SECURITIESAND EXCHANGE COMMISSIONWashington, D.C. 20549

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FORM 10-KSB

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| [X]  | ANNUAL REPORT PURSUANT TO SECTION 13 OR15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |

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| []  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THESECURITIES EXCHANGE ACT OF 1934 |

For the fiscal year endedMarch 31, 2005

Commission File No. 0-12817

PERFECTDATACORPORATION(Exact name of Small Business Issuer in ItsCharter)

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|                 Delaware |  | 95-3087593                          |
| (State or Other Jurisdiction ofIncorporation orOrganization)                                             |  | (IRS Employer IdentificationNumber) |
| 825Third Avenue 32nd Floor New York, NewYork                                                             |  | 10022                               |
| (Address of Principal ExecutiveOffices)                                                                  |  | (ZipCode)                           |
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Issuer's Telephone Number,Including Area Code:(805) 581-4006

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

Securities registered pursuant to Section 12 (g) of the Act:Common Stock

Check whether the issuer: (1) filedall reports required to be filed by Section 13 or 15 (d) of theExchange Act during the past 12 months (or for such shorter period thatthe registrant was required to file such reports), and (2) has beensubject to such filing requirements for the past 90 days:

Yes[X] No[ ].

Check ifthere is no disclosure of delinquent filers in response to Item 405 ofRegulation S-B is not contained in this form, and no disclosure will becontained, to the best of registrant's knowledge, in definitiveproxy or information statements incorporated by reference in Part IIIof this Form 10-KSB or any amendments to this Form 10-KSB. []

Issuer's revenues for its most recent fiscalyear: $326,000 (all from discontinued operations from April 1 to May31, 2004).

As of April 19, 2005, the aggregate marketvalue of the voting stock held by nonaffiliates of the issuer prior tothe Merger described in this Form 10-KSB, was $8,703,896.

As of May 23, 2005, the issuer had 6,584,530 shares of CommonStock outstanding.

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PART I

Forward-Looking Statements

Certain statements made in thisAnnual Report on Form 10-KSB are "forward-lookingstatements" within the meaning of Section 21E of theSecurities and Exchange Act of 1934 regarding the plans and objectivesof management for future operations and market trends and expectations.Such statements involve known and unknown risks, uncertainties andother factors that may cause our actual results, performance orachievements to be materially different from any future results,performance or achievements expressed or implied by suchforward-looking statements. The forward-looking statements includedherein are based on current expectations that involve numerous risksand uncertainties. Our plans and objectives are based, in part, onassumptions involving the continued expansion of our business.Assumptions relating to the foregoing involve judgments with respectto, among other things, future economic, competitive and marketconditions and future business decisions, all of which are difficult orimpossible to predict accurately and many of which are beyond ourcontrol. Although we believe that our assumptions underlying theforward-looking statements are reasonable, any of the assumptions couldprove inaccurate and, therefore, there can be no assurance that theforward-looking statements included in this report will prove to beaccurate. In light of the significant uncertainties inherent in theforward-looking statements included herein, particularly in view of ourearly stage operations, the inclusion of such information should not beregarded as a representation by us or any other person that ourobjectives and plans will be achieved.

REVERSE MERGERTRANSACTION

On April 19, 2005 (the "ClosingDate"), pursuant to an Agreement and Plan of Merger datedas of March 7, 2005 (the "Merger Agreement"),a copy of the Merger Agreement being filed (by incorporation byreference) as Exhibit 2.1 to this Annual Report on Form 10-KSB (this"Report") and being incorporated herein bythis reference, Sona Mobile, Inc., a Washington corporation("Sona"), was merged (the"Merger") with and into PerfectDataAcquisition Corporation ("Merger Sub"), aDelaware corporation and the wholly-owned subsidiary of PerfectDataCorporation (the "Company"), the registrant.Merger Sub simultaneously changed its named to Sona Mobile, Inc.("New Sona"). Pursuant to the MergerAgreement, four of the five directors of the Company resigned and threenominees of Sona were elected to the Company's Board of Directors(the "Board"). The Chairman of the Board andChief Executive Officer of the Company resigned effective with theclosing pursuant to the Merger Agreement and Sona – designatedofficers were elected. See Item 9 to this Report for more informationas to the change in officers and directors.

Pursuant to theMerger Agreement, the former shareholders of Sona received an aggregateof 539,733 shares of the Company's Series A Convertible PreferredStock, $.01 par value (the "Series A PreferredStock"), which shares are convertible into 25,961,714shares of the Company's Common Stock, $.01 par value (the"Common Stock"), representing approximately76% of the Company's issued and outstanding shares on afully diluted basis. In addition, 28,407 shares of the Series APreferred Stock, convertible into 1,366,406 shares of the Common Stockand representing approximately 4% of the Company's issuedand outstanding shares of the Common Stock on a fully diluted basis,were issued to Sona's M&A and financial advisor in connectionwith the Merger (the "Advisor"). The formerSona shareholders and the Advisor will collectively increase theirequity position in the Company to 85% if New Sona, on aconsolidated basis, has (1) revenues of at least $3,000,000 and a grossprofit margin of at least 50% for its fiscal year endingDecember 31, 2005 or (2) Aggregate Revenues (as defined) of at least$12,000,000 and Aggregate Gross Profit Margin (as defined) of at least50% for the two fiscal years ending December 31, 2006. Pursuantto the Merger Agreement, the fiscal year of the Company and New Sonawill change from March 31 to December 31.

For additionalinformation as to the Merger and the related transactions contemplatedby the Merger Agreement, a stockholder or other person may consult theCompany's Information Statement on Form 14F-1 (the"Information Statement") filed pursuant toSection 14(f) of the Securities Exchange Act of 1934, as amended (the"Exchange Act"), a copy of which was mailedto stockholders of the Company on 

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April 4, 2005, and the Company's CurrentReport on Form 8-K filed with the Securities and Exchange Commission(the "Commission") on April 21, 2005. Copiesof this Information Statement and this Report may be inspected withoutcharge at the public reference section of the Commission at JudiciaryPlaza, 450 Fifth Street, N.W., Washington D.C. 20549. Copies may alsobe obtained from the Commission at prescribed rates or on theCommission's website at http://www.sec.gov. Copies mayalso be obtained from the Company by a letter addressed to itsSecretary, c/o Sona Mobile, Inc., 44 Victoria Street, Suite 801,Toronto, Ontario, M5C 1Y2, Canada.

The future performance of theCompany will depend on its new management and the operations of the NewSona. The disclosures in this Report for the fiscal year ended March31, 2005 ("Fiscal 2005") will be only ofhistorical interest, as future financial statements will be those ofSona and New Sona. This Report, except where otherwise indicated, islimited to the operations of the Company in Fiscal 2005. A descriptionof Sona's business is included at the end of Item 1 of thisReport.

Item 1.    Business.

General

PerfectData Corporation (the "Company")was incorporated in the State of California on June 8, 1976. OnNovember 29, 2004, having obtained shareholder approval therefor, theCompany reincorporated in the State of Delaware. See the subsectioncaptioned "Reincorporation in Delaware" inthis Part I to this Report for additional information as to thisreincorporation. The Company was originally founded in 1976 by a groupof engineers and data processing professionals to design andmanufacture a proprietary line of magnetic media maintenance equipment- disk pack cleaners and inspectors. This line of equipment, which haslong since been discontinued, was originally sold to Original EquipmentManufacturers (OEMs) such as Burroughs Corporation (now UnisysCorporation), DEC (Digital Equipment Corporation), NCR Corporation and3M Corporation.

With the evolution of the computer workenvironment from the sterile, climate-controlled surroundings of aclean room to the mainstream office and home environments, simplepreventative maintenance became a key element in maintaining equipmentefficiency and personal productivity. The Company's cleaning andmaintenance products were designed to address the needs of the endusers of computers and office automation equipment and by maintenanceorganizations as part of preventative maintenance programs to reduceequipment "down time" and service costs andto increase product life.

Sale of Business Operations

On October 3, 2003, the Company entered into an Asset PurchaseAgreement (the "APA") with Spray ProductsCorporation ("Spray"), pursuant to which theCompany agreed to sell to Spray (or a Spray affiliate) substantiallyall of the operating assets of the Company for a price equal to the sumof the value of the inventory, collectible accounts receivable and$100,000, less the amount of trade payables which are being assumed bySpray.

From November 1, 2003 until May 31, 2004, Spray, pursuantto the APA, acted as a manager for the fulfillment of orders from theCompany's customers. As compensation for Spray's services,Spray received a fee of 71⁄2% of net sales. As a result ofthe management arrangement with Spray, the Company moved to a smallerfacility and reduced its staff, thereby reducing its ongoing overheadexpenses.

Because the Company's largest customer hadthreatened to seek another supplier because of the othersupplier's offer of lower prices, and because the long delay inclosing the transaction caused uncertainty for customers and Spray, theCompany and Spray agreed in principle, and subsequently finalized theagreement in writing by the Second Amendment dated as of August 12,2004, to the following revisions to the APA: (1) effective June 1,2004, Spray assumed full responsibility for all of the Company'scustomers in order to prevent possible losses of customer business; (2)the payment of $100,000 was reduced to $80,000; and (3) the Company wasgranted the right to put the assets to Spray for the purchase price onthe earlier of (a) September 30, 2004 or (b) the Company receivingshareholder consent to the sale to Spray. The put was neverexercised.

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On November 29, 2004, the Company receivedconsents from the holders of record of 3,440,725 shares of its thenCommon Stock, no par value (the "Company CommonStock"), representing 55.4% of the 6,209,530 sharesof the Company Common Stock outstanding on October 21, 2004 (the"Record Date"), which had been set as therecord date pursuant to Section 701(b)(2) of the California GeneralCorporation Law for the solicitation of consents, to the sale of itsbusiness operations to Spray and the reincorporation described in thesubsection captioned "Reincorporation inDelaware" in this Item 1 of this Report. On November 30,2004, the Company sold the business operations to Spray pursuant to theamended APA. A copy of the original APA is filed (by incorporation byreference) as Exhibit 10.1 to this Report, a copy of the FirstAmendment is filed (by incorporation by reference) as Exhibit 10.2 tothis Report and a copy of the Second Amendment is filed (byincorporation by reference) as Exhibit 10.3 to this Report and the APAas amended by the First Amendment and the Second Amendment areincorporated herein by this reference.

The operating assetstransferred to Spray on November 30, 2004 were the Company'sinventories of finished goods, raw materials and work in progress;books and records, including customer and supplier lists and other datarelating to the operating business; the trade name"PerfectData Corporation" and all other namesused in the business; the goodwill relating to the business; accountsreceivable as to which the parties agree; all of the Company'smachinery and equipment, office furniture, computer equipment andsupplies (except what the Company is using in its office); and all ofthe Company's intellectual property rights. The Company did nottransfer to Spray any of its cash or cash equivalents as part of thetransaction.

There was no material relationship, other than inrespect of the transaction, between Spray and the Company or any of itsaffiliates, or any director or officer of the Company, or any associateof any director or officer of the Company.

Pursuant to the APAas amended, the purchase price for the assets to be sold to Spray wasto be (1) the sum of (a) collectible accounts receivable (which were$217,475), (b) inventory (which was $39,977) and (c) $80,000 less (2)trade payables assumed by Spray. Because Spray had been operating thebusiness for a six-month period between June 1, 2004 and the closingdate of November 30, 2004, all of the trade payables to be assumed bySpray had instead become amounts which the Company owed to Spray. Inaddition, the Company had withheld sums from payments otherwise dueSpray and paid $1,493.54 in commissions on behalf of Spray. Theparties, accordingly, at the closing, agreed that, because the amountsdue Spray unrelated to the closing more than offset the purchase pricedue the Company, no cash need be paid to the Company.

Reincorporation in Delaware

On November 29, 2004, theCompany also received consents from the holders of record of 3,438,445shares of the Company Common Stock, representing 55.37% of the6,209,530 shares of the Company Common Stock outstanding on the RecordDate, consenting to the reincorporation of the Company, which had beenincorporated under the laws of the State of California, as a Delawarecorporation. On November 29, 2004, the reincorporation was effected bythe merger (the "Reincorporation Merger") ofthe Company with and into its wholly-owned subsidiary, PerfectData(Delaware) Inc. ("PerfectData Delaware"),which subsidiary had been incorporated on November 5, 2004 under thelaws of the State of Delaware, and the name of PerfectData Delawarewas, simultaneously with consummation of the Merger, changed toPerfectData Corporation. A copy of the Agreement and Plan of Mergerdated as of November 29, 2004 relating to the Reincorporation Merger isfiled (by incorporation by reference) as Exhibit 2.2 to this Report andis incorporated herein by this reference. As a result of the Merger,each share of the Company Common Stock automatically was converted intoone share of the Common Stock, $.01 par value (the "CommonStock"), of PerfectData Delaware.

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The following description of theCompany's operations in this Item 1 of this Report relates to thepre-June 2004 operations:

The Industry

TheCompany's products were sold in the computer and office equipmentaccessories and supplies market. This market targeted small, medium andlarge sized businesses as well as the home environment. This market wasserviced mainly by office product catalogs, office superstores, massmerchants, consumer electronics retailers, warehouse clubs and computersuperstores. The Company had been organized to service all of thesedistribution channels.

Products

Prior to November 1,2003, when management of order fulfillment was assumed by Spray, theCompany had designed, assembled and/or packaged all of its cleaning andmaintenance products that it marketed and distributed. The Company hadsub-contracted for its components from a variety of establishedsuppliers and manufacturers.

The consumable cleaning andpreventative maintenance products were for home, office and computerenvironments. These products were designed to eliminate or minimizecontamination in and around computer and office automation equipment.Use of the Company's products on a regular basis reducedequipment downtime and the need for unnecessary service andrepairs.

The Company's principal product was thePerfectDuster EcoDuster line of compressed gas dusters. This productwas offered in a variety of formulations to meet competitive pressuresand buyer demands. All of these dusters were 100% CFC free andcontained no ozone depleting chemicals that could damage the ozonelayer in the earth's upper atmosphere. Other products that theCompany sold were CD and tape drive cleaners, CD player cleaners,static control products, laser and inkjet printer cleaners, fax andcopy machine cleaners, and a variety of premoistened cleaning wipes forspecific equipment.

Marketing

**Customers**. TheCompany's products were sold primarily through retaildistribution under the Company's"PerfectData" trademark. The retaildistribution channel was comprised of office product catalogs, officeproduct distributors and dealers, stationery and computer retail storesand large warehouse/superstore type accounts.

While the Companysold products to more than 120 customers in the United States, Canadaand other countries during the fiscal year ended March 31, 2004("Fiscal 2004"), approximately 94% ofthe Company's net sales were accounted for by its 10 largestcustomers. Two customers accounted for 71% and 13%,respectively, of total sales. Sales to these customers were madepursuant to specific purchase orders and neither customer was obligatedto purchase the Company's products under any other agreement. Theloss of either or both of these customers would have had an adverseeffect on the Company's business. No other customer accounted formore than 10% of the Company's net sales in Fiscal2004.

Sales Organization.

**DomesticSales.**    Sales of products under the Company's registeredtrademark "PerfectData" were made byindependent manufacturers' representative groups, dealers andlarge distributors. Sales of the Company's products to OriginalEquipment Manufacturers under private label arrangements were handledby Company sales personnel located in California and, on a selectedbasis, by certain assigned independent manufacturers'representatives. Agreements between the Company andmanufacturers' representatives or distributors could have beenterminated on short notice by either party.

