              --
                                              -------      ----     -----------     --------     -----------
BALANCES AT SEPTEMBER 30, 2001                 10,000        10      17,856,000       17,856       1,417,528

Mandatory conversion of preferred stock
 in February 2002                             (10,000)      (10)     10,000,000       10,000          (9,990)
Surrender of common stock on unfunded
 capital raising                                   --        --      (1,221,000)      (1,221)          1,221
Issuance of common stock for settlement
 of accounts payable                               --        --         307,500          308          61,192
Amortization of unearned compensation              --        --              --           --              --
Adjustment for effective cancellation
 of stock options issued in prior years
 due to March 2002 repricing and election
 to recognize expense concurrent with the
 effective reissuance of "new" options             --        --              --           --         (19,712)
Net loss for the year                              --        --              --           --              --
                                              -------      ----     -----------     --------     -----------

BALANCES AT SEPTEMBER 30, 2002                     --      $ --      26,942,500     $ 26,943     $ 1,450,239
                                              =======      ====     ===========     ========     ===========

                                                Unearned         Accumulated
                                               compensation       deficit            Total
                                               ------------       -------            -----
BALANCES AT OCTOBER 1, 2001                     $(17,650)       $(1,291,683)     $  (102,609)

Capital contribution                                  --                 --          188,790
Stock options issued to employees
 at below fair value                             (39,880)                --               --
Amortization of unearned compensation             11,130                 --           11,130
Net loss for the year                                 --           (900,898)        (900,898)
                                                --------        -----------      -----------
BALANCES AT SEPTEMBER 30, 2001                   (46,400)        (2,192,581)        (803,587)

Mandatory conversion of preferred stock
 in February 2002                                     --                 --               --
Surrender of common stock on unfunded
 capital raising                                      --                 --               --
Issuance of common stock for settlement
 of accounts payable                                  --                 --           61,500
Amortization of unearned compensation              7,204                 --            7,204
Adjustment for effective cancellation
 of stock options issued in prior years
 due to March 2002 repricing and election
 to recognize expense concurrent with the
 effective reissuance of "new" options            19,712                 --               --
Net loss for the year                                 --           (449,724)        (449,724)
                                                --------        -----------      -----------

BALANCES AT SEPTEMBER 30, 2002                  $(19,484)       $(2,642,305)     $(1,184,607)
                                                ========        ===========      ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.

                                       F-6
<PAGE>
                                SNAP2 CORPORATION
                            STATEMENTS OF CASH FLOWS
                     Years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                           Year ended          Year ended
                                                          September 30,       September 30,
                                                              2002               2001
                                                            ---------          ---------
<S>                                                         <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES
  Net Loss                                                  $(449,724)         $(900,898)
  Adjustments to reconcile net income to net cash
   provided by operating activities
      Depreciation                                             22,506             23,789
      Amortization                                              7,204             11,130
      Gain on sale of property and equipment                     (998)                --
      Gain on sale of technology assets                      (300,000)                --
      Compensation expense related to common
       stock issuances at less than "fair value"               25,085                 --
      Compensation expense related to fair
       value of vested stock options                          694,575                 --
      (Increase) Decrease in
        Accounts receivable                                   (52,935)           (16,515)
        Other assets                                           (8,058)             4,460
      Increase (Decrease) in
        Accounts payable and accrued expenses                (143,983)           446,150
        Deferred revenues                                     (15,778)            37,466
                                                            ---------          ---------

NET CASH USED IN OPERATING ACTIVITIES                        (222,106)          (394,418)
                                                            ---------          ---------
CASH FLOWS FROM INVESTING ACTIVITIES
  Cash received from sale of property and equipment             1,500                 --
  Cash received from sale of technology assets                300,000                 --
  Purchases of property and equipment                          (3,079)            (2,536)
                                                            ---------          ---------

NET CASH USED IN INVESTING ACTIVITIES                         298,421             (2,536)
                                                            ---------          ---------
CASH FLOWS FROM FINANCING ACTIVITIES
  Net activity on short-term line of credit                   (40,000)           200,000
  Additional capital contributions                                 --            188,790
                                                            ---------          ---------

NET CASH PROVIDED BY FINANCING ACTIVITIES                     (40,000)           388,790
                                                            ---------          ---------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS               36,315             (8,164)

Cash and cash equivalents at beginning of period               10,792             18,956
                                                            ---------          ---------

Cash and cash equivalents at end of period                  $  47,107          $  10,792
                                                            =========          =========
</TABLE>
                                  - CONTINUED -

