SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C.  20549

                           FORM 10-KSB

[X]  Annual Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934.

[ ]  Transition Report Pursuant to Section 13 or 15(d) of the Securities
     Exchange Act of 1934.

     For the fiscal year ended September 30, 2003

                Commission File Number: 000-28339

                          XVARIANT, INC.
       ----------------------------------------------------
      (Exact name of Registrant as specified in its Charter)

                 Nevada                            84-1398342
     -------------------------------            ------------------
     (State or other Jurisdiction of            (I.R.S. Employer
      Incorporation or Organization)            Identification No.)

      57 West 200 South, Ste. 550 Salt Lake City, Utah 84101
   ------------------------------------------------------------
       (Address of Principal Executive Offices) (Zip Code)


Registrant's Telephone Number including Area Code:  (801) 536-5000


  Securities Registered Under Section 12(b) of the Exchange Act:
                              None.

   Securities Registered Pursuant to Section 12(g) of the Act:
                  Common Stock, Par Value $0.001

Check whether the Registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, during the past 12
months (or for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements for the
past 90 days.  Yes [ X ]     No [  ]

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

State issuer's revenues for its most recent fiscal year.  $2,941,802.

The aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the average bid and asked prices of
such stock, as of August 25, 2004, was $1,340,110.

As of August 25, 2004, the Registrant had outstanding 13,561,100 shares of its
common stock.

Transitional Small Business Disclosure Format: Yes [  ] No [ X ]


<PAGE>


                        TABLE OF CONTENTS

ITEM NUMBER AND CAPTION

PART I                                                                Page No.

Item 1.   Description of Business..........................................1
Item 2.   Description of Property..........................................7
Item 3.   Legal Proceedings................................................7
Item 4.   Submission of Matters to a Vote of Security Holders..............7

PART II

Item 5.   Market for Common Equity and Related Stockholder Matters.........7
Item 6.   Management's Discussion and Analysis or Plan of Operation........8
Item 7.   Financial Statements.......................................13, F-1
Item 8.   Changes In and Disagreements With Accountants on
          Accounting and Financial Disclosure.............................13

PART III

Item 9.   Directors, Executive Officers, Promoters and Control Persons;
          Compliance With Section 16(a) of the Exchange Act...............13
Item 10.  Executive Compensation..........................................14
Item 11.  Security Ownership of Certain Beneficial Owners and
          Management and Related Stockholder Matters......................15
Item 12.  Certain Relationships and Related Transactions..................17
Item 13.  Exhibits and Reports on Form 8-K................................18
Item 14.  Controls and Procedures.........................................18
Signatures................................................................19

The information contained in this Form 10-KSB for the fiscal year ended
September 30, 2003, is as of the latest practicable date except for financial
information, which relates to the fiscal year.


                                i

<PAGE>

                              PART I
                 ITEM 1.  DESCRIPTION OF BUSINESS

History

     Xvariant, Inc. (the "Company") was organized on October 24, 1996, under
the laws of the State of Nevada, as "Almost Country Productions, Inc.," for
the purpose of producing and marketing music.  In approximately March 1997,
the Company sold 100,000 shares of its common stock at $.30 per share in an
offering pursuant to Rule 504 and Section 3(b) of the Securities Act of 1933.
In November, 2000 the Company discontinued its music production business and
actively sought new business opportunities.

     On March 15, 2001, the Company completed the acquisition of Real Estate
Federation, Inc. ("REF"), pursuant to a Stock Purchase Agreement (the
"Agreement") between the Company and the shareholders of REF.  (See
"Acquisition of REF" below).

The Company changed its name to "Xvariant, Inc.," in August, 2001.

     In January, 2002, the Company completed the acquisition of 360House.com,
Inc., a Utah corporation ("360House"), pursuant to a Stock Exchange Agreement
(the "Exchange Agreement") among the Company, 360House, and the shareholders
of 360House.  (See "Acquisition of 360House" below).

     Acquisition of REF

     The Company acquired REF as a wholly owned subsidiary by issuing
20,500,000 shares of the Company's authorized common stock, 20,000,000 of
which were issued to the shareholders of REF in exchange for their interests
in REF, and 500,000 of which were issued as a fee to one of the Company's
shareholders.  The newly issued shares aggregated approximately 97% of the
then issued and outstanding shares of the Company, and resulted in a change in
control of the Company.  At the closing of the acquisition, REF had no
liabilities other than ordinary overhead expenditures, a real estate lease
obligation, employment agreements with the three founders of REF, and a
consulting agreement with another shareholder of REF.  REF had no significant
assets other than its intellectual property, copyrights, and computers used to
deliver its service.  It did, however, have a subscription agreement with one
of its shareholders to provide up to $2,500,000 in capital funding over the
next one-year period.  To date, the full capital commitment has been received
and utilized to pursue Company business operations.

     On or about October 12, 2001, 5,500,000 shares were cancelled in
connection with Separation Agreements entered into by two of the founders,
Messrs. Craig and Knapp.  Messrs. Craig and Knapp were each reissued 100,000
shares of restricted common stock, and were paid $12,500 and $17,500,
respectively, as reimbursement for all accrued salary, benefits and expenses.
On or about July 12, 2002, Mr. Thomas Wright, a founder, agreed to cancel
4,400,000 shares owned by him pursuant to an employment arrangement of that
date.  Mr. Wright was paid a total of $12,500 as reimbursement for all accrued
salary, benefits and expenses.  A total of 500,000 shares of common stock was
reissued to Mr. Wright.

     Acquisition of Bid Trac

     In November, 2001, the Company issued 450,000 shares of restricted common
stock to Bid Trac, Inc. ("Bid Trac"), for the acquisition of certain assets
and software that allowed the Company to provide an additional on-line service
to its customers, and six contracts with


                                1
<PAGE>

customers subscribing to the service.  In addition, the Company granted to Bid
Trac, a warrant to purchase up to 600,000 shares of common stock at an
exercise price of $2.00 per share, exercisable at any time prior to November
21, 2011.  The warrant provides that, in the event gross revenue derived from
the Bid Trac service contracts was less than $200,000 for the twelve months
following the acquisition, only 300,000 shares could be purchased by Bid Trac,
and if gross revenue was less than $100,000 for such twelve month period, then
the warrant terminated and no shares could be purchased.  Gross revenue from
the Bid Trac contracts aggregated less than $100,000 for the initial twelve
months following the acquisition.

     Acquisition of 360House

     In January, 2002, the Company completed the acquisition of 360House.com,
Inc., a Utah corporation ("360House"), under the terms of a Stock Exchange
Agreement (the "Exchange Agreement") among the Company, 360House, and the
shareholders of 360House.

     The Company acquired 360House as a wholly-owned subsidiary by initially
issuing 1,000,000 shares of the Company's authorized common stock to the
shareholders of 360House in exchange for all of the outstanding stock of
360House. In addition, the Exchange Agreement provides for the issuance of
additional shares of the Company's common stock based on the performance of
360House.   The Company has agreed to issue stock, including the 1,000,000
shares issued upon execution of the Agreement, at a price equal to either (a)
a value equal to six times 360House's earnings before interest, taxes,
depreciation and amortization ("EBITDA") in the twelve month period ending
December 31, 2003 ("Earnout Shares"); or (b) the value defined by a valuation
consultant agreed to by the parties (the "Earnout").  Either party may demand
an independent valuation, and the party making such demand must bear the cost.
The value of the Company's common stock for purposes of the Earnout, shall be
calculated based on the average closing price of the stock for the 30 trading
days prior to December 31, 2003.

     At the closing of the acquisition, 360House had no significant tangible
assets except computers, office furniture and equipment, and general files for
its three employees.  It had what it believed was, however, significant and
valuable intellectual property, including, trademarks and internally developed
software and web technology.  360House had no liabilities other than ordinary
overhead expenditures, and employment agreements with Glade Jones, the
President of 360House, and Andy Evans, the founder and Chief Executive Officer
of 360House.  Although the employment agreements are obligations of 360House,
the Company assumed the obligations to ensure that the salaries were paid for
the six months following the acquisition to the extent that 360House did not
have the cash flow to satisfy the salary obligations.  Additionally, the
Company had the obligation, for a period of six months from the acquisition,
to ensure that 360House operating expenses were paid to the extent there was a
cash shortfall in 360House in meeting such expenses, which condition has been
satisfied.

     The Exchange Agreement contains an option allowing the shareholders of
360House to unwind the transaction in certain events.  In the event the
shareholders of 360House did not want to accept the Earnout Shares at December
31, 2003, they could surrender all of their shares in the Company and all of
the issued and outstanding common stock of 360House shall be returned to the
shareholders of 360House.  In such event, however, the Company has the option
to retain the 360House shares and pay the value calculated at December 31,
2003 to the 360House shareholders in cash.  Neither of the alternatives have
been acceptable to either the Company or the shareholders.  The Company and
the shareholders are in the process of preparing settlement documents
reflecting a position somewhere in between the two positions outlined in the
Exchange Agreement, but the parties have not finalized their discussions.

                                2
<PAGE>

Business of Company

     Background

     Technology allows home buyers and sellers to review property listings
that interest them through the Internet instead of relying on multiple listing
services' printed materials that were previously only available to agents.
Internet listings generally appear only on each individual real estate
company's web sites or on the site of an aggregator of real estate listings.
A potential buyer or seller must peruse all of the major companies' sites to
locate a majority of the available product.  A real estate brokerage company
may spend a significant amount of marketing resources to drive people to its
Internet site only to have the prospect visit the site and quickly move on
leaving no trace of the prospect.  Additionally, a prospect may visit the site
of an aggregator and see a listing by a company, but have no direct contact
with the real estate agent who has helped the prospect get to that point.

     The Company has developed the technology and Internet search engines that
allow a real estate company to overcome the shortfalls of existing technology
and still take advantage of the public's desire to have ready access to
information.  The Company search engines unify the listings of independent
brokerage firms enabling prospective buyers to view listings from many
brokerage firms.

     In addition, and probably more important to real estate brokerage
companies, the Company's products are designed to capture data about the
prospect and store it for follow up by the Company's agents.  Management
believes the existence of qualified leads means more contact with interested
and qualified buyers for the agents, which in turn generates more sales
commissions.  Both the agents and the brokerage company benefit from this
collection of information.

     The collection of information for lead generation allows a brokerage
company to allocate marketing resources to drive people to their site secure
in the knowledge that a visit by a serious buyer will result in valuable
information being captured.   The Company's products allow its broker
customers to increase the effectiveness of the leads generated by visits to
their web sites through capturing valuable information about the prospective
buyer and giving the agents qualified leads the agent would not otherwise have
had.

     Services

     The Company provides Internet-delivered lead generation, lead
qualification, and digital imaging services primarily to the real estate
industry and in the last year has rebranded the services acquired from its
acquisitions to provide a unified suite of products for brokers and agents.
The Company is marketing its lead generation services as "LeadMaxx" and its
digital imaging services as "TourMaxx".

