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

                                   FORM 10-KSB

[X]      Annual report under section 13 or 15(d) of the Securities Exchange Act
         of 1934

                   For the Fiscal Year ended DECEMBER 31, 2000

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

For the transition period from ______to______.

Commission file number:  001-15777

                                 UNITREND, INC.
                 (Name of small business issuer in its charter)

                  NEVADA                                  34-1904923
      (State or other jurisdiction of         (IRS Employer Identification No.)
      incorporation or organization)

   4665 W. BANCROFT STREET, TOLEDO, OHIO                     43615
 (Address of principal executive offices)                  (Zip code)

                                 (419) 536-2090
                           (Issuer's telephone number)

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

Securities registered pursuant to Section 12(g) of the Act:   Common Stock
                                                              no par value
                                                                 Options
                                                            (Title of Class)

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

Yes       No  X
   ---       --

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

State issuer's revenues for its most recent year:    $0.00

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates of the registrant computed by reference to the price at which
the stock was sold, or the average bid and ask prices of such stock equity, as
of a date within the past 60 days: $ 96,933,666 as of December 20, 2001.

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

As of December 20, 2001:           Common Stock:                   69,895,580

                       DOCUMENTS INCORPORATED BY REFERENCE
Form 10-12b filed March 30, 2000

Transitional Small Business Disclosure Format:

Yes       No   X
    ---      -----


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FORWARD-LOOKING STATEMENTS

Unitrend, Inc. and its majority-owned subsidiary, Osborne Manufacturing Inc.,
may from time to time make written or oral "forward-looking statements,"
including statements contained in its filings with the Securities and Exchange
Commission. These forward-looking statements may be included in this Annual
Report on Form 10-KSB and the exhibits attached to it, in Unitrend's reports to
shareholders and in other communications, which are made in good faith by us
pursuant to the "safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995.

These forward-looking statements include statements about our beliefs, plans,
objectives, goals, expectations, anticipations, estimates and intentions, that
are subject to significant risks and uncertainties, and are subject to change
based on various factors, some of which are beyond our control. The words "may",
"could", "should", "would", "believe", "anticipate", "estimate", "expect",
"intend", "plan" and similar expressions are intended to identify
forward-looking statements. The following factors, among others, could cause our
financial performance to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in the forward-looking
statements:

       -      the strength of the United States economy in general and the
              strength of the local economies in which we conduct operations;

       -      the effects of, and changes in, trade, monetary and fiscal
              policies and laws, including interest rate policies of the Federal
              Reserve Board;

       -      the timely development of and acceptance of our new products and
              the perceived overall value of these products by users, including
              the features, pricing and quality compared to competitors'
              products;

       -      the willingness of users to substitute our products for products
              of our competitors;

       -      the impact of technological changes;

       -      acquisitions;

       -      changes in consumer spending habits; and

       -      our success at managing the risks involved in the foregoing.

The list of important factors stated above is not exclusive. We do not undertake
to update any forward-looking statement, whether written or oral, that may be
made from time to time by or on behalf of Unitrend, Inc. or Osborne
Manufacturing, Inc.

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                                     PART I

Item 1. Description of Business

Unitrend, Inc. (the "Company") is a development stage company founded as an Ohio
Corporation in 1996 by Conrad A.H. Jelinger. The Company was reincorporated in
Nevada in July, 1999. The Company focuses on the computer enclosure and power
supply industry. The Company is preparing for the release of the VersaCase(R)
computer enclosure mid 2002. In 1998 we agreed to acquire by merger a related
party known as Server Systems Technology, Inc., (SSTI), an Ohio corporation
formed September 27, 1994, for the purpose of obtaining patented technology
crucial to retaining control of the VersaCase line of products. This acquisition
was legally effectuated in July 1999.

COMPANY OVERVIEW

Unitrend, Inc. was founded with the purpose of expanding the useful life of
computer technology. Our mission is to maximize our customers' return on
investment in information systems by extending the value of older technologies
as they combine with the latest advances. Our first product which is designed to
accomplish this aim is the highly modular VersaCase computer enclosure.
Unitrend's current goal is to establish VersaCase as the industry standard for
open architecture computer enclosures while setting new benchmarks for quality
and adaptability.

We utilize proprietary and patented technology to design, develop, manufacture,
and market our products. VersaCase is a computer enclosure which allows a user
or technician to rapidly access all internal components of a computer. This
architecture dramatically reduces downtime for maintenance, and allows quick
upgrading of a single component (such as the computer's central processing unit)
without having to replace or tear down and rebuild the entire computer. We have
also patented a computer power supply unit that greatly enhances the energy
performance and cooling operations inside a computer case. These products save
substantial time and financial resources for both users and technical support
staff. Up to the date of the filing of this document, we have not had any sales
of the VersaCase computer enclosure, but have presently placed five units in the
field for testing.

We have several agreements with nationally known suppliers who have successful
long-term operating histories as manufacturers/providers of component parts for
the computer industry.

The VersaCase will be marketed and sold through direct and indirect channels.
After introducing the product to North America, we will expand to Europe,
Asia/Pacific, and Latin America, although not necessarily in that order. The
unique total modularity of VersaCase enables the end-user to save considerable
time and money, whether the product is utilized as a personal computer (PC) or
as a server in a network of computers. Due to the mission-critical nature of
computer network activities, our primary marketing efforts are directed at
server applications. We will also market to high-end PC users concerned with
complex, high quality computer systems, and expect these users to be strong
early adopters of the VersaCase technology.

Unitrend's corporate headquarters is in Toledo, Ohio. The company currently
employs five people, and expects to grow to approximately to 35 mid 2002.

PATENTS AND TRADEMARKS

We rely on a combination of patents, trademarks, trade secrets and
non-disclosure agreements to protect our proprietary rights. We execute
confidentiality and non-disclosure agreements with our employees and with key
vendors and suppliers. These efforts allow us to rely upon the knowledge and
experience of our management and technical personnel and our ability to market
our existing products and to develop new products. The departure of any of our
management and technical personnel, the breach of their confidentiality and
non-disclosure obligations to us, or the failure to achieve our intellectual
property objectives may have a material adverse effect on our business,
financial condition and results of operations.

Currently, we have six United States patents issued and four United States
patent applications pending. We also have five trademarks and service marks.
There can be no assurance that any new patents will be issued, that we will
continue to develop proprietary products or technologies that are patentable,
that any issued patent will provide us with any competitive advantages or will
not be challenged by third parties, or that the patents of others will not have
a material adverse effect on our business and operating results.

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Our ability to compete successfully and achieve future revenue growth will
depend, in part, on our ability to protect our proprietary technology and
operate without infringing upon the rights of others. There can be no assurance
that these measures will successfully protect our intellectual property or that
our intellectual or proprietary technology will not otherwise become known or be
independently developed by competitors. In addition, the laws of various
countries in which our products are or may be sold may not protect our products
and intellectual property rights to the same extent as the laws of the United
States. Our inability to protect our intellectual property and proprietary
technology could have a material adverse effect on our business, financial
condition and results of operations. As the number of patents, copyrights and
other intellectual property rights in the computer enclosure industry increases,
and as the coverage of these rights and the functionality of the products in the
market further overlap, computer enclosure companies may increasingly become
subject of infringement claims. In the future, we may be notified that we are
infringing patent or other intellectual property rights of others. Although
there are no pending or threatened intellectual property lawsuits against us, we
may become the subject of litigation or infringement claims in the future. Any
of these potential claims could result in substantial costs and diversion of
resources and could have a material effect on our business, results of
operations and financial condition.

INDUSTRY

The computer industry has experienced remarkable growth in the past, but during
2001 this worldwide market is projected to increase by only 5.8% according to
International Data Corp. (IDC) (DJC.com 6/7/01). Worldwide PC shipments dropped
nearly 12% in the third quarter of 2001 over the same period last year from 34.6
million to 30.7 million according to a Dataquest report. During the second
quarter 2001, worldwide PC shipments totaled 29.8 million, a 2% decrease from
the second quarter 2000, logging the first year-over-year quarterly decline
according to IDC (Itworld.com 7/20/01). Dataquest reports 49.4 million units
sold domestically and 134.7 millions units sold worldwide in 2000, a worldwide
growth of 14.5% over 1999. According to Dataquest, PC shipments reached 44.8
million units domestically, and 117.6 million units worldwide in 1999. While the
Y2K issue motivated some of the 1999 purchases, this sales pattern reflects both
the acquisition of first machines and replacement of existing units. Worldwide
PC sales are expected to reach over 215 million units by the year 2005. Even
though sales have slowed, the company believes that worldwide PC sales will
increase in the coming years because of the replacement of outdated units.

Contrary to the PC market, the PC server market grew at a rapid pace. According
to market researcher eTForecasts, 1999 worldwide server shipments reached 3.7
million units. The worldwide PC server market continues to grow at an even more
rapid pace than the domestic market. IDC reports that rack-mount optimized
server shipments jumped almost 138%, igniting revenue growth of 87% year-on-year
for the first quarter of 2001 (IDC release 6/13/01). Projections drawn by
Unitrend from this IDC growth data indicate that total server shipments for 2001
will exceed 15 million units. In the U.S. market, the top five vendors by
revenue share are: IBM-22%, Sun Microsystems-18%, Hewlett-Packard-16.3%,
Compaq-15.9%, and Dell-12%.

Growth in the computer market reflects the rush to build information highways
within and between both work and home environments. The trend of connecting
people and business is further illustrated by the dramatic growth of Web
Hosting, Application Service Providers (ASPs), Internet Service Providers
(ISPs), and a rapid growth in the number of new companies entering this market.
In order to support this high level of "instant" connectivity, these companies
are building massive "server farms" using fiber optic communications to
accelerate the transmission of data by two to three times current speeds. Level
3 Communications is building a worldwide network and currently has 6.1 million
square feet of server space in 68 farms around the globe, 56 in the U.S. (Level
3 Website 6/01).

Open Architecture. The concept of open architecture enables computer users to
combine various components and peripherals from different manufacturers. To some
extent, the industry has moved in the direction of common standards typified by
open architecture. For example, mounting boards, DVD's, CD-ROM's, floppy drives,
and serial ports, to name a few, are designed according to a set of common
specifications. In addition, the ATX logic board platform developed by Intel,
the world's largest manufacturer of microprocessors, sets the standard for
placement of connecting devises to the logic board. However, fiercely
competitive market forces have thus far defeated true open architecture.

Major assemblers such as IBM, Dell, Gateway, and Compaq build units that support
only their proprietary components. If one of these parts should fail, the only
option is to replace it with the same part from the same company. While this
provides additional revenue for the PC producer, the consumer suffers in
significant ways.

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Consumers are locked into the price, availability, and delivery time dictated by
the PC producer, which can add to downtime and cost of maintenance.

Accessibility. In order to simplify the repair and upgrade of computers, the
industry is beginning to create hardware that is easily accessible.
Historically, the design of computer enclosures has severely limited one's
ability to service both critical and ordinary problems with a PC. Rapid access
is especially important in mission-critical applications where a technician must
make a prompt intervention to save the computer network from crashing.
Unfortunately, the human expert often loses this race. These system crashes are
all to frequent and widely publicized, as in the cases of Internet companies
E-bay and Amazon.com. The loss in reputation and revenues can be significant.
Sandy Carter of IBM stated that some of their customers lose $10,000 per minute
of downtime (Computer Reseller News, 5/21/99).

Some industry leaders are moving toward tool-less cases that can be opened by
pressing tabs to lift the top panel. Apple introduced the G-3 model highlighting
the ease of access to the "guts" through a drop-down side panel. Gateway, Dell,
and IBM have recently introduced models that move in this direction as well.

Continuous Need to Upgrade. Both hardware and software components are updated at
an astounding pace. Moore's Law states that processing power doubles roughly
every 18 to 24 months. The rapid release of 12 Intel micro processing chips from
the 8080 through the Pentium III Xeon over the last 25 years shows that Moore's
observation is still remarkably accurate, while also demonstrating technology's
rushing rate of change. A steady stream of software upgrades takes advantage of
this additional processing power to create more powerful, intuitive, and stable
software. We become increasingly dependent on the software, and thus the
software upgrades, which in turn require upgrading the computer's memory,
storage, or processing capabilities. This cycle becomes so expensive that the
estimated 5 year total cost of ownership for a Windows based PC is $47,500
(March 2000 Fujitsu web site, citing a study by the Gartner Group). Instead of
upgrading the computer, entire existing systems are often simply discarded.