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

                                       F-7
<PAGE>
                                SNAP2 CORPORATION
                      STATEMENTS OF CASH FLOWS - CONTINUED
                     Years ended September 30, 2002 and 2001

<TABLE>
<CAPTION>
                                                             Year ended         Year ended
                                                            September 30,      September 30,
                                                                2002              2001
                                                              ---------         ---------
<S>                                                           <C>               <C>
SUPPLEMENTAL DISCLOSURES OF INTEREST AND
INCOME TAXES PAID
  Interest paid during the period                             $  37,204         $  19,510
                                                              =========         =========
  Income taxes paid (refunded)                                $      --         $      --
                                                              =========         =========
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING
AND FINANCING ACTIVITIES
  Conversion of loan from shareholder to common stock         $      --         $  50,000
                                                              =========         =========
  Conversion of preferred stock to common stock               $  10,000         $      --
                                                              =========         =========
  Payment of professional fees with common stock              $  36,415         $      --
                                                              =========         =========
</TABLE>

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

                                       F-8
<PAGE>
                                SNAP2 CORPORATION

                          NOTES TO FINANCIAL STATEMENTS


NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS

SNAP2  Corporation  (Company) was incorporated on October 8, 1998 under the laws
of the  State  of  Nevada  as White  Rock  Enterprises,  Ltd.  The  Company  was
originally formed for the purpose of developing and marketing a sole product,  a
boot dryer that dries both boots and shoes, for commercial and consumer use.

Effective  February  28,  2000,  the  Company  merged with ISES  Corporation  (a
privately-owned Iowa corporation originally incorporated on May 14, 1997) (ISES)
with the  Company  being the legal  surviving  entity.  In  connection  with the
merger, the Company disposed of its boot dryer product.

Concurrent with the merger,  the Company became a software product developer and
software service provider for in-flight  entertainment systems (IFE) principally
for  commercial  passenger  aircraft  and  television  set-top  boxes  (STB) for
interactive  television.  The  Company's  name was changed to SNAP2  Corporation
pursuant to Articles of Amendment filed July 12, 2000.

NOTE B - PREPARATION OF FINANCIAL STATEMENTS

The  Company  follows  the  accrual  basis  of  accounting  in  accordance  with
accounting principles generally accepted in the United States of America and has
a year-end of September 30.

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  the  reported  amounts  of assets and
liabilities  and disclosure of contingent  assets and liabilities at the date of
the  financial  statements  and the  reported  amounts of revenues  and expenses
during the reporting period. Actual results could differ from those estimates.

Management further acknowledges that it is solely responsible for adopting sound
accounting  practices,   establishing  and  maintaining  a  system  of  internal
accounting  control and preventing and detecting  fraud. The Company's system of
internal  accounting  control is designed to assure,  among other items, that 1)
recorded  transactions  are valid; 2) valid  transactions  are recorded;  and 3)
transactions  are  recorded in the proper  period in a timely  manner to produce
financial  statements which present fairly the financial  condition,  results of
operations  and cash  flows of the  Company  for the  respective  periods  being
presented

NOTE C - GOING CONCERN UNCERTAINTY

The Company's  financial  statements  are prepared using  accounting  principles
generally  accepted  in the  United  States of  America  which  contemplate  the
realization  of assets and  liquidation  of  liabilities in the normal course of
business.

On November  26,  2001 the  Company  entered  into an Asset  Purchase  Agreement
(Agreement) with Inflight Digital Limited, a company incorporated under the laws
of England and Wales.  Pursuant to this  Agreement,  the Company  agreed to sell
Inflight  Digital  Limited  all  of  the  Company's  IFE  assets.   Accordingly,
subsequent to November 26, 2001, the Company is principally  dependent upon cash
flows from license fees related to these technology  products sold during Fiscal
2002.

The Company  continues to have significant  debt and other  liabilities and does
not have direct control over it's cash income stream,  does not have significant
cash on hand nor other assets  sufficient to cover its operating  costs to allow
it to continue as a going concern.  The financial  statements do not include any
adjustments  that  might  result  if the  Company  is  unable  to  continue  its
operations.

                                       F-9
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE C - GOING CONCERN UNCERTAINTY - CONTINUED

The Company has entered into and is currently  negotiating  additional contracts
for its  products  and  services.  The  Company  sold  part of its  intellectual
property  and  is  also  exploring  the  licensing  or  additional  sale  of its
intellectual  property and is attempting to raise additional capital.  Also, the
Company has delayed making certain debt payments and other obligations.

The  Company's  continued  existence is  dependent  upon its ability to generate
sufficient cash flows from operations to support its daily operations as well as
provide sufficient resources to retire existing liabilities and obligations on a
timely basis.