     LeadMaxx services include the following components:

     a.   "Plug in" IDX/VOX search engine customized to meet the needs and
desires of customer brokerage firms.  Real estate companies can choose as
little or as much as they desire to increase lead generation results.

     b.   LeadMaxx has a comprehensive, integrated backend that helps to
manage internet leads generated by using LeadMaxx and also can be used as a
front desk to manage other leads the broker generates.  The backend has
statistical reporting to show how many views each property gets from the
broker's web site and how many e-mail updates are sent to


                                3
<PAGE>

potential buyers and tracks agent performance in converting leads to
appointments, showings and closings.

     c.   LeadMaxx offers lead qualification services through both e-mail
contact and call center personal contact with potential buyers, to ensure the
highest percentage of lead conversion.

     d.   LeadMaxx customizes each potential property buyer's experience to
the broker's Internet site by providing a personalized web page to store
favorite properties.  This allows a potential customer browsing the Internet
to schedule appointments to see properties while they are online, and the
program will send automatic, custom e-mail updates of new listings that come
with the brokerage firm's branding every morning to the potential customers'
e-mail addresses.

     e.   LeadMaxx personnel can also design and build, and the Company hosts
and maintains comprehensive, sophisticated, functional, service-oriented
productive web sites for its customers.

     In an attempt to reduce overhead and costs of the LeadMAXX
infrastructure, the Company entered into a reseller agreement with Lantrax,
Inc., a New York corporation ("Lantrax") in September 2003, wherein Lantrax
will market and sell the LeadMaxx product to its existing customers and new
customers, including the maintenance of the Company's servers used to deliver
LeadMaxx products.  This agreement will remove overhead previously expended to
sell LeadMaxx products and the maintenance of its servers.  The financial
impact of this agreement will be realized in 2004.  LeadMaxx, however, will
retain the responsibility of providing lead qualification for all existing
LeadMaxx customers that subscribe to receive those services from its call
center.

     TourMaxx services include the following components:

     a.   The TourMaxx  principal service includes a photography service that
presents a virtual tour of a real estate listing to better display a listed
home for potential buyers.  The virtual tour consists of 360 degree views of
as many rooms of a house as the agent or broker desires to feature.  The
photos of the rooms must be shot with a 360 degree lens and then "unwrapped"
with special software.  The Company has developed and trained a network of
independent photographers to take the photos in all those areas where they
have contracted with real estate companies to provide the service.  Because
the photography methods are taught by 360house trainers, it does not require
that the Company find professionals to take the pictures.  The Company has
found that it has been relatively easy to locate independent contractors to
provide this service.  The Company currently has a data base of over 300
photographers serving this function and does not foresee any significant
difficulty in locating sufficient photographers in any area to service their
needs.  As virtual tours become more in demand nationwide, the Company expects
the market for virtual tours to grow rapidly.

     b.   TourMaxx also provides digital still photography of the exterior and
interior of any home and presents it on the Internet.  Management believes
website presentation and high-resolution copies of photos taken make this an
attractive and cost effective substitute when a virtual tour is not available.
These still tours can be done on a self service basis.  Agents can take their
own photos and upload them onto their website using the Company interface.
The Company also has a training cd-rom that explains the entire process from
start to finish with detailed explanations and informative videos.  The
Company has discovered, however, that its customers have gravitated towards
full service solutions as opposed to a smaller percentage which utilize the
self service solution.


                                4
<PAGE>


     c.   TourMaxx allows an agent or brokerage to print advertisement flyers
with all of the listing information and photos of the house and its rooms
directly from the client's website.  With today's sophisticated color printers
the resulting product looks professionally printed at a fraction of the cost.

     d.   TourMaxx services also include detailed statistical information
concerning the number of website visits by potential purchasers to the
individual listings and helps to gauge the effectiveness of the virtual tours
and many other features to make an agent more successful in selling their
product.

     e.   TourMaxx can communicate with buyers using automated surveys to
improve customer satisfaction.  Tour data is displayed at company, employee,
vendor/sub or customer level and is displayed in an easy to read chart, graph
and text format.

     f.   TourMaxx also includes a service to highlight community amenities,
facilities, vacant lots and available housing inventory for a subdivision
developer to allow the potential buyers to become acquainted with the area in
which they intend to live.

     TourMaxx virtual tour services have been customized to provide a similar
service for the construction industry, under the name "PhotoPhase."  With
Company software a builder can create an interactive photo scrapbook of the
construction process.  The photos can be taken by the Company photographers or
by the builder at various stages of the construction and then the photos are
uploaded to a web page to allow the builder to communicate with his potential
"spec" purchaser or custom purchaser.  This service comes with an automatic
survey module that lets the builder know the reaction of potential customers
throughout the build process.  The Company has entered into contracts with
some of the largest home builders in the United States, and will further
pursue this part of the real estate industry during 2004.

     The Company generates its revenue by charging fees for its services. The
Company charges a brokerage company or an individual agent a flat fee for each
real estate listing that employs a virtual tour, which fee ranges from $79 to
$500 per tour, depending on volume and other factors.  The Company also
charges for other service transactions.  The Company will enter into longer
term contracts with real estate brokerages to provide the TourMaxx services.
The contracts are generally for one to two years.  Fees for the LeadMaxx
services are a monthly service fee ranging from $500 to $5,000 based on the
number of real estate offices being served by the Company and the level of
service being performed.  The fees generated from these services are then
shared with Lantrax according to the following schedule:  implementation fees:
Company receives 5%; current customer monthly fees: Company receives 25%; new
customer monthly fees:  Company receives 10%; and lead qualification:  Company
receives 90%.  Similarly, the LeadMaxx customer contracts are for periods
ranging from one to two years.  The Company may also charge a per lead fee of
$3 to $5 for each lead qualified by the Company customer service personnel if
the customer chooses to employ that service.

     In the fiscal year ended September 30, 2003, approximately 90% of the
revenue derived by the Company was from providing the TourMaxx services and
10% was derived from LeadMaxx services.

     To date, the Company has marketed its services to the real estate
industry primarily through personal contact with larger brokerage companies.
The Company has attended major real estate trade shows since its inception as
an exhibitor.  The service introduction has been well received and resulted in
numerous contacts with real estate brokerages with which the

                                5
<PAGE>


Company has been actively attempting to enter into service agreements.  In
addition, marketing literature has been selectively mailed to the largest
brokerage companies throughout the United States.  Combined, these sales
efforts have resulted in 12 real estate brokerages in different states signing
contracts to receive the LeadMaxx services which have been implemented by the
Company.  Some of the largest brokerage companies in the country have entered
into contracts with the Company for the TourMaxx services.  The Company
provided an average of almost 2500 virtual tours per month in the 2003 fiscal
year, which is an increase of over 800 tours per month over the previous year.

     The Company also provides web design, web development, and supporting web
services to clients and prospective customers, and generates additional income
for the services it provides.

Intellectual Property Protection

     The Company has developed certain Internet search engine technology it
believes gives the Company a competitive advantage in servicing its customers.
The Company has filed a preliminary patent application on the LeadMaxx search
engine application, and is waiting for a response from the patent office.  The
Company is unsure of its financial ability to complete the patent process, and
there can be no assurance that a patent will be issued.

     The Company protects its trade secrets through use of confidentiality
agreements with its employees and customers.

Major Customers

     Approximately 43% of all Company revenue for fiscal year 2003 was derived
from the Company's largest five customers.  As more customers are added to the
services it is expected that the percentage received from those customers will
be reduced significantly.  All five of these customers are subscribers to the
TourMaxx service.

Competition

     The Company is not aware of other competitors that provide all the same
services to the real estate industry as the Company.  However, there are many
companies that provide general Internet delivered services to the real estate
industry and many companies that provide virtual tour services.  The virtual
tour business has very low barriers to entry, as a result of which there are
numerous local and regional companies in the business.  To the Company's
knowledge, there are currently only three companies on a national level, one
of which is the Company.  Many of the competitive services include portions of
the services the Company provides and are perceived by potential customers as
being competitive even though they do not provide all of the services the
Company offers. Some or all of the competitors providing such services may
have greater financial resources than the Company.

Employees

     The Company and its two subsidiaries currently employ 25 people at the
Company's executive offices in.  The Company utilizes over 250 independent
contractors who provide photography services for the TourMaxx services and 92
independent sales agents or affiliates in various states who coordinate sales
efforts in their areas and act as customer liaison for brokerage customers.
Such affiliates are compensated based on a percentage of the revenue generated
from customers they service.

                                6
<PAGE>

Consulting Agreement

     In the beginning of September, 2000, Applied Technology Consultants,
Inc., ("ATC") a Nevada Corporation, entered into a consulting agreement with
REF under the terms of which it was to be paid $5,000 per month for a term of
three years ending on August 31, 2003.  ATC is a shareholder in the Company.
In addition, ATC entered into an agreement under the terms of which it was
entitled to a finder's fee for locating investment capital funding for the
operations of the Company.  The finder's fee was to be a percentage of the
investment proceeds actually received by the Company and was to be paid as
such funds were received.  The finder's fee percentage was 5% of the first
million dollars received, 4% of the next million dollars received and 3% of
any additional funds received.  To date, ATC has received $33,600 in finder's
fees and $20,000 in consulting fees.  All remaining amounts were accrued.  At
September 30, 2003, the Company owed ATC $320,600, of which $105,000 was for
finders fees owed and the remainder for consulting services.  Mr. Reed L.
Benson, who is an officer and director of the Company, is also an officer and
director of ATC and may derive income from ATC.

Government Regulation

     The Company's business activities are subject only to general
governmental regulations.

                 ITEM 2.  DESCRIPTION OF PROPERTY

     The executive offices of the Company are located at 57 West 200 South,
Ste. 550, Salt Lake City, Utah 84101.  360House entered into a lease beginning
in June 2003, for a five year term ending June 30, 2008.  The lease covers
approximately 6,700 square feet of office space at a rate of $5,585  per
month.  The Company has no other properties.

                    ITEM 3.  LEGAL PROCEEDINGS

     There are no legal proceedings pending against the Company, and, to the
best knowledge of the Company, no litigation has been threatened.

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

     There were no shareholders' meetings during the fiscal year.


                             PART II

              ITEM 5.  MARKET FOR COMMON EQUITY AND
                   RELATED STOCKHOLDER MATTERS

     The Company's common stock is currently traded in the pink sheets under
the symbol "XVNT".  The Company's stock began trading on November 20, 2000.
The following table sets forth, for the respective periods indicated, the high
and low bid quotations, as adjusted for stock splits of the Company's common
stock, as reported by the National Quotation Bureau, and represents prices
between dealers, does not include retail markups, markdowns or commissions,
and may not represent actual transactions:

                                7

<PAGE>

Calendar Quarters                   High Bid   Low Bid
--------------------------------    --------   -------

Fiscal 2002

Quarter ended December 31, 2001     $ 2.75     $ 0.66
Quarter ended March 31, 2002          2.00       0.51
Quarter ended June 30, 2002           3.25       2.14
Quarter ended September 30, 2002      5.00       2.75

Fiscal 2003

Quarter ended December 31, 2002     $ 3.20     $ 2.90
Quarter ended March 31, 2003          3.10       2.80
Quarter ended June 30, 2003           3.00       2.80
Quarter ended September 30, 2003       .80        .60

Fiscal 2004

Quarter ended December 31, 2003     $  .35     $  .28



     On July 9, 2004, the closing bid price of the Company's common stock was
$.20 per share, the high bid price was $.20 share and the low bid price was
$.20 share.  As of August 25, 2004, the Company had 13,561,100 shares of its
common stock issued and outstanding, and there were approximately 252
shareholders of record.

