U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                 FORM 10-KSB/A7

              ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                     FOR FISCAL YEAR ENDED OCTOBER 31, 2003.

                                   000-027619
                             Commission File Number


                              IBIZ TECHNOLOGY CORP.
                 ----------------------------------------------
                 (Name of small business issuer in its charter)


          Florida                                                86-0933890
          -------                                                ----------
State or other jurisdiction                                     IRS Employer
      of incorporation                                       Identification No.


    2238 West Lone Cactus Drive, #200, Phoenix, Arizona 85021, (623) 492-9200
         (Address and telephone number of principal executive offices)

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

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

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

Check if 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. [X].

The registrant's  revenues from continuing operations for the year ended October
31, 2003 were $485,382.

As of February 11, 2004, the aggregate  market value of the common stock held by
non-affiliates computed by reference to the average bid and asked prices of such
stock was $65,283,038.72

As of February 11,  2004,  the  registrant  had  2,521,123,225  shares of common
stock, par value $.001 per share, outstanding.

<PAGE>

                                     PART I

Certain  disclosures  in this  Annual  Report  on  Form  10-KSB,  including  the
information  incorporated by reference herein,  include certain  forward-looking
statements  within the meaning of the safe harbor  protections of Section 27A of
the  Securities  Act of 1933,  as amended,  and  Section  21E of the  Securities
Exchange  Act of  1934,  as  amended.  Statements  that  include  words  such as
"believe,"   "expect,"   "should,"  intend,"  "may,"   "anticipate,"   "likely,"
"contingent,"   "could,"  "may,"  or  other  future-oriented   statements,   are
forward-looking statements. Such forward-looking statements include, but are not
limited to, statements regarding our business plans,  strategies and objectives,
and, in  particular,  statements  referring to our  expectations  regarding  our
ability to market and sell PDA accessories,  generate increased market awareness
of, and demand for, our current  products,  realize  profitability  and positive
cash  flow,  and  timely  obtain  required  financing.   These   forward-looking
statements  involve risks and  uncertainties  that could cause actual results to
differ from anticipated results. The forward-looking statements are based on our
current  expectations and what we believe are reasonable  assumptions  given our
knowledge  of  the  markets;  however,  our  actual  performance,   results  and
achievements  could differ  materially  from those  expressed in, or implied by,
these forward-looking  statements.  Factors, within and beyond our control, that
could  cause or  contribute  to such  differences  include,  among  others,  the
following:  those  associated  with  our  marketing  of  a  relatively  new  PDA
accessories  for  consumers in an evolving  marketplace,  consumer  preferences,
perceptions and receptiveness with respect to our PDA accessories,  our critical
capital raising efforts in an uncertain and volatile economical environment, our
ability to maintain existing  relationships with critical customers and vendors,
including related licensing and marketing  arrangements,  our  cash-preservation
and cost-containment  efforts,  our ability to retain key management  personnel,
our relative  inexperience with  advertising,  our competition and the potential
impact of technological  advancements  thereon, the impact of changing economic,
political,  and  geo-political  environments  on our business,  as well as those
factors  discussed in "Item 1 - Our  Business,"  and "Item 6 - Our  Management's
Discussion  and Analysis,"  particularly  the  discussions  under "Our Risks and
Uncertainties,"  and  elsewhere  in this  Form  10-KSB.  Readers  are  urged  to
carefully review and consider the various  disclosures made by us in this report
and those  detailed from time to time in our reports and filings with the United
States  Securities  and Exchange  Commission  that attempt to advise  interested
parties of the risks and factors that are likely to affect our business.

Our fiscal  year ends on October  31.  References  to a fiscal year refer to the
calendar year in which such fiscal year ends.

All  trademarks  and trade names used in this  report are the  property of their
respective owners.


ITEM 1. OUR BUSINESS

                       GENERAL DESCRIPTION OF OUR BUSINESS

iBIZ  Technology  Corp.  (hereinafter,  "iBIZ  Tech," "we," "us," or "our") is a
marketer and distributor of various accessories  primarily intended for use with
Personal Digital  Assistants.  We continue to conduct  substantially  all of our
operations through our wholly-owned subsidiary, iBIZ, Inc. (hereinafter,  "iBIZ,
Inc." or "our subsidiary").

We were  incorporated  in the  State of  Florida  in April  1994,  although  our
operations  have been  headquarted  in the State of Arizona since November 1979.
Since  February  2002,  all of our  operations  have been  conducted from leased
facilities located at 2238 West Lone Cactus,  #200,  Phoenix,  Arizona 85021. We
maintain a corporate website at  www.ibizcorp.com  and an e-commerce  website at
www.ibizpda.com, the content of neither of which is part of this report.


                       OUR RECENT SIGNIFICANT DEVELOPMENTS

Our  Spin-Off of iBIZ,  Inc. - On July 20, 2003,  our Board of  Directors  and a
majority of our  stockholders  approved a proposed  spin-off of iBIZ,  Inc. as a
stand-alone, separately-reporting public company. The proposed spin-off of iBIZ,
Inc. is intended  to  facilitate  a  currently  contemplated,  although  not yet
legally  consummated,  transaction  being  pursued  with  Enterprise  Capital AG
("Enterprise"),  an investment  banking firm  headquartered  in Switzerland,  as
further  described  below.  Prior to any legal  consummation of the contemplated
transaction  with  Enterprise,  all of the then assets and  liabilities of iBIZ,
Inc. would revert back to us. As a result, iBIZ, Inc. would, in effect, become a
legal public shell company. Shortly thereafter, it is contemplated that, through
either an asset purchase or merger,  iBIZ,  Inc. would  principally  acquire two
data input technologies being marketed to us by Enterprise, as further described
below. As a result,  the immediately  subsequent assets and liabilities of iBIZ,
Inc.  would  be  solely  those  acquired  and  assumed,  respectively,  via  our
transaction  with  Enterprise.  Our  proposed  spin-off of iBIZ,  Inc. is merely
intended  to  satisfy a  transaction  prerequisite  of  Enterprise  that the two
subject  technologies be commercialized  by a stand-alone,  separately-reporting
public company.


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<PAGE>

It currently is  contemplated  that the proposed  spin-off of iBIZ, Inc. will be
consummated  via our pro  rata  issuance  of  iBIZ,  Inc.  common  stock  to our
shareholders of record as of September 25, 2003. We currently  estimate that the
ratio of shares to be issued will result in our  issuance of  approximately  2.2
million  non-restricted shares of iBIZ, Inc's. common stock to our shareholders.
The actual  distribution of the iBIZ, Inc. common shares is anticipated to occur
shortly after we receive final  approval from the U.S.  Securities  and Exchange
Commission ("SEC") of our related Form 10 Registration Statement.

The  first  subject  technology  utilizes  a  laser  to  project  a  traditional
full-sized keyboard onto any flat surface ("Virtual Laser Keyboard").  As a user
types onto the laser  projected  virtual  keyboard,  the  battery-powered  laser
emitting device,  which  approximates  the size of a cigarette  lighter standing
on-end,  analyzes  what is being  typed by the  coordinates  of the  user's  key
strokes and transmits such data via infrared signals to a PDA or other mobile or
hand-held computing and/or  communication  device. The second subject technology
transmits  a user's  hand-writing  in high  resolution  to a PDA or  stationary,
mobile or hand-held computing device ("E-Pen"). Enterprise has represented to us
that it  currently  holds  exclusive  worldwide  technology,  manufacturing  and
marketing  licenses to the Virtual Laser Keyboard and E-Pen  technologies  which
were  granted to them by the  developers,  VKB,  Inc.  and  InMotion  E-Pen LTD,
respectively,  with whom we have no existing  business  relationships  or direct
knowledge.  Enterprise has  additionally  represented to us that the licenses it
holds  will be fully  transferable  or  assignable  to  iBIZ,  Inc.  within  the
contemplated  parameters of any  consummated  transaction.  Enterprise  has also
furnished us with  fully-operational  working  prototypes  of the Virtual  Laser
Keyboard and E-Pen,  our  subsequent  evaluations  of which have been  extremely
favorable  from a  commercialization  point of  view.  If the  transaction  with
Enterprise is consummated,  it is contemplated that Enterprise would procure and
oversee all related  manufacturing  with iBIZ,  Inc.  providing  all  subsequent
marketing and support.

It currently is  contemplated  that in exchange  for  transferring  or assigning
these two  technologies  to iBIZ, Inc. that Enterprise will receive 11.2 million
shares of iBIZ,  Inc.'s common stock.  As a result,  we currently  estimate that
immediately after any consummated transaction Enterprise would own approximately
83.3% of iBIZ, Inc.'s  outstanding common shares. As a result of its controlling
ownership  position in iBIZ,  Inc.,  Enterprise would be deemed the acquirer for
accounting purposes with its historical  financial  statements becoming those of
iBIZ, Inc. Immediately after any consummated transaction with Enterprise,  it is
contemplated  that  Kenneth W.  Schilling,  our  Chairman,  President  and Chief
Executive Officer,  and Mark Perkins, our Executive  Vice-President,  will serve
iBIZ, Inc. in corresponding capacities, with the possible exception of Chairman.
Assuming a full-time schedule,  Mssrs.  Schilling and Perkins are anticipated to
commit approximately 70% of their time to us and 30% of their time to iBIZ, Inc.
However,  as a result  of its  controlling  ownership  position  in iBIZ,  Inc.,
Enterprise  would be able to at any time replace  Mssrs.  Schilling and Perkins,
and,  as a  result,  there  can  be no  assurance  that  they  would  not do so.
Additionally,  it currently is contemplated  that we and iBIZ, Inc. will shortly
after the  consummation of any transaction  with Enterprise enter into two joint
marketing  agreements.  Under the first such  contemplated  agreement,  we would
authorize iBIZ, Inc. to market its current  products  outside of North and South
America in exchange for royalties. Under the second such contemplated agreement,
iBIZ,  Inc. would authorize us to market its products in North and South America
in exchange for royalties.  In  contemplation  of the transaction  between iBIZ,
Inc.  and  Enterprise  being  consummated,  we have begun to accept  non-binding
customer orders on the behalf of iBIZ, Inc.

Despite  the  foregoing,  it must be  noted  that the  contemplated  transaction
between iBIZ, Inc. and Enterprise  remains in the negotiation  stage and subject
to a number of uncertainties.  As a result,  there can be no assurance that such
transaction will ultimately be consummated, or if consummated, that the ultimate
form and terms of the transaction  will be as currently  contemplated.  Should a
transaction  with  Enterprise not be consummated,  we may elect,  absent another
suitable  transaction with another party, not to distribute the common shares of
iBIZ, Inc. to our  shareholders,  which would result in iBIZ,  Inc.  remaining a
consolidated wholly-owned subsidiary of ours.

Our  Acquisition  of  Synosphere - On January 20,  2004,  we acquired all of the
outstanding  membership  interests in Synosphere,  LLC  ("Synosphere"),  a Texas
limited  liability company pursuing the development of certain handheld computer
technologies,  in exchange for 30.0 million  shares of our common stock.  As the
technological  feasibility  of each of the acquired  technologies  had yet to be
fully  established  as of the  acquisition  date,  the  aggregate  $1.2  million
purchase price,  based on the then prevailing  market price of our common stock,
will  be  immediately  reflected  within  our  results  of  operations  for  our
forthcoming fiscal 2004 first quarter ending January 31, 2004.


                         OUR CURRENT PRINCIPAL PRODUCTS

Our current  line of  products  principally  consists of over eighty  individual
accessories for a wide array of PDAs. These  accessories range in complexity and
price from simple  connector  cables with  suggested  retail prices  starting at
$9.99 at the low end to our multi-faceted  XELA Keyboard with a suggested retail
price of $69.99 at the high end. However,  during the fiscal years ended October
31,  2003 and  2002,  as  reported  herein,  our  product  sales  revenues  were
substantially attributable to the following principal products:

DATA INPUT DEVICES:

     o    Our  Keysync  Keyboard - We  introduced  our  Keysync  Keyboard to the
          consumer  marketplace  in  November  1998  as a more  practicable  and


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<PAGE>

          user-friendly  alternative to the traditional PDA stylus for inputting
          significant  amounts  of data.  Our  Keysync  Keyboard's  accompanying
          CD-ROM-based  custom software  drivers,  which are loadable into a PDA
          via synchronization with a personal computer,  make it compatible with
          a wide array of PDAs utilizing Windows or PALM (TM) operating systems.
          Our  Keysync   Keyboard   resembles  a  smaller-scale   version  of  a
          conventional  computer  keyboard  and easily  connects to a PDA either
          directly  through  a serial  cable or  indirectly  through  the  PDA's
          synchronization  cradle. Its durable,  lightweight  (approximately ten
          ounces) and  compact  design  (approximately  10.5" long x 4.5" wide x
          1.25" high) and independent  power source (i.e.,  three AAA batteries,
          which are  included)  make it  suitable  for use both in a  stationary
          workstation  setting  and in a  temporary  mobile  work  setting.  Our
          Keysync Keyboard has a suggested retail price of $69.00 and a one-year
          parts and labor warranty,  which includes unlimited  technical support
          via our toll-free telephone number and websites.

     o    Our XELA  Keyboard - We  introduced  our XELA Keyboard to the consumer
          marketplace   in  March  2003  as   another   more   practicable   and
          user-friendly  alternative to the traditional PDA stylus for inputting
          significant   amounts  of  data.  Our  XELA  Keyboard's   accompanying
          CD-ROM-based  custom software  drivers,  which are loadable into a PDA
          via synchronization with a personal computer,  make it compatible with
          a wide array of PDAs  utilizing the PALM (TM)  operating  system.  Its
          unique design,  which incorporates a pivoting,  flip-stand PDA docking
          station  residing  slightly  above and to the rear of a  smaller-scale
          version  of a  conventional  computer  keyboard,  enables  a  user  to
          directly  and  securely  affix  their PDA and to perform  conventional
          two-handed typing in cramped spaces such as on an airplane's fold-down
          tray. Alternatively,  a user can perform one-handed inputting of quick
          notes  and  e-mails  while  standing  in a  crowded  subway  car.  Its
          designated  short-cut  and  command  keys  further  facilitate  speedy
          navigation  and data  entry by the  user.  As its  integrated  docking
          station allows for full  synchronization  and recharging of an affixed
          PDA,  use  of the  PDA's  synchronization  cradle  is  eliminated.  No
          batteries  or cables  are  required  as it obtains  its  modest  power
          requirements  directly from the affixed PDA's power source. By folding
          over its flip-stand,  docking  station and outer keyboard  wings,  our
          XELA Keyboard encapsulates the affixed PDA within a protective casing,
          which  along with its  lightweight  (approximately  four  ounces)  and
          compact  design  (approximately  5.0" long x 3.25" wide x 1.0"  high),
          allows the mobile PDA user to safely and  conveniently  transport both
          their PDA and our keyboard in a pocket,  purse or briefcase.  Our XELA
          Keyboard has a suggested  retail price of $69.00 and a one-year  parts
          and labor warranty, which includes unlimited technical support via our
          toll-free telephone number and websites.

POWER DEVICES:

     o    Our Travel Kits - We  introduced  our first Travel Kit to the consumer
          marketplace in March 2002. We currently offer fifteen such Travel Kits
          to accommodate a wide array of PDAs.  Each of our Travel Kits includes
          an AC charger,  a 12-volt automobile  adapter/charger,  a USB charging
          cable, and a  synchronization  cable. Our Travel Kits have a suggested
          retail  price of  $39.99  and  include  a  one-year  parts  and  labor
          warranty, which includes unlimited technical support via our toll-free
          telephone number and websites.


ENTERTAINMENT DEVICES:

     o    Our  pocketRADIO  - We  introduced  our  pocketRADIO  to the  consumer
          marketplace in October 2002. Our  pocketRADIO is a FM Stereo card that
          allows a PDA user to listen to FM Stereo while simultaneously  running
          other programs.  It is available in CF (Compact Flash ) and SD (Secure
          Digital)  formats for PDAs  operating  Windows or PALM (TM)  operating
          systems,  respectively.  Our pocket RADIO has a AutoScan feature which
          allows a PDA user to quickly  locate  available  FM stations  within a
          particular  geographic  area  and may be  programmed  to  store  up to
          eighteen FM Station locations for instant recall.  Each pocketRADIO is
          accompanied by a pair of stereo headphones and is equipped with a jack
          allowing for its connection to external speakers.  Its automatic power
          management  feature provides for low power  consumption  while its "z"
          button  feature  enables  a user to  turn-off  the  PDA's  screen  and
          backlight so as to further  conserve  power.  Our  pocketRADIO  have a
          suggested  retail  price of  $49.99  and a  one-year  parts  and labor
          warranty, which includes unlimited technical support via our toll-free
          telephone number and websites.


With the  exception  of our XELA  Keyboard  to which we have  certain  exclusive
proprietary  rights  (see  "Item 1. Our  Business  - Our  Product  Licenses  and
Procurement"),  the balance of our products,  principal and  otherwise,  are not
covered by any exclusive  proprietary rights. While we have no current knowledge
of any of our  principal  products  being  marketed  directly  by our vendors or
indirectly by others, there can be no assurance as to the prospective absence of
significant competition.  See "Item 6 - Our Management's Discussion and Analysis
- Our Risk Factors."


                         OUR CURRENT PRINCIPAL SERVICES

With the  exception of the  aforementioned  warranty-related  technical  support
services,  the only other  services  we  performed  during  the  fiscal  periods
reported  herein were pursuant to  maintenance  agreements  associated  with our
technical servicing and support of computer terminals and printers for financial


                                       3
<PAGE>

institutions,  which  business  we no  longer  actively  market or  pursue.  Our
maintenance  service revenues,  which constituted 6.5% of our total consolidated
revenues  for the fiscal year ended  October 31, 2003,  will likely  continue to
decrease in future fiscal years.


                  OUR CURRENT PRODUCT LICENSES AND PROCUREMENT

We continue to procure our  principal  products  through  various  licensing and
manufacturing  arrangements  with  entities  located  in  Taiwan,  the  People's
Republic of China Asia,  and the United  States.  The details of each  principal
product procurement arrangement is set forth below:

     o    Our  Keysync  Keyboard  - We procure  our  Keysync  Keyboard  on an as
          needed,  individual  purchase  order basis from  Datacomp  Electronics
          Corporation,  a full-service  design,  engineering  and  manufacturing
          entity that  specializes in keyboard and data input devices,  which is
          located in Taiwan.

     o    Our XELA  Keyboard - We procure our XELA  Keyboard  from ttools LLC, a
          design  and  engineering  entity  which is  located  in Rhode  Island,
          pursuant to a July 2002 agreement  granting us tooling,  manufacturing
          capabilities,  and patent, trademark and worldwide marketing rights on
          a perpetual basis. The terms of the agreement  required the payment of
          $250,000,  which we have paid,  and a  subsequent  two dollar per unit
          sold  royalty for the initial one million  units sold,  with a minimum
          royalty of $10,000  per  calendar  quarter.  As a result of lower than
          anticipated  unit sales to date, we currently are in discussions  with
          ttools LLC to amend this  agreement with our primary  objective  being
          the reduction of the minimum royalty obligation.  Our XELA Keyboard is
          engineered and manufactured on our behalf, on an as needed, individual
          purchase  order  basis,  pursuant  to the  manufacturing  capabilities
          provision of our agreement  with ttools LLC, by Catronics (a member of
          the CEIEC  Group),  a  contract  manufacturer  which is located in the
          People's Republic of China. For accounting purposes,  we allocated the
          aforementioned  $250,000 payment to the acquired assets,  based on our
          estimates  of  their  respective  fair  values  as of  the  July  2002
          acquisition date, as follows:  intellectual property rights - $200,000
          and molds - $50,000.  As of the  acquisition  date, we assigned  these
          acquired  assets  estimated  useful lives of three  years,  over which
          periods  they  will  be   subsequently   amortized  and   depreciated,
          respectively.  Subsequently,  during our fiscal  2003  fourth  quarter
          ended October 31, 2003,  we recognized a 50%, or $125,000,  impairment
          of the intellectual property rights and molds due to a then downwardly
          revised  estimate  of the  anticipated  cash flows to be derived  from
          future sales of our XELA Keyboard.

     o    Our Travel Kits - We procure our Travel Kits, as well as certain other
          currently  insignificant PDA cable and charging accessories,  on an as
          needed,  individual  purchase  order  basis  from Poto  Technology,  a
          full-service  design,  engineering and  manufacturing  entity which is
          located in the People's Republic of China.

     o    Our  pocketRADIOs  - We  procure  our  pocketRADIOs  on an as  needed,
          individual purchase order basis from Prolink Microsystems  Corporation
          ("Prolink"),  a full-service  design,  engineering  and  manufacturing
          entity  which is  located in Taiwan.  Prolink  developed  and owns the
          software  embedded on the FM stereo card. While Prolink had previously
          granted us  exclusive  marketing  rights in the U.S.  through  October
          2003, we now market our pocketRADIOs on a non-exclusive basis.

We receive fully assembled and packaged  products from all of our vendors at our
Phoenix,  Arizona facility,  from which we, in turn,  fulfill and ship orders to
our customers.

In addition to the agreements  described  above,  we remain party to a June 1999
agreement with Microsoft  Corporation  whereby we became an authorized  original
equipment manufacturer ("OEM"). Pursuant to this agreement, we are authorized to
install,  although we have not done so since  December 2001,  genuine  Microsoft
operating systems in certain of our product  applications with full support from
Microsoft.  Additionally,  this agreement entitles us to pre-production versions
of Microsoft products,  thereby enabling us to provide Microsoft with input into
their product design and development.

                      OUR CURRENT RESEARCH AND DEVELOPMENT

Given our currently limited financial and other resources,  we currently perform
no research and development activities.  Historically,  we primarily have relied
upon   acquiring  or  licensing   technologies   and  products  from   unrelated
third-parties.  While we have  periodically  performed limited in-house research
and  development  in the past,  we did not perform  any  in-house  research  and
development during the fiscal years ended October 31, 2003 and 2002, as reported
herein. Our continuing  inability to perform meaningful research and development
activities  directed  at  ultimately  marketing  our  own  patented  proprietary
products  makes  us  highly  susceptible  to  competition.  See  "Item  6 -  Our
Management's Discussion and Analysis - Our Risk Factors."


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<PAGE>

                       OUR CURRENT PATENTS AND TRADEMARKS

We hold exclusive rights to the following patent application  pending before the
U.S. Patents and Trademarks Office. If granted, the requested patent will expire
on the fourteenth anniversary of its grant date.

     o    Xela Keyboard  (Patent Pending  Application No.  PCT/US02/14568  filed
          December 4, 2002) - As filed,  the patent  application  set forth "The
          present   invention  relates  to  accessories  for  handheld  computer
          devices,   such  as  personal  digital  assistants  (PDAs),  and  more
          particularly  relates  to a  protective  case  for  a  PDA  having  an
          integrated keyboard system, and a pass through input/output (I/O) port
          so that the PDA does not have to be removed  from the case for docking
          with its associated cradle."

We hold exclusive  rights to the following  trademarks  registered with the U.S.
Patents and Trademarks Office that will expire on the tenth anniversary of their
respective registration dates:

     o    Keysync (Registration No. 2,470,437 - July 17, 2001)

     o    Xela (Registered No. 2,801,441 - December 30, 2003)

We do not believe  that our  business is  materially  dependent  upon any of the
above patents or trademarks.


                  OUR CURRENT MARKETING, SALES AND DISTRIBUTION

We currently market, sell and distribute our products primarily through national
and  regional  retailers  (e.g.,  CompUSA,  Inc.,  and Circuit  City) , national
distributors/wholesalers  (e.g., Synnex Information Technologies, Inc. and Daisy
Tek   International),    e-commerce   websites   (e.g.,    www.mobileplanet.com,
www.pdamart.com  and  www.outpost.com,  ),  and our own  proprietary  e-commerce
website  (www.ibizpda.com)  To date,  sales through our  proprietary  e-commerce
website,  which is the only commercial venue through which a customer may access
all of our products and which  accounts for our only product  sales to customers
residing outside of North America, have been nominal. As in recent fiscal years,
we continue to  substantially  outsource our field sales  functions to unrelated
commissioned representatives.