The Company may anticipate  future sales and/or offerings of equity  securities.
However,  there  is no  assurance  that  the  Company  will be  able  to  obtain
additional  funding through the sales of additional  equity  securities or, that
such funding, if available, will be obtained on terms favorable to or affordable
by the Company.

If no additional  operating  capital is received  during the next twelve months,
the  Company  will be  forced  to rely on  existing  cash in the  bank  and upon
additional  funds  loaned  by  management  and/or  significant  stockholders  to
preserve the  integrity of the  corporate  entity at this time. In the event the
Company is unable to acquire adequate working capital from appropriate  sources,
including management and/or significant stockholders and/or conventional debt or
equity sources, the Company's ongoing operations would be negatively impacted.

It  is  the  intent  of  management  and  significant  stockholders  to  provide
sufficient  working  capital  necessary to support and preserve the integrity of
the corporate entity.  However, no formal commitments or arrangements to advance
or loan funds to the Company or repay any such advances or loans exist. There is
no legal obligation for either management or significant stockholders to provide
additional future funding.

While the Company is of the opinion that good faith  estimates of the  Company's
ability to secure additional  capital in the future to reach our goals have been
made, there is no guarantee that the Company will receive  sufficient funding to
sustain operations or implement any future business plan steps.

NOTE D - REVERSE ACQUISITION TRANSACTION

Effective  February 28, 2000, the Company merged with ISES  Corporation  (ISES),
with the Company as the surviving  corporation.  At the date of the merger,  the
Company was a "shell company" as the Company had no assets or  liabilities,  had
generated no revenues since inception, and had incurred total expenses of $6,100
since its inception on October 8, 1998.

In connection with the merger,  the Company issued  10,000,000  shares of common
stock  and  10,000  shares  of  convertible  preferred  stock  for  100%  of the
outstanding  shares  of ISES.  The  convertible  preferred  stock  automatically
converted to 10,000,000 shares of common stock on February 28, 2002.

The merger transaction has been accounted for as a reverse acquisition.  In such
a transaction, the surviving operating enterprise, ISES, is determined to be the
acquiring enterprise for financial reporting purposes.  The historical financial
statements of ISES are presented as the historical  financial  statements of the
combined enterprise.

                                      F-10
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE D - REVERSE ACQUISITION TRANSACTION - CONTINUED

The equity of the  Company  is  presented  as the  equity of ISES  retroactively
restated  to reflect  the par value of the issued and  outstanding  stock of the
Company after giving effect to the number of shares  issued and  outstanding  at
the date of the  merger and the shares  issued in the merger  transaction  as if
this had been the equity structure of the Company from it's inception.

NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

1.   CASH AND CASH EQUIVALENTS

     For  Statement of Cash Flows  purposes,  the Company  considers all cash on
     hand  and  in  banks,  including  accounts  in  book  overdraft  positions,
     certificates of deposit and other highly-liquid investments with maturities
     of three months or less, when purchased, to be cash and cash equivalents.

2.   ACCOUNTS RECEIVABLE

     In the normal course of business,  the Company extends  unsecured credit to
     virtually  all of its  customers  which are located  throughout  the World,
     principally in the United States of America, the United Kingdom, France and
     South America. Because of the credit risk involved, management has provided
     an allowance for doubtful  accounts  which  reflects its opinion of amounts
     which  will  eventually  become  uncollectible.  In the  event of  complete
     non-performance, the maximum exposure to the Company is the recorded amount
     of trade  accounts  receivable  shown on the  balance  sheet at the date of
     non-performance.

3.   REVENUE RECOGNITION

     Consulting revenues are derived primarily from custom contract  engineering
     work and training and consulting  services.  Revenues from custom  contract
     engineering work are recognized using the percentage of completion  method.
     Revenues  from  training  and  consulting  services are  recognized  as the
     services are rendered.

     Software  license fees are recognized as revenue upon contract  signing and
     shipment  of the  software  master  copy or  download  of  software  by the
     customer since the Company does not incur  significant  additional  support
     costs.

     Software  maintenance  revenues are recognized ratably over the term of the
     related agreements.

4.   PROPERTY AND EQUIPMENT

     Property and  equipment are recorded at  historical  cost.  These costs are
     depreciated over the estimated useful lives of the individual  assets using
     the straight-line method, generally three to seven years.

     Gains and losses from  disposition of property and equipment are recognized
     as incurred and are included in operations.