**InternationalSales****.    **Sales of the Company's products worldwidehad been handled by the Company's sales personnel located inCalifornia through international distributors and customers. TheCompany had no agreements with foreign distributors.

**CustomerService and Support**.    In order to enhance customer service,training, field support and technical support, the Company had a tollfree 800 phone number.

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All products were sold with a"return to manufacturer" warranty forreplacement of damaged or defective goods only. Products were warrantedfor 90 days from the date of purchase. Dealers and distributors wererequired to perform this replacement service on behalf of the Company.Costs incurred annually by the Company for product warranties wereinsignificant.

Competition

The Company believes thatneither it nor any of its competitors ever had a dominant position inthe cleaning and maintenance market. There were many competitors inthis market and some of these competitors were substantially larger insize and had greater financial resources than the Company. The Companybelieves that the effectiveness, quality, service and the pricecompetitiveness of its products, along with its marketing efforts andprograms, product selection and responsiveness to accounts'needs, were the principal basis on which it was able to compete in thismarket.

Materials and Supplies

The nature of the rawmaterials used in the Company's products was various chemicals,metals, plastics and paper goods. The Company assembled and/or packagedits products in the United States from materials and supplies purchasedprimarily from domestic vendors and sub-contractors. Some of theassembled component parts were manufactured by vendors located in theFar East because it was more cost effective to obtain goods andfabrication expertise at significantly reduced costs when compared withpurchasing the same goods domestically.

The Company believesthat its established relationships with its vendors and suppliers werein good order. The Company did not experience any significantproduction delays or loss of revenue due to the lack of parts ormaterial shortages. The Company, as a matter of standard businessprocedures, regularly reviewed its vendor relationships and searchedfor new sources and ways to produce its products both domestically andinternationally with the improvement of quality, delivery or loweredcost of goods as its goals.

The Company does not believe thatfederal, state and local provisions which have been enacted or adoptedregulating the discharge of material into the environment, or otherwiserelating to the protection of the environment, had any material effecton its capital expenditures, its potential earnings or its thencompetitive position.

Employees

At March 31, 2005, theCompany employed three persons, all of whom were engaged in generalmanagement and administration, one on a part-time basis. The Companybelieves that its relations with its employees were good. The Companynever had a work stoppage and none of its employees were represented bya labor union.

Terminated Acquisitions

During the fourfiscal years preceding the consummation of the Merger (see the section"Reverse Merger Transactions" preceding Item1 to this Report), the Company had been seeking acquisitions which werenot related to its historical business described above in this Item 1.The Board was of the opinion that profitability on a continuous basiswould not be achieved absent an acquisition of a new business orbusinesses and/or a new product. The Board was of this opinion despiteits efforts to reduce the Company's expenses and to increasesales from the Company's product line, both of which results wereachieved to some degree. The directors reviewed numerous proposals, ofwhich the three described in the ensuing three paragraphs were the mostsignificant.

From October 2001 to February 2002, the Company wasengaged in negotiations pursuant to which the shareholders of GraphCoTechnologies, Inc. ("GraphCo") would acquirea majority interest in, and control of the Board. GraphCo was atechnologies, software and systems development company providingadvanced security solutions for biometric identification, secureaccess, surveillance and secure law enforcement incident management.The negotiations were mutually terminated on February 19, 2002.

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In August and September 2002, the Companywas engaged in negotiations with another privately-held company, withannual revenues approximating $100 million, pursuant to which thestockholders of that company would acquire a majority interest in, andcontrol of the Board. Just as the parties were prepared to execute adefinitive merger agreement, the other company received an offer fromanother very large public company and negotiations were terminated inlate September 2002.

On July 2, 2003, the Company entered intoan Agreement and Plan of Merger and Reorganization, (the"SuperCom Merger Agreement") and relatedagreements with SuperCom, Ltd. ("SuperCom"),an Israeli corporation, culminating the negotiations which had begun inApril 2003. SuperCom was engaged in the research, development andmarketing of advanced technologies and products for government securedID projects and smart card production technology. On October 24, 2003,the Company filed a Registration Statement on Form S-4, File No.333-109933 (the "Registration Statement"), inorder to make available a joint proxy statement for use by the Companyand SuperCom to solicit approvals of the transaction from theirrespective shareholders and prospectus for the Company to offer sharesof the Common Stock to the SuperCom shareholders if the proposedtransaction were approved and consummated. If the transaction had beenconsummated, the SuperCom shareholders would have receivedapproximately 78% of the outstanding shares, subject toadjustment upward depending on the Company's Final Net AvailableCash (as defined) at the closing, and three of the five directors wouldhave been designees of SuperCom. When it became obvious to both partiesthat, in order for the Registration Statement to become effective,SuperCom would at a minimum, be required to include audited financialstatements for its fiscal year which ended December 31, 2003, therebyfurther delaying closing of the transaction as to which negotiationshad begun in April 2003 and which the parties initially hoped to closeby October 2003, the Merger Agreement was terminated after discussionsas to alternatives. From the perspective of the Company'sdirectors, continuation of the transaction would have required theCompany to incur additional expenses, thereby further reducing its NetAvailable Cash and resulting in further dilution to its shareholdersabsent SuperCom agreeing to change the dilution formula, and with nocertainty as to when there would be a closing.

Sona Mobile

As discussed above under the heading "Reverse MergerTransaction", on April 19, 2005, Sona Mobile merged withand into the Company's newly formed wholly owned subsidiary,which then changed its name to Sona Mobile. Sona develops and marketsreal-time data applications for mobile devices that allow users toexecute secure transactions, view streaming data and entertainment andexchange data with corporate systems. Sona's wirelessapplication's are designed to enable enterprise employees toaccess and interact with corporate databases from remote locationsthrough handheld devices.

Sona has initially focused itsmarketing efforts on two vertical markets – finance andentertainment – as well as the broad horizontal market referredto as corporate solutions. For the financial services industry, Sonadevelops and builds mobile applications that allow executives tomonitor their portfolio in a real-time environment, access variouscritical programs and exchange of information with these programs,monitor live news broadcasts and execute trades. For the entertainmentindustry, Sona develops and builds mobile applications that allow itscustomers to access and view real-time live TV and on-demand video,news and music content on their handheld devices. Finally, for thegeneral corporate market, Sona develops and builds solutions thatmobilize technical support and sales applications.

Sona wasincorporated in 2000 and currently has offices in Toronto, New York andLondon.

Item 2.    Properties.

The Company leasesoffice space on a month-to-month basis. The Company initially leasedthe office space for a six-month term effective October 15, 2003 andsubsequently for an additional six-month term that expired October 15,2004. The Company had previously leased a 24,500 square foot facilityunder an operating lease which expired June 20, 2003. The Companycontinued to occupy that facility, along with a subtenant to whom theCompany sublet warehouse space, on a month-to-month basis until October31, 2003. As a result of the management arrangement with Spray, theCompany moved to the smaller facility.

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Item 3.    Legal Proceedings.

Asof March 31, 2005, there were no material pending legal proceedings towhich the Company was a party or of which any of its property was thesubject.

Item 4.    Submission of Matters to a Vote ofSecurity Holders.

No matter was submitted during the fourthquarter of Fiscal 2005 (i.e., the period from January 1 toMarch 31, 2005) to a vote by security holders, through the solicitationof proxies or otherwise.

PART II

Item 5.    Marketfor the Common Equity Related  Stockholder Mattersand Small Business Purchases of Equity Securities.

MarketInformation

During Fiscal 2005 and 2004, the Common Stock ofthe Company was listed on the OTC Bulletin Board under the symbol PERF.Prior to April 17, 2003, the Common Stock was traded on the NasdaqSmallCap Market. The following table sets forth the range of high andlow sales prices per share of the Common Stock for the indicatedquarters of Fiscal 2005 and Fiscal 2004:

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|                                                     |  | SalesPrice |        |
|                                                     |  | High       |        | Low    |  |   |
|         **2005** |  |       |   |   |  |   |   |   |  |
| FirstQuarter                                             |  | $          | .85    |   |  | $      | .40    |   |  |
| Second Quarter                                           |  | $          | .83    |   |  | $      | .33    |   |  |
| Third Quarter                                            |  | $          | .79    |   |  | $      | .37    |   |  |
| Fourth Quarter                                           |  | $          | 1.55   |   |  | $      | .75    |   |  |
|                                                     |  |       |   |   |  |   |   |   |  |   |   |   |
|         **2004** |  |       |   |   |  |   |   |   |  |
| FirstQuarter                                             |  | $          | 1.29   |   |  | $      | .25    |   |  |
| SecondQuarter                                            |  | $          | 1.35   |   |  | $      | .95    |   |  |
| ThirdQuarter                                             |  | $          | 1.24   |   |  | $      | .85    |   |  |
| FourthQuarter                                            |  | $          | 1.10   |   |  | $      | .46    |   |  |
|                                                     |  |       |   |   |  |   |   |   |  |   |   |   |
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Holders

The approximate number of shareholders at March 31, 2005 was 1,700determined by security position listings.

Dividends

Because of its losses from operations, the Company has not paid anycash dividends on the Common Stock and, until profitability isrestored, as to which and when there can be no assurance, the Companydoes not intend to pay any cash dividends.

Item6.    Management's Discussion and Analysis.

The ensuingdiscussion does not, unless otherwise specifically stated, give anyeffect to the Merger and the potential impact of the Sona operations.See the section captioned "Reverse MergerTransaction" preceding Item 1 to this Annual Report.

Critical Accounting Policies

Management believes that thefollowing discussion addresses the Company's most criticalaccounting policies, prior to the sale to Spray on November 30, 2004,which was most important to the portrayal of 

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the Company's financial condition andresults, and required the most difficult, subjective and complexjudgments, often as a result of the need to make estimates about theeffect of matters that were inherently uncertain. Prior to November 1,2003, the date on which Spray assumed responsibility for fulfillment ofcustomer orders, management also included a discussion of itsevaluation of inventory as a critical accounting policy on an on-goingbasis.

Allowance for DoubtfulAccounts:

The Company evaluated the collectibility of itsaccounts receivable and provided an allowance for estimated losses thatmay result from customers' inability to pay. The amount of thereserve was determined by analyzing known uncollectible accounts, agedreceivables and customers' credit-worthiness. Amounts laterdetermined and specifically identified to be uncollectible were writtenoff against the allowance.

RevenueRecognition:

Until June 1, 2004 the Company had recognizedrevenue on a gross basis when products were shipped and the customerstook ownership and assumed risk of loss, collection of relevantreceivables was probable, pervasive evidence of an arrangement existedand the sales price was fixed or determinable. As a result of theprovisions to the APA with Spray, the Company no longer met thecriteria necessary to recognize revenue as a principal and insteadrecognized revenue net as an agent. Effective with the sale of theoperating assets to Spray on November 30, 2004, the Company had nooperations.

Results of Operations

Net sales for Fiscal2005 were $326,000 as compared to net sales of $2,680,000 for Fiscal2004. See "Revenue Recognition" above for anexplanation of the decrease in sales in fiscal 2005. All the net salesin Fiscal 2005 and Fiscal 2004 related to discontinued operations.

Selling, general and administrative expenses("Expenses") for Fiscal 2005 and Fiscal 2004were $970,000 and $933,000, respectively. The increase in Expenses inFiscal 2005 directly related to compensation expense of $180,000related to the 150,000 shares of Common Stock issued to JDK Associates,Inc. ("JDK") for termination of a consultingagreement. In Fiscal 2004, the Company recorded compensation expense of$51,500 related to the 50,000 shares of Common Stock issued to the thenChairman of the Audit Committee for his services as such. The increasein Expenses in Fiscal 2005 was partially offset by a reduction insalary and related taxes. The Chief Executive Officer reduced hisannual salary effective April 2004, and agreed to waive his salaryeffective January 2005.

Other Income for Fiscal 2005 and Fiscal2004 was primarily dividend income of $21,000 and $17,000,respectively.

Income from discontinued operations for Fiscal2005 and Fiscal 2004 was $56,000 and $359,000, respectively. The incomein Fiscal 2005 was sales of $326,000, less cost of goods sold("Costs") of $252,000, Expenses of $98,000,plus the income of $80,000 pursuant to the APA with Spray. The incomein Fiscal 2004 was sales of $2,680,000, less Costs of $1,777,000, andExpenses of $544,000. The decline in sales and Costs in Fiscal 2005 isdue to the fact that, effective June 1, 2004, the Company did notreport any revenues, as described in "RevenueRecognition". The decrease in Expenses in Fiscal 2005 wasrelated to (1) the Company transferring its order fulfillment to Sprayon November 1, 2003 and relocating to a smaller facility enabling theCompany to reduce facility expenses as well as reduce its labor force;and (2) Spray assuming full responsibility for all the Company'scustomers on June 1, 2004, resulting in a further reduction in Expensesrelated to freight, sales representative commissions and customerrebates.

The increased net loss in Fiscal 2005 directly relatedto the increase in Expenses from continuing operations and the decreasein income from discontinued operations, as described above.

Liquidity and Capital Resources

The Company's cashand cash equivalents decreased $636,000 in Fiscal 2005. The decreaseresulted from cash used in continuing operating activities of $698,000,partially offset by cash provided by discontinued operating activitiesof $62,000.

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The Company had a current ratio of betterthan 3 to1 at fiscal year end and no long-term debt.

As a resultof the continuing negative cash flows from operations, the Companydepended on the proceeds from its March 2000 private placement in orderto meet its payable requirements. On March 31, 2000, certain investorspurchased shares of the Common Stock at $2.25 per share. The netproceeds approximated $2,895,000. Because all of such funds were notrequired for operations, the funds deemed excess were invested in aworking capital management account with Merrill Lynch, Pierce, Fenner& Smith Incorporated ("Merrill Lynch").As reported in Note 3 to the Financial Statements in this Report, as ofMarch 31, 2005, the Company had approximately $1,267,000 of cashequivalents in two financial institutions, which exposed the Company toa concentration of credit risk. The Company had, as of that date,approximately $1,256,000 invested in highly liquid money marketinstruments with Merrill Lynch, which are not federally insured. Theremaining $11,000 was deposited at a bank, which is federally insuredup to $100,000.

The Board believed, as of March 31, 2005, that,as a result of the cash described in the preceding paragraph, theCompany's working capital was adequate to fund its requirementsfor its fiscal year ending March 31, 2006 without giving effect to theMerger.

At March 31, 2005, the Company had net operating lossand general business tax credit carry forwards for income tax purposesof approximately $6,373,000 and $12,000, respectively, available toreduce future potential Federal income taxes. As a result of theMerger, the utilization of these loss tax credit carry forwards will belimited pursuant to Section 382 of the Internal Revenue Code of 1986,as amended.

Item 7.    Financial Statements.

Thefinancial statements listed on the accompanying Index to FinancialStatements on page 24 of this Annual Report are filed as part of thisAnnual Report.

Item 8.    Changes in and Disagreements onAccounting and Financial Disclosure.

Not applicable.