For the fiscal year ended  October 31, 2003,  Comp USA and Synnex  accounted for
$168,000 (35%) and $61,000 (13%),  respectively,  of our consolidated net sales.
For the fiscal year ended October 31, 2002, Daisy Tek  International  and Mobile
Planet  accounted  for $75,000  (21%) and $66,000  (18%),  respectively,  of our
consolidated  net sales.  Given our continuing  modest revenue base, the loss of
either Comp USA or Synnex as a  customer,  absent the  obtaining  of one or more
substantially  offsetting new customers,  would likely have  materially  adverse
consequences  on our overall  business,  and, as a result,  on our  consolidated
financial condition, results of operations and cash flows.

Given our limited  financial and other  resources,  our more recent  advertising
activities have been primarily limited to, and are anticipated to continue to be
limited to,  cooperative  advertising  with national and regional  resellers via
their  weekly  sales  flyers and  newspaper  inserts,  advertisements  placed in
targeted monthly periodicals (e.g.,  Handheld Computing  Magazine),  direct mail
flyers and catalogs, and promotions by e-commerce resellers.

Our  continuing  inability  to perform  significant  marketing  and  advertising
activities  limits our ability to grow sales and makes us highly  susceptible to
competition.

                             OUR CURRENT COMPETITION

The PDA accessory marketplace is highly diverse and competitive. With respect to
our products, we compete with various designers, assemblers and manufacturers of
PDA   accessories,   including   those  directly   marketed  by  the  large  PDA
manufacturers.  With respect to  consumers,  we compete with various  single and
multi-channel  (i.e.,  bricks-and-mortar,  catalog and e-commerce)  retailers as
well as with the  direct  sales  forces  of the  large  PDA  manufacturers.  The
majority of our competitors enjoy the advantages of greater financial, marketing
and technological resources than us.

The PDA and PDA accessory  industries are  characterized by rapid  technological
changes in the underlying hardware and software,  evolving consumer  preferences
and  demands,  and the frequent  introduction  of new and  innovative  products.
Competitive  factors would include,  among possible others,  product quality and
reliability,  price to performance characteristics,  technological and marketing
capabilities, and corporate reputation.

The  intense  nature of the  competition  in our  industry  subjects  us to many
competitive disadvantages and risks. For example, many major resellers currently
exclude  consideration  of our products  due to our limited size and  resources.
Additionally,  our current revenue levels cannot support  significant  marketing
and advertising activities which, in turn, makes it difficult for us to increase
the brand recognition and consumer awareness necessary to drive sales.


                                       5
<PAGE>

We  currently  believe that our primary  competitive  strength is the unique and
space-saving characteristics of our products. However, as only our XELA Keyboard
currently  is  protected  in the U.S. to some degree by a patent  pending and we
procure the vast majority of our products from  overseas  vendors,  our products
are  highly  susceptible  to  being  marketed  by  others  and to  imitation  or
duplication designs.

Given the aforementioned risks and uncertainties, there can be no assurance that
we will be able to effectively compete in the future.


                                  OUR EMPLOYEES

We currently employ five individuals on a full-time basis, including a president
and chief executive officer,  an executive vice president,  a product manager, a
network  administrator,  and a technical support technician.  Our accounting and
financial  functions  currently are primarily  outsourced to a local  accounting
firm. Our field sales functions currently are primarily  outsourced to unrelated
commissioned representatives.

To  date,  we have  not  experienced  any  employee-related  work  stoppages  or
slowdowns.  Currently, none of our employees are represented by a labor union or
are subject to a collective bargaining agreement.  We currently believe that our
employee relations are good.


ITEM 2. OUR PROPERTY

Since February 1, 2002, we have been leasing 4,343 square feet at 2238 West Lone
Cactus,  #200,  Phoenix,  Arizona  85201,  which  premises  encompass all of our
in-house  corporate  functions,  including  administration,  marketing,  network
administration,   customer   service,   technical   support,   warehousing   and
distribution.  Our lease has an original term of three years with monthly rental
payments  that  escalate  over the lease term from $2,172 to $4,343.  We believe
that our current  facilities will remain adequate for the foreseeable future and
that  additional  facilities  are readily  available in the  immediate  vicinity
should such become necessary


ITEM 3. OUR LEGAL PROCEEDINGS.

We remain liable to the U.S.  Internal Revenue Service ("IRS") for approximately
$65,000 in unpaid payroll taxes, and subsequently assessed interest, for certain
periods  through the first quarter of 1999. We have continued to accrue for this
liability in our consolidated financial statements.  It is our intention to seek
a reduced  settlement of this liability with the IRS if and when we have surplus
working capital allowing us to timely honor any such settlement.

In  response  to a personal  lawsuit  initiated  by Kenneth  W.  Schilling,  our
Chairman,  Chief Executive Officer and President,  against Douglas A. Dragoo and
Elizabeth W. Dragoo ("Dragoos")  asserting breach of contract in connection with
a commercial  office building jointly owned by Mr. Schilling and the Dragoos and
in which we were then tenants,  the Dragoos  counterclaimed on August 5, 2003 in
the Superior  Court of the State of Arizona,  County of Maricopa  with a lawsuit
against Mr.  Schilling  and us alleging  breach of  contract,  fraud,  negligent
misrepresentation,  and seeking  compensatory  and  punitive  damages as well as
legal fees. We intend to vigorously  contest the counterclaim and do not believe
that we will incur any material liability in connection therewith.

Kenneth W.  Schilling,  our Chairman,  Chief  Executive  Officer and  President,
remains the  subject to a Cease and Desist  Order from the U.S.  Securities  and
Exchange  Commission  ("SEC").  The cease and desist order constituted part of a
negotiated  settlement  between  Mr.  Schilling  and the SEC that  was  formally
entered  into on February  28, 2001  pursuant  to which Mr.  Schilling,  without
admitting or denying the SEC's  allegations  against him, agreed to the entry of
an Order enjoining him from violating  Section 10(b) of the Securities  Exchange
Act of 1934, as amended,  and Rule 10-b5  thereunder,  and ordering him to pay a
civil  penalty  of  $20,000.  In a related  action,  we, as a  company,  without
admitting or denying any of the SEC's findings,  consented to a cease-and-desist
order  enjoining  us from  committing  or causing  any  violation  or any future
violations of Section 10(b) of the Securities  Exchange Act of 1934, as amended,
and Rule  10-b5  thereunder.  The  underlying  SEC  Complaint  alleged  that Mr.
Schilling  provided  false  financial  projections  to a  purported  analyst for
research  reports  recommending  the purchase of our stock.  The Complaint  also
stated that from February 1999 through June 1999, Mr. Schilling placed seventeen
press releases on our corporate website which contained direct hyperlinks to the
analyst  reports and, as late as February 2000, we maintained  press releases on
our corporate  website which referenced and contained  hyperlinks to the analyst
reports.  The SEC further alleged that in a February 19, 1999 press release,  we
characterized  the analyst as  "independent"  even  though we,  through our then
investor  relations  firm,  had agreed to pay the analyst  200,000 shares of our
common stock for the report.  The SEC found that Mr.  Schilling had reviewed and
approved  the press  releases  posted  on our  corporate  website.  The SEC also
alleged  that the false  financial  projections  which  appeared on the Internet
fueled a rise in both the price and the trading volume of our common stock


                                       6
<PAGE>

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

On July 20, 2003, our Board of Directors unanimously approved, and a majority of
our  stockholders  subsequently  approved,  via a written  consent  in lieu of a
special meeting, the spin-off of iBIZ, Inc., our wholly-owned subsidiary through
which a  substantial  majority of our current  operations  are  conducted,  as a
stand-alone,  separately-reporting public company. The spin-off of iBIZ, Inc. is
intended  to  facilitate  a  currently  contemplated,  although  not yet legally
consummated,  transaction being pursued with Enterprise Capital AG. See "Item 1.
Our Business - Recent Developments."


                                       7
<PAGE>

                                     PART II


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

                          MARKET FOR OUR COMMON SHARES

Our common stock  currently  is traded on the  Over-The-Counter  Bulletin  Board
("OTC-BB")  under the symbol "IBZT." Prior to September 30, 2003,  OTC-BB symbol
was "IBIZ." The  following  table sets forth the high and low sales  prices,  as
quoted by the OTC-BB,  for our common stock for each quarter during our two most
recent  fiscal  years  ended  October  31,  2003.   These   quotations   reflect
inter-dealers prices,  without retail mark-ups,  mark-downs or commissions,  and
may not represent actual transactions.

                 Fiscal Quarter Ended         High         Low
           --------------------------- --------------- ----------------
                 January 31, 2002             0.015        0.004
                   April 30, 2002             0.014        0.005
                    July 31, 2002             0.007        0.0015
                 October 31, 2002             0.006        0.0001
                 January 31, 2003             0.035        0.00381
                   April 30, 2003             0.005        0.0119
                    July 31, 2003             0.065        0.00313
                 October 31, 2003             0.0058       0.003
                 January 31, 2004             0.0618       0.003
           --------------------------- --------------- ----------------

* All  prices  have been  retroactively  adjusted  to reflect a 1 for 10 reverse
  stock split of our common stock on September 30, 2002.


We currently  estimate that there are  approximately  7,142 holders of record of
our common stock.  Given our continuing  need to retain any earnings to fund our
operations and desired growth, we have not declared or paid, nor do we currently
anticipate  declaring or paying for the foreseeable future, any dividends on our
common stock.  Additionally,  certain of our outstanding  convertible debentures
and stock purchase warrants  currently  prohibit us from declaring or paying any
dividends.


                   OUR RECENT SALES OF UNREGISTERED SECURITIES

The following  issuances and grants of unregistered  securities by us during the
reported period were conducted pursuant to registration  exemptions provided for
by the Securities Act of 1933, as amended.

OUR ISSUANCES OF CONVERTIBLE DEBT AND WARRANTS FOR CASH:

In order to obtain  funding  for our  ongoing  operations,  we entered  into two
separate Securities  Purchase  Agreements with AJW Offshore,  Ltd, AJW Partners,
LLC and AJW Qualified  Partners,  LLC (collectively,  "AJW") on January 31, 2003
and June 12, 2003, respectively, as follows:

     o    January  31,  2003  Agreement  -  Our  issuance  of  (i)  $500,000  in
          convertible  debentures and (ii) warrants  allowing for the subsequent
          purchase of  2,500,000  shares of our common  stock.  We received  the
          related proceeds as follows: $300,000 on January 31, 2003, $100,000 on
          March 20, 2003, and $100,000 on May 9, 2003.

     o    June 12, 2003  Agreement - Our issuance of (i) $150,000 in convertible
          debentures and (ii) warrants  allowing for the subsequent  purchase of
          750,000 shares of our common stock.  We received the related  proceeds
          as follows:  $300,000 on January 31, 2003, $100,000 on March 20, 2003,
          and $100,000 on May 9, 2003.

The  debentures  issued under each of the above  agreements  bear  interest at a
fixed rate of 12% per annum, mature one year from the date of issuance,  and are
convertible,  at AJW's  option,  into shares of our common stock at the lower of
(i) $0.01  per share or (ii) 50% of the  average  of the three  lowest  intraday
trading  prices for our common  stock on a  principal  market for the 20 trading
days preceding the conversion date. The full principal amount of the convertible
debentures is due upon any default, as defined under each respective  agreement.
The issued warrants are exercisable, at AJW's election, for seven years from the
date of issuance at an exercise price of $0.01 per share.


                                       8
<PAGE>

Subsequent to our fiscal year ended  October 31, 2003,  the holders of the above
debentures  elected to convert them into 426,126,165  shares of our common stock
at an average conversion price of $0.0015.

Our GRANTS OF STOCK OPTIONS IN CONSIDERATION OF SERVICES:

We made the following  grants of options to subsequently  purchase shares of our
common stock, for which we utilized the Black-Scholles valuation model:

November  2003 -  Grant  of an  option  to D.  Scott  Elliott  allowing  for his
subsequent  purchase of 200 million of our common shares over the subsequent two
and  one-half  months at an  exercise  price  per share of equal to the  average
market closing price for the three days immediately  prior to any exercise date,
less a 40%  discount..  We granted this option in  consideration  of  consulting
services  directed at assisting  us in  potentially  expanding  into new markets
and/or introducing new products,  which gave rise to our subsequent  acquisition
of Synosphere, as previously discussed. We valued this option at $260,000, which
reflected a negotiated  40% discount from then  prevailing  market price for our
common stock.

December  2003 - Grant  of an  option  to  Jeffrey  Firestone  allowing  for his
subsequent  purchase of 50 million of our common shares over the subsequent five
year  period at an exercise  price of per share of equal to the market  price at
the time of any  exercise,  less a 15%  discount..  We  granted  this  option in
consideration  of legal services  provided in connection  with our evaluation of
potential  international merger and acquisition  candidates,  which gave rise to
our contemplated transaction with Enterprise, as previously discussed. We valued
this option at $60,000,  which  reflected a negotiated  15%  discount  from then
prevailing market price for our common stock.

January 2004 - Grant of an option to Pangea Investments GmbH ("Pangea") allowing
for its  subsequent  purchase  of 100  million  of our  common  shares  over the
subsequent ten year period at an exercise price of $0.015_per  share. We granted
this option in  consideration  of consulting  and  acquisition  services,  which
principally  included,  but were not limited to, the  development  of a business
plan for  potentially  marketing our existing  products in Europe and Israel and
identifying  potential new products and technologies  that could be added to our
existing  product line. In addition,  Pangea would assist in the negotiation and
financing of new products and  technologies we sought to acquire,  including the
two  technologies  that are the  subject of our  contemplated  transaction  with
Enterprise,  as previously discussed. Sam Elimalech, an officer of Enterprise is
also a member of Pangea. We valued this option at $4,450,000,  which reflected a
negotiated 50% discount from then prevailing market price for our common stock.


ISSUANCES OF COMMON STOCK IN  CONSIDERATION  OF SERVICES OR IN  SATISFACTION  OF
OBLIGATIONS:

We made the following  issuances of shares of our common stock in  consideration
of services or in satisfaction of obligations:

During our  fiscal  year ended  October  31,  2003,  we issued an  aggregate  of
253,063,228  shares  of  our  common  stock  to  six  employees  (i.e.,  Kenneth
Schilling, Mark Perkins, Frank Ligammari, Mike Matthews, Martin Hussey and Jesse
Schilling) in lieu of cash salaries aggregating $695,188.

On August 1, 2003, we issued (i)  3,308,823  shares of our common stock to Cliff
Mastricola in  consideration  of financial  services  valued at $33,088 and (ii)
5,000,000  shares of our common  stock to Brian  Faulkner  for  $50,000 in legal
services to be  performed.  These  services  and the common  shares  issued were
negotiated at arms-length  and valued at the then aggregate  market price of the
shares issued.

On August 14,  2003,  we issued  (i)  3,000,000  shares of our  common  stock to
Gregory  Sichenzia in consideration of legal services valued at $30,000 and (ii)
5,000,000  shares of our common  stock to Lavi Arasney in  consideration  of his
identifying of and  introduction  to a number of Israeli  technology  companies,
including  subsequent  negotiations on our behalf with Enterprise Capital AG for
our potential  acquisition of their virtual keyboard and e-pen products,  valued
at $50,000.  These  services and the common  shares  issued were  negotiated  at
arms-length and valued at the then aggregate market price of the shares issued.

The above issuances were deemed to be exempt under Regulation D and Section 4(2)
of the Securities Act of 1933, as amended. We employed no advertising or general
solicitation in connection with these offerings.  These offerings were made to a
limited number of persons, all of whom were our employees, executive officers or
directors,  or our  externally  retained  professionals,  and all transfers were
restricted by us in accordance  with the  requirements  of the Securities Act of
1933,  as  amended.  In  addition  to  representations  received  by us from the
above-referenced   persons   and/or   entities,   we   have   made   independent
determinations  that all of the  above-referenced  persons and/or  entities were
accredited or sophisticated  investors,  and that they were capable of analyzing
the  merits  and  risks of their  respective  investments  in us,  and that they
understood the speculative nature of their respective investments.  Furthermore,
we provided all of the  above-referenced  persons and/or entities with access to
our SEC filings.


                                       9
<PAGE>

ITEM 6. OUR MANAGEMENT'S DISCUSSION AND ANALYSIS

                                  INTRODUCTION

We are a marketer and distributor of various accessories  primarily intended for
use with PDAs. Our current line of products  principally consists of over eighty
individual  accessories  for a wide array of PDAs.  These  accessories  range in
complexity and price from simple  connector  cables with suggested retail prices
starting  at  $9.99 at the low end to our  multi-faceted  XELA  Keyboard  with a
suggested  retail  price of $69.99 at the high end.  However,  during the fiscal
years ended  October 31, 2003 and 2002,  as reported  herein,  our product sales
revenues were  substantially  attributable to the following  principal  products
(See Item 1. Our Business - Our Principal Products for further details):

DATA INPUT DEVICES:

     o    Our  Keysync  Keyboard - We  introduced  our  Keysync  Keyboard to the
          consumer  marketplace  in  November  1998  as a more  practicable  and
          user-friendly  alternative to the traditional PDA stylus for inputting
          significant  amounts of data.  Our  Keysync  Keyboard  has a suggested
          retail price of $69.00.

     o    Our XELA  Keyboard - We  introduced  our XELA Keyboard to the consumer
          marketplace   in  March  2003  as   another   more   practicable   and
          user-friendly  alternative to the traditional PDA stylus for inputting
          significant  amounts of data. Our XELA Keyboard has a suggested retail
          price of $69.00.

POWER DEVICES:

     o    Our Travel Kits - We  introduced  our first Travel Kit to the consumer
          marketplace in March 2002. We currently offer fifteen such Travel Kits
          to accommodate a wide array of PDAs.  Each of our Travel Kits includes
          an AC charger,  a 12-volt automobile  adapter/charger,  a USB charging
          cable, and a  synchronization  cable. Our Travel Kits have a suggested
          retail price of $39.99.


ENTERTAINMENT DEVICES:

     o    Our  pocketRADIO  - We  introduced  our  pocketRADIO  to the  consumer
          marketplace in October 2002. Our  pocketRADIO is a FM Stereo card that
          allows a PDA user to listen to FM Stereo while simultaneously  running
          other  programs.  Our  pocketRADIO  have a suggested  retail  price of
          $49.99.


With the exception of the free technical  support services we provide as part of
the one year parts and labor warranty that accompanies each of our products, the
only other services we performed  during the fiscal periods reported herein were
pursuant to maintenance  agreements  associated with our technical servicing and
support of computer  terminals  and printers for financial  institutions,  which
business  we no  longer  actively  market or  pursue.  Our  maintenance  service
revenues,  which  constituted  6.5% of our total  consolidated  revenues for the
fiscal year ended  October 31, 2003,  will continue to decrease in future fiscal
years.

                       OUR RECENT SIGNIFICANT DEVELOPMENTS

Our  Spin-Off of iBIZ,  Inc. - On July 20, 2003,  our Board of  Directors  and a
majority of our  stockholders  approved a proposed  spin-off of iBIZ,  Inc. as a
stand-alone, separately-reporting public company. The proposed spin-off of iBIZ,
Inc. is intended  to  facilitate  a  currently  contemplated,  although  not yet
legally  consummated,  transaction  being  pursued  with  Enterprise  Capital AG
("Enterprise"),  an investment  banking firm  headquartered  in Switzerland,  as
further  described  below.  Prior to any legal  consummation of the contemplated
transaction  with  Enterprise,  all of the then assets and  liabilities of iBIZ,
Inc. would revert back to us. As a result, iBIZ, Inc. would, in effect, become a
legal public shell company. Shortly thereafter, it is contemplated that, through
either an asset purchase or merger,  iBIZ,  Inc. would  principally  acquire two
data input technologies being marketed to us by Enterprise, as further described
below. As a result,  the immediately  subsequent assets and liabilities of iBIZ,
Inc.  would  be  solely  those  acquired  and  assumed,  respectively,  via  our
transaction  with  Enterprise.  Our  proposed  spin-off of iBIZ,  Inc. is merely
intended  to  satisfy a  transaction  prerequisite  of  Enterprise  that the two
subject  technologies be commercialized  by a stand-alone,  separately-reporting
public company.

It currently is  contemplated  that the proposed  spin-off of iBIZ, Inc. will be
consummated  via our pro  rata  issuance  of  iBIZ,  Inc.  common  stock  to our
shareholders of record as of September 25, 2003.  There will be no reciprocating
consideration  to us. We  currently  estimate  that the ratio will result in our
issuance of  approximately  2.2 million  non-restricted  shares of iBIZ,  Inc's.
common stock to our  shareholders.  The actual  distribution  of the iBIZ,  Inc.
common shares is  anticipated  to occur shortly after we receive final  approval
from the U.S.  Securities and Exchange Commission ("SEC") of our related Form 10
Registration Statement.


                                       10
<PAGE>

The  first  subject  technology  utilizes  a  laser  to  project  a  traditional
full-sized keyboard onto any flat surface ("Virtual Laser Keyboard").  As a user
types onto the laser  projected  virtual  keyboard,  the  battery-powered  laser
emitting device,  which  approximates  the size of a cigarette  lighter standing
on-end,  analyzes  what is being  typed by the  coordinates  of the  user's  key
strokes and transmits such data via infrared signals to a PDA or other mobile or
hand-held computing and/or  communication  device. The second subject technology
transmits  a user's  hand-writing  in high  resolution  to a PDA or  stationary,
mobile or hand-held computing device ("E-Pen"). Enterprise has represented to us
that it  currently  holds  exclusive  worldwide  technology,  manufacturing  and
marketing  licenses to the Virtual Laser Keyboard and E-Pen  technologies  which
were  granted to them by the  developers,  VKB,  Inc.  and  InMotion  E-Pen LTD,
respectively,  with whom we have no existing  business  relationships  or direct
knowledge.  Enterprise has  additionally  represented to us that the licenses it
holds  will be fully  transferable  or  assignable  to  iBIZ,  Inc.  within  the
contemplated  parameters of any  consummated  transaction.  Enterprise  has also
furnished us with  fully-operational  working  prototypes  of the Virtual  Laser
Keyboard and E-Pen,  our  subsequent  evaluations  of which have been  extremely
favorable  from a  commercialization  point of  view.  If the  transaction  with
Enterprise is consummated,  it is contemplated that Enterprise would procure and
oversee all related  manufacturing  with iBIZ,  Inc.  providing  all  subsequent
marketing and support.

It currently is  contemplated  that in exchange  for  transferring  or assigning
these two  technologies  to iBIZ, Inc. that Enterprise will receive 11.2 million
shares of iBIZ,  Inc.'s common stock.  As a result,  we currently  estimate that
immediately after any consummated transaction Enterprise would own approximately
83.3% of iBIZ, Inc.'s  outstanding common shares. As a result of its controlling
ownership  position in iBIZ,  Inc.,  Enterprise would be deemed the acquirer for
accounting purposes with its historical  financial  statements becoming those of
iBIZ, Inc. Immediately after any consummated transaction with Enterprise,  it is
contemplated  that  Kenneth W.  Schilling,  our  Chairman,  President  and Chief
Executive Officer,  and Mark Perkins, our Executive  Vice-President,  will serve
iBIZ, Inc. in corresponding capacities, with the possible exception of Chairman.
Assuming a full-time schedule,  Mssrs.  Schilling and Perkins are anticipated to
commit approximately 70% of their time to us and 30% of their time to iBIZ, Inc.
However,  as a result  of its  controlling  ownership  position  in iBIZ,  Inc.,
Enterprise  would be able to at any time replace  Mssrs.  Schilling and Perkins,
and,  as a  result,  there  can  be no  assurance  that  they  would  not do so.
Additionally,  it currently is contemplated  that we and iBIZ, Inc. will shortly
after the  consummation of any transaction  with Enterprise enter into two joint
marketing  agreements.  Under the first such  contemplated  agreement,  we would
authorize iBIZ, Inc. to market its current  products  outside of North and South
America in exchange for royalties. Under the second such contemplated agreement,
iBIZ,  Inc. would authorize us to market its products in North and South America
in exchange for royalties.  In  contemplation  of the transaction  between iBIZ,
Inc.  and  Enterprise  being  consummated,  we have begun to accept  non-binding
customer orders on the behalf of iBIZ, Inc.