Payment of Dividends

     As of the date hereof, the Company has not paid or declared any cash
dividends.  Future payment of dividends by the Company, if any, is at the
discretion of the Board of Directors and will depend, among other criteria,
upon the Company's earnings, capital requirements, and its financial condition
as well as other relative factors.  Management intends to retain any and all
earnings to finance the development of its business, at least in the
foreseeable future.  Such a policy is likely to be maintained as long as
necessary to provide working capital for the Company's operations.

Recent Sales of Unregistered Securities

     The Company did not sale any additional stock during the fiscal year.
The Company also granted no options or warrants to acquire its common stock
during the fiscal year.

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

Forward-Looking Information, Cautionary Statements and Risk Factors

     This report on Form 10-KSB includes "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, and Section 21E of
the Securities Exchange Act of 1934.  These forward-looking statements may
relate to such matters as anticipated financial performance, future revenues
or earnings, business prospects, projected ventures, new products and
services, anticipated market performance and similar matters.  When used in
this report, the words "may," "will," "expect," "anticipate," "continue,"
"estimate," "project," "intend," and similar expressions are intended to
identify forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934
regarding events, conditions, and financial trends that may affect the
Company's future plans of operations, business strategy, operating results,
and financial position.  The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.  To comply with the
terms of the safe harbor, we caution readers that a variety of factors could


                                8
<PAGE>

cause our actual results to differ materially from the anticipated results or
other matters expressed in our forward-looking statements.  These risks and
uncertainties, many of which are beyond our control, include (i) the
sufficiency of existing capital resources and the Company's ability to raise
additional capital to fund cash requirements for future operations; (ii)
uncertainties involved in the rate of growth of the Company's business and
acceptance of the products and services of REF; (iii) the ability of the
Company to achieve and maintain a sufficient customer base to have sufficient
revenues to fund and maintain operations; (iv) volatility of the stock market,
particularly within the technology sector; and (v) general economic
conditions.  Although the Company believes the expectations reflected in these
forward-looking statements are reasonable, such expectations may prove to be
incorrect.


Plan of Operation

     The Company continues to target the real estate brokerage firms in the
United States, and to actively undertake efforts to sell the Company's
products and services to such firms, as a means of attempting to secure a
larger share of the market in selected real estate markets in the United
States.  The Company will undertake active efforts to enter into contracts
with the larger real estate brokers in each of these market areas.

     The Company's plan of operation will depend on its ability to raise
substantial additional capital, of which there can be no assurance.  The
Company is a party to subscription agreements for the sale of its restricted
common stock totaling $1,000,000.  However, as of September 30, 2003, no
shares have been issued by Company.  Since December 31, 2003, the Company has
received approximately $100,000 under the subscription agreements, but the
funding source is under no obligation to continue making capital investments
in the Company.  The Company has used, and will continue to use, these funds
to pay general and administrative expenses, and to develop its marketing plan,
which includes participation in trade shows and direct marketing as well as
traveling to meet one-on-one with real estate brokers.  Although additional
funding may be terminated at any time, the Company currently believes that
funding will continue until the subscription agreement is completed.  At the
time that the funding is completed, if the Company has not achieved a
breakeven status, the Company will begin a program of cost reduction and seek
additional investment capital to cover any cost shortfall.   It is anticipated
that cost reductions and additional investment, if received, will cover the
Company's working capital needs over the next twelve months.

     The ability of the Company's technology and the Web presentation to
capture valuable information concerning house buying prospects is proving
valuable. The Company has added customer service representatives who are
charged with the responsibility of contacting all those people visiting a
client web site and qualifying the prospect's present intent to engage in a
real estate transaction.  If the prospect is deemed to be an "imminent"
prospect, the brokerage is contacted and given the "hot" lead to be presented
to an agent for follow up.  This service of qualifying prospect leads and
presenting to a customer is currently being sold by the Company.  The Company
is charging its clients a monthly recurring service fee.   To date, there are
12 brokerage customers that have engaged the Company to provide the lead
generation services, which generate approximately $24,000 per month in service
revenue.

     The Company's main focus is on growing TourMaxx and its accompanying
virtual tours, while also making efficient the lead qualification service of
LeadMaxx.  Currently, many of the sales presentations made by the Company
consist of the bundled services of the LeadMaxx and TourMaxx services. Revenue
from the TourMaxx services constituted approximately 90% of the total revenue
of the Company for the year ended September 30, 2003.  The Company

                                9
<PAGE>

intends to continue to search for complementary services to offer to its
customers and, if acquired,  they will also be included in the bundle of
services offered to Company customers.

Results of Operation

     Revenues

     The Company has generated a total of $2,941,802 in revenue for the year
ended September 30, 2003, compared with revenue of $1,382,954 for the year
ended September 30, 2002. The increase in revenue of 113% is due primarily to
increased sales of virtual tours to an increasing agent base.

     Operating Expenses

     The Company incurred total operating expenses of $5,137,660 for the year
September 30, 2003, compared to total operating expenses of $2,804,082 for the
year ended September 30, 2002.  The increase of $2,333,578 as explained more
fully hereafter, is primarily due to one time charges  incurred in connection
with the impairment of goodwill,  increase in  payments of compensation to
sales affiliates managing TourMaxx customer accounts, increases in salaries
and employee benefits and sales and marketing expenses.

     The largest single component of the increase in operating expenses is the
write off of goodwill that had been recorded on the books in connection with
the acquisition of 360House.  Upon review of the recoverability of the
goodwill it was determined that the Company will not be able to recover the
goodwill and that a charge to the operations of the Company was appropriate.
Accordingly, the Company recorded a charge of $1,068,047 to reflect the
impairment.

     The Company's largest expense is for sales and marketing, which was in
the amount of $1,649,481 for the year ended September 30, 2003 compared to
$610,510 for the year ended September 30, 2002.  The increase of $1,038,971,
as explained more fully hereafter, is primarily due to the Company's affiliate
commission sales structure (encompassing 70% of the Company's sales expense).
The Company paid its sales affiliates approximately $1,152,261, which
accounted for 90% of the increase in total operating expenses other than the
goodwill impairment discussed above.  The increase of $361,843 in salaries and
employee benefits results from the added staff to accommodate future
development of Company software.    The Company has increased the number of
employees from 19 to 26, all of which increase is attributable to 360House.


     The Company incurred photography expenses of $177,869 for the year ended
September 30, 2003, compared to photography expenses of $207,966 for the year
ended September 30, 2002.  The decrease of $30,097 was attributed to increased
affiliate staff which pays for its own photography expenses.

     The Company did not incur expense for consulting fees for the year ended
September 30, 2003 compared to consulting expenses of $494,787 for year ended
September 30, 2002.  This decrease was due primarily to completing tasks
internally.

     Other expenses, which includes all expenses not specifically listed on
the Statement of Operations, such as printing, data communications
connections, telephone, and programming,

                                10
<PAGE>


aggregated $664,208 for the year ended September 30, 2003 as compared to
$337,825 for the year ended September 30, 2002.  The increase was due
primarily to increase in Company sales.

     During the year ended September 30, 2003, the Company did not expend
monies for technology and website design compared to $5,517 for the year ended
September 30, 2003.  The decrease was due primarily to completion of the
Company's website design projects and hiring of in-house personnel to perform
that function.

     Net Losses

     The Company had a net loss in the amount of $2,193,025 for the year ended
September 30, 2003 compared to a net loss of $1,460,116 for the year ended
September 30, 2002.  The net loss increased by $732,909 due to the charge
related to the impairment of goodwill.


Liquidity and Capital Resources

     At September 30, 2003, the Company had cash of $1,136, total current
assets of $97,292, current liabilities of $1,145,755, and total stockholders'
equity deficit of $1,002,118.  The Company experienced negative cash flow from
operations during the fiscal year ended September 30, 2003 of $641,290, which
was met by investor capital contributions pursuant to  subscription
agreements. The Company expects to continue to experience negative cash flow
until the sales and marketing of the LeadMaxx services and the TourMaxx
services result in contract revenue that exceed the fixed costs of operations,
which is estimated to be achieved sometime during the current fiscal year.

     The Company will continue to have the need for infusions of capital over
at least the next several months.  To date, the Company has met its working
capital needs through payments under subscription agreements, and anticipates
that such payments will continue over the next several months.  Since December
31, 2003, the Company has received a total of $100,000 in payments under
subscription agreements, and anticipates that payments will continue over the
next several months, at a level sufficient to meet operating capital deficits.
Additional investor capital after the full funding of the existing
subscription agreements will result in greater dilution to the existing
shareholders.   Therefore, future payments under the subscription agreements
may depend, to some extent, on results of operations, and there can be no
assurance that the Company will be able to attract new investors or that the
current venture investors will continue to fund operations  if the Company
does not demonstrate increased revenues and other favorable operating results
over the next several months.  In the event payments under the subscription
agreements were to terminate, for any reason, the Company would be in
immediate need of another source of capital.  There can be no assurance that,
in such event, the Company will be able to locate a source of capital, or on
terms acceptable to the Company or to reduce costs sufficient to maintain the
operations of the Company at its current level.

Recent Accounting Pronouncements

     Statement of Financial Accounting Standards (SFAS) No. 141, "Business
Combinations," SFAS No. 142, "Goodwill and Other Intangible Assets", SFAS No.
143, "Accounting for Asset Retirement Obligations," and SFAS No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets," were
recently issued.  SFAS No. 141, 142, 143,


                                11
<PAGE>

and 144 have no current applicability to the Company or their effect on the
financial statements would not have been significant.

     In April 2002, the FASB issued Statement No. 145 "Rescission of FASB
Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and
Technical Corrections" (SFAS 145). SFAS 145 will require gains and losses on
extinguishments of debt to be classified as income or loss from continuing
operations rather than as extraordinary items as previously required under
Statement of Financial Accounting Standards No. 4 (SFAS 4).  Extraordinary
treatment will be required for certain extinguishments as provided in APB
Opinion No. 30. SFAS 145 also amends Statement of Financial Accounting
Standards No. 13 to require certain modifications to capital leases be treated
as a sale-leaseback and modifies the accounting for sub-leases when the
original lessee remains a secondary obligor (or guarantor).  SFAS 145 is
effective for financial statements issued after May 15, 2002, and with respect
to the impact of the reporting requirements of changes made to SFAS 4 for
fiscal years beginning after May 15, 2002. The adoption of the applicable
provisions of SFAS 145 did not have an effect on our financial statements.

     In June 2002, the FASB issued Statement No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 nullifies Emerging
Issues Task Force Issue No. 94-3 "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)."  SFAS 146 applies to costs associated
with an exit activity that does not involve an entity newly acquired in a
business combination or with a disposal activity covered by SFAS 144.  SFAS
146 is effective for exit or disposal activities that are initiated after
December 31, 2002, with earlier application encouraged. We are currently
reviewing SFAS 146 and intend to implement them no later than January 1, 2003.