Scalability. The ability to change internal components is essential for
extending the investment in computer technology. As the Fortune Tech Buyers
Guide states, " scalability is key, especially in PCs. Better systems provide
plenty of expansion slots and extra drive bays so PCs can grow as needed"
(Fortune Tech Buyers Guide Supplement Summer, 1999, p. 130, 141).

UNITREND SOLUTION

We believe Unitrend is well positioned to offer solutions to many of the issues
listed above. VersaCase was designed with these factors in mind, resulting in a
product that addresses all four areas: true open architecture; complete
accessibility; rapid upgrade and maintenance; and creative scalability.

True Open Architecture. The VersaCase achieves true open architectural design by
allowing the combination of various technologies and/or peripherals from
different manufacturers. VersaCase accepts all industry standard components,
such as motherboard configurations from Intel. Because the case design allows
for the acceptance of any non-proprietary part, the consumer will not be
restricted to using proprietary components. This significantly enhances the
computer's value by allowing the owner to choose the best component for each
repair and upgrade.

Complete Accessibility. The VersaCase allows a user or technician to quickly
access the internal components of a computer. The design of the case is similar
to a drawer, thereby providing quick access, without tools, to the inside of the
computer. Internal components become modules that can be installed or replaced
simply and easily. This design simplifies routine repair, maintenance, and
upgrade procedures. This full-access-design is vital for mission-critical
applications. Often, a failure in a server system can be isolated to two or
three units, and the technician must rapidly check all three units to save the
entire system from shutting down. Standard computer enclosures require
considerable time to access all internal components because they must be
laboriously dismantled. With the VersaCase, the technician simply slides open
the drawer. What can take agonizing minutes or even hours with a typical
enclosure is done in seconds or minutes with a VersaCase.

Rapid Upgrade and Maintenance. The drawer-like design of the VersaCase not only
allows full access to all the internal components, it dramatically reduces the
time required to get to any given component. The time it takes to perform
upgrades and repairs is doubly expensive when you add the cost of the person's
time performing the task to the lost productivity of the user while the system
is down. In effect, every minute saved by VersaCase buys back

<PAGE>

two minutes of user and technical support time. The total cost of ownership for
a computer built with VersaCase is greatly reduced by allowing individual
components to be upgraded. With other cases, many components such as the
motherboard or central processing unit (CPU) cannot be changed, and you are
forced to discard the entire PC. With other cases, you are forced to buy a whole
new computer, leaving you with many perfectly good, but unusable, components.
Instead of spending thousands of dollars every two years for a whole new system,
VersaCase lets you spend a couple hundred dollars (or less) by merely upgrading
the old component and continuing on with using the rest.

Creative Scalability. The VersaCase provides unmatched flexibility. It can be
used as a PC or a server. As a server, the unit can be used in a rack-mount
application or as a standalone unit. Up to fifteen 3 1/2" drives can be mounted
internally onto three independent universal mounting racks, or six 5 1/4" drives
can be mounted onto two independent universal mounting racks. Removable drive
bay panels allow for any combination of drive sizes to be installed. Due to the
inter-changeability of the components, hundreds of configurations are possible.

In summary, the VersaCase offers new technology to the market, which gives you
the ability to easily maintain and upgrade your system while providing
unsurpassed configuration options. VersaCase simplifies changes and extends the
life of computers, saving substantial time and money for both companies and
individuals.

COMPETITION

We will compete in the computer enclosure market, initially focusing on the
high-end PC and entry-level server segments. The computer enclosure market is
intensely competitive. Within the enclosure market, we will encounter
competition primarily from large domestic enclosure manufacturers and
distributors such as California P.C. Products, American Portwell and Antec. To
our knowledge, no competing company offers an enclosure which contains all the
features and benefits of the VersaCase. As noted above, some major computer
assembly firms, e.g., IBM, Gateway, Acer, and Dell, have introduced PC models
that contain some modular features that are found in a VersaCase. No one,
however, has designed or introduced a model that delivers all the scalable and
versatile technology that the VersaCase offers.

We will also encounter strong competition from international computer enclosure
companies who sell to worldwide original equipment manufacturers and
distributors. These international companies also set up their own distribution
networks in international markets, including the United States. The
international market is extremely competitive due primarily to aggressive
pricing. Examples of international companies include: Chung Long Metal Co.,
Ltd.; Karrie Industrial Co. Ltd.; Leadertech Systems; Everfit Computer Supply;
and Evergreat Group.

The VersaCase is more expensive to purchase than traditional computer
enclosures, with a retail price around $400. This price is competitive when
compared to higher-end rack mount servers. We will compete in the computer
enclosure market by demonstrating the value of the features and benefits of
VersaCase. We separate ourselves from other companies now offering computer
enclosures by focusing on common sense solutions. VersaCase is convertible
technology. Accordingly, it may be used as a single unit, in multiple stacks,
rack-mount configuration, or as a workstation. It can be used in a variety of
applications including, but not limited to a file server, disk array, or
jukebox. Further, non-proprietary components can be used to configure a computer
for a specific application, and possibly achieve lower operating costs.

There can be no assurance that we will be able to compete effectively in this
marketplace. While unit cost and actual pricing is being established for the
product, there is no production and sales history to determine the accuracy of
these figures. Therefore, it is not possible to determine whether we can
effectively compete with other computer enclosure manufacturers on price alone.
An inability to compete with other computer enclosure manufacturers would
adversely affect our business, financial condition, and results of operations.

GROWTH STRATEGY

Our growth strategy is built around five imperatives: maintaining technology
leadership; increasing market share; acquisition of other business entities;
leveraging strategic relationships; and the recruiting and retention of key
personnel.

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Maintaining Technology Leadership. The cutting edge of our effort to achieve
technological leadership is to establish a standard for open architecture and
modularity in the computer enclosure industry. Other components, accessories,
and products are in various stages of development. They will be supported by an
aggressive research and development budget.

Increasing Market Share Our entry into the market is estimated at a modest level
to allow us to grow at a reasonable pace. However, we make no representations or
guarantees that we will be able to manage the growth of our business. Once
VersaCase is introduced, we expect that there will be significant interest
across a number of market segments. The VersaCase is unparalleled in its
versatile application as a PC or server enclosure. The ease of access and
scalability will provide numerous benefits to routine and mission-critical users
that will propel and increase market share.

Acquisition of Other Business Entities. In order to expand our technological and
market capabilities, we may consider the pursuit of other companies. Such
acquisitions may include core and non-core entities. A core entity may be a
research and development group, and a non-core firm could be one that might
enhance our production process.

Leveraging Strategic Relationships. We intend to leverage our relationship with
companies that complement our mission. For instance, the uniqueness of VersaCase
technology will create opportunities for us to establish strong relationships
with key distributors. These distributors will be able to offer their clients a
product that is very competitive and distinctive. We have been approached by
distributors to consider a channel relationship or exclusive position with them.
While we must maintain a broader market focus, we may selectively enter into
agreements that would enhance market credibility and penetration.

Recruitment and Retention of Key Personnel. An entrepreneurial spirit that was
based in creativity, risk and reward drove the birth of this company. We intend
to maintain this quality by offering competitive salary and incentive
compensation. Our overriding human resources philosophy is to build a corporate
culture that supports the success of each employee, as well as the company.

MARKETING AND SALES

We are implementing brand-building strategies for both the Unitrend and
VersaCase brands. Our brand objective is to identify emerging trends in
computer-related technologies and to provide streamlined solutions that make
those technologies more user friendly. The VersaCase computer enclosure is the
first product that we are marketing. We will continue to build equity in the
brand by promoting the unique and patented VersaCase features via multiple
mediums to diverse market segments.

VersaCase will be marketed to, and sold for, two specific PC applications:
high-end PC users, such as automated manufacturing functions, and entry-level
servers. We intend to market and sell our products to non-profit and commercial
organizations, individuals, and original equipment manufacturers (OEMs). OEM
sales and licensing, large corporate and government accounts, and large-volume
value added re-seller (VAR) sales will be managed by Unitrend's direct sales
organization. Sales to all other organizations will be through distributors. We
are in the process of establishing a multi-channel distribution network that
will allow us to leverage the distributors who are strategically focused on
offering value added products and services to the computer industry. Lastly, we
will sell the VersaCase and future products directly to end-users through our
Internet site. However, we will modify our distribution plans as demanded by the
markets we serve in order to maximize efficiency throughout all channels of
distribution. We intend to promote end-user demand, and will support our sales
efforts through a variety of marketing programs including but not limited to:
trade and consumer advertising, public relations, and trade shows.

While our initial focus is the North American market, we plan to expand to
Europe, Asia/Pacific, and Latin America as opportunity arises. The data
presented at the beginning of the business section illustrates the size of these
market segments.

PRODUCT

VersaCase is our flagship product. The VersaCase has undergone an extensive
development process. Five developmental VersaCase prototypes have been
developed, including the yet to be released production-level beta

<PAGE>

units. These units will undergo rigorous in-house testing as well as field
placement at selected sites, which will mirror our more prominent market
segments.

The VersaCase is comprised of a number of characteristics and features, such as:

       -      Chassis and outer shell are made of 16-gauge steel.

       -      Up to fifteen 3 1/2" drives can be mounted internally onto three
              independent universal mounting racks.

       -      Or six 5 1/4" drives can be mounted onto two independent universal
              mounting racks.

       -      Removable drive bay panels allow for any combination of drive
              sizes to be installed.

       -      Front mounted DB connector for easy laptop docking or serial,
              SCSI, USB and parallel connections.

       -      Front DB connector can be swapped with a wireless infrared
              connecting port.

       -      High-security tumbler lock to protect against unauthorized entry
              into the computer's interior.

       -      Easy to read control panel with LED readouts for Power, Turbo,
              HHD1 activity, HDD2 activity, Power supply cooling fan failure
              warning, and Processor cooling fan failure warning, as well as a
              System Reset switch and Turbo speed switch.

       -      19" Rack-Mount ready chassis with invertible outer shell to
              maintain EMI/RFI shielding.

       -      Ultra-strong construction to allow units to be stacked up to six
              high with docking pin accessory.

       -      Rugged design allows even the heaviest CAD Monitors to be placed
              on top of unit.

       -      Ball bearing drawer sliders with heavy duty 100lb weight
              capacities, for smooth opening and closing.

       -      Removable back plane with 25-pin, 9-pin DB connector ports and RJ
              port.

       -      Optional 10, 12, or 16 slot back planes available for AT, ATX,
              Passive back plane and other designs.

       -      Includes Stable Power Supply (when available) or allows the use of
              standard Slim power supplies mounted in either a horizontal or
              vertical position.

       -      Rear mounted cable transom to facilitate moving wires when opening
              and closing chassis drawer.

       -      Quick-release power supply base unit used to distribute power to
              electrical components which accepts optional battery pack for
              uninterrupted power in case of power supply failure.

       -      Removable thread-mounted feet allow unit to be bolted down on or
              under table, desk, wall, rack, etc.

OPERATIONS

For the design and development of our products, we rely on our founder, Mr.
Jelinger. We will look for a skilled work force imbued with a strong work ethic
and moderate wage scale for the manufacturing process. In addition, principal
suppliers have been selected based on experience and pricing considerations.

Key Suppliers. We will use a large national metals company that is established,
well-known and respected in the computer industry, as our major vendor. They
will produce the VersaCase chassis through a hard-tool process, and will apply
the interior rails and feet to the bottom of the unit. The vendor also has the
ability to customize parts with soft-tool applications.

Fulton Industries of Wauseon, Ohio will produce the small steel components that
will be used in the VersaCase. Fulton Industries offers over 75 years experience
in this market.

<PAGE>

Adept Mold of Detroit, Michigan has been selected to supply the plastic
components for the VersaCase. Similar to the other vendors, Adept was selected
based on its location, price, competitive service, and molding expertise.

We intend to establish a comprehensive quality control system and will seek ISO
9000 compliance from the International Standards Organization. Our intent is to
base our quality control program around preventative logic rather than a
detection philosophy and practice. This will be accomplished by establishing a
rigorous inspection protocol at each assembly station. Documentation will be
accomplished by computer-generated evaluation methodologies.