Despite  the  foregoing,  it must be  noted  that the  contemplated  transaction
between iBIZ, Inc. and Enterprise  remains in the negotiation  stage and subject
to a number of uncertainties.  As a result,  there can be no assurance that such
transaction will ultimately be consummated, or if consummated, that the ultimate
form and terms of the transaction  will be as currently  contemplated.  Should a
transaction  with  Enterprise not be consummated,  we may elect,  absent another
suitable  transaction with another party, not to distribute the common shares of
iBIZ, Inc. to our  shareholders,  which would result in iBIZ,  Inc.  remaining a
consolidated wholly-owned subsidiary of ours.

Our  Acquisition  of  Synosphere - On January 20,  2004,  we acquired all of the
outstanding  membership  interests in Synosphere,  LLC  ("Synosphere"),  a Texas
limited  liability company pursuing the development of certain handheld computer
technologies,  in exchange for 30.0 million  shares of our common stock.  As the
technological  feasibility  of each of the acquired  technologies  had yet to be
fully  established  as of the  acquisition  date,  the  aggregate  $1.2  million
purchase price,  based on the then prevailing  market price of our common stock,
will  be  immediately  reflected  within  our  results  of  operations  for  our
forthcoming fiscal 2004 first quarter ending January 31, 2004.

                        OUR CRITICAL ACCOUNTING POLICIES

The  following  discussions  of  our  consolidated  results  of  operations  and
financial  condition,  including our liquidity and capital resources,  are based
upon our consolidated financial statements as included elsewhere in this filing.
The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires us to make certain  estimates and assumptions  that affect the reported
amounts  and  timing  of  revenue  and  expenses,   the  reported   amounts  and
classification  of assets and liabilities,  and disclosure of contingent  assets
and liabilities.  Our actual results have differed,  and will likely continue to
differ, to some extent from our initial estimates and assumptions.  We currently
believe  that the  following  accounting  policies  entail  making  particularly
difficult, subjective or complex judgments of inherently uncertain matters that,
given any  reasonably  possible  variance  therein,  would  make  such  policies
particularly  critical to a materially  accurate  portrayal of our historical or
reasonably foreseeable financial condition or results of operations:

     o    Revenue Recognition for Product Sales and Related Allowances for Sales
          Returns and Rebates.  In accordance with SEC Staff Accounting Bulletin
          No. 101, "Revenue Recognition in Financial Statements," we recognize a
          product sale,  including related shipping and handling income, and the


                                       11
<PAGE>

          cost of the sale,  upon product  shipment  provided  that all material
          risks and rewards of ownership are concurrently transferred from us to
          our customer, collection of the related receivable by us is reasonably
          assured, and we are able to reliably estimate  appropriate  allowances
          for  probable   sales  returns  and  rebates  based  on  our  relevant
          historical  experience  and future  expectations.  We  unconditionally
          accept  product  returns  during the initial thirty days following the
          date of sale. We periodically  offer promotional  rebates of a limited
          duration,  typically one week, on certain product sales,  for which we
          outsource the processing and tracking of related customer submissions.
          The  periodic   provisions  made  by  us  to  establish  and  maintain
          appropriate  allowances  for sales  returns and rebates are charged to
          our  results of  operations  via offsets to our gross  product  sales.
          Actual sales  returns and rebates  realized by us are charged  against
          the related  allowances with any favorable or unfavorable  experience,
          as compared to our preceding estimates,  having a corresponding impact
          on our results of operations.

     o    Accounts  Receivable and Related Allowance for Doubtful  Accounts.  In
          addition to corresponding reductions made for the allowances for sales
          returns  and  rebates,  as  discussed  above,  we  further  reduce our
          consolidated  accounts  receivable  by an  appropriate  allowance  for
          accounts where doubt exists in our opinion,  based on known  specifics
          or the  passage  of time,  as to  their  ultimate  collectability.  We
          routinely  offer our customers  payment terms that range from 30 to 60
          days.  We do not access  interest  on, nor do we require any  securing
          collateral  of, past due customer  balances.  The periodic  provisions
          made by us to establish  and  maintain an  appropriate  allowance  for
          doubtful  accounts  are  charged  to our  results  of  operations  via
          increases to our selling, general and administrative expenses.  Actual
          collection experience realized by us on previously designated doubtful
          accounts,  including  final  determinations  of  uncollectability,  is
          charged against the allowance for doubtful accounts with any favorable
          or  unfavorable  experience,  as compared to our preceding  estimates,
          having a corresponding impact on our results of operations.

     o    Inventories.  Our  consolidated  inventories,  which consist solely of
          finished  products  available  for  sale,  are  stated at the lower of
          average cost or market,  reduced by an appropriate allowance estimated
          by  us  for  probable   obsolescence.   We  record  an  allowance  for
          obsolescence   based  on  our   historical   experience   and   future
          expectations.  The periodic  provisions  made by us to  establish  and
          maintain an appropriate  allowance for obsolescence are charged to our
          results of operations via increases to our cost of goods sold.  Actual
          disposition   experience  realized  by  us  on  previously  designated
          obsolete  inventory is charged against the allowance for  obsolescence
          with any  favorable  or  unfavorable  experience,  as  compared to our
          preceding estimates,  having a corresponding impact our its results of
          operations.

     o    Impairment of Long-Lived Assets. We evaluate,  on at least a quarterly
          basis,  each of our long-lived  assets for impairment by comparing our
          then  estimate of its related  future cash flows,  on an  undiscounted
          basis,  to its net book value.  If impairment is indicated,  we reduce
          the net book value of the asset to an amount  equal to our estimate of
          related future cash flows, on an appropriately  discounted basis, with
          a corresponding impairment charge to our results of operations.

     o    Convertible Debt Securities.  We have  periodically  issued debentures
          that have non-detachable conversion features. In those instances where
          the  stated  conversion  price  reflects  a  discount  from  the  then
          prevailing  market price for our common stock, we make, at the date of
          the  debenture  issuance,  an  estimate  as to the fair  value of this
          beneficial  conversion  feature.  The value assigned to the beneficial
          conversion  feature is then  immediately  recognized in our results of
          operations  via an  interest/financing  charge  with  a  corresponding
          incremental credit to additional paid-in capital.

                     OUR CONSOLIDATED RESULTS OF OPERATIONS

Our  consolidated  total  revenues  for the fiscal  year ended  October 31, 2003
("fiscal 2003") were $485,382, an increase of $129,104, or 36.2%, as compared to
$356,278 for the fiscal year ended October 31, 2002 ("fiscal 2002"). Our product
sales  constituted  93.5% and 91.0% of our  consolidated  total revenues  during
fiscal 2003 and 2002, respectively.  Our maintenance revenues, which constituted
the balance of our  consolidated  total revenues for fiscal 2003 and 2002,  will
continue to decrease as we no longer actively market or pursue this business.

Our product  sales were  $453,797 for fiscal 2003,  an increase of $129,512,  or
39.9%,   as  compared  to  $324,285  in  product   sales  for  fiscal  2002.  We
substantially  attribute  the preceding  increase to sales of our  pocketRADIOs,
which we began  shipping  to  customers  in late  October  2002.  Although  to a
significantly  lesser extent, we also realized  incremental  fiscal 2003 product
sales from our XELA  Keyboard,  which we began  shipping to  customers  in March
2003.  Partially  offsetting the preceding  product sales increases  principally
were sales decreases of varying degrees  realized in our accessories for non-PDA
hand-held computing devices,  the marketing of which we continue to de-emphasize
as we focus our currently limited  operating and financial  resources on the PDA
accessories marketplace. We also realized a significant decrease in sales of our
Keysync  Keyboard which we primarily  attribute to the introduction of competing
products into the marketplace. Sales of our Travel Kits also decreased slightly,
which we  believe  generally  corresponded  to the  overall  softening  of sales
realized by the  underlying PDA  manufacturers.  Variances in the average prices
realized by us on products in existence  during both fiscal years did not have a
significant impact, favorably or unfavorably, on the overall net increase in our
product  sales  for  fiscal  2003.  It must be noted  that,  absent  significant


                                       12
<PAGE>

contributions from the introduction of new products, our future revenues will be
materially  dependent  upon sales of our  pocketRADIOs  and, to a  significantly
lesser extent, our Travel Kits and XELA Keyboard.

We incurred consolidated gross losses of $33,621 and $23,162 for fiscal 2003 and
2002, respectively, which in turn, equated to negative gross margins of 6.9% and
6.5% for fiscal 2003 and 2002, respectively. These consolidated gross losses and
negative gross margins were attributable to gross losses of $43,478 and $32,309,
and resulting  negative  gross  margins of 9.6% and 10.0%,  on our product sales
during  fiscal  2003  and  2002,  respectively.  We  principally  attribute  the
preceding  gross losses and negative  gross  margins on our product sales during
both  fiscal  years to our  inability,  given our  continuing  modest  amount of
product sales,  to leverage our allocable  direct labor and, to a lesser extent,
overhead.

Our  consolidated  total operating  expenses were $2,784,542 for fiscal 2003, an
increase of $1,267,766,  or 83.6%,  from the $1,516,776  incurred  during fiscal
2002. As further detailed below, this overall increase in our operating expenses
primarily was attributable to non-cash charges incurred for stock-based  officer
bonuses and the write-down of certain intellectual property rights and molds.

Our consolidated  selling,  general and  administrative  ("SG&A")  expenses were
$1,614,255  for  fiscal  2003,  an  increase  of  $212,192,  or 15.1%,  from the
$1,402,063 incurred during fiscal 2002. Despite the relatively modest net change
in our SG&A  expenses,  their  composition  varied  significantly.  We  incurred
substantial dollar and percentage  increases in our accounting and auditing fees
during  fiscal  2003 as a result of the  proposed  spin-off  of our  iBIZ,  Inc.
subsidiary,  as previously  discussed,  and, to a lesser  extent,  the increased
outsourcing  of  our  accounting  and  financial   functions  and  the  required
implementation  of certain  provisions of the  Sarbanes-Oxley  Act of 2002. To a
significantly  lesser  dollar  extent,  we  incurred  a  substantial  percentage
increase in our depreciation and amortization expenses as a result of our fiscal
2002 purchases of intellectual  property  rights and property and equipment,  in
our advertsing expenses as a result of marketing activities  associated with the
introductions of our pocketRADIOs and XELA Keyboards,  and in our sales expenses
as a result of our  transitioning  to  incrementally  more  expensive,  yet more
variable  in  nature,   external   commissioned  field  sales   representatives.
Substantially  offsetting the preceding were  significant  dollar and percentage
expense  decreases  realized  primarily  as a result  of the  non-recurrence  of
significant  fiscal 2002 charges associated with our then outsourcing of billing
and collection functions and various legal consultations made in connection with
certain business ventures then under consideration,  certain proposals to settle
then  outstanding  debt  obligations,  and the  contemplated  changes in certain
businesses.

As a result of ongoing working capital  constraints,  our two officers continued
to receive  during  fiscal 2003 only sporadic  payments of salaries  which often
were in amounts less that that  stipulated  for in their  respective  employment
contracts.  Additionally, our other employees periodically experienced delays in
the payment of their salaries or wages due to cash shortfalls. In recognition of
the resulting  personal  hardships  that were imposed and in an effort to retain
these remaining critical employees,  particularly given of minimal staffing,  we
deemed it  critical  to award  retention  bonuses  during  fiscal  2003.  As the
retention  bonuses paid to our two officers  principally took the form of common
stock  issuances,   $1,045,287,  or  82.1%,  of  the  overall  $1,273,189  bonus
compensation  charge to our fiscal 2003  results of  operations  was non-cash in
nature.  We similarly  awarded $114,713 in stock-based  retention bonuses to our
two officers  during  fiscal  2002.  During our fiscal 2003 fourth  quarter,  we
recognized a $125,000  impairment  charge related to the write-down of molds and
intellectual  property rights  underlying our XELA Keyboard which we acquired in
July 2002. This impairment was based on our then downwardly  revised estimate of
the anticipated  cash flows to be derived from future sales of our XELA Keyboard
as a result of lower than  anticipated  sales.  We incurred  no such  impairment
charges during fiscal 2002.

We incurred no product research and development  expenses during fiscal 2003 and
2002. In light of our continuing  working capital  constraints,  we currently do
not anticipate performing any product research and development activities during
fiscal  2004.  As such,  we will  remain  materially  dependent  upon  procuring
innovative and competitive products from external vendors.

Our resulting loss from operations for fiscal 2003 was  $2,818,163,  an increase
of $1,278,225,  or 83.0%,  from the  $1,539,938  loss from  operations  incurred
during fiscal 2002.

Our  non-operating  other  income and  expenses  primarily  consist of  interest
expense,   including   non-cash  charges   attributable  to  the  non-detachable
beneficial   conversion   feature  of  newly  issued   debentures,   and,  to  a
significantly  lesser extent, gains on settlements of obligations to vendors and
miscellaneous  other income. Our net non-operating  expenses were $1,643,969 and
$4,470,923 in fiscal 2003 and 2002,  respectively.  The substantial  majority of
the  preceding  amounts  were  attributable  to  aggregate  non-cash  charges of
$1,379,077 and $4,283,930 in fiscal 2003 and 2002, respectively, associated with
the non-detachable beneficial conversion feature of newly issued debentures. Our
traditional  interest  expense  was  $353,516  in fiscal  2003,  an  increase of
$103,459,  or 41.4%,  from  $250,057 in fiscal 2002,  with such  increase  being
attributable  to a higher average level of outstanding  convertible  debentures.
During fiscal 2003 and 2002, we realized non-cash aggregate gains of $85,733 and
$44,754,  respectively,  on  settlements of obligations to vendors at discounted
amounts.  The balance our  non-operating  income and expenses  items,  including
interest income, were inconsequential to our consolidated results of operations.


                                       13
<PAGE>

Primarily  as a result of the  foregoing,  we  incurred  a loss from  continuing
operations of $4,462,132  ($0.02 per basic and diluted  share) in fiscal 2003 as
compared to a loss from continuing operations of $6,010,911 ($0.23 per basic and
diluted share) in fiscal 2002.

In fiscal 2002, we incurred an aggregate  loss from  discontinued  operations of
$479,554 ($0.02 per basic and diluted share), consisting of a $127,950 loss from
the  operations  of  discontinued  businesses  and  a  $351,604  loss  from  the
abandonment of equipment.  The preceding  pertained to various  computer service
businesses we  discontinued  in fiscal 2001. We  subsequently  incurred  related
operating  losses in fiscal  2002 over and beyond  that which we had  originally
estimated  and  provided  for in fiscal  2001 as a result  of (i)  approximately
$88,000 in expense  settlements  that we had originally  believed in fiscal 2001
would  have been  assumed  by a  prospective  purchaser  and (ii)  approximately
$40,000 in payroll settlements with certain former employees who were dismissed.
We also subsequently  recognized in fiscal 2002 a $351,604 loss from disposition
of equipment when we were ultimately  unable to sell certain  related  equipment
which we had previously  believed in fiscal 2001, based on our then negotiations
with a  prospective  purchaser,  would be  purchased  at its then net book value
thereby resulting in no related gain or loss. On February 1, 2002, we elected to
transfer these net assets held for sale to a real estate  partnership from which
we had previously leased our facilities in satisfaction of $78,376 in delinquent
rent and property taxes. Kenneth W. Schilling, our President and Chief Executive
Officer,  was a non-controlling  limited partner in such partnership at the date
of the transfer.

Our net loss for fiscal 2003 was $4,462,182 ($0.02 per basic and diluted share),
as compared to our net loss of $6,490,465 ($0.25 per basic and diluted share) in
fiscal 2002.

Our future  ability to achieve  profitability  in any given future fiscal period
remains highly  contingent  upon us realizing  significantly  increased  product
sales sufficient to leverage our non-variable,  likely to be recurring expenses.
For instance, our ability to achieve gross profits and positive gross margins in
any given future fiscal period remains highly  contingent  upon us being able to
leverage through  significant  incremental product sales the non-variable direct
labor and overhead components of our costs of goods sold. Similarly, our ability
to realize  income  from  operations  is further  dependent  upon our ability to
additionally  leverage through significant  incremental sales our SG&A expenses,
the majority of which currently are non-variable and recurring in nature. To the
extent that we incur other less frequent or non-recurring operating expenses, as
in fiscal 2003, we will require additional incremental product sales in order to
leverage  them.  Lastly,  our  ability to realize  net income and net income per
common share remains highly  contingent  upon us being able to leverage  through
incremental  product sales any significant net non-operating  expenses,  such as
charges for the beneficial  conversion features of any issued debentures and our
interest  expense  on any  outstanding  debt.  Correspondingly,  our  ability to
realize significant  incremental product sales in any given future fiscal period
remains highly contingent upon us obtaining  significant equity infusions and/or
long-term debt financing sufficient to fund the increased and sustained campaign
of marketing  and  advertising  activities  we believe  necessary to build broad
consumer  awareness of, and demand for, our PDA accessories.  Even if we were to
be successful in procuring such funding,  there can be no assurance that we will
be  successful  in our  marketing  and  advertising  efforts,  and  that we will
subsequently realize the significant incremental product sales we require.

                OUR CONSOLIDATED LIQUIDITY AND CAPITAL RESOURCES

OUR OVERVIEW

We have historically  sustained our operations through an ongoing combination of
trade credit arrangements, short-term financings, and debt and equity issuances.
As our working capital requirements generally precede the realization of product
sales and related accounts receivable,  we routinely draw upon our existing cash
and cash equivalent  balances and seek short and long-term financing to fund our
procurement of inventory.  We currently have no established credit facilities in
place for future borrowings.

During the course of transitioning  our company over the last several years from
our  discontinued  computer  service  businesses  to  our  current  business  of
marketing and distributing  various accessories  primarily intended for use with
PDAs, we have incurred substantial operating and net losses, as well as negative
operating cash flows.  As of our fiscal year ended October 31, 2003, our working
capital deficit was $6,093,514 and our stockholders' deficit was $6,716,685.  We
had a nominal unrestricted cash balance of only $2,140 at October 31, 2003.

We had outstanding  convertible  debentures with an aggregate  unpaid  principal
balance of $4,015,837 at October 31, 2003, of which  $3,265,837 and $750,000 was
to become due and payable  during our fiscal years  ending  October 31, 2004 and
2005, respectively.

See  "Subsequent   Events"  below  for  details  regarding  certain  significant
transactions  consummated  subsequent to October 31, 2003 from which we received
cash proceeds and/or satisfied certain outstanding obligations.


                                       14
<PAGE>

OUR CONSOLIDATED CASH FLOWS

Our  operating  activities  utilized  $783,646 in cash during  fiscal  2003,  an
increase of $112,435, or 16.8%, from the $671,211 in cash utilized during fiscal
2002. While we realized a significantly lower loss from continuing operations in
fiscal 2003 than in fiscal 2002, our fiscal 2002 loss from operations reflected,
on a net aggregate basis,  substantially  higher non-cash charges than in fiscal
2003.  Most  notable was the  substantial  decrease in the  non-cash  charges we
incurred  in fiscal  2003,  as  compared  to  fiscal  2002,  for the  beneficial
conversion   features  of  issued  debentures.   Additionally,   although  to  a
substantially  lesser  extent,  the net change in our working  capital  accounts
contributed slightly less to our operating cash flows during fiscal 2003 than in
fiscal  2002.  Most notable was the  negative  cash impact of the  comparatively
smaller  increase  in our  accounts  payable  during  fiscal 2003 as compared to
fiscal 2002 and the increase in our accounts  receivable during fiscal 2003 as a
result of our obtaining  CompUSA as a major customer.  Substantially  offsetting
the preceding  negative cash impacts primarily was the positive cash flow impact
of significantly increased accrued liabilities and taxes.

Our investing  activities  neither  provided nor utilized any cash during fiscal
2003, whereas our investing  activities used $201,365 in cash during fiscal 2002
in connection  with purchases of  intellectual  property rights and property and
equipment,  which  were  partially  offset by  proceeds  from the sale of a data
center associated with certain previously discontinued operations.

Our  financing  activities  provided  $784,838 in cash  during  fiscal  2003,  a
decrease of $81,705,  or 9.4%,  from the $866,543 in cash  provided by financing
activities  during fiscal 2002. Fiscal 2003 reflects cash inflows primarily from
our issuances of convertible debentures,  and, to a significantly lesser extent,
the  incurring of a loan and the issuance of common stock.  The  preceding  cash
inflows  were  slightly  offset  by  the  cash  outflows  related  to  principal
repayments  made on  outstanding  notes payable and the  collateralization  of a
letter of credit.  In  contrast,  fiscal  2002  primarily  reflects  higher cash
inflows from our issuances of convertible  debentures,  and, to a  significantly
lesser extent,  from issuances of common stock. Such were slightly offset by the
cash outflows related to principal repayments made on outstanding notes payable

As a result of the  foregoing,  our  unrestricted  cash  increased  by $1,192 to
$2,140 at October 31, 2003, as compared with $948 at October 31, 2002.

OUR OFF-BALANCE SHEET LIABILITIES AND COMMITMENTS

Our  off-balance  sheet  liabilities   principally   consist  of  lease  payment
obligations  incurred  under two  operating  leases,  which are  required  to be
excluded from our consolidated  balance sheet by generally  accepted  accounting
principles  in the  United  States  of  America.  By far,  our most  significant
operating lease pertains to our corporate facilities.  Our other operating lease
pertains to office equipment.  Both operating leases are  noncancellable and our
facilities lease contains a rent escalation  clause. We incurred  aggregate rent
expense under  operating  leases of $43,625 and $46,052 during fiscal years 2003
and 2002, respectively.

The future aggregate  minimum lease payments under operating lease agreements in
existence at October 31, 2003 are as follows:

              FISCAL YEARS ENDING OCTOBER 31,
              -------------------------------------------------------
              2004......................................   $   52.275
              2005......................................       15,141
              2006......................................        2,112
              2007......................................          704
              2008......................................           --
                                                           ----------
              Total minimum operating lease payments....   $   70,232
                                                           ==========

We additionally have outstanding  commitments  related to employment  agreements
with Kenneth  Schilling and Mark Perkins which became effective July 1, 2001 and
remain in force through June 30, 2004. Mr. Schilling's  contract provides for an
annual salary of $250,000, quarterly performance bonuses equal to one percent of
our total  revenues,  and the granting of an option  allowing for his subsequent
purchase of 300,000 shares of our common stock at $0.20 per share.  Mr. Perkin's
contract  provides  for an annual  salary  of  $150,000,  quarterly  performance
bonuses  equal to one  percent of our total  revenues,  and the  granting  of an
option  allowing  for his  subsequent  purchase of 120,000  shares of our common
stock  at  $0.20  per  share.  Each  stock  option  vested  immediately  and  is
exercisable  for a  period  of  ten  years.  In the  event  of  their  voluntary
resignation, as defined, the officer shall be entitled to six month's salary. In
the event of their involuntary  termination by us without cause, as defined, the
officer shall be entitled to one year's salary.  In the event of a change in our
control,  each  officer  shall be entitled to a lump sum payment  equal to three
year's annual salary.