     In October 2002, the FASB issued Statement No. 147 "Acquisitions of
Certain Financial Institutions   an amendment of FASB Statements No. 72 and
144 and FASB Interpretation No. 9" (SFAS 147).  SFAS 147 removes acquisitions
of financial institutions from the scope of both Statement 72 and
Interpretation 9 and requires that those transactions be accounted for in
accordance with FASB Statements No. 141, Business Combinations, and No. 142,
Goodwill and Other Intangible Assets. Thus, the requirement in paragraph 5 of
Statement 72 to recognize (and subsequently amortize) any excess of the fair
value of liabilities assumed over the fair value of tangible and identifiable
intangible assets acquired as an unidentifiable intangible asset no longer
applies to acquisitions within the scope of this Statement. In addition, this
Statement amends FASB Statement No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, to include in its scope long-term
customer-relationship intangible assets of financial institutions such as
depositor- and borrower-relationship intangible assets and credit cardholder
intangible assets. Consequently, those intangible assets are subject to the
same undiscounted cash flow recoverability test and impairment loss
recognition and measurement provisions that Statement 144 requires for other
long-lived assets that are held and used.  SFAS 147 is effective October 1,
2002.  The adoption of the applicable provisions of SFAS 147 did not have an
effect on our consolidated financial statements.

      In December 2002, the FASB issued Statement No. 148 "Accounting for
Stock-Based Compensation   Transition and Disclosure   an amendment of FASB
Statement No. 123" (SFAS 148).  SFAS 148 provides alternate methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation.  In addition, this Statement amends the
disclosure requirements of Statement 123 to require prominent disclosures in
both annual and interim financial statements about the method of accounting
for stock-based employee compensation and the effect of the method used on
reporting results.  SFAS 148 is effective for fiscal years beginning after
December 15, 2003.  We are currently reviewing SFAS 148.

                                12
<PAGE>

Inflation

     During fiscal 2002, there was no material impact on the Company from
inflation.


                  ITEM 7.  FINANCIAL STATEMENTS

     The following financial statements required by this Item 7 begin on Page
F-1 and are located following the signature page.  All information which has
been omitted is either inapplicable or not required.

    Independent Auditors' Report
    Report of HJ & Associates, LLC .......................................F-1

    Consolidated Balance Sheet as of September 30, 2003...................F-2

    Consolidated Statements of Operations for the years
    ended September 30, 2003 and September 30, 2002.......................F-3

    Consolidated Statements of Stockholders' Equity for
    the years ended September 30, 2003 and 2002...........................F-4

    Consolidated Statements of Cash Flows for the years ended
    September 30, 2003 and September 30, 2002.............................F-5

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


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

    During the fiscal year, there have been no disagreements with accountants.


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

     The following table sets forth (i) the names of the executive officers,
(ii) their ages as of the date of this Form 10-KSB and (iii) the capacities in
which they serve Xvariant:

Name                    Age  Position                        Officer Since
--------------------    ---- ------------------------------  -------------
Reed L. Benson          57   Chief Executive Officer,         2001
                             Chief Financial Officer
                              and Director


     Reed L. Benson was appointed Chief Executive Officer, President and a
Director of the Company on October 12, 2001.  On November 15, 2002, he
resigned as President, but continues to serve the Company as a Director and as
Chief Executive Officer and Chief Financial Officer.  From October, 1999 to
October, 2001, Mr. Benson was engaged in the


                                13
<PAGE>

private practice of law and business management of personal assets.  From July
1995 to October, 2001, Mr. Benson served as Vice President, Secretary, and
General Counsel for Data Broadcasting Corporation, a publically-traded company
providing real time financial market information to private investors.  From
August 1987 to July 1995, Mr. Benson was General Counsel and Secretary of
Broadcast International, Inc., a publically-traded company which furnished
satellite communications services for businesses.  Mr. Benson is President of
Applied Technology Consultants, Inc., which has a consulting contract with the
Registrant (See "ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").
Mr. Benson is a licensed attorney in the State of Utah. He received his J.D.
degree, from the University of Utah in 1976.

Section 16 (a) Beneficial Ownership Compliance

     Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's executive officers, directors and persons who own more than ten
percent of the Company's Common Stock, to file initial reports of beneficial
ownership on Form 3, changes in beneficial ownership on Form 4 and an annual
statement of beneficial ownership on Form 5, with the SEC.  Such executive
officers, directors and greater than ten percent shareholders are required by
SEC rules to furnish the Company with copies of all such forms that they have
filed.

     Based solely on its review of the copies of such forms received by the
Company and representations from certain reporting persons, the Company
believes that all Section 16(a) filing requirements applicable to its
executive officers, directors and ten-percent shareholders were filed.

                 ITEM 10.  EXECUTIVE COMPENSATION

Summary of Cash and Certain Other Compensation


     The following sets forth the compensation of Xvariant's Chief Executive
Officer and the other officers who were executive officers as of September 30,
2003 and whose total annual salary and bonuses exceeded $100,000 for the three
fiscal years ended September 30, 2003.

Summary Compensation Table

                                 --------------------------------
                                                       Long Term
                                      Annual         Compensation
                                     Compensation       Awards
-------------------------------- ------------------- ------------ ------------
                      Fiscal                                       All Other
Name and Principal  Year Ended                                    Compensation
Position            September 30  Salary($) Bonus($)  Options(#)     ($)
------------------- ------------ ---------- -------- ------------ ------------

Reed L. Benson         2003          0          0          0          0
Chief Executive        2002          0 (1)      0      500,000(2)     0
Officer                2001          0          0          0          0

Glade M. Jones         2003      120,000        0          0          0
President              2002       70,000(3)(4)  0          0          0
                       2001          0          0          0          0

Andy Evans             2003      120,000        0          0          0
Chief Technical        2002       70,000(3)(5)  0          0          0
Officer                2001          0          0          0          0



                                14


<PAGE>

(1)  Does not reflect consulting fees earned by Applied Technology
Consultants, Inc., of which Mr. Benson is an officer and director, under a
consulting agreement providing for a $5,000 per month consulting fee and other
consideration none of which was paid during the fiscal year.  (See "ITEM 12.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS").

(2) Exercisable at $1.09 per share.  (See "ITEM 5.  MARKET FOR COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS:  Recent Sales of Unregistered Securities").

(3) Includes compensation from the Company's subsidiary, 360House.

(4) Resigned as officer of X-Variant on September 19, 2003.  Remains the
President of 360House.com, Inc., a wholly owned subsidiary of X-Variant.

(5) Resigned as officer of X-Variant on September 19, 2003.  Remains the Chief
Technical Officer of 360House.com, Inc., a wholly owned subsidiary of
X-Variant.


    ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
          AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

      The following table sets forth the beneficial ownership of the common
stock of the Company, at April 13, 2004, by each director, current executive
officer and executive officer named in the Summary Compensation Table
appearing above, and each person who, to the knowledge of the Company, owned
beneficially more than 5% of the Company's common stock.


                                             Beneficial Ownership
                                             --------------------
                                       Amount of and Nature of    Percent of
Beneficial Owner                       Beneficial Ownership (1)   Total (2)
------------------------------------- --------------------------- ------------
Calico, Ltd.
PO Box 267
Leeward Highway
Providenciales
Turks and Caicos Islands               6,200,000     Direct        .457%

Reed L. Benson (3)
CEO and Director
57 West 200 South, Ste. 550
Salt Lake City, Utah 84101             1,162,050     Direct (3)    .084%


All current directors, current
executive officers and former
executive officers as a group
(1 persons)                            1,162,050                   .084%



                                15

<PAGE>

(1) The table in this section is based upon information supplied by officers,
directors and principal stockholders and Schedules 13D and 13G, if any, filed
with the SEC.  Unless otherwise indicated in the footnotes to the table and
subject to the community property laws where applicable, each of the
stockholders named in this table has sole voting and investment power with
respect to the shares shown as beneficially owned by him.

(2) Applicable percentage of ownership for the officers and directors is based
on 14,061,100 shares of common stock, which were outstanding on April 13,
2004, and which includes 500,000 shares held by such officer and director
which may be acquired upon exercise of currently exercisable options.

(3) Includes 500,000 shares which may be acquired upon exercise of presently
exercisable options.  (See "ITEM 10. EXECUTIVE COMPENSATION").  Also includes
100,000 shares held by Applied Technology Consultants, Inc., an entity in
which Mr.  Benson has shared voting control, and 12,050 shares held by Double
RR, LLC, an entity in which Mr. Benson has shared voting control.

Stock Option Grants

      No stock options were granted to officers or directors during the fiscal
year.

Compensation of Directors

     There are no non-employee directors of the Company and employees receive
no additional compensation for serving as directors.


Employment Contracts and Termination of Employment and Change of Control
Arrangements

     Mr. Reed L. Benson, CEO, is not a salaried employee of the Company, and
is not compensated directly by the Company.  He is President of Applied
Technology Consultants, Inc. ("ATC"), which has a consulting agreement with
the Company at $5,000 per month.  The Company currently owes ATC approximately
$320,600 under the consulting agreement.  Mr. Benson may derive compensation
from ATC and indirectly from the Company at such time as the Company is able
to pay the amount owed to ATC.  No amounts were paid during the fiscal year
under the consulting agreement.  (See "ITEM 12.  CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS").

     The Company's wholly owned subsidiary, 360House.com, Inc. ("360House")
has entered into employment agreements with Messrs. Jones and Evans which
provide for significant benefits. Each of the employment agreements provides
for a term that expires January 31, 2007 and for a monthly salary of $10,000,
with a bonus  equal to 12.5% of the net profits of 360House paid quarterly.
If their employment is terminated by the Company without cause, they are
entitled to termination benefits for the remainder of the contractual term
equal to their  base salary for such period.

     The Company currently has no other compensation plan or arrangement with
respect to any of the executive officers named on the Summary Compensation
Table, which results or will result from the resignation, retirement, or other
termination of such individual's employment with the Company or from a change
in control of the Company or a change in the individual's responsibilities
following a change in control.


                                16

<PAGE>

Compensation Committee Interlocks and Insider Participation

     The Company does not currently have a Compensation Committee.

Board Meetings

     During the year ended September 30, 2003, the Board took one separate
action by consent resolution, and no formal meetings were held.

     ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     The Company entered into consulting agreement with Applied Technology
Consultants, Inc., a Nevada corporation, in September, 2000, which provides
for a payment of $5,000 per month as a consulting fee for a three year term.
The Agreement also provided for a finder's fees for locating investment
capital funding for the operations of the Company.  The finder's fee is to be
a percentage of the investment proceeds actually received by the Company and
is to be paid as such funds are received.  To date, ATC has received $33,600
in finder's fees and $20,000 in consulting fees.  At December 31, 2003, the
Company owed ATC approximately $320,600, $105,000 of which is for finders
fees.  In addition, ATC loaned the Company $79,000 on a short term note
bearing interest at 6% per annum, of which $36,550 has been repaid.  Mr. Reed
L. Benson, a director and officer of the Company, is also an officer and
director of ATC and may derive compensation from ATC.
Reed L. Benson has also loaned the Company $18,500 and another entity to which
he is related has loaned the Company $68,864.  Both of these loans were
repaid.

                                17
<PAGE>

           ITEM 13.  EXHIBITS, AND REPORTS ON FORM 8-K
   (a) Exhibits

Exhibit No.

    2.1**   Stock Exchange Agreement between Xvariant, Inc. and 360House.com,
            Inc. dated as of January 29, 2002

   10.1*    Asset Purchase Agreement by and between
            Xvariant, Inc. and Bid Trac, Inc.

   10.2*    Common Stock Warrant

   10.3**   Employment Agreement between 360House.com, Inc. and
            Glade M. Jones dated as of December 1, 2001.

   10.4**   Employment Agreement between 360House.com, Inc. and
            Andy Evans dated as of December 1, 2001.

