FORM 10-QSB

                     U.S. SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549
                             ______________________

                Quarterly Report Under Section 13 or 15(d) of the
                         Securities Exchange Act of 1934

                For the Quarterly Period Ended September 30, 2004

                        Commission File Number 000-22236

                               HOMENET CORPORATION
              ----------------------------------------------------
             (Exact name of registrant as specified in its charter)


               Delaware                                33-0565710
     ------------------------------        ---------------------------------
    (State or other jurisdiction of        (IRS Employer Identification No.)
     incorporation or organization)


                      5252 North Edgewood Drive, Suite 310
                    (Address of principal executive offices)
                                Provo, UT, 84604
                    ----------------------------------------
                             (City, State, Zip Code)

                                 (801) 502-6100
               ---------------------------------------------------
              (Registrant's telephone number, including area code)

                             FARADAY FINANCIAL, INC.
                    175 South Main, Suite 1240, SLC, UT 84111
               --------------------------------------------------
              (Former Name, Former Address and Former Fiscal Year,
                         if Changed Since Last Report)

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

                                 [X] Yes [ ] No

         State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.

                 Class                   Outstanding as of November 22, 2004
             ------------                -----------------------------------
             Common Stock                             5,877,849

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

<PAGE>

                         PART I -- FINANCIAL INFORMATION

Item 1. Financial Statements
<TABLE>
<CAPTION>
                                      HOMENET CORPORATION AND SUBSIDIARIES
                               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                                           Consolidated Balance Sheet
                                                   (Unaudited)

                                                     ASSETS
                                                                                                   September 30,
                                                                                                        2004
                                                                                                ------------------
<S>                                                                                             <C>
CURRENT ASSETS

   Cash in bank                                                                                 $          474,869
   Cash in escrow                                                                                           60,000
   Accounts receivable - trade                                                                              94,078
   Accounts receivable - related                                                                            19,587
   Prepaid expenses                                                                                          1,075
                                                                                                ------------------
   Total Current Assets                                                                                    649,609
                                                                                                ------------------

PROPERTY AND EQUIPMENT

   Computer Equipment                                                                                      288,907
   Office Equipment                                                                                         31,146
   Software                                                                                                 53,323
   Less - accumulated depreciation                                                                        (202,631)
                                                                                                ------------------
     Total Property and Equipment                                                                          170,745
                                                                                                ------------------
     TOTAL ASSETS                                                                                          820,354
                                                                                                ==================

                                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

   Accounts payable                                                                             $           97,837
   Accrued liabilities                                                                                     342,263
   Note payable - related - current portion (Note 4)                                                       237,022
   Note payable - current portion (Note 4)                                                                 408,936
   Convertible debt - related parties (Note 4)                                                             675,000
   Convertible debt (Note 4)                                                                               873,000
                                                                                                ------------------
     Total Current Liabilities                                                                           2,634,058
                                                                                                ------------------

LONG TERM LIABILITIES

   Note payable (Note 4)                                                                                   101,837
                                                                                                ------------------
     Total Liabilities                                                                                   2,735,895
                                                                                                ------------------

STOCKHOLDERS' DEFICIT

   Common stock, $0.001 par value, 20,000,000 shares
     Authorized 5,877,849 issued and outstanding                                                             5,877
   Capital in excess of par value                                                                        1,918,224
   Deferred compensation                                                                                  (119,978)
   Treasury stock                                                                                          (59,375)
   Accumulated deficit                                                                                  (3,660,289)
                                                                                                ------------------
     Total Stockholders' Deficit                                                                        (1,915,541)
                                                                                                ------------------
     TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                                                $          820,354
                                                                                                ==================


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

                                                        2
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      HOMENET CORPORATION AND SUBSIDIARIES
                               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                                      Consolidated Statements of Operations
                                                   (Unaudited)


                                                       For the                               For the
                                                  Three Months Ended                    Six Months Ended
                                                      September 30,                         September 30,
                                            -------------------------------     ----------------------------------
                                                 2004             2003                2004                2003
                                            --------------   --------------     --------------      --------------
<S>                                         <C>              <C>                <C>                 <C>
REVENUES                                    $      715,609   $      289,129     $      993,720      $      548,721
                                            --------------   --------------     --------------      --------------

COST OF SALES

  Subscriber-related expenses                      365,529          149,789            577,612             168,981
                                            --------------   --------------     --------------      --------------

     Total Cost of Sales                           365,529          149,789            577,612             168,981
                                            --------------   --------------     --------------      --------------

GROSS MARGIN                                       350,080          139,340            416,108             379,740

OPERATING EXPENSES

  General and administrative                       753,593          295,535          1,054,097             803,431
  Stock-based compensation                          20,124                -            153,648                   -
  Depreciation and amortization                     78,752           19,205            112,184              38,410
                                            --------------   --------------     --------------      --------------

    Total Expenses                                 852,469          314,740          1,319,929             841,841
                                            --------------   --------------     --------------      --------------

LOSS FROM OPERATIONS                              (502,389)        (175,400)          (903,821)           (461,101)

OTHER EXPENSE

    Interest expense                               (73,584)          (2,635)           (89,225)           (281,845)
                                            --------------   --------------     --------------      --------------

NET LOSS                                    $     (575,973)  $     (178,035)    $     (993,046)     $     (743,946)
                                            ==============   ==============     ==============      ==============

BASIC LOSS PER SHARE                    $            (0.25) $         (0.06) $           (0.43)  $           (0.25)
                                            ==============   ==============     ==============      ==============

WEIGHTED AVERAGE
 NUMBER OF SHARES
 OUTSTANDING                                     2,318,000        3,000,000          2,318,000           3,000,000
                                            ==============   ==============     ==============      ==============


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

                                                        3
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      HOMENET CORPORATION AND SUBSIDIARIES
                               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                                      Consolidated Statements of Cash Flows
                                                   (Unaudited)


                                                                                        For the Six Months Ended
                                                                                               September 30,
                                                                                   -------------------------------------
                                                                                        2004                    2003
                                                                                   --------------         --------------
<S>                                                                                <C>                    <C>
CASH FLOWS FROM OPERATING ACTIVITIES

   Net loss                                                                        $     (993,046)        $     (743,946)
   Adjustments to reconcile net loss to net cash
     used by operating activities:
       Depreciation & amortization expense                                                112,184                 38,410
       Common stock issued for services                                                   153,868                      -
       Amortization of debt discount                                                            -                250,000
   Changes in operating assets and liabilities:
       Increase in cash in escrow                                                         (60,000)                     -
       (Increase) decrease in accounts receivable                                         (21,931)                41,056
       Increase in accounts receivable - related                                          (19,587)                     -
       (Increase) decrease in other assets                                                  5,689                 (1,663)
       Increase (decrease) in accounts payable                                             36,463                (69,877)
       Increase (decrease) in current liabilities and accrued interest                    259,893                (79,993)
                                                                                   --------------         --------------
         Net Cash Used by Operating Activities                                           (526,467)              (566,013)
                                                                                   --------------         --------------

CASH FLOWS FROM INVESTING ACTIVITIES

     Purchase of fixed assets                                                             (54,065)               (23,828)
                                                                                   --------------         --------------
       Net Cash Used by Investing Activities                                              (54,065)               (23,828)
                                                                                   --------------         --------------

CASH FLOWS FROM FINANCING ACTIVITIES

     Change in cash overdraft                                                             (12,319)               (25,628)
     Common stock issued for cash                                                          16,000                135,750
     Purchase of treasury shares                                                          (59,375)                     -
     Proceeds from notes payable                                                          603,936                 85,000
     Proceeds from notes payable - related                                                116,022                      -
     Proceeds from convertible debt                                                       517,750                411,479
     Proceeds from convertible debt - related                                             675,000                      -
     Principal payments on capital leases                                                 (16,771)                     -
     Principal payments on notes payable                                                 (784,842)                     -
                                                                                   --------------         --------------
       Net Cash Provided by Financing Activities                                        1,055,401                606,601
                                                                                   --------------         --------------
NET INCREASE IN CASH                                                                      474,869                 16,760

CASH AT BEGINNING OF PERIOD                                                                     -                      -
                                                                                   --------------         --------------
CASH AT END OF PERIOD                                                              $      474,869         $       16,760
                                                                                   ==============         ==============


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

                                                       4
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
                                      HOMENET CORPORATION AND SUBSIDIARIES
                               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                                Consolidated Statements of Cash Flows (Continued)
                                                   (Unaudited)


                                                                                        For the Six Months Ended
                                                                                               September 30,
                                                                                   -------------------------------------
                                                                                        2004                    2003
                                                                                   --------------         --------------
<S>                                                                                <C>                    <C>
SUPPLEMENTAL SCHEDULE OF CASH FLOW ACTIVITIES

NON-CASH INVESTING AND FINANCING ACTIVITIES:

     Common stock issued for debt paid
       on behalf of the Company                                                    $      299,297         $            -
     Distribution of equity in merger                                              $      455,686         $            -
     Common stock issued for services                                              $      153,868         $            -
     Assets purchased with capital lease                                           $            -         $       36,708
     Common stock issued for assets                                                $            -         $      100,000

CASH PAID FOR:
     Interest                                                                      $          355         $            -
     Taxes                                                                         $            -         $            -



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

                                                       5
</TABLE>
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION

         The accompanying unaudited condensed consolidated financial statements
         have been prepared by the Company pursuant to the rules and regulations
         of the Securities and Exchange Commission. The information furnished in
         the interim consolidated financial statements include normal recurring
         adjustments and reflects all adjustments, which, in the opinion of
         management, are necessary for a fair presentation of such financial
         statements.

         a.Organization and Business Activities

         HomeNet Corporation and Subsidiaries, (the "Company") was incorporated
         under the laws of the State of Delaware on June 11, 1992. The Company
         provides fiber optic cable television broadcast subscription services.
         In addition to its television services, the Company also provides
         high-speed internet service as well as voice over internet protocol
         through its fiber optic network. The Company's principal business
         strategy is to continue developing their service line in the United
         States and elsewhere to provide consumers with a fully competitive
         alternative to cable television, internet and voice services.

         b. Accounting Method

         The Company's consolidated financial statements are prepared using the
         accrual method of accounting. The Company has elected to change its
         accounting year-end from March 31 to December 31, effective with the
         year 2004 to coincide with the year-end of its subsidiary, HomeNet
         Communications, Inc. Because of the difference in year-ends between the
         companies, these financial statements reflect the financial position
         and results of operations and cash flow of the companies for 2004 as
         follows:

         HomeNet Corporation - financial position as of September 30, 2004,
         results of operations and cash flow for the periods ended September 30,
         2004.