Furthermore,  we recently assumed additional  commitments in connection with our
January 20, 2004  acquisition  of  Synosphere  as we  concurrently  entered into
two-year employment agreements with Bryan Scott and Ramon Pereles, its President
and Chief Marketing Officer, respectively.  Pursuant to these agreements, Mssrs.
Scott and Pereles are to receive  annual base salaries of $112,000 and $102,000,
respectively.  Mssrs.  Scott  and  Pereles  are  each  to  additionally  receive
retention  bonuses of 2,500,000  shares of our common  stock.  Mssrs.  Scott and
Pereles are also each to receive  $500,000  earn-out  bonuses to be satisfied in
eight  successive  quarterly  issuances  of shares of our common  stock equal to
$62,500  based  upon the  then  market  price of our  common  stock.  A  "golden


                                       15
<PAGE>

parachute" clause shall also be put in place such that if either of the employee
agreements are terminated by us or any successor that the above consideration is
payable in full as of the dates of their respective terminations.

OUR PLANNED CAPITAL EXPENDITURES

We had no significant planned capital expenditures, budgeted or otherwise, as of
October 31, 2003.

OUR SUBSEQUENT EVENTS

Subsequent to our October 31, 2003 balance sheet date through February 13, 2004,
the  original  filing  date of this  report  with the SEC,  we were party to the
following  significant  equity or  debt-related  transactions,  certain of which
improved  our  financial  condition  via the  receipt  of cash  proceeds  or the
elimination of certain liabilities:

     Grants of Stock Options in Consideration of Services:

     o    On November 1, 2003, we granted an option to D. Scott Elliott allowing
          for his  subsequent  purchase of 200 million of our common shares over
          the subsequent two and one-half  months at an exercise price per share
          of equal to the  average  market  closing  price  for the  three  days
          immediately  prior to any  exercise  date,  less a 40%  discount..  We
          granted this option in consideration of consulting  services  directed
          at  assisting  us in  expanding  into  potential  new  markets  and/or
          introducing   new  products,   which  gave  rise  to  our   subsequent
          acquisition of  Synosphere,  as previously  discussed.  We valued this
          option at $260,000,  which  reflected the negotiated 40% discount from
          the then prevailing market price for our common stock. On December 10,
          2003,  Mr.  Elliott  exercised  the  preceding  options  for  which we
          received $93,600 in the aggregate.

     o    On  December  15,  2003,  we granted  an option to  Jeffrey  Firestone
          allowing  for his  subsequent  purchase  of 50  million  of our common
          shares over the  subsequent  five year period at an exercise  price of
          per share of equal to the  market  price at the time of any  exercise,
          less a 15% discount.. We granted this option in consideration of legal
          services  provided in  connection  with our  evaluation  of  potential
          international  merger and acquisition  candidates,  which gave rise to
          our contemplated transaction with Enterprise, as previously discussed.
          We valued this option at $60,000,  which  reflected the negotiated 15%
          discount from the then  prevailing  market price for our common stock.
          During January and February 2004, Mr. Firestone  exercised  36,950,000
          of the  preceding  options  for which we  received  $1,003,947  in the
          aggregate.

     o    On January 28, 2004, we granted an option to Pangea  Investments  GmbH
          ("Pangea")  allowing for its subsequent purchase of 100 million of our
          common shares over the subsequent ten year period at an exercise price
          of $0.015  per share.  We  granted  this  option in  consideration  of
          consulting and acquisition services,  which principally included,  but
          were  not  limited  to,  the   development  of  a  business  plan  for
          potentially  marketing our existing  products in Europe and Israel and
          identifying  potential  new  products and  technologies  that could be
          added to our existing  product line. In addition,  Pangea would assist
          in the negotiation  and financing of new products and  technologies we
          sought to acquire, including the two technologies that are the subject
          of  our  contemplated  transaction  with  Enterprise,   as  previously
          discussed. Sam Elimalech, an officer of Enterprise is also a member of
          Pangea.  We  valued  this  option at  $4,450,000,  which  reflected  a
          negotiated  50%  discount  from then  prevailing  market price for our
          common stock.

     Conversions of Our Outstanding Debentures

     o    During the period from  November 1, 2003  through  February  13, 2004,
          holders  of  certain  of our then  outstanding  debentures  elected to
          convert  a total  of  $2,422,790  in  aggregate  principal  (including
          $18,850  which  was  forgiven),  and  $299,455  in  aggregate  accrued
          interest thereon, into 1,251,212,157 shares of our common stock.

     Issuances of Common Stock in Satisfaction of Obligations:

     o    During November 2003, we issued  10,000,000 shares of our common stock
          to an unrelated  attorney in prepayment  of $37,000 in legal  services
          rendered during our fiscal quarter ended January 31, 2004.

     o    During November 2003, we issued  9,600,000  shares of our common stock
          to  various  creditors  in  satisfaction  of  $35,425  in  outstanding
          obligations.

     o    During  November 2003, we issued 500,000 shares of our common stock to
          an unrelated  company in prepayment of $1,975 in SEC electronic filing
          services rendered during our fiscal quarter ended January 31, 2004.

     o    During November 2003, we issued  1,000,000  shares of our common stock
          to an unrelated company in prepayment of $3,700 in marketing  services
          rendered during our fiscal quarter ended January 31, 2004.


                                       16
<PAGE>

     o    During December 2003, we issued  81,000,000 shares of our common stock
          to an unrelated  consultant  in  prepayment  of $126,360 in merger and
          acquisition  services  to be  rendered  during the  subsequent  twelve
          months.

     o    During December 2003, we issued 204,482,763 shares of our common stock
          to our two officers and other  employees in  settlement of $296,500 of
          $578,000 in accrued bonuses.

     o    During January 2004, we issued  194,137,931 shares of our common stock
          to our two officers and other  employees in  settlement of $281,500 in
          remaining accrued bonuses.

As of our  subsequent  fiscal 2004 first  quarter  ended  January 31, 2004,  our
working  capital  deficit  was  $3,795,901  and our  stockholders'  deficit  was
$4,091,965.  At  January  31,  2004,  we had an  unrestricted  cash  balance  of
$262,649.

As of February 13, 2004, we had  outstanding  unsecured  convertible  debentures
with an aggregate unpaid principal balance of $1,593,047. As were were unable to
repay these  debentures when they became due, they began  subsequently  accruing
interest at their  default  rates of 20.0% per annum.  Although  there can be no
assurance  that  they will  ultimately  do so, we  recently  have been  verbally
advised by the holders of these debentures of their intent to ultimately convert
their respective principal balances,  and accrued interest thereon,  into shares
of our common stock.

It is our  understanding  that the  post-October  31,  2003  improvement  in our
overall  financial  condition,  the expressed intent of our remaining  debenture
holders to convert their principal balances,  and accrued interest thereon, into
shares of our common  stock,  and  certain  other  considerations,  enabled  our
independent  public  accountants  to  ultimately  conclude  that a going concern
qualification  was not warranted  within their audit report on our  accompanying
fiscal 2003 consolidated financial statements. Despite such, we acknowledge that
our current  financial  condition  remains in need of  significant  improvement,
which we continue to pursue.  We also  acknowledge  that our ability to achieve,
and  subsequently  sustain,  positive  operating  results  and cash flows in the
future remains highly contingent upon us obtaining  significant equity infusions
and/or long-term debt financing sufficient to sustain our operations and to fund
the increased and sustained campaign of marketing and advertising  activities we
believe necessary to build broad consumer  awareness of, and demand for, our PDA
accessories. Absent such long-term funding, we believe that it is likely that we
will continue to have substantial, and even larger, working capital deficits and
stockholders' deficits in the future. Even if we were to be successful in timely
procuring such funding,  there can be no assurance that we will be successful in
our marketing and advertising efforts, and that we will subsequently realize the
significant  incremental product sales we require.  Should we be unsuccessful in
any of the critical matters  currently facing us, as previously  discussed,  our
business,  and, as a result,  our consolidated  financial  position,  results of
operations  and cash flows will likely be  materially  adversely  impacted,  the
effects from which we may not recover.

POTENTIAL SIGNIFICANT DILUTION TO OUR EXISTING OR PROSPECTIVE SHAREHOLDERS

It  should  be  noted  by  our  existing  shareholders,  as  well  as  potential
prospective  shareholders,  that you may experience significant dilution in your
respective  equity  interest  and  related  voting  rights  from any  subsequent
conversions  of our  remaining  outstanding  debentures  by their  holders,  any
subsequent  exercises of our outstanding  stock purchase warrants and options by
their holders,  future issuances by us of additional  convertible  debentures or
common shares,  or any future grants by us of additional stock purchase warrants
and/or options.  Your exposure to such dilution will increase to the extent that
the  market  price of our  common  stock  declines  below the price at which you
purchased,  or converted into,  shares of our common stock and we issue or grant
equity or  equity-related  instruments  at the then  lower  market  prices.  The
liklihood that the market price of our common stock will decline,  and that such
a decline will be significant,  will further  increase to the extent that any of
our  existing  shareholders  elect to sell large  numbers of our shares into the
marketplace,  particularly  during a short  period  of time  given  the  limited
trading  in our  common  shares.  Given  that we remain  in need of  significant
additional  debt and/or  equity  financing,  as  previously  discussed,  and the
historical  volatility in the market price of our common stock, our existing and
potential  investors must give due consideration to the potential of significant
dilution to their respectice equity interest and related voting rights.

                                OUR OTHER MATTERS

Seasonal and Inflationary Influences

We expect, absent materially adverse economic or counter-acting events, that our
fiscal first quarter  ending  January 31 will continue to benefit from increased
orders for the holiday shopping season and that our fiscal fourth quarter ending
October 31 will continue to benefit from increased orders for the back-to-school
shopping season. Conversely, we expect that our fiscal second and third quarters
ending  April 30 and July  31,  respectively,  will  continue  to  comparatively
experience  softer orders as retailers  seek to  sell-through  any surplus stock
remaining  from the  aforementioned  shopping  seasons and return to more normal
inventory levels.

To date, we have not been materially impacted by inflationary influences.


                                       17
<PAGE>

Quantitative and Qualitative Disclosures About Market Risk

We currently are not materially  exposed to financial  market risks from changes
in short or  long-term  interest  rates as  substantially  all of our  financial
instruments,  and most notably our remaining outstanding debentures,  have fixed
rates of interest. However, should we be successful in procuring the significant
additional   funding  we  currently   seek  and  if  such  funding  were  to  be
substantially  in the form of debt with  variable  rates of  interest,  then our
exposure to these market risks would increase, possibly significantly.

We  currently  are  not   materially   exposed  to  currency   market  risks  as
substantially  all of our business  dealings,  and most notably our purchases of
inventory  from overseas  vendors,  are  denominated in U.S.  dollars.  However,
should we in the future enter into significant contracts denominated in non-U.S.
dollar  currencies,  then our  exposure  to these  currency  market  risks would
increase, possibly significantly.

We have not  used,  and  currently  do not  contemplate  using,  any  derivative
financial instruments.

Our Legal Contingencies

We  as a  company,  including  our  subsidiary,  are  periodically  involved  in
litigation and administrative proceedings primarily arising in the normal course
of our business.  In our opinion,  our gross liability,  if any, and without any
consideration   given  to  the  availability  of  indemnification  or  insurance
coverage,  under any pending or existing incidental litigation or administrative
proceedings  would not  materially  affect our  financial  position,  results of
operations or cash flows over and beyond any acknowledged liability.

We remain liable to the U.S.  Internal Revenue Service ("IRS") for approximately
$65,000 in unpaid payroll taxes, and subsequently assessed interest, for certain
periods  through the first quarter of 1999. We have continued to accrue for this
liability in our consolidated financial statements.  It is our intention to seek
a reduced  settlement of this liability with the IRS if and when we have surplus
working capital allowing us to timely honor any such settlement.

In  response  to a personal  lawsuit  initiated  by Kenneth  W.  Schilling,  our
Chairman,  Chief Executive Officer and President,  against Douglas A. Dragoo and
Elizabeth W. Dragoo ("Dragoos")  asserting breach of contract in connection with
a commercial  office building jointly owned by Mr. Schilling and the Dragoos and
in which we were then tenants,  the Dragoos  counterclaimed on August 5, 2003 in
the Superior  Court of the State of Arizona,  County of Maricopa  with a lawsuit
against Mr.  Schilling  and us alleging  breach of  contract,  fraud,  negligent
misrepresentation,  and seeking  compensatory  and  punitive  damages as well as
legal fees. We intend to vigorously  contest the counterclaim and do not believe
that we will incur any material liability in connection therewith.

Recently Issued Accounting Standards With Pending Adoptions

There  currently  are no  recently  issued  accounting  standards  with  pending
adoptions that have any applicability to us.

Our Risks and Uncertainties

We Have A History Of Losses And Anticipate Future Losses Which Will Compel Us To
Seek Additional Capital.

For the fiscal year ended October 31, 2003, we sustained a loss of approximately
$(4,462,182) and for the fiscal year ended October 31, 2002, we sustained a loss
of  $(6,490,465).  Future losses are  anticipated to occur.  We continue to have
insufficient  cash flow to grow operations and we cannot assure you that we will
be successful in reaching or maintaining profitable operations.

We Have A Limited  Product Range Which Must Be Expanded In Order To  Effectively
Compete.

To  effectively  compete  in our  industry,  we need to  continue  to expand our
business and generate  greater  revenues so that we have the resources to timely
develop new  products.  We must  continue to market our  products  and  services
through our direct sales force and expand our e-commerce  distribution channels.
At the present time, we have no other products in the  development  process.  We
cannot assure you that we will be able to grow sufficiently to provide the range
and quality of products and services required to compete.

We Have Few  Proprietary  Rights,  The Lack Of Which May Make It Easier  For Our
Competitors To Compete Against Us.

With the  exception  of our XELA  Keyboard  to which we have  certain  exclusive
proprietary  rights, the balance of our products,  principal and otherwise,  are
not  covered  by any  exclusive  proprietary  rights.  While we have no  current
knowledge  of any of our  principal  products  being  marketed  directly  by our
vendors or indirectly by others, there can be no assurance as to the prospective
absence of significant competition.


                                       18
<PAGE>

Our  Continuing   Inability  To  Perform  Meaningful  Research  And  Development
Activities  Directed  At  Ultimately  Marketing  Our  Own  Patented  Proprietary
Products Makes Us Highly Susceptible To Competition.

Given our currently limited financial and other resources,  we currently perform
no research and development activities.  Historically,  we primarily have relied
upon   acquiring  or  licensing   technologies   and  products  from   unrelated
third-parties.  While we have  periodically  performed limited in-house research
and  development  in the past,  we did not perform  any  in-house  research  and
development during the fiscal years ended October 31, 2003 and 2002, as reported
herein. Our continuing  inability to perform meaningful research and development
activities  directed  at  ultimately  marketing  our  own  patented  proprietary
products makes us highly susceptible to competition.

If We Are Required For Any Reason To Repay Any of Our Convertible Debentures We
Currently Have Outstanding, We Would Be Required To Deplete Our Working Capital,
If Available, Or Raise Additional Funds. Our Failure To Repay The Convertible
Debentures, If Required, Could Result In Legal Action Against Us, Which Could
Require The Sale Of Substantial Assets.

As of February 13, 2004, we had an aggregate of $1,593,047  worth of convertible
debentures  outstanding.  We anticipate  that the full amount of the convertible
debentures, together with accrued interest, will be converted into shares of our
common stock, in accordance with the terms of the convertible debentures.  If we
are required to repay the  convertible  debentures,  we would be required to use
our limited  working  capital and raise  additional  funds. If we were unable to
repay the debentures when required,  the debenture  holders could commence legal
action against us to recover the amounts due which  ultimately could require the
disposition  of some or all of our assets.  Any such action would  require us to
curtail or cease operations.

The  Continuously   Adjustable  Conversion  Price  Feature  Of  Our  Convertible
Debentures May Encourage The Debenture Holders To Make Short Sales Of Our Common
Stock, Which Could Have A Depressive Effect On The Price Of Our Common Stock And
Could Require Us To Issue A Substantially Greater Number Of Shares.

Our outstanding convertible debentures are convertible into shares of our common
stock at a discount to the trading  price of our common  stock.  The  conversion
feature may encourage  the  debenture  holders to make short sales of the common
stock prior to their  conversions.  Such sales could  significantly  depress the
price of the common  stock,  allowing  the  debenture  holders to convert into a
substantially  larger  number  of shares of common  stock,  which  would  have a
depressive effect on the market price of our stock.

This Report Contains  Forward-Looking  Statements  Within the Meaning of Section
27A of the  Securities  Act and Section 21E of the  Securities  Exchange  Act of
1934, as amended.

Any statements about our expectations,  beliefs, plans, objectives,  assumptions
or  future  events  or  performance   are  not  historical   facts  and  may  be
forward-looking.  These statements are often,  but not always,  made through the
use of words or phrases such as "anticipate,"  "estimate,"  "plans," "projects,"
"continuing,"  "ongoing,"  "expects,"  "management  believes," "we believe," "we
intend" and similar  words or phrases.  Accordingly,  these  statements  involve
estimates,  assumptions and  uncertainties,  which could cause actual results to
differ materially from those expressed in them. Any  forward-looking  statements
are qualified in their entirety by reference to the "Risk Factors"  contained on
pages 2 through 8 of this Report.

Because  the factors  discussed  in this Report  could cause  actual  results or
outcomes  to differ  materially  from  those  expressed  in any  forward-looking
statements  made by us or on behalf of our  company,  you should not place undue
reliance on any such  forward-looking  statements.  Further, any forward-looking
statement  speaks only as of the date on which it is made,  and we  undertake no
obligation  to update any  forward-looking  statement or  statements  to reflect
events or  circumstances  after the date on which such  statement  is made or to
reflect the occurrence of unanticipated  events. New factors emerge from time to
time, and it is not possible for us to predict which will arise. In addition, we
cannot  assess the impact of each factor on our  business or the extent to which
any factor,  or  combination  of  factors,  may cause  actual  results to differ
materially from those contained in any forward- looking statements.


                                       19
<PAGE>

ITEM 7.  OUR CONSOLIDATED FINANCIAL STATEMENTS

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

iBIZ Technology Corp. and Subsidiaries                                    Page
                                                                         ------

Report of Independent Certified Public Accountants....................   F - 1
Consolidated Balance Sheet............................................   F - 2
Consolidated Statements of Loss.......................................   F - 3
Consolidated Statements of Changes in Stockholders' Deficit...........   F - 4
Consolidated Statements of Cash Flows.................................   F - 5
Notes to Consolidated Financial Statements............................   F - 7


                                       20
<PAGE>

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS


To The Board of Directors and Stockholders of
iBIZ Technology Corp. and Subsidiaries

We have audited the accompanying consolidated balance sheet of iBIZ Technology
Corp. and Subsidiaries as of October 31, 2003, and the related consolidated
statements of loss, changes in stockholders' deficit and cash flows for the
fiscal years ended October 31, 2003 and 2002. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the consolidated financial position of iBIZ
Technology Corp. and Subsidiaries as of October 31, 2003, and the consolidated
results of their operations and their cash flows for the fiscal years ended
October 31, 2003 and 2002, in conformity with accounting principles generally
accepted in the United States of America.

                                                        /s/ Farber & Hass, LLP

Camarillo, California
January 21, 2004


                                      F- 1
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEET


                                     ASSETS
                                                                    October 31,
                                                                       2003
                                                                   ------------

Current assets:
   Cash .........................................................  $      2,140
   Restricted cash equivalent (Note 3) ..........................        10,000
   Accounts receivable, net (Note 4) ............................       111,322
   Inventories, net (Note 5) ....................................        43,842
   Prepaid expenses .............................................        24,057
                                                                   ------------
Total current assets ............................................       191,361
Property and equipment, net (Note 6) ............................        63,329
Intellectual property rights, net (Note 7) ......................        61,000
Note receivable from officer, net (Note 8) ......................            --
Deposits ........................................................         2,500
                                                                   ------------
Total assets ....................................................  $    318,190
                                                                   ============

                      LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
   Accounts payable .............................................  $    581,637
   Accrued liabilities (Note 10) ................................     2,306,911
   Deferred income ..............................................         5,570
   Notes payable (Note 11) ......................................       124,920
   Current maturities of convertible debentures (Notes 12 and 19)     3,265,837
                                                                   ------------
Total current liabilities .......................................     6,284,875
Convertible debentures (Notes 12 and 19) ........................       750,000
                                                                   ------------
Total liabilities ...............................................     7,034,875
                                                                   ------------

Commitments and contingencies (Notes 10, 17 and 18)

Stockholders' deficit (Notes 13 and 19):
   Preferred stock, $.001 par value; 50,000,000 shares
     authorized; none issued or outstanding .....................            --
   Common stock, $.001 par value; 5,000,000,000 shares
     authorized; 649,893,721 issued and outstanding .............       649,894
   Additional paid-in capital ...................................    17,431,753
   Accumulated deficit ..........................................   (24,798,332)
                                                                   ------------
Total stockholders' deficit .....................................    (6,716,685)
                                                                   ------------
Total liabilities and stockholders' deficit .....................  $    318,190
                                                                   ============


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


                                      F- 2
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF LOSS

<TABLE>
<CAPTION>
                                                                     Fiscal Year       Fiscal Year
                                                                       Ended              Ended
                                                                  October 31, 2003  October 31, 2002
                                                                  ----------------  ----------------
<S>                                                                 <C>              <C>
Revenues:
      Net product sales .........................................   $     453,797    $     324,285
      Maintenance services ......................................          31,585           31,993
                                                                    -------------    -------------
Total revenues ..................................................         485,382          356,278
                                                                    -------------    -------------
Cost of revenues:
      Cost of product sales .....................................         497,275          356,594
      Cost of maintenance services ..............................          21,728           22,846
                                                                    -------------    -------------
Total cost of revenues ..........................................         519,003          379,440
                                                                    -------------    -------------

Gross loss ......................................................         (33,621)         (23,162)

Operating expenses:
      Selling, general and administrative .......................       1,614,255        1,402,063
      Officer bonuses (Note 13) .................................       1,045,287          114,713
      Write-down of molds and property rights (Notes 6 and 7) ...         125,000               --
                                                                    -------------    -------------
Total operating expenses ........................................       2,784,542        1,516,776
                                                                    -------------    -------------

Loss from operations ............................................      (2,818,163)      (1,539,938)

Non-operating income (expenses):
      Interest and miscellaneous income (Note 14) ...............          88,624           63,064
      Interest and financing expenses (Note 15) .................      (1,732,593)      (4,533,987)
                                                                    -------------    -------------
Total non-operating expenses, net ...............................      (1,643,969)      (4,470,923)
                                                                    -------------    -------------

Loss from continuing operations before provision for income taxes      (4,462,132)      (6,010,861)
Provision for income taxes ......................................              50               50
                                                                    -------------    -------------
Loss from continuing operations .................................      (4,462,182)      (6,010,911)
                                                                    -------------    -------------
Discontinued operations (Note 16):
      Loss from operations of discontinued businesses ...........              --         (127,950)
      Loss on disposition of equipment ..........................              --         (351,604)
                                                                    -------------    -------------
Loss from discontinued operations ...............................              --         (479,554)
                                                                    -------------    -------------
Net loss ........................................................   $  (4,462,182)   $  (6,490,465)
                                                                    =============    =============
Net loss per common share - basic and diluted:
      Continuing operations .....................................   $       (0.02)   $       (0.23)
      Discontinued operations ...................................              --            (0.02)
                                                                    -------------    -------------
Net loss per common share - basic and diluted ...................   $       (0.02)   $       (0.25)
                                                                    =============    =============
Weighted average number of common shares outstanding -
   basic and diluted ............................................     231,553,359       26,404,820
                                                                    =============    =============
</TABLE>