   31.1     Certification of Chief Executive and Financial Officer pursuant
            to Section 302

   32.1     Certification of Chief Executive and Financial Officer pursuant
            to Section 906

*  Previously filed with the Registrant's Report on Form 10-KSB filed on
   January 15, 2002.
** Previously filed with the Registrant's Current Report on Form 8-K filed on
   February 6, 2002.

   (b)  Reports on Form 8-K

    No other reports on Form 8-K were filed during the year ended September
30, 2003.

                ITEM 14.  CONTROLS AND PROCEDURES

     Evaluation of Disclosure Controls and Procedures.  Based upon an
evaluation under supervision and with the participation of Registrant's
management, as of a date within 90 days of the filing date of this Annual
Report on Form 10-KSB, Registrant's principal executive officer and principal
financial officer has concluded that the Registrant's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c)) under the Securities
Exchange Act of 1934, are effective to ensure that information required to be
disclosed (in reports that we file or submit under that Exchange Act) is
recorded, processed, summarized and reported within the  time periods
specified in SEC rules and forms.

     Changes in Internal Accounting.  There were no significant changes in
Registrant's internal controls or other factors that could significantly
affect these controls subsequent to the date of their evaluation.  There were
no significant deficiencies or material weaknesses, and therefore there were
no corrective actions taken.  However, the design of any system of controls is
based in part upon the assumptions about the likelihood of future events, and
there is no certainty that any design will succeed in achieving its stated
goal under all potential future considerations, regardless of how remote.


                                18
<PAGE>


                            SIGNATURES

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

                                  XVARIANT, INC.


Date: August 25, 2004           /s/ Reed L. Benson
                                ----------------------------------------------
                                By:  Reed L. Benson
                                Its:  Chief Executive Officer, Chief Financial
                                Officer and Director

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


Date: August 25, 2004           /s/ Reed L. Benson
                                ----------------------------------------------
                                By:  Reed L. Benson
                                Its:  Chief Executive Officer, Chief Financial
                                Officer and Director




                                19

<PAGE>



                   INDEPENDENT AUDITORS' REPORT


The Board of Directors
Xvariant, Inc. and Subsidiaries
Salt Lake City, Utah

We have audited the accompanying consolidated balance sheet of Xvariant, Inc.
and Subsidiaries as of September 30, 2003 and the related statements of
operations, stockholders' equity (deficit), and cash flows for the years ended
September 30, 2003 and 2002.  These consolidated financial statements are the
responsibility of the Company's management.  Our responsibility is to express
an opinion on these consolidated financial statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Xvariant, Inc. and Subsidiaries as of September 30, 2003 and the results of
their operations and their cash flows for the years ended September 30, 2003
and 2002, in conformity with accounting principles generally accepted in the
United States of America.

The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern.  As discussed in Note 3 to
the consolidated financial statements, the Company has a stockholders' deficit
and negative working capital along with cumulative loses from operations, all
of  which raise substantial doubt about its ability to continue as a going
concern.  Management's plans with regard to these matters are also described
in Note 3.  The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.



/s/ HJ & Associates LLC

HJ & Associates, LLC
Salt Lake City, Utah
May 3, 2004



                               F-1

<PAGE> 20










                 XVARIANT, INC. AND SUBSIDIARIES
                    Consolidated Balance Sheet

                              ASSETS
                                                             September 30,
                                                                 2003
                                                             ------------
CURRENT ASSETS

  Cash                                                       $     1,136
  Accounts receivable, net                                        96,156
                                                             ------------

    Total Current Assets                                          97,292
                                                             ------------

PROPERTY AND EQUIPMENT, NET (Note 4)                              46,345
                                                             ------------
OTHER ASSETS

  Goodwill (Note 12)                                                   -
                                                             ------------

    Total Other Assets                                                 -
                                                             ------------

    TOTAL ASSETS                                             $   143,637
                                                             ============

          LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Cash overdraft                                             $    42,494
  Trade accounts payable and accrued expenses                    462,743
  Payable- related party (Note 8)                                320,600
  Deferred revenue                                                12,637
  Short-term obligations (Note 6)                                303,040
  Capital leases (Note 7)                                          4,241
                                                             ------------

    Total Current Liabilities                                  1,145,755
                                                             ------------

    Total Liabilities                                          1,145,755
                                                             ------------
STOCKHOLDERS' EQUITY (DEFICIT)

  Common stock, $0.001 par value, 50,000,000 shares
    authorized; 13,561,100 shares issued and outstanding          13,561
  Additional paid-in capital                                   3,990,193
  Accumulated deficit                                         (5,005,872)
                                                             ------------

    Total Stockholders' Equity (Deficit)                      (1,002,118)
                                                             ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)     $   143,637
                                                             ============



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


                               F-2
<PAGE> 21

                 XVARIANT, INC. AND SUBSIDIARIES
              Consolidated Statements of Operations

                                                      For the Years Ended
                                                         September 30,
                                                  ----------------------------
                                                      2003           2002
                                                  ------------- --------------

REVENUES                                          $  2,941,802  $   1,382,954
                                                  ------------- --------------
OPERATING EXPENSES

  Impairment of goodwill                             1,068,047              -
  Salaries and employee benefits                     1,276,588        914,745
  Sales and marketing                                1,649,481        610,510
  Technology development and website design                  -          5,517
  Other                                                664,208        337,825
  Bad debt expense                                      65,755         14,095
  Photography services                                 177,869        207,966
  Consulting services                                        -        494,787
  Rent                                                  59,995         65,269
  Depreciation and amortization                        105,064         95,809
  Travel                                                70,653         57,559
                                                  ------------- --------------

     Total Operating Expenses                        5,137,660      2,804,082
                                                  ------------- --------------

Loss From Operations                                (2,195,858)    (1,421,128)
                                                  ------------- --------------
OTHER EXPENSE

  Interest expense                                     (17,733)       (13,054)
  Loss on disposal of subsidiary (Note 13)                   -        (25,934)
  Gain on release of debt                               20,566              -
                                                  ------------- --------------

    Total Other Expense                                  2,833        (38,988)
                                                  ------------- --------------

Loss before income taxes                            (2,193,025)    (1,460,116)

Income taxes                                                 -              -
                                                  ------------- --------------

NET LOSS                                          $ (2,193,025) $  (1,460,116)
                                                  ============= ==============

BASIC LOSS PER SHARE                              $      (0.16) $       (0.10)
                                                  ============= ==============
WEIGHTED AVERAGE NUMBER OF SHARES
 OUTSTANDING                                        13,561,100     13,945,785
                                                  ============= ==============

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

                               F-3

<PAGE> 22
<TABLE>
<CAPTION>

                         XVARIANT, INC. AND SUBSIDIARIES
            Consolidated Statements of Stockholders' Equity (Deficit)


                                       Common Stock       Additional
                                ------------------------  Paid-in      Subscription  Accumulated  Total
                                 Shares          Amount   Capital      Receivable    Deficit      Equity(Deficit)
                                ------------ ------------ ------------ ------------- ------------ --------------

                             <c>          <c>          <c>          <c>          <c>           <c>

Balance at September 30, 2001    21,121,100  $    21,121  $ 2,439,229  $ (1,215,500) $(1,352,731) $    (107,881)

Cancellation of common stock
 in conjunction with officer
 separation agreements           (9,900,000)      (9,900)       9,900             -            -              -

Issuance of common stock
 in conjunction with officer
 separation agreements              700,000          700         (700)            -            -              -

Issuance of stock for
 asset purchase                     450,000          450       69,550             -            -         70,000

Expense incurred through
 issuance of stock options                -            -      197,302             -            -        197,302

Issuance of common stock
 for purchase of subsidiary       1,000,000        1,000    1,009,000             -            -      1,010,000

Issuance of common stock
 for services                       190,000          190      237,460             -            -        237,650

Payment received on
 common stock subscription                -            -      (47,250)      789,960            -        742,710

Net loss for the year ended
 September 30, 2002                       -            -            -             -   (1,460,116)    (1,460,116)
                                ------------ ------------ ------------ ------------- ------------ --------------

Balance at September 30, 2002    13,561,100       13,561    3,914,491      (425,540)  (2,812,847)       689,665

Payment received on
 common stock subscription                -            -      (12,600)      425,540            -        412,940

Stock option expense                      -            -       88,302             -            -         88,302

Net loss for the year ended
  September 30, 2003                      -            -            -             -   (2,193,025)    (2,193,025)
                                ------------ ------------ ------------ ------------- ------------ --------------

Balance at September 30, 2003    13,531,100  $    13,561  $ 3,990,193  $          -  $(5,005,872) $  (1,002,118)
                                ============ ============ ============ ============= ============ ==============



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

                                  F-4

</TABLE>
<PAGE> 23
<TABLE>
<CAPTION>


                    XVARIANT, INC. AND SUBSIDIARIES
                 Consolidated Statements of Cash Flows

                                                             For the Years Ended
                                                                 September 30,
                                                         ---------------------------
                                                              2003          2002
                                                         ------------- -------------

                                                       <c>          <c>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                               $ (2,193,025) $ (1,460,116)
  Adjustments to reconcile net loss to net cash
  used by operating activities:
    Depreciation and amortization                             105,064        95,809
    Bad debt expense                                           65,755        14,095
    Gain on release of debt                                   (20,566)            -
    Loss on disposal of subsidiary                                  -        25,934
    Common stock and options issued for services               88,302       434,952
    Impairment of goodwill                                  1,068,047             -
  Changes in operating assets and liabilities:
    (Increase) in accounts receivable                         (56,250)     (108,650)
    Decrease in prepaid expenses                                9,232         8,700
    Increase in accounts payable and accrued expenses         147,040       313,379
    Increase in A/P related party and accrued expense
     - related party                                          146,899             -
    (Decrease) in deferred revenue                             (1,788)       (2,999)
                                                         ------------- -------------

      Net Cash Used by Operating Activities                  (641,290)     (678,896)
                                                         ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES

  Purchase of fixed assets                                    (10,038)      (20,837)
  Cash received in stock exchange agreement                         -         2,179
  Cash given up in disposal of subsidiary                           -       (16,545)
                                                         ------------- -------------

      Net Cash Used by Investing Activities                   (10,038)      (35,203)
                                                         ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES

  Net increase (decrease) in lines of credit
    - related party                                           (73,314)       43,314
  Changes in cash overdraft                                    35,552       (17,202)
  Payments on notes payable - related party                   (81,480)      (46,291)
  Proceeds from notes payable - related party                 381,020         3,500
  Principal payments on leases payable                        (27,381)      (23,350)
  Proceeds from stock subscription receivable                 425,540       789,960
  Commissions on stock subscription receivable                (12,600)      (47,250)
                                                         ------------- -------------

      Net Cash Provided by Financing Activities               647,337       702,681
                                                         ------------- -------------

NET DECREASE IN CASH                                           (3,991)      (11,418)

CASH AT BEGINNING OF PERIOD                                     5,127        16,545
                                                         ------------- -------------

CASH AT END OF PERIOD                                    $      1,136  $      5,127
                                                         ============= =============


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

                                  F-5
</TABLE>
<PAGE> 24
<TABLE>
<CAPTION>



                    XVARIANT, INC. AND SUBSIDIARIES
           Consolidated Statements of Cash Flows (Continued)

                                                             For the Years Ended
                                                                 September 30,
                                                              2003          2002
                                                         ------------- -------------

                                                       <c>          <c>
SUPPLEMENTAL CASH FLOW INFORMATION

CASH PAID FOR:

  Interest                                               $     10,343  $     12,785
  Income taxes                                           $          -  $          -

NON-CASH INVESTING AND FINANCING ACTIVITIES:

  Common stock and options issued for services           $     88,302  $    434,952
  Common stock issued in asset purchase                  $          -  $     70,000
  Common stock issued in stock exchange agreement        $          -  $  1,010,000






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

                                  F-6

</TABLE>
<PAGE> 25


                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 1- ORGANIZATION AND BUSINESS ACTIVITY

Xvariant, Inc. (Xvariant) was incorporated under the laws of the state of
Nevada on October 24, 1996, under the name Almost Country Productions, Inc.