         HomeNet Communications, Inc. - financial position as of June 30, 2004,
         results of operations and cash flow for the periods ended June 30,
         2004.

         Operating results for the six months ended September 30, 2004 are not
         necessarily indicative of the results that may be expected for the year
         ending December 31, 2004.

         c. Basic Loss Per Share

         The computation of basic loss per share of common stock is based on the
         weighted average number of shares outstanding during the period.

                                         For the Six Months Ended
                                                September 30,
                                            2004            2003
                                      --------------  --------------

         Loss (numerator)             $     (993,046) $     (743,946)
         Shares (denominator)              2,318,000       3,000,000
         Per share amount             $        (0.43) $        (0.25)

         For the six months ended September 30, 2004 and 2003 the Company has
         excluded 2,021,190 common stock equivalents, respectively, from the
         basic net loss per share calculation as they are anti-dilutive.

                                       6
<PAGE>


                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION (Continued)

         d. Estimates

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

         e. Revenue Recognition

         Subscription Television Services and Other Subscriber-Related Revenue

         Subscription television service revenues are derived principally from
         monthly fees paid by subscribers. In addition to recurring subscriber
         revenues, the Company also derives revenues from the sales of
         pay-per-view movies and events, and from installation charges. The
         Company recognizes cable television, high-speed data, telephony and
         programming revenues as services are provided to subscribers.
         Subscriber fees for multiple receivers and equipment rental are
         recognized as revenue monthly as earned. Revenues derived from other
         sources are recognized when services are provided or events occur.

         Software Revenue

         The Company applies the provisions of Statement of Position 97-2,
         "Software Revenue Recognition " in conjunction with the applicable
         provisions of Staff Accounting Bulletin No. 104, " Revenue
         Recognition." Accordingly, the Company recognizes revenue for software
         when there is (1) persuasive evidence that an arrangement exists, which
         is generally a customer purchase order, (2) the software is delivered,
         (3) the selling price is fixed and determinable and (4) collectibility
         of the customer receivable is deemed probable. The Company has yet to
         complete the development of its software developed for sale and has not
         yet recognized any revenue from the sale of software developed for
         sale.

         f. Cost of Sales

         Subscriber-related expenses

         Subscriber-related expenses consist primarily of monthly fees to the
         National Cable Television Cooperative and other programming providers
         and are generally based on the average number of subscribers to each
         program. The cost of television programming and distribution rights is
         generally incurred on a per subscriber basis and is recognized when the
         related programming is distributed to subscribers.

         Transmission expenses

         Transmission expenses consist primarily of transport cost and network
         access fees specifically associated with subscription services.

         g. Advertising

         The Company follows the policy of charging the costs of advertising to
         expense as incurred. Advertising expense for the six months ended
         September 30, 2004 and 2003 was $3,545 and $8,652, respectively.

                                       7
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION (Continued)

         h. Newly Adopted Accounting Pronouncements

         FASB Interpretation No. 46 -- In January 2003, the FASB issued FASB
         Interpretation No. 46 "Consolidation of Variable Interest Entities."
         FIN 46 provides guidance on the identification of entities for which
         control is achieved through means other than through voting rights,
         variable interest entities, and how to determine when and which
         business enterprises should consolidate variable interest entities.

         This interpretation applies immediately to variable interest entities
         created after January 31, 2003. It applies in the first fiscal year or
         interim period beginning after June 15, 2003, to variable interest
         entities in which an enterprise holds a variable interest that it
         acquired before February 1, 2003. The adoption of FIN 46 did not have a
         material impact on the Company's consolidated financial statements.

         During the six months ended September 30, 2004, the Company adopted the
         following Emerging Issues Task Force Consensuses which did not have a
         material impact on the Company's financial statements: EITF Issue No.
         00-21 "Revenue Arrangements with Multiple Deliverables", EITF Issue No.
         01 -8 " Determining Whether an Arrangement Contains a Lease", EITF
         Issue No. 02-3 "Issues Related to Accounting for Contracts Involved in
         Energy Trading and Risk Management Activities", EITF Issue No. 02-9
         "Accounting by a Reseller for Certain Consideration Received from a
         Vendor", EITF Issue No. 02-17, "Recognition of Customer Relationship
         Intangible Assets Acquired in a Business Combination", EITF Issue No.
         02-18 "Accounting for Subsequent Investments in an Investee after
         Suspension of Equity Method Loss Recognition", EITF Issue No. 03-1,
         "The Meaning of Other Than Temporary and its Application to Certain
         Instruments", EITF Issue No. 03-5, "Applicability of AICPA Statement of
         Position 97-02, `Software Revenue Recognition' to Non-Software
         Deliverables in an Arrangement Containing More Than Incidental
         Software", EITF Issue No. 03-7, "Accounting for the Settlement of the
         Equity Settled Portion of a Convertible Debt Instrument That Permits or
         Requires the Conversion Spread to be Settled in Stock", EITF Issue No.
         03-10, "Application of EITF Issue No. 02-16 by Resellers to Sales
         Incentives Offered to Consumers by Manufacturers.

         i. Concentrations of Credit Risk

         The Company maintains several accounts with financial institutions. The
         accounts are insured by the Federal Deposit Insurance Corporation up to
         $100,000. The Company's balances occasionally exceed that amount.

         Credit losses, if any, have been provided for in the financial
         statements and are based on management's expectations. The Company's
         accounts receivable are subject to potential concentrations of credit
         risk. The Company does not believe that it is subject to any unusual
         risks, or significant risks in the normal course of its business.

         The Company has no customers who account for greater than 10% of the
         accounts receivable balance at September 30, 2004 or who account for
         greater than 10% of total sales for the six months ended September 30,
         2004.

         The Company is dependent on municipalities to provide the necessary
         transport facilities and to cable television content providers for
         content.

                                       8
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION (Continued)

         j. Cash and Cash Equivalents

         The Company considers all highly liquid investments with maturities of
         three months or less when purchased to be cash equivalents.

         k. NCTC Patronage Capital Distributions

         The Company is a member of the National Cable Television Cooperative
         ("NCTC"), which is a not-for-profit, member-operated purchasing
         organization. The NCTC is a cooperative organization whose members and
         affiliates are engaged in the business of providing television
         reception or service to the public, primarily by means of a cable
         television system consistent with the definition of a "cable television
         system" in section 602 of the 1984 Cable Act. The NCTC negotiates and
         administers master affiliation agreements with cable television
         programming networks, cable hardware and equipment manufacturers and
         other service providers on behalf of its member companies. More than
         1,000 NCTC member companies currently serve more than 13 million cable
         TV subscribers throughout the United States.

         NCTC membership includes a one-time, non-refundable initiation fee of
         $1.50 per subscriber. Should the Company acquire other cable systems in
         the future, the fees are covered under the original initiation fee.
         However, if the member has no active subscribers at the time of
         application, the one-time, non-refundable initiation fee is $1.00 per
         home in that member's franchise area. The minimum fee is $1,000 and the
         maximum fee is $50,000.

         The Company made payments, net of rebates, of $65,782 during the six
         months ended September 30, 2004.

         l. Principles of Consolidation

         The consolidated financial statements include the accounts of the
         Company and its wholly-owned subsidiaries, HomeNet Communications,
         Inc., Home Marketing Group and Digital Media Solutions, LLC. All
         significant intercompany accounts and transactions have been eliminated
         in consolidation.

         m. Internal Use Software

         The Company accounts for costs incurred to develop internal use
         software applications in accordance with the American Institute of
         Certified Public Accountants Statement of Position No. 98-1 (SOP 98-1),
         "Accounting for the Cost of Computer Software Developed or Obtained for
         Internal Use." SOP 98-1 requires that entities capitalize certain
         internal use software costs, which includes software design, coding,
         installation, configuration and testing, once technical feasibility of
         the developed software is attained. Costs incurred in the process of
         attaining technological feasibility, which includes the conceptual
         formulation and evaluation of the software alternatives, and costs to
         upgrade and enhance software once developed are expensed as incurred.
         Under SOP 98-1, overhead, general and administration costs, support
         costs and training costs are not capitalized. The Company capitalized
         no additional internal use software development costs for the six
         months ended September 30, 2004.

         Capitalized internal use software costs are being depreciated on a
         straight-line basis over the estimated useful life of the application
         of two years. The Company recognized $4,292 in amortization expense for
         the six months ended September 30, 2004.

         The above-mentioned software was originally developed for internal use.
         During 2003, a single copy of the software was sold to a municipality
         for $150,000. In accordance with SOP 98-1, the proceeds from the sale
         were applied against the carrying amount of the software until the
         carrying value of the software reached zero. The additional proceeds of
         $55,578 were recognized as other income as earned.

