<PAGE>

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

                                   FORM 10-KSB

(Mark One)
[X]      Annual Report under Section 13 or 15(d) of the Securities Exchange Act
         of 1934

                  For the fiscal year ended March 31, 2002

[ ]      Transition report under Section 13 or 15(d) of the Securities Exchange
         Act of 1934

                  For the transition period from _____________ to ______________

                  Commission File No. 0-25521
                                      -------

                            EGX FUNDS TRANSFER, INC.
                            ------------------------
                 (Name of Small Business Issuer in its Charter)
                    (formerly Emergent Financial Group, Inc.)

           Delaware                                          88-0407731
           --------                                          ----------
(State or Other Jurisdiction of                           (I.R.S. Employer
 Incorporation or Organization)                         Identification Number)


                 3125 Sterling Circle, Boulder, Colorado, 80301
                 ----------------------------------------------
               (Address of Principal Executive Offices) (Zip Code)

                                 (303) 544-0044
                                 --------------
                (Issuer's Telephone Number, Including Area Code)

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

         Securities registered under Section 12(g) of the Exchange Act:

                             Common Stock, par value
                                 $.001 per share
                                 ---------------
                                (Title of Class)

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

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

         State issuer's revenues for its most recent fiscal year: $24,460.

         The aggregate market value of the 1,090,473 shares of Common Stock,
$.001 par value per share (the "Common Stock"), held by non-affiliates of the
Registrant as of July 10, 2002 was $1,166,806.

         The number of shares outstanding of the Registrant's sole class of
Common Stock as of July 10, 2002 was 12,672,497 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:

None.

Transitional Small Business Disclosure Format (Check One):

               [  ] YES      [ X ] NO
<PAGE>

                         EGX FUNDS TRANSFER INCORPORATED

                       INDEX TO FORM 10-KSB ANNUAL REPORT


                                     Part I
                                     ------

                                                                            Page

Item 1.   Description of Business.............................................3

Item 2.   Description of Property............................................21

Item 3.   Legal Proceedings..................................................21

Item 4.   Submission of Matters to a Vote of Security Holders................22

                                     Part II
                                     -------

Item 5.   Market for Common Equity and Related Stockholder Matters...........23

Item 6.   Management's Discussion and Analysis or Plan of Operations.........26

Item 7.   Financial Statements...............................................49

Item 8.   Changes in and Disagreements with Accountants on Accounting
          and Financial Disclosure...........................................50

                                    Part III
                                    --------

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance with Section 16(a) of the Exchange Act..................51

Item 10.  Executive Compensation.............................................57

Item 11.  Security Ownership of Certain Beneficial Owners and Management
          and Related Stockholder Matters....................................58

Item 12.  Certain Relationships and Related Transactions.....................59

Item 13.  Exhibits and Reports on Form 8-K...................................62

Signatures...................................................................63

Exhibit Index................................................................64

                                       2
<PAGE>

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         THE FEDERAL SECURITIES LAWS PROVIDE FOR A SAFE HARBOR FOR CERTAIN
FORWARD-LOOKING STATEMENTS. THIS SAFE HARBOR PROTECTS US FROM LIABILITY IN A
PRIVATE ACTION ARISING UNDER EITHER THE SECURITIES ACT OF 1933 OR THE SECURITIES
EXCHANGE ACT OF 1934, AS AMENDED, FOR FORWARD-LOOKING STATEMENTS THAT ARE
IDENTIFIED AS SUCH AND ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS, OR ARE
IMMATERIAL.

         WHEN USED IN THIS FORM 10-KSB, THE WORDS OR PHRASES "WILL LIKELY
RESULT," "ARE EXPECTED TO," "WILL CONTINUE," "IS ANTICIPATED," "ESTIMATE,"
"PROJECTED," "INTENDS," "MAY" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, LACK OF OPERATING HISTORY, NEED FOR
ADDITIONAL FINANCING, HISTORY OF LOSSES AND SUCCESSFUL IDENTIFICATION,
ACQUISITION AND INTEGRATION OF ADDITIONAL TARGET BUSINESSES. SUCH FACTORS, WHICH
ARE DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, COULD AFFECT EGX FUNDS TRANSFER, INC.'S ("EGX" OR THE
"COMPANY") FINANCIAL PERFORMANCE AND COULD CAUSE THE COMPANY'S ACTUAL RESULTS
FOR FUTURE PERIODS TO DIFFER MATERIALLY FROM ANY OPINION OR STATEMENTS EXPRESSED
HEREIN WITH RESPECT TO FUTURE PERIODS. AS A RESULT, THE COMPANY WISHES TO
CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE. WE DISCUSS MANY OF THESE AND
OTHER RISKS AND UNCERTAINTIES IN GREATER DETAIL UNDER THE SECTION ENTITLED,
"RISK FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK" IN ITEM
7 OF PART II AND ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

         THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH THEY
ARE MADE AND, EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE
ANY FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE
ON WHICH THE STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS. 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.


ITEM 1.  DESCRIPTION OF BUSINESS

         EGX Funds Transfer has developed a non-bank transaction processing and
payment system for electronic financial transactions. Our system capitalizes on
the nearly ubiquitous presence of credit card point-of-sale devices ("POS
terminals"), ATM machines, and other automated terminals located around the
world to exploit those devices to deliver additional financial services, such
as: non-bank stored value and money transfer transactions around the world.

         We set out to develop a payment system combining the pervasiveness of
credit card terminals with the existing financial system infrastructure. The
global backbone infrastructure for payment processing is highly evolved. Credit
and debit cards are accepted almost everywhere and for almost everything. VISA
member banks have installed real-time point of sale devices for many years,
principally as a means to reduce costs, including costs associated with fraud.
The infrastructure of wired network devices, commonly known as credit card POS
machines, measures over 19,000,000 active terminals worldwide for VISA alone.
These Information Technology devices have become so commonplace as to be
virtually indistinguishable from a cash register. Nevertheless, the evolution of
terminal software and hardware technology continues to maximize usage of the
network and data communications capabilities and expand revenue sources.

         EGX believes that the efficiencies of modern telecommunication
networks, combined with the simplicity of end-of-network devices (POS
terminals), can be harnessed to offer and distribute more robust services to

                                       3
<PAGE>

consumers in environments where consumers frequent, thereby extending the market
beyond traditional brick-and-mortar branches.

         By embedding our XTRAN(TM) transaction processing software into these
POS devices, EGX becomes a vehicle of profit to the retailer or merchant, as
opposed to an expense. In addition to money transfer services, the EGX-hosted
POS devices also provide pre-paid calling cards, pre-paid cellular, and
electronic bill payment, and future products can be downloaded as developed.

         The objectives of the Company are to establish and expand a universal
and standardized delivery platform capable of generating multiple revenue
streams from each retail agent location, while requiring no capital investment
in establishing physical branch infrastructure.

WIRE TRANSFERS
--------------

         EGX Funds Transfer has developed next-generation electronic wire
transfer technology called XTRAN(TM). Our services enable any consumer the
ability to wire money to another consumer without the need for a bank account,
credit card, personal computer or email and to do so securely, conveniently and
cost-effectively. XTRAN requires absolutely no paperwork or forms and can
complete a transaction in fifteen seconds or less. Through our point-of-sale
terminals, XTRAN enables any consumer the ability to obtain wire transfer
services in familiar convenient retail locations while simultaneously obtaining
basic communications services (prepaid long distance). Our systems also enable
small businesses, such as convenience stores or gas stations, to use
point-of-sale equipment to generate incremental revenue through the sale of our
services using familiar retail equipment requiring no training, any capital
investment or any floor space.

         Our systems fully automate person-to-person (P-to-P) money transfers.
Competitors generally process such services manually. For example, Western
Union, which controls 80% of the worldwide market for non-bank wires, still uses
carbon-copy paper forms and manual data entry. Other money transmission
companies, including check cashers, compete with the superior Western Union
brand and large distribution network either by limiting their focus on niche
ethnic markets, or by price. These smaller legacy providers generally use
facsimile systems to process wire information, some PC-based applications and
in-bound call centers. EGX competes with legacy networks through its use of
technology and the Internet to establish wide, low cost distribution of its
services.

         EGX's point-of-sale technology provides two basic services demanded by
immigrants living away from their home country: (i) Wire Transfers; (ii)
Communication Services.

THE XTRAN P-2-P PRODUCT
-----------------------

         To send a money transfer, an XTRAN user needs only to present cash to
an XTRAN retail agent and to select a unique 7-digit numeric password. There are
no written forms to complete and the transaction is completed as rapidly as the
purchase of a lottery ticket.

         For the XTRAN agent, the transaction is similarly simple. A clerk is
only required to key in the amount of the transaction, collect the cash and the
fee as instructed and to hand the customer a custom printed receipt reflecting
the transaction, including a numeric password. The receipt also contains a free
5-minute prepaid calling card PIN number to encourage and facilitate the sender
to place a international telephone call the intended recipient, often while at a
payphone at the retail store.

         Terminals on which our systems function print all transaction
information on a semi-rigid plastic card which the customer may keep or discord
once they confirm the receipt of funds by the intended recipient or once the
prepaid calling card is fully used.

                                       4
<PAGE>

         To receive a wire transfer, the recipient need only present the numeric
password to an authorized agent and present a picture ID, depending on the laws
of the destination country. All transaction information is recorded centrally in
the XTRAN secured database hosted on the Company's home computer servers at its
central data center.

         To payout a wire transfer, an authorized agent need only to access to
the Internet to verify the authenticity of the numeric password from our
database and to determine the amount of the payment, including the currency
conversion rate. Our web-based system also support VRU's, or Voice Response
Units, whereby an authorized agent without Internet access may use the telephone
to access our automated system to obtain payout authorization through a
voice-prompted automated attendant.

         Our systems have the capability to print the instructions and
transaction receipt in any one of eight languages depending on the ethnic market
served by the retailer. Currency conversions are real time and dynamic. Language
capabilities of the system are also dynamic serving to avoid normal language
barriers otherwise experienced by other systems and their operators.

EGX FORMATION AND RECENT HISTORY
--------------------------------

         EGX was originally incorporated as Shanecy, Inc. in Delaware on May 31,
1994, and was organized to act as a home health care analysis and referral
service. On March 10, 1999, the Company filed a registration statement with the
Securities and Exchange Commission ("SEC") in order to become a reporting
company. On November 11, 1999, the original business activities were
discontinued.

         On November 11, 1999, the two existing directors of the Company
resigned and appointed Jason W. Galanis and Kevin L. Washington to replace them.
Prior to this event, the Company was inactive and had no material assets or
liabilities. From November 19, 1999, when Harry Weitzel was appointed Chairman
and Chief Executive Officer and was joined by two additional Directors and on
December 31, 1999, three final appointments were made, until July 18, 2001, the
Company pursued various e-Commerce and Internet-related business strategies and
investments.

         On July 18, 2001, the Board of Directors adopted a new business plan
which seeks to focus on investments in niche emerging payment services companies
which pursue strategies in electronically delivered financial services. In
connection with approving the revised business plan at the meeting, the
directors unanimously approved a resolution appointing Jason Galanis as
President and CEO and, at the conclusion of the meeting, directors Weitzel and
Pilallis tendered their resignations.

         On July 18, 2001, Incubator Capital, discontinued all e-Commerce
activities and changed its name to Emergent Financial Group in connection with
the acquisition of KeyCom Inc and KeyCom's funds transfer technology, XTRAN. On
June 14, 2002, Emergent Financial Group changed its name to EGX Funds Transfer,
Inc., combining the corporate name of Emergent Group and the product XTRAN name
into the acronym EGX, as well as clarifying the business as a funds transfer
company.

         For more information, see Item 6, Management Discussion and Analysis,
History.

CURRENT STATUS
--------------

         Our technology is currently operational in the field in our test
markets. We currently process money transmission transactions to Jamaica daily
and simultaneously dispense international prepaid calling cards. Based on the
developments since acquisition, we have made arrangements to begin offering
service to Mexico and Central America in conjunction with our operating
partners. We intend to acquire traffic on our network and to acquire new
customers through our partner strategy, which relies on distribution joint
ventures with existing money remittance providers that generally are seeking
technology solutions to provide enhanced money transmission services. Based on
these associations, we believe that our systems may be able to achieve a rapid

                                       5
<PAGE>

adoption in the marketplace. Furthermore, the nature of our systems promotes
user-driven growth whereby senders notify recipients to use our system to
retrieve money transmitted and awaiting pick-up. As a result, the sender has
acquired the recipient as a new user to our system. Additionally, we have direct
in-person interaction with new customers through our network agents. This
presents a further opportunity to encourage system usage. We believe our system
is distinguished from other successful user-driven business models such as
Hotmail or Paypal in that our network users do not require a personal computer,
do not require an email account and do not require a preexisting relationship
with a financial institution (i.e. no bank account or credit card). However, we
believe that our network may have the same inherent growth characteristics and,
as a result, may rapidly achieve market share.

         The Company's growth strategy consists principally of establishing new
retail agent relationships directly with EGX as well as licensing or system on
an ASP basis for software installation. Our objective is to have the largest
number of retail financial services locations in each of its markets and
developing new products for introduction into the existing store base. KeyCom
defines its target markets as cities of 100,000 or more and markets that have a
high demographic concentration of expatriates. The Company has contracts with
distributors representing in excess of forty-five thousand existing stores. The
Company also focuses on the development of its network internationally. The
Company has secured strategic contracts with established internationally-based
payout locations with transaction volume in excess of ten million transactions
annually.

         EMPLOYEES
         ---------

         At March 31, 2002, the Company employed directly 12 persons on a
full-time basis and no persons on a part-time basis. None of the Company's
employees are covered by a collective bargaining agreement. The Company
considers its employee relations to be good.

         EGX has is staffed by a team of executives with specific money transfer
and banking industry credentials. EGX's Chief Financial Officer, who joined in
December, was previously Chief Financial Officer of Citibank Credit Services
(NYSE: C). Additionally, the company has wire transfer industry experience with
the additional of a National Sales Director who recently left Western Union
(NYSE: FDC) as VP of National Accounts. EGX has also hired the former head of
Risk Management for First Data Corporation, parent of Western Union, as Managing
Director of Risk Management and Compliance. See below. Part III; item 10.

Corporate Structure
-------------------

         The Company is a Delaware corporation. The Company owns 100% of KeyCom
Holdings, Inc., a Delaware Company. KeyCom Holdings owns the rights to the XTRAN
money transfer technology. The Company has an interest in several other
subsidiaries as a result of investments from prior operations, all of which have
been discontinued in prior periods.


GENERAL TARGET MARKET OVERVIEW

         Typically, the EGX customer falls into one of three categories: A
Retail Customer - who may fall into one of three user profiles; a Merchant or
Small Business - who sells EGX services to his clientele or may need the
services for himself; third - the Business/ASP Model, which is simply private
labeling the EGX service for another company.

<TABLE>
<CAPTION>
------------------------------- ------------------------------------------ ------------------------------------------
SEGMENT DEFINITION              PROFILE                                    NEEDS/REQUIREMENTS
------------------------------- ------------------------------------------ ------------------------------------------
<S>                             <C>                                        <C>
RETAIL CUSTOMER                 -        Un-Banked                         -        Money Transfer & Communications
                                -        Ethnic/Recent Immigrant                    tools that are convenient, simple
                                -        Non-credit capable (i.e.                   and cost conscious
                                         teenagers)
------------------------------- ------------------------------------------ ------------------------------------------
</TABLE>

                                       6
<PAGE>

<TABLE>
<CAPTION>
------------------------------- ------------------------------------------ ------------------------------------------
SEGMENT DEFINITION (CONT.)      PROFILE                                    NEEDS/REQUIREMENTS
------------------------------- ------------------------------------------ ------------------------------------------
<S>                             <C>                                        <C>
MERCHANT OR                     -        Serves a large or predominant     -        Competitive margins
SMALL BUSINESS                           base of foreign born and/or       -        Quality service
                                         un-banked                         -        Reduced risk
                                -        Foreign born himself - seeks      -        Easy to facilitate
                                         ties to his community             -        Speedy transaction
                                -        DEFACTO location for quality      -        Increase revenue without high
                                         goods and services in his                  fixed costs or inventory
                                         community
                                -        Small business' looking to
                                         increase revenue
------------------------------- ------------------------------------------ ------------------------------------------
         BUSINESS/ASP           -        Niche player with valuable        -        Turn key solution
                                         contracts or specific target               (processing/database/cash
                                         audience                                   management/technology)
                                -        Existing provider looking to      -        Process efficiencies without
                                         reduce costs                               large capital investment
------------------------------- ------------------------------------------ ------------------------------------------
</TABLE>

THE COMPANY'S VALUE PROPOSITION

         EGX sells it services through "Authorized Agent Locations" and does not
own, lease or manage retail operations. Management has extensive professional
experience with the intricacies of providing financial services in a retail
environment which typically involves a non-EGX employee (i.e. store clerk)
performing the service on behalf of the Company. EGX's experienced management
team knows from past experience that if at the retail counter the store clerk or
owner are confused by the process, the consumer will lose confidence and may
walk out without purchasing the Company's services. Therefore, ease of
execution, which is at the heart of the EGX System, is critical to the success
of the business and, in the opinion of management, is a substantial point of
differentiation from its competitors. The Company believes the following key
points as support to its assessment of the market:

Key Attributes
--------------

Consumers User Experience

         Each transaction generated from an EGX Agent Location is quick, secure
and carries services from branded service providers or networks, thereby
possibly establishing credibility and loyalty. The service is available at a
retail location familiar to the consumer and is competitively priced. There are
no forms to fill out, no invasive personal questions from the clerk, no
interaction necessary as to spelling or proper completion of written documents
and limited possibility of identity theft at the point of sale, since no ID is
exchanged.

Retailer User Experience

         By using a POS device that is common to the retail environment, the
process is simple for even part-time employees. This fact is documented by the
increased deployment of the POS device in certain recognized national store
chains. The average tenure of a clerk at these stores is less than 28 days. The

                                       7
<PAGE>

chain has tested numerous other automated solutions, the only application that
continues to prove easy and reliable is the existing POS solution.

         Additionally, for the retailer, there is no inventory to carry. The POS
device has safeguards against theft, which allow the retailer to offer a
multitude of new products without having to worry about theft, or product turn,
as it relates to cash flow. All products are on consignment.

         Despite the success of the POS terminal platform on which the Company's
systems were engineered, the Company has had limited opportunity to deploy its
software on this network of terminals. There can be no assurance that the
company will be able to deploy its services and products on existing or future
terminals.

LICENSEES
---------

         EGX has identified a number of companies as targets for its ASP model.
They include any of the 322 existing money transfer providers who operate via
antiquated technology.

HISTORICAL CHONOLOGY OF THE MARKET AND COMPETITION
--------------------------------------------------

         The international remittance market is rapidly evolving remittance
market. It has grown by over $43 billion in 11 years, up from $6 billion per
year in 1990. Western Union and MoneyGram were best positioned to exploit this
decade of growth. The modern money remittance market is relatively new and
evolving rapidly. Over the last 15 years, this growth of the money remittance
industry moved through the following progression:

         Prior to 1987, Western Union was the only national money transmitter in
existence. The Company was unprofitable and burdened by its legacy telegraph
systems and network of offices.

         In 1989, American Express entered the Money Transfer business in
competition with Western Union by forming American Express MoneyGram, in part to
compliment its 100-year-old Money Order business. The following year, American
Express combined several business units (Integrated Payment Systems, First Data
Resources and others) and created AmEx Information Services Corporation. In
1992, American Express split AmEx Information Services Corp into several
entities, in an Initial Public Offering. This created First Data Corporation
with a $1.2 billion placement. AmEx retained majority ownership and operated in
the money transmission industry as MoneyGram.

         In 1990, MoneyGram introduced a revolutionary concept by creating the
first "Tele-PIN." With each money transfer, the customer was given a 1-800 phone
number and a PIN number, which gave the sender 3 minutes of free phone time. In
1993, MoneyGram entered into a joint venture to sell MCI branded pre-paid phone
cards.

         MoneyGram's strategy focused heavily on niche marketing to Mexico and
by 1994, MoneyGram controlled 60%+ of the Mexican market with its 10-minute
service. Overall, MoneyGram captured 35%+ of consumer money transfer business
(domestic & international).

         In 1993, a competitor to First Data Corporation, First Financial
Management Corporation of Atlanta, Georgia, purchased the unprofitable Western
Union Financial Services from its shareholders and combined First Data with its
credit card processing units. In July 1995, three years after the IPO, First
Data Corporation agreed to acquire its competitor, First Financial Management
Corporation, thereby acquiring control of Western Union.

         By November of 1995, the US government had forced the divestiture of
MoneyGram based on monopolistic market conditions created by the three-year-old
independent First Data Corporation. The next year, MoneyGram filed and
successfully placed its own initial public offering. In 1998, MoneyGram was
purchased by a New York Stock Exchange company, Viad Corp, to compliment their
Travelers Express Money Order businesses.

                                       8
<PAGE>

         Western Union is widely regarded as the dominant provider and has
generated a perception that its brand awareness has created a money transfer
network over a period of decades where, in fact, the primary remittance
activities of First Data Corporation date back less than twelve years, and less
than ten years as an independent company. In this short time, FDC has
established a money transmission company that accounts for almost two thirds of
the company's profits, or nearly $900 million per year in net income.

         EGX management believes that the remittance market is again undergoing
a paradigm shift and that the implementation of technology-based solutions to
money transfer market can have a similar impact on the industry size and the
development of an industry-leading competitor.

         Management may be incorrect in its conclusions above, or, even if
correct, management may not be able to compete successfully, there fore, there
can be no assurances that the Company will be successful.

Fragmented Market
-----------------

         Management of the Company believes that the money remittance market is
highly fragmented amongst competitors to Western Union and Money Gram. There are
no dominant national competitors to those two large money remitters. The smaller
remitters compete by concentrating on niche markets such as specific ethnic
communities or, more narrowly, on ethnic communities that originate from a very
narrow geographic region of their home country.

         The Company has broken out its competition into tiered categories as
follows:

TIER 1 GLOBAL PROVIDERS

         Western Union and MoneyGram. Both of these companies run on DOS based
platforms that do not integrate any of the other products or services they sell.
The typical scenario for an agent is to run the Operating Software on a Western
Union or MoneyGram owned PC. The software tends to be incompatible with many
Windows programs and therefore most agent locations have acquiesced and made
additional space for the money transfer computer, keyboard and monitor.

NICHE PROVIDERS

         By 1992 the price of fax machines and telecommunications costs were
substantially reduced, thus allowing a new tier of competitors (Ria Envia;
Orlandi Valuta; and others) to compete against Western Union/MoneyGram. These
tier 2 companies focused on narrow corridors of activity and using inexpensive
fax technology to complete the transaction. A few have grown to cover entire
country providers and eventually have added more countries. Their systems are
not scalable, reporting capabilities for agent needs are sub-standard, and
extremely labor intensive. Compliance regulatory systems are also difficult to
implement and cannot be done automatically or on a real-time basis.

NEXT GENERATION PROVIDERS

         EGX believes it is the only purely web based/POS driven model in the
market today. The Company believes that by using the web based technology, it
allows not only EGX to be more competitive from a cost basis, but it allows EGX
to approach existing money remittance companies as a potential uniform
consolidation platform, allowing for rapid web-based integration of systems. The
Company believes that the Niche Providers are the most vulnerable and that
technology-based, Next Generation Providers like the Company may be in a
position to compete with or acquire these companies, under certain conditions.

                                       9
<PAGE>

DETAILED MARKET INFORMATION

CONSUMER/RETAIL SUB-SEGMENT ANALYSIS

         MARKET SIZE AND DEFINITION. The Company competes in a market that it
believes is very large. The Consumers that typically buy services of competitors
that are similar to those offered by the Company do not typical maintain a
relationship with a financial institution; they are sometimes referred to as the
`un-banked.' According to the Federal Reserve, 23% of Americans do not have bank
accounts; 28% of all American households cannot obtain credit cards; and over
22,000,000 US households fall into a "cash-based society."

         The Company serves the large, growing and underserved market that
includes the expatriated worker and the un-banked population. The Company
believes that the un-banked segment will continue to grow in the US and abroad
as personal debt has reached an all time high and bankruptcies have rapidly
moved upward for the first time in 11 years. Pre-paid debit cards allow
consumers who have tainted their credit to use the same type of financial
instrument (cards) and receive the same speed of transactions and autonomy (i.e.
pay at the pump) without being tethered to a bank. Simultaneously, it allows
recent immigrants or those who prefer to be un-banked--to blend in with the
community of electronic commerce.

<TABLE>
<CAPTION>
------------------------------- --------------------------------- ---------------------------------------------------
SEGMENT DEFINITION              PROFILE                           NEEDS/DESIRES
------------------------------- --------------------------------- ---------------------------------------------------
<S>                             <C>                               <C>
Un-banked                       -        Either by choice for     -        To integrate into the community of
                                         anonymity, or because poor        electronic commerce at will; without being
                                         credit history                    tethered to a bank ( i.e. book reservations
                                                                           on-line, pay at the pump, etc)
------------------------------- --------------------------------- ---------------------------------------------------
Recent Immigrants               -        Prefer not to call       -        Mainstream
                                         attention to themselves. -        Learn more about technology
                                -        Cost conscious           -        Take advantage of the reduced costs
                                                                           associated with electronic commerce
------------------------------- --------------------------------- ---------------------------------------------------
</TABLE>

RECENT IMMIGRANTS AND THE REMITTANCE MARKET VALUE

         In 2001, industry estimates place remittance abroad at approximately
$49 billion dollars from the United States, up from just $6 billion in 1990.
Approximately $12 billion was sent to Mexico, another $12 billion to other
countries in Latin America and the Caribbean. The balance went to other
countries around the world.

     The demand for EGX hosted services is fueled by economic forces both
domestic and international, as industrialized nations continue to lure labor
from countries such as Mexico, Latin America, the Caribbean, the Philippines,
and others to fill a labor void. There are three re-occurring needs of these
workers:

         1.       Send money home;
         2.       Call to make sure that the money was received; and
         3.       Stay in communication with family/friends.

     In the US, this expatriate/temporary worker, occupies two categories of EGX
users, the remittance market and the un-banked. These consumers use a commercial
money transfer service to remit money back home. Additionally, these consumers
generally do not have established banking relationships and therefore, are
denied many services such phone service, personal cellular service, internet
service etc, because they lack a FICO/credit score needed to establish service.
These consumers utilize pre-paid services to allow them access.. Typically,
these consumers shop at a store where known members of their community direct
them and the retailer caters to their specific needs. EGX's distribution
philosophy is to reside in a terminal (owned by EGX or an affiliate), and
provide those services at that retail location.

                                       10
<PAGE>

MERCHANT & SMALL BUSINESS-PARTNERSHIPS

         Regardless of the health of the economy, retailers are always looking
to bolster revenue. Products and services which have a re-occurring customer
base are believed by management of the Company especially sought after. The EGX
suite of products has a re-occurring consumer pattern that can be tracked and
measured and assists retailers in increasing overall cash flow.

         In conjunction with Zland (www.zland.com), EGX has an opportunity to
deploy terminals, as well as offer services to the 9,000,000 small business
customers it shares jointly with its strategic partner, Sprint. Zland helps
proprietors take advantage of the Internet, CRM software and new marketing
initiatives needed to help grow their business. Together, EGX and Zland
anticipate providing a number of revenue enhancing services to this growing
business-to-business segment.

ASP HOSTING

     An additional target market for the Company is to offer its technology and
processing techniques to other companies. The Company has researched the market
and has identified the following as viable markets to offer private label, or
co-branded products and services.

Money Transfer: Companies who have outgrown their current infrastructure. There
are 322 licensed money transmitters in the US (not including Western Union or
MoneyGram). The majority utilizes a fax-based transaction-processing platform
that is not scalable and is susceptible to system failures.

DISTRIBUTION STRATEGY

POS DEVICE DISTRIBUTION ARCHITECTURE
------------------------------------

LOCATION PLACEMENT STRATEGIES

         The Company's strategy is to create a significant electronic
distribution and retailing network by establishing partnerships with existing
brick-and-mortar stores. The objective is to locate and establish software
licensees with its merchant partner stores in highly visible, accessible
locations and to operate the stores during convenient hours. The Company
attempts to locate stores on high traffic streets or intersections, in many
cases in or near destination shopping centers and in areas where there resides a
high demographic concentration of expatriates. The Company generally seeks
relationships with third-party companies specialized in locating and securing
contracts with merchant locations. The Company believes that by outsourcing this
function it can focus on the development of its technology and other corporate
opportunities, including its mergers and acquisitions plan.

Advantages to Agents and Customers

         The company believes it offers many advantages to the merchant and the
customer. For the merchant it has the potential to increase foot traffic into
the store because of the convenience for the customer in bypassing traditional
check cashing stores and trafficking a more desirable convenience store or other
merchant locations. It also has the potential to increase the amount spent by
each customer who may want to purchase more items since the customer is
generally carrying excess funds, which are intended to be internationally
transferred and/or to purchase prepaid long distance services. For the customer
it is faster and easier than any service currently provided in the market, it
requires no identification at checkout, there is instant global cash
availability and there is the utility of purchasing other point-of-sale services
conveniently.

SMALL BUSINESSES DISTRIBUTE SERVICES OF THE COMPANY
---------------------------------------------------

            EGX' business plan relies on an expansive network of small
businesses to reach its target market. These small businesses are usually retail
stores that already possess and use credit card terminals. Retail adoption

                                       11
<PAGE>

outside existing networks is attractive to store owners, as well. Retail
adopters receive a revenue generating service that does not require any
investment, lease or maintenance costs. Further, it promises to help increase
retail traffic and recurring business in a very low-margin business.

            The Company has been successful in acquiring or engaging existing
networks of retail distribution partners through acquisition and joint venture
agreements. To solidify their position in these retail locations, the Company
has integrated a number of services to enhance the overall proposition to these
resellers.

         1.       Retail locations receive a revenue-generating terminal device
                  that requires no up front, ongoing or maintenance fees;

         2.       Providing non-bank financial services should help increase
                  foot traffic and recurring business for proprietors;

         3.       The Company has integrated Zland North America's
                  (www.zland.com) superb suite of small business services to
                  help retail distributors improve their overall business
                  strategy through the adoption of new technologies.

                  Zland helps proprietors take advantage of the Internet, CRM
                  software and new marketing initiatives to help grow their
                  business. Zland is a strategic partner of Sprint
                  Communications (NYSE: FON) the $23 billion global
                  telecommunications provider with over 9,000,000 small business
                  customers. EGX believes that its network of distribution
                  partners is a critical component to their future success.

Global Partnership Strategy
---------------------------

         EGX is entering into formal partnership arrangements with leading
companies in order to efficiently establish its global remittance platform. EGX
has partnered in three general areas: distribution, technology and processing
expertise.

DISTRIBUTION AND NETWORK SERVICES

         SPRINT COMMUNICATIONS. EGX and Sprint have entered into a national
partnership to deliver retailers an automated point-of-sale solution through a
terminal-based application. Sprint currently delivers its prepaid products
through the distribution of physical cards, which has several competitive
disadvantages. In addition, Sprint has over 9,000,000 small business customers
with a retail presence to whom Sprint sells voice and data services. The
partnership is intended to expand the range of services offered to the small
business customer and, thereby, improving service, revenue and retention.
Historical customer attrition rates in the voice and data industry are causing
providers to offer other services such as those of EGX and Zland. Through Sprint
e-Solutions, we will be co-marketing our solutions to Sprint customers. The
National Account Manager (NAM) program is being completed currently for national
roll-out. EGX expects that the global Sprint brand and association with
reliability and quality will assist EGX in its own branding strategy.

         ZLAND. Zland is the leading Application Service Provider to small
businesses in the Untied States. Zland owns a suite of over 160 Internet-based
applications for small businesses, including the number three selling accounting
package in the United States. Zland (www.zland.com) offers its services through
retailers like Staples and Walmart. Zland also manages a franchisee sales force
which is used to both develop new small business customers and to have
face-to-face interaction with customers to improve retention and sales. EGX is
intending to cross-sell Zland products to retailers.

         NCR. NCR is a 100+-year-old manufacturer of payment solutions. The
company has 30,000 employees worldwide and $6 billion in revenue. NCR and EGX
have signed an agreement to offer money remittance services through ATMs
manufactured by NCR. By adding the remittance application to the terminals, NCR
can offer important new revenue streams to customers who buy their hardware
while EGX hopes to gain importance access to NCR client banks across the world,


                                       12
<PAGE>

as well as to the company's established international distributor network. NCR
is also investing certain hardware to the venture as a showcase remittance and
bill presentment location in the Dominican Republic. NCR and the Company have
executed a letter of intent and are currently completing definitive agreements.

         ATLANTIC PAYMENT AND GLOBAL COLLECT. We entered into an agreement with
Atlantic Payment Systems and Global Collect, a leading payment transfer company,
to process credit card related transactions for EGX. Global Collect is a
subsidiary of TNT Post Group, a Netherlands-based global leader in mail, express
and logistics, with 135,000 employees and over $8 billion in revenue.

         TG GROUP. TG is a technology consulting company founded in part by
executives formerly with SLM Soft, a Canadian provider of electronic banking
solutions. The company is co-managed by Rene Ferrer who was President of SLM
Soft Latin America. Prior, he was CFO of Westinghouse Latin America. TG Group
has extensive established contacts throughout Latin America that are seeking an
electronic remittance solution, including an agreement with the central bank and
post office of a large Caribbean remittance destination country. The TG Group
has extensive experience in setting up public and private E-Commerce exchanges
for competitive advantage in industry. Recent customers include Fluor
Corporation (Construction and Manufacturing), Transplace.com (Transportation),
AGL Resources, Inc. (Energy), and DBMed (Healthcare). THE EXCHANGE WORK BY TG
GROUP HAS BEEN ACCEPTED AS ONE OF THE SIX SUSTAINABLE E-COMMERCE MODELS BY
ABERDEEN RESEARCH AND THE GARTNER GROUP. TG and EGX have formed a joint venture
to expand the remittance network and to develop other services utilizing this
network.

         GLOBAL WIRENET. Global Wirenet has patented a system to process money
remittances, which includes using ATM's and other devices to payout a wire
without the need for an ATM card, using only a PIN number. El Efectivo Money
Wire Transfer System simplifies the process of selling, collecting, transmitting
and distributing funds from one point to another. The Global Wirenet
distribution system manages automated teller machines ("ATM"), such as Diebold,
NCR, Fujitsu, Triton, Tidel, etc. for either Debit/Credit Card or Cardless
withdrawals; and point of sale terminals ("POS"), such as Hypercom, Verifone,
and other scriptwriter type terminals, etc for either Debit/Credit Card or
Cardless withdrawals. EGX is bringing the Send network through its LDC agreement
and Global Wirenet is making available the ATM payout network, initially through
6,000 ATMs owned and operated by Bital Bank in Mexico. Global Wirenet and the
Company have executed a letter of intent and are currently completing definitive
agreements.

TECHNOLOGY PLATFORM

         The software, systems and intellectual property associated with the
international cash remittance business is referred to as the XTRAN System and
was acquired in connection with the acquisition of Keycom. The System includes
the proprietary terminal-driving software, the integrated proprietary back-end
database, Automated Clearing House (ACH) processing software, exclusive
strategic contracts, system know-how based on field operations and various trade
secrets accumulated during the development and implementation stages.