                                      F-11
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

5.   STOCK-BASED COMPENSATION

     The Company  accounted  for  stock-based  compensation  using the intrinsic
     value method  prescribed  in  Accounting  Principles  Board Opinion No. 25,
     "Accounting  for  Stock  Issued to  Employees,"  (APB No.  25) and  related
     interpretations, through September 30, 2002. Under APB No. 25, compensation
     cost is measured as the excess,  if any, of the quoted  market price of the
     Company's  stock at the date of grant over the exercise price of the option
     granted. Compensation cost for stock options, if any, is recognized ratably
     over the  vesting  period  for  those  options  granted  to  employees  and
     directors.

     Effective  September  30,  2002,  the  Company's  Board  of  Directors,  in
     conjunction   with  public   opinion  and  new   accounting   pronouncement
     interpretations  which were released in December  2002,  elected to expense
     the imputed  compensation  cost related to stock options  repriced or newly
     granted during Fiscal 2002. The  calculations to estimate the fair value of
     the options were made using the Black-Scholes pricing model.

     Compensation  cost for stock  options  issued other than to  employees  and
     directors, if any, is recognized at the date of grant. The Company provides
     additional   pro  forma   disclosures  as  required  under  SFAS  No.  123,
     "Accounting for Stock-Based Compensation" for periods prior to Fiscal 2002.

6.   RESEARCH AND DEVELOPMENT EXPENSES

     Research and development expenses are charged to operations as incurred.

7.   ADVERTISING COSTS

     The Company does not conduct any direct  response  advertising  activities.
     For non-direct response advertising, the Company charges the costs of these
     efforts  to  operations  at the  first  time  the  related  advertising  is
     published.

8.   INCOME TAXES

     The Company uses the asset and liability  method of  accounting  for income
     taxes. At September 30, 2002 and 2001, respectively, the deferred tax asset
     and deferred  tax  liability  accounts,  as recorded  when  material to the
     financial  statements,  are entirely  the result of temporary  differences.
     Temporary  differences  represent  differences in the recognition of assets
     and  liabilities  for  tax  and  financial  reporting  purposes,  primarily
     accumulated depreciation and amortization,  allowance for doubtful accounts
     and vacation accruals.

     As of September  30, 2002 and 2001,  the deferred tax asset  related to the
     Company's net operating loss  carryforward  is fully  reserved.  Due to the
     provisions  of Internal  Revenue  Code Section 338, the Company may have no
     net operating loss carryforwards available to offset financial statement or
     tax  return  taxable  income in future  periods  as a result of a change in
     control   involving  50  percentage  points  or  more  of  the  issued  and
     outstanding securities of the Company.

                                      F-12
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE E - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

9.   INCOME (LOSS) PER SHARE

     Basic  earnings  (loss) per share is computed  by  dividing  the net income
     (loss) by the weighted-average  number of shares of common stock and common
     stock  equivalents  (primarily  outstanding  options and warrants).  Common
     stock equivalents  represent the dilutive effect of the assumed exercise of
     the  outstanding  stock  options and  warrants,  using the  treasury  stock
     method.  The calculation of fully diluted earnings (loss) per share assumes
     the dilutive effect of the exercise of outstanding  options and warrants at
     either the  beginning  of the  respective  period  presented or the date of
     issuance,   whichever  is  later.  As  of  September  30,  2002  and  2001,
     respectively,  the Company's  outstanding  stock  warrants,  options and/or
     convertible securities are considered antidilutive for purposes of the loss
     per share calculation due to the Company's net operating loss position.

NOTE F - FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amount of cash,  accounts  receivable,  accounts  payable and notes
payable, as applicable,  approximates fair value due to the short term nature of
these items  and/or the current  interest  rates  payable in relation to current
market conditions.

Interest  rate risk is the risk  that the  Company's  earnings  are  subject  to
fluctuations  in interest  rates on either  investments  or on debt and is fully
dependent  upon  the  volatility  of  these  rates.  The  Company  does  not use
derivative instruments to moderate its exposure to interest rate risk, if any.

Financial  risk  is  the  risk  that  the  Company's  earnings  are  subject  to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the  volatility  of  these  rates.  The  company  does  not use  derivative
instruments to moderate its exposure to financial risk, if any.

NOTE G - CONCENTRATIONS OF CREDIT RISK

The Company maintains its cash in accounts with a financial  institution subject
to  insurance  coverage  issued by the  Federal  Deposit  Insurance  Corporation
(FDIC).  Under FDIC rules,  the Company is  entitled  to  aggregate  coverage of
$100,000 per account type per separate  legal entity per financial  institution.
During the years ended  September 30, 2002 and 2001, the Company at various time
had deposits with credit risk  exposures in excess of statutory  FDIC  coverage.
The  Company has  incurred  no losses  during 2002 or 2001 as a result of any of
these unsecured situations.