On March 15, 2001, Xvariant acquired Real Estate Federation, Inc. ("REF") in a
transaction recorded as a recapitalization of REF with Xvariant being the
legal survivor and REF being the accounting survivor and the operating entity.
REF was established to provide technology for the real estate market that
enhances the use of the Internet in the home-buying process. The technology
allows potential homebuyers to search for real estate properties from all
participating real estate brokers' listings. REF had a wholly owned
subsidiary, Xvariant, Inc. (a Utah corporation) which designed web sites for
real estate brokers along with other real estate related services. Xvariant
(the Utah corporation) was disposed of in October 2001 (see Note 13).

During January 2002, the Xvariant completed the acquisition of 360House.com,
Inc. (360House), pursuant to a stock exchange agreement. Xvariant acquired
360House by issuing 1,000,000 shares of common stock to the shareholders of
360House in exchange for all of the issued and outstanding shares of 360House
(see Note 12). In addition, the exchange agreement provides for issuance of
additional shares of Xvariant's common stock based on the performance of
360House. Xvariant agreed to issue common stock, including the 1,000,000
shares issued upon execution of the agreement, at a price equal to either 1) a
value equal to six times 360House's earnings before interest, taxes,
depreciation, and amortization during the twelve month period ending December
31, 2003; or 2) the value defined by a valuation consultant mutually agreeable
by the parties. Either party may demand an independent valuation.  360House
provides services to the real estate industry principally in the form of
photographic virtual tours of real estate properties available for viewing on
the internet and other video media.

The Company was formed on September 1, 2000 and in prior periods was engaged
in the development of technology and Internet services targeted at the real
estate industry and was considered to be in the development stage through
December 31, 2001.  The Company began substantial operations in January 2002
with the acquisition of 360house (see Note 12) and became an operating company
during the year ended September 30, 2003.

The consolidated financial statements include Xvariant and its wholly owned
subsidiaries, Real Estate Federation, Inc. and 360House.com, Inc.,
collectively referred to as "the Company."  All significant intercompany
accounts and transactions have been eliminated.

                               F-7
<PAGE> 26

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

a.  Accounting Methods

The Company's consolidated financial statements are prepared using the accrual
method of accounting.  The Company has elected a September 30, year-end.
360House has a December 31, year end with the accompanying consolidated
financial statements including the results of financial position and results
of operations of 360House as of and for the nine months ended September 30,
2002 which approximates the period from the date of its acquisition by
Xvariant as discussed in Note 12.

b.  Basic Loss Per Share

The computations of basic loss per share of common stock are based on the
weighted average number of common shares outstanding during the period of the
consolidated financial statements.

                                                       September 30,
                                                     2003         2002
                                                ------------- -------------

Numerator - loss                                $ (2,193,025) $ (1,460,116)

Denominator - weighted average number of
 shares outstanding                               13,561,100    13,945,785
                                                ------------- -------------

Loss per share                                  $      (0.16) $      (0.10)
                                                ============= =============


The Company has excluded 3,865,000 of common stock equivalents from the basic
net loss per share calculation as they are anti-dilutive.

c.  Newly Issued Accounting Pronouncements

During the year ended September 30, 2003, the Company adopted the following
accounting pronouncements:

SFAS No. 143 -- In August 2001, the FASB issued SFAS No. 143, Accounting for
Asset Retirement Obligations, which established a uniform methodology for
accounting for estimated reclamation and abandonment costs.  The statement was
effective for fiscal years beginning after June 15, 2002.   The adoption of
SFAS No. 143 did not have a material effect on the financial statements of the
Company.

SFAS No. 145 -- On April 30, 2002, the FASB issued FASB Statement No. 145
(SFAS 145), "Rescission of FASB Statements No. 4, 44, and 64, Amendment of
FASB Statement No. 13, and Technical Corrections."  SFAS 145 rescinds both
FASB Statement No. 4 (SFAS 4), "Reporting Gains and Losses from Extinguishment
of Debt," and the amendment to SFAS 4, FASB Statement No. 64 (SFAS 64),
"Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements."  Through
this rescission, SFAS 145 eliminates the requirement (in both SFAS 4 and SFAS
64) that gains and losses from the extinguishment of debt be aggregated and,
if material, classified as an extraordinary item, net of the related income
tax effect.  However, an

                               F-8

<PAGE> 27

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c. Newly Issued Accounting Pronouncements (Continued)

entity is not prohibited from classifying such gains and losses as
extraordinary items, so long as it meets the criteria in paragraph 20 of
Accounting Principles Board Opinion No. 30, Reporting the Results of
Operations Reporting the Effects of Disposal of a Segment of a Business, and
Extraordinary, Unusual and Infrequently Occurring Events and Transactions.
Further, SFAS 145 amends paragraph 14(a) of FASB Statement No. 13, "Accounting
for Leases", to eliminate an inconsistency between the accounting for
sale-leaseback transactions and certain lease modifications that have economic
effects that are similar to sale-leaseback transactions.  The amendment
requires that a lease modification (1) results in recognition of the gain or
loss in the 9 financial statements,  (2) is subject to FASB Statement No. 66,
"Accounting for Sales of Real Estate," if the leased asset is real estate
(including integral equipment), and (3) is subject (in its entirety) to the
sale-leaseback rules of FASB Statement No. 98, "Accounting for Leases:
Sale-Leaseback Transactions Involving Real Estate, Sales-Type Leases of Real
Estate, Definition of the Lease Term, and Initial Direct Costs of Direct
Financing Leases."  Generally, FAS 145 is effective for transactions occurring
after May 15, 2002. The  adoption of SFAS 145 did not have a material effect
on the financial statements of the Company.

SFAS No. 146 -- In June 2002, the FASB issued SFAS No. 146, "Accounting for
Exit or Disposal Activities" (SFAS 146).  SFAS 146 addresses significant
issues regarding the recognition, measurement, and reporting of costs that are
associated with exit and disposal activities, including restructuring
activities that are currently accounted for under EITF No. 94-3, "Liability
Recognition for Certain Employee Termination Benefits and Other Costs to Exit
an Activity (including Certain Costs Incurred in a Restructuring)." The scope
of SFAS 146 also includes costs related to terminating a contract that is not
a capital lease and termination benefits that employees who are involuntarily
terminated receive under the terms of a one-time benefit arrangement that is
not an ongoing benefit arrangement or an individual deferred-compensation
contract. SFAS 146 will be effective for exit or disposal activities that are
initiated after December 31, 2002 and early application is encouraged.  The
provisions of EITF No. 94-3 shall continue to apply for an exit activity
initiated under an exit plan that met the criteria of EITF No. 94-3 prior to
the adoption of SFAS 146. The effect on adoption of SFAS 146 will change on a
prospective basis the timing of when the restructuring charges are recorded
from a commitment date approach to when the liability is incurred. The
adoption of SFAS 146 did not have a material effect on the financial
statements of the Company.

SFAS No. 147 -- In October 2002, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS) No. 147,
"Acquisitions of Certain Financial Institutions" which is effective for
acquisitions on or after October 1, 2002.  This statement provides
interpretive guidance on the application of the purchase method to
acquisitions of financial institutions.  Except for transactions between two
or more mutual enterprises, this Statement removes acquisitions of financial
institutions from the scope of both SFAS 72 and Interpretation 9 and requires


                               F-9

<PAGE> 28

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c.  Newly Issued Accounting Pronouncements (Continued)

that those transactions be accounted for in accordance with SFAS No. 141,
"Business Combinations" and No. 142, "Goodwill and Other Intangible Assets".
The adoption of SFAS No. 147 did not have a material effect on the financial
statements of the Company.

SFAS No. 148 -- In December 2002, the FASB issued SFAS No. 148, "Accounting
for Stock Based Compensation-Transition and Disclosure-an amendment of FASB
Statement No. 123" which is effective for financial statements issued for
fiscal years ending after December 15, 2002.  This Statement amends SFAS 123,
Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value based method of accounting
for stock-based employee compensation.  In addition, this Statement amends the
disclosure requirements of SFAS 123 to require prominent disclosures in both
annual and interim financial statements about the method of accounting for
stock-based compensation and the effect of the method used on reported
results.  The adoption of SFAS No. 148 did not have a material effect on the
financial statements of the Company.

SFAS No. 149 -- In April 2003, the FASB issued SFAS No. 149, "Amendment of
Statement 133 on Derivative Instruments and Hedging Activities" which is
effective for contracts entered into or modified after June 30, 2003 and for
hedging relationships designated after June 30, 2003.  This statement amends
and clarifies financial accounting for derivative instruments embedded in
other contracts (collectively referred to as derivatives) and hedging
activities under SFAS 133.  The adoption of SFAS No. 149 did not have a
material effect on the financial statements of the Company.

SFAS No. 150 -- In May 2003, the FASB issued SFAS No. 150, "Accounting for
Certain Financial Instruments with Characteristics of both Liabilities and
Equity" which is effective for financial instruments entered into or modified
after May 31, 2003, and is otherwise effective at the beginning of the first
interim period beginning after June 15, 2003.  This Statement establishes
standards for how an issuer classifies and measures in its statement of
financial position certain financial instruments with characteristics of both
liabilities and equity. It requires that an issuer classify a financial
instrument that is within its scope as a liability (or an asset in some
circumstances) because that financial instrument embodies an obligation of the
issuer. The adoption of SFAS No. 150 did not have a material effect on the
financial statements of the Company.

FASB Interpretation No. 45 --  "Guarantor's Accounting and  Disclosure
Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of
Others   an Interpretation of FASB Statements No. 5, 57 and 107".  The initial
recognition and initial measurement provisions of this Interpretation are to
be applied prospectively to guarantees issued or modified after December 31,
2002.  The disclosure requirements in the Interpretation were effective for
financial statements of interim or annual periods ending after December 15,
2002.  The adoption of FASB Interpretation No. 45 did not have a material
effect on the financial statements of the Company.


                               F-10

<PAGE> 29

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

c.   Newly Issued Accounting Pronouncements (Continued)

FASB Interpretation No. 46 -- In January 2003, the FASB issued FASB
Interpretation No. 46 "Consolidation of Variable Interest Entities." FIN 46
provides guidance on the identification of entities for which control is
achieved through means other than through voting rights, variable interest
entities, and how to determine when and which business enterprises should
consolidate variable interest entities. This interpretation applies
immediately to variable interest entities created after January 31, 2003. It
applies in the first fiscal year or interim period beginning after June 15,
2003, to variable interest entities in which an enterprise holds a variable
interest that it acquired before February 1, 2003. The adoption of FIN 46 did
not have a material impact on the Company's financial statements.