         Keycom was formed in 1999 to develop a software system to permit the
automated transfer of funds from one independent location to another within the
United States or to destinations around the world. The proprietary systems
generate a free 5-minute phone card including a print out of the transaction
confirmation and the customer selected private wire code. Management believes it
is the only fully electronic, web-enabled system available in the market that is
capable of processing cross-border wire transfers originated at point-of-sale
through traditional credit card swipe terminals.

BUNDLED TECHNOLOGY-BASED SERVICES

         EGX's subsidiary, KeyCom, entered into strategic agreement in 1999 with
a prepaid calling card technology platform provider, the operator of the POS
platform. The agreement provides for engineering software to add financial

                                       13
<PAGE>

services to the existing telecommunications software and hardware platform
operated by the provider. We created a bundled Money Remittance service and
telecommunications service. With our service, when the custom printed card is
delivered to the customer at point of purchase, it includes a PIN number
authorizing a long distance call and a PIN number authorizing the retrieval of
money transmitted by the system. Integral to this process is the electronic
validation, authorization and settlement of a cash transaction in a retail
environment and the instantaneous transmission of funds anywhere in the world.

         EGX has developed specialized AutoDebit systems that use the
reliability of the US Federal Reserve's Automated Clearing House system to move
money. We require merchants operating the terminals to preauthorize electronic
transfers from their bank operating accounts.

         EGX's software is platform neutral. In addition to the existing
platform, EGX has engineered its processing software to function on Hypercom
terminals. Hypercom is a NYSE-listed terminal manufacturer, which has sold more
than 3,000,000 units. On November 15, 2001, EGX's engineers completed the
Hypercom Certification process.

Revenue Streams

         The terminals are used to generate plastic cards issued to consumers.
The cards are pre-printed on one side with marketing artwork and are custom
printed at point of purchase by the terminal with text on the other side. The
custom text printing reflects data about the service purchased over the network.
Statistically, the average terminal dispensed 3.4 cards per day, with some chain
stores producing 5.5 per day, or 80% more (Historical Subscriber Revenue). The
services have been exclusively Pay-per-Use telecommunications services.

Where Customers Buy Our Services in the Future

         The third party's POS platform processed and dispensed over 26,000,000
custom printed cards in 2001 representing $480,000,000 in prepaid services
purchased. The cards were printed through 25,000 POS devices located throughout
the United States. The Company intends to offer the XTRAN product to customers
through these terminals as an additional service convenience, but is currently
offering the services through only a few dozen terminals in its test markets. In
year one, EGX projects one Money Remittance to be purchased for each phone card
historically sold through the terminal. However, there can be no assurance that
any success or any transactions from the Company will be sold on these terminals
(see Forward Looking Statements).

         Although the Company believes that its products and services will be
adopted by current and future users of the POS platform noted above, there can
be no assurances that the Company's products will be successfully marketed, or
if they are that they will be profitable to the Company or maintain a
sustainable sales pattern. Also, there can be no assurances that our technology
will be used on the terminals note above, irrespective of our existing agreement
with the operator of the POS platform. Readers are advised to review the Risk
Factors, as there are many risks inherent in an early stage business.

COMMUNICATION SERVICES
----------------------

         Prepaid calling cards have been widely available in the US for over ten
years. Industry publications estimate sales the volumes to be in excess of $6
billion annually. Over the past decade, card utilization and acceptance has
grown and merchants are faced with the difficult situation of having to stock
several denominations of cards, from various providers, all of which are sold to
them on a cash and carry basis. The cards must be maintained and tracked as
inventory and since they are "live" prone to theft or loss.

         Many storeowners are either recent immigrants or have determined the
needs of certain ethnic communities that surround them. In many cases, these
storeowners become a mini-bank for its clientele. Because of the tremendous
amount of trust exchanged between the merchant and the customer, in many cases

                                       14
<PAGE>

the merchant's suggestion to try a new service or product such as prepaid
calling cards or money transfer is highly valued.

         Although the revenue stream pre-paid cards provides can be lucrative,
many retailers (principally large chains) have removed the items from their
shelves until an electronic solution could be developed to address the inventory
and theft/loss problems faced by retailers. The Company feels that it has
developed a solution to their problems with a POS terminal, which can be
integrated into electronic cash register systems when necessary. EGX and its
partner Zland, see this as a cost effective alternative to developing an in
house activation process, which requires hard coding the SKU into merchants'
cash registers and operational/inventory systems.

COMPLIANCE,RISK MANAGEMENT AND UNDERWRITING

         EGX management has adopted various policies and procedures to ensure
compliance with various states, federal and international regulations that
pertain to its business (see Governmental Regulation). From time to time, the
Company will make adjustments to its internal policies based on market forces or
events that may affect its business and the soundness of its operation. In
general, the Company institutes a policy published by the Legal Compliance and
Risk Management staff that all EGX employees, EGX Agents and the Agent's
employees must strictly comply with all applicable laws and regulations. This
standard of conduct is also applied to agents that perform services on a
contract basis for us.

         As detailed elsewhere herein, the Company is subject to various
government regulations, including the Bank Secrecy Act, the Patriot Act and the
Anti-Money Laundering Act, amongst others. The Company has established a
comprehensive Anti-Money Laundering Program that meets all Federal requirements,
which includes:

         o        The Company has designated a Compliance Officer,
         o        Has established strong internal policies, procedures and
                  controls,
         o        Has developed an ongoing Compliance Training Program and
         o        Has created an independent annual audit function to evaluate
                  and test the entire program.

Transaction Database
--------------------

         In addition to adequate policy and procedures, the Company has
developed the XTRAN 2.0 system and related database technology to capture and
permanently record all transaction activity. The Company maintains an SQL
database on it host server. The database contains all payment records including
the time/date stamp of the sending transaction and the time/date and
identification of the receiver. Because the system is interactive and real time,
the system is capable of identifying and flagging transaction patterns
automatically as they occur. From time to time, the Company's management updates
the parameters of the systems to establish exception-reporting criterion, for
example. The system has the capability of identifying suspicious transactions or
patterns of transactions based on this criterion.

Real Time Exception Reporting
-----------------------------

         Additionally, the Company controls its point of sale terminals remotely
from its host server. Based on preset underwriting criterion or on actual
experience with agent locations, the Company may change the parameters in such a
way so as to limit access of certain terminals and terminal operators. For
instance, the Company may establish a daily limit on certain locations based on
loss experience or incidents of suspicious activity (i.e. repeat transactions or
large balance transactions). We believe that this is the only interactive system
available in the market that can, in real time, adapt to market demands.

         The Company has also built in the flexibility that will enable us to
adapt our systems to meet anticipated future, more stringent, Governmental
Compliance requirements.

                                       15
<PAGE>

         The Company's systems technology enables us to manage risk in a manner
we believe to be most effective. System integrity and System security provide
the foundation for our Risk Management functions. We have the ability to track
each of our transactions and reconcile to the penny. Through the use of
firewalls, encryption technology, power failure/downtime avoidance and system
backup procedures we are able to maintain a secure system.

Credit Underwriting
-------------------

         The Company has also developed streamlined Agent Credit Underwriting
procedures and Agent Performance Monitoring and Recovery procedures that allow
us to minimize bad debt losses. EGX wants to provide its products and services
through reliable retail agent locations. Our agent credit /scoring model is
designed to identify retail businesses that will perform up to our expectations.
Our Agent Performance Monitoring process allows us to identify and resolve agent
risk and compliance issues quickly.

Centralized Controls
--------------------

         The Company terminals are all controlled Server-side, without
exception. The terminals do not work without our host computer driving them.
That is, the servers control all terminals centrally. EGX, through its
distributor contract, controls terminals directly operated by using the Director
2.0 web-based controls of POS platform provider.

         We control the movement and tracking of funds electronically and
centrally through the XTRAN WireView(TM) software. The host computer can be used
to turn off services to the terminals at any time. The Subscriber Agreement
provides for deactivation if there are unacceptable ACH rejects.

         A full range of management information and control functions are
operated via the web. This capability makes the business model ideally suited to
locating in an efficient jurisdiction, with little importance on geographical
concerns. KeyCom's POS system and integrated database controls allows the
Company to remotely:

o        Capture, analyze, and update on a daily basis data relating to
         customers and transactions, including the points of origination and
         identities and location of the destination of money transfers, which
         allows the Company to provide management with on-demand access to
         current information.
o        Reduce the risk of transaction errors by, for example, automatically
         calculating all transaction fees, sales commissions, foreign exchange
         conversions and revenue participation and other transaction fees.
o        Utilize an automated data entry methodology that helps service
         associates take appropriate actions in a customer friendly way and
         manage transactions at the point of sale efficiently.
o        Monitor daily revenues by product or service at the level of individual
         transactions and at various levels of aggregation, including by store,
         by region, and for the company as a whole.
o        Identify cash differences between bank statements and the Company's
         records (such as differences resulting from missing items and
         deposits).
o        Determine, on a daily basis, the amount of cash needed at each store
         location, allowing centralized cash management personnel to maintain
         the optimum amount of cash inventory in each store.
o        Provide products and services in a standardized and efficient manner,
         which allows its users to provide a superior degree of service to
         customers.
o        Electronically transmit information and documents to third-party
         providers of services or products offered at the stores.
o        Facilitate compliance with regulatory requirements.

GOVENMENTAL REGULATIONS

                                       16
<PAGE>

MONEY TRANSMITTER LAWS

        More than 40 states in the U.S. regulate bill payers, money
transmitters, check sellers, issuers of payment instruments or similar non-bank
payment businesses, which we refer to collectively as "money services
businesses." The states enacted most of these statutes before the Internet
emerged as a commercial forum, and the application of these statutes to online
payment service providers has not been interpreted by courts or regulatory
authorities.

        Even if all of these state license applications are ultimately granted,
state regulatory authorities have the ability to impose fines and other
penalties for the period of time we provided services without a license to
residents of those states that require us to have a license. Under the recently
enacted International Money Laundering Abatement and Financial Anti-Terrorism
Act of 2001, or IML Act, we could be subject to federal civil and criminal
penalties if we are deemed to be operating without an appropriate money
transmitting license in a state where such operation is punishable as a
misdemeanor or a felony under state law. We have not to date been fined or
received notice of fines or other penalties under state or federal money
transmitter laws.

         If we obtain our own licenses, we must file periodic reports with state
regulators, maintain minimum bonds or levels of capital, ensure that we hold
customer funds only in liquid and highly rated investments and provide notice or
receive advance approval of any change in control of the Company. The minimum
bonding or capitalization requirements vary from state to state but do not
currently exceed $2.0 million in the aggregate. State money services business
regulators will have the authority to examine us for compliance with these laws
and as to the safety and soundness of our operations and financial condition.

         INTERNATIONAL

        We currently offer our product to customers in several countries outside
the U.S. principally as a result of customers receiving funds in those countries
from senders in the U.S. We offer our product from the U.S., in English, and in
U.S. dollars. Our status as a bank, regulated financial institution or other
regulated business in various foreign countries is unclear. We are working with
foreign legal counsel to identify and comply with applicable laws and
regulations. Some of the foreign countries where we offer our product regulate
banks, financial institutions and other businesses and operate under legal
systems that could apply those laws to our business even though we do not have a
physical presence in those countries.

        Under the International Money Laundering Abatement and Financial
Anti-Terrorism Act of 2001, or IML Act, we may be required to obtain additional
information, maintain records and file reports regarding any business we conduct
with residents of jurisdictions that are identified by the Secretary of the
Treasury as being of primary money laundering concern. The Secretary of the
Treasury, however, is not required to rely on the Financial Action Task Force
list in identifying countries of primary money laundering concern, and could
identify additional countries whose residents currently can do business with us
as being of primary money laundering concern. We have implemented procedures,
and are strengthening those procedures, to use Internet Protocol addresses to
identify customers who try to access our systems from countries that are not on
our approved list.

         CONSUMER PROTECTION

        We are subject to state and federal consumer protection laws, including
laws protecting the privacy of consumer non-public information, prohibiting
unfair and deceptive practices, requiring specific disclosures and procedures
with respect to formation of electronic contracts and regarding electronic fund
transfers, including disclosures, for example, in California of foreign exchange
rate information. In particular, under federal and state financial privacy laws
and regulations, we must provide notice to consumers of our policies on sharing
non-public information with third parties, must provide advance notice of any
changes to our policies and, with limited exceptions, must give consumers the
right to prevent sharing of their non-public personal information with
unaffiliated third parties. Under the Electronic Fund Transfer Act and
Regulation E of the Board of Governors of the Federal Reserve Board, we are

                                       17
<PAGE>

required to disclose the terms of our electronic fund transfer services to
consumers prior to their use of the service, to provide 21 days advance notice
of material changes, to establish specific error resolution procedures and
timetables and to limit customer liability for transactions that are not
authorized by the consumer. We believe we have appropriate procedures in place
for compliance with these consumer protection laws, but many issues regarding
delivery of notices and disclosures over the Internet have not yet been
addressed by the federal and state agencies charged with interpreting the
applicable laws.

        In doing business with residents of countries outside the U.S., we also
may be subject to consumer protection laws of those countries, including data
protection laws that are more restrictive than financial privacy laws in the
U.S. We continue to work with foreign legal counsel to identify and comply with
applicable laws and regulations.

         MONEY LAUNDERING

        As a money services business we are subject to state and federal laws
prohibiting the knowing transmission of the proceeds of criminal activities or
funds intended for use in a criminal transaction. We are subject also to
regulations of the Treasury Department's Financial Crimes Enforcement Network,
or FinCEN, requiring reporting and record keeping of various transactions. All
PayPal transactions are recorded and documented, and we believe we have
appropriate processes in place for compliance with these regulations. However,
FinCEN has not issued any specific guidance regarding the application of its
regulations to Internet payment services. Even if we comply with these
requirements, federal and state law enforcement agencies could seize customer
funds in PayPal accounts that are traceable to suspected criminal activities.
The IML Act has also increased the civil and criminal penalties for money
laundering violations to an amount not less than two times the amount of the
transactions in question, up to a maximum of $1.0 million per occurrence.

        The FinCEN regulations require money services businesses, such as our
business, to register with the Treasury Department and to report suspicious
transactions involving a payment or series of related payments of $2,000 or
more. We have filed for registration with the Treasury Department and have
commenced filing suspicious activity reports. We have developed and deployed,
and continue to develop, proprietary systems and procedures to comply with these
regulations. Under the IML Act, all financial institutions are required to
implement anti money-laundering procedures by no later than April 24, 2002 that
include, at a minimum:

         o        the development of internal policies, procedures, and
                  controls;
         o        the designation of a compliance officer;
         o        an ongoing employee training program; and
         o        an independent audit function to test programs.

We believe that compliance with this requirement will not require material
modifications to our existing compliance plans.

        Under the IML Act, the Secretary of the Treasury is directed to enact
regulations, by no later than October 26, 2002, setting forth minimum standards
for financial institutions to determine the identity of their customers in
connection with the opening of an account. The regulations shall, at a minimum,
require financial institutions to implement reasonable procedures for:

         o        verifying the identity of any person seeking to open an
                  account to the extent reasonable and practicable;
         o        maintaining records of the information used to verify a
                  person's identity, including name, address, and other
                  identifying information; and
         o        consulting lists of known or suspected terrorists or terrorist
                  organizations provided by U.S. government agencies to
                  determine whether a person seeking to open an account appears
                  on any such list.

                                       18
<PAGE>

INVESTMENTS PRIOR TO CURRENT DEVELOPMENT STAGE
----------------------------------------------

         ECARD SOLUTIONS, INC.

         On January 18, 2000, the Company acquired, through Shanecy Holding,
Inc. ("SHI"), a wholly-owned subsidiary of the Company,, 400 shares of preferred
stock of eCard Solutions, Inc., which were initially convertible into
approximately 40% of eCard Solutions. This interest in eCard Solutions was
acquired from Thesseus International Asset Fund NV, a Netherlands-Antilles
company, which is partially owned indirectly by Jason Galanis, through a merger,
effective January 11, 2000, between SHI and a subsidiary of Thesseus, in return
for two million common shares of the Company. Three of the Company's directors
were directors of Thesseus at that time.

         eCard Solutions is a specialty financial services company that used
proprietary database mining, marketing techniques, automated systems and
information technology to issue credit cards to moderate income consumers. eCard
Solutions manages the resulting portfolio of accounts in an attempt to ensure
that they remain in a performing status.

         The income level of moderate-income consumers ($25,000 to $50,000 per
year) presents a profile that is unattractive to the majority of credit card
issuers who are focused on the upper income consumer that can qualify for gold
and platinum cards. Given their economic circumstances, eCard Solutions believes
moderate-income consumers that have had access to credit, often experience
problems due largely to circumstances beyond their control (i.e. employment
interruption, marriage break-up, extended uninsured illness, etc.). Once a
credit problem has tarnished an individual's credit report, it becomes extremely
difficult to obtain new credit, regardless of the change in the individual's
economic circumstances. Compounding the credit access problems of many
moderate-income consumers is the fact that they generally have not been educated
in the basics of personal financial management.

         To address the opportunity represented by what eCard Solutions believes
is an underserved, 30 million to 40 million household market, eCard Solutions
determined to exchange certain assets described below for preferred stock in
Junum Incorporated, a Delaware corporation (www.junum.com). Effective December
31, 2000, eCard Solutions entered into a transaction with Junum wherein eCard
sold to Junum its inventory of non performing debt ("the "Receivables")
containing approximately 189,000 individual accounts with a face value of
approximately $352 million, as well as certain intellectual property and
business systems relating to the conversion of non-performing receivables into
performing receivables.

ABOUT JUNUM.COM

         Junum is a financial technology company engaged in Credit Management,
Debt Exchange and Financial Services. Credit Management works towards improving
a Member's Credit Rating and protecting their Credit Identity through the
removal of inaccurate, outdated and unverifiable information from their credit
reports. This membership service is for individuals, small businesses and
corporations with reoccurring monthly charges. Debt Exchange offers consumers
and small businesses that may have become delinquent on a debt the opportunity
to regain their credit standing. Financial Services uses the Company's
patent-pending Analysis Engine to match its members' credit status with loans,
leases and other credit offers from the Company's lending partners.

TRANSACTION TERMS

         eCard is entitled to convert each share of Preferred Stock into 1,000
shares of Common Stock of Junum. While it holds the Preferred Stock, eCard is
not entitled to vote on matters submitted to shareholders of Junum, except as
required by law. The Preferred Stock also is subject to a per share liquidation

                                       19
<PAGE>

preference of $1,000.00, plus any accrued but unpaid dividends. There are no
mandatory dividends. The Preferred Stock issued to eCard Solutions, and all
shares of common stock issuable upon conversion of such Preferred Stock, is not
transferable for a period of 24 months following the Closing Date without the
prior written consent of the Junum.

         Junum has the right, at any time following November 15, 2002, to redeem
for a redemption price of $0.10 per share of Series C Preferred Stock, plus the
Redemption Assignment (as described below) all or any portion of the Preferred
Stock, but only in the event Junum receives and collects less than $4,900,000 in
Net Collections from the Receivables. In such event, on or after November 15,
2002, Junum has the right to redeem a number of shares of Preferred Stock equal
to the difference between $4,900,000 and the Net Collections. There can be no
assurance that Junum will receive any Net Collections, and, therefore, there is
no assurance that the Company will realize any value from the Preferred Stock.

         Net Collections means the amount of all balance transfers arising from
conversion of debts constituting a part of the Receivables, plus the amount of
actual cash collections received by the Company in satisfaction of any portion
of the Receivables that are not considered balance transfers, less (i) all
direct operating costs of Junum relating to the collection or conversion of the
Receivables, (ii) any third party commissions or fees relating to the collection
or conversion of the Receivables, and (iii) any other direct costs of collection
or conversion of the Receivables. A "balance transfer" refers to the amount of
debt agreed to be transferred to a new credit card issued by or through Junum,
and for which Junum or its agent receives at least one cash payment from the
debtor.

         In the event any portion of the Preferred Stock is redeemed as
described above, then Junum will transfer the Redemption Assignment to eCard
upon receipt of the certificates evidencing the redeemed Preferred Stock. The
Redemption Assignment refers to an assignment of a portion of the Receivables
which have not been previously converted or paid, equal to a fraction, the
numerator of which is the number of shares of Preferred Stock redeemed and to be
redeemed, and the denominator of which is equal to 4,900.

         Two directors of the Company serve on eCard's Board of Directors and
one of those directors has entered into a Consulting Agreement with Junum to
provide assistance to Junum in marketing the Junum's membership offerings, as
well as various other products and services to the general public as well as to
the account debtors with respect to the accounts which constitute the
non-performing credit card portfolios owned and to be acquired by Junum.

Acquisition Agreements
----------------------

         The Company entered into various letters of intent and acquisition
agreements previously disclosed which have not been consummated as of March 31,
2002 or as of the date of the accompanying audit report as follows:

         On December 28, 2001, the Company entered into an Asset and Membership
Purchase Agreement with Junum Incorporated (Junum) to acquire 100% of the
outstanding capital stock of NextTech Card Services, Inc. (NextTech), a
California corporation plus 1,200,000 months of Junum's Credit Management
Service in exchange for 8,333,333 shares of the Company's restricted common
stock valued at $5,000,000. Both parties agreed to allocate the purchase price
as $200,000 for NextTech shares and $4,800,000 for the Junum memberships.

         Pursuant to the Asset and Purchase Agreement, the transaction is
conditional based upon the delivery of a valid and enforceable issuing agreement
with a third party bank. The bank has not supplied the Company with a written
confirmation, citing certain management transition issues. Therefore, the
consideration for the transaction has not been delivered to the sellers and the
acquisition will not be recorded until such time as the conditions are fully
met.

                                       20
<PAGE>

         On February 4, 2002, the Company signed a definitive letter of intent
to acquire CashXpress, a provider of consumer cash advances. As of the date of
the accompanying consolidated audit report, no definitive agreement has been
entered into.

         On October 12, 2001, the Company signed a binding Letter of Intent to
acquire a venture partner of Key Com that owns and operates a proprietary
network of point-of-sale terminals distributed nationally and internationally.
The Letter of Intent sets forth the terms and conditions of the acquisition,
including all detailed information on purchase price, contingent payments,
investments into the company, and other material terms, as well as provides for
no-shop provisions as to the sellers, break-up fee penalty payments and
pre-closing confidentiality provisions. Management originally anticipated the
transaction would close in November 2001; however as part of its due diligence
review, management and the rules and regulations under the Securities and
Exchange Commission requires an audit of the financial statement of the seller
which has not been completed as of the date of the accompanying consolidated
audit report. Without the audit, there would be material economic harm to
Emergent if the transaction were completed. The Company is currently reviewing
its available remedies under the letter of intent.

         On December 31, 2001, the Company and Crosstar Surety LLC, an entity
controlled by the CEO of Emergent, executed an assignment of Crosstar's
Agreement to acquire a 90% interest in a life insurance company. Management
believes the controlling interest in the life insurance company may enhance the
Company's non-bank financial service menu of products as well as assist in
meeting state licensing requirements for Money Service Businesses. This
agreement expired prior to being consummated.

ITEM 2.   DESCRIPTION OF PROPERTY

         The Company has entered into a lease for its facilities in Boulder,
Colorado. Under the terms of the lease, the Company leased 6,438 square feet for
a term of five years beginning October 1, 2001. Obligations under the lease are
$56,735, $77,916, $80,253, $82,661, and $85,141 in years one through five,
respectively. Common expenses are estimated to be $17,511 per year with
provisions for annual adjustments.

The lease was amended December 19, 2001 to obtain an additional 5,011 square
feet for expanded operations. The total space under lease in Boulder, Colorado
now totals 11,444 square feet. Obligations for the combined space under the
amended lease are $111,002; $138,561; $142,718; $147,000, and $151,410 in years
one through five, respectively. Common expenses for the combined space are
estimated to be $40,811 per year with provisions for annual adjustments.

Total rent expense for the years ended March 31, 2002 and 2001 was $16,866 and
$36,580, respectively.

ITEM 3.  LEGAL PROCEEDINGS

         Incubator Capital Group, LLC. v. Incubator Capital, Inc.

         On August 24, 2000, a legal action was commenced against the Company by
Incubator Capital Group, LLC ("ICGL") in the United States District Court for
the Southern District of New York. The claims are purportedly based on the
trademark rights of ICGL, for the Company's use of the name "Incubator Capital"
and its use of the domain name www.incubatorcapitalcorp.com. ICGL has filed a
complaint that includes causes of action for False Designation of Origin, Unfair
Competition, Federal Dilution, State Dilution and Deceptive Acts and Practices,
which seeks injunctive relief and damages in an unspecified amount. This matter
is in its early stages, as the Company and ICGL currently are in dispute
regarding procedural issues, whereby the Company claims that is was not properly
served with a summons and complaint, and ICGL has taken the position that
service was effected, and that it will seek a default judgment for failure to
file a responsive pleading. The Company intends to vigorously defend the action.
The outcome of the litigation is uncertain and cannot be predicted at this time.
Any adverse result could have a material adverse affect on the business of the

                                       21
<PAGE>

Company. At this time, as the Company has abandoned the use of the name
Incubator Capital, management believes that this litigation will be settled in
the near future. Additionally, based on the Company's investigation, the
plaintiffs have ceased business operations and the use of the domain name and
trademarks claimed.

         Proprietary Industries v. Emergent Financial Group

         On May 24, 2002, a Proprietary Industries of Alberta, Canada filed a
complaint in United States District Court against the Company alleging wrongful
failure to register and transfer shares of stock and conversion and requests
declaratory judgment. The complaint demands $500,000 in damages. Management
claims it has valid defenses to this claim but is in discussions with the
plaintiff to potentially settle the claim. Management has never had any business
dealings with Proprietary whatsoever. The circumstances by which Proprietary
purported came into the possession of the Company's securities are also in
question. No amounts have been accrued on this matter as of March 31, 2002. The
Company intends to vigorously defend the action if settlement is not reached.
The outcome of the litigation is uncertain and cannot be predicted at this time.

         KeyCom, Inc. v. Tim Autrey

         On January 1, 2001, KeyCom Inc, the predecessor to KeyCom Holdings
commenced an action against Tim Autrey alleging that Mr. Autrey did not fulfill
obligations pursuant to a consulting contract, which included, amongst other
things, a condition to raise certain funds for the KeyCom, Inc, predecessor to
KeyCom Holdings. Mr. Autrey counter sued KeyCom for breach of contract. On March
27, 2002, Mr. Autrey prevailed and was granted a judgment against KeyCom in the
approximate amount of $88,000, which has been accrued. KeyCom intends to appeal
this ruling and believes there are meritorious defense to Mr. Autrey's claims.

         In February 2002, the Company received a demand letter from an attorney
on behalf of his client demanding $335,537 plus interest. Management believes
the demand relates to certain royalty obligations that may have been transferred
from certain royalty holders of Key Com, Inc. to settle their individual legal
matters. The Company believes that any royalties that may be due would be less
than $5,000. Management has not received follow up communications from the
plaintiff or their counsel since February 2002. No amounts have been accrued on
this matter as of March 31, 2002.

         From time to time, the Company is involved as plaintiff or defendant in
various other legal proceedings arising in the normal course of its business.
While the ultimate outcome of these various legal proceedings cannot be
predicted with certainty, it is the opinion of management that the resolution of
these legal actions should not have a material effect on the Company's financial
position, results of operations or liquidity.


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

         No matter was submitted to a vote of security holders, through the
solicitation of proxies or otherwise, during the quarter ended March 31, 2001.
Holders of a majority of the issued and outstanding Common Stock approved
certain actions by written consent adopted on April 24, 2000, including an
amendment and restatement of the Company's Certificate of Incorporation, the
adoption of a Stock Option Plan, and approval of the Company's acquisition of
EAL and CASA as described in the Company's Information Statement dated April 26,
2000, as filed with the Securities and Exchange Commission on April 27, 2000.
Additionally, on August 2, 2001, holders of a majority of the issued and
outstanding Common Stock approved certain actions by written consent including a
name change to Emergent Financial Group, Inc. and a 1 for 30 reverse stock
split. Additionally, on August 2, 2001 and August 22, the holders of a majority
of the issued and outstanding Common Stock approved a 1 for 30 reverse stock
split and on August 2, 2001 approved a name change to Emergent Financial Group,
Inc. On October 29, the majority of shareholders approve by written consent a 5
for 1 forward stock split. In connection with the settlement with the Series E
Preferred Shareholders and the conversion of these liabilities into common
stock, on June 10, 2002, the holders of the majority approved by written consent
a 1 for 70 reverse stock split and changed the name of the corporation to EGX
Funds Transfer.

                                       22
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
         MATTERS

         The Company's Common Stock is currently traded on the NASDAQ OTC
Bulletin Board ("NASDAQ Bulletin Board") under the symbol "EGXF" (recently
changed from "EGFG" pursuant to the Company's name change to EGX Funds Transfer,
Inc.). The Common Stock began trading on the NASDAQ Bulletin Board on December
1, 1999. Prior to the commencement of trading on the NASDAQ Bulletin Board,
there was no active trading market for the Common Stock.

         The following table sets forth the quarterly high and low closing
prices of the Common Stock for the year ended March 31, 2002 2002, as adjusted
for stock splits. On July 31, 2001, the closing price of the Common Stock on the
NASDAQ Bulletin Board (immediately prior to a 1 for 30 reverse stock split) was
$0.01. The prices in the table reflect split-adjusted interdealer prices without
retail markup or commissions and may not represent actual transactions.

                       [NEED THE BELOW FIGURES RECOMPUTED]

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

                QUARTER ENDED                         HIGH             LOW
---------------------------------------------- -- ------------- -- -------------
June 30, 2001.................................    $252.00            $252.00
---------------------------------------------- -- ------------- -- -------------
September 30, 2001............................    $553.00            $437.50
---------------------------------------------- -- ------------- -- -------------
December 31, 2001.............................    $ 47.60            $ 42.00
---------------------------------------------- -- ------------- -- -------------
March 31, 2002................................    $ 15.40            $ 12.60
---------------------------------------------- -- ------------- -- -------------

         On May 12, 2000, the Company's Common Stock was listed and began
trading internationally in Germany on the Third Market Segment of the Frankfurt
Stock Exchange by the Deutsche Borse AG. The trading symbol is "SW6" and the
German securities code is 935 139. The Frankfurt Stock Exchange is a European
exchange with a technology orientation.

         As of June 20, 2002, there were 608 record holders and approximately
2,718 beneficial holders of the Common Stock, as at March 20, 2002.

         On December 30, 1999, the Company effected a two-for-one stock split
(in the form of a 100% stock dividend). On August 3, 2001, the Company effected
a one-for-thirty reverse stock split. The stock price information in the table
above has been adjusted to reflect these stock splits.

         During fiscal 2002, the Company did not pay any cash dividends on its
Common Stock. The payment by the Company of cash dividends in the future is in
the sole discretion of its Board of Directors and will depend, among other
things, upon the Company's earnings, its capital requirements and financial
condition, as well as other relevant factors. The Company does not intend to pay
dividends in the near future.

         On August 28, as detailed below, the Company converted the Series B
Preferred Stock to common stock. The conversion amount included accrued, but
unpaid dividends of $99,333.

         As a Delaware corporation, the Company may not declare and pay cash
dividends on its capital stock if the amount paid exceeds an amount equal to the
excess of the Company's net assets over paid-in-capital or, if there is no
excess, its net profits for the current and/or immediately preceding fiscal

                                       23
<PAGE>

year. In addition, the Company's ability to pay dividend to common shareholders
is subject to the prior payment of all accrued but unpaid dividends on the
Company's outstanding preferred stock.

Stock Issuances Within the last Two Fiscal Years

         On May 16, 2000, in consideration for services rendered under an
investor relations agreement, the Company issued Sabre Communications, Inc. a
warrant to purchase 6,666 shares of its Common Stock, with an exercise price of
$120 per share (as adjusted for the stock splits) for a two year term commencing
on November 16, 2000.

         On May 22, 2000, in consideration for investment services, the Company
issued Quadrant Investment Bankers a warrant to purchase 3,333 shares of its
Common Stock, with an exercise price of $120 per share (as adjusted for the
stock splits) for a two-year term commencing on November 22, 2000.

         On May 12, 2000, in consideration for obtaining a listing on the
Frankfurt Stock Exchange and for ongoing long-term market making sponsorship
services, the Company issued Berliner Freiverkehr a warrant to purchase 6,666
shares of its Common Stock, with an exercise price of $280 per share (as
adjusted for the stock splits) for a two year term commencing on May 12, 2000.

         As of March 31, 2000, the Company granted, pursuant to its Share Option
Plan, options to purchase an aggregate 350,000 common shares (as adjusted for
the stock splits) to certain officers and directors at exercise prices of
between $1.20 and $60.00 per share. The options have either a five or ten year
term and are currently exerciseable.

         On May 30, 2000, the Company received a loan from a shareholder who is
a brother of a director of the Company. The loan bore interest at 8% payable
quarterly in arrears commencing September 1, 2000 and principal was to be
payable in full on July 1, 2001. Subsequently, on July 7, 2000, the shareholder
converted this loan into 1,000,000 non-voting, non-redeemable, Series B, 8%
cumulative preferred shares in return for 1,666 two- year warrants each
entitling the holder to acquire one common share for $75 (as adjusted for the
stock splits). The preferred shares are convertible into 250,000 common shares,
subject to anti-dilution provisions. The accrued but unpaid dividends on such
preferred stock is convertible into the Company's Common Stock at the average of
closing prices on the thirty trading days commencing 45 trading days prior to
conversion of such dividends into Common Stock. The Company was in default of
the provisions of such preferred stock as a result of its failure to pay any
accrued dividends. The Company completed negotiations with the holder of the
Series B Preferred Stock to waive all defaults and convert its Series B
Preferred Stock into Common Stock (see below).

         On September 22, 2000, the Company created and issued 1,300 Series D
Preferred Shares with a stated value of $1,000 each, which are generally
non-voting and not entitled to dividends, for $500,000 cash plus the return of
300,000 then outstanding Common Shares of the Company. The Series D Preferred
Shares are convertible at any time, in an amount equal to the stated value of
the Series D Preferred Shares together with an Additional Amount calculated on a
daily basis at a rate of 4.5% per annum, into Common Shares of the Company based
on a value of 80% of the then current market value of the Company's Common
Shares, to a maximum of $1.50 per Common Share. At any time after the first
anniversary of their issuance, the Company may redeem each Class D Preferred
Share at a price equal to the greater of $1,400 plus the Additional Amount and
the market price of the Common Shares into which such Class D Preferred Share
could then be converted.

         On June 11, 2001, the Company sold 150 units to Xtelligence, Inc. for
consideration of $150,000, consisting of 71,429 commons shares at $2.10 per
share and warrants. The warrants entitle the holder to purchase, for a term of
(5) years, an aggregate of 71,429 shares of common stock at an exercise price
equal to $2.10 per share. The warrants carry a 90-day reset provision in respect
to recapitalizations or reverse splits. This investor became a related party
after the conversion of the Series E preferred stock. This investor became a
related party after the conversion of the Series E Preferred Stock.