                (Remainder of this page left blank intentionally)

                                      F-13
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE H - PROPERTY AND EQUIPMENT

Property and equipment consists of the following at September 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                           September 30,    September 30,
                                               2002            2001         Estimated life
                                             ---------       ---------      --------------
<S>                                          <C>             <C>                <C>
Computer equipment                           $  65,832       $  62,092          3 years
Office furniture, fixtures and equipment        47,047          49,952         3-7 years
                                             ---------       ---------
                                               112,879         112,044
Less accumulated depreciation                  (77,228)        (56,464)
                                             ---------       ---------

Net property and equipment                   $  35,651       $  55,580
                                             =========       =========
</TABLE>

Depreciation  expense  for the  years  ended  September  30,  2002  and 2001 was
approximately $22,506 and $23,789, respectively.


NOTE I - LINE OF CREDIT PAYABLE TO A BANK

                                                 September 30,     September 30,
                                                     2002              2001
                                                 -------------     -------------
$200,000  revolving line of credit.  Interest
 at the Bank's  commercial  base lending rate
 (7.25%  at  September  30,  2002).  Interest
 payable monthly.  Principal and accrued, but
 unpaid, interest due at maturity in February
 2003. Collateralized by virtually all of the
 Company's accounts  receivable and equipment
 and    a    guarantee     of    a    Company
 director/officer.                                 $ 160,000         $ 200,000
                                                   =========         =========

NOTE J - LONG-TERM DEBT

                                                 September 30,     September 30,
                                                     2002              2001
                                                 -------------     -------------
$135,000  note  payable  to a related  party.
 Interest  at  9.0%.   Payable  in  quarterly
 installments of approximately  $9,586,  plus
 accrued  interest,  commencing July 1, 2001.
 Unsecured.  The Company has been  delinquent
 in all  scheduled  payments  since  June  1,
 2000.  The  lending  party  has  not  issued
 demand for payment nor  acceleration  of all
 delinquent payments to the Company.               $ 124,615         $ 124,615

                                      F-14
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE J - LONG-TERM DEBT - CONTINUED

                                                 September 30,     September 30,
                                                     2002              2001
                                                 -------------     -------------

$100,000 note payable to the Iowa  Department
 of   Economic   Development.    Payable   in
 semi-annual  royalty payments equal to 1.50%
 of the prior year's gross  revenues  until a
 total repayment  amount of $200,000 has been
 reached. Unsecured.                               $ 100,000         $ 100,000
                                                   ---------         ---------

      Total long-term debt                           224,615           224,615
      Less current maturities                       (119,543)          (66,000)
                                                   ---------         ---------

      Long-term portion                            $ 105,072         $ 158,615
                                                   =========         =========

Future maturities of long-term debt are as follows:

                                                Year ending
                                               September 30           Amount
                                               ------------           ------
                                                   2003              $119,543
                                                   2004                52,343
                                                   2005                14,000
                                                   2006                14,000
                                                   2007                14,000
                                                   2008                10,729
                                                                     --------

                                                   Totals            $224,615
                                                                     ========

NOTE K - RETIREMENT PLAN

The Company  has a 401(k)  plan  (401(k)  Plan) that  covers  substantially  all
full-time employees that meet certain eligibility requirements.  The plan became
effective  November 1, 2000.  Under the terms of the 401(k) Plan,  employees can
contribute up to 10% of maximum  compensation  as prescribed by law to the plan.
Employee  contributions are matched by the Company at 50% up to a maximum of 10%
of eligible  compensation.  For the years ended September 30, 2002 and 2001, the
Company's  matching  portion  of the plan  amounted  to  approximately  $-0- and
$48,085, respectively.

NOTE L - GAIN ON SALE OF INTELLECTUAL PROPERTY

On November 26, 2001 the Company entered into an Amended and  Substituted  Asset
Purchase  Agreement  ("Agreement")  with  Inflight  Digital  Limited,  a company
incorporated  under the laws of England and Wales ("Buyer") which  superceded an
earlier Asset Purchase Agreement between the parties dated September 6, 2001.
Pursuant  to the  Agreement,  the  Company  agreed  to sell to the  Buyer all of
Company's IFE assets.  The IFE assets  include all of the  Company's  rights and
obligations  under its contracts with airline operators for the licensing of IFE
products and services,  the Company's  rights and obligations  under license and
distribution agreements relating to its IFE business, Company's files, books and
records  relating to its IFE assets and other  tangible  property  and  physical
assets used by the Company solely in connection with IFE business.