Item 8A.    Controls and Procedures

Evaluation ofDisclosure Controls and Procedures

Prior to the Closing Date,the Company had a CEO and a CFO/CAO, constituting all of the thenmanagement, and, during the reporting period, four employees to conductoperations. The then CEO and CFO/CAO performed an evaluation of theeffectiveness of the design and operation of the Company'sdisclosure controls and procedures as of March 31, 2005. Because of itssmall size and limited number of personnel, the Company did not haveelaborate written procedures, nor did then management believe that suchelaborate written procedures were necessary to ensure accuratereporting in the Company's periodic reports. In making theirevaluation, the CEO and CFO/CAO consulted with the Company's thenoutside counsel. Based on that evaluation, the two officers concludedthat the Company's disclosure controls and procedures wereadequate and effective, as of March 31, 2005 to ensure that materialinformation relating to the Company would be made known to them byothers within the Company. Their evaluation was reported to BryanMaizlish, the sole remaining member of the Audit Committee, inconnection with his review of this Annual Report prior to itsfiling.

Changes in Internal Controls

There have been nosignificant changes in the Company's internal controls or inother factors that could significantly affect internal controls sincethe date of their evaluation in the fourth quarter and prior to theMerger.

Item 8B.    Other Information.

Notapplicable.

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PARTIII

Item 9.    Directors and Executive Officers of theRegistrant.

Directors and Executive Officers

Thefollowing table contains certain information relating to the directorsand executive officers of the Company as of March 31, 2005:

|                      |  |        |    |          |  |                                                                        |  |  |  |  |
|----------------------|--|--------|----|----------|--|------------------------------------------------------------------------|--|--|--|--|
| Name                 |  | Age    |    | Position |
| Harris A.Shapiro     |  |   | 69 |     |  | ChiefExecutive Officer, Director and Chairman of the Board             |
| Bryan Maizlish       |  |   | 43 |     |  | Director                                                               |
| Timothy D. Morgan    |  |   | 50 |     |  | Director                                                               |
| Tracie Savage        |  |   | 42 |     |  | Director                                                               |
| Corey P. Schlossmann |  |   | 49 |     |  | Director                                                               |
| Irene J. Marino      |  |   | 60 |     |  | Vice President Finance,Chief Financial Officer and Corporate Secretary |
|                      |

Asa result of the Merger, on April 19, 2005, Messrs. Shapiro, Morgan andSchlossmann and Ms. Savage resigned as directors of the Company and Mr.Shapiro resigned as Chairman of the Board and Chief Executive Officer.Mr. Maizlish is continuing as a director and, on interim basis, Ms.Marino is continuing in the above officerships except as Secretary.

The remaining director of the Company, Bryan Maizlish, appointedthree new directors, Shawn Kreloff, John Bush and Nicholas Glinsman,all of whom were directors and officers of Sona, to fill the vacanciesresulting from the resignations and the newly constituted Boardappointed the following new officers for the Company:

|                     |  |        |    |          |  |                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |  |  |  |
|---------------------|--|--------|----|----------|--|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| Name                |  | Age    |    | Position |
| ShawnKreloff        |  |   | 42 |     |  | Chairmanof the Board                                                                                                                                                                                                                                                                                                                                                                                                                         |
| JohnBush            |  |   | 41 |     |  | President, Chief Executive Officer andDirector                                                                                                                                                                                                                                                                                                                                                                                               |
| Nicholas H.Glinsman |  |   | 44 |     |  | Secretary and Director                                                                                                                                                                                                                                                                                                                                                                                                                       |
| Lance Yu            |  |   | 35 |     |  | Senior Vice President–ChiefTechnologyOfficer                                                                |
|                     |

BusinessHistory of Pre-Merger Directors and Officers.

Harris A. Shapirowas elected as a director of the Company and its Chairman of the Boardon March 31, 2000. On September 7, 2000, he was designated ChiefExecutive Officer of the Company. Mr. Shapiro has been the President ofMillennium Capital Corporation, a consulting firm specializing inmergers and acquisitions, since 1994. He was Senior Vice PresidentCorporate Finance of Gilford Securities Incorporated, a registeredbroker-dealer, from January 1, 1999 to March 29, 2000. Prior to GilfordSecurities, he was a Managing Director of Whale Securities Co., L.P., aregistered broker-dealer, from June 1993 until December 1998.

Bryan Maizlish was elected as a director of the Company on March 31,2000. Mr. Maizlish joined Lockheed Martin Corporation in August 2000and has held various managerial positions since then. He is currentlyserving as the Chief Technology Officer—Program Team in theIntegrated Systems and Solutions Division at Lockheed MartinCorporation. From January 1998 to August 2000, he was employed byMagnet Interactive Inc., a private Internet professional servicescompany and its affiliate Noor Group Ltd., a full service Internetsolutions and infrastructure provider offering a full range of servicesfrom networking, hosting, and Internet service provision to web-basedservices and entertainment based in Cairo, Egypt, his last position atboth companies being Executive Vice President, Chief Strategy Officerand Chief Financial Officer. Prior thereto, he held various managerialand consulting positions for over a decade in the new media andentertainment industries, such as MCA Inc., Gulf Western Corporationand Gene Roddenberry's Norway Corporation.

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Timothy D. Morgan was elected as adirector of the Company on March 31, 2000. He has, since October 1997,been a consultant on matters of business strategies, taxation, financeand asset protection techniques, and providing interim Chief FinancialOfficer and Controller services. None of the foregoing services or anyof those hereafter described were provided to the Company. From 1980through October 1997, he was a principal of Abacus Tax and FinancialServices, a firm specializing in tax compliance and pension planadministration. Prior to 1982, Mr. Morgan was manager of purchasing andaccounting departments for various companies, including DennisonEastman Corporation, Syntel Cavitron, Incorporated, and ContempoCasuals, Incorporated.

Tracie Savage was elected in July 1995 asa director of the Company. Ms. Savage has been the main news anchor forKFWB Radio in Los Angeles since August 2001. From April 2001 to July2001, Ms. Savage worked for the Los Angeles television subsidiary ofthe National Broadcasting Company, Inc.("NBC"). From March 1994 to March 2001, Ms.Savage was the co-anchor of NBC Channel 4's "Todayin L.A.: Weekend". From 1991 to 1994, she was a generalassignment reporter for the independent Los Angeles station, KCAL. Ms.Savage has been in broadcast journalism for more than 17 years and hasbeen the recipient of numerous awards and honors in her field.

Corey P. Schlossmann was elected as a director of the Company onMarch 31, 2000. Mr. Schlossmann has been Chief Executive Officer sinceOctober 1999, and Chief Financial Officer since January 1999, ofNationwide Auction Systems. Since January 1996, he has also served as apartner of Gordon, Fishburn & Schlossmann, a management consultingand accounting firm. Mr. Schlossmann was a partner of Hankin & Co.,a consulting firm, from 1988 until 1995.

Irene J. Marinooriginally joined the Company in March 1982 and rejoined the Company inSeptember 1987 after a leave of approximately four months. Ms. Marinowas promoted to Manager of Finance and Administration in March 1983 andto Controller and Assistant Secretary in March 1986. Upon rejoining theCompany in September 1987, Ms. Marino assumed the position ofController, Chief Financial Officer and Secretary of the Company. Shewas appointed Vice President of Finance in August 1989, and has morethan 36 years' experience in finance, accounting andadministration.

Other Directorships of Pre-MergerDirectors

Since October 1999, Corey P. Schlossmann has servedas a director of Entrade, Inc., a New York Stock Exchange holdingcompany whose online subsidiaries (including Nationwide Auction Systemsof which he is an executive officer as indicated in the secondpreceding section "Business History of Pre-MergerDirectors and Officers") provide auction and assetdisposition services to the utility and manufacturing industries, amongothers.

Business History of New Post-Merger Directors andOfficers

Shawn Kreloff was the Chairman of Sona from September2004 until the Merger. On the Closing Date, he became the Chairman anda director of the Company. He was a founding investor of Insight First,a company that provides analytics software, which was sold to 24/7Media (Nasdaq: TFSM) in 2003. He was also a founding investor, as wellas executive vice president of business development, of Opus360Corporation, which was acquired by Artemis International Solutions(OTC: AMSI) in 2002. He was a founder of Gray Peak Technologies, Inc.,a network consulting firm that provided high end consulting totelecomm, financial and other Fortune 1,000 companies, and served asits Chairman and Chief Executive Officer until it was sold to USWeb(Nasdaq: USWB) in 1998 for over $100 million. From September 2002 to2003, Mr. Kreloff was executive vice president of sales, marketing andbusiness development of Predictive Systems, Corp., a networkinfrastructure and security consulting company. Mr. Kreloff is a memberof the board of directors and, since September 2004, of the board ofdirectors of Secured Services, Inc., (OTCBB: SSVC.OB). Mr. Kreloffserved on the board of directors of Hudson Williams, a computerconsulting firm, from 1999 through 2004 when it was acquired by KeynoteSystems. (Nasdaq NM: KEYN).

John Bush was the President andChief Executive Officer of Sona from December 2003 until the Merger. Onthe Closing Date, he became the President and Chief Executive Officerand a director of the 

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Company. He has been a seniortelecommunications and technology executive for over 17 years. FromNovember 2001 through December 2003, he was self-employed and a privateinvestor. From December 1998 through December 2001, he was VicePresident – Enterprise Marketing for Sprint Canada.

Nicholas H. Glinsman was a member of the board of directors of Sonafrom September 2004 until the Merger and became the Secretary and adirector of the Company on the Closing Date. Mr. Glinsman has over 17years of experience in the financial services industry. Since 2000 Mr.Glinsman has been the Chief Executive Officer of 1 EZcall, LLC, aprivate investment fund. Since 2001 Mr. Glinsman has been a member ofthe board of directors of Braven Capital and Mirebella Funds Services,which are also private investment funds. Prior to 2001, he held varioussenior management positions at Salomon Brothers, Inc. and MerrillLynch, Pierce & Smith, Inc., including manager of the future salesgroup for Europe and the Middle East. He also represented the tradingfloor on the bank's European technology committee.

LanceYu was the Senior Vice President – Chief Technology Officer ofSona from November 2004 until the Merger. From January 2002 throughNovember 2004, he was the Vice President – Technology of SonaInnovations, which was purchased by Sona from Baldhead Systems, aprofessional services, web design and business consulting organizationbased in Toronto, Canada, first as a Senior Project Manager and then asVice President – Technology.

Except as set forth in Mr.Kreloff's biography above, no other post-Merger director of theCompany serves as a director of a company with a class of securitiesregistered pursuant to Section 12 of the Exchange Act, or any companyregistered as an investment company under the Investment Company Act of1940, as amended.

Family Relationships

There are nofamily relationships among the directors and executive officers of theCompany pre-Merger or with any of those who became directors andexecutive officers post-Merger. There are no family relationships amongthe directors and officers post-Merger.

Audit CommitteeFinancial Expert

During Fiscal 2005, the Board of Directors ofthe Company determined that Timothy D. Morgan, then Chairman of itsAudit Committee, was an "audit committee financialexpert" as such term is defined in Item 401 (e) (1) ofRegulation S-B and that Mr. Morgan was independent pursuant to Item 401(e) (1) (ii) of Regulation S-B.

Identification of AuditCommittee

During Fiscal 2005, the Company had aseparately-designated standing Audit-Committee established inaccordance with Section 3(a) (58) (A) of the Exchange Act. As of March31, 2005, the members were: Timothy D. Morgan (Chairman), BryanMaizlish and Tracie Savage. As a result of the Merger, a new AuditCommittee is expected to be designated because only Mr. Maizlish is adirector post-Merger. The Merger Agreement provides that, within threemonths of the Closing Date, the Company must have three directors thatwill meet the eligibility requirements imposed by Nasdaq for service onan audit committee of a Nasdaq-listed company. Accordingly, at leasttwo directors, in addition to Mr. Maizlish, must be added.

Nominating Committee

The Company does not have a standingnominating committee or a committee performing similar functions.Because the Board has been seeking, since March 31, 2000 when four ofthe five directors prior to the Merger took office, to obtain asuitable acquisition candidate which, among other matters, wouldfurnish new directors, the directors did not believe it necessary orappropriate to set up a formal nominating committee nor to adopt acharter for such a committee. However, in its proxy statements, theCompany included a statement that, if a stockholder had arecommendation as to a nominee for election as a director, suchstockholder should make his, her or its recommendation in writingaddressed to Harris 

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A. Shapiro, as the then Chairman of the Boardof the Company, at the Company's address shown in the heading tothe proxy statement, giving the business history and other relevantbiographical information as to the proposed nominee and the reasons forsuggesting such person as a director of the Company, and the Boardwould then promptly review the recommendation and advise thestockholder of its conclusion and, if a rejection, the reasonstherefor. No stockholder ever made a recommendation in response to theCompany's statement in its proxy statement.

Compliancewith Section 16(a) of the Exchange Act

Based solely on a reviewof Forms 3 and 4 furnished to the Company under Rule 16a-3(e)promulgated under the Exchange Act, with respect to Fiscal 2005, theCompany is not aware of any director or executive officer of theCompany who failed to file on a timely basis, as disclosed in suchforms, reports required by Section 16(a) of the Exchange Act duringFiscal 2005.

As of March 31, 2005, i.e., the end ofFiscal 2005, there was no beneficial owners of 10% or more ofthe Common Stock known to the Company other than Joseph Mazin who was,until July 27, 2000, the President and Chief Executive Officer of theCompany and, until March 31, 2000, a director of the Company. Mr. Mazinhas advised the Company that he timely filed all reports required bySection 16(a) of the Exchange Act during Fiscal 2005.

Code ofEthics

The Board of Directors of the Company during Fiscal 2005had determined not to adopt a written code of ethics because theCompany (1) had only two executive officers, (2) had agreed to, andsubsequently did, sell the Company's current operations to anunaffiliated company which had, since November 1, 2003, been acting asthe manager for the fulfillment of orders from the Company'scustomers and (3) had been actively seeking a suitable acquisition ormerger partner for the Company. Instead the Board had counsel to theCompany review with the two officers the standards which would havebeen in a written code of ethics and directed its Audit Committee tomonitor closely the conduct of the two officers on at least a quarterlybasis, which monitoring the Audit Committee performed.

Item10.    Executive Compensation.