During the year ended December 31, 2003, the Company adopted the following
Emerging Issues Task Force Consensuses:  EITF Issue No. 00-21 "Revenue
Arrangements with Multiple Deliverables", EITF Issue No. 01  8 " Determining
Whether an Arrangement Contains a Lease", EITF Issue No. 02-3 "Issues Related
to Accounting for Contracts Involved in Energy Trading and Risk Management
Activities", EITF Issue No. 02-9 "Accounting by a Reseller for Certain
Consideration Received from a Vendor", EITF Issue No. 02-17,  "Recognition of
Customer Relationship Intangible Assets Acquired in a Business Combination",
EITF Issue No. 02-18 "Accounting for Subsequent Investments in an Investee
after Suspension of Equity Method Loss Recognition", EITF Issue No. 03-1, "The
Meaning of Other Than Temporary and its Application to Certain Instruments",
EITF Issue No. 03-5, "Applicability of AICPA Statement of Position 9702,
'Software Revenue Recognition' to Non-Software Deliverables in an Arrangement
Containing More Than Incidental Software", EITF Issue No. 03-7, "Accounting
for the Settlement of the Equity Settled Portion of a Convertible Debt
Instrument That Permits or Requires the Conversion Spread to be Settled in
Stock", EITF Issue No. 03-10, "Application of EITF Issue No. 02-16 by
Resellers to Sales Incentives Offered to Consumers by Manufacturers.

d. Accounts Receivable

Accounts receivable are shown net of an allowance for doubtful accounts of
$77,710 and a return allowance of $1,320 as of September 30, 2003.

e.  Property and Equipment

Property and equipment is recorded at cost.  Major additions and improvement
are capitalized.  The cost and related accumulated depreciation of equipment
retired or sold are removed from the accounts and any differences between the
undepreciated amount and the proceeds from the sale are recorded as gain or
loss on sale of equipment.  Depreciation is computed using the straight-line
method over the estimated useful life of


                               F-11
<PAGE> 30

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

the assets as follows:

          Description Estimated               Useful Life
          ---------------------               -----------

          Furniture and fixtures              3-4 years
          Machinery and equipment             3 years
          Computers                           3 years

f. Goodwill

As of January 1, 2002, the Company adopted Statement of Financial Accounting
Standard (SFAS) No. 142, "Goodwill and Other Intangible Assets" (SFAS 142).
SFAS 142 requires the accounting for goodwill on an impairment-only approach.
SFAS 142 requires that goodwill be tested for impairment annually, or more
frequently if circumstances indicate potential impairment, by comparing the
fair value of the asset to its carrying amount.  Such testing requires, that
each of the Company's reporting units, as defined in SFAS 142, be identified
and that the Company's assets and liabilities, including the existing goodwill
and intangible assets, be assigned to those reporting units.  The Company has
determined that it has a single reporting unit attributable to its goodwill.
SFAS 142 also requires the Company to assess the fair value of the Company.
In determining fair value, the Company considered the guidance in SFAS 142,
including the Company's market capitalization, control premiums, discounted
cash flows and other indicators of fair value.  Based on this analysis,
goodwill totaling $1,068,047 was impaired at September 30, 2003.

g.  Provision For Taxes

Deferred taxes are provided on a liability method whereby deferred tax assets
are recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences.  Temporary differences are the differences between the
reported amounts of assets and liabilities and their tax bases.  Deferred tax
assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the
deferred tax assets will not be realized.  Deferred tax assets and liabilities
are adjusted for the effects of changes in tax laws and rates on the date of
enactment.

Net deferred tax liabilities consist of the following components as of
September 30, 2003 and 2002:

                                                    2003        2002
                                              ------------- -------------
    Deferred tax assets:

      NOL Carryover                           $  1,719,494  $    914,218

    Deferred tax liabilities:

      Depreciation                                 (45,270)      (33,740)


                               F-12

<PAGE> 31

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

g.  Provision For Taxes (Continued)



     Valuation allowance                        (1,674,224)     (880,478)
                                              ------------- -------------

     Net deferred tax asset                   $          -  $          -
                                              ============= =============


The income tax provision differs from the amount of income tax determined by
applying the U.S. federal income tax rate to pretax income from continuing
operations for the years ended September 30, 2003 and 2002 due to the
following:


                                                    2003        2002
                                              ------------- -------------

     Book income                              $   (855,320) $   (569,445)
     Stock for services/Options expense             34,440       169,570
     Depreciation                                  (13,880)      (20,200)
     State tax expense                                   -       (20,375)
     Meals & Entertainment                           1,725         4,820
     Penalty                                        11,529         1,795
     Valuation allowance                           793,746       433,835
                                              ------------- -------------

                                              $          -  $          -
                                              ============= =============

At September 30, 2003, the Company had net operating loss carryforwards of
approximately $4,408,000 that may be offset against future taxable income from
the year 2003 through 2023.  No tax benefit has been reported in the September
30, 2003 consolidated financial statements since the potential tax benefit is
offset by a valuation allowance of the same amount.

Due to the change in ownership provisions of the Tax Reform Act of 1986, net
operating loss carryforwards for Federal income tax reporting purposes are
subject to annual limitations.  Should a change in ownership occur, net
operating loss carryforwards may be limited as to use in future years.

h.  Estimates

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


                               F-13
<PAGE> 32

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

i.  Advertising

The Company follows the policy of charging the costs of advertising to expense
as incurred. During the years ended September 30, 2003 and 2002, the Company
expensed $51,108, and $112,928, respectively.

j.  Revenue Recognition

The Company recognizes revenue from real estate lead commissions as escrow is
closed.  Revenue from photographic virtual tours and related services are
recognized as projects are completed and available for viewing.  Revenue is
recognized on other services rendered as they are performed.

k. Concentration of Risks

During the years ended September 30, 2003 and 2002, one customer accounted for
approximately 24% and 30% of sales, respectively.

l. Stock Options

As permitted by FASB Statement 123 and amended by SFAS No. 148 "Accounting for
Stock Based Compensation" (SFAS No. 123), the Company elected to measure and
record compensation cost relative to employee stock option costs in accordance
with Accounting Principles Board ("APB") Opinion 25, "Accounting for Stock
Issued to Employees," and related interpretations and make proforma
disclosures of net income and earnings per share as if the fair value method
of valuing stock options had been applied.  Under APB Opinion 25, compensation
cost is recognized for stock options granted to employees when the option
price is less that the market price of the underlying common stock on the date
of grant.

m. Reclassifications

Certain balances in the 2002 consolidated financial statements have been
reclassified to conform to the current year's presentation.

n. Technology Development and Website Designs

The costs of computer software developed or obtained for internal use, during
the preliminary project phase, as defined under Statement of Position 98-1
"Accounting for the Costs of Computer Software Developed or obtained for
Internal use", are expensed as incurred.  The costs of web site development,
during the planning stage, as defined under Emerging Issues Task Force No.
00-2 "Accounting for Web Site Development Costs", are expenses as incurred.
Computer software and web site development costs incurred during the
application and infrastructure development stage, including external direct
costs of materials and services consumed in developing software, creating
graphics and web site content, payroll, and interest costs, are capitalized
and amortized over the estimated useful life, beginning when the software is
ready for use and after all substantial testing is completed and the web site
is operational.

                               F-14

<PAGE> 33

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

n. Technology Development and Website Designs (Continued)

Any costs incurred since the web site and related software have become
operational have been expenses as incurred.

NOTE 3 -  GOING CONCERN

The Company's consolidated financial statements are prepared using generally
accepted accounting principles in the United States of America applicable to a
going concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business.  The Company has incurred losses
which have resulted in an accumulated deficit of $5,005,872 at September 30,
2003, a working capital deficit of $1,048,463 and has limited internal
financial resources.  These factors combined raise substantial doubt about the
Company's ability to continue as a going concern.  The accompanying
consolidated financial statements do not include any adjustments relating to
the recoverability and classification of asset carrying amounts or the amount
and classification of liabilities that might result from the outcome of this
uncertainty.

The Company expects that growth in revenue from operations will continue to
increase.  Accordingly, the Company believes that based on these factors, it
has the ability to sustain operations for the next twelve months. However,
there can be no assurance that generation of operating revenues and collection
of the subscription receivable will be sufficient to enable the Company to
maintain its operations. If the Company's plans are not successful, it will be
necessary for the Company to secure additional debt and equity financing which
also cannot be assured.

NOTE 4 - PROPERTY AND EQUIPMENT

Property and equipment consists of the following:
                                                            September 30,
                                                                2003
                                                            -------------
   Furniture and fixtures                                   $     52,377
   Machinery and equipment                                        24,048
   Computers                                                     151,202
                                                            -------------
                                                                 227,627
   Accumulated depreciation                                     (181,282)
                                                            -------------
   Net property and equipment                               $     46,345
                                                            =============


Depreciation expense for the years ended September 30, 2003 and 2002 was
$70,064 and $60,809, respectively.

                               F-15

<PAGE> 34

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002


NOTE 5 -  ASSET PURCHASE

During November 2001, pursuant to an asset purchase agreement, the Company
issued to an unrelated entity 450,000 shares of its common stock and agreed to
issue up to an additional 600,000 in the form of a warrant with a term of 10
years exercisable at $2.00 per share. The exercise of the warrants are
contingent upon gross revenue derived from the assets purchased as follows:

If gross revenue generated from the assets purchased was greater than $200,000
for the twelve months following the acquisition, all 600,000 warrants were to
be available for exercise. If gross revenue was less than $200,000 only
300,000 warrants were to be exercisable and if gross revenue were less than
$100,000 none of the warrants would be exercisable. At September 30, 2003,
none of the revenue thresholds had been achieved and no warrants were
exercisable in conjunction with the asset purchase. Subsequent to September
30, 2003, and upon the expiration of the 12-month period from the date of the
execution of the asset purchase agreement, none of the revenue thresholds had
been met. Accordingly, no warrants to purchase shares of the Company's common
stock pursuant to that agreement are exercisable.

The assets purchased in connection with this transaction consisted of various
items including customer contracts and software. The assets were valued at
$70,000 on the date of purchase based on the net present value of the
contracts acquired.  Amortization expense of $35,000 has been recorded during
the year ended September 30, 2003.

In February 2003, the Company purchased the assets of Virtually Anywhere in
consideration for 20% paid to Seller for each qualified virtual tour ordered
by qualified customer for a period of 24 months from closing date.  With the
purchase, the Company acquired all books and records relating to the ownership
and operation of the business, including intangible assets.

NOTE 6 -  SHORT-TERM OBLIGATIONS

As of September 30, 2003, the Company had two outstanding short-term
obligations for a total of $303,040.  These obligations are unsecured and due
on demand.  Interest is being imputed at 6% per annum on both obligations.
Interest expense for the year ended September 30, 2003 was $9,091.

NOTE 7 -  LONG-TERM OBLIGATIONS

 The Company leases office space under a long-term operating lease agreement
and leases equipment under long-term capital lease agreements.  Minimum
rentals on capital leases have been capitalized at the cost of the leased
equipment or the present value of the rentals at the inception of the leases
and the obligation for such amounts recorded as liabilities.  Amortization of
the capitalized assets, which is included in depreciation and amortization
expense, is computed on the straight-line basis over the life of the asset or
the lease term, whichever is shorter, and interest expense is accrued on the
basis of the outstanding lease obligations.