                                      F-15
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE L - GAIN ON SALE OF INTELLECTUAL PROPERTY - CONTINUED

The Company also granted Buyer a perpetual,  royalty free,  exclusive  worldwide
license for IFE business.

Terms include a total  purchase price for the sale and license of the IFE assets
of $300,000 plus (i) fifty  percent (50%) of all revenue  received by Buyer from
certain  existing  customers  for a period of three (3) years after the closing;
(ii) twenty-five  percent (25%) of all revenues  received by Buyer under certain
new business  generated by Buyer;  (iii) an amount not to exceed $100,000 of the
existing  contract with British  Airways as assigned to Buyer plus fifty percent
(50%) of all revenue received by Buyer from British Airways during the three (3)
years after closing;  and (iv) $75,000 upon receipt of the consent of Air France
that it will expand the number of aircraft  using the software and fifty percent
(50%) of the revenues  received from Air France during the three (3) years after
closing.

In November 2001, the Company received $300,000 as a result of this transaction,
which was recorded as a gain on sale.  Additional amounts to be received will be
recorded as license fees.  The Company's  fees related to this Agreement for the
years ended September 30, 2002 and 2001 were approximately $67,956 and $496,260,
respectively.  Had the transaction  occurred at the beginning of the years ended
September  30,  2002 and 2001,  respectively,  license fee  revenues  would have
approximated $50,000 and $345,000.

It is not anticipated  that future  operating  expenses will not be reduced as a
result of this transaction.

NOTE M - INCOME TAXES

The components of income tax (benefit) expense for the years ended September 30,
2002 and 2001, respectively, are as follows:

                                            Year ended              Year ended
                                           September 30,          September 30,
                                               2002                   2001
                                           -------------          -------------
     Federal:
       Current                                $    --               $    --
       Deferred                                    --                    --
                                              -------               -------
                                                   --                    --
                                              -------               -------
     State:
       Current                                     --                    --
       Deferred                                    --                    --
                                              -------               -------
                                                   --                    --
                                              -------               -------

       Total                                  $    --               $    --
                                              =======               =======

As of September 30, 2002, the Company has a net operating loss  carryforward  of
approximately  $2,100,000 to offset future  taxable  income.  Subject to current
regulations,  this  carryforward  will  begin to expire in 2020.  The amount and
availability  of  the  net  operating  loss  carryforwards  may  be  subject  to
limitations set forth by the Internal  Revenue Code.  Factors such as the number
of shares ultimately issued within a three year look-back period;  whether there
is a deemed more than 50 percent change in control; the applicable long-term tax
exempt bond rate;  continuity of historical  business;  and subsequent income of
the  Company  all  enter  into  the  annual   computation  of  allowable  annual
utilization of the carryforwards.

                                      F-16
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE M - INCOME TAXES - CONTINUED

The Company's  income tax expense  (benefit)  for the years ended  September 30,
2002 and 2001, respectively, are as follows:

<TABLE>
<CAPTION>
                                                            September 30,      September 30,
                                                                2002               2001
                                                              ---------          ---------
<S>                                                           <C>                <C>
Statutory rate applied to income before income taxes          $(152,900)         $(306,300)
Increase (decrease) in income taxes resulting from:
  State income taxes                                                 --                 --
  Other, including reserve for deferred tax asset
   and application of net operating loss carryforward           152,900            306,300
                                                              ---------          ---------

  Income tax expense                                          $      --          $      --
                                                              =========          =========
</TABLE>

Temporary  differences,  consisting primarily of statutory deferrals of expenses
for organizational costs and statutory  differences in the depreciable lives for
property and equipment, between the financial statement carrying amounts and tax
bases of assets and liabilities give rise to deferred tax assets and liabilities
as of September 30, 2002 and 2001, respectively:

                                                September 30,      September 30,
                                                    2002               2001
                                                  ---------          ---------
Deferred tax assets
  Net operating loss carryforwards                $ 714,000          $ 575,000
  Less valuation allowance                         (714,000)          (575,000)
                                                  ---------          ---------

Net Deferred Tax Asset                            $      --          $      --
                                                  =========          =========

During the years ended September 30, 2002 and 2001, the reserve for the deferred
current  tax  asset   increased  by   approximately   $139,000   and   $307,000,
respectively.

NOTE N - COMMON STOCK TRANSACTIONS

In connection  with the February 28, 2000 reverse  acquisition  transaction  the
Company issued an additional 2,200,000 shares of restricted, unregistered common
stock to various  unrelated  parties in exchange  for locating  investors  and a
commitment to raise  $2,000,000 to fund the Company's  working capital needs and
for general corporate purposes.