RESEARCH AND DEVELOPMENT

Apart from tooling costs of $1,469,429, as of December 31, 2000, we have
invested $529,943 in research and development. To date, our primary focus has
been the development of the VersaCase. We are developing accessories that will
further enhance the VersaCase, and allow for further customization. It is our
intent to continue to innovate by developing similar products that will enable a
computer user to save time and money while upgrading and repairing his or her
computer. The design of a unique power supply unit is nearing completion,
although we have already received one patent on the power supply, and expect to
seek others. Other product designs are also on the drawing board. There is no
guarantee that any of these products will become viable revenue sources.

We believe timely introduction of new and enhanced products will be essential to
maintaining a competitive edge. However, we make no representation or guarantee
that we will be able to establish or maintain a competitive edge in the
marketplace. Consequently, the human and financial commitment to research and
development will increase proportionately to meet these demands.

At December 31, 2000, we had a total of eight full-time employees. None of the
Company's employees are represented by a labor union or bound by a collective
bargaining agreement. We consider our employee relations to be good.

Item 2. Properties

Unitrend's headquarters comprise approximately 10,000 square feet of space in an
office building owned by the Company at 4665 West Bancroft Street, Toledo, Ohio
43615. The building houses the Company's principal executive offices, as well as
limited laboratory and technical development space.

Item 3. Legal Proceedings

Two former employees, spouses to each other, filed suit against the company in
April 2000 requesting the return of their investment of $250,000. The suit was
filed in the United States District Court in Hawaii based on Hawaii state
securities law. The United States District Court in Hawaii removed the case to
the United States District Court in Ohio for lack of jurisdiction. The Company
believes this lawsuit has no merit and intends to vigorously defend itself.

On November 16, 2000, we were served with notice of a lawsuit filed in the Lucas
County Court of Common Pleas. This suit was instituted by a former employee of
the Company, who seeks an unspecified monetary judgment in an amount greater
than $25,000 relating to claims of consulting fees and back wages. We have filed
a counterclaim against this former employee and intend to vigorously defend our
self in this lawsuit.

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

None

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

None

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

<PAGE>

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion should be read together with our "Selected Consolidated
Financial Data" and our financial statements and accompanying notes. This
document contains forward-looking statements that involve risks and
uncertainties. The cautionary statements made in this document should be read as
being applicable to all related forward-looking statements wherever they appear
in this document. Actual results may differ materially from those indicated in
forward-looking statements.

OVERVIEW

We invent and market computer-related products designed to make technology
simple, accessible and affordable through modularity. We have exclusive rights
to patented and patent pending products and technology for certain
computer-related products. Our VersaCase computer enclosure system, which we
have begun marketing to businesses and other entities employing computer
servers, allows users to quickly access computer components by incorporating a
pull-drawer design of high modularity, thus reducing downtime and extending the
service life of information technology.

We are a development stage company that commenced operations in April 1996 and
has incurred significant losses since that date. In 1998, we acquired Server
Systems Technology, Inc. (SSTI), a related Ohio corporation formed September 27,
1994. SSTI held the patent on technology crucial to the VersaCase line of
products. We acquired SSTI in a stock-for-stock exchange. Also in 1998, we
incorporated Osborne Manufacturing Inc. (OMI) as an Ohio Corporation to function
as the business entity for a joint venture between our Company and one of our
employees. OMI is to act as the primary assembling and shipping facility for our
line of products. We presently hold a majority interest in OMI, which will be
reduced to a minority interest three years after the commencement of OMI's
production of the VersaCase units for the Company. To date, we have not
generated any revenues from sales of our patented and patent pending products or
through licensing agreements, but have relied on private financing and loans
from our founder. Furthermore, we have not yet been profitable since our
inception and expect to incur additional operating losses in 2001 and 2002 as we
ramp up for production and sales of our VersaCase product. As of December 31,
2000, we had an accumulated deficit in the development stage of approximately
$10,670,000. At December 31, 2000 we had available net operating loss carry
forwards of approximately $5.2 million for federal income tax reporting purposes
which begin to expire in 2011. To date our operations have consisted
predominately of incidental sales of computer components while we have
principally concentrated on the progression of the VersaCase enclosure and
related products. We have not achieved profitability on a quarterly or an annual
basis and anticipate that we will continue to incur net losses through the
second quarter of 2003. Expenses incurred have been primarily for development of
the VersaCase enclosure system, tooling and administrative support. We expect to
incur significant engineering, pre-production, sales, general and administrative
expenses, and as a result, we will need to generate significant revenue to
achieve profitability. Additionally, our lack of operating history makes it
difficult for us to predict future operating results and, accordingly, there can
be no assurance that we will sustain revenue growth or achieve profitability in
future quarters. Although our core management team has worked together for
several years, none of the present members of management has extensive
experience in managing a large public business in the computer industry. We
intend to hire accomplished individuals in the industry to supplement our
current management team. However, we cannot assure that we will be able to
attract and retain such persons.

The Company has conducted extensive research and development activities since
its inception at a variety of levels. Such activities have primarily focused on
market research, marketing, sales and distribution, current technologies,
emerging technologies, manufacturing, tool production and analysis, engineering
(structural, mechanical, and electronic/electrical) and product development. The
Company has engaged various consultants to assist in some of these matters. The
Company initially had a two to three year time line for developing and placing
its initial products into the market. However early in 1998, toward the end of
the initial product development cycle, the computer industry announced sweeping
changes to its 20-year old standard in internal design layouts. These changes
caused the computer industry to adopt a new standard. Substantial changes in the
future are not to be expected for at least ten years. This caused the Company to
redesign its products prior to commencement of the development of tooling and
dies. These changes caused delays and deviations from the initial timeline. An
additional delay were caused by the Company's underestimation of the
complications involved in developing the tools and dies necessary to produce the
Company's products (up to six months may be required per tool). Additionally, a
significant number of these

<PAGE>

tools cannot be built concurrently with one another because the parts produced
by the core tool must be compared and checked against industry standards before
other tools based upon that part may be engineered. The VersaCase product alone
has more than 200 parts, with most of those components having been invented by
the Company. To build the VersaCase more than 40 tools have to be designed,
machined and built. The total cost for tooling to date is $1,469,429 with an
additional $2,427,498 needed to complete tooling, and for various marketing
activities including but not limited to developing a selling proposition,
conduct naming and nomenclature, developing branding elements and launch
material formats, design a trade show exhibit booth, and further develop the web
site prior to full-scale production. There was a decline from approximately
$1,100,000 spent on tooling in 1998 compared to $190,000 spent in 1999 and
$40,000 spent in 2000. This decrease is due to thirty-five tools being launched
in 1998 as opposed to only six tools in 1999 and one tool in 2000.

The Company has applied for 14 patents with respect to its products of which six
have been granted to date. Patent prosecution is also a source of delay and
considerable expense for the Company. To fully prosecute a patent may take
several years, depending on the type of patent and the number of competing or
similar patents. However, the Company believes that patenting its products is
key to protecting the value of tits ideas and it s business plans. In addition
to hiring patent attorneys, engineers and designers as consultants to help
develop the Company's products, the Company has also hired consultants to help
with the marketing of its products. At the present time, the design of the
VersaCase is complete and the Company has produced several working prototypes.
The tools and dies necessary to manufacture this product have been designed and
engineered and "soft" tools have been produced in order to enable the Company to
produce the prototypes. Funds are still required in order to produce the "hard"
tooling which will enable the Company to go into full-scale production of the
VersaCase product. As more expertise has been required to complete the Company's
products and to go into production, the Company has hired additional staff.
Obviously, as the VersaCase product has neared completion, it has been necessary
for the Company to hire additional staff in order to ramp up its ability to
produce, market and distribute this product. The Company expects to continue to
hire additional staff to meet its business challenges as it gets closer to
full-scale operations.

We expect that our initial revenues will primarily be derived from direct sales
of our VersaCase computer enclosure system to businesses specializing in
providing remote server-related services and larger entities which own onsite
server-based network equipment. We expect that substantially all of our revenue
through the fourth quarter of 2002 will be derived from customers based in the
United States. We expect that revenue from customers based outside the United
States will increase in future periods. In addition to revenue derived from
direct sales, we expect that revenue through indirect distribution channels will
increase in future periods. While computer case sales are generally not affected
by seasonality, sales fluctuations may be tracked by changes in computer
standards as those changes relate to the layout of components within computer
cases. Where strategically beneficial, we believe that we will be able to enter
into strategic alliances with companies focusing on the development of computer
peripherals, logic boards and power supplies. Our notion that we can develop
such strategic relationships stems from the idea that entities with a vested
interest in computer components used inside computer enclosures will profit from
the perpetuation of open architecture in server-based computer network
equipment. To date, we have not entered into any such alliances, and the
creation of such alliances cannot be guaranteed.

We plan to initially sell and distribute the VersaCase to two specific PC
applications: high-end PC users, such as automated manufacturing functions, and
entry-level servers. We intend to market and sell our products to non-profit and
commercial organizations, individuals, and original equipment manufacturers
(OEMs). OEM sales and licensing, large corporate and government accounts, and
large-volume value added re-seller (VAR) sales will be managed by the company's
direct sales organization. Sales to all other organizations will be through
distributors. We are in the process of establishing a multi-channel distribution
network that will allow us to leverage the distributors who are strategically
focused on offering value added products and services to the computer industry.
Lastly, we will sell the VersaCase and future products directly to end-users
through our Internet site. We intend to promote end-user demand, and will
support our sales efforts through a variety of marketing programs including, but
not limited to; trade and consumer advertising, public relations, and trade
shows.

While our initial focus is the North American market, we plan to expand to
Europe, Asia/Pacific, and Latin America as opportunity arises. The data
presented at the beginning of the business section illustrates the size of these
market segments.

<PAGE>

RESULTS OF OPERATIONS

Year Ended December 31, 2000 compared to Year Ended December 31, 1999
---------------------------------------------------------------------

We had no net revenues in the year ended December 31, 2000 ("2000") or in the
year ended December 31, 1999 ("1999"). Consequently, there was no cost of
revenues or gross profit in 2000 or 1999.

We incurred an operating loss of $1,239,727 in 2000, compared to an operating
loss of $1,238,862 in 1999, an increase of $865. Our operating loss for 2000 was
consistent with 1999.

Research and development expenses, which were expensed as they were incurred,
consist primarily of salaries and related expenses for personnel engaged in
engineering and development, fees paid to research and engineering consultants
and outside service providers, costs for prototypes and test units, and other
expenses related to the design, development, testing and enhancements of
VersaCase and our future products. Our research and development expenses
increased to $21,035 in 2000 from $6,523 in 1999, an increase of 222%. This
increase was due to a consulting fee paid during 2000 to an international
product design and consulting firm to examine the Company's products for
possible improvement suggestions prior to the commencement of full-scale
production.

There was a decline from $189,081 in 1999 to $40,000 in 2000 spent on tooling
and dies for the VersaCase. This decrease is due to six tools being launched in
1999 as opposed to only one tool in 2000. The total future tooling commitments
remaining as of December 31, 2000 totaled $365,295.

Selling, general and administrative expenses consist primarily of salaries and
related costs of marketing and customer support activities, legal services, and
accounting services, information technologies, human resources, and executive
expenses, as well as costs associated with trade shows, promotional activities,
advertising and public relations. Legal services for the company consisted of
salaries, filing fees, dues and subscriptions and new and ongoing patent and
trademark filings and prosecution costs. Prosecution costs include those legal
fees directly associated with the process of obtaining patents on inventions
under the control of or otherwise originating from the Company. Finance,
information technologies, human resources and executive expenses consisted of
expenses relating to salaries, information systems expansion, professional fees,
facilities expenses and other general corporate expenses. Our selling, general
and administrative expenses decreased to $1,218,692 in 2000 from $1,232,339 in
1999, a decrease of 1%. This change was due primarily to an 89% decrease in
promotional activities, advertising activities and a reduction in Internet
expense. These costs decreased due to the Company no longer outsourcing the
corporate website design and maintenance as of March 31, 2000. By bringing the
website in-house, we were able to significantly reduce associated costs as well
as increase our control over updating our website in a timely fashion. We expect
that selling, general and administrative expenses will increase in the future as
we hire additional personnel, expand our operations domestically, initiate
additional marketing programs, establish sales offices in new locations and
incur additional costs related to the growth of our business and our operations
as a public company. Our professional fees increased to $170,146 in 2000 as
compared to $88,769 in 1999, an increase of 92%. This increase is due to
professional assistance directly relating to the Company's numerous filings with
the United States Securities and Exchange Commission. The Company saw decreases
of approximately $87,210 in contract labor and computer supplies during the year
2000 as compared to 1999.