                                       24
<PAGE>

         On July 31, 2001 Thesseus International Asset Fund, an entity which is
a related party since a director and the CEO of the Company has beneficial
ownership, executed a Subscription Agreement with the Company to purchase up to
650 units for a purchase price of $1,000 per unit or $2.10 per common share.
Each unit consists of 476 shares of the Company's common stock and a five-year
warrant to purchase up to 476 shares of the Company's common stock at an
exercise price equal to $2.10 per share. The units and warrants carry a 90-day
reset provision in respect to recapitalizations or reverse splits. Funds
received on July 31, September 10 and September 20, were $400,000, $30,000 and
$220,000, respectively. The proceeds were used for the acquisition of Key Com,
Inc. A total of 309,523 warrants were issued pursuant to this subscription.

         On August 7, 2001, the Company sold an aggregate of 50 units, for a
purchase price of $1,000 per unit, to Heritage West Holdings. Each unit consists
of 476 shares of the Company's common stock, and a five-year warrant to purchase
up to 142 shares of the Company's Common Stock at an exercise price equal to
$2.10 per share. The Units and warrants carry a 90-day reset provision in
respect to recapitalizations or stock splits. The proceeds of the subscription
were disbursed directly to a supplier of the Company. A total of 7,142 warrants
were issued pursuant to this subscription.

         On August 7, 2001, 214,286 common shares were issued in exchange for a
modification of the terms of the Series A Preferred Shares.

         On August 28, 2001, a creditor elected to convert $350,000, plus all
accrued interest into 166,667 common shares. The stock was valued at the
contemporaneous sale price of $2.10 per share resulting in a no gain or loss on
the transaction. This creditor became a related party after the conversion of
the Series E Preferred Stock.

         On August 28, 2001, the holders of the Series B preferred shares
converted those shares and $99,333 of accrued dividends to 373,838 common shares
and were issued 385,714 warrants as an inducement to convert. The warrants are
exercisable at $3.50 and expire in June 30, 2006.

         On August 28, 2001, an officer elected to convert $101,000 of notes
into 48,095 common shares valued at the contemporaneous offering price of $2.10
per share.

         On September 26, 2001, the Company issued 71,429 common shares as a
consulting fee relating to the Key Com, Inc. acquisition. The shares were valued
at the contemporaneous offering price of $2.10 per share resulting in a total
value of $150,000 which was included as part of the purchase price.

         As of November 30, 2001, a creditor converted $4,149,725 of notes and
accrued interest into 332,919 common shares. In order to induce the creditor to
convert, the Company issued warrants to purchase up to an aggregate of 328,571
shares of the Company's common stock at $3.50 at any time prior to June 30,
2006. (See Note 10(I)) Since there were no shares traded on the conversion date
and the shares were thinly traded around the conversion date, the common shares
issued were valued at the highest bid price on the conversion date of $3.50
resulting in a gain on extinguishment of debt of $2,984,507, which is included
in gain from disposal of discontinued operations.

         Subsequent to the period ending March 31, 2002, the Company entered
into a series of stock purchase agreements with third party accredited
investors. The Company issued 400,000 shares for net proceeds of $300,000 to the
Company. The shares were issued pursuant to an exemption granted under
Regulation D Rule 144 and carry a restrictive legend. The proceeds were received
on or about July 11, 2002. The Company also granted the purchasers warrants to
acquire the Company's common stock for a period of five years. The warrants
carry a strike price of $3.00 and $4.00 and 400,000 warrants were granted for at
each strike price. The Company has the right to call, or cancel, 50% of the
warrants upon written notice if the Company's common stock trades for 20
consecutive trading days at a price equal to 175% of the strike price. If the
warrants were exercised in full, the Company would experience significant
additional dilution through the issuance of additional common shares and would
receive proceeds of $2,800,000.

                                       25
<PAGE>

         Exemption from registration for the issuance described above was
claimed pursuant to Section 4(2) of the Securities Act of 1933, as amended, in
reliance upon the fact that such sales did not involve a public offering. As a
result, such securities are subject to certain transfer restrictions.

         In October 2001, the Company authorized and issued 150,000,000 Class
144A common shares into a reserve account in the Company's name as collateral on
a proposed financing transaction with a third party. As the financing did not
occur, the shares were cancelled in April 2002. As the shares were held for the
benefit of the Company, they are considered issued but not outstanding as of
March 31, 2002 and are not included in the computation of loss per share for any
period in the accompanying consolidated financial statements.

PREFERRED STOCK SERIES E

         On September 26, 2001, as part of the Key Com, Inc. acquisition price,
the Company issued 250,000 of the Company's Senior Series E Non-Voting Secured
Preferred Stock ("Series E") with a stated value of $100 per share. The Series E
Preferred Stock is not transferable until September 26, 2003. The Series E has a
liquidation preference equal to the stated value or an aggregate $25,000,000,
ranks senior to any class or series of common or preferred stock does not pay
dividends and is secured by 100% of the Key Com Holdings, Inc. stock owned by
the Company.

         Commencing January 1, 2003, the shares of Series E Preferred Stock may
be converted into Common shares of the Company, equal to the Stated Value plus
an additional amount, as defined, (`the "Conversion Price"), divided by the
Market Price, provided, however, that in no event shall the Conversion Price be
greater than $21.00 per share of Common Stock (the Maximum Conversion Price).
The Conversion Price and the number of Common Shares into which the Series E
Preferred Stock shall be convertible shall be adjusted for stock splits,
combinations, or other similar events. Series E Preferred Stock holders shall be
required to convert if the common stock into which it is to convert has a market
value equal to 200% of the stated value of the Series E Preferred Stock,
however, such conversion is limited to 20% of the outstanding common stock at
the conversion date, unless shareholder approval is obtained. In the absence of
shareholder approval, an excess issuable over the 20% would be redeemable in
cash at the stated value of the Series E preferred stock.

         Commencing January 1, 2002 and continuing for three subsequent
quarters, the holders of the Series E have the unconditional right to put
$1,000,000 of stated value of stock per calendar quarter to the company for
purchase. The Company has an unconditional right to call such stock in the same
amount and on the same schedule. The Company has the right to also designate any
third party as the counter-party to the put rights. The Company also has the
right to assign its call rights to any third party without consent of the
preferred holders. On or anytime before January 1, 2003, the Company has the
right to call the remaining Series E outstanding. If the Company does not call
the Series E by January 1, 2003, the holders may continue to put $1,000,000 of
stated value of Series E per calendar quarter to the company for purchase until
the entire remaining 210,000 Series E shares have been put back to the Company
for an aggregate $21,000,000. This right is also transferable to a third party
designee, or designees, in whole or in part, as determined in the sole
discretion of the Company; however, such transfer shall not serve to relieve the
company of its liabilities. As of March 31, 2002, the put option had not been
exercised. In June 2002, pursuant to a Settlement Agreement and General Mutual
Release Agreement, the Series E shares were converted to 11,000,000 common
shares Accordingly, the $25,000,000 temporary equity reflected as redeemable
Series E Preferred Stock was reclassified back to permanent equity as common
stock at par value and additional paid-in capital.


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

Forward Looking Statements
--------------------------

                  THE FEDERAL SECURITIES LAWS PROVIDE FOR A SAFE HARBOR FOR
CERTAIN FORWARD-LOOKING STATEMENTS. THIS SAFE HARBOR PROTECTS US FROM LIABILITY
IN A PRIVATE ACTION ARISING UNDER EITHER THE SECURITIES ACT OF 1933 OR THE

                                       26
<PAGE>

SECURITIES EXCHANGE ACT OF 1934, AS AMENDED, FOR FORWARD-LOOKING STATEMENTS THAT
ARE IDENTIFIED AS SUCH AND ACCOMPANIED BY MEANINGFUL CAUTIONARY STATEMENTS, OR
ARE IMMATERIAL.

         WHEN USED IN THIS FORM 10-KSB, THE WORDS OR PHRASES "WILL LIKELY
RESULT," "ARE EXPECTED TO," "WILL CONTINUE," "IS ANTICIPATED," "ESTIMATE,"
"PROJECTED," "INTENDS," "MAY" OR SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY
"FORWARD LOOKING STATEMENTS" WITHIN THE MEANING OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES, INCLUDING BUT NOT LIMITED TO, LACK OF OPERATING HISTORY, NEED FOR
ADDITIONAL FINANCING, HISTORY OF LOSSES AND SUCCESSFUL IDENTIFICATION,
ACQUISITION AND INTEGRATION OF ADDITIONAL TARGET BUSINESSES. SUCH FACTORS, WHICH
ARE DISCUSSED IN MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS, COULD AFFECT EGX FUNDS TRANSFER, INC.'S ("EGX" OR THE
"COMPANY") FINANCIAL PERFORMANCE AND COULD CAUSE THE COMPANY'S ACTUAL RESULTS
FOR FUTURE PERIODS TO DIFFER MATERIALLY FROM ANY OPINION OR STATEMENTS EXPRESSED
HEREIN WITH RESPECT TO FUTURE PERIODS. AS A RESULT, THE COMPANY WISHES TO
CAUTION READERS NOT TO PLACE UNDUE RELIANCE ON ANY SUCH FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE MADE. WE DISCUSS MANY OF THESE AND
OTHER RISKS AND UNCERTAINTIES IN GREATER DETAIL UNDER THE SECTION ENTITLED,
"RISK FACTORS THAT MAY AFFECT FUTURE RESULTS AND MARKET PRICE OF STOCK" IN ITEM
7 OF PART II AND ELSEWHERE IN THIS ANNUAL REPORT ON FORM 10-K.

THE FORWARD-LOOKING STATEMENTS SPEAK ONLY AS OF THE DATE ON WHICH THEY ARE MADE
AND, EXCEPT AS REQUIRED BY LAW, WE UNDERTAKE NO OBLIGATION TO UPDATE ANY
FORWARD-LOOKING STATEMENT TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE ON
WHICH THE STATEMENT IS MADE OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED
EVENTS. 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.


BACKGROUND

         EGX Funds Transfer, Inc. and Subsidiaries (F/K/A Emergent Financial
Group, Inc. and Subsidiaries) (the "Company") was incorporated in Delaware in
May 1994. On July 18, 2001, substantial operations were discontinued. At July
18, 2001, the Company is considered to have initiated a new development stage.
In June 2002, the Company changed its name to EGX Funds Transfer, Inc.

OVERVIEW

         We set out to develop a payment system combining the pervasiveness of
credit card terminals with the existing financial system infrastructure. The
global backbone infrastructure for payment processing is highly evolved. Credit
and debit cards are accepted almost everywhere and for almost everything. VISA
member banks have installed real-time point of sale devices for many years,
principally as a means to reduce costs, including costs associated with fraud.
The infrastructure of wired network devices, commonly known as credit card POS
machines, measures over 19,000,000 active terminals worldwide for VISA alone.
These Information Technology devices have become so commonplace as to be
virtually indistinguishable from a cash register. Nevertheless, the evolution of
terminal software and hardware technology continues to maximize usage of the
network and data communications capabilities and expand revenue sources.

         EGX believes that the efficiencies of modern telecommunication networks
combined with the simplicity of end-of-network devices (POS terminals) can be
harnessed to offer and distribute more robust services to consumers in
environments where consumers frequent, thereby extending the market beyond
traditional brick-and-mortar branches.

         Our objective is to establish and expand a universal and standardized
delivery platform capable of generating multiple revenue streams from each
retail location while making no capital investments in the store infrastructure.

                                       27
<PAGE>

COMPANY BACKGROUND AND MARKET
-----------------------------

         EGX Funds Transfer (formerly Emergent Financial Group) began its
current operations in July 2001. Its XTRAN data processing technology became a
public company subsidiary in September 2001 for a payment of approximately
$26,000,000 in cash and Series E Preferred stock and a fee of $150,000 payable
in common stock. The company is a niche transaction processing firm that
leverages new technologies to take advantage of traditional systems in the
electronic payment processing market. Currently, the market is served by two
competitors with distinctly different approaches: Western Union, a wholly-owned
subsidiary of First Data Corp (NYSE: FDC), and PayPal, Inc. (NNM: PYPL), a start
up electronic payment remittance company recently entering an acquisition
agreement with Ebay. Western Union is a 140-year-old telegraph and financial
services company using legacy technology deployed through field offices to
transmit money for consumers. PayPal uses email-based technology and the
Internet to electronically transfer money for users that are willing to register
a bank account and have computer access. PayPal users have predominantly been
online auction customers, such as Ebay shoppers.

         EGX owns proprietary software that management believes combines the
best of traditional reliable in-person money transfer systems with the speed and
ease of the Internet. Our systems do not require a preexisting relationship with
a financial institution, which much of its target market does not have. The
Company makes services available through in-store point-of-sale terminals
located at existing convenient retail locations such as convenience stores.

LARGE AND GROWING UNDERSERVED MARKET
------------------------------------

         The Company is targeting a market that management believes is
inadequately covered by its competitors. The Company has focused on the $49
billion transfer market comprised of immigrants and expatriates who work in the
United States and regularly send money home to family and friends. Unlike PayPal
and C2it's (Citibank's equivalent to PayPal) email-based services, the EGX
customer is most likely not Internet-enabled and does not plan to be. However,
with the wider availability of affordable telecommunications services, families
abroad are afforded unprecedented ability to communicate, thus are migrating in
larger numbers.

According to Susan F. Martin, Georgetown University, Institute for the Study of
International Migration, "A second, related factor stimulating increased
migration involves the transportation and communication revolution that makes it
easier to move and keep contact with one's home community."

BUSINESS MODEL
--------------

         Like PayPal or Ebay, EGX has several advantages that are unique to
online business. First, the Company has no inventory whatsoever, so there is no
inventory expense or risk. Additionally, EGX has no receivables, since it
receives payment for its services at the time they are performed and collects
the payment in cash. Third, the Company has high margins for its services, since
these types of services traditionally have substantial fees and other charges.

         The Company has targeted a multi-billion dollar niche market for its
services and technology in the person-to-person (P-to-P) transfer market. The
Company's XTRAN transaction processing system allows near instant terminal-based
transfers utilizing the Internet in coordination with the Automated Clearing
House (ACH) system and typical credit card terminals located in nearly every
retail location around the globe. The system, therefore, requires no special
training for users and offers retail agents revenue generation with no
investment whatsoever. The system is scalable and offers the potential to
support numerous non-bank financial services in the future.

                                       28
<PAGE>

GROWTH MODEL
------------

         EGX has developed a communication-driven system to gain market share
that management believes is similar to that of online providers C2it and
PayPal's exponential growth through viral, or referral-based, marketing. The
Company's business plan incorporates a referral-based marketing business model
to drive growth. The nature of its systems promotes user-driven growth whereby
senders notify recipients to use its system to retrieve money transmitted and
awaiting pick-up. As a result, the sender has acquired the recipient as a new
user to its system. Additionally, the Company has direct face-to-face
interaction with new customers through its network agents. This presents a
further opportunity to encourage system usage. The combination of requiring both
transfer and recipient to become part of the network, along with complementary
5-minute calling card should, in the opinion of management, help the Company
achieve global brand awareness. PayPal was able to increase its user base from
approximately 10,000 users in early 2000, to over 13,000,000 registered users as
of their recent public offering.

         Furthermore, EGX intends to acquire traffic on its network and to
acquire new customers through its partner strategy, which relies on distribution
joint ventures with existing money remittance providers that generally are
seeking technology solutions to provide enhanced money transmission services.
Based on these associations, it believes that its systems may be able to achieve
a rapid adoption in the marketplace. Despite management's evaluation of the
marketplace and their own conclusions about the services offered or the business
competitiveness more generally, there can be no assurance that the Company will
have any success whatsoever in its business.

LOW COST PROVIDER

         EGX believes that its average fees charged for transactions are lower
than any of its competitor for similar services. The Company's $18.65 average
fee per $300 transaction versus approximately $30 for other carriers may be a
competitive advantage. We also believe that the increased convenience could help
the Company achieve a significant user base in a short period of time. There can
be no assurance that either lower fees or more conveniently available services
will permit the Company to compete successfully or to achieve any market
acceptance whatsoever.

GENERAL

          The Company has a limited operating history upon which to base an
evaluation of its business. The Company's business and prospects must be
considered in light of the risks, expenses and difficulties frequently
encountered by companies in the early stages of development, particularly
companies in new and rapidly evolving markets. In addition, because the Company
acquires significant interests in companies which concentrate on businesses
using the Internet to provide products and services to moderate income
consumers, many of which generate net losses, it is experiencing, and expects to
continue to experience, significant volatility in its operating results. The
Company does not know when or if it will report net income, and it expects that
it will report net losses in many quarters for the foreseeable future.

         EGX Funds Transfer, Inc. and Subsidiaries (F/K/A Emergent Financial
Group, Inc. and Subsidiaries) (the "Company") was incorporated in Delaware in
May 1994. On July 18, 2001, substantial operations were discontinued. At July
18, 2001, the Company is considered to have initiated a new development stage.
In June 2002, the Company changed its name to EGX Funds Transfer, Inc.

         The Company was originally incorporated as Shanecy, Inc. in Delaware on
May 31, 1994, and was organized to act as a home health care analysis and
referral service. On March 10, 1999, the Company filed a registration statement
with the Securities and Exchange Commission ("SEC") in order to become a
reporting company. On November 11, 1999, the original business activities were
discontinued.

                                       29
<PAGE>

         On November 11, 1999, the two existing directors of the Company
resigned and appointed Jason W. Galanis and Kevin L. Washington to replace them.
Prior to this event, the Company was inactive and had no material assets or
liabilities. On November 19, 1999, Harry Weitzel was appointed Chairman and
Chief Executive Officer joined by two additional Directors and on December 31,
1999, three final appointments were made, bringing the total number of Directors
to eight. Under the direction of its new board, the Company pursued a business
strategy of internet-focused investments. Subsequently, on September 12, 2000
the Company determined to redefine its business plan away from financial
services and toward providing small business owners with a range of
Internet-based enterprise solutions (B2B), at which time Mr. Galanis resigned as
an executive officer of the Company. Despite his resignation, Mr. Galanis
arranged for additional equity financing through the issuance of Series D
preferred stock to a New York-based institutional investor, International
Investment Group which funded on September 22, 2000 (see "Management's
Discussion and Analysis of Financial Condition and results of Operations-
Financial Condition"; see note 6(d) of the audited Financial Statements ending
March 31, 2001 in Form 10KSB for the year ended March 31, 2001). Beginning in
October 2000, the existing management directed the Company to begin to borrow
funds from the Starfish Group pursuant to a series of short-term senior secured
promissory notes. The Company borrowed an aggregate of approximately $3,600,000,
$1,600,000 of which was received from Mr. Washington. Based on numerous factors,
including an extended deterioration in the capital markets in regards to B2B
companies, the new focus of management did not attract the necessary level of
funding so as to obtain funding other than the secured notes above and, as a
consequence, the Company could not sustain its B2B business model. On December
31, 2000, the Company defaulted on certain secured debt obligations as disclosed
in the Form 10Q for the period ended December 31, 2000 (also see "Management's
Discussion and Analysis of Financial Condition and results of Operations-
Financial Condition"). The defaults also led to a foreclosure on certain assets
of the Company, which consisted primarily of the Company's interest in EAL, on
February 17, 2001 (see Financial Statements), which was not contested by prior
management.

         On July 18, 2001, the Board of Directors adopted a new business plan
which seeks to focus on investments in niche emerging payment services companies
which pursue strategies in electronically delivered financial services. The
board approved a restructuring plan which included the conversion of
approximately $3,000,000 of outstanding debt into approximately 15% of the
Company's outstanding Common Stock on a fully diluted basis, a name change of
the company from Inc.ubator Capital to Emergent Financial Group, Inc., and a 1
for 30 reverse stock split of the Company's Common Stock. In connection with
approving the revised business plan at the meeting, the directors unanimously
approved a resolution appointing Jason Galanis as President and CEO and, at the
conclusion of the meeting, directors Weitzel and Pilallis tendered their
resignations.

         On each date of July 18, 2001 and August 22, 2001, the Board authorized
a 1 for 30 reverse stock split of the Company's common stock. On October 22,
2001, the Board authorized a 5 for 1 forward stock split of the Company's common
stock.

         As of November 30, 2001, a creditor converted $4,149,725 of notes and
accrued interest into 332,919 common shares. In order to induce the creditor to
convert, the Company issued warrants to purchase up to an aggregate of 328,571
shares of the Company's common stock at $3.50 at any time prior to June 30,
2006. Since there were no shares traded on the conversion date and the shares
were thinly traded around the conversion date, the common shares issued were
valued at the highest bid price on the conversion date of $3.50 resulting in a
gain on extinguishment of debt of $2,984,507, which is included in gain from
disposal of discontinued operations.

         Subsequent to the March 31, 2002 fiscal year end, on June 14, 2002 the
Company affected a 1 for 70 reverse stock split. All share and per share data,
and data on common stock equivalents, as applicable, reflect all forward and
reverse stock splits retroactively in the accompanying consolidated financial
statements for all periods presented. Concurrent with the 1 for 70 reverse stock
split on June 14, 2002, the Company issued 11,000,000 restricted common shares
upon conversion of all of the 250,000 Series E preferred shares.

                                       30
<PAGE>

Going Concern Assumption

         As reflected in the accompanying consolidated financial statements, the
Company has a deficit accumulated since July 18, 2001 (inception of development
stage) to March 31, 2002 of $27,182,323, a net loss in 2002 of $27,596,671, cash
used in operations of $1,033,992 during 2002, and a working capital deficit of
$4,044,481 at March 31, 2002. The Company is also in technical default on
certain loans and notes, although no note holder of the Company has sought any
remedies, other than two creditors of the Company's subsidiary, KeyCom. The
ability of the Company to continue as a going concern is dependent on the
Company's ability to raise additional capital and generate further revenues. The
consolidated financial statements do not include any adjustments that might be
necessary if the Company is unable to continue as a going concern.

         The Company is actively seeking sources of funding and believes it has
secured funding that will permit the ongoing operations. Management believes
that the actions presently being taken to obtain additional funding and
implement its business plan provide the opportunity for the Company to continue
as a going concern.

Events of September 11; System Deployment
-----------------------------------------

         We executed definitive agreements in July 19, 2001 to acquire the money
transfer company KeyCom. Less than 60 days thereafter, the events associated
with the September 11 terrorist attacks on the United States occurred. The
impact on our business and industry has been significant and has contributed to
certain delays in the Company implementing its business plan. These conditions
could continue to cause the Company significant delays and adversely affect the
Company.

         As a direct consequence of these tragic events, Congress enacted the
International Money Laundering Abatement and Financial Anti-Terrorism Act of
2001, or IML Act. In addition, the US Treasury Department has now required all
companies engaged in a Money Service Business, as defined, to register with the
Department for the first time ever. Additionally, we are subject also to
regulations of the Treasury Department's Financial Crimes Enforcement Network,
or FinCEN, requiring reporting and record keeping of various transactions.

         As a result of various new regulatory requirements, we determined to
take several preventative actions in order to maintain compliance. Some of these
actions, including shutting down operating locations in some states in our test
markets, have delayed the implementation of our business plan. Since the
enactment of these new regulations, we have also instituted a number of
technology-based enhancements to our systems and database that we believe
provide us a competitive advantage over traditional providers of money transfer
services. We believe that the current state of our systems and compliance
procedures and controls, will permit a rapid market rollout without a
significant financial or management burden. There can be no assurance that the
company is successful even after making the aforementioned adjustments, or that
new regulations or market conditions will not adversely affect the company.

Series E Preferred Liabilities
------------------------------

         Beginning on January 1, 2002, the holders of the Series E Preferred
stock had the right to require the Company to make quarterly payments of
$1,000,000, as further discussed herein. A significant amount of management's
time was devoted to negotiating a deferment of such payments. Additionally, the
Sellers remained in a managerial role in the two quarters after acquisition,
which included maintaining records and material contracts in California. The
Company did not make any payments under the preferred and from time to time
informally received indications from the Series E holder that the rights under
the Security Agreement may be exercised. No formal notice was ever received.

         On June 14, subsequent to the end of the fiscal year end ending March
31, 2002, we settled with the Series E preferred stockholders, as disclosed in
Form 8K dated June 18, 2002. The parties exchanged release agreements and
management does not believe there will be any future effect on the Company.

                                       31
<PAGE>

Liability Overhang
------------------

         During the period ended March 31, 2002, The Company was potentially
subject to certain redemption payments on the Series E Preferred Stock of
$1,000,000 per quarter and a subsequent payment of $21,000,000 on June 30, 2003.
As a result of this rapid amortization of liabilities, management experienced
significant difficulty in raising additional capital. Potential capital
providers could not determine an adequate economic benefit to investing money,
which substantially would have been used to retire prior liabilities. Moreover,
potential capital providers identified the risks that, even with an investment,
there could be no assurances that the subsequent larger payment due would not
seriously jeopardize the investment. As a result, the Company relied primarily
on loans from shareholders to fund operations and growth was impeded by a lack
of access to the broader financing markets.

Effect of Accounting Methods
----------------------------

         The various interests that the Company acquired in its subsidiaries are
accounted for under the equity, consolidation or cost method. The applicable
accounting method is generally determined based on the Company's voting interest
in the subsidiaries. In the future, the presentation of the Company's financial
statements may differ from period to period, primarily due to whether or not it
applies the consolidation method or the equity method. This could result if its
voting interest in a company either rises above or drops below 50%.
         The Company evaluates, on an ongoing basis, the carrying value of its
ownership interests in and advances to the companies in which it has invested
("Subsidiaries") for possible impairment, based on achievement of business plan
objectives, the financial condition and prospects of the Subsidiaries and other
relevant factors. Such factors may be financial or non-financial in nature.

         Management has determined to write-down certain intangible assets with
the effect of eliminating them from the company's balance sheet for accounting
purposes. Due to the uncertainty of valuing intangible assets, including their
estimated future value, management determined in the fourth quarter to adjust
the carrying value of its assets.

         The accounting presentation of assets of the company have no effect on
the actual operations of the company. Further, there are no implications about
the business prospects of the company as a result of this accounting treatment.

         The company has undergone certain delays in deploying its money
transfer business as a consequence of events surrounding September 11 and the
resulting regulations enacted by Congress. Although management believes it has
now adequately addressed these requirements and can move to fully commercialize
its systems, there are inherent market uncertainties that management determined
should be reflected in the financial statements.

Results of Operations for the Year Ended March 31, 2002
-------------------------------------------------------

         The twelve-month period ended, March 31, 2002 continues to reflect
start-up results only as at July 18, 2001, the Company is considered to have
initiated a new development stage with the acquisition of KeyCom, Inc.

         The Company reported a net loss of $27,596,671 and net loss
attributable to common stockholder of $28,750,482 or (32.06 per share), for the
twelve months ended March 31, 2002. The net operating loss is believed by
management to be non-recurring in nature and resulted from certain extraordinary
items representing non-cash accounting charges, discussed below.

         Management, in consultation with the Company's independent accountants,
determined that it was in the best interests of the Company to adjust the
carrying value of certain assets associated with the acquisition of KeyCom prior
to year-end. The result of this accounting write down is reflected in the net

                                       32
<PAGE>

operating loss above. The presentation is intended by the Company to reflect the
adoption of a conservative accounting policy of management.

         Revenue. The Company reported total revenue of $24,103 for the twelve
months ended March 31, 2002, which represents transaction fees for transfers
made in our test market. As detailed elsewhere, the Company initiated its
current stage of development On July 18, 2001 and has had a limited experience n
commercializing its current technologies.

         Expenses. The Company had expenses of $27,348,005 for the twelve months
ended March 31, 2002 of which compared to $813,885 in 2001. The Company's
expenses related to the commencement of operations as a public company, the
acquisitions of the companies discussed herein and the preparation of securities
documents. Expenses also included audit and accounting expenses of $81,825 and
an administration fee payable to Thesseus Services Ltd., a subsidiary of
Thesseus International Asset Fund NV (a related party), of $205,644. the 2002
expense consist primarily of $23,238,660 impairment of software rights and
systems, terminals and certain deferred charges and prepaid advertising
$2,272,626 of intangible amoritization.

         Net Operating Loss. The Company has available at March 31, 2002,
operating loss carryforwards of approximately $14,943,827, which may be applied
against future taxable income in years. At March 31, 2002, the total of all
deferred tax assets was $14,091,868, at March 31, 2002 there was a 100%
valuation allowance. The amount of and ultimate realization of the benefits from
the deferred tax assets for income tax purposes is dependent, in part, upon the
tax laws in effect, the Company's future earnings, and other future events, the
effects of which cannot be determined.

Financial Condition
-------------------

         At March 31, 2002, the Company's assets were comprised primarily of its
assets in KeyCom Holdings, Inc. Substantially all of the Company's other assets
had been written off. Please see Note 4 of the Company's audited Consolidated
Financial Statements for the year ended March 31, 2002, for a full description.

KeyCom
------

         At March 31, 2002, the Company had outstanding $25,000,000 of Series E
preferred stock issued in connection with the acquisition of KeyCom Inc., as
disclosed in form 10K-SB dated August 15, 2001 and Exhibits 10.1 through 10.5
thereto. The Company entered into four agreements, which are the Plan of Merger,
the Series E Preferred Designation of Rights, the Security Agreement and the
Registration Rights Agreement. Non-performance with various terms and conditions
of any of the agreements could have a serious negative impact on the Company.

         Subsequent to year-end, the company reached agreement dated May 31,
2002, to extinguish $25,000,000 of liabilities represented by its Series E
Preferred Stock through a conversion to common stock.

         As disclosed on form 10K-SB and form 8K dated October 11, 2001, the
Company acquired KeyCom for $1,000,000 in cash and $25,000,000 in preferred
stock. The Company paid the $1,000,000 in cash and delivered the Preferred
Stock, closing the transaction on September 26, 2001. Prior to the May 31, 2002
agreement, the Company was required to redeem all of the Series E preferred
stock from the Holders upon written request, up to a maximum of $1,000,000 per
quarter.

         As disclosed in form 10Q-SB dated November 11, 2001 and February 19,
2002 in Management's Discussion and Analysis and in form 10K-SB dated August 15,
2001 and form 8K dated October 11, 2001, in the event of any breach of the terms
and conditions of the Senior Series E Preferred Stock or any of the Company's
obligations to the sellers of KeyCom, the holders of the Senior Series E

                                       33
<PAGE>

Preferred Stock have the right to foreclose on 100% of the capital stock of
KeyCom Holdings, Inc., the Company's wholly-owned subsidiary which acquired
KeyCom. The above described herein prevent the foreclosure.

         The June 14, 2002 agreement also provides for the termination of the
Registration Rights Agreement dated July 19, 2001 pursuant to which the Series E
Holders could have forced the Company to register shares making them eligible
for open market sale. As noted above, the agreement further provides for a
two-year lockup pursuant to which the common stock issued to the E Holders is
contractually restricted for twenty-four months from issuance.

         The founders of KeyCom have received a royalty agreement pursuant to
which they may earn up to $8.3 million based on future fees generated using the
XTRAN technology. All payments are contingent on future performance. Possible
future payments, if any, are secured by the intellectual property representing
XTRAN. If the Company des not perform any transactions in a specified period of
time, the Company could be subject to claims pursuant to the security agreement
which may include the foreclosure on the intellectual property of the Company.
This could have adverse consequences for the Company. The parties delivered
reciprocal mutual general releases as consideration for entering into the
agreements.

Discontinued Operations

         As described in Note 4(b) through Note 4 (g) of the Company's March 31,
2002 audited Consolidated Financial Statements the Company had written off
investments in various entities in fiscal 2001 resulting in an accounting charge
to earnings. All of the investments had been written off in periods prior to the
Company's audit for the period ending March 31, 2001 and reported on Form 10K-SB
and are incorporated by reference.

         The Company had a working capital deficiency of $4,033,481 and an
accumulated deficit of $49,859,698 at March 31, 2002 ($27,023,156 since
inception of current Development Stage). The Company expects to remain in a
negative working capital position for the foreseeable future and if it is unable
to promptly raise additional funding to augment its working capital position it
will not be able to continue as a going concern.

Liquidity and Capital Resources
-------------------------------

         A major objective of the Company is to raise sufficient capital to
maintain its viability as ongoing concern. Historically, the Company has
financed its working capital requirements through internally generated funds,
the sale of shares of its common and preferred stock, and proceeds from
short-term borrowings, convertible debentures, and notes payable. During the
fiscal year, the Company had undertaken a restructuring to eliminate or
compromise liabilities associated with prior Internet activities of the Company.
The Company has made substantial progress during the period in accomplishing
these objectives. However, there can be no assurances that it will continue to
achieve these results.

         During the twelve months ended March 31, 2002, the Company's operations
were financed primarily through issuances of equity in the cumulative amount of
$950,000, loan proceeds of $350,000 from Xtelligence, $101,000 from the CEO,
loans of approximately $545,075 from parties related to an original shareholder
of KeyCom Inc, and advances under a blanket $2,000,000 promissory note payable
to Internet Transaction Services by the Company's subsidiary, KeyCom Holdings,
to Internet Transaction Services amounting to $593,860.

         On August 28, 2001, the Company retired $1,000,000 of Series B
preferred shares by converting those shares and $99,333 of accrued dividends to
373,838 common shares and issued the Series B holders 385,714 warrants as an
inducement to convert. The warrants are exercisable at $3.50 and expire in June
30, 2006.

         As of November 30, 2001, the Company improved its liquidity through the
conversion of $4,149,725 of senior secured notes and accrued interest into

                                       34
<PAGE>

332,919 common shares. In order to induce the creditor to convert, the Company
issued warrants to purchase up to an aggregate of 328,571 shares of the
Company's common stock at $3.50 at any time prior to June 30, 2006.

         Any debt incurred or issued by the Company may be secured or unsecured,
fixed or variable rate interest and may be subject to such terms as the board of
directors of the Company deems prudent. Any sales of equity securities may be at
or below current market rates for the Company's common stock. The Company
expects any proceeds from such additional credit or sale of securities to be
used primarily in the marketing and development of its network for the sale of
telecommunications products, costs of new placements of XTRAN software on
terminals, and in the reduction of short-term liabilities. No assurance can be
given that the Company will be successful in generating sufficient capital from
new borrowings or from the sale of its securities to adequately fund its
liquidity needs.

         The Company does not believe that inflation had a significant impact on
the Company's results of operations for the period presented. On an ongoing
basis, the Company attempts to minimize any effects of inflation on its
operating results by controlling operating costs, and, whenever possible,
seeking to insure that product price rates reflect increases in costs due to
inflation.

         At March 31, 2002, the Company had a working capital deficit of
approximately $4,033,481 and $4,245 cash on hand. If the Company is unable to
promptly raise additional funding it will not be able to continue as a going
concern. The Company is diligently exploring various options to raise the
additional funding it requires. However, there can be no assurance that
additional funding will be available or, if available, that it will be available
on terms acceptable to the Company.