Through  September  30, 2001,  an aggregate of  approximately  $615,650 had been
received in  consideration  for the  issuance,  in prior  periods,  of 2,000,000
shares of  restricted,  unregistered  common  stock.  As of September  30, 2001,
Management was of the opinion that it was unlikely that any  additional  capital
will be provided  and began the process to recover as many of the  approximately
1,523,460  unearned shares as possible.  In May 2002, the Company was successful
in recovering  1,221,000 of the unearned  shares of common stock.  The effect of
this  action  was to  reallocate  the par  value of the  surrendered  shares  to
additional paid-in capital.

                                      F-17
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE N - COMMON STOCK TRANSACTIONS - CONTINUED

In May and June  2002,  the  Company  issued  an  aggregate  307,500  shares  of
restricted,  unregistered  common stock to an unrelated entity providing various
financial  services.  These aggregate  transactions were valued at approximately
$36,415, which was below the "fair value" of the Company's common stock based on
the  quoted  closing  price  of the  Company's  common  stock on the date of the
respective   transactions.   The   differential   between   the   "fair   value"
(approximately  $0.20 per share) and the value of the services rendered resulted
in a charge to  operations of  approximately  $25,085 for  compensation  expense
related to common stock issuances at less than "fair value".

NOTE O - STOCK OPTIONS

On  February  1, 1999 and March 4, 1998 the  president  of the  Company  granted
options to purchase  7,805,025  and  7,077,412,  respectively,  shares of common
stock of the Company  owned by him,  (adjusted for the February 28, 2000 merger)
to employees of the Company and  consultants  to the Company for $0.10 and $0.05
per share, respectively.  These options were issued at fair value at the date of
grant and were  accounted  for as if such  options  were issued  directly by the
Company. The options vest three years from the date of grant.

The Company's Board of Directors  adopted the Stock Option Plan (Plan) effective
March 15, 2000. Under the Plan,  options may be granted to employees,  officers,
consultants,  directors and advisors to purchase up to an aggregate of 5,000,000
shares of the  Company's  common  stock.  Options  granted under the Plan may be
options that are intended to qualify as incentive stock options and options that
are not  intended to so qualify.  If  incentive  stock  options are granted to a
person possessing more than ten percent of the combined voting power or value of
all classes of stock of the Company,  the exercise  price shall not be less than
110% of the Company's common stock fair market value on the date of grant. Under
the Plan, the term of options may not exceed ten years unless an incentive stock
option  is  granted  to a  stockholder  who owns more  than ten  percent  of the
combined  voting power of the Company,  then the term may not exceed five years.
The Board of Directors  determines the exercise price, vesting period of options
at the date of grant and other conditions as specified in the Plan.

The Company applied the provisions of APB No. 25 and related  interpretations in
accounting for stock options and related compensation expense, if any, under the
Plan for all  periods  prior to  October  1, 2002,  as  retroactively  adjusted.
Compensation  expense of  approximately  $7,204 and $11,130 was  recognized  for
stock options issued below fair value to employees to purchase 447,500 shares of
the Company's  common stock during the years ended  September 30, 2002 and 2001,
respectively.  Had the Company  determined  compensation  cost based on the fair
value at the grant  date for stock  options  including  options  granted  by the
Company's  president  under SFAS 123,  the  Company's  net loss and net loss per
share would have been as indicated below:

                                                                   Year ended
                                                                  September 30,
                                                                      2001
                                                                  -------------
Net loss - as reported                                            $  (900,898)
Net loss - pro forma                                              $(1,308,519)
Loss per share, basic and fully diluted - as reported             $     (0.05)
Loss per share, basic and fully diluted - pro forma               $     (0.06)

                                      F-18
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE O - STOCK OPTIONS - CONTINUED

Effective  September 30, 2002, the Company's Board of Directors,  in conjunction
with public opinion and new accounting pronouncement  interpretations which were
released in December  2002,  elected to expense  the imputed  compensation  cost
related to stock options repriced or newly granted during Fiscal 2002.

During March 2002,  the Company issued  approximately  1,060,000 new options and
repriced an aggregate  1,512,500  existing  options with exercise prices ranging
between  $0.52 and  $3.60  per share to  approximately  $0.272  per  share.  The
repricing event effected a cancellation of the initial outstanding option and an
equivalent  replacement  grant of equivalent new options.  The overall effect of
the issuance of the new options and the repriced  options were components of the
charge to expense for the imputed compensation costs of these items.