                                       9
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 1 - BASIS OF FINANCIAL STATEMENT PRESENTATION (Continued)

         n. Software Developed for Sale

         The Company plans to sell or lease certain development software and
         have accounted for the costs to develop this software in accordance
         with SFAS No. 86 , "Accounting for Computer Software to be Sold,
         Leased, or Otherwise Marketed." Computer software development costs are
         charged to research and development expense until technological
         feasibility or a detail design document of the software is established,
         after which remaining significant software production costs are
         capitalized. Once capitalized software cost products are made available
         for sale or when the related product is put into use, the costs will be
         amortized on a straight-line basis over the estimated economic life of
         the software.

         The Company will make ongoing assessments of recoverability of
         capitalized software projects by comparing the amount capitalized for
         each product to the estimated net realizable value ("NRV") of the
         product. If the NRV is less than the amount capitalized, a write-down
         of the amount capitalized is recorded.

         The Company did not capitalize any additional software development for
         sale costs for the six months ended September 30, 2004. Costs
         capitalized in previous periods which have yet to placed into service
         are classified in other assets in the accompanying consolidated balance
         sheet.

         o. Stock-based Compensation

         As permitted by FASB Statement 148 "Accounting for Stock Based
         Compensation-Transition and Disclosure" (SFAS No. 148), the Company
         elected to measure and record compensation cost relative to employee
         stock option costs in accordance with Accounting Principles Board
         ("APB") Opinion 25, "Accounting for Stock Issued to Employees", and
         related interpretations and make proforma disclosures of net income and
         earning per share as if the fair value method of valuing stock options
         had been applied. Under APB opinion 25, compensation cost is recognized
         stock options granted to employees when the option price is less than
         the market price of the underlying common stock on the date of grant.

NOTE 2 - MERGER TRANSACTION

         During September 2004 the Company ("HC"), HomeNet Communications, Inc.
         ("HNC") (Formerly Video Internet Broadcasting Corporation) and HomeNet,
         Utah, Inc., ("HNU") a wholly owned subsidiary of the Company, entered
         into a Merger Agreement whereby HNU was merged into HNC ("Merger") with
         HNC the surviving corporation. The separate existence of HNU ceased
         once the Merger became effective. In addition, as part of the Merger,
         VIB's name was changed to HomeNet Communications, Inc. Upon closing of
         the Merger Agreement, each share of HNC capital stock that was issued
         and outstanding immediately prior to the closing was converted into
         1.0903 shares of the Company's common stock and all previously
         outstanding shares of HNC capital stock is no longer outstanding and
         was automatically canceled and ceased to exist. All other securities
         convertible into or exercisable for shares of HNC capital stock,
         including but not limited to stock options, convertible debt and
         warrants and issued by the Company prior to the effective date of the
         Merger became convertible into or exercisable for the number of shares
         of Company common stock determined by using the 1.0903 conversion
         factor. HNC had 2,184,939 shares of common stock outstanding, 350,550
         shares of preferred stock outstanding, options exercisable for an
         additional 618,520 shares of stock and other convertible securities
         that are convertible under terms that are in dispute. The Company
         issued approximately 2,764,449 shares of its common stock on a fully
         diluted basis in connection with the Merger. In addition, there is a
         possibility that the Company may create a class of preferred stock that
         would be issued to some of the holders of HNC securities that were
         convertible into HNC preferred stock. The merger was accounted for as a
         recapitalization of HNC because the

                                       10
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 2 - MERGER TRANSACTION (Continued)

         shareholders of HNC controlled HC after the merger. HNC was treated as
         the surviving entity for accounting purposes and HC was the surviving
         entity for legal purposes. There was no adjustment to the carrying
         value of the assets or liabilities or HNC.

NOTE 3 - RELATED PARTY TRANSACTIONS

         Development Costs

         The Company has employed certain family members of management on a
         contract basis for the development of software. The Company paid a
         total of $30,000 to these individuals for six months ended September
         30, 2004.

         Accounts Payable

         The Company has $10,577 in payables to related parties at September 30,
         2004. The amount is included in accounts payable.

         Common Stock

         The Company issued 100,000 shares of common stock to a related party in
         February 2003 to purchase $100,000 of multimedia equipment. The
         equipment was valued at predecessor's cost.

         In December of 2003 the Company issued 138,846 shares of its common
         stock to an employee in payment of consulting services valued at
         $138,846.

         During 2002, the Company issued 94,500 shares of its common stock to
         board members and directors of the Company for cash of $94,500.

         Also during 2002, the Company issued 43,788 shares of its common stock
         to two board members and directors of the Company in payment of debt of
         $43,788.

         After inception on March 23, 2001, the Company issued 470,000 shares to
         founders of the Company for services provided. The stock was valued at
         $0.001 per share, par value.

         During 2001, the Company issued 2,000 shares of common stock to a
         director of the Company for $10,000 in cash.

         Lease Guarantees

         The Company's Chief Executive Officer has personally guaranteed several
         equipment leases and the Company's current office space lease.

NOTE 4 - NOTES PAYABLE AND CONVERTIBLE DEBENTURES

         In connection with the merger between HomeNet Corporation and HomeNet
         Communications, the parties entered into a loan agreement, pursuant to
         which HomeNet Corporation has lent HNC a principal amount of $670,000
         as of September 30, 2004. All inter-company debt has been eliminated in
         the consolidation.

         To obtain the financing needed for the loan agreement between HC and
         HNC, HC entered into loan agreements with several investors. During
         March 2004, the Company issued convertible debentures to finance its
         loan to HNC. The debentures accrue interest at 12% per annum and are
         due six months from the original date of the notes. Principal and
         interest not paid when due shall bear interest at the rate of 18% per

                                       11
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 4 - NOTES PAYABLE AND CONVERTIBLE DEBENTURES (Continued)

         annum. The notes are convertible at any time at the option of the
         holder into shares of the Company's common stock at the rate of one
         share of common stock for every $1.00 in principal and accrued interest
         that is converted. In addition, the notes have attached common stock
         purchase warrants to acquire 100 shares of common stock at an exercise
         price of $1.50 per share for every one thousand dollars in principal
         lent by the lender.

         In determining whether an instrument includes a beneficial conversion
         option, the Emerging Issues Task Force reached a consensus that the
         effective conversion price based on the proceeds received for or
         allocated to the convertible instrument should be used to compute the
         intrinsic value, if any, of the embedded conversion option. As a result
         of this consensus, an issuer should first allocate the proceeds
         received in a financing transaction that includes a convertible
         instrument to the convertible instrument and any other detachable
         instruments included in the exchange (such as detachable warrants) on a
         relative fair value basis. Then, the Issue 98-5 model should be applied
         to the amount allocated to the convertible instrument, and an effective
         conversion price should be calculated and used to measure the intrinsic
         value, if any, of the embedded conversion option.

         During the six months ended September 30, 2004 HC issued $1,275,000 of
         convertible debt with a par amount of $1,275,000 and 127,500 warrants.
         The convertible debt is convertible at a conversion price of $1 per
         share (holder would receive 1 share of stock for each dollar of debt or
         1,275,000 shares of the Company's common stock). Using the
         Black-Scholes model, the 127,500 warrants have no value. The Company
         has recorded accrued interest of $83,272 associated with the
         convertible debentures.

         The Company has determined that the embedded conversion option within
         the debt instrument is not beneficial (has no intrinsic value) to the
         holder.

         Notes payable, convertible debentures and notes payable - related
         parties consist of the following as of September 30, 2004:

         Unsecured notes payable to shareholders of the Company
           due on demand, payable through the issuance of or
           proceeds from the sale of shares of NutraCea common
           stock Interest is computed at a rate of 12% per annum.   $  153,436

         Note payable bearing interest at 8% per annum,
           unsecured, annual payments of $51,375 plus interest
           due on May 30 each year until paid in full.                 205,500

         Note payable bearing interest at 2.5% per annum,
           unsecured, due by April 1, 2007, monthly payments of
           $3,000                                                      151,837

         Less current portion                                         (408,936)
                                                                    ----------

         Total Notes Payable                                        $  101,837
                                                                    ==========

                                       12
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 4 - NOTES PAYABLE AND CONVERTIBLE DEBENTURES (Continued)

         Unsecured notes payable to shareholders of the Company
           due on demand, payable through the issuance of or
           proceeds from the sale of shares of NutraCea common
           stock Interest is computed at a rate of 12% per annum.   $   17,022

         Note payable bearing interest at 12% per annum,
           unsecured, payable on demand                                 50,000

         Note payable bearing interest at 12% per annum,
           unsecured, payable on demand                                170,000
                                                                    ----------

         Total Notes Payable - Related                                 237,022
                                                                    ==========

         Unsecured convertible notes payable to shareholders of
           the Company due September 2004, convertible at the
           holder's option to common stock of the Company at a
           ratio of one share per each dollar of outstanding
           principal and interest. Interest is computed at at a
           rate of 12% per annum.                                   $1,275,000

         Convertible note payable, bearing interest at 8% per
           annum, convertible to Series B preferred stock at a
           rate of two shares for each dollar loaned, conversion
           price of $1.00 per share, note also carries warrants
           to purchase Series B preferred at the rate of 25% of
           the total shares the note is convertible to and are
           exercisable at $1.00 per share 273,000

         Less related party portion                                   (675,000)
                                                                    ----------

         Total Convertible Debt                                     $  873,000
                                                                    ==========

         Interest expense on the above debt amounted to $89,225 for the six
         months ended September 30, 2004. Accrued interest was $298,871 at
         September 30, 2004.

         During the year December 31, 2003, the Company raised $444,250 of
         operating capital in the form of convertible debentures ($89,000 from
         related parties, $355,250 from other investors). The debentures have
         varying terms of 1 to 2 years and accrue interest at 8% to 10% per
         annum. All convertible debentures are convertible at the option of the
         holder.