Summary CompensationTable

The following table provides certain summary informationconcerning the compensation earned for services rendered in allcapacities to the Company during each of the last three fiscal years bythe Company's Chief Executive Officer as of the end of the lastfiscal year. No other executive officer of the Company earned in excessof $100,000:

SUMMARY COMPENSATION TABLE

|                            |  |                    |      |                        |  |                             |         |        |  |        |         |        |  |        |       |           |  |  |
|----------------------------|--|--------------------|------|------------------------|--|-----------------------------|---------|--------|--|--------|---------|--------|--|--------|-------|-----------|--|--|
|                       |  | AnnualCompensation |      | Long-Term Compensation |  | OtherCompensation           |
| Name and PrincipalPosition |  | Year               |      | Salary                 |  | SecuritiesUnderlyingOptions |         | ($)    |
|                       |  |               |      | ($)                    |  |                        |         |   |
| HarrisA. Shapiro (1)       |  |               | 2005 |                   |  |                        | 71,250  |   |  |   | 25,000  |   |  |   | 1,750 | (2)  |
| Chief Executive Officerand |  |               | 2004 |                   |  |                        | 150,000 |   |  |   | — |   |  |   | 2,500 | (2)  |
| Chairman of theBoard       |  |               | 2003 |                   |  |                        | 150,000 |   |  |   | 35,000  |   |  |   | 2,250 | (2)  |
|                            |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | The Board designatedMr. Shapiro as the Chief Executive Officer of the Company effectiveSeptember 2000. The Company and Mr. Shapiro entered into a one-yearemployment agreement in September 2000 providing for a base annualsalary of $150,000. The Board had, from time to time, extended the termof his contract at the same salary. Effective April 1, 2004, the Boardamended his contract (a) to a base annual salary of $95,000 and (b) thecontract become terminable upon two weeks' prior notice by eitherparty. Effective January 1, 2005, Mr. Shapiro agreed to waive hissalary. The employment agreement was terminated effective with theMerger. |

|     |                                                                                                                                                                                                                            |
|-----|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Mr. Shapiro was paid cashcompensation for his services as a director in accordance with the feearrangements for directors as described in the subsection captioned"Directors' Compensation" in this Item10 to this Report. |

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Option /SAR Grants in Last FiscalYear

(1)    2000 Option Plan

In May 2000, the Boardof Directors of the Company adopted the Stock Option Plan of 2000 (the"2000 Option Plan"). In October 2000, theshareholders of the Company approved the 2000 Option Plan and ratifiedoptions previously granted. The Company registered under the SecuritiesAct of 1933, as amended (the "SecuritiesAct"), the shares issuable upon the exercise of optionsgranted or to be granted pursuant to the 2000 Option Plan in aRegistration Statement on Form S-8, File No. 333-51744, filed onDecember 13, 2000. As a result of this registration under theSecurities Act, an optionee who is not an affiliate of the Company mayresell the shares of the Common Stock received upon exerciseimmediately and an optionee who is an affiliate (i.e., adirector or an executive officer) may resell pursuant to the exemptionof Rule 144 under the Securities Act without compliance with anyholding period under paragraph (d) of Rule 144. The 2000 Option Planprovides for the grant of options to purchase shares of the CommonStock to directors, officers, employees and consultants of the Company.Non-qualified stock options may be granted to directors, officers,employees and consultants. Incentive stock options, as such form isdefined in Section 422 of the Code, may be granted only to employees.The term of the 2000 Option Plan is for ten years and it provides forthe grants of options to purchase an aggregate of 1,925,000 shares ofCommon Stock. The 2000 Option Plan initially provided for the grants ofoptions to purchase an aggregate of 2,000,000 shares of Common Stock;however, three options to purchase an aggregate of 75,000 shares havebeen exercised. The 2000 Option Plan was administered by the Board (andnot the Compensation Committee) during Fiscal 2005 and prior years.

The 2000 Option Plan, consistent with the provisions of the Code,provides that the exercise price of an incentive stock option shall notbe less than the fair market value of Common Stock on the date ofgrant, except that, if the employee owns stock possessing more than10% of the total combined voting power of all classes of stock,the exercise price of the option must be at least 110% of thefair market value of Common Stock on the date of grant and theincentive stock option cannot be exercised after five years from thedate of grant. No stock option granted has, and no option to be grantedunder the 2000 Option Plan may have, a term in excess of ten years. Theexercise price of a non-statutory or nonqualified option may be lessthan the fair market value on the date of grant.

The number ofshares subject to an outstanding option and the exercise price thereofare subject to adjustment in the event of a stock dividend, stocksplit, reorganization, recapitalization, combination of shares, changein corporate structure or similar events. No fractional shares will beissued upon exercise and the Company has no obligation to pay for suchfractional share.

Options granted to date were not exercisableduring the first year after the date of grant and thereafter becameexercisable in annual installments of 25% each. Although the2000 Option Plan permits some options to be granted to employees tohave performance goals as the condition precedent to becomingexercisable, no option granted to date has such provision.

Options granted under the 2000 Option Plan are non-transferable andnot immediately exercisable. However, as a result of the consummationof the Merger, all outstanding options became immediately exercisable,even if not already exercisable, and their expiration date became April19, 2008.

The provisions described in this paragraph areapplicable to future options: If the optionee's employment willterminate for any reason other than his or her death or disability, heor she may, for a period of up to three months, exercise the option tothe extent exercisable upon the date of termination. If theoptionee's employment terminates because of his or her total andpermanent disability (as defined in the Code), the optionee will have12 months within which he or she can exercise the stock option to theextent it was exercisable on the date of termination. In the event ofother disability causing termination, the optionee may have six months(three months in the event the optionee wants continuous treatment ofthe stock option as an incentive stock option) to exercise the stockoption to the extent exercisable upon the date of termination. If theoptionee dies, his estate may exercise the stock option to the extentexercisable upon the date of death of the optionee, whether it occurredduring the initial term or during the three, six or 12-month periodsdescribed in the three preceding sentences. In no event may a stockoption be exercised beyond its original expiration date. Similarprovisions are applicable to optionees who are not employees.

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For a consultant to be eligible to receivea grant of a stock option under the 2000 Option Plan, the optionee mustbe a natural person and the services rendered for the Company must beof a bona fide nature and not in connection with the offer or sale ofsecurities of the Company in a capital raising transaction and do notdirectly or indirectly promote or maintain a market for theCompany's securities.

At March 31, 2005, options coveringa total of 314,000 shares of the Common Stock were outstanding underthe 2000 Option Plan at a weighted average exercise price of $0.92 pershare. As indicated above, options to purchase 75,000 shares weresubsequently exercised.

(2)    Activity in Fiscal 2005

During Fiscal 2005, each of the five directors, including Harris A.Shapiro, the Chief Executive Officer of the Company was granted a stockoption for 25,000 shares of Common Stock.

During Fiscal 2005, anoption for 10,000 shares of Common Stock was granted to an executiveofficer of the Company.

During Fiscal 2005, options covering anaggregate of 4,500 shares of Common Stock expired.

The Companyhas never granted any stock appreciation rights (SARs).

Option,Grants, Exercises and Values

The following table providescertain summary information concerning the granting of options duringFiscal 2005 to the Chief Executive Officer who is the sole executiveofficer named in the Summary Compensation Table:

OPTION GRANTSIN LAST FISCAL YEAR

|                  |  |                            |        |                                                  |  |                          |    |                |  |        |      |        |  |        |         |        |  |  |
|------------------|--|----------------------------|--------|--------------------------------------------------|--|--------------------------|----|----------------|--|--------|------|--------|--|--------|---------|--------|--|--|
| Name             |  | Numberof OptionsGranted(#) |        | % ofTotalOptionsGranted toEmployees inFiscalYear |  | ExercisePriceperShare($) |    | ExpirationDate |
| Harris A.Shapiro |  |                       | 25,000 |                                             |  |                     | 71 | %         |  |   | 0.52 |   |  |   | 6/09/14 |   |
|                  |

Thefollowing table provides certain summary information concerning theexercise of options during Fiscal 2005 and unexercisable options heldas of the end of Fiscal 2005 by the Chief Executive Officer who is thesole executive officer named in the Summary Compensation Table:

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCALYEAR END OPTION VALUES

|                  |  |                              |         |                  |  |                                                       |         |                                                          |  |               |        |           |  |        |       |        |  |        |        |        |  |  |
|------------------|--|------------------------------|---------|------------------|--|-------------------------------------------------------|---------|----------------------------------------------------------|--|---------------|--------|-----------|--|--------|-------|--------|--|--------|--------|--------|--|--|
| Name             |  | SharesAcquiredOnExercise (#) |         | ValueRealized($) |  | Number ofUnexercisedOptions Held atFiscalYear End (#) |         | Value of UnexercisedIn-the-Money Optionsat FY-End (2)($) |
|             |  |                         |         |             |  |                                                  |         | Exercisable                                              |  | Unexercisable |
| HarrisA. Shapiro |  |                         | — |             |  |                                                  | — |                                                     |  |          | 60,000 | (1)  |  |   | 6,666 |   |  |   | 25,334 |   |
|                  |

|  |
|--|
|  |  |
|  |

|     |                                                                         |
|-----|-------------------------------------------------------------------------|
| (1) | Asof March 31, 2005, options were exercisable to purchase 23,332shares. |

|     |                                                                                                                                                                                                                                                        |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | Such value is based upon the marketvalue of the Common Stock as of March 31, 2005, less the exercise pricepayable per share under such options. An option for 10,000 shares hasbeen excluded because the market value was less than the exerciseprice. |

Directors' Compensation

During Fiscal2005, each of the five directors of the Company was granted a stockoption under the 2000 Option Plan for 25,000 shares of the CommonStock. In addition, each director was eligible to receive $500.00 foreach meeting attended in person, plus reimbursement for out-of-pocketexpenses, and $250.00 for each meeting attended telephonically.

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|               |                                                                                                |
|---------------|------------------------------------------------------------------------------------------------|
| Item11.  | Security Ownership of Certain Beneficial Ownersand Management and Related Stockholder Matters. |

SecurityOwnership

The following table sets forth, as of April 19, 2005,certain information with respect to all stockholders known by theCompany to be beneficial owners of more than 5% of itsoutstanding shares of the Common Stock, the Chief Executive Officer ofthe Company (being the sole executive officer named in the SummaryCompensation Table in Item 10 to this Report), all directors and allofficers and directors of the Company as a group. The ownershipinformation was furnished to the Company by the person or entity andreflects the ownership by PerfectData stockholders prior to givingeffect to the changes in officers and directors and the issuance ofshares of the Series A Preferred Stock to the former Sona shareholdersas a result of the Merger.

|                                                                                                |  |                                                  |  |                                                |  |  |  |  |  |  |
|------------------------------------------------------------------------------------------------|--|--------------------------------------------------|--|------------------------------------------------|--|--|--|--|--|--|
| Nameand Addressof Beneficial Owner                                                             |  | Number of SharesofCommon StockBeneficially Owned |  | Percentage ofCommonStockBeneficially Owned (1) |
| JosephMazinc/o Flamemaster Corporation11120 Sherman WaySunValley, CA91252                      |  | 788,997(2)                                       |  | 11.98%                                         |
| StarBizCorporation11120 Sherman WaySun Valley, CA91252                                         |  | 537,997(2)                                       |  | 8.17%                                          |
| WilliamB. Wachtel,c/o Wachtel & Masyr, LLP110 East59th StreetNew York, NY10022             |  | 727,873(3)                                       |  | 11.05%                                         |
| HarrisA. Shapiro (4)c/o PerfectData Corporation1445 East LosAngeles AvenueSimi Valley, CA93065 |  | 344,500(5)                                       |  | 5.18%                                          |
| BryanMaizlish (6)9705 Conestoga WayPotomac, MD20854                                            |  | 64,256(7)                                        |  | less than1%                                    |
| Timothy D. Morgan (8)11734 GladstoneCircleFountain Valley, CA 92708                            |  | 65,456(7)                                        |  | lessthan 1%                                    |
| Tracie Savage (8)6212 BannerAvenueLos Angeles, CA90038                                         |  | 74,556(9)                                        |  | 1.12%                                          |
| CoreyP. Schlossmann (8)19654-A Roscoe Blvd.Northridge, CA91324                                 |  | 264,759 (10)                                     |  | 4.01%                                          |
| Alldirectors and officers as a group(6 innumber)                                               |  | 829,343(11)                                      |  | 12.14%                                         |
|                                                                                                |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Thepercentages computed in the table are based upon 6,584,530 shares ofCommon Stock which were outstanding as of April 19, 2005 prior to theissuance of shares of the Series A Preferred Stock to the former Sonashareholders as a result of the Merger. Effect is given, pursuant toRule 13-d(1)(i) under the Exchange Act, to shares issuable upon theexercise of options currently exercisable as a result of giving effectto the Merger. Effect is also given to 150,000 shares issued subsequentto April 19, 2005 to Wachtel & Masyr, LLP in lieu of certain legalfees. See Note (3) to this table. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (2) | The sharesof Common Stock reported in the table include (a) 537,997 shares ownedby StarBiz Corporation, or "StarBiz", forwhich Mr. Mazin has voting power as the President, Chairman and ChiefExecutive Officer of StarBiz; (b) 36,000 shares owned by theFlamemaster Corporation Employees' Profit Sharing Plan for whichMr. Mazin is the fiduciary; and (c) 23,000 shares owned by AltiusInvestment Corporation ("Altius") for whichMr. Mazin has shared voting power as Chairman of the Board |

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|  |                                                                                                                                                                        |
|--|------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|  | of Altius. Certain of the shares reported inthe table are owned by Donna Mazin, his wife, or as to which shares sheshares dispositive and voting powers with Mr.Mazin. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (3) | The Shares reported in the tablereflect (1) 427,873 shares (the "TrustShares") held by William B. Wachtel as the Trustee ofDigital Trust, (2) 150,000 shares (the "FirmShares") held by Wachtel & Masyr, LLP, counsel to theCompany in which law firm Mr. Wachtel is a managing partner. Such lawfirm received the Firm Shares in lieu of certain legal fees due or tobecome due from the Company, and (3) 150,000 shares (the"JDK Shares") held by EuroAmericanCorporation, a Delaware corporation("EuroAmerican"), in which stockholder Mr.Wachtel is the sole director, officer and stockholder. EuroAmericanreceived the JDK Shares as the designee of JDK in extinguishment ofindebtedness owed to it by JDK and its principal shareholder. JDKreceived the JDK Shares from the Company in February 2005 asconsideration for its agreeing to cancellation of the ConsultingAgreement dated January 20, 2000. Mr. Wachtel as the Trustee of theDigital Trust has, under the trust agreement, sole voting andinvestment power with respect to the Trust Shares reported in thetable. Harris A. Shapiro, the Chairman of the Board, Chief ExecutiveOfficer and a director of the Company pre-Merger, was the settler ofthe Digital Trust and made an irrevocable grant to it of the assetswhich the Digital Trust used to effect the purchase of the TrustShares. The beneficiaries of the Digital Trust are Mr. Shapiro'schildren and grandchildren who survive him, although the Trustee, inhis absolute discretion, may pay or apply yearly income or theprincipal of the Trust to any beneficiary. Because he made anirrevocable grant and has no voting or investment power with respect tothe Trust Shares, Mr. Shapiro is not the beneficial owner of the TrustShares reported in the table as being owned of record by the DigitalTrust and beneficially by the Trustee. Mr. Wachtel is deemed thebeneficial owner of the Firm Shares because he has sole voting powerwith respect thereto. The table does not give effect to 5,263 shares ofthe Company's Series A Preferred Stock (convertible into 253,216shares of the Common Stock) issuable to EuroAmerican as a former Sonashareholder upon the Merger. |

|     |                                                                                                                                          |
|-----|------------------------------------------------------------------------------------------------------------------------------------------|
| (4) | Mr. Shapiro wasthe Chairman of the Board, the Chief Executive Officer and a directorof the Company on April 19, 2005 prior to theMerger. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    |
|-----|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (5) | The shares of the Common Stockreported in the table reflect (a) 284,500 shares owned by MillenniumCapital Corporation ("Millennium"), for whichMr. Shapiro has voting power as its President; (b) 10,000 sharesissuable upon the exercise of an option expiring June 19, 2012 underthe 2000 Option Plan (c) 25,000 shares issuable upon the exercise of anoption expiring September 25, 2012 under the 2000 Option Plan; and (d)25,000 shares issuable upon the exercise of a an option expiring June9, 2014 under the 2000 Option Plan. As a result of the Merger, theexpiration date of all three options became April 19, 2008. |

|     |                                                            |
|-----|------------------------------------------------------------|
| (6) | A director of the Company both before and after theMerger. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
|-----|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (7) | The shares of Common Stock reportedin the table include (a) 10,000 shares issuable upon the exercise of anoption expiring June 19, 2012 under the 2000 Option Plan; (b) 25,000shares issuable upon the exercise of an option expiring September 25,2012 under the 2000 Option Plan; and (c) 25,000 shares issuable uponthe exercise of an option expiring June 9, 2014 under the 2000 OptionPlan. As a result of the Merger, the expiration date of all threeoptions became April 19, 2008. |

|     |                                                                 |
|-----|-----------------------------------------------------------------|
| (8) | A directorof the Company who resigned as a result of theMerger. |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |
|-----|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | The shares of Common Stock reportedin the table include (a) 10,000 shares issuable upon the exercise of anoption expiring July 20, 2005 under the Company's 1985 StockOption Plan; (b) 10,000 shares issuable upon the exercise of an optionexpiring June 19, 2012 under the 2000 Option Plan; and (c) 25,000shares issuable upon the exercise of an option expiring September 25,2012 under the 2000 Option Plan. As a result of the Merger, theexpiration date of all three options became April 19, 2008. |

|      |                                                                                                                                                                                                                                                        |
|------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (10) | The shares of the Common Stock reported in thetable include 10,000 shares issuable upon the exercise of an optionexpiring June 19, 2012 under the 2000 Option Plan. As a result of theMerger, the expiration date of this option became April 19,2008. |

|      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (11) | The shares of the Common Stockreported in the table include (a) those shares indicated in the text toNotes 5, 7, 9 and 10; (b) 2,500 shares issuable to an executive officerupon the exercise of an option expiring October 30, 2011 under the 2000Option Plan; and (c) 10,000 shares issuable to the same executiveofficer upon the exercise of an option expiring June 9, 2014 under the2000 Option Plan. As a result of the Merger, the expiration date ofthese two options became April 19, 2008. |