During 2000, 78,102 stock options were granted to non-employees at an exercise
price of $0.50 each, under our 1999 Stock Option Plan. As of December 31, 2000,
3,792,102 total options remain exercisable by non-employee consultants at a
strike price of $0.50 each. Options to non-employee consultants were recorded as
consulting expenses and disclosed as selling, general and administrative
expenses in the Company's accompanying consolidated financial statement, using
the fair market value of the services rendered or the options granted on the
date of issuance. During 2000, 218,270 options were cancelled and 12,000 were
exercised. We recognized $11,844 of compensation expense to non-employees
relating to these options during 2000, compared to $7,868 in 1999, an increase
of approximately 51%. We determined that the per share weighted average fair
value of post-splits stock options granted during 2000 was $0.50 on the date of
grant.

Accrued payroll and related taxes increased to $517,755 at December 31, 2000 as
compared to $14,922 at December 31, 1999. Since April 1, 2000, the employees
have agreed to defer compensation for their services until such a time that the
Company's cash flow deficiencies are satisfied. Interest expense decreased to
$39,006 in 2000

<PAGE>

compared to $97,268 in 1999, a decrease of 60%. This decrease in interest
expense is attributed directly to our President/majority stockholder forgiving
loans to the Company of $2,171,854 and accrued interest of $69,942 on March 31,
2000. This was accounted for as contributed capital.

Year Ended December 31, 1999 compared to Year Ended December 31, 1998
---------------------------------------------------------------------

We had no net revenues in the year ended December 31, 1999 ("1999") or in the
year ended December 31, 1998 ("1998"). Consequently, there was no cost of
revenues or gross profit in 1999 or 1998.

We incurred an operating loss of $1,238,862 in 1999, compared to an operating
loss of $1,013,776 in 1998, an increase of 22%. The increase in operating losses
is attributable to increased salaries from hiring additional full-time and
part-time employees and increases in wages to existing employees as well as
additional costs of outside consultants and companies hired by the Company to
aid in its marketing and production efforts.

Research and development expenses, which were expensed as they were incurred,
consist primarily of salaries and related expenses for personnel engaged in
engineering and development, fees paid to research and engineering consultants
and outside service providers, costs for prototypes and test units, and other
expenses related to the design, development, testing and enhancements of
VersaCase and our future products. Our research and development expenses
decreased to $6,523 in 1999 from $206,956 in 1998, a decrease of 97%. This
decrease is due to the finalization in 1998 of many design elements of our
initial products as we prepare to produce those products. We believe that
research and development is critical to our strategic product development
objectives and intend to enhance our products and technology to meet the
changing requirements of the market demand.

There was a decline from $1.1 million in 1998 to $189,081 in 1999 spent on
tooling and dies for the VersaCase. This decrease was due to thirty-five tools
being launched in 1998 as opposed to only six tools in 1999. In 1998, most
component designs were finalized; therefore purchase orders were submitted for
those tools. The tooling commitments as of December 31, 1999 total $405,295.

Selling, general and administrative expenses consist primarily of salaries and
related costs of marketing and customer support activities, legal services, and
finance, information technologies, human resources, and executive expenses, as
well as costs associated with trade shows, promotional activities, advertising
and public relations. Legal services for the company consisted of salaries,
filing fees, dues and subscriptions and new and ongoing patent and trademark
filings and prosecution costs. Prosecution costs include those legal fees
directly associated with the process of obtaining patents on inventions under
the control of or otherwise originating from the Company. Finance, information
technologies, human resources and executive expenses consisted of expenses
relating to salaries, information systems expansion, professional fees,
facilities expenses and other general corporate expenses. Our selling, general
and administrative expenses increased to $1,232,339 in 1999 from $806,820 in
1998, an increase of 53%. This increase was due to salaries from hiring
additional full-time and part-time employees and increases in wages to existing
employees as well as additional costs of outside consultants and companies hired
by the Company to aid in its marketing and production efforts.

Our prosecution costs decreased to $1,980 in 1999 from $2,208 in 1998, a
decrease of 10%. This decrease is reflective of the typically more significant
initial costs associated with the pursuit of patent protection.

During 1999, stock options were issued to employees and certain non-employee
consultants, which were formalized in writing under our 1999 Stock Option Plan.
As of December 31, 1999, 3,944,270 total options were granted to non-employee
consultants at a strike price of $0.50 each. Options to non-employee consultants
were recorded as consulting expenses and disclosed as selling, general and
administrative expenses in the Company's accompanying consolidated financial
statement, using the fair market value of the services rendered or the options
granted on the date of issuance. We recognized $7,868 of compensation expense to
non-employees relating to these options during 1999, compared to $55,316 in
1998, a decrease of 86%. This decrease in compensation expense relating to
options granted to non-employees results from the issuance of 639,730 fewer
options in 1999 compared to 1998. We determined that the per share weighted
average fair value of post-splits stock options granted during 1999 was $0.50 on
the date of grant.

<PAGE>

Interest expense increased to $97,268 in 1999 compared to $61,387 in 1998, an
increase of 58%. This increase in interest expenses is attributed directly to
notes payable to the founder, issued in 1998 and 1999, which have an interest
rate calculated as the prime rate on the first business day of the year, payable
in ten equal annual installments after we are profitable for one year. This note
was forgiven by the founder in March, 2000.

Year Ended December 31, 1998 compared to Year Ended December 31, 1997
---------------------------------------------------------------------

We had no net revenues in the year ended December 31, 1998 ("1998") or in the
year ended December 31, 1997 ("1997"). Consequently, there was no cost of
revenues or gross profit in 1998 or 1997.

We incurred an operating loss of $1,013,776 in 1998, compared to an operating
loss of $1,292,747 in 1997, a decrease of 22%. This decrease in operating losses
is tied to reduction of wages associated with the elimination of certain
full-time employment positions, reduction in rent, and the transitional
reduction in costs of outside consultants and companies hired by the Company to
aid in its marketing and production efforts.

Research and development expenses, which were expensed as they were incurred,
consist primarily of salaries and related expenses for personnel engaged in
engineering and development, fees paid to research and engineering consultants
and outside service providers, costs for prototypes and test units, and other
expenses related to the design, development, testing and enhancements of
VersaCase and our future products. Our research and development expenses
decreased to $206,956 in 1998 from $213,898 in 1997, a decrease of 3%. This
decrease is primarily tied to the elimination of certain outside research and
development consulting in favor of in-house engineering efforts, as well as a
reduction in overall research and development costs due to the finalization of
initial design analyses.

VersaCase tooling expenditures increased in 1998 to $1.1 million as opposed to
only $116,000 spent in 1997. This can be credited to purchase orders for nine
tools being submitted in 1997 as opposed to thirty-five tools in 1998. The
finalization of most component designs was also made in 1998, which directly
contributed to the majority of the tools being launched in this year.

Selling, general and administrative expenses consist primarily of salaries and
related costs of marketing and customer support activities, legal services, and
finance, information technologies, human resources, and executive expenses, as
well as costs associated with trade shows, promotional activities, advertising
and public relations. Legal services for the company consisted of salaries,
filing fees, dues and subscriptions and new and ongoing patent and trademark
filings and prosecution costs. Prosecution costs include those legal fees
directly associated with the process of obtaining patents on inventions under
the control of or otherwise originating from the Company. Finance, information
technologies, human resources and executive expenses consisted of expenses
relating to salaries, information systems expansion, professional fees,
facilities expenses and other general corporate expenses. Our selling, general
and administrative expenses decreased to $806,820 in 1998, from $1,078,849 in
1997, a decrease of 25%. This decrease is primarily due to cost-cutting efforts
by our management.

Our Prosecution costs decreased to $2,208 in 1998 from $10,774 in 1997, a
decrease of 80%. This decrease is linked directly to the more significant
initial costs associated with the pursuit of patent protection.

During 1998, stock options were issued to employees and certain non-employee
consultants, which were formalized in writing under our 1999 Stock Option Plan.
As of December 31, 1998, 3,846,000 total options were granted to non-employee
consultants at a strike price of $0.50 apiece. Options to non-employee
consultants were recorded as consulting expenses and disclosed as selling,
general and administrative expenses in the Company's accompanying consolidated
financial statement, using the fair market value of the services rendered or the
options granted on the date of issuance. We recognized $55,316 of compensation
expense to non-employees relating to these options during 1998, as compared to
$252,011 in 1997, a decrease of 78%. This decrease in compensation expense
relating to options granted to non-employees results from the issuance of
2,230,000 fewer options in 1998 compared to 1997. We determined that the per
share weighted average fair value of post-splits stock options granted during
1998 was $0.50 on the date of grant.

Interest expense in 1998 increased to $61,387. There was no interest expense
recorded in 1997. This interest expense is attributed directly to a note payable
to the founder issued in 1998, which has an interest rate calculated as

<PAGE>

the prime rate on the first business day of the year, payable in ten equal
annual installments after we are profitable for one year. The founder made no
similar loans in 1997.

LIQUIDITY AND CAPITAL RESOURCES

From inception, we have financed our operations primarily through private
placements of equity securities, which provided aggregate net proceeds of
approximately $2,620,000 and net loans from founder received from inception of
$2,450,000. At December 31, 2000, our cash balance was $43,739. Since that date,
we have received additional proceeds from founder's loans and the Company's cash
position fluctuates. The Company expects founder's loans to continue funding the
Company's operations until the time that such loans are not necessary. The cash
requirement needed to complete production tooling and infrastructure of
VersaCase is approximately $2,500,000, of which $365,295 was contractual
committed to as of December 31, 2000. Production could feasibly start mid 2002
and would require approximately $5,000,000 to begin initial ramp-up production
for a 90 day period.

Net cash used in operating activities for the years ended 2000 and 1999 was
$627,134 and $1,526,703, respectively. Our net cash flow used by investing
activities was $78,221 in 2000 and $288,532 in 1999 and relates primarily to
capitalized tooling costs and other equipment purchased. Net cash inflow from
financing activities was $740,315 in 2000 and $1,822,123 in 1999.

Our future capital requirements will depend upon numerous factors, including the
amount of revenues generated from operations, the cost of our sales and
marketing activities and the progress of our research and development
activities, none of which can be predicted with certainty. In December, 2000,
the company filed an SB-2 registration statement with the Securities and
Exchange Commission to register 4,000,000 shares of common stock, at $10.00 per
share in a "Best Efforts" offering. The filing was declared effective on
December 28, 2000. The purpose of the offering was to raise sufficient funds to
enable the company to commence manufacturing of its VersaCase product.
Ultimately, the company did not receive sufficient subscriptions to enable to
commence manufacturing operations and the offering terminated with all funds
returned to subscribers. Currently, the company plans to raise sufficient funds
to commence manufacturing through the advancement of monies by its founder.
While funds advanced from the founder may enable the company to commence
manufacturing, we cannot be certain that the founder will continue to fund our
capital needs. Consequently, we may seek additional funding during the next 24
months through a post effective amendment to the SB-2 registration statement.
There can be no assurance that any additional financing will be available on
acceptable terms, if required. Moreover, if additional financing is not
available, we could be required to reduce or suspend our operations, seek an
acquisition partner or sell securities on terms that may be highly dilutive or
otherwise disadvantageous to existing investors, or investors purchasing stock
offered in the anticipated secondary offering. In the event that neither of the
capital-raising mechanisms described above result in timely usable proceeds to
the Company, we may have a serious shortfall of working capital. We have
experienced in the past, and may continue to experience, operational
difficulties and delays in product development due to working capital
constraints. Any such difficulties or delays could have a material adverse
effect on our business, financial condition and results of operations.