         Upon issuance of the debentures, the Company recognized a debt discount
         related to the beneficial conversion feature of the debentures totaling
         $444,246. This beneficial conversion feature was expensed during the
         year ended December 31, 2003 pursuant to the EITF 96-18 and has been
         included in interest expense in the accompanying consolidated statement
         of operations.

                                       13
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 5 - COMMON STOCK

         The Company has authorized 30,000,000 shares of common stock with a par
         value of $0.001 per share.

         During the year ended December 31, 2003 the Company issued 150,750
         shares of its common stock to various investors for cash of $271,250.
         During February 2003, the Company issued 100,000 shares of its common
         stock to purchase multimedia equipment valued at $100,000. Also during
         2003 the Company issued 189,994 shares of its common stock for services
         valued at $220,624.

         During the year ended December 31, 2002, the Company issued 185,000
         shares of its common stock for cash of $189,000. In June 2002 the
         Company issued 63,788 shares of its common stock in payment of debt of
         $63,788. Also in 2002, the Company issued 35,700 shares of its common
         stock for services valued at $35,700.

         During the year ended December 31, 2001, the Company issued 198,000
         shares of its common stock for cash of $90,180. In June 2001, the
         Company issued 470,000 shares of its common stock to founders of the
         Company in payment of services valued at $470.

NOTE 6 - COMMITMENTS AND CONTINGENCIES

         Operating Leases

         On August 30, 2001, the Company entered into a seven-year lease
         agreement for office space in Ephrata, Washington. The monthly rental
         payment is currently $1,321 per month. The payment is adjusted on each
         anniversary to reflect the change in the Consumer Price Index from the
         previous twelve months. Future minimum lease payments under this
         non-cancelable operating lease, subject to CPI adjustments, are as
         follows:

                   Years Ending
                    March  31,
                   ------------
                      2005                             $      15,852
                      2006                                    15,852
                      2007                                    15,852
                      2008                                     7,926
                                                       -------------
                                                       $      71,334
                                                       =============

         Litigation

         As of December 31, 2003, a Summary Judgment had been entered against
         the Company in the amount $26,395 arising from a dispute with a vendor
         and has been accrued by the Company in notes payable and accrued
         interest in the consolidated balance sheet. The balance was paid in
         full in March 2004 and the judgment was dismissed.

         The Company has been contacted by an attorney for its investment banker
         regarding a claim for fees owed. Management can not reasonably estimate
         any settlement amount.

NOTE 7 - OUTSTANDING STOCK PURCHASE WARRANTS

         The Company has elected to follow the intrinsic value method of
         accounting under Accounting Principles Board Opinion No. 25 "Accounting
         for Stock Issued to Employees," ("APB 25") and related interpretations
         in accounting for their stock-based compensation plans. Under APB 25,
         the Company

                                       14
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 7 - OUTSTANDING STOCK PURCHASE WARRANTS (Continued)

         generally does not recognize compensation expense on the grant of
         options under their Stock Incentive Plan because typically the option
         terms are fixed and the exercise price equals or exceeds the market
         price of the underlying stock on the date of the grant. The Company
         applies the disclosure only provisions of Statement of Financial
         Accounting Standards No. 148, "Accounting and Disclosure of Stock-Based
         Compensation," ("FAS 148").

         Pro forma information regarding net income and earnings per share is
         required by FAS 148 and has been determined as if the Company had
         accounted for its stock-based compensation plans using the fair market
         value method prescribed by that statement. For purposes of pro forma
         disclosures, the estimated fair market value of the options is
         amortized to expense over the options' vesting period on a
         straight-line basis. All options are initially assumed to vest.
         Compensation previously recognized is reversed to the extent applicable
         to forfeitures of unvested options.

         Under FASB Statement 148, the Company estimates the fair value of each
         stock award at the grant date by using the Black-Scholes option pricing
         model with the following weighted average assumptions used for grants:
         dividend yields of 0%; expected volatility of 172%; risk-free interest
         rates of between 1.33% and 1.65% and expected lives of
         between1and4years.

         A summary of the status of the Company's stock options and warrants as
         of September 30, 2004 and changes during the six months ended September
         30, 2004 is presented below:

                                                         Weighted      Weighted
                                             Options      Average       Average
                                               and       Exercise     Grant Date
                                            Warrants       Price      Fair Value
                                            --------     --------     ----------
         Outstanding, March 31, 2003               -   $        -    $        -
               Granted                        71,000         1.50             -
               Expired/Canceled                    -            -             -
               Exercised                           -            -             -
                                           ---------   ----------    ----------
         Outstanding, March 31, 2004          71,000   $     1.50    $        -
               Granted                     2,336,932         1.50             -
               Expired                             -            -             -
               Exercised                           -            -             -
                                           ---------   ----------    ----------
         Outstanding, September 30, 2004   2,407,932         1.50             -

         Exercisable, September 30, 2004   2,096,423   $     1.50    $        -
                                           =========   ==========    ==========

         During 2003, the Company's board of directors approved the "2003 Stock
         Option Plan," (2003 Plan). Under the terms of this Plan, the Company
         registered 350,000 shares of its $0.001 par value common stock at a
         proposed offering price per share of $1.50. During the year ended
         December 31, 2003 the Company granted 349,000 stock options to
         employees under the 2003 Plan.

         During September 2003, the Company issued 62,500 options to purchase
         common stock to various consultants for services. The options had an
         exercise price of $3.00 per share and a term of three years. The
         Company recognized a total of $16,784 in expense associated with the
         issuance of these options.

         During 2003, the Company issued warrants to purchase common stock with
         convertible debt (discussed in Note 3 to the financial statements). At
         December 31, 2003 a total of 572,131 warrants to purchase common stock
         were outstanding.

                                       15
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 7 - OUTSTANDING STOCK PURCHASE WARRANTS (Continued)

         Also during 2003, the Company issued warrants to purchase common stock
         with convertible debt (see Note 3). At December 31, 2003 a total of
         55,219 warrants to purchase common stock were outstanding.

         Had compensation cost for the Company's stock options granted to
         directors and employees been based on the fair value as determined by
         the Black-Scholes option pricing model at the grant date under the
         accounting provisions of SFAS No. 123, the Company would have recorded
         additional expense of $45,469and $12,783 for the six months ended
         September 30, 2004 and 2003, respectively. Also under these same
         provisions, the Company's net loss would have been changed by the pro
         forma amounts indicated below:

                                       For the Six Months Ended
                                              September 30,
                                   ---------------------------------
                                        2004                2003
                                   -------------      --------------
         Net loss:
           As reported             $    (993,046)     $     (743,946)
           Pro forma               $  (1,038,515)     $     (756,729)

         Basic loss per share:
           As reported             $       (0.43)     $        (0.25)
           Pro forma               $       (0.45)     $        (0.25)

NOTE 8 - DISPUTED CLAIMS

         The Company is indebted to certain persons in what it believes to be
         the aggregate principal amount of $273,000, as evidenced by fourteen
         (14) separate promissory notes ("Convertible Notes"). These notes are
         convertible into Series B Preferred Stock. The holders of these notes
         also received warrants to purchase an aggregate of 121,565 shares of
         Series B Preferred Stock at an exercise price of $1.00 per share. The
         holders of four (4) of these notes claim to be owed Series B Preferred
         stock in addition to the principal in an amount equal to the amount of
         the Notes actually loaned to the Company ("Disputed Notes").

         The individual who negotiated and signed the Disputed Notes on the
         Company's behalf was the Company's Interim Chief Financial Officer, and
         was also employed by the firm acting as the placement agent for the
         Convertible Notes ("Placement Agent"). This individual executed the
         Disputed Notes without the prior knowledge or authorization of the
         Company's Board of Directors. Moreover, certain of the Disputed Notes
         are held by affiliates of the Placement Agent/Chief Financial Officer.

         The Company is in negotiations to resolve disagreements over the
         amounts owed and to eliminate this debt. The amount of repayment and or
         number shares and warrants to be issued cannot be determined at this
         time. However, the original principal amount of the notes and the
         stated number of warrants are included in these financial statements.
         All of the above mentioned amounts have been accrued in the financial
         statements.

NOTE 9 - GOING CONCERN

         The Company's financial statements are prepared using accounting
         principles generally accepted in the United States of America
         applicable to a going concern, which contemplates the realization of
         assets and liquidation of liabilities in the normal course of business.
         The Company has not yet established an ongoing source of revenues
         sufficient to cover its operating costs and allow it to continue as a
         going concern. The ability of the Company to continue as a going
         concern is dependent on the Company obtaining adequate capital to fund
         operating losses until it becomes profitable. If the Company is unable
         to obtain adequate

                                       16
<PAGE>

                      HOMENET CORPORATION AND SUBSIDIARIES
               (FORMERLY FARADAY FINANCIAL, INC. AND SUBSIDIARIES)
                 Notes to the Consolidated Financial Statements
              For the Six Months Ended September 30, 2004 and 2003


NOTE 9 - GOING CONCERN (Continued)

         capital, it could be forced to cease operations. In order to continue
         as a going concern, develop a reliable source of revenues, and achieve
         a profitable level of operations the Company will need, among other
         things, additional capital resources. Management's plans to continue as
         a going concern include raising additional capital through sales of
         common stock and or issuance of corporate debt.

         However, management cannot provide any assurances that the Company will
         be successful in accomplishing any of its plans. The Company is
         involved in a highly competitive industry and has encountered
         difficulty in raising capital in the past. Management estimates that
         $5,000,000 of additional capital will be required to fund the Company's
         operations for the next twelve months.