         Subsequent to the period ending March 31, 2002, the Company entered
into series of stock purchase agreements with third party accredited investors.
The Company issued 400,000 shares for net proceeds of $300,000 to the Company.
The shares were issued pursuant to an exemption granted under Regulation D Rule
144 and carry a restrictive legend. The proceeds were received on or about July
11, 2002. The Company also granted the purchasers warrants to acquire the
Company's common stock for a period of five years. The warrants carry a strike
price of $3.00 and $4.00 and 400,000 warrants were granted for at each strike
price. The Company has the right to call 50% of the warrants upon written notice
if the Company's common stock trades for 20 consecutive trading days at a price
equal to 175% of the strike price. If the warrants were exercised in full, the
Company would experience significant additional dilution through the issuance of
additional common shares and would receive proceeds of $2,800,000.

                  Subsequent to the period ending March 31, 2002, on July 3,
2002 the Company received written notice from a third party creditor that the
creditor was prepared to accept the Company's offer to compromise. Under the
offer, the Company will retire approximately $554,000 of trade payables. The
Company will make no payments under the arrangement and will deliver mutual
releases. The retirement of the liability will be reflected in the Company's
fiscal second quarter ending September 30, 2002.

Other Factors Affecting Financial Performance or Liquidity
----------------------------------------------------------

Legal Action

         In February 2002, the Company received a demand letter from an attorney
on behalf of his client demanding $335,537 plus interest. Management believes
the demand relates to certain royalty obligations that may have been transferred
from certain royalty holders of Key Com, Inc. to settle their individual legal
matters. The Company believes that any royalties that may be due would be less
than $5,000. Management has not received follow up communications from the
plaintiff or their counsel since February 2002. No amounts have been accrued on
this matter as of March 31, 2002.

         On March 27, 2002, the Company's subsidiary, Key Com received a
judgment against it from a lawsuit with damages totaling $88,000. The amount has
been accrued as of March 31, 2002.

                                       35
<PAGE>

         On May 24, 2002, a plaintiff filed a complaint in United States
District Court against the Company alleging wrongful failure to register and
transfer shares of stock and conversion and requests declaratory judgment. The
complaint demands $500,000 in damages. Management claims it has valid defenses
to this claim but is in discussions with the plaintiff to potentially settle it.
No amounts have been accrued on this matter as of March 31, 2002.

Senior Secured Lenders

         Secured Revolving Convertible Line of Credit, dated October 1, 2001,
for $2,000,000 from a party related to former principal stockholder of Key Com,
Inc. who controlled 16.67% of Key Com, Inc. voting common stock and who in June
2002 beneficially gained control of approximately 84% of the Company's total
outstanding common shares. Interest at 10% on all advances. Principal and
interest is due on demand but all outstanding principal and interest must be
paid no later than January 2, 2003. Lender has the right to convert upon three
days notice to common shares at 50% of the lowest bid price 30 days prior or
past to the notes date of October 2001. Draws against the line may be limited,
denied, or subject to conditions as dictated by the lender at the lender's
discretion. The revolving line of credit is secured by all assets of the
Company's subsidiary, Key Com. As of March 31, 2002, accrued interest was
$24,600.

         Because the draws against the credit line are subject to the discretion
of the lender, we may not be able to access funds when we require them. As a
result, we may be adversely affected and may suffer negative consequences.
Additionally, the credit facility is subject to repayment on demand. If the
lender calls notifies us, we may be forced to repay the credit line in full at
that time. There can be no assurances that we will have sufficient funds to
repay at that time. As a result, we may suffer severe negative consequences,
which could include a foreclosure pursuant to the security agreement entered
into by our subsidiary, KeyCom Holdings.

Royalty Agreements

         Prior to its acquisition by the Company, KeyCom, Inc. had issued
financial instruments to investors for aggregate cash of $3,154,410, net of
offering costs. The instruments were classified as preferred contributed capital
in Key Com, Inc. These instruments, entitled "Transaction Debt Certificates,"
were classified as capital rather than liabilities since the instruments
promised a residual royalty benefit into perpetuity based on a stipulated
percentage of transaction fees generated on the first 10,000 point-of-sale
systems placed at merchant locations. If no revenues are generated, then no
royalties or payments are due and the investment does not have to be repaid. The
Company is committed under these instruments to pay future royalties based on
the future revenue stream. Royalty expense through March 31, 2002 was not
material.

         The instruments granted stock options to purchase common shares of Key
Com, Inc. stock contingent upon the filing of a registration statement by Key
Com, Inc. with the Securities and Exchange Commission, (the "Contingency"). The
quantity of Key Com shares that could be purchased with the options are derived
from the residual royalty benefits due to each investor based on a formula
stipulated in the instruments. The options were not cancelled in the acquisition
agreement between the Company and Key Com, Inc., however; management believes
that the Contingency will never be satisfied as Key Com, Inc. is now a
subsidiary of the Company and Management does not intend to file a separate
registration statement for Key Com, Inc.

         We may be adversely affected in the future based on claims made by the
holder of these financial instruments. Such claims may include royalty payments
or certain conversion rights. The Company may suffer litigation as a result of
such claims if the claims are deemed to be in dispute. Additionally, the Company
could suffer additional dilution if the investors are deemed to be entitled to
convert the financial instruments to equity of the Company.

Effects of Accounting Pronouncements

         Statement No. 141 "Business Combinations" ("SFAS 141") establishes
revised standards for accounting for business combinations. Specifically, the

                                       36
<PAGE>

statement eliminates the pooling method, provides new guidance for recognizing
intangible assets arising in a business combination, and calls for disclosure of
considerably more information about a business combination. This statement is
effective for business combinations initiated on or after July 1, 2001. The
Company adopted this pronouncement on July 1, 2001 and accounted for the
acquisition of Key Com accordingly.

         Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142")
provides new guidance concerning the initial accounting for the acquisition of
intangibles, except those acquired in a business combination, which is subject
to SFAS 141, and the manner in which intangibles and goodwill, regardless of how
acquired, should be accounted for subsequent to their initial recognition.
Generally, intangible assets with indefinite lives, and goodwill, are no longer
amortized; they are carried at lower of cost or market and subject to annual
impairment evaluation, or interim impairment evaluation if an interim triggering
event occurs, using a new fair market value method. Intangible assets with
finite lives are amortized over those lives, with no stipulated maximum, and an
impairment test is performed only when a triggering event occurs. This statement
is effective for all fiscal years beginning after December 15, 2001. The Company
believes that the implementation of SFAS 142 on April 1, 2002 will not have a
material effect on the Company's financial position, results of operations or
liquidity.

Statement No. 143, "Accounting for Asset Retirement Obligations," ("SFAS 143")
requires entities to record the fair value of a liability for an asset
retirement obligation in the period in which it is incurred. When the liability
is initially recorded, the entity capitalizes 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 asset. Upon settlement of the liability, an entity
either settles the obligation for its recorded amount or incurs a gain or loss
upon settlement. The standard is effective for fiscal years beginning after June
15, 2002. The Company believes that the implementation of SFAS 142 on April 1,
2003 will not have a material effect on the Company's financial position,
results of operations or liquidity.

Statement No. 144 "Accounting for the Impairment or Disposal of Long-Lived
Assets" ("SFAS 144") supercedes Statement No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed of" ("SFAS 121").
Though it retains the basic requirements of SFAS 121 regarding when and how to
measure an impairment loss, SFAS 144 provides additional implementation
guidance. SFAS 144 excludes goodwill and intangibles not being amortized among
other exclusions. SFAS 144 also supercedes the provisions of APB 30, "Reporting
the Results of Operations," pertaining to discontinued operations. Separate
reporting of a discontinued operation is still required, but SFAS 144 expands
the presentation to include a component of an entity, rather than strictly a
business segment as defined in SFAS 131, Disclosures about Segments of an
Enterprise and Related Information. SFAS 144 also eliminates the current
exemption to consolidation when control over a subsidiary is likely to be
temporary. This statement is effective for all fiscal years beginning after
December 15, 2001. The Company believes that the implementation of SFAS 142 on
April 1, 2002 will not have a material effect on the Company's financial
position, results of operations or liquidity.

Statement No. 145, "Rescission of FASB Statements No. 4, 44, and 64, Amendment
of FASB Statement No. 13, and Technical Corrections," ("SFAS 145") updates,
clarifies, and simplifies existing accounting pronouncements. Statement No. 145
rescinds Statement 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 Opinion 30 will now
be used to classify those gains and losses. Statement 64 amended Statement 4,
and is no longer necessary because Statement 4 has been rescinded. Statement 44
was issued to establish accounting requirements for the effects of transition to
the provisions of the motor Carrier Act of 1980. Because the transaction has
been competed, Statement 44 is no longer necessary. Statement 145 amends
Statement 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. This amendment is consistent with FASB's
goal requiring similar accounting treatment for transaction that has similar
economic effects. The Company believes that the implementation of SFAS 142 on
April 1, 2003 will not have a material effect on the Company's financial
position, results of operations or liquidity.

                                       37
<PAGE>

                          RISKS RELATED TO OUR BUSINESS

POSSIBLE ADVERSE EFFECT OF PENNY STOCK RULES ON LIQUIDITY OF THE COMPANY'S
SECURITIES.

         The SEC regulations define a "penny stock" to be an equity security not
registered on a national securities exchange or for which quotation information
is disseminated on the Nasdaq Stock Market that has a price of less than $5.00
per share or an exercise price of less than $5.00 per share, subject to certain
exemptions. For any transaction involving a penny stock, unless exempt, the
rules require delivery, prior to a transaction in a penny stock, of a disclosure
schedule relating to the penny stock market. Disclosure is also required to be
made about commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally, monthly
statements are required to be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in penny
stocks.

         The foregoing required penny stock restrictions will not apply to the
Company's securities if such securities are listed on the Nasdaq SmallCap Market
and have certain price and volume information provided on a current and
continuing basis, or meet certain minimum net tangible assets or average return
criteria. In any event, even if the Company's securities were exempt from such
restrictions, it would remain subject to Section 15(b)(6) of the Securities
Exchange Act of 1934, which gives the SEC the authority to prohibit any person
that is engaged in unlawful conduct while participating in a distribution of a
penny stock from associating with a broker-dealer or participating in a
distribution of a penny stock, if the SEC finds that such a restriction would be
in the public interest. If the Company's securities were subject to the rules on
penny stocks, the market liquidity for the Company's securities could be
adversely effected.

DEFAULT WITH UNSECURED CREDITORS.

         The Company is in default with certain third parties which provided
bridge loans to the Company aggregating $290,000 and that matured thirteen
months after origination. The notes have matured and were not repaid by the
Company pursuant to their terms. The creditors may pursue certain collection
remedies that would negatively impact the Company. The Company does not believe
it has defenses to such claims. Current management is attempting to negotiate
new terms that may include exchanging debt for equity. This would result in
dilution to the current shareholders. There is no assurance that acceptable
terms will be arranged.

SECURED CREDITOR OF KEYCOM COULD REFUSE ADDITONAL ADVANCES OR COULD ACCELERATE
NOTES

         Draws against the line may be limited, denied, or subject to conditions
as dictated by the lender at the lender's discretion. The revolving line of
credit is secured by all assets of the Company's subsidiary, Key Com. because
the draws against the credit line are subject to the discretion of the lender,
we may not be able to access funds when we require them. As a result, we may be
adversely affected and may suffer negative consequences. Additionally, the
credit facility is subject to repayment on demand. If the lender calls notifies
us, we may be forced to repay the credit line in full at that time. There can be
no assurances that we will have sufficient funds to repay at that time. As a
result, we may suffer severe negative consequences, which could include a
foreclosure pursuant to the security agreement entered into by our subsidiary,
KeyCom Holdings.

KEYCOM ISSUED ROYALTY PARTICPATIONS THAT MAY HAVE CONVERSION RIGHTS AND CERTAIN
PAYMENT RIGHTS

         Prior to its acquisition by the Company, Key Com, Inc. had issued
financial instruments to investors for aggregate cash of $3,154,410, net of
offering costs. The instruments were classified as preferred contributed capital
in Key Com, Inc. These instruments, entitled "Transaction Debt Certificates,"
were classified as capital rather than liabilities since the instruments

                                       38
<PAGE>

promised a residual royalty benefit into perpetuity based on a stipulated
percentage of transaction fees generated on the first 10,000 point-of-sale
systems placed at merchant locations. If no revenues are generated, then no
royalties or payments are due and the investment does not have to be repaid. The
Company is committed under these instruments to pay future royalties based on
the future revenue stream. Royalty expense through March 31, 2002 was not
material.

         The instruments granted stock options to purchase common shares of Key
Com, Inc. stock contingent upon the filing of a registration statement by Key
Com, Inc. with the Securities and Exchange Commission, (the "Contingency"). The
quantity of Key Com shares that could be purchased with the options are derived
from the residual royalty benefits due to each investor based on a formula
stipulated in the instruments. The options were not cancelled in the acquisition
agreement between the Company and Key Com, Inc., however; management believes
that the Contingency will never be satisfied as Key Com, Inc. is now a
subsidiary of the Company and Management does not intend to file a separate
registration statement for Key Com, Inc.

         We may be adversely affected in the future based on claims made by the
holder of these financial instruments. Such claims may include royalty payments
or certain conversion rights. The Company may suffer litigation as a result of
such claims if the claims are deemed to be in dispute. Additionally, the Company
could suffer additional dilution if the investors are deemed to be entitled to
convert the financial instruments to equity of the Company.

ACCRUED AND UNPAID TRADE PAYABLES.

         The Company has a significant number of unsecured trade creditors.
Current management is attempting to negotiate definitive agreement with
individual creditors. If the Company is unsuccessful, the creditors could force
the Company into an involuntary bankruptcy.

SEVERE WORKING CAPITAL DEFICIENCY.

         The Company had a working capital deficiency of $4,033,481 and an
accumulated deficit of $49,859,698 at March 31, 2002 ($27,023,156 since
inception of current Development Stage). The Company expects to remain in a
negative working capital position for the foreseeable future and if it is unable
to promptly raise additional funding to augment its working capital position it
will not be able to continue as a going concern.

FLUCTUATIONS IN EMERGENT'S STOCK PRICE IS HIGHLY LIKELY.

         Prior to November, 1999, there was no public market for the Company's
Common Stock and currently there is only a limited market for these securities
on the NASDAQ OTC Bulletin Board. Accordingly, the market price of the Company's
Common Stock has been highly volatile. Any significant fluctuations in the
future might result in a general decline in the market price of the Company's
Common Stock.

         The price at which the Company's Common Stock will trade in the future
is likely to be highly volatile and may fluctuate substantially due to factors
such as:

         o        Actual or anticipated variations in quarterly operating
                  results;
         o        Announcements of technological innovations; o New sales
                  formats of new products or services;
         o        Changes in or failure to meet financial estimates of
                  securities analysts;
         o        Conditions or trends in the financial services industry;
         o        Announcements by the Company or its competitors of significant
                  acquisitions, strategic partnerships or joint ventures;
         o        Capital commitments;
         o        Additions or departures of key personnel; or
         o        Sales of Common Stock.

                                       39
<PAGE>

         In addition, the U.S. stock markets have from time to time experienced
significant price and volume fluctuations that have affected the market price
for the common stock of small- and micro-cap companies, particularly Internet
companies. In the past, these broad market fluctuations have been unrelated or
disproportionate to the operating performance of these companies. In the past,
following periods of volatility in the market price of a particular company's
securities, securities class action litigation has often been brought against
that company. The Company may become involved in this type of litigation in the
future. Litigation is often expensive and diverts the attention and resources of
management, which could cause the Company's business, prospects and results of
operations to be adversely effected.

THE COMPANY HAS RECENTLY RAISED CAPITAL FROM A LIMITED GROUP OF INVESTORS,
INCLUDING RELATED PARTIES.

         A major objective of the Company is to raise sufficient capital to
maintain its viability as an ongoing concern. The primary sources of cash to
date have been loans and preferred equity financing from related parties and
distributions from EAL pursuant to the MBDA. The Company has recently raised
capital from a limited number of new investors. A substantial portion of the new
investment capital raised was from Thesseus International Asset Fund, a Company
with whom Mr. Galanis is affiliated. The terms of the new subscription were
deemed to be consistent with terms that would be offered to third parties,
however the Company has been unsuccessful in raising similar capital from the
market.

NEW MANAGEMENT TEAM.

         The Board of Directors of the Company in July 2001 elected Jason
Galanis as President and CEO. Mr. Galanis had resigned from the Company in
September 2000 when the Company undertook a previously disclosed new business
direction and has had no day-to-day affiliation with the Company since his
resignation. There can be no assurance that current management can execute the
existing business plan.


THE SERIES D PREFERRED STOCK IS CONVERTIBLE INTO COMMON SHARES OF THE COMPANY
WITHOUT A LOWER LIMIT ON THE NUMBER OF SHARES TO BE RECEIVED WHICH COULD RESULT
IN SUBSTANTIAL DILUTION TO THE CURRENT SHAREHOLDERS.

         The Series D Preferred Shares are convertible at any time, in an amount
equal to the stated value of the Series D Preferred Shares together with an
Additional Amount calculated on a daily basis at a rate of 4.5% per annum, into
Common Shares of the Company based on a value of 80% of the then current market
value of the Company's Common Shares, to a maximum of $1.50 per Common Share.
Based on the $1,300,000 stated value of the series D preferred, the exercise of
any conversion right would result in substantial dilution to the shareholders at
current market prices. The conversion rights may also further depress the price
of the Company's common securities as a consequence of having no practical fixed
limit on the number of common shares into which the preferred may be converted.

EMERGENT HAS NO SIGNIFICANT OPERATING HISTORY UPON WHICH TO ASSESS THE VIABILITY
OF ITS BUSINESS STRATEGY OR MANAGEMENT.

         Although the Company has been in existence since 1994, it has no
significant operating history upon which its current management, business and
business plans, and prospects may be evaluated. In addition, the Company only
recently installed a new management team and determined to pursue a new business
strategy. Furthermore, the Company's prospects must be considered in light of
the risks, expenses and difficulties frequently encountered by companies in new,
unproven and rapidly evolving markets. To address these risks, the Company must,
among other things:

                                       40
<PAGE>

         o        Develop and expand its cash remittance business;
         o        Respond to competitive developments;
         o        Continue to attract, retain and motivate qualified employees;
                  and
         o        Continue to upgrade its technologies and identify and complete
                  acquisitions of cash remittance and related businesses.

         There can be no assurance that the Company will be successful in
addressing these risks and if it is not successful its ability to survive as a
going concern will be adversely affected.

EMERGENT ANTICIPATES INCURRING LOSSES FOR THE FORESEEABLE FUTURE.

         Since its recent change in business strategy, the Company has incurred
costs to expand its business, to attract qualified employees and to upgrade and
improve its technologies. As a result, the Company has incurred significant
losses and expects to continue to incur losses on a quarterly and annual basis
for the foreseeable future. As of March 31, 2002, the Company had an accumulated
deficit of approximately $49,859,698. There can be no assurance that the Company
will be able to generate sufficient revenues from operations to achieve or
maintain profitability on a quarterly or annual basis in the future. The Company
expects negative cash flow from operations to continue for the foreseeable
future.

EMERGENT WILL REQUIRE ADDITIONAL LONG AND SHORT TERM FINANCING IN ORDER TO FUND
ITS WORKING CAPITAL REQUIREMENTS, IMPLEMENT ITS BUSINESS PLAN AND FUND THE
ACQUISITION OF ADDITIONAL COMPANIES AND BUSINESSES.

         In order to fund its working capital requirements, implement its
business plan and fund the acquisition of additional complementary and strategic
businesses, the Company will require additional equity and/or debt financing in
the short-term future. The Company anticipates that it will need to raise
approximately $10.0 million over the next 12 to 18 months to implement its
business plan and to fund the amounts to be invested in Keycom and other
ventures. The Company also expects that it will be required to raise additional
funds over the long term. It may not be possible for the Company to secure debt
or equity financing on terms acceptable to it at the time that it seeks such
financing. As a result of these funding needs, the Company will need to seek
additional external debt and/or equity financing. Adequate funds on terms
acceptable to the Company, whether through additional equity financing, debt
financing or other sources, may not be available when needed or may result in
significant dilution to existing shareholders. If the Company is unable to
obtain sufficient funds from operations and external sources, the Company may
not be able to continue as a going concern.

EMERGENT IS ENTERING INTO NEW HIGH-RISK MARKETS AND ITS SUCCESS WILL DEPEND ON
PERFORMANCE OF ITS INVESTMENTS IN COMPANIES IN THIS MARKET.

         The Company has entered into the moderate income cash remittance and
financial services market which is still developing, speculative and uncertain.
The Company generally faces a high degree of risk of failure and volatility in
the market price of its securities.

BECAUSE THE BUSINESS MODEL PROPOSED BY EMERGENT IS UNPROVEN, IT IS UNCERTAIN
WHETHER IT WILL SUCCEED.

         The Company's business model is unproven. The success of the Company's
business model depends on acquiring cash remittance businesses, and entering
into agreements with new locations to expand the network of locations where the
Company's customers can send and receive cash remittances. If the Company cannot
convince potential acquisition targets and the owners of new locations of the
value of its business model, the Company's ability to acquire additional
businesses and attract new locations will be adversely affected and its strategy

                                       41
<PAGE>

of expanding its cash-remittance network may not succeed, which would result in
the Company's business, prospects and results of operations to be adversely
effected.

         the Company's business also depends upon its ability to successfully
integrate new acquisitions into its business, which is uncertain. Potential
conflicts among current management and employees with that of acquired
businesses, as well as potential conflicts with the customers, suppliers and
creditors of such acquired businesses, all can have an adverse effect on the
Company's ability to successfully integrate acquired businesses. Economic,
governmental, industry and internal company factors outside its control all can
have an additional adverse effect on the Company's financial condition and
results of operations. A significant portion of the Company's assets will be
comprised of ownership interests in its subsidiaries. It is expected that, from
time to time, the Company's investment in one or more subsidiaries could
represent a significant portion of its market capitalization. If the Company's
subsidiaries do not succeed, the value of its assets will decline, which could
result in the Company's business, prospects and results of operations being
adversely effected.

EARLY STAGE COMPANY INVESTMENTS ARE PARTICULARLY RISKY.

         Some of the companies in which the Company may acquire an interest are
in the early stages of their development. Some of these companies may not have
commenced material operations, and consequently, may not have any operating
history upon which an evaluation of those companies can be based. the Company's
business and prospects must be considered in light of the risk, expense and
difficulties frequently encountered by companies in an early stage of
development, particularly companies in new and rapidly evolving, as well as the
problems, expenses, difficulties, complications and delays frequently
encountered in connection with the investments in new business in general. If
the Company is unable to effectively allocate its resources and help grow the
businesses of its subsidiaries, its business, prospects and results of
operations may be adversely effected.

IF EMERGENT IS UNABLE TO ASSEMBLE AND MAINTAIN THE REQUIRED KEY EMPLOYEES, ITS
ABILITY TO COMPETE COULD BE HARMED.

         The Company's success is dependent on the retention and successful
performance of its key personnel and the key personnel of its subsidiaries. If
one or more members of the Company's management, or the management of its
subsidiaries, were unable or unwilling to continue in their present positions,
the Company's business, prospects and results of operations may be adversely
effected. If existing management proves inadequate to the success of the
Company's business plan, then the Company may be unable to find and hire
additional qualified management and professional personnel to help lead it or
its subsidiaries because competition for managers and professionals is extremely
tight.


EMERGENT MAY BE UNABLE TO IMPLEMENT ITS INVESTMENT STRATEGY ON ACCEPTABLE TERMS.

         The Company may have difficulty acquiring additional companies that
complement its business strategy at acceptable prices. This could occur for many
reasons, including:

         o        A failure to agree on the terms of the acquisition, such as
                  the amount or price of an acquired interest;
         o        Incompatibility between management teams of the target company
                  and the Company;
         o        Competition from other acquirors and
         o        A lack of capital on acceptable terms, or at all, to acquire
                  an interest in the target company.

                                       42
<PAGE>

         Many of the acquiror companies with which the Company will compete for
anticipated acquisitions have substantially greater financial resources than the
Company. The Company's management is aggressively pursuing other acquisition and
investment opportunities, although, except as disclosed herein, it does not have
agreements with respect to any such opportunities. There is no assurance that
any of these opportunities will materialize.

EMERGENT RECENTLY COMPLETED SIGNIFICANT ACQUISITIONS OF BUSINESSES AND
TECHNOLOGIES AND EMERGENT MAY MAKE OTHER BUSINESS ACQUISITIONS IN THE FUTURE
WHICH MAY BE DIFFICULT TO INTEGRATE INTO ITS EXISTING BUSINESS AND MAY DISRUPT
OR NEGATIVELY IMPACT ITS BUSINESS.

         The Company recently made, and expects to continue to make investments
in and acquisitions of complementary companies, technologies and assets that
constitute critical aspects of its current and future business operations. If it
fails to successfully integrate the operations of these companies, technologies
or assets into its business, the Company may not be able to successfully execute
its business strategy. Since March 31, 2001, the Company acquired Keycom, as
described above.

         This and any future acquisitions may result in:

         o        Difficulties in assimilating technologies, products, personnel
                  and operations;
         o        Diversion of management's attention;
         o        Entering markets in which the Company has no or limited prior
                  experience;
         o        Loss of key employees of acquired organizations; and
         o        Capital requirements in excess of what the Company currently
                  anticipates.

         In the future, acquiring companies, assets or technologies may also
require the Company to make cash payments, assume debt, incur large write-offs
related to intangible assets and issue equity, that will dilute ownership of
current stockholders and could result in substantial fluctuations in the
Company's results of operations and the price of the Company's securities.


EMERGENT'S INTERESTS IN ITS SUBSIDIARIES IS EXPECTED TO CONTINUE TO BE HEAVILY
CONCENTRATED ON THE FINANCIAL SERVICES MARKET, AND, MORE SPECIFICALLY, THE
CASH-REMITTANCE MARKET AND CERTAIN ANCILLARY MARKETS.

         The success of the Company depends on the development of the financial
services and cash remittance market for moderate income consumers, which is
speculative and uncertain. The development of the financial service markets for
moderate income consumers is in the early stages. If widespread acceptance among
moderate- and low-income consumers of the Company's products and services does
not develop, the Company's business, prospects and results of operations may be
adversely effected.

SECURITY AND PRIVACY BREACHES IN OUR ELECTRONIC TRANSACTIONS MAY EXPOSE US TO
ADDITIONAL LIABILITY AND RESULT IN THE LOSS OF CUSTOMERS, EITHER OF WHICH EVENTS
COULD HARM OUR BUSINESS AND CAUSE OUR STOCK PRICE TO DECLINE.

        Any inability on our part to protect the security and privacy of our
electronic transactions could have a material adverse effect on our
profitability. A security or privacy breach could:

         o        expose us to additional liability;
         o        increase our expenses relating to resolution of these
                  breaches; and
         o        deter customers from using our product.

                                       43
<PAGE>

         We cannot assure you that our use of applications designed for data
security will effectively counter evolving security risks or address the
security and privacy concerns of existing and potential customers. Any failures
in our security and privacy measures could have a material adverse effect on our
business, financial condition and results of operations.

 WE COULD INCUR SUBSTANTIAL LOSSES FROM EMPLOYEE FRAUD AND, AS A RESULT, OUR
BUSINESS WOULD SUFFER.

        The large volume of payments that we handle for our customers makes us
vulnerable to employee fraud or other internal security breaches. We cannot
assure you that our internal security systems will prevent material losses from
employee fraud.

OUR PAYMENT SYSTEM MIGHT BE USED FOR ILLEGAL OR IMPROPER PURPOSES, WHICH COULD
EXPOSE US TO ADDITIONAL LIABILITY AND HARM OUR BUSINESS.

        Despite measures we have taken to detect and prevent identify theft,
unauthorized uses of credit cards and similar misconduct, our payment system
remains susceptible to potentially illegal or improper uses. These may include
illegal online gaming, fraudulent sales of goods or services, illicit sales of
prescription medications or controlled substances, software and other
intellectual property piracy, money laundering, bank fraud, child pornography
trafficking, prohibited sales of alcoholic beverages and tobacco products and
online securities fraud. Despite measures we have taken to detect and lessen the
risk of this kind of conduct, we cannot assure you that these measures will
succeed. Our business could suffer if customers use our system for illegal or
improper purposes.

        In addition, we classify merchants who historically have experienced
significant chargeback rates, such as online gaming-related service providers
and online gaming merchants as "higher risk". The legal status of many of these
higher risk accounts is uncertain, and if these merchants are prohibited or
restricted from operating in the future, our revenue from fees generated from
these accounts would decline. Proposed legislation has been introduced in the
U.S. Congress to clarify that operation of an Internet gaming business violates
federal law, and to prohibit payment processors from processing payments for
online gaming merchants. Even if this proposed legislation is not enacted,
online gaming merchants could be determined to violate existing federal and
state gambling laws. In particular, the New York State Attorney General recently
stated that even under current law, the processing of known gambling
transactions may lead to liability for facilitating or aiding and abetting the
underlying activity. If the online gaming merchants that accept PayPal are
operating illegally, we could be subject to civil and criminal lawsuits,
administrative action and prosecution for, among other things, money laundering
or for aiding and abetting violations of law. We would lose the revenues
associated with these accounts and could be subject to material penalties and
fines, both of which would seriously harm our business.

OUR STATUS UNDER STATE, FEDERAL AND INTERNATIONAL FINANCIAL SERVICES REGULATION
IS UNCLEAR. VIOLATION OF OR COMPLIANCE WITH PRESENT OR FUTURE REGULATION COULD
BE COSTLY, EXPOSE US TO SUBSTANTIAL LIABILITY, FORCE US TO CHANGE OUR BUSINESS
PRACTICES OR FORCE US TO CEASE OFFERING OUR CURRENT PRODUCT.

        We operate in an industry subject to government regulation. We currently
are subject to some states' money transmitter regulations, to federal
regulations in our role as transfer agent and investment adviser to the PayPal
Money Market Fund, or the Fund, and to federal electronic fund transfer and
money laundering regulations. In the future, we might be subjected to:

         o        state or federal banking regulations;

                                       44
<PAGE>

         o        additional states' money transmitter regulations and federal
                  money laundering regulations;
         o        international banking or financial services regulations or
                  laws governing other regulated industries; or
         o        U.S. and international regulation of Internet transactions.

        If we are found to be in violation of any current or future regulations,
         we could be:

         o        exposed to financial liability, including substantial fines
                  which could be imposed on a per transaction basis and
                  disgorgement of our profits;
         o        forced to change our business practices; or
         o        forced to cease doing business altogether or with the
                  residents of one or more states or countries.

IF WE WERE FOUND SUBJECT TO OR IN VIOLATION OF ANY LAWS OR REGULATIONS
GOVERNING BANKING, WE COULD BE SUBJECT TO LIABILITY AND FORCED TO CHANGE OUR
BUSINESS PRACTICES.

        We believe the licensing requirements of the Office of the Comptroller
of the Currency, the Federal Reserve Board and other federal or state agencies
that regulate banks, bank holding companies or other types of providers of
electronic commerce services do not apply to us, except for certain money
transmitter licenses mentioned below. The need to comply with state laws
prohibiting unauthorized banking activities could also limit our ability to
enhance our services in the future.

IF WE WERE FOUND SUBJECT TO OR IN VIOLATION OF ANY LAWS OR REGULATIONS GOVERNING
MONEY TRANSMITTERS, WE COULD BE SUBJECT TO LIABILITY AND FORCED TO CHANGE OUR
BUSINESS PRACTICES.

        A number of states have enacted legislation regulating money
transmitters. As a licensed money transmitter, we are subject to bonding
requirements, restrictions on our investment of customer funds, reporting
requirements and inspection by state regulatory agencies. If our future
applications were denied, or if we were found to be subject to and in violation
of any money services laws or regulations, we also could be subject to liability
or forced to cease doing business with residents of certain states or to change
our business practices. Even if we are not forced to change our business
practices, we could be required to obtain licenses or regulatory approvals that
could impose a substantial cost on us.

IF WE WERE FOUND SUBJECT TO OR IN VIOLATION OF ANY LAWS OR REGULATIONS GOVERNING
ELECTRONIC FUND TRANSFERS, WE COULD BE SUBJECT TO LIABILITY AND FORCED TO CHANGE
OUR BUSINESS PRACTICES.

        Although there have been no definitive interpretations to date, we have
assumed that our product is subject to the Electronic Fund Transfer Act and
Regulation E of the Federal Reserve Board. As a result, among other things, we
must provide advance disclosure of changes to our product, follow specified
error resolution procedures and absorb losses from transactions not authorized
by the consumer. In addition, we are subject to the financial privacy provisions
of the Gramm-Leach-Bliley Act and related regulations. As a result, some
customer financial information that we receive is subject to limitations on
reuse and disclosure. Additionally, pending legislation at the state and federal
levels may restrict further our information gathering and disclosure practices.
Existing and potential future privacy laws may limit our ability to develop new
products and services that make use of data gathered through our product. The
provisions of these laws and related regulations are complicated, and we do not
have extensive experience in complying with these laws and related regulations.
Even technical violations of these laws can result in penalties of up to $1,000
assessed for each non-compliant transaction.

                                       45
<PAGE>

WE ARE SUBJECT TO LAWS AND REGULATIONS ON MONEY LAUNDERING AND REPORTING OF
SUSPICIOUS ACTIVITIES THAT COULD HAVE A MATERIAL ADVERSE IMPACT ON OUR BUSINESS
AND COULD SUBJECT US TO CIVIL AND CRIMINAL LIABILITY.

        We are subject to money laundering laws and regulations that prohibit,
among other things, our involvement in transferring the proceeds of criminal
activities. These laws and regulations require us to operate an anti-money
laundering program that contains at least the following elements: written
policies and procedures (including those relating to customer identification),
training for employees, designation of a compliance officer, and regular
independent review of the program. Such a program must be in place by July 24,
2002. We have adopted a program to comply with these regulations, but any errors
or failure to implement the program properly could lead to lawsuits,
administrative action, fine and/or prosecution by the government. We are also
subject to regulations that require us to report suspicious activities involving
transactions of $2,000 or more and to obtain and keep more detailed records on
the senders and recipients in transfers of $3,000 or more. The interpretation of
suspicious activities in this context is uncertain. Future regulations under the
USA Patriot Act may require us to revise the procedures we take to verify the
identity of our customers and to monitor more closely international
transactions. These regulations could impose significant costs on us or make it
more difficult for new customers to join our network. We could be required to
learn more about our customers before opening an account, to obtain additional
verification of international customers, or to monitor our customers' activities
more closely. These requirements could raise our costs significantly and reduce
the attractiveness of our product. Failure to comply with federal and state
money laundering laws could result in significant criminal and civil lawsuits,
penalties and forfeiture of significant assets.

        Even if we comply with these laws, federal and state law enforcement
agencies could seize customer funds that are proceeds of unlawful activity,
which could result in adverse publicity for us and affect our business
adversely. Some online casinos may use our product to accept and make payments.
If these casinos are operating illegally, we may be subject to civil or criminal
prosecution for numerous laws, including but not limited to money laundering
laws. In addition, future regulation in this area is likely, and we cannot
predict how such regulation would affect us. Complying with such regulation
could be expensive or require us to change the way we operate our business.