YEAR 2000 ISSUES

We completed our assessment of internal systems that could be affected by the
Year 2000 issue prior to December 31, 1999 and found that our computer systems
would properly utilize dates past December 31, 1999. We did not experience any
significant problems associated with Year 2000 issues, and we are not aware that
any of our vendors or suppliers experienced any such problems.

NEW ACCOUNTING PRONOUNCEMENTS

In June 2000, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101B, which delayed the implementation of SAB No. 101
"Revenue Recognition in Financial Statements" until the fourth quarter of fiscal
years beginning after December 15, 1999. We do not expect the adoption of SAB
No. 101 to have an impact on our financial conditions or results of operations.

In June 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 138 "Accounting for Certain
Derivative Instruments and Certain Hedging Activities - an Amendment

<PAGE>

of SFAS 133." We do not expect the adoption of SFAS No. 138 or 133 to have an
impact on our financial conditions or results of operations.

In September 2000, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard ("SFAS") No. 140 "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities - a Replacement
of FASB Statement No. 125." We do not expect the adoption of SFAS No. 140 to
have an impact on our financial conditions or results of operations.

In October 2000, the Securities and Exchange Commission adopted the rule
"Selective Disclosure and Insider Trading." These new rules were adopted to
address three issues: the selective disclosure by issuers of material nonpublic
information; when insider trading liability arises in connection with a trader's
"use" or "knowing possession" of material nonpublic information; and when the
breach of a family or other non-business relationship may give rise to liability
under the misappropriation theory of insider trading. The rules are designed to
promote the full and fair disclosure of information by issuers, and to clarify
and enhance existing prohibitions against insider trading. We maintain the
Company is in compliance with these rules and these rules will not have an
impact on our financial conditions or results of operations.

In June 2001, the Financial Accounting Standards Board (FASB) issued Statements
of Financial Accounting Standards (SFAS) No. 141, "Business Combinations" and
SFAS No. 142, "Goodwill and Other Intangible Assets". These statements prohibit
pooling-of-interests accounting for transactions initiated after June 30, 2001,
require use of the purchase methods of accounting for all combinations after
June 30, 2001, and establish new standards for accounting for goodwill and other
intangibles acquired in business combinations. Goodwill will continue to be
recognized as an asset, but will not be amortized after adoption of SFAS 141 and
142. Certain other intangible assets with indefinite lives, if present, may also
not be amortized. Instead, goodwill and other intangible assets will be subject
to periodic (at least annual) tests for impairment and recognition of impairment
losses in the future could be required based on a new methodology for measuring
impairments prescribed by these pronouncements. The revised standards include
transition rules and requirements for identification, valuation and recognition
of a much broader list of intangibles as part of business combinations than
prior practice, most of which will continue to be amortized. The Company is
expecting that these new pronouncements will not have a material effect to
prospective financial statements of the Company.

In August 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement
Obligations," which will be effective for fiscal years beginning after June 15,
2002. This statement requires companies to recognize asset retirement
liabilities when they are incurred, measure them at their fair value, and
classify the accrued amount as a liability in the balance sheet. Additionally,
the recorded asset retirement liability is accreted to the ultimate payout
amount, with the accretion being classified as interest expense. The Company
does not expect the adoption of this statement to have a material impact on its
financial position and its results of operations

In August 2001, the FASB issued SFAS No. 144, " Accounting for the Impairment or
Disposal of Long-Live Assets" which will be effective for fiscal years beginning
after December 31, 2001. This statement address accounting for the impairment or
disposal of long-lived assets by requiring one accounting model to be used for
long-lived assets to be disposed if by sale, whether previously held and used or
newly acquired, and by broadening the presentation of discontinued operations to
include more disposable transactions. The effect of adoption of this new
pronouncement is unknown at this time and Management is assessing the impact of
adoption, if any, at the present time.

<PAGE>

Item 7.  Financial Statements

                          UNITREND, INC. AND SUBSIDIARY
                          (DEVELOPMENT STAGE COMPANIES)

                        CONSOLIDATED FINANCIAL STATEMENTS

                                   * * * * * *

                       DECEMBER 31, 2000, 1999, 1998, AND
                       FOR THE PERIODS FROM THE INCEPTION
                          DATE OF SEPTEMBER 27, 1994 TO
                                DECEMBER 31, 2000



<PAGE>

                                 C O N T E N T S





                                                                       Page

INDEPENDENT AUDITORS' REPORT                                              3

CONSOLIDATED FINANCIAL STATEMENTS:

         BALANCE SHEETS                                                   4

         STATEMENTS OF OPERATIONS                                         5

         STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)                     6

         STATEMENTS OF CASH FLOWS                                         8

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS                               10



<PAGE>

To the Stockholders
Unitrend, Inc.
Toledo, Ohio

                          INDEPENDENT AUDITORS' REPORT


         We have audited the accompanying consolidated balance sheets of
Unitrend, Inc. and Subsidiary (Development Stage Companies) as of December 31,
2000 and 1999, and the related consolidated statements of operations,
stockholders' equity (deficit) and cash flows for the years ended December 31,
2000, 1999, 1998, and for the period from the inception date of September 27,
1994 to December 31, 2000. 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 audits.

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

         In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Unitrend,
Inc. and Subsidiary as of December 31, 2000 and 1999, and the results of their
operations and their cash flows for the years ended December 31, 2000, 1999,
1998, and for the period from the inception date of September 27, 1994 to
December 31, 2000 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 the
notes to the consolidated financial statements, the Company is in the
development stage, has suffered development stage losses, and has a net capital
deficiency. These conditions raise substantial doubt about its ability to
continue as a going concern. Management's plans in regard to these matters are
also described in the going concern note in the accompanying notes to the
consolidated financial statements. The consolidated financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ GBQ PARTNERS LLP

Columbus, Ohio
December 20, 2001

<PAGE>
                         UNITREND, INC. AND SUBSIDIARY
                         (Development Stage Companies)
                          CONSOLIDATED BALANCE SHEETS
                           December 31, 2000 and 1999


================================================================================
                                     ASSETS

<TABLE>
<CAPTION>
                                                               2000             1999
                                                           ------------     ------------
<S>                                                        <C>              <C>
CURRENT ASSETS
  Cash                                                     $     43,739     $      8,779
  Current portion of notes receivable                                 -           22,458
  Prepaid expenses                                                    -           19,830
                                                           ------------     ------------
    Total current assets                                         43,739           51,067
                                                           ------------     ------------

PROPERTY AND EQUIPMENT, at cost
  Land                                                           67,485           67,485
  Building and improvements                                     376,385          376,385
  Furniture and fixtures                                         83,115           72,295
  Computer equipment                                            151,064          125,054
  Computer software                                              46,719           45,328
  Automobiles                                                    15,937           15,937
  Tooling and dies under construction                         1,469,429        1,429,429
                                                           ------------     ------------
                                                              2,210,134        2,131,913
  Less accumulated depreciation                                (235,248)        (198,879)
                                                           ------------     ------------
    Net property and equipment                                1,974,886        1,933,034
                                                           ============     ============

OTHER ASSETS

  Patent licensing costs, net of accumulated amortization        28,924           30,790
  Loan costs, net of accumulated amortization                     2,724            3,813
  Notes receivable                                                    -           11,550
                                                           ------------     ------------
    Total other assets                                           31,648           46,153
                                                           ------------     ------------

    TOTAL ASSETS                                           $  2,050,273     $  2,030,254
                                                           ============     ============

                      LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES
  Accounts payable                                         $    338,176     $    364,358
  Current portion of note payable                               248,073          264,224
  Accrued payroll and sundry taxes                              517,755           14,922
                                                           ------------     ------------
    Total current liabilities                                 1,104,004          643,504
                                                           ------------     ------------

NOTES PAYABLE - RELATED PARTY                                    32,466        1,703,854
                                                           ------------     ------------

STOCKHOLDERS' EQUITY (DEFICIT)
  Common stock, no par value                                  3,557,503        3,301,503
  Additional paid-in capital                                  8,023,695        5,770,055
  Deficit accumulated in the development stage              (10,667,395)      (9,388,662)
                                                           ------------     ------------

    Total stockholders' equity (deficit)                        913,803         (317,104)
                                                           ------------     ------------

    TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)   $  2,050,273     $  2,030,254
                                                           ============     ============
</TABLE>

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

                                       (4)
<PAGE>
                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)
                      CONSOLIDATED STATEMENTS OF OPERATIONS
 For the Years Ended December 31, 2000, 1999, 1998 and for the period from the
           inception date of September 27, 1994 to December 31, 2000

================================================================================


<TABLE>
<CAPTION>
                                                                                                    September 27,
                                                                                                        1994
                                                   Year Ended       Year Ended      Year Ended    (Date of Inception)
                                                  December 31,     December 31,    December 31,     to December 31,
                                                      2000             1999            1998             2000
                                                 ----------------  --------------  --------------  ---------------
<S>                                               <C>              <C>              <C>             <C>
        Sales                                      $         -      $         -      $         -     $        603

        Research and development
          expenses                                     (21,035)          (6,523)        (206,956)        (529,943)

        Selling, general and
          administrative expenses                   (1,218,692)      (1,232,339)        (806,820)      (9,917,972)
                                                   -----------      -----------      -----------     ------------
        Operating loss                              (1,239,727)      (1,238,862)      (1,013,776)     (10,447,312)

        Interest income                                      -            1,546                -            1,546

        Interest expense                               (39,006)         (97,268)         (61,387)       (1197,661)
                                                   -----------      -----------      -----------     ------------
        Net loss before cumulative
          effect of change in accounting
          principle                                 (1,278,733)      (1,334,584)      (1,075,163)     (10,643,427)

        Cumulative effect of change in
          accounting principle                               -                -          (23,968)         (23,968)
                                                   -----------      -----------      -----------     ------------
        Net loss                                   $(1,278,733)     $(1,334,584)     $(1,099,131)    $(10,667,395)
                                                   ===========      ===========      ===========     ============
        Basic and diluted loss per share:

          Before cumulative effect of
            of change in accounting
            principle                              $     (0.02)     $     (0.02)     $     (0.02)    $      (0.16)

          Cumulative effect of change in
            accounting principle                             -                -                -                -
                                                   -----------      -----------      -----------     ------------

          Net loss                                 $     (0.02)     $     (0.02)     $     (0.02)    $      (0.16)
                                                   ===========      ===========      ===========     ============
        Weighted average shares outstanding
          used to compute basic and
          diluted loss per share                    69,456,336       69,059,567       67,471,023       66,622,136
                                                   ===========      ===========      ===========     ============
</TABLE>



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


                                      (5)

<PAGE>



                         UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)
            CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
  For the Years Ended December 31, 2000, 1999, 1998 and for the period from the
           inception date of September 27, 1994 to December 31, 2000

================================================================================

<TABLE>
<CAPTION>

                                                                                          Deficit
                                                                                        Accumulated
                                                Common Stock             Additional      During the
                                       ------------------------------     Paid-In       Development
                                            Shares          Amount         Capital          Stage           Total
                                       ---------------   ------------   -------------  ---------------  -------------
<S>                                     <C>              <C>             <C>            <C>              <C>
        BALANCE -
          SEPTEMBER 27, 1994
          (DATE OF INCEPTION)                       -     $        -      $        -     $         -     $         -

        Sale of stock to founders for
          cash at .000006 per share
          on September 27, 1994            17,500,000            100         454,910               -         455,010

        Sale of common stock
          to founder for cash at
          $0.000002 per share on
          April 12, 1996                   45,296,000            113               -               -             113

        Stock options issued on
          July 2, 1996                              -              -       4,999,950                       4,999,950

        Net loss since inception to
          December 31, 1996                         -              -               -      (5,662,200)     (5,662,200)
                                       --------------     ----------      ----------     -----------     -----------
        BALANCE -
          DECEMBER 31, 1996                62,796,000            213       5,454,860      (5,662,200)       (207,127)

        Exercise of stock options
          for common stock at
          $0.000005 per share on
          December 10, 1997                10,000,000             50               -               -              50

        Stock options issued on
          January 15 and
          November 26, 1997                         -              -         252,011               -         252,011

        Cancellation of stock options
          for common stock at
          $0.000005 per share on
          December 31, 1997               (10,000,000)           (50)              -               -             (50)