NOTE 10 - SUBSEQUENT EVENT

         On or about November 30, 2004, the Company entered into secured loan
         arrangement whereby three accredited lenders provided the Company with
         loans in the aggregate principal amount of $600,000. These loans bear
         interest at the rate of 12% per annum and have a default interest rate
         of 18% per annum. In connection with the loans, the lenders received
         warrants exercisable for 50,000 shares of common stock at the price of
         $1.50 per share. The loans are secured by the general intangibles of
         Homenet Communications, Inc., subject to certain prior rights of Zions
         National Bank.

                                       17
<PAGE>

Item 2. Management's Discussion and Analysis or Plan of Operation.

The following discussion and analysis provides information which management
believes is relevant to an assessment and understanding of the Company's
consolidated results of operations and financial condition. The discussion
should be read in conjunction with the consolidated financial statements and
notes thereto.

Overview

This report represents the initial reporting period to reflect the consolidated
activities of the Company and its recently acquired wholly owned subsidiary,
HomeNet Communications, Inc., ("HNC") (formerly Video Internet Broadcasting
Corporation). Information relating to 2003 is for HNC.

In furtherance of the Company's plan of operation, the Company, HNC and HNU, a
wholly owned subsidiary of the Company, completed a Plan of Merger whereby HNU
was merged HNC ("Merger") with HNC being the surviving corporation.

Upon closing of the Merger, each share of HNC capital stock that was issued and
outstanding immediately prior to the closing was converted into 1.0903 shares of
the Company's common stock and all previously outstanding shares of HNC capital
stock are no longer outstanding and were automatically canceled and ceased to
exist. All other securities convertible into or exercisable for shares of HNC
capital stock, including but not limited to stock options, convertible debt and
warrants and issued by HNC prior to the effective date of the Merger were
converted into or exercisable for the number of shares of HNC common stock
determined by using the 1.0903 conversion factor. On the date of the Merger HNC
had 2,184,939 shares of common stock outstanding, 350,550 shares of preferred
stock outstanding, options exercisable for an additional 618,520 shares of stock
and other convertible securities that are convertible under terms that are in
dispute. See footnote 2 to the attached financial statements. The Company issued
approximately 2,764,449 shares of its common stock on a fully diluted basis to
consummate the Merger. In addition, there is a possibility that the Company may
create a class of preferred stock that would be issued to some of the holders of
HNC securities that were convertible into HNC preferred stock immediately prior
to the Merger. However, the exact number of shares and the number and form of
the convertible securities to be issued is still subject to agreement.

The merger was accounted for as a recapitalization of HNC because the
shareholders of HNC controlled HC after the merger. HNC was treated as the
surviving entity for accounting purposes and HC was the surviving entity for
legal purposes. There was no adjustment to the carrying value of the assets or
liabilities or HNC.

As a result of the Merger, we are now involved in providing deployed Internet
Protocol (IP) television services. We have approximately 4,000 paying video and
data or data only subscribers in Utah and Washington State. We are a service
provider for the delivery of video, data, and voice services ("triple play") to
the municipal and government consumer markets.

We provide these services over fiber optic systems designed and built by
municipal and governmental entities. We have partnered with technology providers
and well-capitalized Public Utility Districts (PUDs) and cities to deploy our
services in the initial targeted areas. In each case, the city or the utility
deploys the fiber infrastructure to businesses and residences in their
respective service areas. We lease this end-to-end fiber infrastructure from the
utilities, on a per subscriber basis, thereby, we believe, minimizing our
capital expenditures.

Results of operations consist of:

The traditional cable and "Triple Play" (voice, video and data) IP service
providing business of HNC:

                                       18
<PAGE>

We signed an "Initial Provider Network Access And Use Agreement" with the City
of Provo, Utah (Provo) on July 8, 2004. This contract designates us as the
initial service provider for Provo to deliver video, data, and telephony to its
population of 30,000 households and 3,000 businesses. It is anticipated that
other providers will have the opportunity to "co-locate" on this system in the
future; although we have a period of exclusivity while the system is being built
out.

In February 2004, in contemplation of the awarding of our contract with Provo,
we acquired the customers of and the right to operate Provo Cable Company (PCC),
a traditional, analog delivery cable system. We plan to continue to operate this
system until the fiber infrastructure reaches these customers, at which time we
will convert them to the IP delivery system. The results of those operations are
included in the analysis below.

The service and product fulfillment business of HMG:

HMG commenced operations in March 2004. Its results are included in the analysis
below.

Three and Six Months Ended September 30, 2004

Revenues

Revenues for the three month period ended September 30, 2004 increased 148% to
$715,609 from $289,129 for the three month period ended September 30, 2003.
Revenue in the 2004 period included $217,775 and $82,145 from HMG and PCC,
respectively.

Revenue for the six month period ended September 30, 2004 increased 81% to
$993,720 from $548,721 for the six month period ended September 30, 2004.
Revenue in the 2004 period included $332,568 and $280,711 from HMG and PCC,
respectively. Additionally, revenue in the 2003 period included a one-time sale
of software in the amount of $150,000.

Gross Margin

Gross margin for the three month period ended September 30, 2004 increased 151%
to $350,080 from $139,340 for the three month period ended September 30, 2003.
Gross margin in the 2004 period included $100,887 and $74,670 from HMG and PCC,
respectively.

Gross margin for the six month period ended September 30, 2004 increased 9.6% to
$ 416,108 from $379,740 for the six month period ended September 30, 2004. Gross
margin in the 2004 period included $167,185 and $237,460 from HMG and PCC,
respectively. Additionally, gross margin in the 2003 period included margin from
a one-time sale of software in the amount of $150,000.

Operating Expenses

Operating expenses for the three months ended September 30, 2004 increased 170%
to $852,469 from $314,740 for the three months ended September 30, 2003.
Operating expenses increased, primarily, as a result of increased staffing and
administrative infrastructure to support the HMG and PCC operations.

Operating expenses for the six months ended September 30, 2004 increased 56% to
$1,319,929 from $841,841 for the six months ended September 30, 2003. Operating
expenses increased, primarily, as a result of increased staffing and
administrative infrastructure to support the HMG and PCC operations.

                                       19
<PAGE>

Interest Expense

Interest expense for the three month period ended September 30, 2004 increased
to $73,584 from $2,636 for the three months ended September 30, 2003.

Interest expense for the six month period ended September 30, 2004 decreased to
$89,225 from $281,845 for the six months ended September 30, 2003.

During 2004 and prior to September 30, 2004, we issued $1,275,000 in Convertible
Notes. We also established a line of credit with a national bank in the amount
of $1,500,000. At the date of this filing we have not borrowed against the line
of credit. Interest on these instruments was responsible for the increase in
interest over the prior period.

Net Loss

Net losses for the three month periods ended September 30, 2004 and 2003 were
$575,973 and $178,035, respectively Net losses for the six month periods ended
September 30, 2004 and 2003 were $993,046 and $743,946, respectively. In each
case, current year net losses were higher as a result of assembling a staff and
building processes to support the Provo launch as well as future projects.
Continuing development of our proprietary set top box software and the cost of
expanding our market share were also contributing factors.

Liquidity and Capital Resources

To date, we have financed our operations principally through private placements
of equity and debt securities and revenues from operations. We used net cash for
operating activities of $526,467during the six months ended September 30, 2004,
a decrease of $39,546 as compared to the $566,013 used during the same period in
2003. The reason for the decrease in cash needed to fund operations was due to a
beneficial conversion feature adjustment which was included in the 2003 results.
During the six months ended September 30, 2004, net cash of $54,065 was used in
investing activities, involving purchase of fixed assets, compared with $23,828
for the same period in 2003. Cash proceeds of $1,192,750 were realized from the
issuance of convertible notes and $16,000 in common stock, cash of $16,771 was
used to pay capital lease and note payable obligations and cash of $784,842 was
used in other financing activities. As of September 30, 2004, our current
liabilities totaled $2,634,058 and we had a working capital deficit of
$1,984,449.

Our working capital requirements for the foreseeable future will vary based upon
a number of factors, including the acquisition of, and the costs associated with
launching, new projects, the acceptance of our product and market penetration
along with other factors that may not be foreseeable at this time. We believe
that we will need at least $5,000,000 in funding by the end of January 2005 to
fund operations for the next twelve months. We have no commitments to provide
additional funding and there can be no assurance that we will be able to obtain
additional funding on satisfactory terms, or at all. If we do not receive the
needed funding, we will not be able to execute our business plan and will be
required to significantly curtail and perhaps cease operations.

The Company had no significant non-cancelable operating lease obligations as of
September 30, 2004.