18

----

Securities Authorized for Issuance UnderEquity Compensation Plans

The following table sets forth, as ofMarch 31, 2005, certain summary information with respect tocompensation plans under which shares of the Common Stock areauthorized for issuance:

EQUITY COMPENSATION PLANINFORMATION

|                                                             |  |                                                                                      |         |                                                                   |  |                                                                                                                                    |         |        |  |        |           |        |  |  |
|-------------------------------------------------------------|--|--------------------------------------------------------------------------------------|---------|-------------------------------------------------------------------|--|------------------------------------------------------------------------------------------------------------------------------------|---------|--------|--|--------|-----------|--------|--|--|
|                                                        |  | Numberof securitiesto be issued uponexercise ofoutstandingoptions, warrantsandrights |         | Weighted-average price ofoutstanding options, warrants and rights |  | Numberofsecurities remainingavailable for futureissuance underequitycompensation plans(excluding securitiesreflectedin column (a)) |
|                                                        |  | (a)                                                                                  |         | (b)                                                               |  | (c)                                                                                                                                |
| Equitycompensation plansapproved by securityholders         |  |                                                                                 | 324,000 |                                                              |  | $                                                                                                                                  | ..93    |   |  |   | 1,686,000 |   |
| Equity compensation plansnotapproved by security holders(1) |  |                                                                                 | — |                                                              |  |                                                                                                                               | — |   |  |   | 76,000    |   |
| Total                                                       |  |                                                                                 | 324,000 |                                                              |  | $                                                                                                                                  | ..93    |   |  |   | 1,762,000 |   |
|                                                             |

|  |
|--|
|  |  |
|  |

|     |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         |
|-----|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (1) | Theonly plan not approved by the Company's stockholders as to whichshares may be issued as of March 31, 2005 was: In April 1999, the Boardof Directors authorized a reserve of 100,000 shares of the Common Stockfor granting of warrants and options. Said warrants and options were tobe sold for a price of five cents per share and would have an exerciseprice of $1.56 per share. The term was to be three years from date ofissuance. This plan was cancelled by the Board of Directors effectiveApril 18, 2005. |

Item 12.    Certain Relationships andRelated Transactions.

None.

Item13.    Exhibits.

|            |  |                                                                                                                                                                                                   |  |  |  |  |
|------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                             |
| 2.1        |  | Agreementand Plan of Merger dated as of March 7, 2005 by and among PerfectDataCorporation, PerfectData Acquisition Corporation and Sona Mobile, Inc.(without disclosure schedules or exhibits)(1) |
| 2.2        |  | Agreement and Plan of Merger datedas of November 29, 2004 by and between PerfectData Corporation, aCalifornia corporation, and PerfectData (Delaware) Inc.(2)                                     |
| 3.1(i)     |  | Articles of Incorporation asamended to date (3)                                                                                                                                                   |
| 3.2(ii)    |  | Bylaws asamended to date (3)                                                                                                                                                                      |
| 4.1        |  | Certificate ofDesignations of Series A Convertible Preferred Stock(4)                                                                                                                             |
| 4.2        |  | Excerpts from Certificate ofIncorporation (Exhibit 3.1(i)) defining rights of holders of equitysecurities (4)                                                                                     |
| 10.1       |  | Asset Purchase Agreemententered into as of October 3, 2003 by and between PerfectDataCorporation and Spray Products Corporation(5)                                                                |
| 10.2       |  | First Amendment, dated as ofFebruary 26, 2004 to the Asset Purchase Agreement, dated as of October3, 2003, filed as Exhibit 10.1(6)                                                               |
| 10.3       |  | Second Amendment, dated as ofAugust 12, 2004, to the Asset Purchase Agreement, dated as of October3, 2003, filed as Exhibit 10.1 (7)                                                              |
|            |

19

----

|            |  |                                                                                                                                                                                                             |  |  |  |  |
|------------|--|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--|--|--|
| ExhibitNo. |  | Description ofExhibit                                                                                                                                                                                       |
| 10.4       |  | Addendum to LeaseAgreement and Standard Commercial Lease dated September 24, 2003between Albert and Helen LaMonte, as landlords, and the Company, astenant (6)                                              |
| 10.5       |  | Stock Option Plan of 2000 ofthe Company (8)                                                                                                                                                                 |
| 10.6       |  | Forms of Stock OptionAgreements (9)                                                                                                                                                                         |
| 10.7       |  | 1985 Employee StockOption Plan (10)                                                                                                                                                                         |
| 10.8       |  | Form of Non-QualifiedStock Option Agreement (10)                                                                                                                                                            |
| 10.9       |  | StockPurchase Agreement dated January 20, 2000 by and among PerfectDataCorporation, Millennium Capital Corporation("Millennium"), JDK Associates, Inc.("JDK") and other Buyers(11)                          |
| 10.10      |  | Letter Agreement dated January20, 2000 by and among PerfectData Corporation, Millennium and JDK(12)                                                                                                         |
| 10.11      |  | Amendment dated as of February14, 2005 to the Letter Agreement dated January 20, 2000 filed asExhibit 10.10 by and among PerfectData Corporation, Millennium, HarrisA. Shapiro, JDK and Joseph D. Kowal.(4) |
| 10.12      |  | Employment Agreement datedSeptember 1, 2000 by and between PerfectData Corporation and HarrisShapiro (13)                                                                                                   |
| 10.13      |  | Form of RepresentativeAgreement between the PerfectData Corporation and its Representatives(14)                                                                                                             |
| 10.14      |  | Form and Standard ExclusiveDistributor Agreement between PerfectData Corporation and itsDistributors (14)                                                                                                   |
| 10.15      |  | Standard IndustrialLease dated August 26, 1991, between Wayne Mertes, Mamie Mertes, MikeButler and Sarah Butler, as lessor, and PerfectData Corporation, aslessee (15)                                      |
| 10.16      |  | Agreement and Plan ofMerger and Reorganization, dated as of July 2, 2003 by and amongPerfectData Corporation, SuperCom Ltd. And SuperCom Merger Sub. Ltd.(without disclosure schedules or exhibits)(16)     |
| 21         |  | Subsidiaries(4)                                                                                                                                                                                             |
| 23         |  | Consent of Independent RegisteredPublic Accounting Firm(4)                                                                                                                                                  |
| 31.1       |  | Certification of Chief ExecutiveOfficer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of1934 (4)                                                                                             |
| 31.2       |  | Certification of ChiefFinancial Officer Pursuant to Rule 13a-14(a) under the SecuritiesExchange Act of 1934 (4)                                                                                             |
| 32         |  | CertificationPursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934and Section 1350 of Chapter 63 of Title 18 of United States Code(4)                                                        |
|            |

|  |
|--|
|  |  |
|  |

|     |                                                                                              |
|-----|----------------------------------------------------------------------------------------------|
| (1) | Incorporated byreference to the Company's Current Report on Form 8-K filed onMarch 11, 2005. |

|     |                                                                                                |
|-----|------------------------------------------------------------------------------------------------|
| (2) | Incorporated by referenceto the Company's Current Report on Form 8-K filed on December 3,2004. |

|     |                                                                                                                                         |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------|
| (3) | Incorporated by reference to theCompany's definitive Consent Solicitation Statement dated October26, 2004 as filed on November 1, 2004. |

|     |                                                         |
|-----|---------------------------------------------------------|
| (4) | Filed or, in the case of Exhibit 32, furnishedherewith. |

|     |                                                                                               |
|-----|-----------------------------------------------------------------------------------------------|
| (5) | Incorporated by reference to theCompany's Current Report on Form 8-K filed on October 8,2003. |

20

----

|     |                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------|
| (6) | Incorporated by referenceto the Company's Annual Report on Form 10-KSB for the fiscal yearended March 31, 2004. |

|     |                                                                                                               |
|-----|---------------------------------------------------------------------------------------------------------------|
| (7) | Incorporated byreference to the Company's Quarterly Report on Form 10-QSB forthe quarter ended June 30, 2004. |

|     |                                                                                                               |
|-----|---------------------------------------------------------------------------------------------------------------|
| (8) | Incorporated by reference to the Company'sAnnual Report on Form 10-K for its fiscal year ended March 31,2000. |

|     |                                                                                                                                                                                                                                                                 |
|-----|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| (9) | The four forms of stock optionagreements used under the Stock Option Plan of 2000 are filed asExhibits 4(d)(1) to 4(d)(4), both inclusive, to the Company'sRegistration Statement on Form S-8, File No. 333-51774, and areincorporated herein by thisreference. |

|      |                                                                                                               |
|------|---------------------------------------------------------------------------------------------------------------|
| (10) | Incorporated by reference to theCompany's Annual Report on Form 10-K for its fiscal year endedMarch 31, 1985. |

|      |                                                                                                                   |
|------|-------------------------------------------------------------------------------------------------------------------|
| (11) | Incorporated by referenceto the Company's definitive Proxy Statement dated March 10, 2000filed on March 14, 2000. |

|      |                                                                                              |
|------|----------------------------------------------------------------------------------------------|
| (12) | Incorporated byreference to the Company's Form 8-K dated March 31, 2000 filedApril 14, 2000. |

|      |                                                                                                               |
|------|---------------------------------------------------------------------------------------------------------------|
| (13) | Incorporated by referenceto the Company's Annual Report on Form 10-K for its fiscal yearended March 31, 2001. |

|      |                                                                                                               |
|------|---------------------------------------------------------------------------------------------------------------|
| (14) | Incorporated byreference to the Company's Annual Report on Form 10-K for itsfiscal year ended March 31, 1987. |

|      |                                                                                                               |
|------|---------------------------------------------------------------------------------------------------------------|
| (15) | Incorporated by reference to the Company'sAnnual Report on Form 10-K for its fiscal year ended March 31,1992. |

|      |                                                                                            |
|------|--------------------------------------------------------------------------------------------|
| (16) | Incorporated by reference to theCompany's Current Report on Form 8-K filed on July 9,2003. |

Item 14.    Principal Accountant Fees andServices.

Audit Fees

Singer Lewak Greenbaum &Goldstein, LLP (the "Singer Firm"), theCompany's Independent Registered Public Accounting Firm, billedthe Company $39,957 for professional services rendered in connectionwith its audit of the Company's annual financial statements forFiscal 2004. KPMG, LLP ("KPMG") theCompany's former Independent Registered Public Accounting Firm,billed the Company $10,000 for its review of the Company'sfinancial statements included in the Company's Forms 10-QSB filedfor Fiscal 2004.

The Singer Firm estimated that it will bill theCompany $26,000 for professional services rendered in connection withits audit of the Company's annual financial statements for Fiscal2005 of which $10,000 has already been paid. The Singer Firm billed theCompany $20,780 for its review of the Company's financialstatements included in the Company's Forms 10-QSB filed forFiscal 2005.

Audit-Related Fees

KPMG billed the Company(1) $30,000 for its professional services in Fiscal 2004 in connectionwith the Company's Registration Statement on Form S-4, File No.333-109933, filed in connection with the then proposed mergertransaction with SuperCom, which Registration Statement was withdrawnwhen the proposed transaction terminated, (2) $15,000 for itsprofessional services in connection with the Company's thenpending preliminary consent solicitation statement relating toshareholder approval of the proposed sale to Spray and reincorporationof the Company in the State of Delaware, and (3) $25,000 for itsprofessional services in connection with the Company's AnnualReport on Form 10-KSB for Fiscal 2004.

The Singer Firm billedthe Company $1,061 for its professional services in Fiscal 2005 inconnection with the Company's consent solicitation statementrelating to shareholder approval of the sale to Spray andreincorporation of the Company in the State of Delaware.

TaxFees

The Singer Firm billed the Company $4,182 for itsprofessional services in connection with preparing the Company'sfederal and state tax returns for Fiscal 2004.

The Singer Firmestimates that it will bill the Company $5,000 for its professionalservices in connection with preparing and filing the Company'sfederal and state tax returns for Fiscal 2005.

All OtherFees

During Fiscal 2004 KPMG billed the Company $25,000 for itsprofessional services in connection with a limited due diligence reviewof SuperCom's financial statements.

21

----

During Fiscal 2005 the Singer Firm billedthe Company $6,378 for its professional services in connection with theSona merger.

Audit Committee Approval

Pursuant to theAudit Committee Charter, only the Audit Committee may select annuallythe Independent Registered Public Accounting Firm for the Company,subject to stockholder ratification. Only the Audit Committee mayreplace the Independent Registered Public Accounting Firm. The Charteralso requires the Audit Committee to approve the retention of theindependent auditors for any non-audit service and the fee for suchservice. The Audit Committee also approves the scope of the annualaudit and the intended fee for such service and the fees for thequarterly reviews of the financial statements in the Forms 10-QSB. TheCharter does not permit any delegation of the Audit Committee'sauthority to management and sets forth procedures for annual reviews bythe Audit Committee of the Independent Registered Public AccountingFirm to determine their qualifications and independence.

Withrespect to all of the services described under the captions"Audit-Related Fees," "TaxFees" and "All Other Fees," theAudit Committee reviewed in advance the scope of the services to berendered and determined that the services were compatible withmaintaining the independence of KPMG or the Singer Firm, whichever wasapplicable. The Audit Committee also approved in advance all of thefees for such services and for the fees described under the caption"AuditFees."

22

----

SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of theSecurities Exchange Act of 1934, the Registrant has duly caused thisReport to be signed on its behalf by the undersigned, thereunto dulyauthorized.