        Net loss - 1997                             -              -               -      (1,292,747)     (1,292,747)
                                       --------------     ----------      ----------     -----------     -----------
        BALANCE -
          DECEMBER 31, 1997                62,796,000            213       5,706,871      (6,954,947)     (1,247,863)
</TABLE>



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

                                       (6)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)
      CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) (continued)
  For the Years Ended December 31, 2000, 1999, 1998 and for the period from the
           inception date of September 27, 1994 to December 31, 2000

================================================================================

<TABLE>
<CAPTION>
                                                                                           Deficit
                                                                                         Accumulated
                                                   Common Stock          Additional      During the
                                          ---------------------------     Paid-In        Development
                                             Shares          Amount       Capital           Stage          Total
                                          ------------   ------------  -------------    ------------   -------------
<S>                                        <C>              <C>            <C>           <C>             <C>
     BALANCE -
       DECEMBER 31, 1997                    62,796,000            213      5,706,871     (6,954,947)     (1,247,863)

     Sale of common stock for
       cash at $0.50 per share
       from January 17 to
       April 13, 1998                        5,812,260      2,906,130           --             --         2,906,130

     Stock options issued on
       January 15, August 1,
       and August 31, 1998                        --             --           55,316           --            55,316

     Net loss - 1998                              --             --             --       (1,099,131)     (1,099,131)
                                          ------------   ------------   ------------   ------------    ------------

     BALANCE -
       DECEMBER 31, 1998                    68,608,260      2,906,343      5,762,187     (8,054,078)        614,452

     Sale of common stock for
       cash at $0.50 per share
       from January 1 to                       770,320        385,160           --             --           385,160
       June 30, 1999

     Stock options issued on
       January 15, August 10,
       August 15, and
       November 29, 1999                          --             --            7,868           --             7,868

     Common stock issued for
       services at $2.00 per share
       on August 30, 1999                        5,000         10,000           --             --            10,000

     Net loss - 1999                              --             --             --       (1,334,584)     (1,334,584)
                                          ------------   ------------   ------------   ------------    ------------

     BALANCE -
       DECEMBER 31, 1999                    69,383,580      3,301,503      5,770,055     (9,388,662)       (317,104)

     Stock options issued on
       January 2, January 3, February 3,
       March 1, and June 5, 2000                  --             --           11,844           --            11,844

     Forgiveness of loans by
       majority stockholder on
       March 31, 2000                             --             --        2,241,796           --         2,241,796

     Exercise of stock options at $0.50
       per share on October 11 and
       December 19, 2000                        12,000          6,000           --             --             6,000

     Majority stockholder exercised
       options at $0.50 per share
       on December 1, 2000                     500,000        250,000           --             --           250,000

     Net loss - 2000                              --             --             --       (1,278,733)     (1,278,733)
                                          ------------   ------------   ------------   ------------    ------------

     BALANCE -
       DECEMBER 31, 2000                    69,895,580   $  3,557,503   $  8,023,695   $(10,667,395)   $    913,803
                                          ============   ============   ============   ============    ============
</TABLE>


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

                                      (7)

<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31, 2000, 1999, 1998 and for the period from the
            inception date of September 27, 1994 to December 31, 2000

================================================================================


<TABLE>
<CAPTION>
                                                                                                             September 27, 1994
                                                          Year Ended       Year Ended        Year Ended     (Date of Inception)
                                                         December 31,     December 31,      December 31,      to December 31,
                                                            2000             1999              1998                 2000
                                                       ---------------  ----------------  ----------------  -------------------
<S>                                                    <C>               <C>                <C>                <C>
       CASH FLOWS FROM OPERATING ACTIVITIES:
         Net loss                                       $(1,278,733)      $(1,334,584)       $(1,099,131)       $(10,667,395)
                                                        -----------       -----------        -----------        ------------
         Adjustments to reconcile net loss to
           net cash used in operating activities:
             Change in accounting principle                       -                 -             23,968              23,968
             Options issued for services                     11,844             7,868             55,316           5,326,989
             Depreciation and amortization                   39,324            35,265             34,673             246,971
             Bad debt                                        34,008             8,149                  -              42,157
             Accrued interest income                              -           (1,545)             (1,546)             (3,091)
             Common stock issued for services                     -            10,000                  -              10,000
           (Increase) decrease in operating assets:
             Prepaid expenses                                19,830                 -            (19,830)                  -
             Other assets                                         -                 -              5,537                   -
           Increase (decrease) in operating liabilities:
             Accounts payable                                43,760          (210,181)           454,771             408,118
             Accrued payroll and sundry taxes               502,833           (41,675)          (138,170)            517,755
                                                        -----------       -----------        -----------        ------------
               Total adjustments                            651,599          (192,119)           414,719           6,572,867
                                                        -----------       -----------        -----------        ------------

           Net cash used in operating activities          (627,134)        (1,526,703)          (684,412)         (4,094,528)
                                                        -----------       -----------        -----------        ------------

       CASH FLOWS FROM INVESTING ACTIVITIES:
         Payment for patent licensing costs                      -            (31,723)                 -             (31,723)
         Purchase of property and equipment                (78,221)          (263,809)        (1,540,723)         (2,210,134)
         Loans to related parties                                -                  -                  -             (18,191)
         Repayment from (loans to) other entities                -              7,000              7,999             (23,916)
         Repayment from employee                                 -                  -              3,041               3,041
         Payment of organizational cost                          -                  -                  -             (30,168)
         Repayment from stockholder                              -                  -             49,430                   -
                                                        -----------       -----------        -----------        ------------
           Net cash used in investing activities           (78,221)         (288,532)         (1,480,253)         (2,311,091)
                                                        -----------       -----------        -----------        ------------
</TABLE>



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

                                       (8)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
  For the Years Ended December 31, 2000, 1999, 1998 and for the period from the
            inception date of September 27, 1994 to December 31, 2000

===============================================================================


<TABLE>
<CAPTION>
                                                                                                            September 27, 1994
                                                         YEAR ENDED       Year Ended       Year Ended       (Date Of Inception)
                                                        DECEMBER 31,     December 31,     December 31,        To December 31,
                                                           2000             1999             1998                 2000
                                                       -------------   ---------------  ---------------   ------------------
<S>                                                    <C>               <C>               <C>                  <C>
       CASH FLOWS FROM FINANCING ACTIVITIES:
         Payment of loan costs                                      -               -           (5,448)              (5,448)
         Loan from stockholder                                742,288       1,545,323          123,737            2,446,142
         Loans from employees                                   8,178               -                -                8,178
         Proceeds from note payable                                 -               -          290,000              290,000
         Payments on note payable                             (16,151)        (16,110)          (9,566)             (41,927)
         Proceeds from sale of common stock
           and exercise of stock options                        6,000         292,910        1,865,430            2,619,563
         Payments for stock rescissions                             -               -          (97,920)            (134,170)
         Sales of stock subject to rescission
           for cash                                                 -               -                -            1,267,020
                                                        -------------   -------------   --------------   ------------------
           Net cash provided by
             financing activities                             740,315       1,822,123        2,166,233            6,449,358
                                                        -------------   -------------   --------------   ------------------

           Net increase in cash                                34,960           6,888            1,568               43,739

       Cash - beginning of year                                 8,779           1,891              323                    -
                                                        -------------   -------------   --------------   ------------------

       Cash - end of year                                      43,739   $       8,779   $        1,891   $           43,739
                                                        =============   =============   ==============   ==================

       SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
         Cash paid during the period for:
           Interest                                     $      35,672   $      26,298   $       61,387   $          127,823

       SUPPLEMENTAL DISCLOSURE OF NONCASH FINANCING ACTIVITIES:
         During the year ended December 31, 2000 the President/Majority Stockholder forgave loans to the company of $2,171,854
         and accrued interest of $69,942.  The forgiveness of debt was accounted for as additional paid-in capital. The President/
         Majority Stockholder also exercised 500,000 options to purchase stock, during the year ended December 31, 2000, at a price
         of $0.50 per share by forgiving debt of $250,000.
</TABLE>


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

                                      (9)


<PAGE>
                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


NATURE AND SCOPE OF BUSINESS

      Unitrend, Inc. (the Company), a Nevada corporation as of January 1999,
      formerly an Ohio corporation, is a development stage company formed to
      produce computer ergonomic enclosures for a national market. The Company
      was incorporated on April 11, 1996 as Versa Case, Inc. On May 15, 1996,
      the Company changed its name to Unitrend, Inc. The Company's operations to
      date have consisted primarily of incidental sales of computer components
      while the company personnel have concentrated on the development of the
      enclosures. Expenses incurred have been primarily for administrative
      support, tooling and product development of the enclosures that will
      ultimately be sold, which have resulted in an accumulated deficit in the
      development stage of approximately $10,670,000.

      On April 16, 1998, the Company formed another entity called Osborne
      Manufacturing, Inc. (OMI). The Company owns sixty percent of OMI and a
      current employee owns the remaining forty percent. The Company's ownership
      will be reduced to forty percent three years after the commencement of
      OMI's production of the "VersaCase(R)" units for the Company. OMI was
      organized to do all of the production of "VersaCase(R)" units as well as
      manufacturing for other entities. The Company has advanced OMI monies for
      operating expenses and expects to be repaid in full. Total advances as of
      December 31, 2000 and 1999 were $409,083 and $283,943, respectively.
      Interest is being accrued on the outstanding balance of the advances at
      8.25%. The total accrued interest was $39,138 and $11,804 at December 31,
      2000 and 1999, respectively. All intercompany balances have been
      eliminated in the accompanying consolidated financial statements. Expenses
      incurred have been primarily for administrative support, tooling and
      product development of the enclosures that will ultimately be sold, which
      have resulted in an accumulated deficit in the development stage of
      approximately $280,000.

      The Company merged with Server Systems Technology, Inc., (SSTI) effective
      December 15, 1998. SSTI was formed September 27, 1994. It owns several
      patents that are key to the Company's products, but otherwise has ceased
      its development stage operations when the Company was formed in April
      1996. SSTI and the Company were entities under common control prior to the
      merger.

      Generally accepted accounting principles require the merger of entities
      under common control to be accounted for in a manner similar to pooling of
      interest accounting. SSTI's assets, liabilities and stockholders' equity
      were recorded at historical cost as of the effective date of the
      transaction. At the time of the merger, SSTI's recorded assets were not
      material and there were no liabilities. Additionally, it had ceased its
      development stage operations upon the commencement of activities by the
      Company. The patents held by SSTI were deemed to have approximately a
      $10,000,000 market value and, therefore, 17,500,000 shares of the Company
      were issued to stockholders of SSTI at the time of the merger.

      The financial statements prior to December 31, 1999, have been restated to
      reflect the assets acquired and the issuance of stock to the stockholders
      of SSTI. Additionally, the consolidated statements of operations have been
      restated to reflect $449,625 of selling, general and administrative
      expenses that were incurred by SSTI from September 27, 1994 to April 11,
      1996. As noted previously, SSTI had ceased operations in April 1996. This
      restatement increased the basic and fully diluted loss per share by $.01
      for the period prior to April 1996.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      USE OF ESTIMATES

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

                                   (Continued)
                                      (10)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      PRINCIPLES OF CONSOLIDATION

      The consolidated financial statements are on the accrual basis of
      accounting and include the financial statements of the Company for 2000,
      1999 and 1998, in entirety, and include the financial statements of its
      60% owned Subsidiary from its inception date of April 16, 1998. All
      material intercompany balances and transactions are eliminated in
      consolidation.

      PROPERTY AND EQUIPMENT

      Property and equipment is carried at cost, less accumulated depreciation
      computed using the straight-line method over the estimated useful lives of
      the related assets. Furniture, fixtures, computer software, automobiles,
      and computer equipment are depreciated over lives ranging from three to
      ten years. Building and improvements are depreciated over lives of 40
      years. Major renewals and betterments are capitalized and depreciated;
      maintenance and repairs that neither improve nor extend the life of the
      respective assets are charged to expense as incurred. Property and
      equipment is reviewed for impairment whenever circumstances change and
      there is an indication that the carrying amount of any given asset or
      group of assets is not recoverable.