OUR STATUS UNDER BANKING OR FINANCIAL SERVICES LAWS OR OTHER LAWS IN COUNTRIES
OUTSIDE THE U.S. IS UNCLEAR. THE COST OF OBTAINING ANY REQUIRED LICENSES OR
REGULATORY APPROVALS IN THESE COUNTRIES COULD AFFECT OUR FUTURE PROFITABILITY.

        We intend to offer our product to customers outside the U.S. In these
countries, it is not clear whether, in order to provide our product in
compliance with local law, we need to be regulated as a bank or financial
institution or otherwise. If we were found to be subject to and in violation of
any foreign laws or regulations, we could be subject to liability, forced to
change our business practices or forced to suspend operations in one or more
countries. Alternatively, we could be required to obtain licenses or regulatory
approvals that could impose a substantial cost on us and involve considerable
delay to the provision or development of our product. Implementation of our
plans to enhance the attractiveness of our product for international customers,
in particular our plans to offer customers the ability to transact business in
major currencies in addition to the U.S. dollar, will increase the risks that we
could be found in violation of laws or regulations in countries outside the U.S.

WE RELY ON FINANCIAL INSTITUTIONS, INCLUDING SEVERAL CURRENT OR POTENTIAL
COMPETITORS, TO PROCESS OUR PAYMENT TRANSACTIONS. SHOULD ANY OF THESE
INSTITUTIONS DECIDE TO STOP PROCESSING OUR PAYMENT TRANSACTIONS, OUR BUSINESS
COULD SUFFER.

        Because we are not a bank, we cannot belong to and directly access the
credit card associations or the ACH payment network. As a result, we must rely
on banks or their independent service operators to process our transactions.

                                       46
<PAGE>

FINET, a division of Bank One, currently processes our ACH transactions. We
intend to process creit card payments through Allied Irish Bank, pursuant to a
contract with Global Collect and Atlantic Payment, a vendor. If we could not
obtain these processing services on acceptable terms from these sources or
elsewhere, and if we could not switch to another processor quickly and smoothly,
our business could suffer materially.

INABILITY OF EMERGENT TO PROTECT INTELLECTUAL PROPERTY COULD IMPEDE GROWTH AND
VALUE.

         Some of the Company's subsidiaries may be unable to protect their
proprietary rights and may infringe on the proprietary rights of others. In
addition, effective patent, copyright and trademark protection may be
unenforceable or limited in certain countries. Any infringement on the
intellectual property rights of others, or any infringement on the Company's
intellectual property, could cause the Company's business, prospects and results
of operations to be adversely effected.

TECHNOLOGICAL AND EQUIPMENT BREAKDOWNS COULD INTERRUPT AND ADVERSELY EFFECT
EMERGENT'S BUSINESSES.

         Some of the Company's businesses depend on the efficient and
uninterrupted operation of their computer and communications hardware systems
and related software. Any system interruptions could cause the Company's
business, prospects and results of operations to be adversely effected.
Interruptions could result from natural disasters as well as power loss,
telecommunications failure, violations of physical and electronic security
measures, and similar events.

 Capacity limits on some of the Company's technology, transaction processing
systems and network hardware and software may be difficult to project and they
may not be able to expand and upgrade their systems to meet increased use. As
the Company's customer base begins to increase, they must expand and upgrade
their technology, transaction processing systems and network hardware and
software. the Company may be unable to accurately project the rate of increase
in demand for their goods and services. In addition, the Company may not be able
to expand and upgrade its systems and network hardware and software capabilities
to accommodate an increased customer base, and the operations and processes of
the Company may be disrupted.

THE COMPANY'S UNISSUED PREFERRED STOCK MAY DETER POTENTIAL ACQUISITION BIDS FOR
EMERGENT'S BUSINESS, INCLUDING BIDS THAT MAY BE BENEFICIAL TO SHAREHOLDERS.

         The Company's amended and restated certificate of incorporation permits
its board of directors to issue up to 25,000,000 shares of preferred stock in
one or more series. The board of directors can fix the number of shares of each
class and the voting rights, preferences, limitations and special rights, if
any, without any further vote or action by the Company's stockholders. The
issuance of shares of preferred stock without further action by the Company's
stockholders may delay or prevent a change in control transaction. The issuance
of shares of preferred stock may adversely affect shares of Common Stock held by
current shareholders.

DELAWARE LAW MAY DETER POTENTIAL ACQUISITION BIDS FOR ITS BUSINESS, INCLUDING
BIDS WHICH MAY BE BENEFICIAL TO SHAREHOLDERS.

         Delaware law may deter potential bidders for the Company's business.
the Company is subject to the anti-takeover provisions of the Delaware General
Corporation Law, which regulates corporate acquisitions. Delaware law prevents
the Company from engaging in a business combination with any interested
stockholder for three years following the date that the stockholder became an

                                       47
<PAGE>

interested stockholder. For purposes of Delaware law, a business combination
includes a merger or consolidation involving the Company and the interested
stockholder and the sale of more than 10% of the Company's assets. In general,
Delaware law defines an interested stockholder as any entity or person
beneficially owning 15% or more of the outstanding voting stock of a corporation
and any entity or person affiliated with, controlling or controlled by such
entity or person. Under Delaware law, a Delaware corporation may opt out of the
anti-takeover provisions. the Company does not intend to opt out of these
anti-takeover provisions.

CERTAIN OF THE COMPANY'S PREVIOUS ACQUISITIONS WERE ACQUIRED FROM AFFILIATED
PARTIES AND AS A RESULT WERE NOT THE RESULT OF ARMS-LENGTH NEGOTIATIONS.

         Several of the members of the Company's management team, namely, Harry
Weitzel, former Chairman and Chief Executive Officer, Jason Galanis, Director,
President and Chief Executive Officer, and former Chief Operating Officer, and
Dr. Rory Knight, a former director of the Company were principals of Thesseus
International Asset Fund, NV ("Thesseus"), the entity from which the Company
acquired its interests in EAL, eCard Solutions and InfoBase. In addition,
Michael Bodnar was the CFO of Thesseus and was a director of a subsidiary of
Thesseus. CASA was acquired from K. Washington-Galanis Investments, LLC, a
company controlled by Jason Galanis and Kevin Washington, an Executive Vice
President and director of the Company. Therefore, the transactions were not the
result of arms-length negotiations and the related agreements may include terms
and conditions that may be more or less favorable to the Company than terms
contained in similar agreements negotiated with third parties.

A SIGNIFICANT PORTION OF EMERGENT'S OUTSTANDING COMMON STOCK AND ALL OF THE
SHARES OF PREFERRED STOCK ARE OWNED BY CERTAIN MEMBERS OF MANAGEMENT AND THEIR
AFFILIATES.

         Certain members of management of the Company, indirectly through
Thesseus, own or control, 100% of the outstanding Series A preferred stock of
the Company. As of March 31, 2002, management beneficially owned approximately
19.7% of the Company's capital stock (on a fully-diluted basis). See "Security
Ownership of Certain Beneficial Owners and Management." Together this person has
sufficient voting power to control the outcome of all corporate matters
submitted to the vote of shareholders, including the election of directors,
changes in the size and composition of the Board of Directors, mergers, tender
offers and open-market purchase programs that could give shareholders of the
Company the opportunity to realize a premium over the then-prevailing market
price for their shares. In addition, the concentration of ownership in this
entity and its affiliates could have the effect of delaying or preventing a
change in control of the Company and may affect the market price of the Common
Stock.

EMERGENT DOES NOT INTEND TO PAY CASH DIVIDENDS FOR THE FORESEEABLE FUTURE.

         The Company has never declared or paid any cash dividends on its Common
Stock. The Company does not anticipate paying any cash dividends on its Common
Stock in the foreseeable future.

                                       48
<PAGE>

ITEM 7.   FINANCIAL STATEMENTS

                                                                            PAGE
                                                                            ----

Report of Independent Auditor's Report..................................... F-1

Consolidated Balance Sheet................................................. F-2

Consolidated Statements of Operations...................................... F-3

Consolidated Statements of Stockholders' Equity (Deficiency)............... F-4

Consolidated Statements of Cash Flows.....................................F-5-6

Notes to Consolidated Financial Statements................................F-7-34

                                       49
<PAGE>









                            EGX FUNDS TRANSFER, INC.
                                AND SUBSIDIARIES
                      (F/K/A EMERGENT FINANCIAL GROUP, INC.
                                AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)

                        CONSOLIDATED FINANCIAL STATEMENTS

                             MARCH 31, 2002 AND 2001

<PAGE>







                    EGX Funds Transfer, Inc. and Subsidiaries
             (F/K/A Emergent Financial Group, Inc. and Subsidiaries)
                          (A Development Stage Company)



                                    Contents
                                    --------



                                                                        Page(s)
                                                                        -------
Independent Auditors' Report                                             F-1

Consolidated Balance Sheet                                               F-2

Consolidated Statements of Operations                                    F-3

Consolidated Statements of Changes in Stockholders' Equity (Deficiency)  F-4

Consolidated Statements of Cash Flows                                 F-5 - F-6

Notes to Consolidated Financial Statements                            F-7 - F-34


<PAGE>


                          Independent Auditors' Report
                          ----------------------------



To the Board of Directors of:
    EGX Funds Transfer, Inc. and Subsidiaries
    (F/K/A Emergent Financial Group, Inc. and Subsidiaries)


We have audited the accompanying consolidated balance sheet of EGX Funds
Transfer, Inc. and Subsidiaries (F/K/A Emergent Financial Group, Inc. and
Subsidiaries) (a development stage company) as of March 31, 2002 and the related
consolidated statements of operations, changes in stockholders' equity
(deficiency) and cash flows for the year then ended. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit. The consolidated financial statements as of March
31, 2001 were audited by other auditors whose report dated August 10, 2001 on
those statements included an explanatory paragraph describing conditions that
raised substantial doubt about the Company's ability to continue as a going
concern.

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

In our opinion, the consolidated financial statements referred to above present
fairly in all material respects, the financial position of EGX Funds Transfer,
Inc. and Subsidiaries (F/K/A Emergent Financial Group, Inc. and Subsidiaries) (a
development stage company) as of March 31, 2002, and the results of its
operations, changes in stockholders' equity (deficiency) and cash flows for the
year then ended, in conformity with accounting principles generally accepted in
the United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated financial statements, the Company has a deficit accumulated during
development stage from July 18, 2001 (inception of development stage) to March
31, 2002 of $27,182,323, a net loss in 2002 of $27,596,671, cash used in
operations of $1,033,992 during 2002, a working capital deficit of $4,033,481 at
March 31, 2002 and is in default on certain loans and notes payable, which
raises substantial doubt about its ability to continue as a going concern.
Management's Plan in regards to these matters is also described in Note 2. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.



SALBERG & COMPANY, P.A.
Boca Raton, Florida
July 12, 2002

                                      F-1
<PAGE>
<TABLE>

                            EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
                     (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                                  (A DEVELOPMENT STAGE COMPANY)
                                   CONSOLIDATED BALANCE SHEET
                                         MARCH 31, 2002
                                         --------------
<CAPTION>

                                              ASSETS
                                              ------
<S>                                                                                     <C>
CURRENT ASSETS
Cash                                                                                    $      4,245
                                                                                        -------------
TOTAL CURRENT ASSETS                                                                           4,245
                                                                                        -------------

PROPERTY AND EQUIPMENT, NET                                                                   96,208
                                                                                        -------------

OTHER ASSETS
Software rights and systems, net                                                           1,000,000
Deposits and other assets                                                                     13,814
                                                                                        -------------
TOTAL OTHER ASSETS                                                                         1,013,814
                                                                                        -------------

TOTAL ASSETS                                                                            $  1,114,267
                                                                                        =============


                             LIABILITIES AND STOCKHOLDERS' DEFICIENCY
                             ----------------------------------------

CURRENT LIABILITIES
Loans, notes and convertible notes payable, relates parties                             $  1,324,355
Notes payable                                                                                701,570
Accounts payable                                                                           1,457,318
Accrued expenses and other liabilities                                                       554,483
                                                                                        -------------
TOTAL CURRENT LIABILITIES                                                                  4,037,726
                                                                                        -------------

Redeemable Series A Preferred Stock, convertible and voting, 8,500,000 authorized,
   8,500,000 issued and outstanding (Redemption value, $7,746,305)                         7,746,305
Redeemable Series E Preferred stock, convertible and non-voting, 250,000 authorized,
   250,000 issued and outstanding (Redemption value, $25,000,000)                         25,000,000

STOCKHOLDERS' DEFICIENCY
Preferred stock, 25,000,000 shares authorized, $.001 par value
    Series C, $0.001 par value, none issued and outstanding                                       --
    Series D, non-voting, convertible, $0.001 par value, 1,300 issued and outstanding
   (liquidation value, $1,388,952)                                                                 1
Common stock, $0.001 par value, 300,000,000 shares authorized,
  1,614,193 issued and outstanding                                                             1,614
Common stock, Class 144A, $0.001 par value, 150,000,000 shares authorized,
  150,000,000 issued, none outstanding                                                            --

Additional paid-in capital                                                                14,188,319
Accumulated deficit ($27,023,156 since July 18, 2001 (Inception of
  Development Stage))                                                                    (49,859,698)
                                                                                        -------------
TOTAL STOCKHOLDERS' DEFICIENCY                                                           (35,669,764)
                                                                                        -------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIENCY                                          $  1,114,267
                                                                                        =============
</TABLE>

                   See accompanying notes to consolidated financial statements.

                                               F-2
<PAGE>
<TABLE>

                                 EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
                          (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                                       (A DEVELOPMENT STAGE COMPANY)
                                   CONSOLIDATED STATEMENTS OF OPERATIONS
                                          MARCH 31, 2002 AND 2001
                                          -----------------------
<CAPTION>
                                                                                           From July 18, 2001
                                                                                             (Inception of
                                                                                            Development Stage)
                                                                 2002            2001        to March 31, 2002
                                                             -------------   -------------     -------------
<S>                                                          <C>             <C>               <C>
REVENUES                                                     $     24,103    $         --      $     24,103
                                                             -------------   -------------     -------------
OPERATING EXPENSES
Compensation                                                      318,174              --           318,174
Consulting                                                        538,072              --           538,072
Bad debt                                                          436,102              --           436,102
Depreciation                                                       96,930              --            96,930
Software amortization                                           2,272,626              --         2,272,626
Impairment loss                                                23,238,660              --        23,238,660
General and administration                                        447,441              --           447,441
Write-off investment in eCard                                          --         813,885                --
                                                             -------------   -------------     -------------
TOTAL OPERATING EXPENSES                                       27,348,005         813,885        27,348,005
                                                             -------------   -------------     -------------

LOSS FROM OPERATIONS                                          (27,323,902)       (813,885)      (27,323,902)
                                                             -------------   -------------     -------------

OTHER INCOME (EXPENSE)
Foreign exchange transaction gain                                   2,344              --             2,344
Interest income                                                     2,301              --             2,301
Interest expense                                                 (374,590)       (367,098)         (374,590)
                                                             -------------   -------------     -------------
TOTAL OTHER INCOME (EXPENSE), NET                                (369,945)       (367,098)         (369,945)
                                                             -------------   -------------     -------------

LOSS FROM CONTINUING OPERATIONS BEFORE EQUITY IN LOSSES IN
   INVESTEE                                                  $(27,693,847)   $ (1,180,983)     $(27,693,847)
                                                             -------------   -------------     -------------

EQUITY IN LOSSES OF INVESTEE                                           --      (5,713,110)               --
                                                             -------------   -------------     -------------

LOSS FROM CONTINUING OPERATIONS                               (27,693,847)     (6,894,093)      (27,693,847)
                                                             -------------   -------------     -------------

DISCONTINUED OPERATIONS
Loss from discontinued operations                                (414,348)    (13,130,428)               --
Gain (loss) on disposal                                           511,524              --           511,524
                                                             -------------   -------------     -------------
TOTAL INCOME (LOSS) FROM DISCONTINUED OPERATIONS                   97,176     (13,130,428)          511,524
                                                             -------------   -------------     -------------

Net Loss                                                      (27,596,671)    (20,024,521)      (27,182,323)
                                                             -------------   -------------     -------------

Constructive Dividend on Preferred Series A                    (1,153,811)             --        (1,153,811)
                                                             -------------   -------------     -------------

NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                    $(28,750,482)   $(20,024,521)     $(28,336,134)
                                                             =============   =============     =============

BASIC AND DILUTED NET LOSS PER SHARE AVAILABLE TO COMMON
   STOCKHOLDERS
Loss from continuing operations                              $     (32.17)   $  (4,284.71)     $     (22.76)
Income (Loss) from discontinued operations                           0.11       (8,160.61)             0.40
                                                             -------------   -------------     -------------
NET LOSS AVAILABLE TO COMMON STOCKHOLDERS                    $     (32.06)   $ (12,445.32)     $     (22.36)
                                                             =============   =============     =============

BASIC AND DILUTED WEIGHTED AVERAGE SHARES OUTSTANDING             896,780           1,609         1,267,353
                                                             =============   =============     =============

</TABLE>
                   See accompanying notes to consolidated financial statements.

                                               F-3
<PAGE>
<TABLE>

                                              EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
                                       (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                                                    (A DEVELOPMENT STAGE COMPANY)
                               CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                                                       MARCH 31, 2002 AND 2001
                                                       -----------------------

<CAPTION>


                                                                     Value of    Value of
                                                                     Preferred    Common
                                                                      Shares      Shares
                              Preferred Stock       Common Stock      to be       to be     Additional
                           -------------------- ------------------  Authorized  Authorized    Paid-in     Accumulated
                             Shares     Amount    Shares   Amount   and Issued  and Issued    Capital       Deficit        Total
                           ----------- -------- ---------- ------- ------------  --------  ------------- ------------- -------------
<S>                        <C>         <C>      <C>        <C>     <C>           <C>       <C>           <C>           <C>
Balance, March 31, 2000            --  $    --      1,401  $    1  $ 6,592,494   $ 2,000   $  7,026,526  $ (1,084,695) $ 12,536,326
Preferred Stock Series A
   issued for acquisition   8,500,000    8,500        159      --   (6,592,494)   (2,000)     6,585,994            --            --
Reclassify Preferred Stock
Stockholder loan converted
   to Preferred Series B
   stock                    1,000,000    1,000         --      --           --        --        999,000            --     1,000,000
Retire common stock                --       --        (24)     --           --        --            (10)           --           (10)
Stock issued for services          --       --        397       1           --        --        399,999            --       400,000
Issued Series D Preferred
   Stock                        1,300        1         --      --           --        --        500,009            --       500,010
Stock issued for services          --       --        230       1           --        --        231,999            --       232,000
Net Loss, 2001                     --       --         --      --           --        --             --   (20,024,521)  (20,024,521)
                           ----------- -------- ---------- ------- ------------  --------  ------------- ------------- -------------
Balance, March 31, 2001     9,501,300    9,501      2,163       3           --        --     15,743,517   (21,109,216)   (5,356,195)
Stock issues for cash              --       --    404,763     404           --        --        849,596            --       850,000
   Series A to temporary
   equity                  (8,500,000)  (8,500)        --      --           --        --     (6,583,994)           --    (6,592,494)
Preferred Series A
   modification                    --       --    214,286     214           --        --         99,786            --       100,000
Conversion of Series B
   Preferred Stock and
   dividends               (1,000,000)  (1,000)   373,838     374           --        --            626            --            --
Conversion of portion of
   note payable                    --       --     48,095      48           --        --        100,952            --       101,000
Conversion of note payable
   and accrued interest            --       --    166,667     167           --        --        362,636            --       362,803
Common stock issued for
   services                        --       --     71,429      71           --        --        149,929            --       150,000
Conversion of debt                 --       --    332,919     333           --        --      1,164,885            --     1,165,218
Warrants issued as
   conversion inducement           --       --         --      --           --        --      2,300,386            --     2,300,386
Fractional share adjustment        --       --         33      --           --        --             --            --            --
Net Loss, 2002                     --       --         --      --           --        --             --   (27,596,671)  (27,596,671)
Constructive dividend              --       --         --      --           --        --             --    (1,153,811)   (1,153,811)
                           ----------- -------- ---------- ------- ------------  --------  ------------- ------------- -------------
BALANCE, MARCH 31, 2002         1,300  $     1  1,614,193  $1,614           --        --   $ 14,188,319  $(49,859,698) $(35,669,764)
                           =========== ======== ========== ======= ============  ========  ============= ============= =============

                                     See accompanying notes to consolidated financial statements.

                                                                 F-4
</TABLE>

<PAGE>
<TABLE>
                                           EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
                                    (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                                                 (A DEVELOPMENT STAGE COMPANY)
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    MARCH 31, 2002 AND 2001
                                                    -----------------------
<CAPTION>
                                                                                                                 From July 18,
                                                                                                                2001 (Inception
                                                                                                                of Development
                                                                                                                   Stage) to
                                                                               2002               2001          March 31, 2002
                                                                           -------------      -------------      -------------
<S>                                                                        <C>                <C>                <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss                                                                   $(27,596,671)      $(20,024,521)      $(27,182,323)
Adjustments to reconcile net loss to net cash used in
    operating activities:
Depreciation                                                                     96,930                 --             96,930
Software amortization                                                         2,272,626                 --          2,272,626
Bad debt                                                                        462,801                 --            100,500
Gain on debt conversion                                                      (2,984,507)                --         (2,984,507)
Impairment loss                                                              23,238,660                 --         23,238,660
Stock issued for services                                                       150,000            632,000            150,000
Warrants issued as inducement to convert                                      2,300,386                 --          2,300,386
Write-off of intellectual capital                                                    --              2,000                 --
Write-off of investment in eCard                                                     --            813,885                 --
Write-off of investment in InfoBase                                                  --            226,466                 --
Write-off of investment in Eikos Acquisition Limited                                 --          6,107,994
Write-off of ThemeWare note receivable                                               --          3,791,524                 --
Write-off of Graphics Technology note receivable                                     --            587,140                 --
Equity losses                                                                        --          5,854,435                 --
Changes in operating assets and liabilities:
(Increase) decrease in:
Interest receivable                                                                  --           (181,664)                --
Prepaid assets                                                                   66,161             35,651             66,161
Deposits                                                                         19,979            150,000             19,979
Increase (decrease) in:
Accounts payable, accrued and other liabilities                                 969,643            839,626            905,295
                                                                           -------------      -------------      -------------
NET CASH USED IN OPERATING ACTIVITIES                                        (1,003,992)        (1,165,464)        (1,016,293)
                                                                           -------------      -------------      -------------

CASH FLOWS FROM INVESTING ACTIVITIES:
Advances to ThemeWare                                                          (393,556)                --            (31,255)
Purchase of property and equipment                                             (115,016)                --           (115,016)
Purchase of Key Com, Inc.                                                    (1,000,000)                --           (850,000)
Notes receivable                                                                     --         (4,197,000)                --
Cash acquired from Key Com                                                       50,588                 --             50,588
Loan repayments from related parties                                             81,053                 --             81,053
Distribution from Eikos Acquisition Limited                                          --            337,500                 --
                                                                           -------------      -------------      -------------
NET CASH USED IN INVESTING ACTIVITIES                                        (1,376,931)        (3,859,500)          (864,630)
                                                                           -------------      -------------      -------------

CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from common stock issuance                                             950,000                 --            800,000
Issuance of preferred shares                                                         --          1,500,000                 --
Notes payable, Starfish Group, LLC                                                   --          3,585,348                 --
Loan proceeds from related parties, net                                       1,193,168                 --          1,193,168
Loan proceeds                                                                   350,000                 --                 --
Loan repayments                                                                (108,000)                --           (108,000)
Advances from related parties, net                                                   --             (7,648)                --
Notes payable                                                                        --            (63,430)                --
                                                                           -------------      -------------      -------------
NET CASH PROVIDED BY FINANCING ACTIVITIES                                     2,385,168          5,014,270          1,885,168
                                                                           -------------      -------------      -------------

                                                                 F-5
<PAGE>

                                           EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
                                    (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                                                 (A DEVELOPMENT STAGE COMPANY)
                                             CONSOLIDATED STATEMENTS OF CASH FLOWS
                                                    MARCH 31, 2002 AND 2001
                                                    -----------------------


NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                              4,245            (10,694)             4,245

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                                     --             10,694                 --
                                                                           -------------      -------------      -------------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                                 $      4,245       $         --       $      4,245
                                                                           =============      =============      =============


SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
-------------------------------------------------

CASH PAID DURING THE YEAR FOR:
Interest                                                                   $     18,998       $         --       $     18,998
                                                                           -------------      -------------      -------------

SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
---------------------------------------------------------------------

Common stock issued for services                                           $    150,000       $    632,000       $    150,000
Conversion of stockholder loan to preferred stock                          $         --       $  1,000,000       $         --
Conversion of preferred stock to common stock                              $      1,000       $         --       $      1,000
Conversion of debt to common stock                                         $  4,512,527       $         --       $  4,512,527
Conversion of officer note to common stock                                 $    101,000       $         --       $    101,000

The Company purchased all of the common stock of Key Com, Inc. for $1,000,000
cash, Preferred Series E stock valued at $25,000,000 and a fee of common shares
valued at $150,000 in conjunction with the acquisition the following liabilities
were assumed:

Fair value of assets acquired                      $ 26,813,335
Less liabilities assumed and cash acquired             (713,923)
                                                   -------------
Acquisition, net of cash acquired                  $ 26,099,412
                                                   =============


                                  See accompanying notes to consolidated financial statements.

                                                              F-6
</TABLE>

<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


NOTE 1   NATURE OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
--------------------------------------------------------------------------

         (A) NATURE OF BUSINESS

         EGX Funds Transfer, Inc. and Subsidiaries (F/K/A Emergent Financial
         Group, Inc. and Subsidiaries) (the "Company") was incorporated in
         Delaware in May 1994. On July 18, 2001, substantial operations were
         discontinued. At July 18, 2001, the Company is considered to have
         initiated a new development stage. (See Note 9)

         In June 2002, the Company changed its name to EGX Funds Transfer, Inc.

         The Company is a holding company with a primary subsidiary engaged in
         electronic data processing of financial transactions. The Company has
         two primary lines of business principally conducted through its wholly
         owned subsidiary, Key Com Holdings, Inc. ("Key Com") oriented around
         proprietary software and systems trademarked as XTRAN. XTRAN is used to
         centrally manage financial transactions initiated principally through
         Point of Sale ("POS") terminal devices, and other automatic devices
         such as kiosks or ATMs. The systems increase the terminal functionality
         by processing various additional specialized financial transactions in
         addition to traditional credit and debit payments. The two primary
         systems permit the real-time transfer of monetary funds internationally
         ("wires"), commonly referred to as Family Remittances and the real-time
         electronic distribution of pre-paid telephony and Internet services -
         Electronic Prepaid. The business plan of management is to become a
         global provider of innovative transaction data processing services.
         Accordingly, the Company set out to develop a payment system combining
         the pervasiveness of credit card terminals with the existing financial
         system infrastructure- the Automated Clearing House, or "ACH," and the
         credit card networks and the ATM/debit card networks. The Company's
         systems are designed to take advantage of the reliability of modern
         electronic payment infrastructure and global telecommunications
         networks.

         The Company derives its revenues primarily from fees charged and
         collected from customers at the time its service is delivered.

         Activities during the new development stage include fundraising,
         creation of new corporate infrastructure and negotiations of potential
         operating agreements and affiliations.

         (B) PRINCIPLES OF CONSOLIDATION

         The accompanying consolidated financial statements include the accounts
         of the Company and its wholly-owned inactive subsidiaries, Shanecy
         Holdings, Inc. ("SHI"), Eikos Acquisition Limited ("EAL") (for fiscal
         2001 only through the foreclosure date - See Note 4 (E)) and CASA@Home,
         Inc. ("CASA"), and its active subsidiary Key Com Holdings, Inc. ("Key
         Com"). All material intercompany balances and transactions have been
         eliminated in consolidation.

         (C) FOREIGN CURRENCY TRANSACTIONS

         Monetary items denominated in a foreign currency are translated into
         United States dollars, the Company's functional currency, at exchange
         rates in effect at the balance sheet date, and non-monetary items are
         translated at rates of exchange in effect when the assets were acquired
         or obligations incurred. Revenues and expenses are translated at rates
         in effect at the time of the transactions. Net gains and losses
         resulting from foreign exchange transactions are included in the
         consolidated statements of operations and were not material during the
         periods presented.

                                      F-7
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (D) USE OF ESTIMATES

         In preparing consolidated financial statements, management is required
         to make estimates and assumptions that affect the reported amounts of
         assets and liabilities and disclosure of contingent assets and
         liabilities at the date of the consolidated financial statements and
         revenues and expenses during the reported period. Actual results may
         differ from these estimates.

         (E) CASH EQUIVALENTS

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

         (F) CONCENTRATION OF CREDIT RISK

         The Company maintains its cash in bank deposit accounts, which, at
         times, exceed federally insured limits. At March 31, 2002, the Company
         had no deposits, which exceed federally insured limits. The Company has
         not experienced any losses in such accounts through March 31, 2002.

         (G) PROPERTY AND EQUIPMENT

         Property and equipment are stated at cost, less accumulated
         depreciation. Expenditures for maintenance and repairs are charged to
         expense as incurred. Depreciation is provided using the straight-line
         method over the estimated useful lives of the assets of five years.

         (H) SOFTWARE DEVELOPMENT COSTS

         In accordance with EITF Issue No. 00-2, the Company accounts for its
         XTRAN software since the Key Com, Inc. acquisition date in accordance
         with Statement of Position No. 98-1 "Accounting for the Costs of
         Computer Software Developed or Obtained for Internal Use" ("SOP 98-1").

         SOP 98-1 requires the expensing of all costs of the preliminary project
         stage and the training and application maintenance stage and the
         capitalization of all internal or external direct costs incurred during
         the application development stage. The Company amortizes the
         capitalized cost of software developed or obtained for internal use
         over an estimated life of three years.

         (I) INTANGIBLES

         Intangibles are carried at cost less accumulated amortization. The cost
         of other identified intangibles are primarily software and systems at
         March 31, 2002, being amortized on a straight-line basis over three
         years. The Company implemented Statement of Financial Accounting
         Standards 142 on April 1, 2002. (See Notes 1(H) and 3)

         (J) LONG-LIVED ASSETS

         The Company reviews long-lived assets and certain identifiable assets
         related to those assets for impairment whenever circumstances and
         situations change such that there is an indication that the carrying
         amounts may not be recoverable. If the non-discounted future cash flows
         of the enterprise are less than their carrying amount, their carrying
         amounts are reduced to fair value and an impairment loss is recognized.
         (See Note 3)

                                      F-8
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (K) ADVERTISING

         In accordance with Accounting Standards Executive Committee Statement
         of Position 93-7, ("SOP 93-7") costs incurred for producing and
         communicating advertising of the Company, are charged to operations as
         incurred.

         (L) STOCK-BASED COMPENSATION

         The Company accounts for stock options issued to employees in
         accordance with the provisions of Accounting Principles Board ("APB")
         Opinion No. 25, "Accounting for Stock Issued to Employees," and related
         interpretations. As such, compensation cost is measured on the date of
         grant as the excess of the current market price of the underlying stock
         over the exercise price. Such compensation amounts are amortized over
         the respective vesting periods of the option grant. The Company adopted
         the disclosure provisions of Statement of Financial Accounting
         Standards No. 123 ("SFAS No. 123"), "Accounting for Stock-Based
         Compensation," which permits entities to provide pro forma net income
         (loss) and pro forma earnings (loss) per share disclosures for employee
         stock option grants as if the fair-valued based method defined in SFAS
         No. 123 had been applied.

         The Company accounts for stock options or warrants issued to
         non-employees for goods or services in accordance with the fair value
         method of SFAS 123. Under this method, the Company records an expense
         equal to the fair value of the options or warrants issued. The fair
         value is computed using an options pricing model.

         (M) REVENUE RECOGNITION

         The Company's subsidiary, Key Com, earns transaction fees from
         processing wire transfer transactions. Revenue resulting from these
         transactions is recognized at the gross fee amount as transactions are
         completed.

         (N) COST OF SALES

         Transaction processing expenses consist primarily of third party
         transaction fees to Automatic Clearing House ("ACH"), paying agents and
         merchants, which are recorded as a cost of sales.

         (O) REPORTING GAINS AND LOSSES FROM EXTINGUISHMENT OF DEBT

         The Company reports any gains or losses from conversion of debt to
         equity in accordance with Statement of Financial Standards ("SFAS") No.
         4, "Reporting Gains and Losses from Extinguishment of Debt." The
         statement specifies that gains and losses in the current year from
         extinguishments of debt, other than to meet sinking fund requirements,
         shall be aggregated and, if material, classified as an extraordinary
         item, net of the related income tax effect. The standard also provides
         that a description of the extinguishment transaction, the income tax
         effect, and the per share amount of the aggregate gain or loss net of
         the tax effect be disclosed in the financial statements. Gains and
         losses reported under this standard are not immediately impacted by
         income taxes given the Company's current net operating loss position
         for tax purposes. The future tax benefit of a net operating loss would
         be reduced by the amount of a net gain.

                                      F-9
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (P) INCOME TAXES

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

         (Q) NET LOSS PER COMMON SHARE

         Basic net income (loss) per common share (Basic EPS) excludes dilution
         and is computed by dividing net income (loss) by the weighted average
         number of common shares outstanding during the year. Diluted net income
         per share (Diluted EPS) reflects the potential dilution that could
         occur if stock options or other contracts to issue common stock, such
         as convertible notes, were exercised or converted into common stock.
         The assumed exercise of common stock equivalents was not utilized since
         the effect was antidilutive. At March 31, 2002, there were 1,102,419
         common stock warrants outstanding, which may dilute future earnings per
         share. (See Note 11)

         (R) FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "Disclosures about
         Fair Value of Financial Instruments," requires disclosures of
         information about the fair value of certain financial instruments for
         which it is practicable to estimate that value. For purposes of this
         disclosure, the fair value of a financial instrument is the amount at
         which the instrument could be exchanged in a current transaction
         between willing parties, other than in a forced sale or liquidation.

         The carrying amounts of the Company's short-term financial instruments,
         including accounts payable and accrued liabilities, and notes payable,
         approximate fair value due to the relatively short period to maturity
         for these instruments.

         (S) RECENT ACCOUNTING PRONOUNCEMENTS

         Statement No. 141 "Business Combinations" ("SFAS 141") establishes
         revised standards for accounting for business combinations.
         Specifically, the statement eliminates the pooling method, provides new
         guidance for recognizing intangible assets arising in a business
         combination, and calls for disclosure of considerably more information
         about a business combination. This statement is effective for business
         combinations initiated on or after July 1, 2001. The Company adopted
         this pronouncement on July 1, 2001 and accounted for the acquisition of
         Key Com accordingly.

         Statement No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142")
         provides new guidance concerning the initial accounting for the
         acquisition of intangibles, except those acquired in a business
         combination, which is subject to SFAS 141, and the manner in which
         intangibles and goodwill, regardless of how acquired, should be
         accounted for subsequent to their initial recognition. Generally,


                                      F-10
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         intangible assets with indefinite lives, and goodwill, are no longer
         amortized; they are carried at lower of cost or market and subject to
         annual impairment evaluation, or interim impairment evaluation if an
         interim triggering event occurs, using a new fair market value method.
         Intangible assets with finite lives are amortized over those lives,
         with no stipulated maximum, and an impairment test is performed only
         when a triggering event occurs. This statement is effective for all
         fiscal years beginning after December 15, 2001. The Company believes
         that the implementation of SFAS 142 on April 1, 2002 will not have a
         material effect on the Company's financial position, results of
         operations or liquidity.