PERFECTDATA CORPORATION

|        |  |                    |  |                                                                                  |  |  |  |  |  |  |
|--------|--|--------------------|--|----------------------------------------------------------------------------------|--|--|--|--|--|--|
|   |  | By:  /s/ |  | IreneJ. Marino                                                                   |
|   |  |               |  | Irene J. Marino,Authorized Officer and Principal Financial and AccountingOfficer |
|        |

Date: May 24, 2005

Pursuant to the requirements of the Securities Exchange Actof 1934, this Report has been signed below by the following persons onbehalf of the Registrant and in the capacities indicated on May 24,2005.

|                         |  |                                                                                      |
|-------------------------|--|--------------------------------------------------------------------------------------|
| Signature               |  | Title                                                                                |
|                         |
| /s/ John Bush           |  | President, Chief Executive Officer, and Director(Principal Executive Officer)        |
|                         |
| JohnBush                |
|                         |
| /s/ Irene J.Marino      |  | V.P. Finance, andChief Financial Officer (Principal Financial and AccountingOfficer) |
|                         |
| Irene J. Marino         |
|                         |
| /s/ BryanMaizlish       |  | Director                                                                             |
|                         |
| Bryan Maizlish          |
|                         |
| /s/ ShawnKreloff        |  | Director                                                                             |
|                         |
| Shawn Kreloff           |
|                         |
| /s/ Nicholas H.Glinsman |  | Director                                                                             |
|                         |
| Nicholas H.Glinsman     |
|                         |

23

----

PERFECTDATACORPORATION

SEC Form 10-KSB

Index to FinancialStatements

|                                                                        |  |        |     |        |  |  |
|------------------------------------------------------------------------|--|--------|-----|--------|--|--|
| FinancialStatements                                                    |  | Page   |
| Report of IndependentRegistered Public Accounting Firm - March 31,2005 |  |   | F-1 |   |
| Balance Sheet – March 31,2005                                    |  |   | F-2 |   |
| Statements of Operations– Years Ended March 31, 2005 and 2004    |  |   | F-3 |   |
| Statements of Shareholders' EquityYears Ended March31, 2005 and 2004   |  |   | F-4 |   |
| Statements of CashFlows –Years Ended March 31, 2005 and2004      |  |   | F-5 |   |
| Notes to Financial Statements                                          |  |   | F-6 |   |
|                                                                        |

24

----

REPORTOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

PerfectDataCorporation Simi Valley, California

We have audited theaccompanying balance sheet of PerfectData Corporation (the"Company") as of March 31, 2005, and therelated statements of operations, shareholders' equity and cashflows for the years ended March 31, 2005 and 2004. These financialstatements are the responsibility of the Company's management.Our responsibility is to express an opinion on these financialstatements based on our audit.

We conducted our audit inaccordance with the standards of the Public Company Accountingoversight Board (United States). Those standards require that we planand perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An auditincludes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates madeby management, as well as evaluating the overall financial statementpresentation. We believe that our audits provided a reasonable basisfor our opinion.

In our opinion, the financial statementsreferred to above present fairly, in all material respects, thefinancial position of PerfectData Corporation as of March 31, 2005, andthe results of its operations and its cash flows for the years endedMarch 31, 2005 and 2004 in conformity with accounting principlesgenerally accepted in the United States of America.

/s/ SINGERLEWAK GREENBAUM & GOLDSTEIN LLP

Los Angeles, CaliforniaMay 3, 2005

F-1

----

PERFECTDATACORPORATION

Balance Sheet March 31,2005 (Amounts in thousands except share amounts)

|                                                                     |  |        |        |        |  |        |         |         |  |  |
|---------------------------------------------------------------------|--|--------|--------|--------|--|--------|---------|---------|--|--|
| **Assets**                                                          |
| Currentassets:                                                      |  |   |   |   |  |   |    |    |
| Cash and cashequivalents                                            |  |   |   |   |  | $      | 1,267   |    |
| Prepaidexpenses and other currentassets                             |  |   |   |   |  |   | 15      |    |
| Totalcurrentassets                                                  |  |   |   |   |  |   | 1,282   |    |
| Totalassets                                                         |  |   |   |   |  | $      | 1,282   |    |
| **Liabilities**                                                     |
| Currentliabilities:                                                 |  |   |   |   |  |   |    |    |
| Accountspayable                                                     |  |   |   |   |  | $      | 151     |    |
| Accruedcompensation                                                 |  |   |   |   |  |   | 69      |    |
| Otheraccrued expenses                                               |  |   |   |   |  |   | 74      |    |
| Currentliabilities of discontinuedoperations                        |  |   |   |   |  |   | 41      |    |
| Totalcurrentliabilities                                             |  |   |   |   |  |   | 335     |    |
| Commitmentsand contingencies (note7)                                |  |   |   |   |  |   |    |    |
| Shareholders'equity:                                                |  |   |   |   |  |   |    |    |
| Preferred Stock,par value, $.01 pershare.                           |  |   |   |   |  |   |    |    |
| Authorized 2,000,000shares; noneissued                              |  |   |   |   |  |   | — |    |
| Common Stock,par value, $.01 pershare.                              |  |   |   |   |  |   |    |    |
| Authorized10,000,000 shares; issued and outstanding 6,359,530shares |  |   |   |   |  |   | 63      |    |
| Additional paid -inCapital                                          |  |   |   |   |  |   | 11,375  |    |
| Accumulateddeficit                                                  |  |   |   |   |  |   | (10,491 | )  |
| Totalshareholders'equity                                            |  |   |   |   |  |   | 947     |    |
| Totalliabilities and shareholders'equity                            |  |   |   |   |  | $      | 1,282   |    |
|                                                                     |

|  |                                               |
|--|-----------------------------------------------|
|  | Seeaccompanying notes to financial statements |

F-2

----

PERFECTDATA CORPORATION

Statements of Operations Years endedMarch 31, 2005 and 2004 (Amounts in thousands, except per shareinformation)

|                                             |  |        |        |         |  |        |        |         |  |  |
|---------------------------------------------|--|--------|--------|---------|--|--------|--------|---------|--|--|
|                                        |  | 2005   |        | 2004    |
| Selling,general, and administrativeexpenses |  | $      | 970    |    |  | $      | 933    |    |
| Lossfromoperations                          |  |   | (970   | )  |  |   | (933   | )  |
| Otherincome:                                |  |   |   |    |  |   |   |    |
| Other,net                                   |  |   | 21     |    |  |   | 17     |    |
| Lossfrom continuingoperations               |  |   | (949   | )  |  |   | (916   | )  |
| Incomefrom discontinuedoperations           |  |   | 56     |    |  |   | 359    |    |
| Netloss                                     |  | $      | (893   | )  |  | $      | (557   | )  |
| Netloss per commonshare:                    |  |   |   |    |  |   |   |    |
| Basic anddiluted:                           |  |   |   |    |  |   |   |    |
| Loss fromcontinuingoperations               |  | $      | (0.15  | )  |  | $      | (0.15  | )  |
| Incomefrom discontinuedoperations           |  |   | 0.01   |    |  |   | 0.06   |    |
|                                        |  |   |   |    |  |   |   |    |
|                                        |  | $      | (0.14  | )  |  | $      | (0.09  | )  |
| Weightedaverage shareoutstanding:           |  |   |   |    |  |   |   |    |
| Basic anddiluted                            |  |   | 6,222  |    |  |   | 6,193  |    |
|                                             |

|  |                                               |
|--|-----------------------------------------------|
|  | Seeaccompanying notes to financial statements |

F-3

----

PERFECTDATA CORPORATION

Statements of Shareholders' Equity(notes 5 and 6) Years ended March 31, 2005 and 2004 (Amountsinthousands)

|                          |  |             |         |                           |  |                    |         |                          |  |        |         |        |  |        |         |         |  |        |        |         |  |  |
|--------------------------|--|-------------|---------|---------------------------|--|--------------------|---------|--------------------------|--|--------|---------|--------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                     |  | CommonStock |         | AdditionalPaid -inCapital |  | Accumulateddeficit |         | Totalshareholders'equity |
|                     |  | Shares      |         | Amounts                   |  |
| Balance at March 31,2003 |  |        | 6,159   |                      |  | $                  | 61      |                     |  | $      | 11,145  |   |  | $      | (9,041  | )  |  | $      | 2,165  |    |
|                     |  |        |    |                      |  |               |    |                     |  |   |    |   |  |   |    |    |  |   |   |    |
| StockCompensation        |  |        | 50      |                      |  |               | 1       |                     |  |   | 51      |   |  |   | — |    |  |   | 52     |    |
| Netloss                  |  |        | — |                      |  |               | — |                     |  |   | — |   |  |   | (557    | )  |  |   | (557   | )  |
| Balanceat March 31,2004  |  |        | 6,209   |                      |  |               | 62      |                     |  |   | 11,196  |   |  |   | (9,598  | )  |  |   | 1,660  |    |
| StockCompensation        |  |        | 150     |                      |  |               | 1       |                     |  |   | 179     |   |  |   | — |    |  |   | 180    |    |
| Netloss                  |  |        | — |                      |  |               | — |                     |  |   | — |   |  |   | (893    | )  |  |   | (893   | )  |
| Balanceat March 31,2005  |  |        | 6,359   |                      |  | $                  | 63      |                     |  | $      | 11,375  |   |  | $      | (10,491 | )  |  | $      | 947    |    |
|                          |

|  |                                               |
|--|-----------------------------------------------|
|  | Seeaccompanying notes to financial statements |

F-4

----

PERFECTDATA CORPORATION

Statements of Cash Flows Years endedMarch 31, 2005 and 2004 (Amounts inthousands)

|                                                                           |  |        |         |         |  |        |        |         |  |  |
|---------------------------------------------------------------------------|--|--------|---------|---------|--|--------|--------|---------|--|--|
|                                                                      |  | 2005   |         | 2004    |
|                                                                      |  |   |    |    |  |   |   |    |
| Cashflows from continuing operatingactivities:                            |  |   |    |    |  |   |   |    |
| Netloss                                                                   |  | $      | (949    | )  |  | $      | (916   | )  |
| Adjustmentsto reconcile net loss to net cash used in operatingactivities: |  |   |    |    |  |   |   |    |
| Depreciationandamortization                                               |  |   | — |    |  |   | 6      |    |
| Stockissued forservices                                                   |  |   | 180     |    |  |   | 52     |    |
| Decrease inprepaid expenses and otherassets                               |  |   | 15      |    |  |   | 32     |    |
| Increase inacccountspayable                                               |  |   | 25      |    |  |   | 54     |    |
| Increase inaccruedexpenses                                                |  |   | 31      |    |  |   | 29     |    |
| Netcash used in continuing operatingactivities                            |  |   | (698    | )  |  |   | (743   | )  |
| Netcash provided by discontinued operatingactivities                      |  |   | 62      |    |  |   | 473    |    |
| Netdecrease in cash and cashequivalents                                   |  |   | (636    | )  |  |   | (270   | )  |
| Cashand cash equivalents at beginning ofyear                              |  |   | 1,903   |    |  |   | 2,173  |    |
| Cashand cash equivalents at end ofyear                                    |  | $      | 1,267   |    |  | $      | 1,903  |    |
|                                                                           |

|  |                                              |
|--|----------------------------------------------|
|  | Seeaccompanying notes to financialstatements |

F-5

----

PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

|           |                                           |
|-----------|-------------------------------------------|
| (1)  | Summaryof Significant Accounting Policies |

|           |                         |
|-----------|-------------------------|
| (a)  | Description of Business |

Prior to June 1, 2004, when Spray ProductsCorporation ("Spray") assumed fullresponsibility for all of the Company's customers, PerfectDataCorporation (the "Company") had sold computerand office equipment care and maintenance products. After the Companycompleted the sale of its operating assets to Spray on November 30,2004, it had no operations. On April 19, 2005, the Company consummateda merger transaction with Sona Mobile, Inc.("Sona"). See the section captioned"Reverse Merger Transaction" preceding Item 1to this Annual Report.

|           |                          |
|-----------|--------------------------|
| (b)  | Cash and CashEquivalents |

The Company considers allhighly liquid money market instruments with an original maturity ofthree months or less to be cash equivalents. At March 31, 2005, theCompany had cash and cash equivalents of $1,267,000.

|           |             |
|-----------|-------------|
| (c)  | Inventories |

Prior to the APA (see note 2 below) entered intowith Spray, inventories were stated at the lower of cost or market andconsisted of finished goods. Cost was determined using the first-in,first-out method.

On November 30, 2004, theCompany sold its operating assets to Spray, which included theinventory previously transferred to Spray on October 31, 2003, pursuantto the APA.

|           |                       |
|-----------|-----------------------|
| (d)  | Financial Instruments |

The carrying amounts related to cash and cashequivalents, accounts receivable, and accounts payable approximate fairvalue due to their relatively shortmaturity.

|           |                     |
|-----------|---------------------|
| (e)  | Plant and Equipment |

Prior to the sale of the operating assets toSpray on November 30, 2004, plant and equipment were stated atcost.

Depreciation on plant and equipmentwas calculated using the straight-line method over the estimated usefullives of the assets. Leasehold improvements were amortized straightline over the shorter of the lease term or estimated useful life of theasset. The estimated useful lives were as follows:

|                        |  |              |  |  |  |  |
|------------------------|--|--------------|--|--|--|--|
| Machineryand equipment |  | 3to 5 years  |
| Furniture and fixtures |  | 3 to 5years  |
| Leasehold improvements |  | Life oflease |
|                        |

|           |                    |
|-----------|--------------------|
| (f)  | RevenueRecognition |

Until June 1, 2004 the Companyhad recognized revenue on a gross basis when products were shipped andthe customers took ownership and assumed risk of loss, collection ofrelevant receivables was probable, pervasive evidence of an arrangementexisted and the sales price was fixed or determinable. As a result ofthe provisions to the APA with Spray, the Company no longer met thecriteria necessary to recognize revenue as a principal and insteadrecognized revenue net as an agent. Effective with the sale of theoperating assets to Spray on November 30, 2004, the Company had nooperations.

F-6

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

|           |                      |
|-----------|----------------------|
| (g)  | Loss per CommonShare |

Basic and diluted loss per commonshare is based on the weighted average number of shares outstandingduring each of the respective periods. Diluted earnings per shareincludes the dilutive impact of stock options, warrants, or otherequity instruments. During the years presented herein, because netlosses were incurred, the impact from such common stock equivalents wasantidilutive; accordingly, the common stock equivalents were excludedfrom the calculation.