                               F-16
<PAGE> 35

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002



NOTE 7 -  LONG-TERM OBLIGATIONS (Continued)

Future minimum lease payments under capital and operating leases are as
follows:

                                                    Capital      Operating
                                                    Leases       Leases
                                                    ------------ ------------
     Year ending September 30,
        2003                                        $     4,335  $    55,391
        2004                                                  -        4,616
        Thereafter                                            -            -
                                                    ------------ ------------

        Total minimum lease payments                      4,335  $    60,007
                                                                 ============

        Less amount representing interest                    94
                                                    ------------

        Present value of net minimum lease payments       4,241

        Less current maturities                           4,241
                                                    ------------
                                                    $         -
                                                    ============

NOTE 8 -  RELATED PARTY TRANSACTIONS

The Company entered into an agreement on September 1, 2000 with an attorney to
provide legal and other consulting services.  The attorney is also a
shareholder of the Company.  The agreement stipulates monthly payments of
$3,500 for a term of five years with an option to renew for an additional
two-years.  The base consulting fee is subject to a yearly increase of 10
percent or a cost of living adjustment whichever is greater.  Consulting fees
paid in conjunction with this agreement totaled $-0- and $31,500 for the years
ended September 30, 2002, and 2001, respectively.  The agreement was cancelled
during the year ended September 30, 2003.

The Company also entered into a consulting agreement with another shareholder,
Applied Technologies Consulting (ATC).  A director and officer of the Company
is also an officer and director of ATC and derives compensation from ATC.
Under the agreement, ATC will provide business and financial advisory services
for the Company for a monthly consulting fee of $5,000.  The agreement was
entered into September 1, 2000 and extends for a period of three years.  The
consulting fee for the first two months of the contract was waived by ATC.
Total consulting fee expense for the years ended September 30, 2003 and 2002
totaled $60,000 and $60,000, respectively.  Included in accounts payable at
September 30, 2003 is approximately $320,600 of amounts payable to ATC.
Included in the accounts payable balance, are amounts owed for commissions
related to the subscription agreement discussed at Note 9.



                               F-17


<PAGE> 36

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002



NOTE 8 -  RELATED PARTY TRANSACTIONS (Continued)

The Company has a Technology Development Agreement and Assignment with two
officers of the Company that are also shareholders of the Company.  The
agreement stipulates that the Company will pay a royalty of three percent of
gross revenues (as defined) on all revenues, except those that are directly
related to the real estate industry.

NOTE 9 -  CONTINGENCIES

At September 30, 2003, the Company has employment agreements with two of the
officers of the Company.  The agreement stipulates total annual salaries of
$240,000 annually for the next 4 years.  The agreement also provides for
bonuses based on net income.

NOTE 10 - COMMON STOCK TRANSACTIONS

During the year ended September 30, 2002, the Company cancelled 9,900,000
common shares and issued 700,000 common shares pursuant to the separation
agreements with former officers of the Company.

In November 2001, the Company issued 450,000 shares of common stock for the
purchase of assets (see Note 5) and issued an additional 1,000,000 shares
pursuant to a stock exchange agreement executed in January 2002 (see Note 12).

Additionally, the Company issued 165,000 shares of common stock in January
2002 to an unrelated individual for services rendered valued at a price of
$0.91 per share. An additional 25,000 shares were issued to the same
individual in July 2002 for services rendered valued at $3.50 per share. The
value of the shares issued approximated the fair market value of the shares on
the date of authorization.

NOTE 11 - STOCK OPTIONS AND WARRANTS

During November 2001, the Company approved a stock option plan authorizing the
Company grant up to a maximum of 2,500,000 shares of qualified and
nonqualified options to employees, officers, directors, and others.

During November 2001, the Company granted stock options to its president to
purchase up to 500,000 shares of common stock at $1.09 per share.  The options
vest one third upon grant, one third one year from the date of grant, and one
third two years from the date of grant, contingent upon the president
remaining an officer for such time.  In addition, the Company granted options
to purchase 100,000 shares of common stock to an outside consultant at $1.09
per share which vest upon grant.

In conjunction with an asset purchase agreement entered into in November 2001,
the Company granted to an unrelated entity a warrant to purchase up to 600,000
shares of common stock at an exercise price of $2.00 per share, exercisable at
any time prior to November 21, 2011 based on achieving certain gross revenue
thresholds (see Note 5). As of September 30, 2003, none of the gross revenue
thresholds had been achieved


                               F-18

<PAGE> 37

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002

NOTE 11 - STOCK OPTIONS AND WARRANTS (Continued)

and, accordingly, no related warrants were exercisable.

During February 2002, the Company granted stock options to an employee of the
Company to purchase up to 2,000,000 shares of common stock at $1.08 per share.
The options vest based on the performance of the Company and the time the
employee remains employed by the Company.  At September 30, 2003, no options
had vested under this agreement.

In addition, the Company granted options to purchase 500,000 shares of common
stock to an outside consultant at $0.65 per share which vest one third upon
grant, one third one year from the date of grant and one third two years from
date of grant, contingent upon the consultant continuing to provide services
during the vesting periods.

During March 2002, the Company granted stock options to employees of the
Company to purchase up to a total of 165,000 shares of common stock at $1.08
per share.  The options vest one third upon grant, one third one year from the
date of grant, and one third two years from the date of grant, contingent upon
the employees remaining employees of the Company for such time.

A summary of the status of the Company's outstanding stock options as of
September 30, 2003 and 2002 and changes during the years then ended is
presented below:

                                           2003                2002
                                 ----------------------- --------------------
                                               Weighted             Weighted
                                               Average              Average
                                               Exercise             Exercise
                                    Shares     Price       Shares   Price
                                 ------------ ---------- ---------- ---------
 Outstanding, beginning of year    3,865,000  $    1.17          -  $      -
 Granted                                   -          -  3,865,000      1.17
 Expired/Cancelled                         -          -          -         -
 Exercised                                 -          -          -         -
                                 ------------ ---------- ---------- ---------
 Outstanding end of year           3,865,000  $    1.17  3,865,000  $   1.17
                                 ============ ========== ========== =========

 Exercisable                         768,900  $    0.95    488,329  $   0.95
                                 ============ ========== ========== =========



                             Outstanding                Exercisable
                 --------------------------------- ----------------------
                              Weighted
                 Number       Average     Weighted  Number       Weighted
                 Outstanding  Remaining   Average   Exercisable  Average
Range of         at Sept. 30, Contractual Exercise  at Sept. 30, Exercise
Exercise Prices  2003         Life        Price     2003         Price
---------------- ------------ ----------- --------- ------------ ---------
$    0.65            500,000       9.42   $   0.65      166,667  $   0.65
     1.08          2,165,000       9.36       1.08       54,996      1.08
     1.09            600,000       9.15       1.09      266,660      1.09
     2.00            600,000       9.15       2.00            -         -
                 ------------ ----------- --------- ------------ ---------

$ 0.65-2.00        3,865,000       9.13   $   1.17      488,329  $   0.95
                 ============ =========== ========= ============ =========




                               F-19
<PAGE> 38

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002


NOTE 11 - STOCK OPTIONS AND WARRANTS (Continued)

The Company estimates the fair value of each stock option at the grant date by
using the Black-Scholes option pricing model based on the following
assumptions:



                                                     For the Year
                                                        Ended
                                                  September 30, 2003
                                                  -------------------

    Risk free interest rate                           4.90% - 4.93%
    Expected life                                          10 years
    Expected volatility                                 203% - 224%
    Dividend yield                                            0.00%

Of the 3,865,000 options issued, 2,665,000 were issued to employees or
employee directors and were accounted for under APB 25, "Accounting for Stock
Issued to Employees." All of these shares were issued either at or above the
market price of the Company's common stock on the date of issue and no
compensation expense was recognized.  Had compensation cost for the issuance
of the options been determined based on the fair value at the grant dates
consistent with the method of FASB Statement 123, "Accounting for Stock Based
Compensation," the Company's net loss and loss per share would have been
increased to the pro forma amounts indicated below:


                                                   For the Years Ended
                                                       September 30,
                                                    2003          2002
                                               ------------- -------------
    Net (loss) as reported                     $ (2,193,025) $ (1,460,116)
    Pro forma net loss                         $ (2,403,829) $ (1,670,919)
    Basic (loss) per share as reported         $      (0.16) $      (0.10)
    Pro forma                                  $      (0.18) $      (0.12)



                               F-20

<PAGE> 39

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002



NOTE 12- BUSINESS COMBINATION

During January 2002, the Company, through a purchase combination, acquired all
of the outstanding common shares of 360house.com, Inc. (360house).  The
results of 360House's operations have been included in the consolidated
financial statements since that date.  360House is a provider of virtual tours
primarily targeted at the real estate industry.

The aggregate purchase price was $1,010,000 which was paid in common stock.
The value of the 1,000,000 shares issued was determined based on the value of
the Company's common shares on the date of closing.

The following table summarizes the estimated fair values of the assets
acquired and liabilities assumed at the date of acquisition.

     Current assets                         $     12,282
     Property and Equipment                       30,365
                                            -------------
        Total Assets Acquired                     42,647

        Total Liabilities Assumed               (100,695)
                                            -------------
        Net Assets (Liabilities) acquired   $    (58,048)
                                            =============

Goodwill associated with this transaction has been recorded at $1,068,047.
The Company assesses the amount reported as goodwill on an annual basis, or on
an interim basis when events and circumstances warrant for possible impairment
for the year ended September 30, 2003, the Company fully impaired the goodwill
for $1,068,047.

Unaudited pro forma consolidated results of operations for the year ended
September 30, 2002 as though 360house had been acquired as of October 1, 2001
is as follows:

                                            For the Year
                                               Ended
                                            September 30,
                                                2002
                                            -------------

   Revenue                                  $   1,488,354
   Operating expenses                          (2,939,082)
                                            --------------

   Operating loss                           $  (1,450,728)
                                            ==============

   Net loss                                 $  (1,467,760)
                                            ==============

   Basic and diluted loss per share         $       (0.11)
                                            ==============

                               F-21


<PAGE> 40

                 XVARIANT, INC. AND SUBSIDIARIES
          Notes to the Consolidated Financial Statements
                   September 30, 2003 and 2002


NOTE 13- DISPOSAL OF SUBSIDIARY

In conjunction with an employee separation agreement entered into with one of
the former officers of the Company in October 2001, the Company transferred
all of the issued and outstanding shares of Xvariant, the Utah Corporation, to
the former officer.  At the date of transfer, Xvariant, the Utah Corporation,
had a net book value of $25,934 from cash, accounts receivable and accounts
payable.  All revenue generated by Xvariant, the Utah Corporation, was from
services provided by 360house before 360house was a wholly owned subsidiary.
Effective as of a date approximating the acquisition of 360House, the revenues
and related contractual arrangement previously derived by Xvariant, the Utah
Corporation, were assumed by REF.  As such, the disposal of this entity was
not considered or accounted for as a discontinued operation.  The disposal
resulted in a loss of $25,934.

NOTE 14- SUBSEQUENT EVENTS

Subsequent to year end, the Company has borrowed an additional $204,900 from a
related party.




                               F-22

<PAGE> 41