Notes payable, convertible debentures and notes payable - related parties
consist of the following as of September 30, 2004:

                                       20
<PAGE>

         Unsecured notes payable to shareholders of the Company
           due on demand, payable through the issuance of or
           proceeds from the sale of shares of NutraCea common
           stock Interest is computed at a rate of 12% per annum.   $  153,436

         Note payable bearing interest at 8% per annum,
           unsecured, annual payments of $51,375 plus interest
           due on May 30 each year until paid in full.                 205,500

         Note payable bearing interest at 2.5% per annum,
           unsecured, due by April 1, 2007, monthly payments of
           $3,000                                                      151,837

         Less current portion                                         (408,936)
                                                                    ----------

         Total Notes Payable                                        $  101,837
                                                                    ==========

         Unsecured notes payable to shareholders of the Company
           due on demand, payable through the issuance of or
           proceeds from the sale of shares of NutraCea common
           stock Interest is computed at a rate of 12% per annum.   $   17,022

         Note payable bearing interest at 12% per annum,
           unsecured, payable on demand                                 50,000

         Note payable bearing interest at 12% per annum,
           unsecured, payable on demand                                170,000
                                                                    ----------

         Total Notes Payable - Related                                 237,022
                                                                    ==========

         Unsecured convertible notes payable to shareholders of
           the Company due September 2004, convertible at the
           holder's option to common stock of the Company at a
           ratio of one share per each dollar of outstanding
           principal and interest. Interest is computed at at a
           rate of 12% per annum.                                   $1,275,000

         Convertible note payable, bearing interest at 8% per
           annum, convertible to Series B preferred stock at a
           rate of two shares for each dollar loaned, conversion
           price of $1.00 per share, note also carries warrants
           to purchase Series B preferred at the rate of 25% of
           the total shares the note is convertible to and are
           exercisable at $1.00 per share                              273,000

         Less related party portion                                   (675,000)
                                                                    ----------

         Total Convertible Debt                                     $  873,000
                                                                    ==========

On or about November 30, 2004, the Company entered into secured loan arrangement
whereby three accredited lenders provided the Company with loans in the
aggregate principal amount of $600,000. These loans bear interest at the rate of
12% per annum and have a default interest rate of 18% per annum. In connection
with the loans, the lenders received warrants exercisable for 50,000 shares of
common stock at the price of $1.50 per share. The loans are secured by the
general intangibles of Homenet Communications, Inc., subject to certain prior
rights of Zions National Bank.

                                       21
<PAGE>

Off Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.

Recent Accounting Pronouncements

The Company has not adopted any new accounting policies that would have a
material impact on the Company's financial condition, changes in financial
conditions or results of operations.

Critical Accounting Policies

Revenue Recognition

Subscription Television Services and Other Subscriber-Related Revenue
Subscription television service revenues are derived principally from monthly
fees paid by subscribers. In addition to recurring subscriber revenues, the
Company also derives revenues from the sales of pay-per-view movies and events,
and from installation charges. The Company recognizes cable television,
high-speed data, telephony and programming revenues as services are provided to
subscribers. Subscriber fees for multiple receivers and equipment rental are
recognized as revenue monthly as earned. Revenues derived from other sources are
recognized when services are provided or events occur.

Software Revenue

The Company applies the provisions of Statement of Position 97-2, "Software
Revenue Recognition " in conjunction with the applicable provisions of Staff
Accounting Bulletin No. 104, " Revenue Recognition." Accordingly, the Company
recognizes revenue for software when there is (1) persuasive evidence that an
arrangement exists, which is generally a customer purchase order, (2) the
software is delivered, (3) the selling price is fixed and determinable and (4)
collectibility of the customer receivable is deemed probable. The Company has
yet to complete the development of its software developed for sale and has not
yet recognized any revenue from the sale of software developed for sale.

Forward Looking Statements

When used in this Form 10-QSB or other filings by the Company with the
Securities and Exchange Commission, in the Company's press releases or other
public or shareholder communications, or in oral statements made with the
approval of an authorized officer of the Company's executive officers, the words
or phrases "would be", "will allow", "intends to", "will likely result", "are
expected to", "will continue", "is anticipated", "estimate", "project", or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995.
Forward-looking statements specifically include, but are not limited to, project
launch dates; successfully commercialization of our projects; expectations
regarding the ability of our products and services to compete with the products
and services of our competitors; acceptance of our products and services by the
marketplace as cost effective; sufficiency and timing of available resources to
fund operations; plans regarding the raising of capital; the size of the market
for our products and services; plans regarding sales and marketing; and
strategic business initiatives.

                                       22
<PAGE>

We caution readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made, are based on certain
assumptions and expectations which may or may not be valid or actually occur,
and which involve various risks and uncertainties, including but not limited to
risk of a lack of demand or low demand for our products and services, the
inability to successfully implement our projects, competitive products, services
and pricing, delays in introduction of products and services, commercialization
and technology, changes in the regulation or service provider selection and
other risks. See "Risk Factors."

Unless otherwise required by applicable law, we do not undertake, and
specifically disclaim any obligation, to update any forward-looking statements
to reflect occurrences, developments, unanticipated events or circumstances
after the date of such statement.

Risk Factors

We have a limited operating history upon which you may evaluate us and may never
become profitable.

The Company has been operating a subscriber-based service offering since March
2001. We have a limited operating history upon which you may evaluate our
business and prospects. We have incurred net losses since inception. Currently,
we have approximately 4,000 paying customers, limited revenues, and are not yet
profitable. Though we have a limited amount of revenue generating business, the
success of our business model will depend on our ability to continue to finance
the growth of the business and execute the operating model. There is no
assurance that we will become profitable in the future.

We do not have sufficient funds to execute our business plan.

The Report of Independent Public Accountants relating to the Company's audited
financial statements contains a "going concern" explanatory paragraph. We
estimate that we will need at least $5,000,000 in financing to fund operations
and pay for required capital expenditures during the next twelve months. We may
fail to raise needed capital for the following reasons, among others: (i)
continued low valuations of service and technology companies in the capital
markets; (ii) lack of acceptance of our business model by potential investors
and or lending institutions; (iii) a failure to agree on the terms of an
investment or debt line; and (iv) competition from other companies with similar
business models which are willing to accept lower valuations or more onerous
terms. If we are unable to raise needed additional capital on favorable terms,
we will not be able to implement our business model.

We are highly dependent on emerging markets.

Our ability to generate revenue is dependent on the development of new
opportunities for video, data, and voice services in the municipal and
government markets, and on the receptiveness of those markets to the Company's
services and products. Specifically, market acceptance of the Company's services
and products is highly dependent upon commercial and residential deployment
programs by municipal and governmental entities. There can be no assurance that
the deployment of the network infrastructure by these operators, required to
deploy our services and products, will go on as anticipated or that the Company
will be able to gain significant market share while providing services and
products over these networks.

Our business is dependent upon variable transport costs which may change.

Our business model is predicated on the build out of infrastructure by third
parties and the wholesale leasing of that infrastructure on a per subscriber
basis. These rates are subject to change among the various government and
municipal entities we work with. If these rates were increased to the extent
that we were not able to maintain our competitive market margins, our business
would be materially adversely affected.

                                       23
<PAGE>

Our business model is unproven at scale.

Our strategy is based upon a relatively unproven business model. Our business
model of delivering a range of services to residential and business customers in
a purely digital media over fiber optic cable has been done in limited quantity
with limited customers. We intend to take advantage of large infrastructure
investments in fiber optic infrastructure systems by public utilities and
government entities to serve their customers and thereby increase the Company's
competitive advantage. However, to our knowledge, no other existing companies
have done this successfully. If the utilities or government entities slow their
build out of the infrastructure, the Company's growth would be slowed as well.
If consumers do not adopt the technology solution and service at our forecasted
rates, our success will be limited as well. We may shift our focus or redefine
our business model or strategy in the future. There can be no assurance that the
Company will be able to devise a long-term business strategy that will result in
commercially exploitable products or services or generate future profits.

Increased subscriber turnover could affect our financial performance.

Historically, we have had significant levels of subscriber turnover (churn). Any
development, which among other things, increases costs to our existing customers
or materially adversely affects the quality of service, will increase the
desirability of a competing product. A number of risks described in this
memorandum as potentially having a material adverse affect on cost or quality
could also result in an increase in churn which would harm our financial
performance. Churn can also increase due to factors beyond our control,
including a slowing economy, significant signal compromise, a maturing
subscriber base, and competitive service offerings. There can be no assurance
that we will be able to manage our churn rates to achieve profitability.

We may be unable to manage rapidly expanding operations.

If we are unable to manage our growth effectively, our business and results of
operations could be materially adversely affected. To manage our growth
effectively, we must continue to:

         o Develop expanded internal and external sales forces;

         o Develop expanded installation capabilities;

         o Develop expanded customer service operations and information systems;

         o Maintain our relationships with third party vendors and strategic
           partners; and

         o Expand, train, and manage our employee base.

Furthermore, our management personnel must assume even greater levels of
responsibility. If we are unable to effectively manage our growth, we may
experience a decrease in subscriber growth, an increase in churn, an increase in
expenses or other adverse results, any one of which could have a material
adverse affect on our business.

We depend on others to produce programming.

We depend on third parties to provide us with programming services. Our
programming agreements have remaining terms ranging from less than two to up to
six years and contain various renewal and cancellation provisions. We may not be
able to renew or modify these agreements on favorable terms, or at all, or these
agreements may be canceled prior to expiration of their original term. If we are
unable to renew or modify any of these agreements or the other parties cancel
the agreements, there can be no assurance that we would be able to obtain
substitute programming, or that such substitute programming would be comparable
in quality or cost to our existing programming or that of our competitors. In
addition, programming costs are anticipated to continue to increase. We may be
unable to pass programming costs on to our customers which could have a material
adverse impact on our business, cash flows, and operating margins.

                                       24
<PAGE>

The Company's industry is highly competitive.

We expect to face intense competition in the development, production, and sale
of our services and products. The opportunities created by the convergence of
the information, telecom, and entertainment industries over fiber and
telecommunication networks is likely to attract numerous service suppliers
competing for these markets, including consumer electronics, computer, network
infrastructure and traditional cable and satellite equipment manufacturers. The
Company will also be subject to competitive pressure from consumer grade cable
and satellite providers in the service territories in which we are focused. The
Company's potential competitors have substantially greater resources than the
Company. In addition, a number of the Company's competitors may have a broader
array of product offerings, with greater scale and ability to provide such
products at lower cost, which could provide prospective customers a greater
number of options. There can be no assurance that alternative and superior
technologies or services may not become available, or that the Company will be
able to compete successfully with larger, more established companies.

We are highly dependent on our suppliers and partners.