The following wereexcluded from the calculation:

|          |  |              |         |                |  |        |         |        |  |  |
|----------|--|--------------|---------|----------------|--|--------|---------|--------|--|--|
| Options  |  | March31,2005 |         | March 31, 2004 |
| 1985Plan |  |         | 10,000  |           |  |   | 10,000  |   |
| 2000Plan |  |         | 314,000 |           |  |   | 183,500 |   |
|          |

|           |             |
|-----------|-------------|
| (h)  | IncomeTaxes |

Income taxes are accounted for underthe asset and liability method. Deferred tax assets and liabilities arerecognized for the future tax consequences attributable to differencesbetween the financial statement carrying amounts of existing assets andliabilities and their respective tax bases and operating loss and taxcredit carryforwards. Deferred tax assets and liabilities are measuredusing enacted tax rates expected to apply to taxable income in theyears in which those temporary differences are expected to be recoveredor settled. The effect on deferred tax assets and liabilities of achange in tax rates is recognized in income in the period that includesthe enactment date. The realizability of deferred tax assets isassessed throughout the year and a valuation allowance is establishedaccordingly.

|           |                  |
|-----------|------------------|
| (i)  | Use of Estimates |

The preparation of the financial statementsrequires management of the Company to make a number of estimates andassumptions relating to the reported amount of assets and liabilitiesand the disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues andexpenses during the period. Significant items subject to such estimatesand assumptions include the allowance for doubtful accounts, inventoryvaluation (prior to November 1, 2003), deferred income tax assetvaluation allowances, and the estimated future operating cash flowsfrom the Company's long-lived assets. Considerable managementjudgment is necessary to estimate future operating cash flows as futurecash flows are impacted by competitive and other factors that aregenerally out of management's control. Accordingly, actualresults could vary significantly from management'sestimates.

|           |                         |
|-----------|-------------------------|
| (j)  | Stock-BasedCompensation |

The Company applies theintrinsic-value-based method of accounting prescribed by AccountingPrinciples Board (APB) Opinion No. 25, Accounting for Stock Issuedto Employees, and related interpretations including FASBInterpretation No. 44, Accounting for Certain Transactions involvingStock Compensation, and Interpretation of APB Opinion No. 25,issued in March 2000, to account for its fixed-plan stock options.Under this method, compensation expense is recorded on the date ofgrant only if the current market price of the underlying stock exceededthe exercise price. SFAS No. 123, Accounting for Stock-BasedCompensation, established accounting and disclosure requirementsusing a fair-value-based method of accounting for stock-based employeecompensation plans. As allowed by SFAS No. 123, the Company has electedto continue to apply the intrinsic-value-based method of accountingdescribed above and has adopted only the disclosure requirements ofSFAS No. 123.

F-7

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

SFAS No. 123, asamended by SFAS No. 148, permits companies to recognize, as expenseover the vesting period, the fair value of all stock-based awards onthe date of grant. The Black-Scholes option valuation model wasdeveloped for use in estimating the fair value of traded options, whichhave no vesting restrictions and are fully transferable. Because theCompany's stock-based compensation plan has characteristicssignificantly different from those of traded options and becausechanges in the subjective input assumptions can materially affect thefair value estimate, management believes that the existing optionvaluation models do not necessarily provide a reliable single measureof the fair value of awards from the plan. Therefore, as permitted, theCompany applies the existing accounting rules under APB No. 25 andprovides pro forma net income (loss) disclosures for stock-based awardsmade during the year as if the fair value method defined in SFAS No.123, as amended, had been applied. Due to the reduction of the exerciseprice of fixed stock options through the cancellation of stock optionawards and the granting of replacement awards, per FIN No. 44,Accounting for Certain Transactions involving Stock Compensation,the Company has adopted variable accounting for the replacementawards, per FIN No. 28, Accounting for Stock Appreciation Rights andOther Variable Stock Option or Award Plans.

The following table illustrates the effect onnet loss as if the Company had applied the fair value recognitionprovisions of SFAS No. 123 to stock based employee compensation. Thefair value of these options was estimated at the date of grant using aBlack-Scholes option-pricing model, assuming a risk-free interest rateof 4.57% - 6.26%, a ten-year term, 50% volatility,and $0 expected dividend rate.

(000's,except per share amounts)

|                                                                                                                          |  |        |       |         |  |        |       |         |  |  |
|--------------------------------------------------------------------------------------------------------------------------|--|--------|-------|---------|--|--------|-------|---------|--|--|
|                                                                                                                     |  | 2005   |       | 2004    |
| Net loss, as reported                                                                                                    |  | $      | (893  | )  |  | $      | (557  | )  |
| Deduct total stock-based employee compensation expensedetermined under fair-value-based method for all awards, net oftax |  |   | (24   | )  |  |   | (27   | )  |
| Pro forma netloss                                                                                                        |  | $      | (917  | )  |  | $      | (584  | )  |
| Basic and diluted net loss per commonshare:                                                                              |  |
| Asreported                                                                                                               |  | $      | (0.14 | )  |  | $      | (0.09 | )  |
| Proforma                                                                                                                 |  | $      | (0.14 | )  |  | $      | (0.09 | )  |
|                                                                                                                          |

OnDecember 1, 2004, the Board amended outstanding stock options so that,in the event of a consummation of merger or other "changein control" transaction, each option would becomeimmediately exercisable as to all shares subject thereto and wouldexpire three years from the closing date of the merger or othertransaction.

|           |                                     |
|-----------|-------------------------------------|
| (k)  | Recently IssuedAccounting Standards |

In November 2004, theFASB issued SFAS No. 151, "Inventory Costs".SFAS No. 151 amends the accounting for abnormal amounts of idlefacility expense, freight, handling costs, and wasted material(spoilage) under the guidance in ARB No. 43, Chapter 4,"Inventory Pricing". Paragraph 5 of ARB No.43, Chapter 4, previously stated that ". . .under some circumstances, items such as idle facility expense,excessive spoilage, double freight, and rehandling costs may be soabnormal as to require treatment as current periodcharges. . . ." This Statementrequires that those items be recognized as current-period chargesregardless of whether they meet the criterion of "so

F-8

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

abnormal." In addition, thisStatement requires that allocation of fixed production overheads to thecosts of conversion be based on the normal capacity of the productionfacilities. This statement is effective for inventory costs incurredduring fiscal years beginning after June 15, 2005. Management does notexpect adoption of SFAS No. 151 to have a material impact on theCompany's financial statements.

InDecember 2004, the FASB issued SFAS No. 152, "Accountingfor Real Estate Time-Sharing Transactions". The FASBissued this Statement as a result of the guidance provided in AICPAStatement of Position (SOP) 04-2, "Accounting for RealEstate Time-Sharing Transactions". SOP 04-2 applies to allreal estate time-sharing transactions. Among other items, the SOPprovides guidance on the recording of credit losses and the treatmentof selling costs, but does not change the revenue recognition guidancein SFAS No. 66, "Accounting for Sales of RealEstate", for real estate time-sharing transactions. SFASNo. 152 amends Statement No. 66 to reference the guidance provided inSOP 04-2. SFAS No. 152 also amends SFAS No. 67,"Accounting for Costs and Initial Rental Operations ofReal Estate Projects", to state that SOP 04-2 provides therelevant guidance on accounting for incidental operations and costsrelated to the sale of real estate time-sharing transactions. SFAS No.152 is effective for years beginning after June 15, 2005, withrestatements of previously issued financial statements prohibited. Thisstatement is not applicable to the Company.

In December 2004, the FASB issued SFAS No. 153,"Exchanges of Nonmonetary Assets," anamendment to Opinion No. 29, "Accounting for NonmonetaryTransactions". Statement No. 153 eliminates certaindifferences in the guidance in Opinion No. 29 as compared to theguidance contained in standards issued by the International AccountingStandards Board. The amendment to Opinion No. 29 eliminates the fairvalue exception for nonmonetary exchanges of similar productive assetsand replaces it with a general exception for exchanges of nonmonetaryassets that do not have commercial substance. Such an exchange hascommercial substance if the future cash flows of the entity areexpected to change significantly as a result of the exchange. SFAS No.153 is effective for nonmonetary asset exchanges occurring in periodsbeginning after June 15, 2005.

Earlierapplication is permitted for nonmonetary asset exchanges occurring inperiods beginning after December 16, 2004. Management does not expectadoption of SFAS No. 153 to have a material impact on theCompany's financial statements.

InDecember 2004, the FASB issued SFAS No. 123(R),"Share-Based Payment". SFAS 123(R) amendsSFAS No. 123, "Accounting for Stock-BasedCompensation", and APB Opinion 25,"Accounting for Stock Issued to Employees."SFAS No. 123(R) requires that the cost of share-based paymenttransactions (including those with employees and non-employees) berecognized in the financial statements. SFAS No. 123(R) applies to allshare-based payment transactions in which an entity acquires goods orservices by issuing (or offering to issue) its shares, share options,or other equity instruments (except for those held by an ESOP) or byincurring liabilities (1) in amounts based (even in part) on the priceof the entity's shares or other equity instruments, or (2) thatrequire (or may require) settlement by the issuance of anentity's shares or other equity instruments. This statement iseffective (1) for public companies qualifying as SEC small businessissuers, as of the first interim period or fiscal year beginning afterDecember 15, 2005, or (2) for all other public companies, as of thefirst interim period or fiscal year beginning after June 15, 2005, or(3) for all nonpublic entities, as of the first fiscal year beginningafter December 15, 2005. Management is currently assessing the effectof SFAS No. 123(R) on the Company's financial statements.

F-9

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

In March 2005, theFASB issued FASB Interpretation ("FIN") No.47, "Accounting for Conditional Asset RetirementObligations". FIN No. 47 clarifies  that  theterm conditional asset retirement obligation as used in FASB StatementNo. 143, "Accounting for Asset RetirementObligations," refers to a  legal obligation toperform an asset retirement activity in which the timing and (or)method of settlement are conditional on a future event that may or maynot be within the control of the entity.   The obligation toperform the asset retirement activity is unconditional even thoughuncertainty exists about the timing and (or) method ofsettlement.   Uncertainty about the timing and/or method ofsettlement of a conditional asset retirement obligation should befactored into the measurement of the liability when sufficientinformation exists. This interpretation also clarifieswhen an entity would have sufficient information to reasonably estimatethe fair value of an asset retirement obligation. FIN No. 47  iseffective no later than the end of fiscal years ending after December15, 2005 (December 31, 2005 for calendar-year companies). Retrospectiveapplication of interim financial information is permitted but is notrequired. Management does not expect adoption of FIN No. 47 to have amaterial impact on the Company's financial statements.

|           |                   |
|-----------|-------------------|
| (l)  | Reclassifications |

Certain reclassifications of previously reportedamounts have been made to conform to current year'spresentation.

|           |                        |
|-----------|------------------------|
| (2)  | DiscontinuedOperations |

On October 3, 2003, the Companyentered into an Asset Purchase Agreement (the"APA") with Spray, pursuant to which theCompany agreed to sell to Spray (or a Spray affiliate) substantiallyall of the operating assets of the Company for a price equal to the sumof the value of the inventory, collectible accounts receivable and$100,000, less the amount of trade payables assumed by Spray.

From November 1, 2003 until May 31, 2004, Spray,pursuant to the APA, acted as a manager for the fulfillment of ordersfrom the Company's customers. As compensation for Spray'sservices, Spray received a fee of 71⁄2% of net sales. As aresult of the management arrangement with Spray, the Company moved to asmaller facility and reduced its staff, thereby reducing its ongoingoverhead expenses.

Because theCompany's largest customer had threatened to seek anothersupplier because of a supplier's offer of lower prices, andbecause of the long delay in closing the transaction, thereby causinguncertainty for customers and Spray, the Company and Spray agreed inprinciple and subsequently finalized the agreement in writing by theSecond Amendment dated as of August 12, 2004, to the followingrevisions to the APA: (1) effective June 1, 2004, Spray assumed fullresponsibility for all of the Company's customers in order toprevent possible losses of customer business; (2) the aforementionedpayment of $100,000 was reduced to $80,000; and (3) the Company wasgranted the right to put the assets to Spray for the purchase price onthe earlier of (a) September 30,2004 or (b) the Company receivingshareholder consent to the sale to Spray.

OnNovember 29, 2004, the Company received shareholders' approval,by consents, to permit the sale of its operating assets to Spray and tothe reincorporation of the Company in the State of Delaware. TheCompany then closed the transaction with Spray. As a result, theCompany has no operations and will receive no revenues until anacquisition or merger is effected.

Pursuantto the APA as amended, the purchase price for the assets sold to Spraywas (1) the sum of (a) collectible accounts receivable of $217,475, (b)inventory of $39,977 and (c) $80,000 less (2) 

F-10

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

the trade payables to be assumed by Spray. Aspreviously reported, Spray had assumed full responsibility for all ofthe customers of the Company effective June 1, 2004. Because Spray hadbeen operating the business for a six-month period between June 1, 2004and the closing date of November 30, 2004, all of the trade payables tobe assumed by Spray had instead become amounts which the Company owedto Spray. In addition, the Company had withheld sums from paymentsotherwise due Spray and paid $1,494 in commissions on behalf of Spray.The parties, accordingly, at the closing, agreed that, because theamounts due Spray unrelated to the closing more than offset thepurchase price due the Company, no cash need be paid to theCompany.

The carrying amount of liabilitiesof the discontinued operations at March 31, 2005 is $41,000 and isunrelated to the APA and the sale to Spray.

Operating results of the discontinued operationsare as follows:

(amounts in thousandsexcept per share information)

|                                              |  |              |      |               |  |        |       |        |  |  |
|----------------------------------------------|--|--------------|------|---------------|--|--------|-------|--------|--|--|
|                                         |  | March31,2005 |      | March 31,2004 |
| Netrevenue                                   |  | $            | 326  |          |  | $      | 2,680 |   |
| Income fromdiscontinued operations           |  |         | 56   |          |  |   | 359   |   |
| Income per share from discontinuedoperations |  | $            | 0.01 |          |  | $      | 0.06  |   |
|                                              |

|           |                             |
|-----------|-----------------------------|
| (3)  | Concentrationof Credit Risk |

Financial instruments whichpotentially subject the Company to a concentration of credit riskprincipally consist of cash and cash equivalents.

As of March 31, 2005, the Company hadapproximately $1,267,000 of cash equivalents in two financialinstitutions, which exposes the Company to concentration of creditrisk. The Company had approximately $1,256,000 invested in highlyliquid money market instruments, which are not federally insured. Theremaining $11,000 was deposited at a bank, which is federally insuredup to $100,000.

|           |              |
|-----------|--------------|
| (4)  | Income Taxes |

A reconciliation of the federal statutory incometax rate to the effective income tax rate on loss from continuingoperations is as follows:

|                                                   |  |         |         |         |  |        |         |         |  |  |
|---------------------------------------------------|--|---------|---------|---------|--|--------|---------|---------|--|--|
|                                              |  | March31 |
|                                              |  | 2005    |         | 2004    |
| Federal statutory rate                            |  |    | 34      | %  |  |   | 34      | %  |
|   Increase (reductions) in taxesdue to: |  |
| State income taxes (net of federalbenefit)        |  |    | 6       |    |  |   | 3       |    |
| Change in valuationallowance                      |  |    | (40     | )  |  |   | (18     | )  |
| Dividends-receiveddeduction                       |  |    | — |    |  |   | 1       |    |
| Expiration offederal net operating loss           |  |    | — |    |  |   | (16     | )  |
| Expiration of state net operatingloss             |  |    | (1      | )  |  |   | (4      | )  |
| Other                                             |  |    | 1       |    |  |   | — |    |
|                                              |  |    | — | %  |  |   | — | %  |
|                                                   |

F-11

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

The tax effects oftemporary differences that give rise to a significant portion of thedeferred tax assets at March 31, 2005 are summarized as follows (inthousands):

Deferred tax assets(liabilities):

|                                  |  |        |         |         |  |  |  |  |  |  |
|----------------------------------|--|--------|---------|---------|--|--|--|--|--|--|
| Netoperating losses              |  | $      | 2,349   |    |  |
| Accruedexpenses                  |  |   | 43      |    |  |
| Business tax creditcarryforwards |  |   | 12      |    |  |
| Other                            |  |   | (5      | )  |  |
|                             |  |   | 2,399   |    |  |
| Less valuationallowance          |  |   | 2,399   |    |  |
|                             |  | $      | — |    |  |
|                                  |

AtMarch 31, 2005, the Company had net operating loss (NOL) carryforwardsof approximately $6,373,000 and $2,829,000 for federal income taxpurposes and California income tax purposes, respectively, expiring invarying amounts through 2024. The NOL carryforwards, which areavailable to offset future profits of the Company begin to expire in2009 if not utilized and are subject to annual limitations should a"change in ownership" as defined in theInternal Revenue Code (the "Code") occur. OnApril 19, 2005 as discussed in Note 8, the Company entered into atransaction which affected a change in ownership. Section 382 of theCode imposes an annual limitation on the utilization of NOLcarryforwards based on a statutory rate of return (the"adjusted Federal long term rate", as definedin the Code) and the value of the corporation at the time of a changein ownership as defined by Section 382 of the Code.