         Statement No. 143, "Accounting for Asset Retirement Obligations,"
         ("SFAS 143") requires entities to record the fair value of a liability
         for an asset retirement obligation in the period in which it is
         incurred. When the liability is initially recorded, the entity
         capitalizes 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 asset. Upon settlement of the liability, an
         entity either settles the obligation for its recorded amount or incurs
         a gain or loss upon settlement. The standard is effective for fiscal
         years beginning after June 15, 2002. The Company believes that the
         implementation of SFAS 142 on April 1, 2003 will not have a material
         effect on the Company's financial position, results of operations or
         liquidity.

         Statement No. 144 "Accounting for the Impairment or Disposal of
         Long-Lived Assets" ("SFAS 144") supercedes Statement No. 121
         "Accounting for the Impairment of Long-Lived Assets and for Long-Lived
         Assets to be Disposed of" ("SFAS 121"). Though it retains the basic
         requirements of SFAS 121 regarding when and how to measure an
         impairment loss, SFAS 144 provides additional implementation guidance.
         SFAS 144 excludes goodwill and intangibles not being amortized among
         other exclusions. SFAS 144 also supercedes the provisions of APB 30,
         "Reporting the Results of Operations," pertaining to discontinued
         operations. Separate reporting of a discontinued operation is still
         required, but SFAS 144 expands the presentation to include a component
         of an entity, rather than strictly a business segment as defined in
         SFAS 131, Disclosures about Segments of an Enterprise and Related
         Information. SFAS 144 also eliminates the current exemption to
         consolidation when control over a subsidiary is likely to be temporary.
         This statement is effective for all fiscal years beginning after
         December 15, 2001. The Company believes that the implementation of SFAS
         142 on April 1, 2002 will not have a material effect on the Company's
         financial position, results of operations or liquidity.

         Statement No. 145, "Rescission of FASB Statements No. 4, 44, and 64,
         Amendment of FASB Statement No. 13, and Technical Corrections," ("SFAS
         145") updates, clarifies, and simplifies existing accounting
         pronouncements. Statement No. 145 rescinds Statement 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 Opinion 30 will now be used to
         classify those gains and losses. Statement 64 amended Statement 4, and
         is no longer necessary because Statement 4 has been rescinded.
         Statement 44 was issued to establish accounting requirements for the
         effects of transition to the provisions of the motor Carrier Act of
         1980. Because the transaction has been competed, Statement 44 is no
         longer necessary. Statement 145 amends Statement 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. This amendment is consistent with FASB's
         goal requiring similar accounting treatment for transaction that has
         similar economic effects. The Company believes that the implementation
         of SFAS 142 on April 1, 2003 will not have a material effect on the
         Company's financial position, results of operations or liquidity.

                                      F-11
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (T) RECLASSIFICATIONS

         Certain amounts in the 2001 consolidated financial statements have been
         reclassified to conform to the 2002 presentation.

NOTE 2   GOING CONCERN
----------------------

As reflected in the accompanying consolidated financial statements, the Company
has a deficit accumulated since July 18, 2001 (inception of development stage)
to March 31, 2002 of $27,182,323, a net loss in 2002 of $27,596,671, cash used
in operations of $1,033,992 during 2002, and a working capital deficit of
$4,033,481 at March 31, 2002. The Company is also in default on certain loans
and notes. The ability of the Company to continue as a going concern is
dependent on the Company's ability to raise additional capital and generate
further revenues. The consolidated financial statements do not include any
adjustments that might be necessary if the Company is unable to continue as a
going concern.

The Company completed a private placement of new common shares in early July
2002 (see Note 17). Management is in continuing discussions with investment
banking firms and lending institutions to obtain traditional equity and debt
financing. Based upon the funds already received in July plus anticipated
funding, management believes there are sufficient monies available to implement
the Company's business model and to generate the level of revenues necessary to
provide the opportunity for the Company to continue as a going concern.

NOTE 3   BUSINESS COMBINATIONS
------------------------------

On September 26, 2001, (the "Acquisition Date") the Company acquired 15,000,000
common shares or 100% of Key Com, Inc. voting common stock by merging Key Com,
Inc into a wholly owned subsidiary of the company, Key Com Holdings, Inc. Key
Com, Inc. developed the XTRAN point-of-sale system used for international wire
transfers. The Company acquired Key Com pursuant to its change in business
strategy to enter the market of electronically driven financial services. (See
Note 9) Under the terms of the agreement, the Company issued 250,000 shares of
Series E Preferred Stock (See Note 11) with a stated value of $100 per share, or
$25,000,000 in securities, and paid $1,000,000 in cash. The Company used the
stated value as the value of the Series E Preferred Stock since the seller of
Key Com, Inc. held a put option to sell all 250,000 Series E preferred shares
back to the Company for $25,000,000. (See Note 11(E)) In addition, 71,428 common
shares valued at $150,000 ($2.10 per share based on contemporaneous issuances
for cash) were issued to a third party as a fee relating to the transaction. The
aggregate purchase price was $26,150,000. The merger was accounted for under the
purchase accounting method. The purchase price was allocated among the
identifiable tangible assets based on the estimated fair market value of those
assets at the Acquisition Date and the excess of the purchase price over the
fair value of net assets acquired totaling $25,702,989 was allocated primarily
to the XTRAN software technology that had reached technological feasibility and
to identifiable contracts and relationships all reflected on the balance sheet
as Software Rights and Systems. (See Note 6) All common stock options held by
various investors of Key Com, Inc. were not converted to stock options of the
Company since they were contingent on Key Com, Inc. filing a registration
statement with the Securities and Exchange Commission, which will not happen as
a result of the acquisition.

                                      F-12
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


The estimated fair market value of the assets acquired and liabilities assumed
at the Acquisition Date was as follows:

Cash                                                     $     50,588
Prepaid assets and other                                       94,978
Loans receivable                                               40,245
Deferred cost                                                 312,500
Deposits                                                       33,793
Property and equipment                                        283,227
Software and systems                                       25,998,004
Accounts payable and accrued liabilities                     (180,335)
Loans                                                        (483,000)
                                                         -------------
                                                         $ 26,150,000
                                                         =============

The accompanying consolidated financial statements include the operations of Key
Com, Inc. from the acquisition date.

Pursuant to SFAS 142, the software and systems is being amortized over three
years. Amortization from September 26, 2001 through March 31, 2002 was
$2,272,626. (See Note 6)

The following unaudited pro forma information for the Company gives effect to
the Key Com, Inc. acquisition as if it had occurred on April 1, 2000:

                                                 2002              2001
                                            ---------------  ---------------
Revenues                                    $       45,417   $      214,155
Net Loss                                    $  (28,672,795)  $  (21,145,377)
Net loss per share                          $       (31.97)  $   (13,141.94)

These pro forma results have been prepared for comparative purposes only and do
not purport to be indicative of the result of operations which actually would
have resulted had the acquisition occurred on the date indicated or which may
result in the future.

NOTE 4   INVESTMENTS AND IMPAIRMENT
-----------------------------------

         (A) KEY COM HOLDINGS, INC.

         On August 7, 2001, pursuant to the Agreement and Plan of Merger dated
         July 19, 2001 with Key Com, Inc. the Company invested $750,000 of the
         proceeds obtained from the sale of common stock to acquire $750,000
         Zero-Coupon Participating Convertible Debt Certificates from Key Com,
         Inc. The Debt Certificates entitle the Company to receive repayment of
         its investment from predefined royalty income and, after recovery of
         principal, to receive a reduced royalty payment in perpetuity. Since,
         Key Com, Inc. was acquired by the Company (See Note 3); this investment
         is eliminated in consolidation.

         (B) ECARD SOLUTIONS, INC.  PREFERRED STOCK INVESTMENT IMPAIRMENT

         On January 18, 2000, the Company acquired, through its wholly owned
         subsidiary, 400 preferred shares in eCard Solutions, Inc. ("eCard"),
         convertible into 40% of the common stock of eCard.

                                      F-13
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         In a recapitalization effected on March 13, 2000, eCard created two
         separate series (A and B) of preferred shares. The 400 shares purchased
         on January 18, 2000 were reclassified, as Series A preferred shares.
         The Company subscribed to 1,000,000 Series B preferred shares in eCard
         for $1,000,000, to be paid in four equal installments. A $750,000
         remained as a note payable at March 31, 2000. On May 24, 2000, eCard
         delivered the Company a notice of default on its obligation. As at
         March 31, 2001, none of the remaining installment payments on the note
         have been made and the shares and initial investment are subject to
         forfeiture under the Company's agreement with eCard. The Company
         wrote-off the $250,000 investment net of the unpaid balance of the note
         at March 31, 2001.

         In addition, Management determined that the carrying value of the eCard
         Series A Preferred Stock was impaired and recorded a write-down of
         $563,886 as of March 31, 2001. eCard's primary asset is it's investment
         in Junum Series C Preferred Stock. The Company believes that the future
         value, if any, of the Junum Series C, Preferred stock is not
         determinable.

         On or before March 1, 2003, eCard can redeem, in whole but not in part,
         the Series B preferred shares for $1.00 per share. If the Series B
         shares are not redeemed before March 1, 2003, Series A and Series B
         preferred shares held by the Company may be converted, at the option of
         the Company, into 40% of eCard's outstanding common shares, on a
         fully-diluted basis. If the Series B shares are redeemed before March
         1, 2003, Series A preferred shares may at any time after March 1, 2003,
         at the option of the Company, be converted into 20% of eCard's
         outstanding common shares, on a fully-diluted basis.

         (C) THEMEWARE INVESTMENT IMPAIRMENT

         The Company advanced $393,556 through December 31, 2001 for combined
         total advances of $4,020,556 to ThemeWare. In return, ThemeWare
         executed a promissory note in favor of the Company. The note bears
         interest at 8%, with both principal and interest payable on demand. The
         operations of ThemeWare were discontinued as of December 31, 2001 and,
         as a result, the Company no longer has reasonable assurance that the
         ThemeWare investment will be recoverable. As a result, the Company has
         determined that no additional advances should be made to ThemeWare, and
         that the Company's note receivable should be written off. Accordingly,
         the principal of the note in the amount of $393,556 plus accumulated
         interest of $2,301 as of December 31, 2001 has been written off and
         included in bad debt expense. The principal of $3,627,000 plus
         accumulated interest of $164,524 was written off at year-end March 31,
         2001 and is included in the accompanying consolidated financial
         statements in loss from discontinued operations.

         (D) INFOBASE INVESTMENT IMPAIRMENT

         The Company owns 4,900 preferred shares in InfoBase Direct Marketing
         Services, Inc. ("InfoBase") convertible into a 49% participating
         interest. InfoBase provides marketing services for credit card
         companies. The Company accounts for this investment under the equity
         method.

         At June 30, 2000, the carrying value of the investment in InfoBase was
         $226,466. InfoBase's ability to carry out its business plan is
         dependent on receiving additional investments from the Company. During
         the third quarter of fiscal 2001, management decided that no additional
         investment should be made in InfoBase. As a result, the Company has
         written off the investment in fiscal 2001 at the June 2000 carrying
         value. In addition, the Company carried in its accounts receivable
         $53,190 that was due from an officer of InfoBase. It was determined
         that the receivable is uncollectible and it was also written off in
         2001. The write-off amounts are included in loss from discontinued
         operations.

                                      F-14
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (E) EIKOS ACQUISITION LIMITED INVESTMENT IMPAIRMENT

         The Company owned a 49.5% interest in Eikos, a company involved in the
         debt recovery business. The investment was accounted for under the
         equity method.

         The Company was in default on certain debt obligations in 2001. The
         notes were secured by a first lien on the assets of the Company
         including its wholly owned subsidiary, Eikos Acquisition Limited,
         ("EAL"). On February 17, 2001, the creditor exercised its rights
         pursuant to the note to foreclose on the collateral, that being, all of
         the Company's rights title and interest in the shares of common stock
         in Eikos Acquisition Limited.

         A public sale was conducted and the shares were purchased for $500,000
         in satisfaction of the indebtness. As a result, the Company has written
         off the investment in EAL in the amount of $6,107,994 as of March 31,
         2001. The amount is included in loss from discontinued operations.

         (F) GRAPHICS TECHNOLOGY, INC. ("GTIX") INVESTMENT IMPAIRMENT

         On November 20, 2000, the Company entered into an agreement with
         Graphics Technology, Inc. ("GTI") formerly known as Virtual Technology
         Corporation ("VTC") and GTI Acquisition Corporation ("GTI"), both
         Minnesota corporations, referred to collectively as GTIX, under which
         the Company agreed to provide GTIX with credit financing up to $570,000
         for general corporate purposes and to assume liability for the payment
         of certain of existing indebtedness of GTIX and/or its affiliates. The
         credit financing is evidenced by a Credit Agreement (the "Agreement"),
         which includes all necessary documentation to provide the Company a
         perfected security interest in all of the assets of GTIX. As of March
         31, 2001, the Company has provided $570,000 in credit financing to GTIX
         under the Agreement.

         On December 20, 2000, GTIX filed for Chapter 11 bankruptcy protection
         in the U.S. Bankruptcy Court, District of Minnesota, in order to
         facilitate restructuring its business. The Company is a first position
         creditor in the reorganization proceeding and is currently discussing
         with GTIX various options with regard to its restructuring so as to
         protect the Company's advances and facilitate GTIX's transition into a
         business-to-business wholesale technology provider.

         During the fourth quarter of fiscal 2001, the Company determined that
         GTIX's various restructuring options were unlikely to result in any
         material recovery for the Company and so the recovery of the Company's
         advances were no longer assured. Therefore, the Company has written-off
         the note receivable. Additionally, the Company carries in its Interest
         Receivable $17,140 as of March 31, 2001. It has also been determined
         that the receivable is uncollectible and it has been written off in
         2001.

         (G) INVESTMENT IN CASA@HOME.COM, INC. ("CASA") IMPAIRMENT

         In November 1999, the Company agreed with K. Washington-Galanis
         Investments, LLC ("WGI"), a private investment entity controlled by a
         Company director and a shareholder, to acquire 100% of CASA for 158
         common shares (as adjusted for the stock splits) of the Company. The


                                      F-15
<PAGE>


                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------

         shares were issued to 19 investors represented by WGI. The sole asset
         of CASA at the date of acquisition was certain intellectual capital and
         a business plan for an Internet-based provider of services. The Company
         carried this asset at the par value of the shares issued, which
         represents the cost base of the former owners. The ability of CASA to
         implement its business plan is dependent on receiving additional
         investment from the Company. The Company has been unable to raise
         sufficient funds to invest in CASA and, to date; it has been unable to
         implement its plan. Since the Company cannot be certain whether it will
         be able to raise sufficient funds to permit CASA to implement its
         business plan, during the third quarter of fiscal 2001 it was
         determined to write off this investment.

         (H) IMPAIRMENT OF SOFTWARE RIGHTS AND SYSTEMS

         During 2002, the Company recognized an impairment loss on Software
         Rights and Systems. (See Note 6)

         (J) ACQUISITION OF BIZPAY TECHNOLOGY

         In March 2002, the Company acquired the BizPay person to person online
         money transfer technology in exchange for an agreement to attempt to
         commercialize the software associated with such technology. If
         successful, a royalty will be paid as the purchase price on all fees
         collected.

NOTE 5   PROPERTY AND EQUIPMENT
-------------------------------

Property and equipment consists of the following at March 31, 2002:

Point-of-sale terminals                           $   35,030
Computers and equipment                               68,105
Furniture office equipment                           181,360
                                                  -----------
                                                     284,495
Less: Accumulated depreciation                      (188,287)
                                                  -----------
                                                  $   96,208
                                                  ===========

Depreciation was $96,930 for the year ended March 31, 2002. As of March 31,
2002, the Company has deactivated approximately 438 terminals located at
merchant sites while management evaluates State licensing requirements.
Management estimates it most likely will not be cost effective to reactivate or
recover these terminals, therefore, management has written off $135,720 of
terminals and related accumulated depreciation of $39,520 resulting in an
impairment loss of $96,200 in 2002.

NOTE 6   SOFTWARE RIGHTS AND SYSTEMS AND IMPAIRMENT
---------------------------------------------------

Pursuant to the allocation of the Key Com, Inc. purchase price, the Company
reflects the allocated licensed software rights and systems as an asset as of
March 31, 2002 and depreciates them over a three year life based on the
generally accepted amortization period for software and based on the terms of
the contracts. (See Notes 3 and 10(B)) The systems include the proprietary
terminal driving software, the integrated proprietary back-end database,
Automated Clearing House ("ACH") processing software, exclusive strategic
contracts (see Note 10(B)) system know-how based on field operations and various
trade secrets accumulated during the development and implementation stage. Under


                                      F-16
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


the terms of the software developer agreement, the Company does not own the
source code, but was granted exclusive rights. In addition, the Company has an
option to purchase the source code in exchange for stock options in its
subsidiary, Key Com. Although no software development costs have been incurred
since the acquisition date of September 26, 2001, any future XTRAN software
development costs may be capitalized in accordance with SOP 98-1 and reviewed
for impairment under SFAS 144, which is effective for the fiscal year starting
April 1, 2002.

The XTRAN software is held as collateral by certain original stockholders of the
seller, Key Com, Inc. (see Note 17(B).

The Company has evaluated impairment of its software and systems under the
guidelines of SFAS 121. Management has determined to write-down certain
intangible assets with the effect of eliminating them from the Company's balance
sheet for accounting purposes. Due to the uncertainty of valuing intangible
assets, including their estimated future value, management determined in the
fourth quarter to adjust the carrying value of its assets as of December 31,
2001 to its estimated fair market value of $1,100,000 based on a undiscounted
cash flows method and projecting those cash flows using only current operating
terminals in place as of December 31, 2001. The Company then recognized
additional amortization for the three months ended March 31, 2002. The
write-down results in a non-cash impairment loss of $22,798,882.

The accounting presentation of assets of the Company has no effect on the actual
operations of the company. Further, there are no implications about the business
prospects of the company as a result of this accounting treatment.

The Company has undergone certain delays in deploying its money transfer
business as a consequence of events surrounding September 11 and the resulting
regulations enacted by Congress. Although management believes it has now
adequately addressed these requirements and can move to fully commercialize its
systems, there are inherent market uncertainties that management determined
should be reflected in the consolidated financial statements.

<TABLE>
<CAPTION>

NOTE 7   LOANS, NOTES, AND CONVERTIBLE NOTES PAYABLE-RELATED PARTIES
--------------------------------------------------------------------

Loans, Notes and Convertible Notes to related parties consist of the following
at March 31, 2002:

  <S>                                                                           <C>
  Related Party Senior convertible note payable, dated August 10, 2001
  from President of Company, original principal of $50,000, interest at
  15% interest, principal and interest due November 10, 2001. In default
  as of March 31, 2002                                                          $    8,087

  Secured Revolving Convertible Line of Credit, dated October 1, 2001,
  for $2,000,000 from party related to former principal stockholder of
  Key Com, Inc. who controlled 16.67% of Key Com, Inc. voting common
  stock and who in June 2002 beneficially gained control of approximately
  84% of the Company's total outstanding common shares. (See Note 17)
  Interest at 10% on all advances. Principal and interest is due on
  demand but all outstanding principal and interest must be paid no later
  than January 2, 2003. Lender has the right to convert upon three days
  notice to common shares at 50% of the lowest bid price 30 days prior or
  past to the notes date of October 2001. Draws against the line may be
  limited, denied, or subject to conditions as dictated by the lender at
  the lender's discretion. The revolving line of credit is secured by all
  assets of the Company's subsidiary, Key Com. As of March 31, 2002,
  accrued interest was $24,600.                                                    593,860

                                      F-17
<PAGE>

  Note payable to president, dated February 20, 2002, original principal
  of $80,000, interest at 8%, default rate of 10%, due 30 days after
  demand                                                                            80,000

  Note payable to former officer of Key Com, dated March 10, 2002,
  interest at 10%, unsecured, due on demand                                         28,000

  Note payable to individual related to former officer of Key Com, Inc.,
  dated April 10, 2000, interest at 10%, unsecured, due on demand                   50,000

  Note payable to company affiliated with former controlling stockholders
  of Key Com, Inc. who became majority holders of the Company's Series E
  Preferred Stock, dated, December 7, 2001, January 10, 2002 and March
  10, 2002, interest at 10%, unsecured, due on demand                              382,075

  Note payable to company affiliated with former controlling stockholders
  of Key Com, Inc. who became majority holders of the Company's Series E
  Preferred Stock, non-interest bearing, due on demand                               5,000

  Related party, loan payable, non-interest bearing, due on demand                 177,333
                                                                                -----------

                                                                                $1,324,355
                                                                                ===========

NOTE 8   NOTES PAYABLE
----------------------

Notes payable consists of the following at March 31, 2002:

  Note payable dated March 28, 2000, original principal of $150,000,
  interest at 8% unsecured. Principal and interest due April 27, 2001, in
  default as of March 31, 2002                                                  $  150,000

  Note payable dated March 28, 2000, original principal of $140,000,
  interest at 8% unsecured. Principal and interest due April 27, 2001, in
  default as of March 31, 2002                                                     140,000

  Note payable dated March 28, 2000, original principal of $100,000,
  interest at 8% unsecured. Principal and interest due April 27, 2001, in
  default as of March 31, 2002                                                      36,570

  Note payable, as amended, interest at 15% with interest payments of
  $3,125 due monthly. Secured by 833.33 issued and outstanding common
  shares of Key Com owned by the Company, guaranteed by former president           200,000
  of Key Com. Matures January 31, 2002, in default as of March 31, 2002.

  Note payable, as amended, interest at 15% with interest payments of
  $2,500 due monthly. Secured by 667.67 issued and outstanding common
  shares of Key Com owned by the Company, guaranteed by president of
  Company. Matures January 31, 2002, in default as of March 31, 2002               175,000
                                                                                -----------

                                                                                $  701,570
                                                                                ===========
</TABLE>

                                      F-18
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


NOTE 9   DISCONTINUED OPERATIONS
--------------------------------

On July 18, 2001, (the "Measurement Date"), the Board of Directors committed to
a new business plan which seeks to focus on investments in niche emerging
payment services companies which pursue strategies in electronically delivered
financial services. With the exception of the eCard segment, this Board action
resulted in the effective abandonment of all other segments of business, which
had been in the business of providing small business owners with a range of
Internet-based enterprise solutions.

The net liabilities related to discontinued operations aggregated $1,519,141;
however, they are not presented as of March 31, 2002 as net liabilities of
discontinued operations since they will not be assumed by others pursuant to
Accounting Principals Board Opinion No. 30 regarding discontinued operations.

The Loss from Discontinued Operations reported separately in the Statement of
Operations consists of the loss from normal business activities in fiscal year
2001 as reclassified, and from April 1, 2001 through the Measurement Date. The
Company has selected the abandonment date of September 30, 2001 as the "Disposal
Date" which is just after the acquisition of Key Com, Inc. The Gain on Disposal
consists of disposal activities from the Measurement Date through the Disposal
Date as follows:

<TABLE>
<CAPTION>
                                                                             From July 18,
                                                                            2001 (Inception
                                                                            of Development
                                                                               Stage) to
                                            2002               2001         March 31, 2002
                                       -------------      -------------      -------------
<S>                                    <C>                <C>                <C>
Loss from discontinued operations      $   (414,348)      $(13,130,428)      $         --
Gain on disposal                            511,524                 --            511,524
                                       -------------      -------------      -------------
                                       $     97,176       $(13,130,428)      $    511,524
                                       =============      =============      =============
</TABLE>

The Gain on Disposal in 2002 includes an extraordinary gain of $2,984,507
relating to conversion of promissory notes to common stock. (See Note 11)

Interest expense on debt relating to past operations is included in other
expenses.

NOTE 10  COMMITMENTS AND CONTINGENCIES
--------------------------------------

         (A) LEGAL MATTERS

         In February 2002, the Company received a demand letter from an attorney
         on behalf of his client demanding $335,537 plus interest. Management
         believes the demand relates to certain royalty obligations that may
         have been transferred from certain royalty holders of Key Com, Inc. to
         settle their individual legal matters. The Company believes that any
         royalties that may be due would be less than $5,000. Management has not
         received follow up communications from the plaintiff or their counsel
         since February 2002. No amounts have been accrued on this matter as of
         March 31, 2002.

         On March 27, 2002, the Company's subsidiary, Key Com received a
         judgment against it from a lawsuit with damages totaling $88,000. The
         amount has been accrued as of March 31, 2002.

         On May 24, 2002, a plaintiff filed a complaint in United States
         District Court against the Company alleging wrongful failure to
         register and transfer shares of stock and conversion and requests
         declaratory judgment. The complaint demands $500,000 in damages.
         Management claims it has valid defenses to this claim but is in
         discussions with the plaintiff to potentially settle it. No amounts
         have been accrued on this matter as of March 31, 2002.

                                      F-19
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         A legal firm who provided past services to the Company is owed
         $553,980, which is included in accounts payable. The legal firm claims
         to have a security interest in the Company's assets, however, current
         management is unaware of such security interest and such security
         interest was never disclosed in any filings with the Securities and
         Exchange Commission by prior or current management. The Company is in
         negotiations to settle the matter and based on current correspondence
         with the legal firm believes the settlement will not result in any
         additional liability to the Company.

         (B) OPERATING AGREEMENTS

                  (i) POINT-OF-SALE TERMINAL SYSTEMS

                  The Company entered into an agreement (the "Agreement") with a
                  vendor to purchase, as a distributor, point-of-sale terminal
                  systems (the "systems") at stipulated fixed prices per system
                  plus a transaction based fixed fee for each transaction
                  utilizing the systems. The Agreement continues until
                  terminated by one of the parties as follows: The agreement may
                  be terminated by either party for cause, as defined in the
                  agreement, upon delivery of notice of termination to the other
                  party or without cause upon 180 days prior written notice.
                  That same vendor was also paid by Key Com, Inc. prior to its
                  acquisition to develop a portion of the software used by the
                  Company's terminals to process wire transfers. (See Note 3)

                  (ii) SOFTWARE DEVELOPMENT AND EQUIPMENT AGREEMENT

                  The Company's subsidiary, Key Com, entered into Services and
                  Equipment Agreements (the "Agreement") with a software
                  developer and equipment vendor (the "Developer"), dated April
                  12, 2000 and June 13, 2001 ("Agreement Date") and as amended
                  on February 14, 2002. The Agreements provides for initial and
                  continued development and upgrades to the XTRAN software, and
                  for purchases of stipulated equipment required to operate the
                  software, for its intended use to provide money transfer
                  services to customers. The consideration for the software
                  development and equipment purchases includes stipulated cash
                  amounts and a stipulated fixed fee for each transaction
                  processed by the Company for customers using the XTRAN system.
                  The transaction fees continue if the Agreement is terminated.
                  The Agreement grants the Company an exclusive worldwide
                  license to promote, sell, use, copyright, trademark,
                  hypothecate and otherwise deal with the XTRAN software, all
                  pursuant to the terms of the Agreement and in conformity with
                  industry standards, which exclusive license shall continue
                  after the upgraded version of XTRAN is placed and operating in
                  the market. The term of the license is unlimited but subject
                  to the term and termination provisions of the Agreement as
                  follows: The term begins on the Agreement Date and continues
                  unless there is a material breach by either party. In the
                  event of a material breach, the effected party may cancel the
                  Agreement by providing 30 days written notice. If the
                  Agreement is terminated by the Developer, the Company has the
                  right to continue to employ the XTRAN software and hardware
                  for a period of 180 days from the event of termination. In the
                  event the Agreement is terminated, the Developer may not use,
                  engage, or otherwise hypothecate in any way any version of the
                  XTRAN software. The Company is also granted the option to
                  purchase all aspects and versions of XTRAN including the
                  source code and software together with all intellectual
                  rights, copyright and patents including all international


                                      F-20
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


                  rights and to own all associated hardware. The purchase price
                  of the source code and related property shall be paid in the
                  form of stock options for 700,000 common shares of Key Com
                  Holdings, Inc. granted to the developer, with a price to the
                  developer of $0.01 per share. The option is valid for up to 90
                  days after any termination of the Agreement between the
                  Company and the developer. Under the provision of the
                  Agreement, the Developer has placed the source code with an
                  escrow agent.

                  (iii) INDEPENDENT CONTRACTOR AGREEMENTS

                  In the normal course of business, the Company, under
                  independent contractor agreements, retains independent
                  contractors to place XTRAN terminal in retail locations. The
                  independent contractors are paid a fixed fee per unit placed
                  and a transaction based fee for all transactions processed
                  through terminals placed by the independent contractor. The
                  transaction based fees range from 1% to 5% of the transaction
                  fee charged to the end user customer by the Company or a fixed
                  dollar amount per transaction depending upon the terms of the
                  agreement.

                  (iv) MERCHANT AGREEMENTS

                  In the normal course of business, the Company enters into
                  Merchant License agreements whereby Point-of-Sale Terminal
                  Systems are placed at merchant locations and the merchant is
                  granted a license to use the XTRAN Express Transfer Cash
                  Transmittal System. The merchant receives a per transaction
                  fee for all transactions processed through the placed
                  terminal.

                  (v) PAYOR AGREEMENTS

                  The Company utilizes the services of independent pay stations
                  whereby the recipients of wire transfers may obtain the cash
                  wire to them. The Company contracts with organizations
                  ("Payors") that provide such services. The Payors generally
                  receive a fixed dollar fee per transaction and may also charge
                  a foreign currency conversion fee up to a stipulated
                  percentage of the transactions. As of the date of the
                  accompanying audit report, the Company does not share in any
                  foreign currency conversion fees.

                  (vi) AUTOMATED CLEARING HOUSE AGREEMENT

                  The Company contracts with an automated clearinghouse ("ACH")
                  to process all of its XTRAN transactions. The ACH
                  automatically pays the stipulated fees to the appropriate
                  parties, which being, the merchant, the payor, and the Company
                  on each transaction processed through XTRAN terminals.

                  The Company is required to maintain an escrow balance as a
                  reserve for charge backs with the ACH equal to 30 percent of
                  the highest monthly origination total as defined in the ACH
                  Agreement with a minimum amount of $10,000. The ACH receives a
                  transaction based fixed dollar fee which decreases based on
                  volume of transactions.

                  The agreement is effective June 2000 and continues for 48
                  months with automatic annual renewals. The Agreement may be
                  terminated by either party upon 90 days written notice.

                                      F-21
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


                  (vii) MERCHANT PROCESSING AGREEMENT

                  The Company has contracted with a third party under a one year
                  agreement, renewable in one year terms, whereby that party
                  will provide:

                  (a) bankcard processing and clearance through bankcard
                      companies,
                  (b) the facilitation of appropriate links between the Company
                      and bankcard companies and
                  (c) the payment by the Company to the third party of fees
                      associated with the above services.

         (C) LEASES

         The Company has entered into a lease for its facilities in Boulder,
         Colorado. Under the terms of the lease, the Company leased 6,438 square
         feet for a term of five years beginning October 1, 2001. Obligations
         under the lease are $56,735, $77,916, $80,253, $82,661, and $85,141 in
         years one through five, respectively. Common expenses are estimated to
         be $17,511 per year with provisions for annual adjustments.

         The lease was amended December 19, 2001 to obtain an additional 5,011
         square feet for expanded operations. The total space under lease in
         Boulder, Colorado now totals 11,444 square feet. Obligations for the
         combined space under the amended lease are $111,002; $138,561;
         $142,718; $147,000, and $151,410 in years one through five,
         respectively. Common expenses for the combined space are estimated to
         be $40,811 per year with provisions for annual adjustments.

         Total rent expense for the years ended March 31, 2002 and 2001 was
         $16,866 and $36,580, respectively.

         (D) CONSULTING AND FINANCING AGREEMENTS

         On August 1, 2001, the Company has entered into a Financial Advisor
         Agreement with an investment bank to provide investment banking advice
         and related mergers and acquisition professional services. The
         agreement is for a one-year term and generally provides for fees to be
         paid upon consummation of acquisitions or financings.

         On October 25, 2001, the Company entered into an agreement with a
         merchant bank to arrange one or more debt financings. The agreement
         established a custodial or sub-custodian relationship for the Company.
         The merchant bank is expected to arrange a line of credit provided by a
         syndicate of commercial banks.

         The Company entered into an agreement on November 1, 2001 with a
         consulting group for assistance in market development, strategic
         planning, technological development, and corporate finance. The
         consulting group's primary objective is to assist the Company to raise
         not less than $5,000,000 of capital through the issuance of debt or
         equity securities. The term of the agreement runs from November 1, 2001
         through November 30, 2002. Under the terms of the agreement, the
         Company will pay the consulting group a monthly fee of $20,000. The fee
         will accrue beginning November 1, 2001 but is not payable unless and
         until the closing of a capital raising transaction in which the Company
         receives net proceeds of at least $5,000,000. As of the date of the
         accompanying audit report the minimum funds have not been raised and no
         fees were payable.

                                      F-22
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         On December 17, 2001, the Company retained an investment bank as its
         exclusive financial advisor for investment banking services and
         transaction services for a period of one year. The terms of the
         agreement calls for a payment of $10,000 per month to the investment
         bank as a monthly advisory fee. Additionally, the Company will pay a
         cash fee of 10% of the dollar amount raised by the investment bank for
         the Company plus warrants equal to 10% of the number of shares sold in
         the fundraising process. The Company will pay 10% of the value of any
         transaction, payable in the same form and manner as the consideration
         paid or received by the Company or its shareholders, for any
         transaction with which the Company may be involved in during the term
         of the agreement. As of the date of the accompanying consolidated audit
         report, no funds have been raised and the fees have not been paid to
         the investment bank.

         On December 31, 2001, the Company and an entity controlled by the CEO
         of the Company, executed an assignment of the entity's Agreement to
         acquire a 90% interest in a life insurance company. The Agreement
         provides for the terms and conditions of the acquisition, including all
         detailed information on purchase price, contingent payments,
         investments into the company, and other material terms and pre-closing
         confidentiality provisions. As of the date of the accompanying
         consolidated audit report, the acquired acquisition agreement has not
         been consummated.

         The Company entered into an agreement with a consulting group on
         January 15, 2002 for consulting services regarding all matters
         involving state and interstate licensing, all aspects of regulation as
         applied to the cash remittance industry including maintenance of
         licenses, compliance with the Bank Secrecy Act, compliance with
         Internal Revenue notice requirements, and all matters involving
         regulation and compliance in foreign jurisdictions. For such services,
         the consulting group will be paid $100,000 as an advance against 1.5%
         of all remittance fees derived from XTRAN transactions from terminals
         situated in all jurisdictions which operate under license authority
         derived from the Company's status as a client of the consulting group
         under the contract. The term of the agreement is five years.