Many of our prospective customers want access to a "turnkey" solution that they
can obtain from a single provider. To this end, we have entered into strategic
partnerships and supplier relationships to bundle such a turnkey solution. We
believe we possess considerable industry experience and know-how, and a robust
software and operating system solution. Our suppliers and partners provide
necessary infrastructure, including backbone, servers, front-end and content.
Such supplier relationships and partnerships include Cisco, Sigma Designs,
National Semi Conductor, Intel Corporation, Vbrick, Optical Solutions Inc,,
Ncube, Kasenna and others. This listing is not intended to be inclusive of all
supplier and partner and relationships the Company currently maintains To the
extent our suppliers and partners enter into similar arrangements with our
competitors or fail to meet service level requirements, our business could be
materially adversely affected.

Our business depends upon the performance of our partner and supplier companies,
which is uncertain.

Economic, governmental, industry, and other factors outside our control will
affect the Company. If our partner and supplier companies do not succeed, the
value of our assets could decline. Many of our partner and supplier companies
will be in the early stages of their development and may be under-performing.
Our business and prospects must be considered in light of the risk, expense and
difficulties frequently encountered by companies in early stages of development,
particularly companies in still new and rapidly evolving markets. The material
risks relating to our partner companies will include, among others: (i) lack of
the widespread commercial use of the technologies to which their businesses
relate; (ii) intense competition among providers of the products and services
our partner companies offer, which could lead to the failure of some of our
partner companies; (iii) inadequate market demand for the products or services
of our partner companies; and (iv) poor implementation of the business plans of
our respective partner companies. If we are unable to effectively mitigate the
risks associated with our partner companies, our business operating results and
financial condition may be adversely affected and we may be unable to execute
our strategy.

                                       25
<PAGE>

Our business may be disrupted if we are unable to upgrade our systems to meet
increased demand.

Capacity limits on some of our technology (and that of certain of our partners
and suppliers), transaction processing systems and network hardware and software
may be difficult to project and we may not be able to expand and upgrade our
systems to meet increased use. As traffic on our systems increases, we and our
partners will be required to expand and upgrade our technology, transaction
processing systems and network hardware and software. We may be unable to
accurately project these rates of increase. In addition, we may not be able to
expand and upgrade our systems and network hardware and software capabilities to
accommodate increased use of our products and services. If we are unable to
appropriately upgrade our systems and network hardware and software, our
operations and processes may be disrupted or we may lose potential customers.

We may be unable to protect our proprietary rights and may infringe on the
proprietary rights of others.

We will likely be entering or even creating new markets for goods and services.
In support of this innovation, we may develop proprietary techniques,
trademarks, processes, hardware, and software. Although reasonable efforts will
be taken to protect the rights to this intellectual property, the complexity of
international trade secret, copyright, trademark, and patent law, coupled with
the limited resources of young companies and the demands of quick delivery of
products and services to market, create risks that our efforts will prove
inadequate. Further, the nature of the technology industry demands that
considerable detail about innovative processes and techniques be exposed to
competitors for a variety of reasons, including partnering relationships,
fostering compatibility, and the ease of reverse engineering. We may also
license content from third parties and it is possible that we could become
subject to infringement actions based upon the content licensed from those third
parties. Any claims against our proprietary rights, with or without merit, could
subject us to costly litigation and the diversion of our technical and
management personnel. If we incur costly litigation and our personnel are not
effectively deployed, the expenses and losses incurred by us will increase and
their profits, if any, will decrease.

Rapid technological changes may prevent us from remaining current with our
technical resources and maintaining competitive product and service offerings.

The markets in which we will operate are characterized by rapid technological
change, frequent new product and service introductions and evolving industry
standards. Significant technological changes could render our existing
technologies or other products and services obsolete. If we are unable to
successfully respond to these developments or do not respond in a cost-effective
way, our business, financial condition and operating results will be adversely
affected. To be successful, we will be required to adapt to our rapidly changing
markets by continually improving the responsiveness, services and features of
our products and services and by developing new features to meet the needs of
our customers. Our success will depend, in part, on our partner companies'
ability to license leading technologies useful in their businesses (and to pass
the benefit of such technologies through to us), enhance their existing products
and services and develop new offerings and technology that address the needs of
their and our customers.

New or changed government regulation could significantly reduce demand for our
services and products.

We are subject not only to regulations applicable to businesses generally, but
also laws and regulations directly applicable to the Internet, telephone, cable
and satellite television networks, and other telecommunications content and
services. State, federal, and foreign governments may adopt additional laws and
regulations that adversely affect the Company or its markets in any of the
following areas: user privacy, open access rights, copyrights, consumer
protection, taxation of e-commerce, the online distribution of content, and the
characteristics and quality of online products and services. In particular,
government laws or regulations restricting, burdening and taxing telephony or
the exchange of personally identifiable information could delay the
implementation of interactive services or create liability for us that
facilitates information exchange. Also, if the Company has to re-design its
products and services to comply with new or changed government laws or
regulations, the Company could face additional expense and delay in delivering
its services and products to its customers.

                                       26
<PAGE>

Our success is dependent on our key personnel.

We believe that our success will depend on continued employment by us of senior
management and key technical personnel. If one or more members of our senior
management were unable or unwilling to continue in their present positions, our
business and operations could be disrupted.

Our efficiency may be limited while our current employees and future employees
are being integrated into our operations. In addition, we may be unable to find
and hire additional qualified management and professional personnel to help lead
our company. There is considerable competition for qualified personnel in the
area of the Company's activities, and there can be no assurance that the Company
will be able to attract and retain qualified personnel necessary for the
development of the business.

We expect to experience losses in the foreseeable future.

We expect to incur operating losses for the foreseeable future and, if we ever
have profits, we may not be able to sustain them. Our expenses will increase as
we build an infrastructure to implement our business model. For example, we
expect to hire additional employees, expand information technology systems, and
lease space for retail visibility in new geographic areas. In addition, we plan
to significantly increase our operating expenses to:

         o Broaden our geographic presence by deploying the services in other
           counties and states

         o Explore other corporate and commercial applications for the
           technology and service in combination with corporate partners, and

         o Explore and respond to new business opportunities in this industry.

If any of these and other expenses are not accompanied by increased revenue, our
losses will be greater than we anticipate.

We will, eventually, have competition on the iProvo Network

Our contract with the City of Provo, Utah, provides for a limited period of
exclusivity. Once that period has expired, there could be additional providers
on the network which could effect our penetration rates and revenue stream.

We may be subject to liability as a result of our failure to file the required
reports with the Securities and Exchange Commission

                                       27
<PAGE>

Our common stock is registered pursuant to section 12(g) of the Securities
Exchange Act of 1934 (the "1934 Act") and we are thereby obligated to file
annual reports on Form 10-K or 10-KSB, quarterly reports on Form 10-Q or 10-QSB,
Current Reports on Form 8-K, other reports and information as described in the
1934 Act and related rules and to otherwise comply with various provisions of
the 1934 Act and related rules. From 1996 until 2004 we failed to comply with
substantially all of the obligations imposed upon it by the 1934 Act (the "1934
Act Violations"). As a result, we could be subject to substantial civil and
criminal penalties due to such non-compliance. There can be no assurance that
substantial civil and criminal penalties will not be imposed.

No assurance of a liquid public market for our common stock

The is no market for our securities and there can be no assurance that a market
will develop. If a market develops, there can be no assurance as to the depth or
liquidity of any market for our securities or the prices at which holders may be
able to sell their securities. As a result, an investment in our securities may
not be liquid, and investors may not be able to liquidate their investment
readily or at all when they need or desire to sell.

Applicability of low priced stock risk disclosure requirements may adversely
affect the prices at which our common stock trades

Our common stock may be considered a low priced security under rules promulgated
under the Securities Exchange Act of 1934 (the "Exchange Act"). Under these
rules, broker-dealers participating in transactions in low priced securities
must first deliver a risk disclosure document which describes the risks
associated with such stocks, the broker-dealer's duties, the customer's rights
and remedies, and certain market and other information, and make a suitability
determination approving the customer for low priced stock transactions based on
the customer's financial situation, investment experience and objectives.
Broker-dealers must also disclose these restrictions in writing to the customer,
obtain specific written consent of the customer, and provide monthly account
statements to the customer. With these restrictions, the likely effect of
designation as a low priced stock will be to decrease the willingness of
broker-dealers to make a market for the stock, to decrease the liquidity of the
stock and to increase the transaction cost of sales and purchases of such stock
compared to other securities.

Item 3. Controls and Procedures

The Company has evaluated, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, the effectiveness of the design
and operation of the Company's disclosure controls and procedures as of
September 30, 2004 pursuant to Exchange Act Rule 13a-15(e). Based upon that
evaluation, the Chief Executive Officer and Chief Financial Officer concluded
that the Company's disclosure controls and procedures are effective in timely
alerting them to material information relating to the Company required to be
included in the Company's periodic SEC filings. There have been no significant
changes in internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent evaluation.

PART II -- OTHER INFORMATION

Item 1. Legal Proceedings.

HNC is indebted to certain persons in what HNC management believes to be the
aggregate principal amount of $273,000; as evidenced by fourteen (14) separate
promissory notes (the "Convertible Notes"). The Convertible Notes were
convertible into HNC Series B Preferred Stock prior to the Merger. The holders
of the Convertible Notes also received warrants to purchase an aggregate of
121,565 shares of HNC Series B Preferred Stock at an exercise price of $1.00 per
share. The holders of four (4) of the Convertible Notes claim to be entitled to
receive shares of HNC Series B Preferred Stock in addition to being paid the
principal and accrued interest on their Convertible Notes ("Disputed Notes").