      Recoverability is assessed based on criteria that includes a significant
      decrease in the market value of the asset, its use has changed, legal or
      business factors adversely affect the asset's value, a history of cash
      flow losses and continued asset losses are forecasted as well as other
      factors that may give rise to a potential decrease in an asset's value.
      Upon disposal of assets, the cost and related accumulated depreciation are
      removed from the accounts and any gain or loss is included in income. The
      Company has capitalized certain costs related to the construction of
      tooling and dies to be used in the manufacturing process. These costs
      consist of amounts paid to outside vendors for the actual manufacturing of
      the tools and dies. The cost of the tooling and dies is not being
      depreciated until such time as the Company commences manufacturing.

      PATENT COSTS

      Patent costs, which consist of the costs to obtain certain patents, are
      being amortized over the 20-year life of such patents. The patents are
      being shown net of amortization on the consolidated financial statements.
      Accumulated amortization was $2,799 and $933 at December 31, 2000 and
      1999, respectively. The Company's existing patents begin to expire in
      April 2016.

      LOAN COSTS

      Loan costs are being amortized over the life of the loan and are shown net
      of amortization. Accumulated amortization was $2,724 and $1,635 at
      December 31, 2000 and 1999, respectively.

      RESEARCH AND DEVELOPMENT

      All research and development costs are expensed as incurred. Research and
      development costs for the years ended December 31, 2000, 1999, 1998 and
      for the period from the date of inception on September 27, 1994 to
      December 31, 2000 amounted to $21,035, $6,523, $206,956, and $529,943,
      respectively.

      STATEMENT OF CASH FLOWS

      For the purpose of reporting cash flows, cash includes cash on hand and
      demand deposits held by banks.

                                   (Continued)
                                      (11)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

      CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE

      On January 1, 1998 the Company adopted Statement of Position 98-5
      "Reporting on the Costs of Start-Up Activities" that requires all start-up
      costs previously capitalized by the Company to be expensed. The cumulative
      effect of the change in accounting principles is reflected in the
      consolidated statements of operations. All start-up costs incurred after
      adoption of the statement will be expensed as incurred.

NOTES RECEIVABLE

      As of December 31, 1999, the Company was owed $34,008 from two unrelated
      parties under note agreements that included interest at 5%. The notes were
      unsecured and were due December 31, 2000 and July 31, 2001, respectively.
      During 2000, the notes were deemed uncollectible and were recorded as
      such in the accompanying consolidated financial statements.

NOTES PAYABLE - RELATED PARTY

<TABLE>
<CAPTION>
                                                                                      2000                1999
                                                                                  -----------          ------------
<S>                                                                                <C>                  <C>
           The Company is obligated on several notes to the President and
            majority stockholder. Interest is at prime (9.50% and 8.25% as of
            December 31, 2000 and 1999, respectively) and the principal is due
            in ten annual installments after the Company is profitable for one
            year. During 2000, the President agreed to forgive $2,171,854 of the
            notes. These amounts have been reflected as additional paid-in
            capital in the accompanying consolidated financial statements.

                                                                                   $    32,466          $ 1,703,854
                                                                                   ===========          ===========
</TABLE>

      Based on the borrowing rates currently available to the Company for loans
      with similar terms and average maturities, the fair value of the related
      party payables approximates the recorded value.

NOTE PAYABLE

      The Company has a note payable with a bank that was used to finance the
      acquisition of the building. The note is payable in monthly installments
      of $1,611 plus interest which is charged at the prime rate plus 1 1/2 %
      (11.00% and 9.75% at December 31, 2000 and 1999, respectively). The note
      is secured by the building and the personal guarantee of the majority
      stockholder. Based on the borrowing rates currently available to the
      Company for loans with similar terms and average maturities, the fair
      value of the note payable with a bank approximates the recorded value.

      The note's original maturity was to be on August 1, 2003 at which time the
      remaining principal was to be repaid, however the Company did not remain
      current with its payments during the year ended December 31, 2000 and at
      year end was in default on the debt. Subsequent to year end, the Company
      reached an agreement with the lender and made payments of $50,524
      to the lender, which brought the loan current. The Company further agreed
      to make timely payments for six months and refinance this debt with
      another institution by June 1, 2002. The lender agreed to cease all
      activities related to acceleration of the collection of the debt.
      Accordingly, the remaining balance due on the note payable has been
      classified as a current liability on the consolidated balance sheet.

                                   (Continued)
                                      (12)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


EMPLOYEE BENEFIT PLAN

      The Company maintains a simplified employee pension salary reduction plan.
      The plan allows employees to make contributions up to the maximum amount
      permitted by the Internal Revenue Code. All full-time employees are
      eligible to participate in the plan. The Company may make contributions at
      the discretion of management. The Company has made no discretionary
      contributions to date.

INCOME TAXES

      Deferred income taxes are recognized for the tax consequences in future
      years of the temporary differences between the financial reporting and tax
      bases of assets and liabilities at each year-end based on enacted tax laws
      and statutory tax rates. Valuation allowances are established when
      necessary to reduce deferred tax assets to the amount expected to be
      realized. An income tax expense represents the taxes currently payable and
      the net change during the period in deferred tax assets and liabilities.

      The components of the net deferred tax asset (liability) are as follows:
<TABLE>
<CAPTION>
                                                                                      2000                1999
                                                                              -----------------     ---------------
<S>                                                                            <C>                  <C>
           Assets:
              Net operating loss                                                $ 1,992,000          $ 1,557,000
              Organizational costs                                                    2,000                5,000
              Other                                                                  47,000                1,000
                                                                                -----------          -----------
                 Gross deferred tax assets                                        2,041,000            1,563,000
                                                                                -----------          -----------

           Liabilities:
              Depreciation                                                            5,000                5,000
                                                                                -----------          -----------

                 Net deferred tax asset                                           2,036,000            1,558,000
                 Less valuation allowance                                        (2,036,000)          (1,558,000)
                                                                                -----------          -----------
                                                                                $         -          $         -
                                                                                ===========          ===========
</TABLE>

      A reconciliation of the Company's effective tax values is as follows:
<TABLE>
<CAPTION>
                                                                                              September 27, 1994
                                                                                             (Date of Inception) to
                                                2000             1999              1998        December 31, 2000
                                          --------------   --------------   ---------------    -----------------
<S>                                        <C>              <C>               <C>               <C>
         Income tax at statutory rates     $   (434,770)    $   (453,759)     $   (373,705)          $(3,626,914)
         Surtax and other rate
           differences                              313            1,005             1,091                   649
         State and local, net of
             federal tax                        (51,149)         (53,383)          (43,965)             (426,697)
         Permanent differences                    7,606            2,137               579             2,016,962
         Change in valuation allowance
                                                478,000          504,000           416,000             2,036,000
                                          -------------     ------------     -------------     -----------------
                                          $         --       $       --       $        --      $             --
                                          =============     ============     =============     =================
</TABLE>


      A valuation allowance has been recorded against the net deferred tax
      assets, as it is not known if the benefits will be realized by the Company
      and OMI.

      As of December 31, 2000, the Company and OMI have approximately $5,200,000
      of tax net operating loss carryforwards remaining to be utilized. The tax
      net loss carryforwards begin to expire in 2011 through 2020.

                                   (Continued)
                                      (13)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


COMMON STOCK SUBJECT TO RESCISSION

      The Company issued shares of stock in 1996 and 1997 that were subject to a
      rescission offer, which could have been exercised at the option of the
      stockholder and accordingly were not included in equity. The Company sold
      1,559,020 shares for $779,510 in 1997 and 963,020 shares for $481,510 in
      1996. During 1997 and 1996, a total of 60,000 and 500 shares for $30,000
      and $250, respectively, were rescinded.

      During 1998, the Company issued 5,812,260 shares of common stock under an
      offering. As part of this offering, significantly all holders of common
      stock subject to rescission agreed to convert their stock subscription
      receipts under a one for one trade for the new stock or to rescind their
      stock subscription in full. During 1998, four states had not given their
      approval for the offering as of December 31, 1998. A total of 2,081,200
      shares were issued in exchange for common stock. Stock subscription
      rescissions totaled 195,840 for $97,920 along with interest costs of
      $3,039 as of December 31, 1998. The total number of shares left to be
      exchanged or rescinded was 184,500 at December 31, 1998. These shares were
      exchanged for the new stock during 1999. There were no stock rescissions
      during 2000 or 1999.

      Accordingly, the Company was precluded from classifying the securities as
      capital until such time as the rescission offer was completed. At the
      completion of the rescission offer, the Company classified as capital,
      such securities proceeds to the extent the security holders elected to
      retain their ownership in the Company.

EARNINGS PER SHARE

      Earnings per share are computed on the weighted average number of common
      shares outstanding, including any dilutive options and warrants. Per share
      amounts have been restated for the effects of the four-for-one and
      five-for-one stock splits that were effective July 9, 1999 and August 9,
      1999 for stockholders of record as of the same dates, respectively.

      Options to purchase 7,823,802, 6,885,970, 6,742,700, and 4,684,680, shares
      for the years ended December 31, 2000, 1999, 1998, and the period from the
      inception date of September 27, 1994 to December 31, 2000, respectively,
      were not included in the computation of diluted EPS because the Company
      had a net loss during the periods and therefore the options are assumed to
      be anti-dilutive.

STOCKHOLDERS' EQUITY (DEFICIT)

      In July 1999, the Company reincorporated as a Nevada corporation. At
      December 31, 2000 and 1999, the Company had 200,000,000 authorized common
      shares, no par value. In July 1999, the Company effected a four-for-one
      stock split, except for the shares issued to the president/major
      stockholder related to the SSTI merger that were split at three-for-one.
      In August 1999, the Company split its common stock, issuing five shares
      for every one share outstanding at the time. The Company issued 5,000
      shares of common stock for consulting expense during August 1999. The
      service had a value of $10,000, which was recorded for the exchange of the
      common stock.

      The Company provides for the granting of stock options to certain
      employees. Payment upon the exercise of a stock option may be made only in
      shares of the Company's stock.

      The Company applies Accounting Principles Board Opinion (APB) No. 25 and
      related interpretations in accounting for its employee stock option plan.
      Accordingly, no compensation cost has been recognized in the accompanying
      consolidated financial statements for options issued under the plan, as
      the option price equaled the market price on the date of the grant. Had
      compensation cost for the Company's stock option plan been determined
      based on the fair

                                   (Continued)
                                      (14)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


STOCKHOLDERS' EQUITY (DEFICIT) (continued)

      value at the grant dates for awards under the plan consistent with the
      methodology of Financial Accounting Standards Board Statement No. 123
      "Accounting for Stock-Based Compensation," the Company's net loss and net
      loss per share would change as indicated below:

<TABLE>
<CAPTION>
                                                                                                    Inception
                                                                                                      Date to
                                                                                                    December 31,
                                                           2000           1999           1998          2000
                                                       ------------   -----------     ----------  ------------
<S>                                                    <C>            <C>             <C>           <C>
      Net loss:
         As reported                                   $(1,278,733)   $(1,334,584)    $(1,099,131)  $(10,667,395)
         Pro forma                                      (1,412,480)    (1,368,789)     (1,239,134)   (11,026,730)

      Basic and diluted loss per share:
         As reported                                   $(     0.02)   $(     0.02)    $(     0.02)  $(      0.16)
         Pro forma                                      (     0.02)    (     0.02)     (     0.02)   (      0.17)
</TABLE>


      The fair value of each option grant is estimated on the date of grant
      using the Black-Scholes option-pricing model with the following
      weighted-average assumptions used for grants in 2000, 1999, 1998, and the
      period from the inception date of September 27, 1994 to December 31, 2000:

<TABLE>
<CAPTION>
                                                                                                  Inception
                                                                                                    Date to
                                                                                                 December 31,
                                      2000                 1999                 1998                 2000
                                 ---------------      ---------------      ---------------      --------------
<S>                              <C>                  <C>                  <C>                  <C>
      Dividend yield             0                    0                    0                    0
      Expected volatility        0%                   0%                   0%                   0%
      Risk-free interest rates   5.43%, 5.45%,        4.55%, 4.57%,        5.39%, 5.06%, &       4.55% - 6.62%
                                 5.65%, & 5.77%       4.60%, 5.13%,        5.61%
                                                      5.01%, & 5.67%
      Expected lives             3 YEARS              3 years              3 years               3 years
</TABLE>






                                   (Continued)
                                      (15)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


STOCKHOLDERS' EQUITY (DEFICIT) (continued)