The new options issued as a result of the repricing vest at a rate of 75% on the
first  anniversary  date of the new grant and the  remaining  25% on the  second
anniversary  date of the new grant.  Other newly issued options vest at rates of
either 20% or 25% per year, commencing at the grant date.

The  calculations to estimate the fair value of the options,  in each respective
period,  were made using the  Black-Scholes  pricing model which required making
significant assumptions, which are listed as follows:

Year ended September 30, 2002

Expected life of the option:    The initial life of the corresponding option,
                                either five (5) or ten (10) years
Expected volatility in
 the Company's stock price:     100.0%, which was based on fluctuations of the
                                Company's stock price over the past Fiscal year.
Expected dividends:             Zero (0.00) based on past performance
Anticipated risk free
 interest rate:                 Estimated to be 6.0%.

This calculation resulted in approximately  $694,575 being charged to operations
for the year ended  September 30, 2002 for stock options issued and/or  repriced
during the year.

The fair values of the option grants in Fiscal 2002 were approximately $0.27 per
share.

Year ended September 30, 2001

Expected life of the option:    The initial life of the corresponding option
                                of five (5) years
Expected volatility in
 the Company's stock price:     110.0%, which was based on fluctuations of the
                                Company's stock price over the past Fiscal year.
Expected dividends:             Zero (0.00) based on past performance
Anticipated risk free
 interest rate:                 Estimated to be 6.50%.

The fair  values of the  option  grants in Fiscal  2001 were  $0.41 to $1.24 per
share.

                                      F-19
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE O - STOCK OPTIONS - CONTINUED

The stock option  activity  under the Plan during the years ended  September 30,
2002 and 2001 is summarized as follows:

                            Year ended      Weighted     Year ended     Weighted
                           September 30,    average     September 30,    average
                               2002          price          2001          price
                           -------------    -------     -------------    -------
Beginning balance            1,847,500      $ 1.03         395,000       $ 2.36
Granted                      1,310,000      $ 0.272      1,452,500       $ 0.67
Canceled                    (1,392,500)         --              --           --
                            ----------                  ----------
Ending balance               1,765,000      $ 0.36       1,847,500       $ 1.03
                            ==========                  ==========
Options exercisable
 at year end                   199,500                      79,000
                            ==========                  ==========

At September 30, 2002,  3,235,000  stock options were  available for grant.  The
options  outstanding  under the Plan as of September 30, 2002 have the following
attributes:

<TABLE>
<CAPTION>
Option statistics by price range:  $0.272 to $0.99   $1.00 to $1.99   $2.00 and over
                                   ---------------   --------------   --------------
<S>                                <C>              <C>               <C>
Options outstanding                  1,765,000             --              --
Weighted-average price                $0.272               --              --
Weighted-average remaining life        9.50                --              --
Number exercisable                    199,500              --              --
</TABLE>

On or about September 30, 2002,  concurrent with significant  staff  reductions,
approximately  1,392,500  of the  issued  and  outstanding  stock  options  were
terminated. These terminations are included in the tables above. Pursuant to the
option  terms,  each grant had an  automatic 90 day  exercise  period  following
termination.  None of these options were exercised  during the  post-termination
period.

NOTE P - RELATED PARTY TRANSACTIONS

ISES Canada,  a Canadian  Company with common  ownership  through the  Company's
president,  provided software development and consulting services to the Company
through June 30, 2001.  Fees paid to ISES Canada  totaled  $196,267 for the year
ended September 30, 2001.


                (Remainder of this page left blank intentionally)

                                      F-20
<PAGE>
                                SNAP2 CORPORATION

                    NOTES TO FINANCIAL STATEMENTS - CONTINUED


NOTE Q - OPERATING LEASES

The Company leases an office  facility under an operating  lease.  For the years
ended  September 30, 2002 and 2001, rent expense was  approximately  $57,000 and
$54,000, respectively.

At September  30,  2002,  the  Company's  future  minimum  lease  obligation  is
approximately:

                                                Year ended
                                               September 30,         Amount
                                               -------------         ------
                                                   2003             $ 60,000
                                                   2004               61,000
                                                   2005               39,000
                                                                    --------

                                                  Totals            $160,000
                                                                     =======

NOTE R - SIGNIFICANT CUSTOMERS

For the years ended  September 30, 2002 and 2001, the Company had two customers,
respectively,  who accounted for approximately 84.28% and 73.0 % of total sales.
Included  in  trade  accounts  receivable  at  September  30,  2002 and 2001 was
approximately $94,773 and $100,100 due from these customers, respectively.

                                      F-21