                                       28
<PAGE>

Immediately prior to the close of the Merger, HNC had no shares of Series B
Preferred Stock outstanding and the Series B Preferred had not been authorized
by the HNC board of directors. The individual who negotiated and signed the
Disputed Notes on HNC's behalf was HNC's Interim Chief Financial Officer and was
also employed by the firm acting as the placement agent for the Convertible
Notes ("Placement Agent"). The Disputed Notes were executed on terms not known
to, or authorized by HNC's board of directors. Moreover, certain of the Disputed
Notes are held by affiliates of the Placement Agent/Chief Financial Officer. HNC
is engaged in negotiations with the holders of the Convertible Notes. Under the
terms of the Merger Agreement, the Convertible Notes were to convert into Common
Stock at the conversion ratio of 1.0903. However, the Company may create a class
of preferred stock that would be issued to the holders of Convertible Notes or
the Disputed Notes upon conversion of such notes instead of issuing common stock
to the holders of such notes. The exact number of shares of common or preferred
stock issuable upon exercise of the notes and the rights, preferences and
designations of the preferred stock if preferred stock is authorized for
issuance is still subject to negotiation.

The Placement Agent also claims that it is owed additional placement fees as a
result of its agreement with the HNC. If HNC is able to reach agreement with the
holders of the Convertible Notes, it intends to request that the Company, in
connection with the settlement of the claim, issue up to any additional 109,030
shares of Common Stock in order to settle the disputed claim over fees allegedly
payable pursuant to a finder's fee agreement ("Finder's Fee Resolution").
However, there can be no assurance that the Finder's Fee Resolution will be
settled on the stated terms or at all.

To date and to the knowledge of the Company, no legal proceedings have been
filed to date with respect to these matters.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On or about August 2, 2004, the Company, HNC and Homenet Utah, Inc. ("Homenet"),
a wholly owned subsidiary of the Company, entered into a Merger Agreement
whereby Homenet would be merged into HNC with HNC to be the surviving
corporation. The separate existence of Homenet would cease if the Merger became
effective. Consummation of the Merger was subject to a number of contingencies.
On August 23, 2004, the shareholders of HNC approved the Merger and on September
8, 2004, the Merger was consummated.

As part of the Merger each share of HNC capital stock that was issued and
outstanding immediately prior to the closing was converted into 1.0903 shares of
the Company's common stock and all previously outstanding shares of HNC capital
stock is no longer outstanding and was automatically canceled. All other
securities convertible into or exercisable for shares of HNC capital stock,
including but not limited to stock options, convertible debt and warrants issued
by HNC prior to the effective date of the Merger, became, without further
action, convertible into or exercisable for the number of shares of Company
common stock determined by using the 1.0903 conversion factor.

HNC had 2,184,939 shares of common stock outstanding, 350,550 shares of
preferred stock outstanding, options exercisable for an additional 618,520
shares of stock and other convertible securities that are convertible under
terms that are in dispute. The Company issued approximately 2,764,449 shares of
its common stock on a fully diluted basis in connection with the Merger. In
addition, there is a possibility that the Company may create a class of
preferred stock that would be issued to some of the holders of HNC securities
that were convertible into HNC preferred stock.

The issuance of Company securities to the former HNC security holders was exempt
from registration under Section 4(2) of the Securities Act of 1933 and Rule 506
as promulgated thereunder. All of the securities issued in connection with the
Merger were restricted securities. The Company did not use an underwriter in
connection with the Merger.

                                       29
<PAGE>

During 2004 the Company issued common stock valued at $299,297 for debt paid on
behalf of the Company. In addition, in 2004 the Company issued common stock
valued at $158,868 for services rendered. These security issuances were exempt
from registration under Section 4(2) of the Securities Act of 1933 and Rule 506
as promulgated thereunder. All of the securities issued in these transactions
were restricted securities and no underwriters was used.

Item 3. Defaults Upon Senior Securities.

The Company is also in default on the Convertible Notes described under Part II,
Item 1, above.

Item 5. Other Information.

In connection with the Merger, the Company changed its name to HomeNet
Corporation.


Item 6. Exhibits and Reports on Form 8-K.

         (a) Index to Exhibits


        EXHIBIT
          NO.                          DESCRIPTION OF EXHIBIT
        -------                        ----------------------

         2.1      Agreement and Plan of Merger (Incorporated by reference to
                  Exhibit 10.11 of the Company's Form 10-QSB, dated June 30,
                  2004)

         3(i).1   Certificate of Incorporation of the Company (Incorporated by
                  reference to Exhibit 3.1 of the Company's Form 10-SB, File No.
                  0-22236)

         3(i).2   Amendment to the Certificate of Incorporation of the Company

         3(i).3   Amended and Restated Articles of Incorporation of HomeNet
                  Communications, Inc.

         3(i).4   Articles of Amendment to Articles of Incorporation of HomeNet
                  Communications, Inc.

         3(ii).1  Bylaws of the Company (Incorporated by reference to Exhibit
                  3.2 of the Company's Form 10-QSB, File No. 0-22236)

         3(ii).2  Bylaws of HomeNet Communications, Inc.

         10.1     Settlement Agreement by and between the Company and NutraCea,
                  dated December 10, 2002 (Incorporated by reference to Exhibit
                  10.1 of the Company's Form 10-KSB, dated March 31, 2004).

         10.2     Loan Agreement by and between the Company and Video Internet
                  Broadcasting Corporation, dated February 18, 2004
                  (Incorporated by reference to Exhibit 10.2 of the Company's
                  Form 10-KSB, dated March 31, 2004).

                                       30
<PAGE>

         10.3     Security Agreement by and between the Company and Video
                  Internet Broadcasting Corporation, dated March 12, 2004
                  (Incorporated by reference to Exhibit 10.3 of the Company's
                  Form 10-KSB, dated March 31, 2004).

         10.4     Intellectual Property Security Agreement by and between the
                  Company and Video Internet Broadcasting Corporation, dated
                  March 12, 2004 (Incorporated by reference to Exhibit 10.4 of
                  the Company's Form 10-KSB, dated March 31, 2004).

         10.5     Amendment Number One to the Agreements by and between the
                  Company and Video Internet Broadcasting Corporation, dated
                  April 21, 2004 (Incorporated by reference to Exhibit 10.5 of
                  the Company's Form 10-KSB, dated March 31, 2004).

         10.6     Amendment Number Two to the Agreements by and between the
                  Company and Video Internet Broadcasting Corporation, dated May
                  1, 2004 (Incorporated by reference to Exhibit 10.6 of the
                  Company's Form 10-KSB, dated March 31, 2004).

         10.7     Form of Loan Agreement by and between the Company and Lenders
                  whereby the Company borrowed the principal amount of $765,000
                  (Incorporated by reference to Exhibit 10.7 of the Company's
                  Form 10-KSB, dated March 31, 2004).

         10.8     Form of Loan Agreement by and between the Company and Lenders
                  whereby the Company borrowed the principal amount of $445,000
                  (Incorporated by reference to Exhibit 10.8 of the Company's
                  Form 10-KSB, dated March 31, 2004).

         10.9     Employment Agreement with Frank J. Gillen (Incorporated by
                  reference to Exhibit 10.9 of the Company's Form 10-KSB, dated
                  March 31, 2004).

         10.10    Employment Agreement with Shauna Badger (Incorporated by
                  reference to Exhibit 10.10 of the Company's Form 10-KSB, dated
                  March 31, 2004).

         10.11    Form of Loan Agreement by and between the Company and Lenders
                  whereby the Company borrowed the principal amount of $500,000

         10.12    Founders Stock Option Plan (Incorporated by reference to
                  Appendix A of the Company's Definitive Proxy Statement, filed
                  on October 10, 2004).

         10.13    HomeNet Corporation 2004 Stock Option Plan (Incorporated by
                  reference to Appendix A of the Company's Definitive Proxy
                  Statement, filed on October 10, 2004).

         10.14    Secured Business Loan Agreement (including Promissory Note,
                  Guarantee, Assignment of Deposit Account, with Zions First
                  National Bank, dated July 1, 2004.

         10.15    Lease by and between the Company and The Canopy Group
                  (including Promissory Note and Security Agreement), dated
                  September 16, 2004.

         10.16    Lease by and between HomeNet Communications, Inc. and Moore
                  Furniture, Inc., dated August 30, 2001.

         10.17    Initial Provider Network Access And Use Agreement by and
                  between the Company and the City of Provo, Utah.

                                       31
<PAGE>

         10.18    Master Service Agreement by and between HomeNet
                  Communications, Inc. and Level 3 Communications, LLC (certain
                  portions of the agreement were omitted from the exhibit
                  pursuant to a request for confidential treatment).

         10.19    Addendum to the Master Service Agreement by and between
                  HomeNet Communications, Inc. and Level 3 Communications, LLC
                  (certain portions of the agreement were omitted from the
                  exhibit pursuant to a request for confidential treatment).

         31.1     Certification of W. Kelly Ryan pursuant to Section 302 of the
                  Sarbanes-Oxley Act of 2002

         31.2     Certification of Michael W. Devine pursuant to Section 302 of
                  the Sarbanes-Oxley Act of 2002

         32.1     Certification of W. Kelly Ryan pursuant to 18 U.S.C. Section
                  1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley
                  Act of 2002

         32.2     Certification of Michael W. Devine pursuant to 18 U.S.C.
                  Section 1350, as adopted pursuant to Section 906 of the
                  Sarbanes-Oxley Act of 2002


         (b) Reports on Form 8-K:

         The Company filed a current report on Form 8-K on September 13, 2004,
reporting under Items 2.01, 3.02 and 5.01 the Merger and related events.

                                   SIGNATURES

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


                                                  HOMENET CORPORATION
                                                  (Registrant)



Date: December 13, 2004                           By /s/ W. Kelly Ryan
                                                  -----------------------------
                                                  W. Kelly Ryan
                                                  Chief Executive Officer

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