         (E) ROYALTY COMMITMENT AND STOCK OPTION CONTINGENCY

         Prior to its acquisition by the Company, Key Com, Inc. had issued
         financial instruments to investors for aggregate cash of $3,154,410,
         net of offering costs. The instruments were classified as preferred
         contributed capital in Key Com, Inc. These instruments, entitled
         "Transaction Debt Certificates," were classified as capital rather than
         liabilities since the instruments promised a residual royalty benefit
         into perpetuity based on a stipulated percentage of transaction fees
         generated on the first 10,000 point-of-sale systems placed at merchant
         locations. If no revenues are generated, then no royalties or payments
         are due and the investment does not have to be repaid. The Company is
         committed under these instruments to pay future royalties based on the
         future revenue stream. Royalty expense through March 31, 2002 was not
         material.

         The instruments granted stock options to purchase common shares of Key
         Com, Inc. stock contingent upon the filing of a registration statement
         by Key Com, Inc. with the Securities and Exchange Commission, (the
         "Contingency"). The quantity of Key Com shares that could be purchased
         with the options are derived from the residual royalty benefits due to
         each investor based on a formula stipulated in the instruments. The
         options were not cancelled in the acquisition agreement between the
         Company and Key Com, Inc., however; management believes that the
         Contingency will never be satisfied as Key Com, Inc. is now a
         subsidiary of the Company and Management does not intend to file a
         separate registration statement for Key Com, Inc.

                                      F-23
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (F) ACQUISITION AGREEMENTS

         The Company entered into various letters of intent and acquisition
         agreements previously disclosed which have not been consummated as of
         March 31, 2002 or as of the date of the accompanying audit report as
         follows:

         On December 28, 2001, the Company entered into an Asset and Membership
         Purchase Agreement with Junum Incorporated (Junum) to acquire 100% of
         the outstanding capital stock of NextTech Card Services, Inc.
         (NextTech), a California corporation plus 1,200,000 months of Junum's
         Credit Management Service in exchange for 8,333,333 shares of the
         Company's restricted common stock valued at $5,000,000. Both parties
         agreed to allocate the purchase price as $200,000 for NextTech shares
         and $4,800,000 for the Junum memberships.

         Pursuant to the Asset and Purchase Agreement, the transaction is
         conditional based upon the delivery of a valid and enforceable issuing
         agreement with a third party bank. The bank has not supplied the
         Company with a written confirmation, citing certain management
         transition issues. Therefore, the consideration for the transaction has
         not been delivered to the sellers and the acquisition will not be
         recorded until such time as the conditions are fully met.

         On February 4, 2002, the Company signed a definitive letter of intent
         to acquire CashXpress, a provider of consumer cash advances. As of the
         date of the accompanying consolidated audit report, no definitive
         agreement has been entered into.

         On October 12, 2001, the Company signed a binding Letter of Intent to
         acquire a venture partner of Key Com that owns and operates a
         proprietary network of point-of-sale terminals distributed nationally
         and internationally. The Letter of Intent sets forth the terms and
         conditions of the acquisition, including all detailed information on
         purchase price, contingent payments, investments into the company, and
         other material terms, as well as provides for no-shop provisions as to
         the sellers, break-up fee penalty payments and pre-closing
         confidentiality provisions. Management originally anticipated the
         transaction would close in November 2001; however as part of its due
         diligence review, management and the rules and regulations under the
         Securities and Exchange Commission requires an audit of the financial
         statement of the seller which has not been completed as of the date of
         the accompanying consolidated audit report. Without the audit, there
         would be material economic harm to Emergent if the transaction were
         completed. The Company is currently reviewing its available remedies
         under the letter of intent.

         On December 31, 2001, the Company and Crosstar Surety LLC, an entity
         controlled by the CEO of Emergent, executed an assignment of Crosstar's
         Agreement to acquire a 90% interest in a life insurance company.
         Management believes the controlling interest in the life insurance
         company may enhance the Company's non-bank financial service menu of
         products as well as assist in meeting state licensing requirements for
         Money Service Businesses.

NOTE 11  STOCKHOLDERS' DEFICIENCY
---------------------------------

         (A) FORWARD AND REVERSE STOCK SPLITS

         On each date of July 18, 2001 and August 22, 2001, the Board authorized
         a 1 for 30 reverse stock split of the Company's common stock. On
         October 22, 2001, the Board authorized a 5 for 1 forward stock split of
         the Company's common stock. Subsequent to the March 31, 2002 fiscal
         year end, on June 14, 2002 the Company affected a 1 for 70 reverse


                                      F-24
<PAGE>


                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         stock split. All share and per share data, and data on common stock
         equivalents, as applicable, reflect all forward and reverse stock
         splits retroactively in the accompanying consolidated financial
         statements for all periods presented.

         Concurrent with the 1 for 70 reverse stock split on June 14, 2002, the
         Company issued 11,000,000 restricted common shares upon conversion of
         all of the 250,000 Series E preferred shares. (See Note 17)

         (B) PREFERRED STOCK SERIES A

         In July 2000, the Company filed a certificate of designation for
         Preferred Stock Series A, which was issued in November 1999. At that
         time the certificate provided for conversion to common stock at a 2 for
         1 ratio, 2 votes for each preferred share, a liquidation preference
         valued at $0.7756 per share plus a preferred liquidation preference
         amount of a 10% simple accrual on the $0.7756 ("Liquidation Value") and
         6.5% cumulative dividends on the liquidation value.

         On August 23, 2000 the Company and the holders of the Series A
         Preferred Stock agreed to amend the certificate of designations to
         eliminate the cumulative dividends and add a provision whereby the
         preferred stock would be convertible to common stock at the greater of
         a 2 for 1 ratio or 20% of the common stock on a fully diluted basis.

         On August 1, 2001, the Company again amended the certificate of
         designations including changing the conversion rights to the greater of
         1.65 to 1 or 19.99% of the total common stock outstanding on a fully
         diluted basis with voting rights based on the greater of 2 votes per
         preferred shares or the numbers of common shares that the preferred is
         convertible to at any time considering the new conversion terms, and
         making the preferred stock redeemable at the Liquidation Value on or
         after December 31, 2005 or earlier if a default occurs, as defined in
         the certificate. A board resolution clarifies the voting rights noting
         the Series A stockholder will have minimum voting rights of 39.98%. The
         amendment also requires a 75-day notice period prior to conversion. The
         preferred stock Series A holders also agreed to pay consideration of
         $100,000 cash and were issued 214,285 common shares as part of the
         overall, transaction.

         The value of the preferred stock had originally been recorded as it
         original liquidation value of $0.7756 per share or an aggregate
         $6,592,494. The above transactions have been collapsed into one
         transaction for accounting purposes. The maximum liquidation value of
         $7,746,305 (as escalated per the 10% accrual discussed above) as of
         March 31, 2002 has been reclassified to temporary equity, between
         liabilities and equity, due to the redemption feature and the increase
         of $1,153,811 was charged to the accumulated deficit as a constructive
         dividend to the Series A preferred stockholders. The liquidation and
         redemption value increases by $54,938 per month under the 10% formula
         discussed above. The liquidation preference is subordinate to the
         Series E preferred stock discussed below.

         (C) PREFERRED STOCK SERIES C

         On October 8, 2000, the Board authorized the creation of Series C
         preferred shares. As of March 31, 2002, no class C preferred shares
         have been issued.

                                      F-25
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         (D) PREFERRED STOCK SERIES D

         On September 22, 2000, the Company created and issued 1,300 Series D
         Preferred Shares with a stated value of $1,000 each, which are
         generally non-voting and not entitled to dividends, for $500,000 cash
         plus the return of 23 then outstanding Common Shares of the Company.
         The Series D Preferred Shares are convertible at any time, in an amount
         equal to the stated value of the Series D Preferred Shares together
         with an Additional Amount calculated on a daily basis at a rate of 4.5%
         per annum, into Common Shares of the Company based on a value of 80% of
         the then current market value of the Company's Common Shares, to a
         maximum of $18,900 per Common Share. At any time after the first
         anniversary of their issuance, the Company may redeem each Class D
         Preferred Share at a price equal to the greater of $1,400 plus the
         Additional Amount and the market price of the Common Shares into which
         such Class Preferred Share could then be converted. On September 23,
         2003, the Company must, at its option, either mandatorily redeem or
         convert the Series D. However, in aggregate, the Series D holder may
         not receive from this or prior conversions greater than 20% of the
         total outstanding common stock of the Company. Any excess shall be paid
         to the Series D holder in cash. The Series D ranks senior to Series A,
         B, and C, and subordinate to Series E for liquidation preference. (See
         Note 17 for partial subsequent conversion)

         (E) PREFERRED STOCK SERIES E

         On September 26, 2001, as part of the Key Com, Inc. acquisition price,
         the Company issued 250,000 of the Company's Senior Series E Non-Voting
         Secured Preferred Stock ("Series E") with a stated value of $100 per
         share. The Series E Preferred Stock is not transferable until September
         26, 2003. The Series E has a liquidation preference equal to the stated
         value or an aggregate $25,000,000, ranks senior to any class or series
         of common or preferred stock does not pay dividends and is secured by
         100% of the Key Com Holdings, Inc. stock owned by the Company.

         Commencing January 1, 2003, the shares of Series E Preferred Stock may
         be converted into Common shares of the Company, equal to the Stated
         Value plus an additional amount, as defined, (`the "Conversion Price"),
         divided by the Market Price, provided, however, that in no event shall
         the Conversion Price be greater than $21.00 per share of Common Stock
         (the Maximum Conversion Price). The Conversion Price and the number of
         Common Shares into which the Series E Preferred Stock shall be
         convertible shall be adjusted for stock splits, combinations, or other
         similar events. Series E Preferred Stock holders shall be required to
         convert if the common stock into which it is to convert has a market
         value equal to 200% of the stated value of the Series E Preferred
         Stock, however, such conversion is limited to 20% of the outstanding
         common stock at the conversion date, unless shareholder approval is
         obtained. In the absence of shareholder approval, an excess issuable
         over the 20% would be redeemable in cash at the stated value of the
         Series E preferred stock.

         Commencing January 1, 2002 and continuing for three subsequent
         quarters, the holders of the Series E have the unconditional right to
         put $1,000,000 of stated value of stock per calendar quarter to the
         company for purchase. The Company has an unconditional right to call
         such stock in the same amount and on the same schedule. The Company has
         the right to also designate any third party as the counter-party to the
         put rights. The Company also has the right to assign its call rights to
         any third party without consent of the preferred holders. On or anytime
         before January 1, 2003, the Company has the right to call the remaining
         Series E outstanding. If the Company does not call the Series E by
         January 1, 2003, the holders may continue to put $1,000,000 of stated
         value of Series E per calendar quarter to the company for purchase
         until the entire remaining 210,000 Series E shares have been put back
         to the Company for an aggregate $21,000,000. This right is also


                                      F-26
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         transferable to a third party designee, or designees, in whole or in
         part, as determined in the sole discretion of the Company; however,
         such transfer shall not serve to relieve the company of its
         liabilities. As of March 31, 2002, the put option had not been
         exercised. Accordingly, pursuant to the Emerging Issues Task Force
         Issue No 00-19 ("EIFT 00-19"), the preferred shares have been
         classified in the balance sheet as temporary equity, between
         liabilities and equity, at the maximum redemption value of $25,000,000
         as of March 31, 2002.

         On February 15, 2002 the Company and the Holders of the Series E shares
         entered into a Rescheduling of Redemption Rights Redemption Agreement
         (the "Rescheduling Agreement"). The schedule require the Company to pay
         $12,500 weekly to one of the Series A holders commencing February 15,
         2002 which may be paid in cash or free trading stock by a creditor who
         is a common stockholder of the Company in exchange for 125 of the
         Series E shares for each weekly payment. The initial date of exercise
         of the put option for $1,000,000 per quarter was amended to June 30,
         2002 and continuing each quarter for $1,000,000 per quarter with a
         final balloon payment of $21,000,000 due June 1, 2003 in exchange for
         the remaining preferred Series E shares. The Rescheduling Agreement
         also allows for accelerated redemption based on a formula tied to the
         amount of capital raised by the Company. If the Company does not raise
         at least $2,000,000 by June 30, 2002 at the option of 50% of the
         preferred Series E stockholders, they may take back 100% of the Key
         Com, Inc. stock.

         In June 2002, under a settlement, the Series A shares were ultimately
         converted to 11,000,000 common shares. (See Note 17)

         (F) COMMON STOCK AND WARRANT ISSUANCES

         On June 11, 2001, the Company sold 150 units to Xtelligence, Inc. for
         consideration of $150,000, consisting of 71,429 commons shares at $2.10
         per share and warrants. The warrants entitle the holder to purchase,
         for a term of (5) years, an aggregate of 71,429 shares of common stock
         at an exercise price equal to $2.10 per share. The warrants carry a
         90-day reset provision in respect to recapitalizations or reverse
         splits. This investor became a related party after the conversion of
         the Series E Preferred stock. (See Note 17)

         On July 31, 2001 Thesseus International Asset Fund, an entity which is
         a related party since a director and the CEO of the Company has
         beneficial ownership, executed a Subscription Agreement with the
         Company to purchase up to 650 units for a purchase price of $1,000 per
         unit or $2.10 per common share. Each unit consists of 476 shares of the
         Company's common stock and a five-year warrant to purchase up to 476
         shares of the Company's common stock at an exercise price equal to
         $2.10 per share. The units and warrants carry a 90-day reset provision
         in respect to recapitalizations or reverse splits. Funds received on
         July 31, September 10 and September 20, were $400,000, $30,000 and
         $220,000, respectively. The proceeds were used for the acquisition of
         Key Com, Inc. A total of 309,523 warrants were issued pursuant to this
         subscription.

         On August 7, 2001, the Company sold an aggregate of 50 units, for a
         purchase price of $1,000 per unit, to Heritage West Holdings. Each unit
         consists of 476 shares of the Company's common stock, and a five-year
         warrant to purchase up to 142 shares of the Company's Common Stock at
         an exercise price equal to $2.10 per share. The Units and warrants
         carry a 90-day reset provision in respect to recapitalizations or stock
         splits. The proceeds of the subscription were disbursed directly to a
         supplier of the Company. A total of 7,142 warrants were issued pursuant
         to this subscription.

                                      F-27
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         On August 7, 2001, 214,286 common shares were issued in exchange for a
         modification of the terms of the Series A Preferred Shares. (See Note
         11(B))

         On August 28, 2001, a creditor elected to convert $350,000, plus all
         accrued interest into 166,667 common shares. The stock was valued at
         the contemporaneous sale price of $2.10 per share resulting in a no
         gain or loss on the transaction. This creditor became a related party
         after the conversion of the Series E Preferred stock. (See Note 17)

         On August 28, 2001, the holders of the Series B preferred shares
         converted those shares and $99,333 of accrued dividends to 373,838
         common shares and were issued 385,714 warrants as an inducement to
         convert. The warrants are exercisable at $3.50 and expire in June 30,
         2006. (See Note 11(I))

         On August 28, 2001, an officer elected to convert $101,000 of notes
         into 48,095 common shares valued at the contemporaneous offering price
         of $2.10 per share.

         On September 26, 2001, the Company issued 71,429 common shares as a
         consulting fee relating to the Key Com, Inc. acquisition. The shares
         were valued at the contemporaneous offering price of $2.10 per share
         resulting in a total value of $150,000 which was included as part of
         the purchase price.

         As of November 30, 2001, a creditor converted $4,149,725 of notes and
         accrued interest into 332,919 common shares. In order to induce the
         creditor to convert, the Company issued warrants to purchase up to an
         aggregate of 328,571 shares of the Company's common stock at $3.50 at
         any time prior to June 30, 2006. (See Note 11(I)) Since there were no
         shares traded on the conversion date and the shares were thinly traded
         around the conversion date, the common shares issued were valued at the
         highest bid price on the conversion date of $3.50 resulting in a gain
         on extinguishment of debt of $2,984,507, which is included in gain from
         disposal of discontinued operations.

         (G) COMMON STOCK, CLASS 144A

         In October 2001, the Company authorized and issued 150,000,000 Class
         144A common shares into a reserve account in the Company's name as
         collateral on a proposed financing transaction with a third party. As
         the financing did not occur, the shares were cancelled in April 2002.
         As the shares were held for the benefit of the Company, they are
         considered issued but not outstanding as of March 31, 2002 and are not
         included in the computation of loss per share for any period in the
         accompanying consolidated financial statements.

         (H) STOCK OPTION PLAN

         During fiscal 2000, the 1999 Stock Option Plan (the "Plan") was
         approved by the stockholders and 833 options were granted to certain
         officers and directors with a computed expense under APB 25 of
         $50,745,000. This amount was not recorded since on July 18, 2001, the
         Board of Directors voted unanimously to rescind the 1999 company stock
         option plan and the 833 options. (See Note 11(I))

         (I) WARRANTS AND NON-EMPLOYEE OPTIONS

         The Company has issued options to an unrelated party, which is not
         covered by the 1999 Stock Option Plan, for consideration of $150,000.
         These options were granted on January 24, 2000, are for 39 common
         shares, have an exercise price of $88,200 per share, and are
         exercisable for two years from the date of grant. The options expired
         in January 2002.

                                      F-28
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         On February 4, 2000, the Company signed an Investment Banking
         Agreement. Pursuant to this agreement, the Company issued, on February
         8, 2000, a warrant to purchase 1 common share at $151,200 per share.
         The agreement also stipulated the issuance of three additional tranches
         as follows:

         1.       1 warrant exercisable at $176,400, to be issued immediately
                  after the first day that the Company's Common Stock closes at
                  or above $750; and
         2.       1 warrant exercisable at $201,600, to be issued immediately
                  after the first day that the Company's Common Stock closes at
                  or above $1,050; and
         3.       1 warrant exercisable at $226,800, to be issued immediately
                  after the first day that the Company's Common Stock closes at
                  or above $1,350.

         The latter three warrants were never issued.

         All of the warrants covered by this agreement are no longer exercisable
         after November 1, 2003.

         On May 12, 2000, in consideration for obtaining a listing on the
         Frankfurt Stock Exchange and for ongoing long-term market making
         sponsorship services, the Company issued Berliner Reiverkehr warrants
         to purchase 16 shares of its Common Stock, with an exercise price of
         $88,200 per share, for a two-year term commencing on May 12, 2000.

         On May 16, 2000, the Company appointed Sabre Communications, Inc. as a
         management advisor with responsibility for investor relations, and
         issued them 16 cashless warrants bearing a strike price of $50,400 per
         share exercisable for two years after November 15, 2000.

         On May 22, 2000, the Company engaged Quadrant Investment Bankers, Inc.
         as financial advisor and placement agent and issued them warrants to
         purchase 8 shares at $50,400 per share, exercisable for two years after
         November 22, 2000.

         As discussed in Note 11(F) above, in August 2001 the Company granted
         warrants to purchase an aggregate 714,285 shares of common stock at an
         exercise price of $3.50 per share as an inducement for certain debt
         holders and preferred stock holders to convert to common stock. In
         accordance with SFAS 123, the Company recognized an inducement expense
         of $2,300,386, which is included in the 2002 gain on disposal.

         For financial statement disclosure purposes and for purposes of valuing
         common stock warrants issued to debt holders and preferred stock
         holders as an inducement to convert, the fair market value of each
         stock option granted was estimated on the date of grant using the
         Black-Scholes Option-Pricing Model in accordance with SFAS 123 using
         the following weighted-average assumptions in 2002: expected dividend
         yield 0%, risk-free interest rate of 4.04%, volatility 199% and
         expected term of three years.

         A summary of the warrants issued for cash, under consulting agreements
         or as an inducement to convert debt and preferred stock as of March 31,
         2002 and 2001 and changes during the years is presented below:

                                      F-29
<PAGE>
<TABLE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------
<CAPTION>
                                                              2002                                  2001
                                                  --------------------------------    ---------------------------------
                                                    Number of          Weighted                             Weighted
                                                                        Average         Number of           Average
                                                     Warrants       Exercise Price      Warrants         Exercise Price
                                                  ---------------   --------------    ------------     ----------------
         <S>                                          <C>          <C>                      <C>        <C>
         Stock Options
         -------------
         Balance at beginning of period                      80    $  77,647.50              913       $      5,292
         Granted                                      1,102,378    $       3.01                -       $          -
         Exercised                                            -    $       -                   -       $          -
         Forfeited                                          (39)   $  88,200                (833)      $      5,292
                                                  ---------------  ---------------    ------------     ---------------
         Balance at end of period                     1,102,419    $    5.52                  80       $     77,647.50
                                                  ===============  ===============    ============     ===============

         Options exercisable at end of period         1,102,419    $    5.52                   -       $          -
                                                  ===============  ===============    ============     ===============
         Weighted average fair value of
           warrants granted for services or as
           inducement during the period                            $    3.22                           $     60,918
                                                                   ===============                     ===============
</TABLE>

         The following table summarizes information warrants outstanding at
         March 31, 2002:
<TABLE>
<CAPTION>
                            Warrants Outstanding                                      Warrants Exercisable
        --------------------------------------------------------------------    ----------------------------------

                            Weighted            Average          Weighted                              Weighted
         Range of            Number            Remaining          Average            Number             Average
         Exercise        Outstanding at       Contractual        Exercise        Exercisable at        Exercise
           Price         March 31, 2002           Life             Price         March 31, 2002          Price
        ------------    ------------------    -------------     ------------    ------------------    ------------
        <S>                     <C>             <C>             <C>                     <C>           <C>
        $      2.10                 7,142       4.36 Years      $      2.10                 7,142     $      2.10
               2.10               309,523       4.34 Years             2.10               309,523            2.10
               3.50               714,285       4.25 Years             3.50               714,285            3.50
               2.10                71,428       4.20 Years             2.10                71,428            2.10
            151,200                     1       1.59 Years          151,200                     1         151,200
             50,400                     8       0.65 Years           50,400                     8          50,400
             50,400                    16       0.63 Years           50,400                    16          50,400
             88,200                    16       0.12 Years           88,200                    16          88,200
                        ------------------                      ------------    ------------------    ------------
                                1,102,419                       $      5.06             1,102,419     $      5.06
                        ==================                      ============    ==================    ============
</TABLE>

NOTE 12  RELATED PARTY BALANCES AND TRANSACTIONS
------------------------------------------------

The Company was charged $205,644 in fiscal 2001 in administration fees by
Thesseus Services Ltd., a wholly owned subsidiary of a related party.

The CEO of the Company is a 25% beneficiary of a family trust that beneficially
controls approximately 19.6% of the common shares of the Company as of March 31,
2002. After the recapitalization resulting from the conversion of Series E


                                      F-30
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


preferred stock in June 2002, this trust beneficially controlled approximately
2.5% of the common shares of the Company. The trust also beneficially controlled
the Series A Preferred Shares. (See Note 17)

On December 31, 2001, the Company and an entity controlled by the CEO of the
Company executed an assignment of the entity's agreement to acquire a 90%
interest in a life insurance company. (See Note 10(D))

The controlling member of an entity that owned the Series B Preferred shares
immediately prior to the conversion is the brother of the CEO of the Company.

There were various loans and notes payable to related parties at March 31, 2002.
(See Notes 7 and 9)

NOTE 13  EQUITY LOSSES
----------------------

eCard incurred losses of $5,609,323 for the twelve months ended December 31,
2000 and 2001, including a write-down of its investment in Junum Series C
Preferred Stock of $5,099,490. This amount, along with amortization of the
excess of cost over net assets acquired for the twelve months of $103,787 is
reflected in equity losses in the consolidated statements of operations for
fiscal 2001. As the investment has been written down to zero, there are no
equity method losses recognized in 2002.

InfoBase incurred losses of $113,741 for the period up to which the Company
wrote off the investment in InfoBase. This amount, along with amortization of
the excess of cost over net assets acquired for the twelve months of $27,584,
was reflected in equity losses in the consolidated statements of operations in
fiscal 2001, but has been reclassified to loss from discontinued operations to
conform to the 2002 presentation.

Certain directors of the Company also serve as directors of eCard, an equity
method investee. (See Note 4)

NOTE 14  INCOME TAXES
---------------------

There was no income tax expense for the years ended March 31, 2002 and 2001 due
to the Company's net losses.

The Company's tax expense differs from the "expected" tax expense for the years
ended March 31, 2002 and 2001, (computed by applying the Federal Corporate tax
rate of 34% to loss before taxes), as follows:

                                                  2002                2001
                                             ---------------     ---------------
Computed "expected" tax expense (benefit)    $  (9,382,868)      $  (6,808,337)
Non-deductible stock issued for services            51,000                -
Other non-deductible items                            -              2,343,337
Change in valuation allowance                   (9,331,868)         (4,465,000)
                                             ---------------     ---------------
                                             $        -          $        -
                                             ===============     ===============

The effects of temporary differences that gave rise to significant portions of
deferred tax assets and liabilities at March 31, 2002 are as follows:

Deferred tax assets:
Net operating loss carryforward                            $    5,080,901
Amortization of software rights and systems                     8,228,836
Warrants issued as and inducement to convert                      782,131
                                                           ----------------
Total gross deferred tax assets                            $   14,091,868
Less valuation allowance                                      (14,091,868)
                                                           ----------------
Net deferred tax assets                                    $         -
                                                           ================

                                      F-31
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


The Company has a net operating loss carryforward of approximately $14,943,827
available to offset future taxable income through 2022. This net operating loss,
however, may be significantly limited under Section 382 of the Internal Revenue
Code due to a significant ownership change, which occurred in June 2002. In
addition, if it is determined that the Company does not meet the Continuity of
Business requirements under Section 382 due to the change in Business Strategy
which occurred in July 2001 or for any other reason, the net operating loss
usage could be eliminated in its entirety.

The estimated valuation allowance at March 31, 2002 was $4,760,000. The net
change in valuation allowance during the year ended March 31, 2002 was an
increase of $9,331,868.

NOTE 15 SEGMENT INFORMATION
---------------------------

The Company applies Statement of Financial Accounting No. 131 "Disclosures about
Segments of an Enterprise and Related Information." The Company currently
operates in one segment. All revenues in 2002 and 2001 were derived from
transactions initiated in the United States of America.

NOTE 16 CONCENTRATIONS
----------------------

The Company purchases its point-of-sale terminals from one vendor. The XTRAN
software is designed for use with these terminals through a software component
that integrates the XTRAN software specifically with these terminals.
(See Note 10)

The Company's XTRAN software is developed by one third party vendor who
currently owns the source code and licenses the XTRAN software to the Company.

As of the date of the accompanying audit report, the Company has one source of
available financing, that being the $2,000,000 revolving line of credit with a
related party. (See Note 7)

NOTE 17 SUBSEQUENT EVENTS
-------------------------

         (A) CONVERSION OF SERIES D PREFERRED STOCK TO COMMON STOCK

         During March 2002 and June 2002, the Series D preferred stock holders
         converted 50 shares and 25 shares into 5,161 and 10,630 common shares,
         respectively.

         (B) SETTLEMENT, CONVERSION OF SERIES E PREFERRED STOCK TO COMMON STOCK,
             XTRAN COLLATERAL AND CONSULTING AGREEMENT

         On May 31, 2002 (the "Settlement Date"), under a settlement with the
         Preferred Series E stockholders (the "Series E Holders"), the Company
         and the Series E Holders signed a mutual release. A minority Series E
         stockholder (the "Minority Holder") purchased all the Series E shares
         from the other Series E stockholders (the "Majority Holders") in return
         for assigning a portion of his Amended and Restated Royalty Interest to
         the Majority Holders. The minority stockholder obtained that Amended
         and Restated Royalty Interest from the Company on the Settlement Date.
         The Amended and Restated Royalty Interest provides for an overriding
         royalty for each and every transaction charged through the XTRAN system
         equal to 5% of the gross revenues derived from such transaction subject
         to a $0.25 per transaction minimum. The portion assigned includes the
         entire royalty amount until the aggregate sum of royalty payments made
         under the assignment equals $8,300,000.

                                      F-32
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         As part of the above transaction, the Company entered into a security
         agreement to secure the stipulated obligations and the various parties
         in this series of transactions. The collateral is defined, as all
         rights to the software know as XTRAN in whatever conditions previously
         developed or any versions developed here from forward (see Note 6). The
         collateral may be foreclosed on in an event of default. Events of
         default include; a) default in payments or performance of the Company's
         obligations b) levy or proceedings against the collateral, except in
         cases where parties may assert a claim based on agreements entered into
         prior to the Company's purchase of Key Com, Inc. c) commencement of
         bankruptcy, insolvency, arrangement, reorganization or other debtor
         relief proceedings by or against dissolution, termination of existence
         or insolvency of the Company, d) material misrepresentation by the
         Company or e) failure to produce two thousand (2,000) transactions per
         month by the end of six months from the May 31, 2002 agreement date.

         As part of the above transactions, the Company retained an ex-officer
         of Key Com, Inc. (the "Consultant") as a consultant to assist in
         developing money transfer volume on it XTRAN system whether by joint
         venture, license, or purchase. The term of the consulting agreement
         commences June 1, 2002 and terminates in four years or when the
         $8,300,000 royalty is fully paid, whichever occurs first. Compensation
         under the consulting agreement (the "Consulting Fees") is in addition
         to the above royalty amounts and includes 5% of the gross revenues
         derived from all transaction fees charged through the XTRAN system
         subject to a $0.25 per transaction minimum for any relationship
         referred to the Company in writing from the consultant. The Company
         shall pay the consultant a minimum amount of $12,500 per month as an
         advance against the consulting fees beginning September 1, 2002. The
         consulting agreement may only be terminated for cause, as defined in
         the consulting agreement.

         The Series A preferred shares were then converted on June 19, 2002 to
         11,000,000 common shares of the Company. Accordingly, the $25,000,000
         temporary equity reflected as redeemable Series E Preferred Stock was
         reclassified back to permanent equity as common stock at par value and
         additional paid-in capital.

         (C) COMMON STOCK ISSUANCES

         In May 2002, the Company granted 45,572 common shares for services
         valued at approximately $446,000 based on the trading price on the
         grant date. The $446,000 will be recognized as an expense on the grant
         date. In May 2002, the Company issued 19,029 common shares as an
         advance payment for future legal services. The value of such shares,
         based on the trading price on the grant date, will be recorded as
         deferred legal fees deducted from equity.

         In June 2002, the Company issued 112,500 common shares, warrants to
         purchase 90,000 common shares at $3.00 per share, and warrants to
         purchase 90,000 common shares at $4.00 per share, exercisable for 5
         years. The aggregate purchase price was $100,000 or $0.89 per common
         share including the warrants. The Company may, at its option and at any
         time, redeem up to 50% of unexercised warrants, for $0.01 per share, if
         the closing trading price of the common stock is at least 175% of the
         warrant exercise price for 20 consecutive days.

                                      F-33
<PAGE>

                    EGX FUNDS TRANSFER, INC. AND SUBSIDIARIES
             (F/K/A EMERGENT FINANCIAL GROUP, INC. AND SUBSIDIARIES)
                          (A DEVELOPMENT STAGE COMPANY)
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 2002
                                 --------------


         In July 2002, the Company issued 310,000 units each unit consisting of
         1 share of common stock, a warrant to purchase 1 share of common stock
         at $3.00 per share and a warrant to purchase 1 share of common stock at
         $4.00 per share. The aggregate purchase price was $200,000 or
         approximately $0.65 per unit.

         (D) LINE OF CREDIT DRAWS

         Additional draws against the line of credit from April 1, 2002 to the
         date of the accompanying audit report were approximately $150,000.

         (E) NAME CHANGE

         In June 2002, the Company changed its name to EGX Funds Transfer, Inc
         from Emergent Financial Group, Inc.

         (F) NEW SUBSIDIARY

         In June 2002, the Company formed a new subsidiary, e-Merchant
         Processing, Inc. to focus on processing capabilities of the Company to
         process a wide array of electronic financial transactions for the
         Company or for third party clients.


                                      F-34
<PAGE>

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

         Effective January 11, 2000, KPMG LLP was engaged as the auditors of the
Company and completed such audits for the fiscal year ending March 31, 2000 and
March 31, 2001. There were no disagreements on any matter of accounting
principles or practices, financial statement presentation or disclosure, or
auditing scope or procedures with the Company's prior accountants, Barry
Friedman, P.C. The independent accountants' reports issued by KPMG on the
Company's financial statements for the past two years did not contain an adverse
opinion, disclaimer of opinion nor was it qualified or modified as to
uncertainty, audit scope or accounting principles. The decision to change
auditors was approved by the Company's Board of Directors.

         On April 3, 2002, the Company selected Salberg & Company, P.A., as the
auditors of the Company's financial statements, to audit the consolidated
financial statements of the Company for the fiscal year ended March 31, 2002.
The decision to change auditors was approved by the Board of Directors.

         During the two most recent fiscal years, and any subsequent interim
period prior to the date hereof, the Company believes that there were no
disagreements with KPMG on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of KPMG would have caused
them to make reference to the subject matter of the disagreements in connection
with their report. KPMG's report on the financial statements of the Company for
each of the past two fiscal years did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty, audit
scope or accounting principles. KPMG's report for the fiscal year ended March
31, 2001 contained a going concern qualification.

         During the two most recent fiscal years the Company believes that there
was no disagreement or difference of opinion with KPMG regarding any "reportable
event" as that term is defined in Item 304(a)(1)(v) of Regulation S-K, except as
to the interim three month period ending December 31, 2001, which KPMG has
indicated was not reviewed primarily as a result of a disagreement over
outstanding invoices. The Company disagrees with KPMG and believed to have
followed the same procedure as in prior periods. The Company has attached hereto
as Exhibit 99.1 a letter from KPMG concerning the matter. The Company engaged
its current auditors to perform a review of the quarterly results in addition to
auditing the entire period ending March 31, 2002.

         During the two most recent fiscal years and through the date hereof,
the Company (or anyone on the Company's behalf) did not consult Salberg & Co. in
connection with the Company's financial statements regarding either the
application of accounting principles to a specified transaction, either
completed or proposed, or the type of audit opinion that might be rendered on
the Company's financial statements or any matter that was the subject of any
reportable event as described above.


                                       50
<PAGE>

                                    PART III

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

         The Company's Amended and Restated Bylaws currently provide that the
Board shall consist of not less than one nor more than nine directors and that
within these limits the number of directors shall be as established by the
Board. The Board has set the number of directors at eight. The Company's Amended
and Restated Certificate of Incorporation provides that the Board of Directors
shall be divided into three classes, having staggered terms of office, which are
as equal in number as possible. The Company's Board of Directors was divided
into three classes as required by the Amended and Restated Certificate of
Incorporation. At the Annual Meeting, director nominees will be elected to serve
for terms of one, two or three years depending upon the class in which each
director serves or until their successors are elected and qualified.