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


                                      F- 3
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT

<TABLE>
<CAPTION>
                                                         Common Stock           Additional
                                                 ---------------------------      Paid-in      Accumulated
                                                    Shares         Amount         Capital        Deficit          Total
                                                 ------------   ------------   ------------   ------------    ------------
<S>                                                 <C>         <C>            <C>            <C>             <C>
Balances as of October 31, 2001 ..............      9,986,320   $      9,986   $  9,891,221   $(13,845,685)   $ (3,944,478)

Common stock issued for cash (Note 13) .......      3,000,000          3,000         76,500             --          79,500

Common stock issued for services received and
   in settlement of accounts payable (Note 13)      6,146,200          6,147        500,215             --         506,362

Common stock issued to officers and other
   employees as retention bonuses (Note 13) ..     18,778,104         18,778        228,287             --         247,065

Issuance of common stock to President as
   compensation, net (Note 13) ...............        571,440            571         85,145             --          85,716

Beneficial conversion feature of debentures
   issued (Note 13) ..........................             --             --      4,283,930             --       4,283,930

Common stock issued upon conversion of
   debentures and accrued interest, net of
   related issuance costs (Note 13) ..........      6,518,033          6,518        284,070             --         290,588

Net loss .....................................             --             --             --     (6,490,465)     (6,490,465)
                                                 ------------   ------------   ------------   ------------    ------------

Balances as of October 31, 2002 ..............     45,000,097         45,000     15,349,368    (20,336,150)     (4,941,782)

Common stock issued for cash (Note 13) .......     36,691,176         36,691             --             --          36,691

Common stock issued for services received and
   in settlement of accounts payable (Note 13)     44,161,764         44,162        204,088             --         248,250

Common stock issued to officers and other
   employees as retention bonuses (Note 13) ..    253,063,228        253,063        442,125             --         695,188

Beneficial conversion feature of debentures
   issued (Note 13) ..........................             --             --      1,379,077             --       1,379,077

Common stock issued upon conversion of
   debentures and accrued interest, net of ...    270,977,456        270,978         57,095             --         328,073
   related issuance costs (Note 13)

Net loss .....................................             --             --             --     (4,462,182)     (4,462,182)
                                                 ------------   ------------   ------------   ------------    ------------
Balances as of October 31, 2003 ..............    649,893,721        649,894     17,431,753    (24,798,332)     (6,716,685)
                                                 ============   ============   ============   ============    ============
</TABLE>


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


                                      F- 4
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                             Fiscal Year    Fiscal Year
                                                                                Ended          Ended
                             October 31, October 31,
                                    2003 2002
                                                                             -----------    -----------
<S>                                                                          <C>            <C>
Cash flows from operating activities:
   Loss from continuing operations .......................................   $(4,462,182)   $(6,010,911)
   Adjustments to reconcile loss from continuing operations to net cash
     used in operating activities of continuing operations:
       Loss from discontinued operations (Note 16) .......................            --       (479,554)
     Depreciation of property and equipment and amortization of
       intellectual property rights ......................................        60,875         27,837
      Write-down of molds and property rights (Notes 6 and 7) ............       125,000             --
      Provisions for sales returns, rebates and doubtful accounts (Note 4)        94,731         14,798
      Provision for inventory obsolescence (Note 5) ......................        33,100         90,035
      Gains on settlements of obligations to vendors (Note 13) ...........       (85,733)       (44,754)
      Common stock issued for services received (Note 13) ................       193,894          6,151
      Common stock issued to officers and other employees as retention
       bonuses (Note 13) .................................................       695,188        247,065
      Beneficial conversion feature of debentures (Notes 12 and 13) ......     1,379,077      4,283,930
   Net changes in operating assets and liabilities:
     Accounts receivable .................................................      (194,186)        67,082
     Inventories .........................................................        18,658        (18,894)
     Prepaid expenses ....................................................        (6,057)        36,127
     Deposits ............................................................            --         13,512
     Accounts payable ....................................................       177,134        554,273
     Accrued liabilities .................................................     1,187,201        540,671
     Deferred income .....................................................          (346)         1,421
                                                                             -----------    -----------
Net cash used in operating activities ....................................      (783,646)      (671,211)
                                                                             -----------    -----------
Cash flows from investing activities:
   Purchases of property and equipment (Note 7) ..........................            --        (50,000)
   Purchase of intellectual property rights (Note 7) .....................            --       (200,000)
   Proceeds from asset sales .............................................            --         48,635
                                                                             -----------    -----------
Net cash used in investing activities ....................................            --       (201,365)
                                                                             -----------    -----------
Cash flows from financing activities:
   Net proceeds from issuances of note payable (Note 11) .................        90,000             --
   Net proceeds from issuances of convertible debentures (Note 12) .......       686,813        848,723
   Net proceeds from issuances of common stock (Note 13) .................        36,691         79,500
   Principal payments on notes payable (Note 11) .........................       (18,666)       (61,680)
   Restricted cash equivalent (Note 3) ...................................       (10,000)            --
                                                                             -----------    -----------
Net cash provided by financing activities ................................       784,838        866,543
                                                                             -----------    -----------

Net increase (decrease) in cash and cash equivalents .....................         1,192         (6,033)
Cash at beginning of period ..............................................           948          6,981
                                                                             -----------    -----------
Cash at end of period ....................................................   $     2,140    $       948
                                                                             ===========    ===========
</TABLE>

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


                                      F- 5
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

<TABLE>
<CAPTION>
                                                                        Fiscal Year   Fiscal Year
                                                                           Ended         Ended
                             October 31, October 31,
                                    2003 2002
                                                                        -----------   -----------
<S>                                                                     <C>           <C>
Supplemental schedule of cash activities:
   Interest paid in cash ............................................   $     8,566   $    33,209
   Taxes paid in cash ...............................................            50            50

Supplemental schedule of non-cash investing and financing activities:
Debenture principal and accrued interest thereon converted to
common stock (Notes 12 and 13) ......................................       328,073       290,588
Officer bonuses paid in common stock (Note 13) ......................       695,188       247,065
Issuance of common stock for services received and in settlement of
accounts payable (Note 13) ..........................................       248,250       506,362
</TABLE>


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


                                      F- 6
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. NATURE OF BUSINESS, ORGANIZATIONAL STRUCTURE AND PRINCIPLES OF CONSOLIDATION

iBIZ  Technology  Corp.,  together  with  its  wholly-owned   subsidiaries  (the
"Company"), a Florida corporation,  headquartered in Phoenix, Arizona, primarily
is a marketer and distributor of various accessories  primarily intended for use
with Personal Digital Assistants  ("PDAs").  The Company conducts  substantially
all of its  operations  through its  wholly-owned  subsidiary,  iBIZ,  Inc.  The
Company's other wholly-owned  subsidiaries,  Invnsys Technology  Corporation and
Qhost,   Inc.  have  been  inactive  since  their  respective   operations  were
discontinued (See "Note 15 - Discontinued Operations" for further details).

These  consolidated  financial  statements include the operations of the Company
and its wholly-owned  subsidiaries.  All material intercompany  transactions and
balances have been eliminated in consolidation.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Fiscal Year-End

The Company's  fiscal  year-end is October 31st.  References  herein to a fiscal
year refer to the calendar year in which such fiscal year ends.

Use of Estimates

The  preparation  of  consolidated   financial  statements  in  conformity  with
accounting  principles  generally  accepted  in the  United  States  of  America
requires  management to make certain  estimates and assumptions  that affect the
reported  amounts and timing of revenue and expenses,  the reported  amounts and
classification  of assets and liabilities,  and disclosure of contingent  assets
and  liabilities.  These  estimates and  assumptions  are based on the Company's
historical results as well as management's  future  expectations.  The Company's
actual  results  could  vary   materially   from   management's   estimates  and
assumptions.

Reclassifications

Certain amounts in the  consolidated  financial  statements for the prior fiscal
year have been  reclassified  to be  consistent  with the current  fiscal year's
presentation.

Cash and Cash Equivalents

The Company maintains its cash balances with high quality financial institutions
thereby minimizing any associated credit risks. For purposes of the statement of
cash flows, the Company  considers all highly liquid debt instruments  purchased
with an original  maturity of three months or less to be cash  equivalents.  The
Company had no unrestricted cash equivalents at October 31, 2003 and 2002.

Accounts  Receivable and Related Allowances for Sales Returns,  Customer Rebates
and Doubtful Accounts

The Company's  accounts  receivable  are reported net of related  allowances for
probable  sales  returns,  customer  rebates and doubtful  accounts.  Management
believes that the concentration of credit associated with the Company's accounts
receivable  portfolio  is primarily  limited to large  national  retailers,  the
credit worthiness of such it monitors.

The Company  unconditionally  accepts  product returns during the initial thirty
days following the date of sale.  Additionally,  the Company periodically offers
promotional  rebates  of a limited  duration,  typically  one week,  on  certain
product sales for which it  outsources  the  processing  and tracking of related
customer  submissions.  The periodic provisions made by the Company to establish
and maintain  appropriate  allowances for sales returns and customer rebates are
charged to its results of  operations  via offsets to its gross  product  sales.
Such  provisions are based on  management's  estimates of probable sales returns
and customer rebates which, in turn, are based on its


                                      F- 7
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounts  Receivable and Related Allowances for Sales Returns,  Customer Rebates
and Doubtful Accounts (continued)

relevant historical experience and future expectations. Actual sales returns and
customer  rebates  realized  by the  Company  are  charged  against  the related
allowances  with  any  favorable  or  unfavorable  experience,  as  compared  to
management's preceding estimates, having a correspondingly impact on its results
of operations.

The Company routinely offer its customers payment terms that range from 30 to 60
days. The Company does not access  interest on, nor does it require any securing
collateral of, past due customer balances.  The periodic  provisions made by the
Company to establish and maintain an appropriate allowance for doubtful accounts
are charged to its results of operations  via increases to its selling,  general
and  administrative   expenses.   Such  provisions  are  based  on  specifically
identified  accounts that management believes to be uncollectible based on facts
then known to it and accounts  that are past due beyond a certain  date.  Actual
collection  experience realized by the Company on previously designated doubtful
accounts  is charged  against  the  allowance  for  doubtful  accounts  with any
favorable  or  unfavorable  experience,  as compared to  management's  preceding
estimates, having a correspondingly impact on its results of operations.

Inventories

Inventories,  which  consist  solely of finished good  available  for sale,  are
stated  at the  lower of  average  cost or  market,  reduced  by an  appropriate
allowance estimated by management for probable obsolescence. The Company records
an allowance for  obsolescence  based on its  historical  experience  and future
expectations.  The  periodic  provisions  made by the Company to  establish  and
maintain an appropriate allowance for obsolescence are charged to its results of
operations  via  increases  to its cost of  product  sales.  Actual  disposition
experience  realized by the Company on previously  designated obsolete inventory
is  charged  against  the  allowance  for  obsolescence  with any  favorable  or
unfavorable experience, as compared to management's preceding estimates,  having
a corresponding impact on its results of operations.

Prepaid Expenses

The Company  amortizes its prepaid  expenses on a  straight-line  basis over the
period during which it will receive the underlying services.

Property and Equipment

Property and equipment  are recorded at cost.  Cost  includes  expenditures  for
major  additions and  improvements.  Maintenance and repairs which do not extend
the useful life of the related  property or equipment  are charged to operations
as incurred.  The provision for related depreciation has been computed using the
straight-line method over the following estimated useful lives: office furniture
and equipment - five to ten years;  tooling - three years; vehicle - five years;
machinery and equipment - ten years; and molds - five years.

The net book value of property and equipment sold or retired is removed from the
asset and related  depreciation  accounts  with any  resulting  net gain or loss
included in the determination of the Company's results of operations.

Intellectual Property Rights

Direct  costs  incurred  in  acquiring  intellectual  property  rights have been
capitalized  and are being  subsequently  amortized into operating  results on a
straight-line basis over estimated useful lives of three years.


                                      F- 8
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Impairment of Long-Lived Assets

Management,  on at least a  quarterly  basis,  evaluates  each of the  Company's
long-lived  assets for impairment by comparing the related estimated future cash
flows,  on an  undiscounted  basis,  to its net book  value.  If  impairment  is
indicated,  the net book value is reduced  to an amount  equal to the  estimated
future cash flows, on an appropriately discounted basis.

Deferred Financing Costs

Direct costs incurred in connection  with the issuance of debt  instruments  are
initially deferred and subsequently amortized using the interest method over the
term in which the related  debt  remains  outstanding.  However,  in those cases
where the fair value  attributable to any beneficial  conversion  feature of the
debt instrument indicates that, despite its legal form, the underlying substance
of the  instrument is that of equity,  the Company  offsets the direct  issuance
costs  incurred  immediately  against  the fair value  allocated  to  additional
paid-in capital.

Deferred Income Taxes

Deferred  income tax assets and  liabilities  are  recognized  for the  expected
future income tax benefits or consequences,  based on enacted laws, of temporary
differences between tax and financial statement  reporting.  Deferred tax assets
are then  reduced by a valuation  allowance  for the amount of any tax  benefits
that more likely than not, based on current  circumstances,  are not expected to
be realized.

Beneficial Conversion Rights

The Company  periodically issues debentures that have non-detachable  conversion
features.  In those  instances  where the  stated  conversion  price  reflects a
discount from the then  prevailing  market price of the Company's  common stock,
management makes, at the date of the issuance,  an estimate as to the fair value
of this  beneficial  conversion  feature.  The value  assigned to the beneficial
conversion  feature is then immediately  recognized in the Company's  results of
operations  via an  interest/financing  charge  with a  corresponding  credit to
additional paid-in capital.

Non-Cash Equity Issuances

The Company  periodically  issues shares of its common stock in exchange for, or
in settlement of, services. The Company's management values the shares issued in
such transactions at either the then market price of the Company's common stock,
after taking into  consideration  factors such as the volume of shares issued or
trading restrictions,  or the value of the services received,  whichever is more
readily determinable.

Fair Value of Financial Instruments

Management believes that the carrying values reported for the Company's accounts
receivable, accounts payable, and accrued expenses materially approximated their
respective  fair  values at each  balance  sheet  date due to the  immediate  or
short-term  maturity of these  financial  instruments.  Management also believes
that the carrying  values  reported  for the  Company's  outstanding  debentures
materially  approximated their respective fair values at each balance sheet date
as the stated  rates of  interest  reflected  then  prevailing  market  rates of
interest. The estimated fair value amounts have been determined by the Company's
management  using  available  market   information  and  appropriate   valuation
methodologies.  Considerable judgment is required in interpreting market data to
develop the  estimates of fair value,  and  accordingly,  the  estimates are not
necessarily  indicative  of the  amounts  that the  Company  could  realize in a
current market exchange.


                                      F- 9
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition

In accordance with SEC Staff Accounting  Bulletin No. 101, "Revenue  Recognition
in  Financial  Statements,"  the Company  recognizes a product  sale,  including
related  shipping and handling  income,  and the cost of the sale,  upon product
shipment  provided  that  all  material  risks  and  rewards  of  ownership  are
concurrently  transferred  from the Company to its  customer,  collection of the
related  receivable is reasonably  assured,  and  management is able to reliably
estimate appropriate  allowances for probable sales returns and customer rebates
based on its relevant  historical  experience and future  expectations.  Cost of
sales  primarily  consists of direct  labor,  material and  overhead,  including
freight-in costs,  warehousing costs, shipping and handling costs, and inventory
valuation adjustments for obsolescence.

The Company  recognizes  revenues from  maintenance  services on a straight-line
basis over the terms of the respective underlying maintenance agreements,  which
range from three months to one year in  duration.  Any  prepaid,  yet  unearned,
portion of a maintenance  agreement is recorded as deferred income.  The Company
is no longer actively  marketing these  computer-related  maintenance  services,
which primarily remain with financial  institutions,  and, as a result, does not
expect the related revenues to be material in future fiscal periods.

Major Customers

Two  customers  individually  accounted  for  approximately  35%  and 13% of the
Company's  consolidated  net  sales  for  fiscal  2003,  with one such  customer
accounting for approximately 64% of accounts receivable at October 31, 2003. Two
different customers  individually accounted for approximately 21% and 18% of the
Company's consolidated net sales for fiscal 2002.

Major Vendors

Two  vendors  individually  accounted  for  approximately  24%  and  20%  of the
Company's  inventory  purchases  during  fiscal 2003.  Two vendors  individually
accounted for  approximately  58% and 23% of the Company's  inventory  purchases
during fiscal 2002.

Product Warranties

The Company's  products are accompanied by limited  liability  warranties of one
year durations  against defects in material or workmanship.  At the time of each
product's sale,  management makes an estimate based on the Company's  historical
experience and future expectations of the probable future cost to be incurred in
honoring the  accompanying  warranty and accrues a corresponding  liability.  To
date,  the  Company's  warranty  liabilities,  in the  aggregate,  have not been
material.

Advertising Costs

The Company expenses all advertising  costs as incurred.  Consolidated  selling,
general and  administrative  expenses include  advertising  costs of $45,028 and
$23,167 for fiscal 2003 and 2002, respectively.

Product Research and Development

The Company  incurred no research and  development  costs during fiscal 2003 and
2002.

Net Loss Per Share

Basic and diluted net loss per share has been  computed by dividing  net loss by
the weighted average number of common shares outstanding during the fiscal year.
At October 31, 2003 and 2002, the Company had stock warrants


                                     F- 10
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Net Loss Per Share (continued)

outstanding that could potentially be exercised into 5,082,205 additional common
shares. The Company additionally had debentures  outstanding at October 31, 2003
and 2002 the conversion price of which will be established as of the date of any
subsequently elected conversion,  thus the number of potentially issuable common
shares pursuant to the terms of these unexercised  conversion rights will not be
previously  determinable.  Should  the  Company  report  net  income in a future
period,  diluted net income per share will be separately disclosed giving effect
to the  potential  dilution  that  could  occur  if the then  outstanding  stock
warrants were exercised into common shares.

Segment Reporting

The  Company's  chief  operating  decision  makers  consist of members of senior
management  that  work  together  to  allocate  resources  to,  and  assess  the
performance of, the Company's business.  Senior management currently manages the
Company's business,  assesses its performance,  and allocates its resources as a
single operating segment. To date, the Company's products and services have been
principally  marketed to customers residing within the United States of America.
Net revenues realized from customers  residing in other geographic  markets were
less than ten  percent of  consolidated  net  revenues  in fiscal 2003 and 2002,
respectively.

Accounting Standards Adopted During Fiscal 2003

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets"
("SFAS No. 142"),  which revises the accounting for purchased goodwill and other
intangible assets. Under SFAS No. 142, goodwill and other intangible assets with
indefinite  lives  will no longer be  systematically  amortized  into  operating
results.  Instead,  each of these  assets  will be tested,  in the absence of an
indicator of possible  impairment,  at least annually,  and upon an indicator of
possible impairment, immediately.

In August 2001, the FASB issued SFAS No. 143,  "Accounting for Asset  Retirement
Obligations" ("SFAS No. 143"). SFAS No. 143 requires entities to record the fair
value of a liability for an asset  retirement  obligation in the period in which
it is a cost by increasing the carrying amount of the related  long-lived asset.
Over time,  the liability is accreted to its present value each period,  and the
capitalized cost is depreciated  over the useful life of the related  obligation
for its recorded amount or incurs a gain or loss upon settlement.

In August 2001, the FASB issued SFAS No. 144,  "Accounting for the Impairment or
Disposal of  Long-lived  Assets"  ("SFAS No.  144").  SFAS No. 144 was issued to
resolve certain  implementation issues that had arisen under SFAS No. 121. Under
SFAS No.  144, a single  uniform  accounting  model is  required  to be used for
long-lived assets to be disposed of by sale, whether previously held and used or
newly acquired, and certain additional disclosures are required.

In April 2002, the FASB issued SFAS No. 145,  "Rescission of FASB Statements No.
4, 44, and 64,  Amendment of FASB  Statement No. 13, and Technical  Corrections"
("SFAS No.  145").  SFAS No. 145  updates,  clarifies  and  simplifies  existing
accounting  pronouncements,  by rescinding  SFAS No. 4, which required all gains
and losses  from  extinguishment  of debt to be  aggregated  and,  if  material,
classified as an  extraordinary  item,  net of related  income tax effect.  As a
result,  the criteria in Accounting  Principles  Board Opinion No. 30 ("APBO No.
30") will now be used to classify those gains and losses. Additionally, SFAS No.
145 amends SFAS No. 13 to require that  certain  lease  modifications  that have
economic effects similar to sale-leaseback  transactions be accounted for in the
same manner as  sale-leaseback  transactions.  Finally,  SFAS No. 145 also makes
technical  corrections to existing  pronouncements.  While those corrections are
not  substantive  in  nature,  in some  instances,  they may  change  accounting
practice.


                                     F- 11
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting Standards Adopted During Fiscal 2003 (continued)

The Company  adopted the provisions of SFAS No. 145 that amended SFAS No. 13, as
required,  on May 15, 2002, for  transactions  occurring after such date with no
material impact on its consolidated  financial  statements.  The Company adopted
SFAS Nos. 142, 143 and 144, as well as the remaining provisions of SFAS No. 145,
as required,  on November 1, 2002, with no material  impact on its  accompanying
consolidated financial statements.

In June 2002,  the FASB issued SFAS No. 146,  "Accounting  for Costs  Associated
with Exit or Disposal  Activities"  ("SFAS No. 146"). SFAS No. 146 was issued to
address the financial accounting and reporting for costs associated with exit or
disposal activities,  unless specifically excluded. SFAS No. 146 requires that a
liability  for a cost  associated  with a covered  exit or disposal  activity be
recognized  and measured  initially at its fair value in the period in which the
liability is incurred,  except for a liability for one-time termination benefits
that is incurred  over time.  If employees  are not  required to render  service
until they are terminated in order to receive the one-time  termination benefits
or if  employees  will not be  retained  to render  service  beyond the  minimum
retention  period (as dictated by existing law,  statute or contract,  or in the
absence  thereof,  60 days), a liability for the  termination  benefits shall be
recognized  and  measured  at its  fair  value  at the  communication  date.  If
employees are required to render  service until they are  terminated in order to
receive the one-time termination benefits and will be retained to render service
beyond the minimum  retention  period, a liability for the termination  benefits
shall be measured initially at the communication date based on the fair value of
the liability as of the  termination  date.  The  liability  shall be recognized
ratably  over the  future  service  period.  SFAS No. 146 also  dictates  that a
liability for costs to terminate an operating lease or other contract before the
end of its term  shall be  recognized  and  measured  at its fair value when the
entity  terminates  the  contract  in  accordance  with the  contract  terms.  A
liability for costs that will  continue to be incurred  under a contract for its
remaining  term without  economic  benefit to the entity is to be recognized and
measured at its fair value when the entity  ceases  using the right  conveyed by
the contract.  SFAS No. 146 further  dictates that a liability for other covered
costs associated with an exit or disposal activity be recognized and measured at
its fair value in the period in which the  liability  is  incurred.  The Company
adopted SFAS No. 146, as required,  on January 1, 2003,  with no material impact
on its accompanying consolidated financial statements.

In  November  2002,  the FASB issued FASB  Interpretation  No. 45,  "Guarantor's
Accounting  and  Disclosure  Requirements  for  Guarantees,  Including  Indirect
Guarantees  of  Indebtedness  of Others"  ("FIN  45").  FIN 45  requires  that a
liability  be  recorded  in the  guarantor's  balance  sheet upon  issuance of a
guarantee. In addition, FIN 45 requires disclosures about the guarantees that an
entity has issued, including a reconciliation of changes in the entity's product
warranty liabilities.  The initial recognition and measurement provisions of FIN
45 are applicable on a prospective  basis to guarantees issued or modified after
December 31, 2002,  irrespective of the guarantor's fiscal year-end. The Company
adopted FIN 45, as required,  on January 1, 2003, with no material impact on its
accompanying consolidated financial statements.