Additionally, the Company has general businesstax credit carryforwards of approximately $12,000 which will begin toexpire in 2006.

Realization of the futuretax benefits of the NOL carryforwards and other deferred tax assets isdependent on the Company's ability to generate future taxableincome and the limitations of the Code within the periods in which theybenefit. In assessing the likelihood of utilization of existingdeferred tax assets, management considered the historical results ofcontinuing operations over the last three years and the currenteconomic environment in which the Company operates. Management hasdetermined that future taxable income of the Company will more likelythan not be insufficient to realize the recorded net deferred taxassets of $2,399,000 and has recorded a valuation allowance of$2,399,000. During the year ended March 31, 2005, the Company increasedthe valuation allowance in deferred tax assets by $355,000.

|           |                      |
|-----------|----------------------|
| (5)  | Shareholders' Equity |

In conjunction with the Company's privateplacement which closed on March 31, 2000, the Company entered into aconsulting agreement dated January 20, 2000 with Millennium CapitalCorporation ("MCC") and JDK Associates, Inc.("JDK"). Under this agreement MCC and JDKwould provide financial advisory assistance to the Company in searchingfor and closing future acquisitions and financings for which they wouldreceive an advisory fee of 5% of the estimated purchase pricefor a future acquisition which they introduced to the Company or foradditional capital raised in support of future acquisitions. The termof this consulting agreement was five years. The consulting agreementwith MCC and JDK was amended February 14, 2005 (the"Amendment"). Pursuant to the Amendment, theconsulting agreement was terminated whereby JDK's designeereceived 150,000 shares of the Common Stock, and MCC (of which HarrisA. Shapiro, the then Chairman of the Board, Chief Executive Officer anda director of the Company, 

F-12

----

PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

is the President of MCC) received nocompensation. The Company has recorded compensation expense of $180,000for the shares issued.

The remainingwarrants from the private placement in March 2000 to purchase 20,000shares of the Common Stock at $2.75 per share expired on March 31,2005.

On July 31, 2003, the Company issued50,000 shares of the Common Stock to the Chairman of the AuditCommittee as compensation for his services over the past three years.The Company has recorded compensation expense of $51,500 for theshares.

On November 29, 2004, the Companyreceived shareholders' approval, by consents, to thereincorporation of the Company, which had been incorporated under thelaws of the State of California, as a Delaware corporation.

On November 29, 2004, the reincorporation waseffected by the merger (the "ReincorporationMerger") of the Company with and into its wholly-ownedsubsidiary, PerfectData (Delaware) Inc. ("PerfectDataDelaware"), which subsidiary had been incorporated onNovember 5, 2004 under the laws of the State of Delaware. The name ofPerfectData Delaware was, simultaneously with consummation of theReincorporation Merger, changed to PerfectData Corporation.

As a result of the Reincorporation Merger, eachshare of the Company Common Stock, no par value, automatically wasconverted into one share of the Common Stock, $.01 par value, ofPerfectData Delaware.

The articles ofincorporation authorize a class of preferred stock issuable in classesand series with such designations, voting rights, redemptionprovisions, dividend rates, liquidation and conversion rights, andother preferences and limitations as may be determined by the board ofdirectors. No preferred stock was outstanding at March 31, 2005.

|           |                              |
|-----------|------------------------------|
| (6)  | Stock Option and Bonus Plans |

1985 Stock Option Plan

DuringNovember 1985, the Company adopted the 1985 Stock Option Plan (the"1985 Plan") to grant incentive andnonqualified stock options to officers and key employees of the Companyfor the purchase of up to 500,000 shares of the Common Stock. Under the1985 Plan, options were granted at prices equal to or greater than fairmarket value at date of grant. The shares, subject to variouslimitations, are exercisable over terms not to exceed ten years. Nooptions were granted during the three years ended March 31, 2005.Options to purchase a total of 377,750 shares were exercised throughMarch 31, 2005 with an option to purchase 10,000 shares leftoutstanding. The 1985 Plan has expired; therefore, no additionaloptions can be issued under its terms.

Activity under the 1985 Plan is summarized asfollows:

|                                      |  |                |        |                               |  |        |        |        |  |  |
|--------------------------------------|--|----------------|--------|-------------------------------|--|--------|--------|--------|--|--|
|                                 |  | Numberofshares |        | Weightedaverageexercise price |
| Options outstanding at March 31,2003 |  |           | 11,500 |                          |  | $      | 1.3017 |   |
| Optionscanceled                      |  |           | (1,500 | )                        |  |   | 2.0625 |   |
| Option outstanding at March 31,2004  |  |           | 10,000 |                          |  |   | 1.1875 |   |
| Optionoutstanding at March 31,2005   |  |           | 10,000 |                          |  | $      | 1.1875 |   |
|                                      |

F-13

----

PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

As of March 31, 2005,the option outstanding was exercisable and the weighted averageremaining contractual life of the outstanding option was approximately4 months. As a result of the consummation of the Merger with Sona onApril 19, 2005, the expiration date of the option became April 19,2008.

1999 Options

OnApril 28, 1999, the board of directors authorized the granting ofoptions or warrants to purchase up to an aggregate of 100,000 shares ofthe Common Stock to directors, employees, or consultants. The optionsor warrants were to be sold to the grantee at $0.05 per share, to havean exercise price of $1.56 per share, and to have a three-year termfrom the respective date of grant. Options to purchase a total of24,000 shares were exercised through March 31, 2005. Activity for theseoptions and warrants is summarized as follows:

|                                       |  |                        |         |                      |  |        |         |        |  |  |
|---------------------------------------|--|------------------------|---------|----------------------|--|--------|---------|--------|--|--|
|                                  |  | WeightedNumberofShares |         | Averageexerciseprice |
| Options outstanding at March 31, 2003 |  |                   | 5,000   |                 |  | $      | 1.56    |   |
| Canceled                              |  |                   | (5,000  | )               |  |   | 1.56    |   |
| Options outstanding at March 31,2004  |  |                   | — |                 |  |   | — |   |
| Options outstanding at March 31,2005  |  |                   | — |                 |  | $      | — |   |
|                                       |

EffectiveApril 18, 2005, the board of directors rescinded and revoked theremaining 76,000 shares reserved.

2000 Stock OptionPlan

On May 22, 2000, the Company'sboard of directors adopted the Stock Option Plan of 2000 of PerfectDataCorporation (the "2000 Plan") which providesfor the granting of options to directors, officers, employees, andconsultants of the Company. The Company has reserved 2,000,000 sharesof the Common Stock to be issued in connection with the 2000 Plan.

Options granted under the 2000 Plan shall be ata price no less than the fair market value of the Common Stock on thedate of grant or in the case of nonqualified stock options at a priceequal to or greater than 85% of the fair market value on thedate of grant. Options granted under the 2000 Plan are exercisable atvarious times as determined by the board of directors or itsdesignee.

On October 31, 2001, the Companygranted options to purchase an aggregate of 10,000 shares of the CommonStock at $3.43 per share to various employees. The option price wasequal to the fair market value at the time of grant. All of the optionsdescribed were to become exercisable in four substantially equalinstallments, commencing with the first anniversary of the respectivedate of grant.

On June 15, 2002, the Companygranted an option to purchase 10,000 shares of the Common Stock at$1.60 per share to each of the five directors. The option price wasequal to 120% of the fair market value at the time of grant. Allof the options described were to become exercisable in threesubstantially equal installments, commencing with the first anniversaryof the respective date of grant.

OnSeptember 17, 2002, the board of directors canceled the options grantedon March 31, 2000 to each director pursuant to the 2000 Plan topurchase 25,000 shares of the Common Stock at $18.50 per share andthose granted on September 7, 2000 to purchase 25,000 shares of theCommon Stock at $4.63 per share. None of the options to purchase anaggregate of 250,000 shares were exercised.

F-14

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

On September 26,2002, the Company granted an option to purchase 25,000 shares of theCommon Stock at $1.00 per share to each of the five directors. The fairmarket value of the stock on the date shareholder approval was obtainedwas below the exercise price. All of the options described were tobecome exercisable in three substantially equal installments,commencing with the first anniversary of the respective date of grant.In accordance with FIN 44, the Company has adopted variable accountingfor these replacement awards. No compensation expense has beenrecognized in the financial results as the fair market value has notexceeded the exercise price.

On June 10,2004, the Company granted an option to purchase 25,000 shares of theCommon Stock at $.52 per share to each of the its five directors and10,000 shares to an executive officer. The option price was equal tothe fair market value at the time of grant. All of the optionsdescribed were to become exercisable in three substantially equalinstallments, commencing with the first anniversary of the respectivedate of grant.

Activity under the 2000 Planis summarized as follows:

|                                      |  |                |         |                               |  |        |      |        |  |  |
|--------------------------------------|--|----------------|---------|-------------------------------|--|--------|------|--------|--|--|
|                                 |  | Numberofshares |         | Weightedaverageexercise price |
| Options outstanding at March 31,2003 |  |           | 185,000 |                          |  | $      | 1.29 |   |
| Optionscanceled                      |  |           | (1,500  | )                        |  |   | 3.43 |   |
| Options outstanding at March 31,2004 |  |           | 183,500 |                          |  |   | 1.28 |   |
| Optionsgranted                       |  |           | 135,000 |                          |  |   | .52  |   |
| Optionscanceled                      |  |           | (4,500  | )                        |  |   | 3.43 |   |
| Options outstanding at March 31,2005 |  |           | 314,000 |                          |  | $      | 0.92 |   |
|                                      |

Asof March 31, 2005, options to purchase 119,666 shares of the CommonStock are exercisable at a weighted average exercise price of $1.228.As of March 31, 2005, 1,686,000 shares were available for futuregrants.

The following table summarizes inmore detail information regarding the Company's stock optionsoutstanding under the 2000 Plan at March 31, 2005:

|               |  |                    |         |                                         |  |                    |      |                                         |  |        |         |        |  |        |         |        |  |  |
|---------------|--|--------------------|---------|-----------------------------------------|--|--------------------|------|-----------------------------------------|--|--------|---------|--------|--|--------|---------|--------|--|--|
| ExercisePrice |  | OutstandingOptions |         | WeightedAverageRemainingContractualLife |  | ExercisableOptions |      | Weighted AveragePriceExercisableOptions |
| $0.52         |  |               | 135,000 |                                    |  |               | 9.21 |                                    |  |   | — |   |  |   | — |   |
| $1.00         |  |               | 125,000 |                                    |  |               | 7.50 |                                    |  |   | 83,333  |   |  | $      | 1.00    |   |
| $1.60         |  |               | 50,000  |                                    |  |               | 7.21 |                                    |  |   | 33,333  |   |  | $      | 1.60    |   |
| $3.43         |  |               | 4,000   |                                    |  |               | 6.58 |                                    |  |   | 3,000   |   |  | $      | 3.43    |   |
| Total         |  |               | 314,000 |                                    |  |               | 8.27 |                                    |  |   | 119,666 |   |  | $      | 1.23    |   |
|               |

Asa result of the consummation of the merger with Sona on April 19, 2005,all options became fully exercisable and expiration date of the optionsbecame April 18, 2008.

|           |             |
|-----------|-------------|
| (7)  | Commitments |

The Company leases office space on amonth-to-month basis. The Company initially leased the office space fora six-month term effective October 15, 2003 and subsequently for anadditional six-month term that expired October 15, 2004. The Companyhad previously leased a facility under an operating lease which expiredJune 20, 2003. The Company continued to occupy the 

F-15

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PERFECTDATACORPORATION

Notes to FinancialStatements

March 31, 2005 and2004

facility, along with a subtenant to whom theCompany sublet warehouse space, on a month-to-month basis until October31, 2003.

Rental expense was $12,000 for theyear ended March 31, 2005 and rental expense net of sublease income was$50,000 for the year ended March 31, 2004.

|           |                  |
|-----------|------------------|
| (8)  | Subsequent Event |

On April 19, 2005, pursuant to an Agreement andPlan of Merger dated as of March 7, 2005, Sona Mobile, Inc., aWashington corporation ("Sona"), was mergedwith and into PerfectData Acquisition Corporation, a Delawarecorporation and the wholly-owned subsidiary of PerfectData Corporation,the registrant. Former Sona shareholders will own approximately80% of PerfectData on a fully diluted basis. In connection withthe Merger, PerfectData's Chairman, CEO and four out of its fivedirectors have resigned and were replaced by Sona officers anddirectors. See the section captioned "Reverse MergerTransaction" preceding Item 1 to thisReport.

F-16

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PerfectDataCorporation Index to Exhibits Filed with Annual Report onForm10-KSB

|                                  |  |                                                                                                                                                                                                         |  |        |                 |        |  |  |  |  |
|----------------------------------|--|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--|--------|-----------------|--------|--|--|--|--|
| ExhibitNo.                       |  |                     Description ofExhibit                                                           |  | Page   |
| 4.1                    |  | Certificateof Designations of Series A2 Convertible Preferred Stock                                                                                                                                     |  |   | E-2   |   |
| 4.2                    |  | Excerpts from Certificate ofIncorporation (Exhibit 3.1(i)) defining rights of holders ofequity securities                                                                                               |  |   | E-12            |   |
| 10.11                            |  | Amendment dated as of February 14, 2005 to the LetterAgreement dated January 20, 2000 filed as Exhibit 10.10 by andamong PerfectData Corporation, Millennium, Harris A. Shapiro,JDK and Joseph D. Kowal |  |   | E-13            |   |
| 21      |  | Subsidiaries                                                                                                                                                                                            |  |   | E-15            |   |
| 23      |  | Consent of IndependentRegistered Public Accounting firm                                                                                                                                                 |  |   | E-16            |   |
| 31.1                   |  | Certification of ChiefExecutive Officer Pursuant to Rule 13a-14(a) under theSecurities Exchange Act of 1934                                                                                             |  |   | E-17            |   |
| 31.2                   |  | Certification of ChiefFinancial Officer Pursuant to Rule 13a-14(a) under the SecuritiesExchange Act of 1934                                                                                             |  |   | E-18            |   |
| 32      |  | Certification Pursuant toRule 13a-14(b) under the Securities Exchange Act of 1934 andSection 1350 of Chapter 63 of Title 18 of United StatesCode                                                        |  |   | E-19            |   |
|                                  |

E-1

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