         The initial directors of Class I, Michael Bodnar and Leighton A. Bloom,
have been nominated to serve for terms of one year or until the 2001 Annual
Meeting of Stockholders. As of August 9, 2001, Mr. Bodnar had resigned, and his
successor had not been appointed, while Mr. Bloom continues to serve as a
director. The initial directors of Class II, George C. Pilallis, Kevin L.
Washington and Dr. Rory F. Knight, have been nominated to serve for terms of two
years or until the 2002 Annual Meeting of Stockholders. As of August 9, 2001,
Mssrs. Pilallis and Rory Knight had resigned, and their successors had not been
appointed. The initial directors of Class III, Harry J. Weitzel, Jason W.
Galanis and Nicholas Wise, have been nominated to serve for a term of three
years or until the 2003 Annual Meeting of Stockholders. As of August 9, 2001,
Mr. Weitzel had resigned, and his successor has not been appointed. Accordingly,
there are currently four vacancies on the board of directors, which can be
filled by majority vote of the remaining directors without shareholder action.
As of July 10, 2002, three additional director had been elected, the directors
being Charlie Samel, Max Lucas and Russ Cheetham. Mr. Galanis was elected to
serve as Chairman beginning on July 19, 2001. At each Annual Meeting of
Stockholders following the 2000 Annual Meeting, elections shall be held to elect
directors, whose term has expired, for a term of three years and after the
expiration of such term, shall thereafter be elected every three years for a
three-year term. The Company's Amended and Restated Articles of Incorporation
does not permit stockholders to cumulate their votes for the election of
directors.

                                       51
<PAGE>

         The following table sets forth certain information, as of July 10,
2002, regarding the Company's current Board of Directors and executive officers.

<TABLE>
<CAPTION>
                                               Position(s) Held           Director      Term to
     Name                        Age (1)       In the Company                            Since         Expire
----------------                 -------   ------------------------------------------   --------      -------
<S>                               <C>        <C>                                          <C>          <C>
Jason W. Galanis(3)               32         President and Chief  Executive Officer       1999         2003
Mr. Max Lucas                     60         Chief Financial Officer and Director         2002
Mr. Mike Luebbert                 49         Vice President of Risk Operations and
                                             Compliance.
John Mendez                       43         Vice President and Director of
                                             Business Development.
Jason Tam                                    Controller
Frank McBride                     40         Managing Director
Russell J. Cheetham              [  ]        Director                                     1999         2003
Charles L. Samel                  53         Director                                     1999         2003
Leighton Bloom                    66         Director                                     1999         2001 Resigned
Nicholas Wise (2)                 42         Director                                     1999         2001 Resigned
Harry J. Weitzel (2)              62         Chairman and Chief Executive Officer         1999         2001 Resigned
Kevin L. Washington               28         Executive Vice President and Director        1999         2001 Resigned
Dr. Rory F. Knight(2)             47         Director                                     1999         2001 Resigned
George Pilallis(2)                52         Director                                     1999         2001 Resigned
Michael Bodnar(2)                 52         Director                                     1999         2001 Resigned
</TABLE>

-----------------
(1)      As of July 16, 2002;
(2)      Directors Pilallis and Weitzel resigned following the Board Meeting of
         July 18, 2001. Mr Weitzel concurrently resigned as CEO. Director Bodnar
         resigned effective January 7, 2001. Director Knight resigned effective
         March 2, 2001; Director Wise resigned during the fiscal year ended
         March 31, 2002.
(3)      Director Galanis was unanimously voted as President and CEO on July 18,
         2001. He previously had resigned as an officer on September 12, 2000 as
         disclosed.

                                       52
<PAGE>

         The principal occupation of each director of the Company and each of
the named executive officers is set forth below. All directors have held their
present position for at least five years unless otherwise indicated.

         JASON W. GALANIS -Chief Executive Officer and Chairman. Mr. Galanis
became President and a Director of the Company in November 1999, later resigning
in September 2000. He returned in July 2001 as the Company's President and Chief
Executive Officer. Mr. Galanis has 13 years experience as a private equity
investor specializing in electronically processed financial services, having
founded The Credit Store in June 1992, a nationwide VISA/MasterCard credit card
issuer traded on the American Stock Exchange and funded in part by General
Electric Capital and other institutional investors. His experience also includes
debtor/creditor restructuring and international structured finance. Mr. Galanis
is a principal of Vianden Capital Management, L.L.C., the investment advisor to
Thesseus International Asset Fund, a closed-end, split income venture capital
fund that he founded in 1997 to invest in early-stage financial services
companies in North America and the UK. Mr. Galanis has also served as a director
of Thesseus from February 9, 1998 until April 10, 2000. He lived in London for
two years managing a private equity fund he co-founded and completed the
Advanced Management Programme at Oxford University (Templeton College).

         MAX LUCAS, Chief Financial Officer and Director. Mr. Lucas was Chief
Financial Officer and Director at Citicorp Credit Services, part of Citigroup
(NYSE: C), where he worked for eight years. For the prior twenty-two years, he
held positions at First Chicago Corporation, a division of Bank One (NYSE: ONE),
where he was Vice President & Financial Manager for the Trading Products Group,
Vice President & Financial Manager for the Investment Banking Group, and
Corporate Secretary and Controller.

         RUSSELL J. CHEETHAM, Director and Audit Committee Chairman. Mr.
Cheetham served in various executive capacities with the World Bank for 27 years
focused on large loan and economic development initiatives. He is now President
of Asia-Pacific Investment Services Corporation, a Seattle-based business
advisory company to corporations and governments in the Asia-Pacific region,
Europe, the former Soviet Union and the United States. He is a member of the
Board of Advisors of the SC&M Investment Management Corporation, an asset
management and investment banking services company with offices in Chicago,
Florida and Tokyo. He is also a member of the Advisory Board of Cross Pacific
Technology Partners, a private equity fund based in California. Mr. Cheetham is
Chairman of the Financial Markets Committee of the U.S. Pacific Economic
Cooperation Council (PECC) and a member of the PECC Board. He is also a member
of the board of the Rural Development Institute. Mr. Cheetham received his
undergraduate degree in Agricultural Science from the University of Sydney. He
earned his M.A. and Ph.D. in Economics from the University of Wisconsin, after
coming to the U.S. as a Fulbright fellow. Mr. Cheetham is the recipient of a
number of awards, including the Bintang Jasa Pratama conferred by the Government
of Indonesia.

         LEIGHTON A. BLOOM -- DIRECTOR. Mr. Bloom became Chief Technology
Officer and Director of the Company in November 1999. Mr. Bloom is currently and
has been since 1998 a technology consultant to Key Bank, a national bank, on
Internet and intranet information retrieval and publishing. He is currently
employed as a technology consultant to Citigroup, reporting to European
operations. He was a senior technology consultant to Chemical Bank and its
successor, Chase Manhattan Bank, from 1993 until August 1999, developing
techniques for management of, and information mining and distribution from, very
large investment databases in support of private, corporate and mutual fund
asset managers, most recently for intranet publication. Previously, from 1991 to
1993, Mr. Bloom was a senior consultant to Donaldson, Lufkin & Jenrette on the
collection, management and internal publication of investment banking
information; to Avon Corporation on data mining and analysis of marketing
program effectiveness; and to Aetna, Inc. on the optimization of computer-based
corporate health care customer service interactions. During 38 years in the
computer industry, Mr. Bloom has developed systems for several other firms in
the financial services industry as well as firms in other industries that
include publishing, litigation, real estate, natural resources, manufacturing,
transportation, communications, and advertising.

                                       53
<PAGE>

         CHARLES L. SAMEL, Director. Mr. Samel is the principal financial
advisor and senior advisor the Office of the Chairman of a 30-year old New York
print media company, General Media, with sales of US$100 million. He was
formerly President of Bankers Capital, which was the lead US-advisor to several
Japanese multi-national real estate investors. Mr. Samel has developed in excess
of $500 million of residential construction and has structured the acquisition
of dozens of large projects for Japanese investors. He is a Reinsurance
Intermediary Broker and is active in developing risk management strategies and
reinsurance agreements for structured finance transactions.

         JOHN MENDEZ, Vice President and Director of Business Development. Mr.
Mendez previously held several executive positions with Western Union's
Commercial Services, a unit of First Data Corporation (NYSE: FDC) and MoneyGram
Payment Systems, a unit of Viad (NYSE: VVI), which together are estimated to
control 90% of the worldwide cash remittance business. At Western Union, Mr.
Mendez's last position was Vice President of National Accounts. He was
responsible for a wide range of executive functions in connection with Western
Union's Commercial Services sales strategy. Mr. Mendez also managed Western
Union's highly successful Quick Collect program within their largest accounts,
such as Ford Credit (NYSE: F), Chrysler Financial (NYSE: DCX), and GE Capital
(NYSE: GE). At MoneyGram, he was Vice President of Sales and was responsible for
establishing retail distribution relationships throughout North and South
America.

         MIKE LUEBBERT, Vice President of Risk Operations and Compliance. Mr.
Luebbert had been Vice President of Risk Management for First Data Corporation
(NYSE: FDC) since 1994, where he was in charge of all commercial payment units,
including Western Union Financial Services and Integrated Payment Systems, both
wholly-owned subsidiaries of First Data Corporation. In this position, Mr.
Luebbert coordinated compliance, credit, collections and fraud prevention
functions, as well as monitoring all agent activity to ensure they meet
governmental compliance regulations. In this role, he reduced aggregate losses
to under $9 million on over $1 trillion in annual payments risk. During his
tenure, volume grew over 300%, while losses were reduced by 60%. In 2000, Mr.
Luebbert won the First Data Corporation Service Profit Team Award for best
overall team performance out of more than 30,000 employees.

         FRANK MCBRIDE, Managing Director. A series of unique and dynamic
professional experiences has allowed Mr. McBride to build a balanced, and
extremely creative professional skills package. Frank served ten years of
uninterrupted employment which included being part of the American Express
spin-off to First Data Corp. (FDC) and the acquisition of First Financial
Management Corporation (FFMC) and Western Union, allowed Frank to experience and
practice traditional management techniques, as well as first hand knowledge of
managing and integrating acquisitions, as well as developing strategic
partnerships, and licensing concepts. Working in various disciplines with
increasing responsibility levels taught him how to navigate through the sales
cycles both internally and externally to achieve maximum performance. Combining
the entrepreneurial spirit with the logic of product/brand extensions. He was
able to establish several `business within a business' applications; all
utilizing existing infrastructure which was sold to a different vertical market.
Some personal highlights include: 5 years of Presidential Awards as well as
spearheading a cross-selling initiative that was embraced by the Chairman of
First Data Corporation.

         During his tenure as, General Manager of National Accounts as well as
working in Product Development and sales he personally served: AT&T
International, Ford Motor Credit Company, General Motors, Kroger, Rite Aid,
Southland Corp, MCI/WorldCom, American Express TRS, ACE Cash Express and Chase
Manhattan Bank.

         HARRY J. WEITZEL. During the reporting period ended March 31, 2002, Mr.
Weitzel served as Chief Executive officer and Chairman of the Board of the
Company. He has resigned effective July 18, 2001. Mr. Weitzel currently is, and
has been since June 1998, the Managing Principal of Cedar Cove Advisors, LLC, a
private investment management and financial advisory firm located in Lexington
Park, Maryland. From August 1996 to May 1998 he was the CEO of Pacific Consumer
Funding, LLC, ("PCF") a major national originator, servicer and seller of
sub-prime consumer loans located in Dallas, Texas. Mr. Weitzel continues to

                                       54
<PAGE>

serve as a consultant to Pacific USA Holdings Corp., PCF's parent. From January
1992 to July 1996, Mr. Weitzel was President of the Consumer Asset Management
Division ("CAMD"), formerly CLS, of Electronic Data Systems Corporation. Under
Mr. Weitzel's direction, CAMD became a leading provider of consumer loan
out-sourcing services in the United States and actively participated with
clients in the creation of national financial conduits for various types of
consumer loans. Prior to joining CAMD, Mr. Weitzel was with MNC Financial
Corporation (a major commercial bank holding company) for 30 years, retiring as
President of MNC Retail Services Corporation, its consumer finances subsidiary.
While at MNC, Mr. Weitzel also oversaw its international merchant banking
operation, which was headquartered in London and served as Chairman of its
Luxembourg bank subsidiary. He also served as a director of MBNA which, since
1982, has developed into the world's third largest credit card lender with over
$50 billion in consumer receivables. Mr. Weitzel was also a founder of Thesseus
and has served as a director since its inception.

         NICHOLAS P. WISE -- During the reporting period ended March 31, 2002,
Mr. Wise served as a Director of the Company having resigned during 2001. Mr.
Wise became a Director of the Company in December 1999. Mr. Wise has a long
career managing public policy issues in Washington, D.C.. He is President and
founder of the government affairs firm of Wise & Associates, Washington, D.C.,
specializing in legislative and regulatory matters before the Congress and
executive branch agencies, a position he has held since January 1997. From 1983
until 1986, Mr. Wise was an attorney on the staff of Senator Mike DeWine (Rep:
Ohio). He served as Senator DeWine's Chief Counsel and Legislative Director from
1986 to 1989. From 1989 to 1992, he served as Deputy Assistant Attorney General
at the Department of Justice, where he was Attorney General Thornburgh's liaison
with Congress and to the Counsel to the President. Mr. Wise served as Chief
Strategist and Chief Counsel for Senator DeWine from 1992 through 1997.Mr. Wise
earned his J.D. at Case Western Reserve University in 1983 and his B.A. (cum
laude) at the University of Cincinnati in 1980. Mr. Wise is a member of the Ohio
and Virginia Bar.

         DR. RORY F. KNIGHT-- Director. Dr, Knight was not a director of the
Company during the reporting period ending March 31, 2002. He resigned effective
March 2, 2001. Dr. Knight is founder of Oxford Metrica, an independent risk
management advisory firm. Dr. Knight was Dean of Templeton College, the graduate
business school at Oxford University, a position he has held since 1994. He is
also a Fellow in Finance at Templeton College. Prior to coming to Oxford he was
the Deputy Director of a foundation within the Swiss National Bank (the central
bank of Switzerland) from 1986 to 1994. In this capacity he worked directly with
the Directorate and with the International Banking sector. Dr. Knight's work on
stockholder value has been published internationally and includes the Value
Creation Quotient (VCQ), his public company quantitative analysis. Dr. Knight
also advises a number of multinational businesses and is on the board of an
international investment fund.

         KEVIN WASHINGTON-- Director. During the reporting period ended March
31, 2002, Mr. Washington served as a Director of the Company having resigned
during 2001. Mr. Washington became Executive Vice President and Director of the
Company in November 1999. Mr. Washington was a principal in Olympic Holdings, a
privately held equity securities investment and trading firm with offices in Los
Angeles and London. He is a founding partner of KnightVianden Capital, an Oxford
based financial services group founded with Jason Galanis and Dr. Knight.
KnightVianden Capital operates KnightVianden Research Associates within
Templeton (Oxford University) which focuses on risk and value with a particular
focus in biotechnology, Internet companies and financial services. Mr.
Washington is also a partner in a family partnership which has interests in real
estate, avionics and other venture capital investments.

         GEORGE C. PILALLIS--During the reporting period ending March 31, 2002,
Mr. Pilallis served as Executive Vice President and Director. He resigned
effective July 18, 2001. Mr. Pilallis joined the Company as Managing Director in
December 1999 and became Executive Vice President in February 2000. From June
1997 to December 1999, Mr. Pilallis was President and Chief Executive Officer of
Advantage Funding Group, Inc. a subsidiary of Pacific Consumer Funding ("PCF")
an originator, servicer and seller of non-prime consumer loans located in
Boston, Massachusetts. Mr. Pilallis previously held the position of Managing

                                       55
<PAGE>

Director for PCF, a unit of Pacific USA Holdings Corp., a national originator,
servicer and seller of non-prime consumer loans located in Dallas, Texas from
March 1997 to January 1998. From June 1991 to February 1997, Mr. Pilallis was
Managing Director of Capital Markets of the Consumer Asset Management Division
("CAMD"), formerly CLS Corporation, of Electronic Data Systems Corporation. Mr.
Pilallis was responsible for all aspects of consumer loan outsourcing services
for capital market transactions, particularly those involving non-prime and
sub-prime asset-backed classes in automobile, home equity and credit cards.
Prior to joining CAMD, Mr. Pilallis held a variety of executive positions with
SMS Corporation, GE Capital Mortgage Insurance and the John H. Harland Company.

         MICHAEL BODNAR. During the prior reporting period ended March 31, 2001,
Mr. Bodnar had been Chief Financial Officer and Director of the Company until
his resignation on January 7, 2001. He served as Chief Financial Officer of
Thesseus since December 1997. He has been a member of the British Columbia and
Canadian Institutes of Chartered Accountants since 1978. From June 1997 until he
joined Thesseus, Mr. Bodnar was Chief Financial Officer of a group of financial
services sector companies with offices in Vancouver that concentrated in the
distressed debt field. In this capacity, his responsibilities included
overseeing the accounting and record keeping functions for a portfolio of both
performing and non-performing Visa(R) and MasterCard(R) receivables. From March
1983 to April 1997 Mr. Bodnar was Vice President, Finance for Wosk's Ltd., a
major Western Canadian retailer of furniture, appliances and electronics
products, where his responsibilities included overseeing all areas of consumer
finance, including credit card programs. From 1973 to 1983 he was a Senior
Manager with KPMG in its Vancouver and New Westminster offices, where he
performed audit and general business advisory services.

Board, Committees and Attendance at Meetings

         The Board of Directors of the Company held five meetings during the
fiscal year ended March 31, 2001. During fiscal 2001, no director attended fewer
than 75% of the aggregate of the total number of Board meetings on which he
served. No committees were established during fiscal 2001. The following is a
description of each of the committees of the Board of Directors of the Company.

         Audit Committee. The members of the Audit Committee are Mssrs. Galanis,
Bloom and Wise . The Audit Committee, which was established May 1, 2000, reviews
the Company's audited financial statements and makes recommendations to the
Board concerning the Company's accounting practices and policies and the
selection of independent accountants. The Audit Committee did not meet during
fiscal 2001.

(1) All options were rescinded at the meeting of the Board of Directors by a
unanimous vote.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

         Section 16(a) of the Exchange Act ("Section 16(a)") requires the
Company's directors, executive officers, and persons who own more than 10% of a
registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common Stock
and other equity securities of the Company. Officers, directors and greater than
10% stockholders are required by SEC regulation to furnish the Company with
copies of all Section 16(a) forms they file.

         To the Company's knowledge, based solely on a review of the copies of
such reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended March 31, 2001 all Section
16(a) filing requirements applicable to its officers, directors and greater than
10% beneficial owners were complied with.

                                       56
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

Executive Compensation

         The following table sets forth information regarding compensation paid
by the Company and its subsidiaries to the Chief Executive Officer and each
Named Officer.

<TABLE>
                                           SUMMARY COMPENSATION TABLE
<CAPTION>

                                                                                      Long Term
                                         Annual Compensation                     Compensation Awards
                              ---------------------------------------  -----------------------------------------
                                                                                            Securities
                                                                                            Underlying
Name and                      Fiscal                            Other Annual         Options/        All Other
Principal Position             Year     Salary     Bonus        Compensation(1)      SARS (#)      Compensation
------------------------      -------   ------    --------   ---------------------  -----------    -------------
<S>                           <C>     <C>         <C>                <C>             <C>                 <C>
Jason Galanis                 2002    180,000(4)
Max Lucas                     2002    125,000
Mike Luebbert                 2002    125,000
John Mendez                   2002    125,000
Frank McBride                 2002    125,000
Harry J. Weitzel              2001         0            0            0               66,666(2)(3)        0
Chairman and Chief            2000         0            0            0               66,666(2)(3)        0
Executive
Officer
</TABLE>

----------------------------
(1)      Excludes perquisites and other personal benefits that do not exceed
         $50,000 or 10% of each officer's total salary and bonus.
(2)      Represents options to purchase 66,666, as adjusted for splits, shares
         of common stock at the exercise price of $1.35.
(3)      On July 18, 2001, the Board of directors unanimously voted to rescind
         the 1999 Stock Option Plan in its entirety which covers all previously
         issued options, including Director Weitzel's above.
(4)      Mr. Galanis has not been paid in fiscal 2002. His salary has been
         accured prorata from July 19, 2001 when he was appointed as CEO.


1999 Stock Option Plan

         The Board of Directors and stockholders holding a majority of the
outstanding common stock of the Company have also adopted the 1999 Stock Option
Plan (the "Stock Option Plan"), which provides for the issuance of options to
acquire up to 500,000 shares (as adjusted for the Company's December 30, 1999
and August 2001 stock splits) of the Company's common stock. As of March 31,
2000, options to purchase 833 shares had been granted. These options were
rescinded in July 2001. None of these options had been exercised as of the
rescission date. The purpose of Stock Option Plan is provide additional
financial incentive to officers, directors, key employees and important
consultants of the Company (and its present or future subsidiary corporations).

                                       57
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT


                      SECURITY OWNERSHIP OF MANAGEMENT AND
                            CERTAIN BENEFICIAL OWNERS

         The following table sets forth, as of July 10, 2002, the beneficial
ownership of the Company's Common Stock (as adjusted for all stock splits
through such date): (i) by each person known by the Company to be the beneficial
owner of five percent or more of the Company's outstanding Common Stock, (ii) by
each director of the Company, (iii) by the chief executive officer and each
executive officer whose compensation would have exceeded $100,000 during fiscal
2001 (the "Named Officers"), and (iv) by the directors and executive officers of
the Company as a group. Unless otherwise specified, all persons listed below
have sole voting and investment power with respect to their shares. The business
address of the officers of the Company is that of the Company.

<TABLE>
<CAPTION>
                                               Number of                         Number of
Name, Position and Address                     Common Shares                     Preferred Shares
Beneficial Owner                               Beneficially        Percent       Beneficially           Percent
                                               Owned (1)           of Class      Owned (1)              of Class
------------------------------------------     --------------      ----------  -------------------   --------------
<S>                                               <C>                 <C>         <C>                     <C>
Thesseus International Asset
Fund NV                                           317,244(2)          2.5%        8,500,000(3)            100%
Zeelandia Office Park
16 Kaya W.F.G. (Jombi)
Mensing, Curacao,
Netherlands Antilles

Thesseus International Asset
Fund NV                                           317,244(2)          2.5%        8,500,000(3)            100%
Zeelandia Office Park
16 Kaya W.F.G. (Jombi)
Mensing, Curacao,
Netherlands Antilles

Jason W. Galanis(4)                               317,244(2)         19.7%        8,500,000(3)            100%
c/o EGX Funds Transfer
3125 Sterling Circle
Boulder, CO 80301
Chief Executive Officer
and Chairman

TransStar(5)                                    1,760,000            13.9%
c/o EGX Funds Transfer
3125 Sterling Circle
Boulder, CO 80301

Internet Transaction Services(6)                3,520,000            27.8%
c/o EGX Funds Transfer
3125 Sterling Circle
Boulder, CO 80301

Future Generations(7)                           3,520,000            27.8%
c/o EGX Funds Transfer
3125 Sterling Circle
Boulder, CO 80301

Directors and Executive
Officers as a Group                               343,929(2)         2.71%        8,500,000(3)            100%
(1) persons) (x)

Max Lucas                                          10,985            0.09%

Mike Luebbert                                      12,086            0.10%

John Mendez                                         3,614            0.29%
</TABLE>

                                       58
<PAGE>

---------------------
(1)      The securities "beneficially owned" by an individual are determined in
         accordance with the definition of "beneficial ownership" set forth in
         Rule 13d-3 promulgated by the SEC. Accordingly they may include
         securities owned by or for, among others, the wife and/or minor
         children or the individual and any other relative who resides in the
         same home as such individual, as well as other securities as to which
         the individual has or shares voting or investment power or has the
         right to acquire under outstanding stock options or convertible
         securities within 60 days after the date of this table. Beneficial
         ownership may be disclaimed as to certain of the securities.
(2)      Includes shares issuable upon conversion of series A preferred stock,
         subject to anti-dilution adjustments. The series A preferred stock is
         convertible into 19.99 % of the outstanding common shares or 1.65
         shares for each preferred share held. The preferred shares carry voting
         rights on an as converted basis. On August 1, 2001, the designations of
         rights and preferences were modified to provided for, amongst other
         things, a 75 day notice period prior to conversion. As a result, the
         preferred holders are not deemed to be beneficial owners as set forth
         in Rule 13d-3 promulgated by the SEC.
(3)      Series A preferred shares includes 8,500,000 series a preferred shares.
(4)      Mr. Galanis is a managing director of Thesseus and is a beneficiary of
         a family trust which beneficially owns majority of Thesseus. Includes
         216,933 shares of common stock, and 8.5 million shares of Series A
         preferred stock, beneficially owned by Thesseus. Trustkantoor Curacao,
         the Ernst and Young affiliate which is the resident director of
         Thesseus, has sole voting and dispositive power over the shares held by
         Thesseus. Jason W. Galanis is a one fourth beneficiary of a family
         trust that owns a majority of the voting capital stock of Thesseus. Mr.
         Galanis has no voting or dispositive power over the shares held by
         Thesseus. Until their resignation as of April 10, 2000, Harry Weitzel,
         Mr. Galanis and Rory Knight were directors of Thesseus.
(5)      TranStar is controlled by Scott Boyd, who is the son of Alan Boyd, a
         consultant to Internet Transactions Services. Internet Transaction
         Services is also a lender to a subsidiary of the Company pursuant to a
         $2,000,000 secured line of credit.
(6)      Internet Transaction Services is controlled by Chris Boyd, who is the
         son of Alan Boyd, a consultant to Internet Transaction Services.
         Internet Transaction Services is also a lender to a subsidiary of the
         Company pursuant to a $2,000,000 secured line of credit.
(7)      Future Generations is a corporation established for the benefit of
         certain children of Alan Boyd. Alan Boyd is a consultant to Internet
         Transaction Services. Certain of Mr. Boyd's adult children are
         shareholders of the corporation. Future Generations was previously a
         principal shareholder of KeyCom, Inc.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         Several of the members of the Company's current and former management
team, namely, Harry Weitzel, Kevin Washington and Jason Galanis, were, until
their resignation on April 10, 2000, principals in Thesseus International Asset
Fund NV ("Thesseus"), the entity from which the Company acquired its interests
in Eikos Acquisition Limited, eCard Solutions, Inc. (formerly Brunswick Capital
Partners, Inc.) and InfoBase Direct Marketing Services, Inc. ("InfoBase"). the
Company acquired 100% of Eikos for 100,000 shares of common stock (as adjusted
for the December 1999 stock split and the August 2001 stock split) and 8.5
million shares of Series A Preferred Stock. The Series A Preferred Stock
converts into an aggregate of 20% of the outstanding Common Stock on a fully
diluted basis. the Company also initially acquired from Thesseus, in exchange
for 158 shares of Common Stock, preferred stock convertible into 40% of the
common stock of eCard Solutions, Inc. and preferred stock convertible into 49%
of the common stock of InfoBase. As a result, these transactions did not result
from arms-length negotiations. The related agreements may include terms and
conditions that may be more or less favorable to the Company than terms
contained in similar agreements negotiated with third parties. Michael Bodnar, a
former officer of the Company, was an officer of Thesseus at the time of such
transactions.

         Thesseus and the Company also have an informal arrangement pursuant to
which the Company reimburses Thesseus for its pro rata share of administrative
expenses as determined by management. These administrative expenses include
among other things, rent, administrative staff and office costs. During the 2000
and 2001 fiscal years, the Company paid Thesseus $71,000 and $205,644,
respectively, for these expenses.

         Kevin Washington and Jason Galanis are principals of K. Washington -
Galanis Investments LLC, from which the Company acquired 100% of CASA@Home.com,
Inc. for 317 shares of Common Stock (as adjusted for stock splits). As a result,
this transaction did not result from arms-length negotiations and the related
agreement may include terms and conditions that may be more or less favorable to
the Company than the terms contained in similar agreements negotiated with third
parties.

                                       59
<PAGE>

         In order to fund the initial advances to ThemeWare described above, the
Company received a $1,000,000 loan from Derek M. Galanis, a brother of Jason
Galanis. Subsequently, on July 7, 2000, Derek Galanis agreed to convert this
loan into 1,000,000 non-voting, non-redeemable, Series B, 8% cumulative
preferred shares in return for 1,667 two year warrants each entitling the holder
to acquire one common share for $75.000. The preferred shares are convertible
into 250,000 shares of Common Stock, subject to anti-dilution provisions, and
the dividends on such preferred stock are convertible into Common Stock at the
average market price of the Common Stock for the thirty trading days commencing
45 trading days prior to conversion.

         The Company was charged $205,644 in fiscal 2001 in administration fees
by Thesseus Services Ltd., a wholly owned subsidiary of a related party.

         The CEO of the Company is a one fourth beneficiary of a family trust
that beneficially controls approximately 19.6% of the common shares of the
Company as of March 31, 2002. After the recapitalization resulting from the
conversion of Series E preferred stock in June 2002, this trust beneficially
controlled approximately 2.5% of the common shares of the Company.

         On June 11, 2001, the Company sold 150 units to Xtelligence, Inc. for
consideration of $150,000, consisting of 71,429 commons shares at $2.10 per
share and warrants. The warrants entitle the holder to purchase, for a term of
(5) years, an aggregate of 71,429 shares of common stock at an exercise price
equal to $2.10 per share. The warrants carry a 90-day reset provision in respect
to recapitalizations or reverse splits.

         On July 31, 2001 Thesseus International Asset Fund, an entity which is
a related party since a director and the CEO of the Company has beneficial
ownership, executed a Subscription Agreement with the Company to purchase up to
650 units for a purchase price of $1,000 per unit or $2.10 per common share.
Each unit consists of 476 shares of the Company's common stock and a five-year
warrant to purchase up to 476 shares of the Company's common stock at an
exercise price equal to $2.10 per share. The units and warrants carry a 90-day
reset provision in respect to recapitalizations or reverse splits. Funds
received on July 31, September 10 and September 20, were $400,000, $30,000 and
$220,000, respectively. The proceeds were used for the acquisition of Key Com,
Inc. A total of 309,523 warrants were issued pursuant to this subscription.

         On August 7, 2001, 214,286 common shares were issued in exchange for a
modification of the terms of the Series A Preferred Shares. The Series A
Preferred Stock is owned by Thesseus, described above.

         On August 7, 2001, pursuant to the Agreement and Plan of Merger dated
July 19, 2001 with Key Com, Inc. the Company invested $750,000 of the proceeds
obtained from the sale of common stock to acquire $750,000 Zero-Coupon
Participating Convertible Debt Certificates from Key Com, Inc. The Debt
Certificates entitle the Company to receive repayment of its investment from
predefined royalty income and, after recovery of principal, to receive a reduced
royalty payment in perpetuity. Since, Key Com, Inc. was acquired by the Company
(See Note 4(J)); this investment is eliminated in consolidation for accounting
purposes.

         On August 28, 2001, the holders of the Series B preferred shares
converted those shares and $99,333 of accrued dividends to 373,838 common shares
and were issued 385,714 warrants as an inducement to convert. The warrants are
exercisable at $3.50 and expire in June 30, 2006. The Series B Preferred stock
was issued in connection with the conversion of a $1,000,000 promissory note
held by Derek Galanis, the brother of Jason Galanis, the CEO of the Company. In
addition, Derek Galanis is a one fourth beneficiary of a trust that is the
majority shareholder of Thesseus. Derek Galanis does not control the trust and
does not control Thesseus.

         On August 28, 2001, Jason Galanis elected to convert $101,000 of notes
into 48,095 common shares valued at the contemporaneous offering price of $2.10
per share.

         In July 2000, the Company filed a certificate of designation for
Preferred Stock Series A, which was issued in November 1999. At that time the
certificate provided for conversion to common stock at a 2 for 1 ratio, 2 votes

                                       60
<PAGE>

for each preferred share, a liquidation preference valued at $0.7756 per share
plus a preferred liquidation preference amount of a 10% simple accrual on the
$0.7756 ("Liquidation Value") and 6.5% cumulative dividends on the liquidation
value.

         On August 23, 2000 the Company and the holders of the Series A
Preferred Stock agreed to amend the certificate of designations to eliminate the
cumulative dividends and add a provision whereby the preferred stock would be
convertible to common stock at the greater of a 2 for 1 ratio or 20% of the
common stock on a fully diluted basis.

         On August 1, 2001, the Company again amended the certificate of
designations including changing the conversion rights to the greater of 1.65 to
1 or 19.99% of the total common stock outstanding on a fully diluted basis,
voting rights based on the greater of 2 votes per preferred shares or the
numbers of common shares that the preferred is convertible to at any time
considering the new conversion terms, and making the preferred stock redeemable
at the Liquidation Value on or after December 31, 2005 or earlier if a default
occurs, as defined in the certificate. The amendment also requires a 75-day
notice period prior to conversion. The preferred stock Series A holders also
agreed to pay consideration of $100,000 cash and were issued 214,285 common
shares as part of the overall, transaction.

         The value of the preferred stock had originally been recorded as it
original liquidation value of $0.7756 per share or an aggregate $6,592,494. The
above transactions have been collapsed into one transaction for accounting
purposes. The maximum liquidation value of $7,746,305 (as escalated per the 10%
accrual discussed above) as of March 31, 2002 has been reclassified to temporary
equity, between liabilities and equity, due to the redemption feature and the
increase of $1,153,811 was charged to the accumulated deficit as a constructive
dividend to the Series A preferred stockholders. The liquidation and redemption
value increases by $54,938 per month under the 10% formula discussed above. The
liquidation preference is subordinate to the Series E preferred stock discussed
below.

         On August 28, 2001, the holders of the Series B preferred shares
converted those shares and $99,333 of accrued dividends to 373,838 common shares
and were issued 385,714 warrants as an inducement to convert. The warrants are
exercisable at $3.50 and expire in June 30, 2006. The controlling member of the
entity, Blair Developers LLC, that owned the Series B immediately prior to
conversion is the brother of the CEO of the Company.

                                       61
<PAGE>

                                     PART IV

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


                  (a) (1)  FINANCIAL STATEMENTS:

                  (a) (2)  FINANCIAL STATEMENT SCHEDULES:

                  None.

                  (a) (3)  EXHIBITS:

       --------------------------- ---------------------------------------------
             EXHIBIT NUMBER        DESCRIPTION
       --------------------------- ---------------------------------------------


                                       62
<PAGE>

                                   SIGNATURES

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

                                            EGX FUNDS TRANSFER, INC.


Date: July 15, 2002                 By:     /s/ Jason Galanis
                                       -----------------------------------------
                                               Name:  Jason Galanis
                                               Title: Chief Executive Officer
                                                      (Duly Authorized 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.


             /s/ Jason W. Galanis
             --------------------------------------------------
             Name: Jason W. Galanis
             Title:  Chairman and Chief Executive Officer
             Date:         July 15, 2002

             /s/  Max Lucas
             --------------------------------------------------
             Name: Max Lucas
             Title:  Chief Financial Officer and Director
             Date:         July 15, 2002

             /s/ Russ Cheetham
             --------------------------------------------------
             Name: Russ Cheetham
             Title:  Director
             Date:         July 15, 2002

             /s/ Leighton Bloom
             --------------------------------------------------
             Name: Leighton Bloom
             Title:  Director
             Date:         July 15, 2002

             /s/ Charlie Samel
             --------------------------------------------------
             Name: Charlie Samel
             Title:  Director
             Date:         July 15, 2002

                                       63
<PAGE>

                                  EXHIBIT INDEX

       --------------------------- ---------------------------------------------
             EXHIBIT NUMBER        DESCRIPTION
       --------------------------- ---------------------------------------------

              2.1


                                       64