In  December  2002,  the FASB issued SFAS No. 148  "Accounting  for  Stock-Based
Compensation  --- Transition and Disclosure,  an amendment of FASB Statement No.
123"  ("SFAS No.  148").  SFAS No. 148  amended  SFAS No.  123  "Accounting  for
Stock-Based Compensation" ("SFAS No. 123") to provide for alternative methods of
transition for an entity that voluntarily changes to the fair value based method
of accounting for stock-based employee compensation. SFAS No. 148 further amends
the disclosure  provisions of SFAS No. 123 and APBO No. 28 to require  prominent
annual and interim  disclosures about the effects on reported net income or loss
of an entity's accounting policy decisions with respect to stock-based  employee
compensation.  As the Company continues to account for any stock-based  employee
compensation  under the intrinsic value based method allowed by APBO No. 25, its
adoption of the disclosure  provisions of SFAS No. 148, as required, on November
1,  2002 had no  material  impact  on its  accompanying  consolidated  financial
statements.


                                     F- 12
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Accounting Standards Adopted During Fiscal 2003 (continued)

In April 2003,  the FASB issued SFAS No. 149,  "Amendment  of  Statement  133 on
Derivative  Instruments and Hedging  Activities"  ("SFAS No. 149"). SFAS No. 149
amends and clarifies  accounting for derivative  instruments,  including certain
derivative  instruments embedded in other contracts,  and for hedging activities
under SFAS No.  133.  SFAS No.  149  requires  that  contracts  with  comparable
characteristics  be accounted  for  similarly  and  clarifies  when a derivative
contains a financing  component that warrants special reporting in the statement
of cash flows.  SFAS No. 149 is effective for contracts entered into or modified
after  June  30,  2003,  except  in  certain  circumstances,   and  for  hedging
relationships  designated after June 30, 2003. The Company adopted SFAS No. 149,
as  required,  on July 1,  2003  with no  material  impact  on its  accompanying
consolidated financial statements..

In May 2003,  the FASB issued SFAS No. 150,  "Accounting  for Certain  Financial
Instruments with  Characteristics  of Both Liabilities and Equity." SFAS No. 150
established standards for how an issuer classifies and measures in its statement
of financial position certain financial instruments with characteristics of both
liabilities and equity.  The Company  adopted SFAS No. 150, as required,  on May
31, 2003 for  financial  instruments  entered into or modified  after such date,
with no material impact on its accompanying  consolidated  financial statements.
The  remaining  provisions  of SFAS No. 150 were  effective  beginning  with the
Company's  fiscal 2003 fourth quarter ended October 31, 2003 and must be applied
prospectively  by reporting the  cumulative  effect of a change in an accounting
principle for financial instruments created before the issuance date of SFAS No.
150 and still  existing at August 1, 2003. The Company  adopted these  remaining
provisions  of SFAS No. 150, as  required,  on August 1, 2003,  with no material
impact.

In January 2003, the FASB issued FASB  Interpretation No. 46,  "Consolidation of
Variable  Interest  Entities"  ("FIN 46"). In December  2003,  the FASB issued a
revision to FIN 46. This  interpretation of Accounting Research Bulletin No. 51,
"Consolidated   Financial  Statements,"  addresses   consolidation  by  business
enterprises of variable interest entities that possess certain  characteristics.
FIN 46  requires  that if a  business  enterprise  has a  controlling  financial
interest in a variable interest entity, the assets, liabilities,  and results of
the  activities  of  the  variable  interest  entity  must  be  included  in the
consolidated financial statements with those of the business enterprise.  As the
Company  has not had,  and  continues  not to have,  any  ownership  in variable
interest entities,  its adoption of FIN 46, as originally required,  on November
1, 2003,  had no  material  impact on its  accompanying  consolidated  financial
statements. The FASB's subsequent revision of FIN 46 also had no material impact
on the Company's accompanying consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

There  currently  are no  recently  issued  accounting  standards  with  pending
adoptions that have any applicability to the Company.


3.    RESTRICTED CASH

The  Company  has  pledged  $10,000  of its cash to  secure a letter  of  credit
guaranteeing  the payment of rebates to the customers of a major  retailer.  The
letter of credit will expire in June 2004.


                                     F- 13
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. ACCOUNTS  RECEIVABLE AND ALLOWANCES FOR SALES RETURNS,  CUSTOMER  REBATES AND
DOUBTFUL ACCOUNTS

The Company's accounts receivable, net, consists of:

                                                                    October 31,
                                                                       2003
                                                                   ------------
         Accounts receivable, gross............................    $    174,489
         Allowances for sales returns, customer rebates
           and doubtful accounts                                        (63,167)
                                                                   ------------
         Accounts receivable, net..............................    $    111,322
                                                                   ============


The following schedule sets forth the activity in the Company's allowance for
sales returns:

                                                   Fiscal Year     Fiscal Year
                                                      Ended           Ended
                                                   October 31,     October 31,
                                                       2003            2002
                                                  -------------- --------------
         Balance, beginning of year...............$        1,600 $       19.862
         Provisions...............................        46,354          1,600
         Returns..................................       (20,716)       (19,862)
                                                  -------------- --------------
         Balance, end of year.....................$       27,238 $        1,600
                                                  ============== ==============


The following schedule set forth the activity in the Company's allowance for
customer rebates:

                                                   Fiscal Year     Fiscal Year
                                                      Ended           Ended
                                                   October 31,     October 31,
                                                       2003            2002
                                                  -------------- --------------
         Balance, beginning of year...............$           -- $           --
         Provisions...............................        12,429             --
         Rebates..................................            --             --
                                                  -------------- --------------
         Balance, end of year.....................$       12,429 $           --
                                                  ============== ==============


The following schedule set forth the activity in the Company's allowance for
doubtful accounts:

                                                   Fiscal Year     Fiscal Year
                                                      Ended           Ended
                                                   October 31,     October 31,
                                                       2003            2002
                                                  -------------- --------------
         Balance, beginning of year...............$       56,509 $       50,000
         Provisions...............................        35,948         13,198
         Write-offs, net of recoveries............       (68,957)        (6,689)
                                                  -------------- --------------
         Balance, end of year.....................$       23,500 $       56,509
                                                  ============== ==============


                                     F- 14
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

5.    Inventories, net

Inventories, net, consists of the following:

                                                               October 31,
                                                                  2003
                                                              ------------
         Inventories, gross................................   $     76,942
         Less allowance for inventory obsolescence.........        (33,100)
                                                              ------------
         Inventories, net..................................   $     43,842
                                                              ============


The  following  schedule set forth the activity in the  Company's  allowance for
obsolescence:

                                                    Fiscal Year     Fiscal Year
                                                       Ended           Ended
                                                    October 31,     October 31,
                                                        2003            2002
                                                   -------------   ------------
         Balance, beginning of year............... $          --   $        --
         Provisions...............................        33,100        90,035
         Write-offs, net of recoveries............            --       (90,035)
                                                   -------------  ------------
         Balance, end of year..................... $      33,100   $        --
                                                   =============  ============


6. Property and Equipment, net

Property and equipment, net, consists of the following:

                                                                   October 31,
                                                                      2003
                                                                   -----------
         Office furniture and equipment.........................   $    81,027
         Tooling................................................        68,100
         Vehicle................................................        39,141
         Machinery and equipment................................        37,641
         Molds..................................................        25,000
                                                                   -----------
         Property and equipment, gross..........................       250,909
         Less accumulated depreciation, including write-down....      (187,580)
                                                                   -----------
         Property and equipment, net............................   $    63,329
                                                                   ===========

During  its  fiscal  2003  fourth  quarter,  the  Company  recognized  a $25,000
impairment  charge to write-down  the then carrying  value of molds for its Xela
Case Keyboard.  See "Note 7 -  Intellectual  Property  Rights,  net" for further
related details.


                                     F- 15
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

7.    INTELLECTUAL PROPERTY RIGHTS, NET

Intellectual property rights, net, consist of the following:

                                                                    October 31,
                                                                       2003
                                                                   ------------
         Intellectual property rights, gross.....................  $    200,000
         Less accumulated amortization., including write-down....      (139,000)
                                                                   ------------
         Intellectual property rights, net.......................  $     61,000
                                                                   ============

In July 2002, the Company purchased the intellectual  property rights underlying
and molds for its Xela Case  Keyboard for  $200,000  and $50,000,  respectively.
Upon the Xela Keyboard  becoming  fully  developed and available for sale to the
general public, the Company began amortizing these intellectual  property rights
on a  straight-line  basis over an  estimated  useful  life of three  years.  In
connection  with the  acquisition of these  intellectual  property  rights,  the
Company  became  obligated  to pay the seller a royalty of two  dollars per unit
sold on the first one million units sold.

During the  Company's  fiscal  2003 fourth  quarter,  the  Company's  management
downwardly revised its estimate of the anticipated cash flows to be derived from
future sales of the XELA Keyboard as a result of lower than  anticipated  sales.
As a result, the Company correspondingly recognized a $100,000 impairment charge
to write-down the underlying intellectual property rights, which is reflected in
the immediately preceding schedule.


8.    Note Receivable from Officer, net

The Company's  privately-held  predecessor (Southwest Financial) advanced monies
to its sole shareholder,  Ken Schilling. When the Company entered into a reverse
merger in January 1999,  the Company  executed a note  receivable  consolidating
these past  advances  which had a stated  interest  rate of 6.0% per annum,  was
collateralized by personally owned shares of the Company's common stock, and was
payable upon demand. As the collaterizing  common stock was subsequently donated
to the Company  during fiscal 2001 in order to  facilitate  its  procurement  of
certain necessary corporate financing, the aforementioned note receivable became
unsecured.  In the  absence of any  collateral,  given  certain  other  concerns
regarding its collectability,  the Board of Directors directed management during
fiscal 2001 to  establish a full  allowance  against the note  receivable,  thus
reducing its then net carrying value to zero.


9.    Deferred Tax Assets

Deferred tax assets, net, at October 31, 2003 consist of the following:

                                                                    October 31,
                                                                       2003
                                                                  -------------
         Net operating loss carry-forwards......................  $   2,900,500
         Accrued expenses and miscellaneous.....................          8,800
                                                                  -------------
         Deferred tax assets, gross.............................      2,909,300
         Valuation allowance....................................     (2,909,300)
                                                                  -------------
         Deferred tax assets, net...............................  $          --
                                                                  =============

The Company's net operating loss carry-forwards, which aggregated $14,524,938 at
October 31, 2003,  expire in varying  amounts during calendar years 2010 through
2023.


                                     F- 16
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

9. DEFERRED TAX ASSETS (CONTINUED)

A reconciliation of the valuation allowance follows:

                                                                   Fiscal Year
                                                                      Ended
                                                                   October 31,
                                                                      2003
                                                                  -------------
         Balance, beginning of year..........................     $   1,158,265
         Additions...........................................         1,751,035
                                                                  -------------
         Balance, end of year................................     $   2,909,300
                                                                  =============


10.   ACCRUED LIABILITIES

Accrued liabilities consist of the following:

                                                                   October 31,
                                                                      2003
                                                                  ------------
         Accrued interest....................................     $    741,398
         Accrued wages.......................................          670,077
         Accrued bonuses.....................................          578,000
         Accrued payroll and income taxes....................          216,940
         Accrued sales commissions...........................           51,762
         Accrued vacation....................................           47,051
         Accrued royalties...................................            1,683
                                                                  ------------
         Total accrued liabilities...........................     $  2,306,911
                                                                  ============

The Company  remains liable to the U.S.  Internal  Revenue  Service  ("IRS") for
approximately  $65,000  in  unpaid  payroll  taxes,  and  subsequently  assessed
interest, for certain periods through its first quarter of 1999. The Company has
continued to accrue for this liability in its consolidated financial statements.
It is management's intention to seek a reduced settlement of this liability with
the IRS, if and when,  the Company has surplus  working  capital  allowing it to
timely honor any such  settlement.  As of October 31, 2003,  the IRS had not yet
assessed, nor has the Company accrued for, any related penalties.


11.   NOTES PAYABLE

Notes payable consist of the following:

                                                                   October 31,
                                                                      2003
                                                                  ------------
         Note payable - Enterprise Capital AG................     $     90,000
         Note payable - Gammage and Burnham..................           30,000
         Note payable - Community First National Bank........            4,920
                                                                  ------------
         Total notes payable.................................     $    124,920
                                                                  ============

The note payable from Enterprise Capital AG is unsecured,  has no stated rate of
interest  and has no maturity  date.  The note payable to Gammage and Burnham is
secured by the Company's accounts receivable,  has no stated rate of interest or
maturity date, and requires periodic repayments of the outstanding  principal as
the securing  accounts  receivable  are realized.  The note payable to Community
First National Bank is secured by a fully-depreciated


                                     F- 17
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

11. NOTES PAYABLE (CONTINUED)

automobile, accrues interest at 7.0% per annum, and requires monthly payments of
principal and interest rate of $545 through its March 7, 2004 maturity  date. At
October 31, 2003, the Company was in default of the notes payable to Gammage and
Burnham and Community First National Bank. See "Note 20 - Subsequent Events" for
details  regarding the  subsequent  repayment of the note payable to Gammage and
Burnham.

12. CONVERTIBLE DEBENTURES

The Company's outstanding convertible debentures consist of the following:

                                                                  October 31,
                                                                     2003
                                                                -------------
         KCM, LLC.    ......................................... $   1,668,702
         AJW Offshore, LLC, AJW Qualified Partners, LLC and
           AJW Partners, LLC (collectively, "AJW Entities")....     1,033,150
         Lites Trading Company.................................       750,000
         Laurus Master Fund, Ltd...............................       323,985
         Alpha Capital Alktiengesellschaft.....................       240,000
                                                                -------------
         Total debentures outstanding.......................... $   4,015,837
         Current maturities - Fiscal 2004...................... $  (3,265,837)
                                                                -------------
         Non-current maturities - Fiscal 2005.................. $      750,000
                                                                =============

The Company's outstanding  debentures to KCM, LLC (KCM") were issued October 31,
2000 through  January 15, 2002 in the original  aggregate  amount of $5,000,000,
are unsecured,  accrued interest at 8.0% per annum,  with interest only payments
due on the first day of each subsequent  calendar quarter  beginning  January 1,
2001,  and  became  due and  payable on  October  31,  2003.  KCM has the stated
unilateral right to initially convert one-half of any outstanding  principal and
accrued  interest  thereon at any time into shares of the Company's common stock
at the lesser of (i) 80% of the average of the three  lowest  closing bid prices
over  the  preceding  twenty-two  consecutive  trading  days or (ii)  80% of the
average  of the  five  lowest  closing  bid  prices  over  the  preceding  sixty
consecutive  trading days. KCM has the stated  unilateral  right to subsequently
convert the remaining one-half of any outstanding principal and accrued interest
thereon  at any time into  shares of the  Company's  common  stock at 86% of the
average  of  the  three  lowest  closing  bid  prices  over  the  preceding  ten
consecutive trading days. The Company is required to reserve twice the number of
its common shares  necessary to  accommodate  the  conversion of any then unpaid
principal  and accrued  interest  thereon,  plus the  exercise  of the  warrants
described  below,  and it will incur  certain  penalties  if any  conversion  or
exercise shares are not issued within the specified timeframe. KCM also received
anti-dilution rights allowing it to participate in any prospective  issuances by
the  Company  of shares of its  common  stock.  As it was  unable to redeem  the
$1,668,702  aggregate principal balance, and $367,568 aggregate accrued interest
thereon,  of these  outstanding  debentures  when they became due and payable on
October 31, 2003, the Company became in default at which time the then aggregate
outstanding principal and interest balance began accruing interest at the stated
default rate of 20.0% per annum.  In  connection  with the original  issuance of
these debentures,  the Company granted KCM detachable  warrants  entitling it to
subsequently  purchase over a five-year  period  371,667 shares of the Company's
common stock at exercise  prices  ranging  from $0.21 to $0.42 per share.  These
warrants remained unexercised as of October 31, 2003.

The Company's  outstanding  debentures  to the AJW Entities  ("AJW") were issued
August 2002 through June 2003 in the original  aggregate  amount of  $1,350,000,
are secured by all of the Company's assets, accrued interest at 12.0% per annum,
with  interest  only  payments due on the last day of each  subsequent  calendar
quarter  beginning  September  30, 2002,  and became,  or will  become,  due and
payable at various dates between  August 2003 and June 2004.  AJW has the stated
unilateral  right to convert all or a portion of any  outstanding  principal and
accrued  interest  thereon at any time into shares of the Company's common stock
at the lesser of (i) $0.05 per common share or (ii) 50% of the


                                     F- 18
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. CONVERTIBLE DEBENTURES (CONTINUED)

average  of the three  lowest  closing  bid  prices  over any  specified  twenty
successive  trading  days. As it was unable to redeem the  $1,033,150  aggregate
principal  balance,  and $95,458 aggregate  accrued interest  thereon,  of these
outstanding  debentures as of October 31, 2003 when they  previously  became due
and  payable,  the  Company  became in default at which time the then  aggregate
outstanding principal and interest balance began accruing interest at the stated
default rate of 15.0% per annum.  In  connection  with the original  issuance of
these debentures,  the Company granted AJW detachable  warrants  entitling it to
subsequently purchase over a five and seven year periods 3,460,000 shares of the
Company's  common  stock at an  exercise  price of $0.05 and  $0.01  per  share,
respectively. These warrants remained unexercised as of October 31, 2003.

The Company's  outstanding debenture to Lites Trading Company ("LTC") was issued
on March 27, 2000 in the original  amount of $1,600,000,  is unsecured,  accrues
interest at 7.0% per annum,  with  interest  only  payments  due on May 1st, and
December 1st of each year commencing May 1, 2000, and becomes due and payable on
March 27, 2005. LTC has the stated  unilateral right to convert all or a portion
of any  outstanding  principal  and  accrued  interest  thereon at any time into
shares of the  Company's  common  stock at the  lesser of (i)  $14.50 per common
share or (ii) 80% of the  average  closing  bid price over any three  successive
trading  days over the  preceding  twenty  trading  days.  To the extent  that a
default  event  occurs,  as defined,  interest on the then unpaid  principal and
accrued interest thereon will  subsequently  accrue at 18.0% per annum. Upon any
change of control in the Company, as defined,  LTC may demand redemption at 125%
of the aggregate unpaid principal and accrued interest  thereon.  The Company is
required to obtain the advance  approval of LTC for any  proposed  issuances  of
debt and/or equity securities,  or for any proposed declarations of dividends or
equity   retirements,   during  the  period  in  which  the  debenture   remains
outstanding.  In connection with the original  issuance of this  debenture,  the
Company granted LTC detachable  warrants  entitling it to subsequently  purchase
over a five year  period  37,500  shares  of the  Company's  common  stock at an
exercise price of $14.50 per share.  These warrants  remained  unexercised as of
October 31, 2003.

The Company's outstanding debentures to Laurus Master Fund, Ltd. ("Laurus") were
issued  in April  through  October  2001 in the  original  aggregate  amount  of
$709,723, are unsecured,  accrued interest at 8.0% per annum, with interest only
payments  due on the  last day of each  subsequent  calendar  quarter  beginning
September 30, 2001,  and became due and payable on October 31, 2003.  Laurus has
the  stated  unilateral  right to convert  all or a portion  of any  outstanding
principal and accrued  interest thereon at any time into shares of the Company's
common stock at the lesser of (i) 80% of the average  closing bid price over any
specified three  successive  trading days or (ii) 80% of the average closing bid
price over any specified twenty-two successive trading days. As it was unable to
redeem the $323,985 aggregate  principal balance,  and $60,121 aggregate accrued
interest  thereon,  of these  outstanding  debentures  when they  became due and
payable on October 31,  2003,  the  Company  became in default at which time the
then  aggregate  outstanding  principal  and  interest  balance  began  accruing
interest at the stated default rate of 20.0% per annum.  In connection  with the
April 2001  issuance  of  debentures,  the  Company  granted  Laurus  detachable
warrants  entitling it to subsequently  purchase over a five year period 150,000
shares of the Company's common stock at an exercise price equal to the lesser of
(i) $1.23 per common shares or (ii) the average of the three lowest  closing bid
prices over any subsequent ten successive  trading days. In connection  with the
July 2001 issuance of debentures, the Company granted Laurus detachable warrants
entitling it to subsequently  purchase over a five year period 100,000 shares of
the Company's common stock at an exercise price equal to the lesser of (i) $0.48
per common  shares or (ii) 105% of the average of the three  lowest  closing bid
prices over any subsequent ten successive  trading days. In connection  with the
August  2001  issuance of  debentures,  the Company  granted  Laurus  detachable
warrants  entitling it to  subsequently  purchase over a five year period 52,500
shares of the Company's common stock at an exercise price equal to the lesser of
(i) $0.39 per  common  shares or (ii) 105% of the  average  of the three  lowest
closing  bid  prices  over  any  subsequent  ten  successive  trading  days.  In
connection  with the October 2001 issuance of  debentures,  the Company  granted
Laurus  detachable  warrants  entitling it to subsequently  purchase over a five
year period  35,000 shares of the  Company's  common stock at an exercise  price
equal to the lesser of (i) $0.26 per common  shares or (ii) 105% of the  average
of the three  lowest  closing  bid prices  over any  subsequent  ten  successive
trading days. These warrants remained unexercised as of October 31, 2003.


                                     F- 19
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

12. CONVERTIBLE DEBENTURES (CONTINUED)

The  Company's  outstanding  debentures  to  Alpha  Capital  Alktiengesellschaft
("Alpha") were issued in January and April 2002 in the original aggregate amount
of $262,500,  are unsecured,  accrue  interest at 8.0% per annum,  with interest
only payments due on the last day of each subsequent  calendar quarter beginning
March 31, 2002, and become due and payable at various dates between  January 30,
2004 and April 25, 2004. Alpha has the stated unilateral right to convert all or
a portion of any outstanding  principal and accrued interest thereon at any time
into shares of the Company's common stock at the lesser of 80% of the average of
the three lowest closing bid prices over (i) any specified twenty-two successive
trading days or (ii) any specified sixty successive  trading days. To the extent
that a default event occurs,  as defined,  interest on the then unpaid principal
and accrued  interest  thereon will  subsequently  accrue at 20.0% per annum. In
connection  with the issuances of these  debentures,  the Company  granted Alpha
detachable  warrants  entitling  it to  subsequently  purchase  over a five year
period  800,000  shares of the  Company's  common stock at an exercise  price of
$0.60 per share. These warrants remained unexercised as of October 31, 2003.

See  "Note  20 -  Subsequent  Events"  for  details  regarding  subsequent  debt
conversions.


13.   STOCKHOLDERS' DEFICIT

General

On December 20, 2001, the Company's  Board of Directors  authorized the issuance
of 3.5 million shares of the Company's preferred stock to one director and three
officers in satisfaction of retention and performance  bonuses.  Although all of
these  preferred  shares have been  reserved  for,  their  actual  issuance  was
postponed  due to  the  subsequent  downturn  in the  Company's  operations  and
departure of two of the officers.  If and when ultimately issued, each preferred
share  will have a 10:1  conversion  rate to common and super  voting  rights of
100:1.  No other  rights have yet been  designated  to these  preferred  shares,
including, but not limited to, dividend and liquidation rights.

On September 6, 2002, the Company  transacted a one-for-ten  reverse stock split
of its common stock.  This stock split has been  retroactively  reflected in the
financial statements as if it occurred at the date of the Company's inception.

On February 24, 2003, the Company's Board of Directors  approved an amendment to
the Company's Articles of Incorporation to increase its authorized common shares
from 450 million to five billion.

Common Stock Issued for Cash

During fiscal 2002, the Company  issued an aggregate of 3,000,000  shares of its
common stock to one unrelated individual in exchange for $79,500 in cash.

During fiscal 2003, the Company issued an aggregate of 36,691,176  shares of its
common stock to one unrelated individual in exchange for $36,691 in cash.

Common Stock Issued for Services Received and in Settlement of Accounts Payable

During fiscal 2002, the Company  issued an aggregate of 6,146,200  shares of its
common stock to former employees and various unrelated individuals in settlement
of $506,362 in services received and accounts payable.

During fiscal 2003, the Company issued an aggregate of 44,161,764  shares of its
common  stock to various  unrelated  individuals  in  settlement  of $248,250 in
services received and accounts payable.


                                     F- 20
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. STOCKHOLDERS' DEFICIT (CONTINUED)

Common Stock Issued to Officers and Other Employees as Retention Bonuses

During fiscal 2002, the Company issued an aggregate of 18,778,104  shares of its
common  stock to  officers  and other  employees  in  settlement  of $247,065 in
retention bonuses.

During fiscal 2003, the Company issued an aggregate of 253,063,228 shares of its
common  stock to  officers  and other  employees  in  settlement  of $695,188 in
retention bonuses.

Issuance of Common Stock to President as Compensation

In November  2001,  the Company had no additional  common shares  authorized for
issuance.  In order to honor conversion  elections by certain debenture holders,
Kenneth W.  Schilling,  the  Company's  President and Chief  Executive  Officer,
donated  928,560  shares  of the  Company's  common  stock  owned  by him to the
Company.  Upon  obtaining  subsequent   shareholder  approval  to  increase  the
Company's authorized common shares, the Board of Directors approved the issuance
of 1,500,000 restricted shares of the Company's common stock to Mr. Schilling as
reimbursement and compensation for the previously contributed common shares.

Beneficial Conversion Feature of Debentures Issued

The Company  recorded  $4,283,930 and $1,379,077 in additional  paid-in  capital
during  fiscal years 2002 and 2003,  respectively,  in  recognition  of the fair
value  attributable  to the  non-detachable  conversion  features of  debentures
issued whereby the stated  conversion  price  reflected a discount from the then
prevailing market price of the Company's common stock.

Common Stock Issued Upon Conversion of Debentures and Accrued Interest Thereon

The Company issued  6,518,033 and 270,977,456  common shares during fiscal years
2002 and 2003, respectively,  to honor conversion elections by certain debenture
holders of related principal and accrued interest thereon.

Stock Options and Warrants

The following table  summarizes  stock option and warrant activity during fiscal
2003 and 2002:

<TABLE>
<CAPTION>
                                                                            Weighted
                                                                            Average
                                                             Options/       Exercise
                                                             Warrants        Price
                                                           -----------    -----------
<S>                                                          <C>          <C>
      Options/warrants outstanding at October 31, 2001...    1,220,449    $      4.49
                                                           -----------    -----------
      Granted warrants...................................    1,046,667           0.06
      Cancelled options..................................     (314,500)          5.60
      Cancelled warrants.................................      (35,500)         10.66
      Expired warrants...................................      (10,000)         10.00
      Exercised warrants.................................            -              -
                                                           -----------    -----------
      Warrants outstanding at October 31, 2002...........    1,907,116           1.98
      Granted warrants...................................    3,280,000           0.01
      Expired warrants...................................     (104,911)          9.87
      Exercised warrants.................................            -              -
                                                           -----------    -----------
      Warrants outstanding at October 31, 2003...........    5,082,205    $      0.45
                                                           ===========    ===========

      Exercisable at October 31, 2003....................    5,082,205    $      0.45
                                                           ===========    ===========
</TABLE>


                                     F- 21
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

13. STOCKHOLDERS' DEFICIT (CONTINUED)

Stock Options and Warrants (continued)

The Company cancelled its employee stock option plan effective October 31, 2002.

The following table summarizes information about the Company's outstanding stock
purchase warrants at October 31, 2003:

                          Warrants Outstanding and Exercisable
         ---------------------------------------------------------------------
            Range of
            Exercise        Number       Contractual             Grant
             Prices       Outstanding   Life in Years           Date(s)
         ---------------------------------------------------------------------
         $0.01               1,500,000       5.0                01/31/03
         $0.01               1,750,000       7.0          03/20/03 - 06/12/03
         $0.05                 210,000       5.0          08/15/02 - 11/05/02
         $0.06                 800,000       5.0          01/30/02 - 04/23/02
         $0.21                 150,000       5.0                06/27/01
         $0.26                  35,000       5.0                10/09/01
         $0.39                  52,500       5.0                08/21/01
         $0.42                 150,000       5.0                06/22/01
         $1.23                 150,000       5.0                04/26/01
         $2.28                  55,000       5.0                12/20/00
         $4.76                  50,000       2.0                10/31/00
         $9.37                   3,413       5.0                08/30/00
         $9.40                  20,000       5.0                12/28/99
         $9.90                  28,125       5.0                01/10/00
         $14.50                 37,500       5.0                03/27/00
         $20.50                 24,000       5.0                03/27/00
         Indeterminable         66,667       5.0                01/15/02
         ---------------------------------------------------------------------
         $0.01 - $50.00      5,082,205    2.0 - 7.0       12/28/99 - 06/12/03
         =====================================================================

Reflected in the above tables are 66,667 warrants granted during fiscal 2002 the
exercise  price of which will be equal to 105% of the  closing  bid price of the
Company's common stock on the trading day immediately  preceding the date of any
exercise.  Such  warrants  have been  excluded in the  computations  of weighted
average exercise prices.


14.   INTEREST AND MISCELLANEOUS INCOME

Interest and miscellaneous income consist of the following:

<TABLE>
<CAPTION>
                                                                 Fiscal Year      Fiscal Year
                                                                    Ended            Ended
                                                                 October 31,      October 31,
                                                                     2003             2002
                                                                ------------     ------------
<S>                                                             <C>              <C>
         Interest income....................................... $         --     $     18,310
         Gains on settlements of obligations to vendors........       85,733           44,754
         Other miscellaneous income............................        2,891               --
                                                                ------------     ------------
         Total interest and miscellaneous income............... $     88,624     $     63,064
                                                                ============     ============
</TABLE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

15.   INTEREST AND FINANCING EXPENSES

Interest and financing expenses consist of the following:

<TABLE>
<CAPTION>
                                                                 Fiscal Year      Fiscal Year
                                                                    Ended            Ended
                                                                 October 31,      October 31,
                                                                     2003             2002
                                                                ------------     ------------
<S>                                                             <C>              <C>
         Interest expense...................................... $   (353,516)    $   (250,057)
         Beneficial conversion features of debentures issued...   (1,379,077)      (4,283,930)
                                                                ------------     ------------
         Total interest and financing expenses................. $ (1,732,593)    $ (4,533,987)
                                                                ============     ============
</TABLE>


16. DISCONTINUED OPERATIONS / RELATED PARTY TRANSACTION

The Company's management and Board of Directors previously agreed to discontinue
certain  of  the  Company's   businesses   effective  October  31,  2001.  These
discontinued  businesses  consisted  of the  Company's  (i) network  integration
services business which was conducted through its Invnsys Technology Corporation
subsidiary and (ii) its digital internet  connection services business which was
conducted through its Qhost, Inc.  subsidiary.  At October 31, 2001, the Company
reported the related assets held for sale at management's  then best estimate of
their net realizable value. The Company subsequently  incurred related operating
losses in fiscal  2002 over and beyond  that  which  management  had  originally
estimated  and  provided  for in fiscal  2001 as a result  of (i)  approximately
$88,000 in expense settlements that management had originally believed in fiscal
2001 would have been assumed by a prospective  purchaser and (ii)  approximately
$40,000 in payroll settlements with certain former employees who were dismissed.
The Company also  subsequently  recognized during fiscal 2002 a $351,604 loss on
disposition of equipment when the Company was ultimately  unable to sell certain
related equipment which management had previously believed in fiscal 2001, based
on its then negotiations with a prospective purchaser, would be purchased at its
then net book value thereby resulting in no related gain or loss. On February 1,
2002,  the Company  elected to transfer these net assets held for sale to a real
estate  partnership  from  which it had  previously  leased  its  facilities  in
satisfaction  of $78,376  in  delinquent  rent and  property  taxes.  Kenneth W.
Schilling,   the  Company's  President  and  Chief  Executive  Officer,   was  a
non-controlling limited partner in such partnership at the date of the transfer.


17.   OPERATING LEASES

The  Company  leases  its  corporate  facilities  as well as a piece  of  office
equipment  under  operating   leases.   Both  of  these  operating   leases  are
noncancellable  and the facilities lease contains a rent escalation  clause. The
Company  incurred  aggregate rent expense under its operating  leases of $43,625
and $46,052 during fiscal years 2003 and 2002, respectively.

The future aggregate  minimum lease payments under operating lease agreements in
existence at October 31, 2003 are as follows:

                 Fiscal years ending October 31,
                 ----------------------------------------------------
                 2004..................................... $   52,275
                 2005.....................................     15,141
                 2006.....................................      2,112
                 2007.....................................        704
                 2008.....................................          -
                                                           ----------
                 Total minimum operating lease payments... $   70,232
                                                           ==========


                                     F- 22
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

18.     COMMITMENTS AND CONTINGENCIES

Legal and Administrative Proceedings

The Company, including its subsidiaries,  is periodically involved in litigation
and  administrative  proceedings  primarily  arising in the normal course of its
business. In the opinion of management,  the Company's gross liability,  if any,
and without any consideration  given to the availability of  indemnification  or
insurance  coverage,  under any pending or existing litigation or administrative
proceedings  would not  materially  affect its  financial  position,  results of
operations or cash flows.

Officer Employment Agreements

The Company has employment  agreements  with Kenneth  Schilling and Mark Perkins
which became  effective  July 1, 2001 and remain in force through June 30, 2004.
Mr.  Schilling's  contract provides for an annual salary of $250,000,  quarterly
performance  bonuses equal to one percent of the Company's total  revenues,  and
the granting of an option allowing for his subsequent purchase of 300,000 shares
of the Company's common stock at $0.20 per share. Mr. Perkin's contract provides
for an annual  salary of $150,000,  quarterly  performance  bonuses equal to one
percent of the Company's total revenues,  and the granting of an option allowing
for his subsequent  purchase of 120,000 shares of the Company's  common stock at
$0.20 per share.  Each stock option vested  immediately and is exercisable for a
period of ten years.  In the event of their voluntary  resignation,  as defined,
the  officer  shall be entitled  to six  month's  salary.  In the event of their
involuntary  termination by the Company without cause,  as defined,  the officer
shall be entitled to one year's salary.  In the event of a change in the control
of the Company,  each officer  shall be entitled to a lump sum payment  equal to
three year's annual salary.

On December 20, 2001, the Company's  Board of Directors  authorized the issuance
of  convertible  debentures  to the above  officers in  consideration  of unpaid
wages.  These  convertible  debentures were never formally issued as the subject
wages were ultimately paid in cash in January 2004.


19. SUBSEQUENT EVENTS (UNAUDITED)

Acquisition of Synosphere

On January 20,  2004,  the Company  acquired all of the  outstanding  membership
interests in Synosphere,  LLC ("Synosphere"),  a Texas limited liability company
pursuing the development of certain handheld computer technologies,  in exchange
for 30.0 million shares of its common stock. As the technological feasibility of
each of the  acquired  technologies  had yet to be fully  established  as of the
acquisition  date, the aggregate $1.2 million purchase price,  based on the then
prevailing  market price of the  Company's  common  stock,  will be  immediately
reflected within the Company's results of operations for its forthcoming  fiscal
2004 first quarter ending January 31, 2004.

In connection  with its  acquisition  of  Synosphere,  the Company  entered into
two-year employment agreements with Bryan Scott and Ramon Pereles,  Synosphere's
President  and  Chief  Marketing  Officer,   respectively.   Pursuant  to  these
agreements,  Mssrs.  Scott and  Pereles are to receive  annual base  salaries of
$112,000  and  $102,000,  respectively.  Mssrs.  Scott and  Pereles  are each to
additionally  receive  retention  bonuses of 2,500,000  shares of the  Company's
common  stock.  Mssrs.  Scott  and  Pereles  are also each to  receive  $500,000
earn-out  bonuses to be satisfied  in eight  successive  quarterly  issuances of
shares of the Company's common stock equal to $62,500 based upon the then market
price of the Company's common stock. A "golden  parachute"  clause shall also be
put in place such that if either of the employee  agreements  are  terminated by
the Company or any successor that the above  consideration is payable in full as
of the dates of their respective terminations.


                                     F- 23
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SUBSEQUENT EVENTS (CONTINUED) (UNAUDITED)

Proposed Spin-Off of iBIZ, Inc.

The Company currently conducts substantially all of its operations through iBIZ,
Inc., a  wholly-owned  subsidiary.  On July 20,  2003,  the  Company's  Board of
Directors  and a majority of its  stockholders  approved a proposed  spin-off of
iBIZ, Inc. as a stand-alone,  separately-reporting  public company. The proposed
spin-off  of iBIZ,  Inc. is intended  to  facilitate  a currently  contemplated,
although not yet legally consummated,  transaction being pursued with Enterprise
Capital  AG   ("Enterprise"),   an  investment  banking  firm  headquartered  in
Switzerland,  as further described below. Prior to any legal consummation of the
contemplated transaction with Enterprise, all of the then assets and liabilities
of iBIZ, Inc. would revert back to the Company.  As a result,  iBIZ, Inc. would,
in effect,  become a legal  public  shell  company.  Shortly  thereafter,  it is
contemplated that, through either an asset purchase or merger,  iBIZ, Inc. would
principally acquire two data input technologies being marketed to the Company by
Enterprise,  as further described below. As a result, the immediately subsequent
assets and  liabilities  of iBIZ,  Inc.  would be solely  acquired  and assumed,
respectively,  via the  Company's  transaction  with  Enterprise.  The Company's
proposed  spin-off  of iBIZ,  Inc. is merely  intended to satisfy a  transaction
prerequisite of Enterprise that the two subject  technologies be  commercialized
by a stand-alone, separately-reporting public company.

It currently is  contemplated  that the proposed  spin-off of iBIZ, Inc. will be
consummated  via the Company's pro rata issuance of iBIZ,  Inc.  common stock to
its  shareholders  of  record  as  of  September  25,  2003.  There  will  be no
reciprocating consideration to the Company. The Company currently estimates that
the  ratio  will   result  in  its   issuance  of   approximately   2.2  million
non-restricted  shares of iBIZ,  Inc's.  common stock to its  shareholders.  The
actual  distribution  of the iBIZ,  Inc.  common shares is  anticipated to occur
shortly after the Company  receives final approval from the U.S.  Securities and
Exchange Commission ("SEC") of its related Form 10 Registration Statement.

The  first  subject  technology  utilizes  a  laser  to  project  a  traditional
full-sized keyboard onto any flat surface ("Virtual Laser Keyboard").  As a user
types onto the laser  projected  virtual  keyboard,  the  battery-powered  laser
emitting device,  which  approximates  the size of a cigarette  lighter standing
on-end,  analyzes  what is being  typed by the  coordinates  of the  user's  key
strokes and transmits such data via infrared signals to a PDA or other mobile or
hand-held computing and/or  communication  device. The second subject technology
transmits  a user's  hand-writing  in high  resolution  to a PDA or  stationary,
mobile or hand-held  computing device  ("E-Pen").  Enterprise has represented to
the  Company   that  it  currently   holds   exclusive   worldwide   technology,
manufacturing  and marketing  licenses to the Virtual  Laser  Keyboard and E-Pen
technologies  which  were  granted  to them by the  developers,  VKB,  Inc.  and
InMotion E-Pen LTD, respectively, with whom the Company has no existing business
relationships or direct  knowledge.  Enterprise has additionally  represented to
the Company that the licenses it holds will be fully  transferable or assignable
to iBIZ, Inc. within the contemplated parameters of any consummated transaction.
Enterprise  has  also  furnished  the  Company  with  fully-operational  working
prototypes of the Virtual  Laser  Keyboard and E-Pen,  the Company's  subsequent
evaluations  of which have been  extremely  favorable  from a  commercialization
point  of  view.  If the  transaction  with  Enterprise  is  consummated,  it is
contemplated that Enterprise would procure and oversee all related manufacturing
with iBIZ, Inc. providing all subsequent marketing and support.

It currently is  contemplated  that in exchange  for  transferring  or assigning
these two  technologies  to iBIZ, Inc. that Enterprise will receive 11.2 million
shares  of iBIZ,  Inc.'s  common  stock.  As a  result,  the  Company  currently
estimates that immediately  after any consummated  transaction  Enterprise would
own approximately  83.3% of iBIZ, Inc.'s  outstanding common shares. As a result
of its controlling  ownership position in iBIZ, Inc., Enterprise would be deemed
the acquirer for accounting  purposes with its historical  financial  statements
becoming those of iBIZ, Inc. Immediately after any consummated  transaction with
Enterprise,  it  is  contemplated  that  Kenneth  W.  Schilling,  the  Company's
Chairman, President and Chief Executive Officer, and Mark Perkins, the Company's
Executive  Vice-President,  will serve iBIZ, Inc. in  corresponding  capacities,
with the possible exception of Chairman.  Assuming a full-time schedule,  Mssrs.
Schilling and Perkins are anticipated to commit  approximately 70% of their time
to the


                                     F- 24
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SUBSEQUENT EVENTS (CONTINUED) (UNAUDITED)

Proposed Spin-Off of iBIZ, Inc. (continued)

Company  and 30% of  their  time to  iBIZ,  Inc.  However,  as a  result  of its
controlling ownership position in iBIZ, Inc., Enterprise would be able to at any
time replace  Mssrs.  Schilling and Perkins,  and, as a result,  there can be no
assurance that they would not do so. Additionally,  it currently is contemplated
that the Company and iBIZ,  Inc.  will  shortly  after the  consummation  of any
transaction with Enterprise enter into two joint marketing agreements. Under the
first such  contemplated  agreement,  the Company would  authorize iBIZ, Inc. to
market its current  products  outside of North and South America in exchange for
royalties.  Under the second  such  contemplated  agreement,  iBIZ,  Inc.  would
authorize  the  Company to market  its  products  in North and South  America in
exchange for royalties.  In contemplation of the transaction  between iBIZ, Inc.
and Enterprise being  consummated,  the Company has begun to accept  non-binding
customer orders on the behalf of iBIZ, Inc.

Despite  the  foregoing,  it must be  noted  that the  contemplated  transaction
between iBIZ, Inc. and Enterprise  remains in the negotiation  stage and subject
to a number of uncertainties.  As a result,  there can be no assurance that such
transaction will ultimately be consummated, or if consummated, that the ultimate
form and terms of the transaction  will be as currently  contemplated.  Should a
transaction  with Enterprise not be consummated,  the Company may elect,  absent
another  suitable  transaction  with another party, not to distribute the common
shares of iBIZ,  Inc.  to its  shareholders,  which would  result in iBIZ,  Inc.
remaining a consolidated wholly-owned subsidiary of the Company.

Repayment of Notes Payable in Default

On November 4, 2003,  the $30,000 note payable in default to Gammage and Burnham
was repaid in full by the Company  through the issuance of  8,108,108  shares of
its common stock (see "Note 11 - Notes Payable").

Convertible Debentures

During the period from  November 1, 2003 through  February 13, 2004,  holders of
certain of the Company's then outstanding  debentures,  certain of which were in
default, elected to convert $2,422,790 in aggregate principal (including $18,850
which  was  forgiven),   and  $299,455  in  accrued   interest   thereon,   into
1,251,212,157  shares of the Company's  common stock (see "Note 12 - Convertible
Debentures"). The Company's remaining outstanding convertible debentures, all of
which are in default, at February 13, 2004 are as follows:

                                                        February 13,
                                                            2004
                                                       --------------
         KCM, LLC.(including Keshet L.P.,
         Keshet Fund L.P. and Tabbaya B.
         Investments Ltd.  .........................   $    1,285,346
         Laurus Master Fund, Ltd....................          307,701
                                                       --------------
         Total debentures outstanding...............   $    1,593,047
                                                       ==============

Other Equity-Related Events

Subsequent to the Company's October 31, 2003 balance sheet date through February
13, 2004, the Company was party to the following other equity-related events.

     Grants of Stock Options in Consideration of Services:

      o     On November 1, 2003,  the Company  granted an option to an unrelated
            consultant  allowing for his  subsequent  purchase of 200 million of
            our common shares over the subsequent two and one-half  months at an
            exercise  price per  share of equal to the  average  market  closing
            price of the Company's  common stock for the three days  immediately
            prior to any exercise date, less a 40% discount. The Company granted
            this


                                     F- 25
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SUBSEQUENT EVENTS (CONTINUED) (UNAUDITED)

Other Equity-Related Events (continued)

     Grants of Stock Options in Consideration of Services (continued):

         option in consideration of consulting services directed at assisting it
         in expanding into potential new markets and/or introducing new products
         which gave rise to the Company's subsequent  acquisition of Synosphere,
         as previously  discussed.  The Company  valued this option at $260,000,
         which  reflected the negotiated  40% discount from the then  prevailing
         market price for its common stock. On December 10, 2003, the consultant
         exercised the preceding  options for which the Company received $93,600
         in the aggregate.

      o     On December 15, 2003, the Company  granted an option to an unrelated
            lawyer  allowing  for his  subsequent  purchase of 50 million of its
            common  shares over the  subsequent  five year period at an exercise
            price per share equal to the market  price of the  Company's  common
            stock at the time of any exercise,  less a 15% discount. The Company
            granted this option in consideration  of legal services  provided in
            connection with its evaluation of potential international merger and
            acquisition   candidates,   which  gave  rise  to  its  contemplated
            transaction with Enterprise,  as previously  discussed.  The Company
            valued this option at $60,000,  which  reflected the  negotiated 15%
            discount from the then prevailing market price for its common stock.
            During January and February 2004, the lawyer exercised 36,950,000 of
            the preceding  options for which the Company received  $1,003,947 in
            the aggregate.

      o     On  January  28,  2004,  the  Company  granted  an  option to Pangea
            Investments GmbH ("Pangea")  allowing for its subsequent purchase of
            100 million of the Company's  common shares over the  subsequent ten
            year  period at an exercise  price of $0.015 per share.  The Company
            granted this option in  consideration  of consulting and acquisition
            services,  which principally included,  but were not limited to, the
            development  of  a  business  plan  for  potentially  marketing  its
            existing products in Europe and Israel and identifying potential new
            products  and  technologies  that  could be  added  to its  existing
            product  line. In addition,  Pangea would assist in the  negotiation
            and financing of new products and technologies the Company sought to
            acquire,  including the two technologies that are the subject of its
            contemplated  transaction with Enterprise,  as previously discussed.
            Sam Elimalech,  an officer of Enterprise is also a member of Pangea.
            The  Company  valued this option at  $4,450,000,  which  reflected a
            negotiated  50% discount from then  prevailing  market price for the
            Company's common stock.

     Issuances of Common Stock in Satisfaction of Obligations:

      o     During  November 2003, the Company issued  10,000,000  shares of its
            common stock to an unrelated  attorney in  prepayment  of $37,000 in
            legal services  rendered during its fiscal quarter ended January 31,
            2004.

      o     During  November 2003, the Company  issued  9,600,000  shares of its
            common  stock to various  unrelated  creditors  in  satisfaction  of
            $35,425 in outstanding obligations.

      o     During  November  2003,  the Company  issued  500,000  shares of its
            common stock to an unrelated  company in prepayment of $1,975 in SEC
            electronic  filing services rendered during its fiscal quarter ended
            January 31, 2004.

      o     During  November 2003, the Company  issued  1,000,000  shares of its
            common  stock to an  unrelated  company in  prepayment  of $3,700 in
            marketing  services rendered during its fiscal quarter ended January
            31, 2004.


                                     F- 26
<PAGE>

                     IBIZ TECHNOLOGY CORP. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

19. SUBSEQUENT EVENTS (CONTINUED) (UNAUDITED)

Other Equity-Related Events (continued)

     Issuances of Common Stock in Satisfaction of Obligations (continued):

      o     During  December 2003, the Company issued  81,000,000  shares of its
            common stock to an unrelated consultant in prepayment of $126,360 in
            merger and acquisition services to be rendered during the subsequent
            twelve months.

      o     During December 2003, the Company issued  204,482,763  shares of its
            common stock to its two officers and other  employees in  settlement
            of $296,500 of $578,000 in accrued bonuses.

      o     During January 2004, the Company  issued  194,137,931  shares of its
            common stock to its two officers and other  employees in  settlement
            of $281,500 in remaining accrued bonuses.


                                     F- 27
<PAGE>

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

On October 11, 2002,  we were notified by Moffitt & Company,  P.C.,  ("Moffitt")
that it resigned as our independent auditors effective that date. On October 17,
2002, we engaged Farber and Hass LLP, as our independent auditors for the fiscal
year ending  October 30,  2002.  The action to engage  Farber and Hass,  LLP was
taken upon the unanimous approval of our Board of Directors.

During the fiscal  years ended  October 31,  2000 and 2001,  and the  subsequent
interim period through October 11, 2002, there were no disagreements  between us
and  Moffitt on any matter of  accounting  principles  or  practices,  financial
statement  disclosure or auditing scope or procedure  which,  if not resolved to
the  satisfaction  of Moffitt would have caused Moffitt to make reference to the
matter in its  reports on our  financial  statements.  Additionally,  during the
fiscal years ended October 31, 2000 and 2001, and the subsequent  interim period
through  October 11, 2002,  there were no  reportable  events as defined in Item
304(a)(1)(iv) of Regulation S-B.  Moffitt's opinions as expressed in its reports
on our  financial  statements  for the fiscal  years ended  October 31, 2000 and
2001,  respectively,  expressed substantial doubt with respect to our ability to
continue as a going concern.

During the fiscal  years ended  October 31,  2000 and 2001,  and the  subsequent
interim  period  through  October 11,  2002,  we did not consult with Farber and
Hass, LLP regarding either:

         1.  the   application   of  accounting   principles  to  any  specified
         transaction, either completed or proposed, or the type of audit opinion
         that might be rendered on our financial statements; or

         2. any matter  that was either  subject of  disagreement  or event,  as
         defined in Item  304(a)(1)(iv)(A)  of  Regulation  S-B and the  related
         instructions to Item 304 of Regulation  S-B, or a reportable  event, as
         that term is explained in Item 304(a)(1)(iv)(A) of Regulation S-B.

We  requested  that  Moffitt  furnish  us with a  letter  addressed  to the U.S.
Securities and Exchange  Commission  ("SEC")  stating whether it agrees with the
above  statements.  A copy of such letter,  dated October 17, 2002, was filed as
Exhibit 16.1 to a Form 8-K (Item 4) filed with the SEC on October 18, 2002.


                                       21
<PAGE>

                                    PART III

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

NAME                    AGE     POSITION
----                    ---     --------
Kenneth W. Schilling    52      President, Chief Executive Officer, Acting
                                Principal Accounting and Financial Officer,
                                Chairman of Board of Directors

Mark Perkins            40      Executive Vice President and Director


Our directors serve until the next annual meeting and until their successors are
elected and  qualified.  Our officers are  appointed to serve for one year until
the  meeting  of  the  board  of  directors  following  the  annual  meeting  of
stockholders and until their  successors have been elected and qualified.  There
are no family relationships between any of our directors or officers.

Kenneth W. Schilling founded our predecessor,  Southwest  Financial Systems,  in
1979, and has been our President,  Chief Executive Officer,  and Chairman of the
Board  of  Directors  since  our  founding.  Mr.  Schilling  studied  electrical
engineering  at  the  University  of  Pittsburgh  and  the  Devry  Institute  of
Technology and served in the U.S. military. Mr. Schilling remains the subject to
a Cease and  Desist  Order  from the U.S.  Securities  and  Exchange  Commission
("SEC"). The cease and desist order constituted part of a negotiated  settlement
between Mr. Schilling and the SEC that was formally entered into on February 28,
2001  pursuant to which Mr.  Schilling , without  admitting or denying the SEC's
allegations  against  him,  agreed to the entry of an Order  enjoining  him from
violating Section 10(b) of the Securities Exchange Act of 1934, as amended,  and
Rule 10-b5 thereunder,  and ordering him to pay a civil penalty of $20,000. In a
related action, we, as a company,  without admitting or denying any of the SEC's
findings,  consented to a cease-and-desist order enjoining us from committing or
causing  any  violation  or  any  future  violations  of  Section  10(b)  of the
Securities  Exchange Act of 1934,  as amended,  and Rule 10-b5  thereunder.  The
underlying SEC Complaint  alleged that Mr.  Schilling  provided false  financial
projections  to a  purported  analyst  for  research  reports  recommending  the
purchase of our stock. The Complaint also stated that from February 1999 through
June 1999, Mr. Schilling placed 17 press releases on our corporate website which
contained  direct  hyperlinks  to the analyst  reports  and, as late as February
2000, we maintained press releases on our corporate website which referenced and
contained  hyperlinks to the analyst reports.  The SEC further alleged that in a
February 19, 1999 press release,  we characterized  the analyst as "independent"
even though we, through our then investor  relations firm, had agreed to pay the
analyst  200,000  shares of our common stock for the report.  The SEC found that
Mr.  Schilling  had  reviewed  and  approved  the press  releases  posted on our
corporate  website.  The SEC also alleged that the false  financial  projections
which  appeared on the Internet  fueled a rise in both the price and the trading
volume of our common stock

Mark H. Perkins  joined us in 1994 and currently  serves as our  Executive  Vice
President.  Mr. Perkins was subsequently  appointed to our Board of Directors on
March 5, 1999.  Prior to his  joining us, Mr.  Perkins was  employed at American
Express as a project  manager for major  systems  implementation,  a position he
held for eight years. Mr. Perkins earned a BA degree in business management from
California State University-Sonoma in 1987.

COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT, AS AMENDED.

Based  solely upon our review of copies of Forms 3, 4 and 5, and any  subsequent
amendments  thereto,  furnished  to the Company by our  directors,  officers and
beneficial owners of more than ten percent of our common stock, we are not aware
of any  director,  officer or  beneficial  owner of more than ten percent of our
common stock that, during our fiscal year ended October 31, 2003, failed to file
on a timely basis reports  required by Section 16(a) of the Securities  Exchange
Act of 1934.


                                       22
<PAGE>

ITEM 10. EXECUTIVE COMPENSATION.

The  following  table sets forth certain  compensation  paid or accrued by us to
certain of our  executive  officers  during our fiscal  years ended  October 31,
2003, 2002 and 2001.

                           SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
                                                                          Other
                                                           Annual      Restricted      Options       LTIP
  Name & Principal                Salary       Bonus       Compen-        Stock          SARs       Payouts      All Other
      Position          Year        ($)         ($)      sation ($)    Awards ($)       (#)(1)        ($)      Compen-sation
--------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------ --------------
<S>                     <C>     <C>            <C>             <C>     <C>             <C>             <C>           <C>
Kenneth W. Schilling,   2003    175,000.00        0            0       523,652.39(1)      0            0             0
President, CEO,         2002     68,750.00        0            0        57,691.82(1)      0            0             0
Acting Principal        2001    200,000.00     26,138          0             0         300,000         0             0
Accounting Officer,
and Director
--------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------ --------------
Mark H. Perkins,        2003    150,000.00        0            0         521,634.65       0            0             0
Executive Vice          2002     69,791.69        0            0          57,021.48       0            0             0
President, Director     2001    150,000.00     26,138          0             0         300,000         0             0
--------------------- --------- ------------ ----------- ------------ -------------- ----------- ------------ --------------
</TABLE>

(1) Represents 57,691,823 restricted shares issued at the market price of $0.001
    on August 22, 2002.

(2) Represents 57,021,476 restricted shares issued at the market price of $0.001
    on August 22, 2002.


OPTIONS

No options were  exercised or granted  during our fiscal year ended  October 31,
2003.

We had no long-term  incentive plans and made no stock rewards during our fiscal
year ended October 31, 2003.

EMPLOYMENT AGREEMENTS

We have  employment  agreements  with Kenneth  Schilling  and Mark Perkins which
became  effective  July 1, 2001 and remain in force  through June 30, 2004.  Mr.
Schilling's  contract  provides  for an  annual  salary of  $250,000,  quarterly
performance  bonuses equal to one percent of the Company's total  revenues,  and
the granting of an option allowing for his subsequent purchase of 300,000 shares
of the Company's common stock at $0.20 per share. Mr. Perkin's contract provides
for an annual  salary of $150,000,  quarterly  performance  bonuses equal to one
percent of the Company's total revenues,  and the granting of an option allowing
for his subsequent  purchase of 120,000 shares of the Company's  common stock at
$0.20 per share.  Each stock option vested  immediately and is exercisable for a
period of ten years.

In addition to the foregoing,  each of the above employment  agreements  contain
the following termination provisions:

         (a)  Termination By Us For Cause:  We shall have the right to terminate
         this  Agreement  and  to  discharge  Employee  for  cause  (hereinafter
         "Cause"),  and all  compensation to Employee shall cease to accrue upon
         discharge  of Employee for Cause.  For the purposes of this  Agreement,
         the term "Cause" shall mean (i) Employee's conviction of a felony; (ii)
         the alcoholism or drug addiction of Employee; (iii) gross negligence or
         willful misconduct of Employee in connection with his duties hereunder;
         (iv)  the  determination  by  any  regulatory  or  judicial   authority
         (including any securities  self-regulatory  organization) that Employee
         directly  violated,  before or after the date  hereof,  any  federal or
         state securities law, any rule or regulation adopted thereunder; or (v)
         the  continued  and willful  failure by Employee to  substantially  and
         materially perform his material duties hereunder.

         (b) Termination By Us Without Cause: In the event Employee's employment
         hereunder  shall be  terminated  by us for other  than  Cause:  (1) the
         Employee  shall  thereupon  receive as  severance in a lump sum payment
         from us the  amount of one year of Salary in effect at the time of such
         termination.

         (c) Resignation: In the event Employee resigns without Reason, he shall
         receive any unpaid fixed salary through such  resignation date and such
         benefits to which he is entitled by law,  and shall also receive a lump
         sum payment from us in the amount of six months Salary in effect at the
         time of such resignation.

         (d)  Change  of  Control:  In the  event of a  Change  in  Control,  as
         hereinafter defined, we shall pay the Employee in a lump sum the amount
         of three years of annual Salary in effect at the time of such Change in
         Control.  Such  payment  and  grant  shall  be made  regardless  of the
         continuation  or termination of Employee's  employment  with us after a
         Change of Control, and shall be in addition to, and not in lieu of, any


                                       23
<PAGE>

         other  payments  or  issuances  due  pursuant  to  the  terms  of  this
         agreement.  For purposes hereof, a Change in Control shall be deemed to
         have  occurred  (i) if there has occurred a "change in control" as such
         term is used in Item 1 (a) of Form 8-K promulgated under the Securities
         Exchange Act of 1934, as amended,  at the date hereof  ("Exchange Act")
         or (ii) if there has occurred a change in control as the term "control"
         is defined in Rule 12b-2 promulgated under the Exchange Act."


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

As of February 11, 2004,  there were  2,132,956,988  shares of common stock, par
value $0.001  outstanding.  The following  table sets forth certain  information
regarding the beneficial ownership of our common stock as of February 11, 2004:

- all directors

- each  person who is known by us to be the  beneficial  owner of more than five
percent (5%) of the outstanding common stock

- each executive officer named in the Summary Compensation Table

- all directors and executive officers as a group

The number of shares beneficially owned by each director or executive officer is
determined  under  rules  of the SEC,  and the  information  is not  necessarily
indicative of beneficial  ownership for any other purpose.  Under the SEC rules,
beneficial ownership includes any shares as to which the individual has the sole
or shared voting power or investment  power. In addition,  beneficial  ownership
includes any shares that the individual has the right to acquire within 60 days.
Unless  otherwise  indicated,  each person listed below has sole  investment and
voting  power  (or  shares  such  powers  with his or her  spouse).  In  certain
instances,  the number of shares  listed  includes  (in addition to shares owned
directly), shares held by the spouse or children of the person, or by a trust or
estate of which the  person is a trustee or an  executor  or in which the person
may have a beneficial interest.

                                                   Amount of
                  Name and Address                 Beneficial       Percent of
Title of Class    of Beneficial Owner              Ownership (1)    Class
--------------    ----------------------------     ---------------  -----------
Common Stock      Kenneth W. Schilling             257,737,722       12.08%
                  2238 West Lone Cactus Drive
                  Suite 200
                  Phoenix, Arizona 85021

Common Stock      Mark H. Perkins                  243,143,298       11.40%
                  2238 West Lone Cactus Drive
                  Suite 200
                  Phoenix, Arizona 85021

Common Stock      Shares of all directors and      500,881,020       23.48%
                  executive officers as a
                  group (2 persons)


IBIZ TECHNOLOGY CORP. STOCK OPTION PLAN

The iBIZ  Technology  Corp.  Stock  Option Plan  provides for the grant of stock
options to purchase common stock to eligible directors, officers, key employees,
and service providers of iBIZ. The stock option plan covers an aggregate maximum
of ten million (10,000,000) shares of common stock and provides for the granting
of both  incentive  stock  options (as  defined in Section  422 of the  Internal
Revenue Code of 1986, as amended) and non-qualified stock options (options which
do not meet the requirements of Section 422). Under the stock option plan, the

exercise price may not be less than the fair market value of the common stock on
the date of the grant of the option.  As of October 31, 2001,  3,145,000 options
had been granted to 37 *persons (net of cancelled and exercised)  under the plan
at exercise  prices of between  $0.53 and $5.00.  As of February 11,  2003,  the
market  price of the stock was $0.04.  The options have been granted for periods
ranging  from one (1) to ten (10) years,  subject to earlier  cancellation  upon
termination of employment,  resignation,  disability and death. The options vest
pursuant to the terms of each individual option,  which to date have ranged from
immediate to a five (5) year period.


                                       24
<PAGE>

The  stock  option  plan  benefits  currently  have  no  value,  as  all  of the
outstanding  options  were issued at exercise  prices  greater  than the current
price of our common stock.

The Board of Directors  administers  and interprets the stock option plan and is
authorized to grant options thereunder to all eligible persons. In the event the
Board has at least two (2) members who are not either  employees  or officers of
iBIZ or of any  parent or  subsidiary  of iBIZ,  the stock  option  plan will be
administered  by a  committee  of not  less  than two (2)  persons  who are such
independent directors.  The Board designates the optionees, the number of shares
subject to the  options and the terms and  conditions  of each  option.  Certain
changes in control of iBIZ, as defined in the stock option plan,  will cause the
options to vest  immediately.  Each option  granted  under the stock option plan
must be exercised,  if at all, during a period established in the grant that may
not exceed ten (10) years from the date of grant.  An optionee  may not transfer
or assign any option  granted and may not exercise any options after a specified
period subsequent to the termination of the optionee's employment with iBIZ. The
Board may make  amendments  to the stock  option plan from time to time it deems
proper and in the best  interests  of iBIZ  provided  it may not take any action
which  disqualifies  any  option  granted  under  the  stock  option  plan as an
incentive stock option or which  adversely  effects or impairs the rights of the
holder of any option under the stock option plan.

ITEM 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

Our privately-held predecessor (Southwest Financial) advanced monies to its sole
shareholder,  Ken W.  Schilling,  our  President,  Chief  Executive  Officer and
Chairman of the Board of  Directors.  When we entered  into a reverse  merger in
January 1999, we executed a note  receivable  consolidating  these past advances
which  had a stated  interest  rate of 6.0% per  annum,  was  collateralized  by
personally owned shares of our common stock, and was payable upon demand. As the
collaterizing  common stock was subsequently donated to us during fiscal 2001 in
order to facilitate its procurement of certain  necessary  corporate  financing,
the  aforementioned  note  receivable  became  unsecured.  In the absence of any
collateral, given certain other concerns regarding its collectability, our Board
of  Directors  directed  management  during  fiscal  2001  to  establish  a full
allowance against the note receivable, thus reducing its then net carrying value
to zero.

In November 2001, we had no additional common shares authorized for issuance. In
order to honor conversion  elections by certain debenture holders, Mr. Schilling
donated  928,560  shares of our common stock owned by him to us. Upon  obtaining
subsequent  shareholder  approval to increase our authorized common shares,  our
Board of Directors  approved the issuance of 1,500,000  restricted shares of our
common  stock  to Mr.  Schilling  as  reimbursement  and  compensation  for  the
previously contributed common shares.


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

iBIZ did not file a Form 8-K for during the last quarter  ending on December 31,
2003.

Exhibit No.     DESCRIPTION
--------------------------------------------------------------------------------

2.01(1)         Plan  of  Reorganization  and  Stock  Exchange  Agreement  dated
                January 1, 1999

3.01(1)         Articles of Incorporation, as amended

3.02(1)         Bylaws

10.03(1)        iBIZ Technology Corp. Stock Option Plan dated January 31, 1999

10.26(6)        Modification  and  Waiver  by  and  among  iBIZ  Technology  and
                Subscribers to 8% Convertible debentures Agreement,  dated as of
                April 17, 2001

10.27(6)        Subscription  Agreement for Debentures  Convertible  into Common
                Stock of iBIZ Technology Corp., dated as of April 26, 2001

10.28(6)        Form of 8% Convertible debentures Due April 26, 2003


                                       25
<PAGE>

Exhibit No.     DESCRIPTION
--------------------------------------------------------------------------------

10.29(6)        Form of Warrant dated April 26, 2001, 2000

10.30(6)        Form of Subscription  Agreement for Debentures  Convertible into
                Common Stock of iBIZ  Technology  Corp.,  dated as of October 9,
                2001

10.31(8)        Form of 8% Convertible debentures Due October 9, 2002

10.32(8)        Form of  Warrant  dated  October  9, 2001  Form of  Subscription
                Agreement for Debentures Convertible into Common Stock of iBIZ

10.33(10)       Technology  Corp.,  dated as of August  21,  2001  between  iBiz
                Technology and Laurus Master Fund, Ltd. and Keshet, L.P.

10.34(10)       Form of 8%  Convertible  Debenture  Due October  August 21, 2002
                between iBiz Technology and Laurus Master Fund, Ltd.

10.35(10)       Form of Warrant  dated  August 21, 2001 issued to Laurus  Master
                Fund, Ltd.

10.36(10)       Form of 8%  Convertible  Debenture  Due October  August 21, 2002
                between iBiz  Technology and Keshet,  L.P. Form of  Subscription
                Agreement for Debentures Convertible into Common Stock of iBIZ

10.37(12)       Technology  Corp.,  dated  as of  July  30,  2001  between  iBiz
                Technology  and Laurus  Master  Fund,  Ltd.,  Esquire  Trading &
                Finance, Inc. and Celeste Trust Reg.

10.38(12)       Form of 8%  Convertible  Debenture  Due  October  July 30,  2002
                between iBiz Technology and Laurus Master Fund, Ltd.

10.39(12)       Form of Warrant  dated  July 30,  2001  issued to Laurus  Master
                Fund, Ltd.

10.40(12)       Form of 8%  Convertible  Debenture  Due  October  July 30,  2002
                between iBiz Technology and Esquire Trading & Finance, Inc..

10.41(12)       Form of Warrant dated July 30, 2001 issued to Esquire  Trading &
                Finance, Inc.

10.42(12)       Form of 8%  Convertible  Debenture  Due  October  July 30,  2002
                between iBiz Technology and Celeste Trust Reg.

10.43(12)       Form of Warrant dated July 30, 2001 issued to Celeste Trust Reg.
                Form of Subscription Agreement for Debentures Convertible into
                Common Stock of iBIZ

10.44(12)       Technology  Corp.,  dated  as of  June  22,  2001  between  iBiz
                Technology and The Keshet Fund, L.P.


                                       26
<PAGE>

Exhibit No.     DESCRIPTION
--------------------------------------------------------------------------------

10.45(12)       Form of 8%  Convertible  Debenture  Due  October  June 22,  2002
                between iBiz Technology and The Keshet Fund, L.P.

10.46(12)       Form of Warrant  dated July 30, 2001 issued to The Keshet  Fund,
                L.P.

10.47           Employment Agreement with Bryan Scott.

10.48           Employment Agreement with Ramon Perales.

31.1            Certification  by Chief  Executive  Officer and Chief  Financial
                Officer pursuant to Sarbanes -Oxley Section 302.

32.1            Certification by Chief Executive Officer and Chief Financial
                Officer pursuant to 18 U.S. C. Section 1350


(1) Incorporated by reference from iBIZ's Form 10-SB, File No. 000-27619,  filed
with the SEC on October 13, 1999

(2)  Incorporated  by reference  from iBIZ's Form 10-SB/A,  File No.  000-27619,
filed with the SEC on November 30, 1999.

(3) Incorporated by reference from iBIZ's Form SB-2, File No.  333-94409,  filed
with the SEC on January 11, 2000.

(4)  Incorporated  by reference  from iBIZ's Form 10-KSB,  File No.  000-027619,
filed with the SEC on January 7, 2000.

(5)  Incorporated  by reference  from iBIZ's Form 10-QSB,  File No.  000-027619,
filed with the SEC on March 16, 2000.

(6) Incorporated by reference from iBIZ's Form SB-2, File No.  333-34936,  filed
with the SEC on April 17, 2000.

(7) Incorporated by reference from iBIZ's Form SB-2, File No.  333-42414,  filed
with the SEC on July 28, 2000.

(8) Incorporated by reference from iBIZ's Form SB-2, File No.  333-50564,  filed
with the SEC on November 22, 2000.

(9) Incorporated by reference from iBIZ's Form 8-K, File No.  000-027619,  filed
with the SEC on January 19, 2001.

(10)  Incorporated  by reference from iBIZ's Form 10-KSB,  File No.  000-027619,
filed with the SEC on January 29, 2001.

(11) Incorporated by reference from iBiz's Form SB-2, File No. 333-63808,  filed
with the SEC on June 25, 2001.

(12) Incorporated by reference from iBiz's Form SB-2, File No. 333-74496,  filed
with the SEC on December 4, 2001.

(13) Incorporated by reference from iBiz's Form SB-2, File No. 333-88274,  filed
with the SEC on May 15, 2002.

(14) Incorporated by reference from iBiz's Form SB-2, File No. 333-100450, filed
with the SEC on October 9, 2002.


ITEM 14. CONTROLS AND PROCEDURES

As of October 31, 2003, an evaluation was performed by Kenneth W. Schilling, our
President,  Chief Executive Officer and Chairman of our Board of Directors,  and
our current Acting Chief Financial and Accounting  Officer, of the effectiveness
of the design and operation of our disclosure controls and procedures.  Based on
that  evaluation,  Mr.  Schilling  concluded  that our  disclosure  controls and
procedures were effective as of October 31, 2003. There have been no significant
changes in our internal  controls or in other  factors that could  significantly
affect internal controls subsequent to October 31, 2003.


                                       27
<PAGE>

                                   SIGNATURES

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

                                IBIZ TECHNOLOGY CORP., A FLORIDA CORPORATION


                                By: /s/ Kenneth W. Schilling
                                    ------------------------------------
                                    Kenneth W. Schilling, President,
                                    Chief Executive Officer, Chairman of
                                    the Board of Directors, and Acting
                                    Principal Financial and Accounting
                                    Officer



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

                                By: /s/ Kenneth W. Schilling
                                ----------------------------------------
                                    Kenneth W. Schilling, President,
                                    Chief Executive Officer, Chairman of
                                    the Board of Directors, and Acting
                                    Principal Financial and Accounting
                                    Officer

                                By: /s/ Mark H. Perkins
                                ----------------------------------------
                                    Mark H. Perkins, Vice President of
                                    Operations, Director

                                       28