      A summary of the status of the Company's employee stock option plan as of
      December 31, 2000, 1999 and 1998 and changes for the years then ended is
      presented below:

<TABLE>
<CAPTION>
                                          2000                           1999                            1998
                              ------------------------------  ----------------------------   -------------------------------
                                             WEIGHTED-AVERAGE               Weighted-Average                Weighted-Average
                                                EXERCISE                       Exercise                         Exercise
                                  SHARES          PRICE          Shares          Price          Shares           Price
                              -------------   --------------  ------------  --------------   -------------   ---------------
<S>                           <C>               <C>           <C>               <C>           <C>               <C>
       January 1                 2,941,700        $0.50          2,896,700        $0.50          1,596,680         $0.50
       Granted                   1,590,000         0.50             45,000         0.50          1,500,000          0.50
       Exercised                  (500,000)        0.50                  -            -                  -             -
       Canceled                          -            -                  -            -           (199,980)         0.50
                              -------------                   -------------                   -------------
       December 31               4,031,700         0.50          2,941,700         0.50          2,896,700          0.50
                              =============                   =============                   =============

       Options exercisable
        at year-end
                                 4,031,700                       2,726,700                       2,250,407

       Weighted-average
        fair value of
        options granted
        during the year            $  0.08                         $  0.06                        $  0.07
</TABLE>


      The following summarizes information about employee stock options at
December 31:

<TABLE>
<CAPTION>
                                      Outstanding                                               Exercisable
        ---------------------------------------------------------------------    --------------------------------------
                                             Weighted-Average
                                                 Remaining
                                             Contractual Life
         Range of      Number Outstanding          (In         Weighted-Average   Number Exercisable    Weighted-Average
     Exercise Prices   December 31, 2000          Years)        Exercise Price    December 31, 1999      Exercise Price
     ---------------   ------------------    ----------------- ----------------   ------------------    ----------------
<S>                       <C>                    <C>               <C>               <C>                    <C>
          $0.50             4,031,700              3.00              $0.50             2,726,700              $0.50
</TABLE>



                                   (Continued)
                                      (16)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


STOCKHOLDERS' EQUITY (DEFICIT) (continued)

      The Company applies Financial Accounting Standards Board Statement No. 123
      "Accounting for Stock-Based Compensation" and related interpretations in
      accounting for stock options issued to non-employees for services.
      Accordingly, consulting expense totaling $11,844, $7,868, $55,316, and
      $5,326,989, (which includes the $4,999,950 expense to Eric V. Jelinger)
      was recorded during 2000, 1999, 1998, and the period from the inception
      date of September 27, 1994 to December 31, 2000, respectively, using the
      fair market value of the consulting services or the options on the grant
      dates of the options issued. The fair value of each option grant is
      estimated on the date of grant using the Black-Scholes option-pricing
      model with the following weighted-average assumptions used for grants in
      2000, 1999, 1998, and the period from the inception date of September 27,
      1994 to December 31, 2000:


<TABLE>
<CAPTION>
                                                                                                     Inception
                                                                                                      Date to
                                                                                                    December 31,
                                     2000                  1999                   1998                  2000
                                 ---------------      ---------------      ----------------      -----------------
<S>                              <C>                  <C>                  <C>                   <C>
      Dividend yield             0                    0                    0                     0
      Expected volatility        0%                   0%                   0%                    0%
      Risk-free interest rates   5.57%, 5.65%,        4.57%, 5.13%, &      5.39% & 5.06%         4.57% - 6.25%
                                 5.67%, & 5.77%       5.67%
      Expected lives             3 YEARS              3 - 5 years          3 years               3 - 5 years
</TABLE>


      A summary of the status of the options granted by the Company as of
      December 31, 2000, 1999, and 1998 and changes for the years then ended is
      presented below:

<TABLE>
<CAPTION>
                                          2000                           1999                            1998
                              ------------------------------  ----------------------------   -------------------------------
                                             WEIGHTED-AVERAGE               Weighted-Average                Weighted-Average
                                                EXERCISE                       Exercise                        Exercise
                                  SHARES          PRICE          SHARES          Price          Shares           Price
                              -------------   --------------  ------------  --------------   -------------   ---------------
<S>                           <C>               <C>           <C>               <C>           <C>               <C>

       January 1                 3,944,270        $0.50          3,846,000       $0.50           3,088,000        $0.50
       Granted                      78,102         0.50            118,000        0.50             758,000         0.50
       Exercised                   (12,000)        0.50                  -           -                   -         0.50
       Canceled                   (218,270)        0.50            (20,000)       0.50                   -            -
                              --------------                  -------------                   -------------
       December 31               3,792,102         0.50          3,944,270        0.50           3,846,000         0.50
                              =============                   =============                   =============

       Options exercisable
        at year-end
                                 3,792,102                       2,342,733                       1,040,426

       Weighted-average
        fair value of
        options granted
        during the year            $  0.08                         $  0.08                        $  0.07
</TABLE>


                                   (Continued)
                                      (17)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


STOCKHOLDERS' EQUITY (DEFICIT) (continued)

      The following summarizes information about non-employee stock options at
December 31:

<TABLE>
<CAPTION>
                                      Outstanding                                               Exercisable
        ---------------------------------------------------------------------    --------------------------------------
                                             Weighted-Average
                                                 Remaining
                                             Contractual Life
         Range of      Number Outstanding          (In         Weighted-Average   Number Exercisable    Weighted-Average
     Exercise Prices   December 31, 2000          Years)        Exercise Price    December 31, 1999      Exercise Price
     ---------------   ------------------    ----------------- ----------------   ------------------    ----------------
<S>                       <C>                    <C>               <C>               <C>                    <C>

          $0.50             3,792,102              3.00              $0.50             2,342,733              $0.50
</TABLE>


      Options granted to non-employees expire December 28, 2003, which is three
      years after the effective date of the Company's registration for a public
      offering of its common stock with the Securities and Exchange Commission.

      In 1996, the Company granted stock purchase options to Eric V. Jelinger,
      brother of the President. The option was granted for compensation of past
      services to the Company. The options allowed Mr. Jelinger to acquire up to
      10,000,000 shares of stock at a price of $0.000005 per share. Under
      Financial Accounting Standards Board Statement No. 123 "Accounting for
      Stock-Based Compensation," compensation expense was recorded in 1996 of
      $4,999,950. On December 31, 1997, the options were canceled under an
      agreement of mutual mistake entered into by Unitrend and Eric V. Jelinger.

OPERATING LEASE OBLIGATIONS

      The Company leased office space and equipment. OMI leases facility space
      under an agreement, which expires during 2003. Lease expense for the years
      ended December 31, 2000, 1999, and 1998 and for the period from the
      inception date of September 27, 1994 to December 31, 2000 was $66,974,
      $53,750, $11,879, and $157,684, respectively. The Company and OMI have
      future minimum lease payments of $48,240 in 2001; $48,240 in 2002; and
      $20,100 in 2003.

CONTINGENCIES

      The Company is a defendant in two lawsuits, one by a stockholder and one
      by a former employee. Management believes that it will ultimately prevail
      in these legal actions and accordingly, no provision for the amount of any
      award has been recorded in the accompanying financial statements.

COMMITMENTS

      The Company has entered into purchase commitments with outside vendors to
      perform the tooling designs for the computer enclosures. The total
      commitments as of December 31, 2000 totaled $1,834,724 with progress
      payments having been made of $1,469,429. The total future commitments
      remaining as of December 31, 2000 totaled $365,295. As tooling is
      completed, the vendors' invoices are submitted to the Company and paid in
      normal terms. A liability for the future commitments has not been recorded
      in the accompanying consolidated balance sheets.


                                   (Continued)
                                      (18)


<PAGE>


                          UNITREND, INC. AND SUBSIDIARY
                          (Development Stage Companies)

                 NOTES TO CONSOLIDATED STATEMENTS OF CASH FLOWS

              December 31, 2000, 1999, 1998 and for the period from
          the inception date of September 27, 1994 to December 31, 2000

===============================================================================


GOING CONCERN

      As shown in the accompanying consolidated financial statements, the
      Company has incurred net losses of $1,278,733 and $1,334,584 during the
      years ended December 31, 2000 and 1999, respectively. The Company has an
      accumulated net loss of $10,667,395 from the date of inception to December
      31, 2000. The Company's current liabilities exceed its current assets by
      $1,060,265. The majority stockholder has been providing interim funding,
      however it is not certain that he will continue to provide such funding in
      the future. Management plans to seek additional funding during the next 24
      months through a post effective amendment to the SB-2 registration
      statement. The ability of the Company to continue as a going concern is
      dependent on its ability to obtain additional capital in the public or
      private markets. The consolidated financial statements do not include any
      adjustments that might be necessary if the Company is unable to raise the
      necessary capital and continue as a going concern.

      Management's plans are to commence production soon after the raising of
      the additional equity necessary to fund the costs of commencing
      production, which will most likely be mid 2002. Management expects to
      commence sales of the VersaCase(R) following commencement of production in
      2002. Management projects that it will be able to achieve profitability
      within 12-months of commencing production. These objections are based on
      many factors, including market changes, changes by new or existing
      competition, new or different technology and the ability to obtain the
      necessary equity. Based on these factors and the possibility of other
      factors, it is not certain that management can achieve these plans.








                                   (Continued)
                                      (19)


<PAGE>


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

None

                                    PART III
Item 9.  Directors, Executive Officers and Key Employees

             Name         Age             Position with the Company
             ----         ---             -------------------------
Conrad  A.H. Jelinger      49      President, Chief Executive Officer, Chairman,
                                   interim CFO and Director
Kathleen M. Novak          27      Executive Vice President
Aaron C. Wood              31      Chief Operating Officer
Eric V. Jelinger           48      Director
K. Dale Boley              32      Director
Robert J. Hayes            43      Director
Martha A. Moloney          63      Director
Darryl Stolper             60      Director

CONRAD A. H. JELINGER.

Conrad A.H. Jelinger is the founder of Unitrend and has been Chairman, President
and CEO of the Company since its inception in 1996. Mr. Jelinger has over 25
years of experience in the technical and computer industry. This includes
serving as President and CEO of Server Systems Technologies from September 1994
to April 1996. Mr. Jelinger attended the University of Toledo, where he studied
Business Administration and International Finance. He also completed technical
and electronics training while serving in the United States Navy. Mr. Jelinger
is one of our executive officers.

KATHLEEN M. NOVAK.

Kathleen M. Novak joined Unitrend in December 1996 as Marketing Analyst after
graduating with a B.B.A. in Finance and Marketing from Ohio University. In 1997,
as Director of Marketing, Ms. Novak brought Unitrend to Fall COMDEX.
Additionally, in 1997, Ms. Novak was appointed Investor Relations Specialist. In
August 1999, Ms. Novak was appointed Director of Administration and in February
2000, she was promoted to Executive Vice President. Ms. Novak is one of our
executive officers.


AARON C. WOOD

Aaron C. Wood joined Unitrend in September 1999 as Assistant to General Counsel.
In February, 2001, Mr. Wood was appointed Chief Operating Officer. From 1988 to
1998, Mr. Wood held numerous operations positions in the Sedona, Arizona
Hospitality and Human Resource industry. Mr. Wood attended Brigham Young
University, the University of Toledo College of Law, and holds a B.S. in
Political Science from Northern Arizona University. Mr. Wood expects to be
awarded an M.P.A. from the University of Toledo in 2002. Mr. Wood is one of our
executive officers.


ERIC V. JELINGER.

Eric V. Jelinger has been a member of the Board of Directors since July 1999 and
was elected as Assistant Secretary of the Company in July 1999. Eric Jelinger is
the brother of Conrad Jelinger. Since June of 1994, Eric Jelinger has been a
vascular interventional radiologist at the Joint Township District Memorial
Hospital in St. Mary's, Ohio. In addition, he was Vice President and member of
the Board of Server Systems Technologies from 1994 to 1996. Since January of
1999, he has also held the following additional business positions: Managing
Member of Van Hague Elevator Company (a business holding company), Managing
Director of Golden Apple Limited (a real estate development company), and
Managing Director of AP Net Limited (an on-line tutorial company). Since June of
1998, he has been President of 5171 CRA, Inc. (an aircraft rental company). Eric
Jelinger received a B.A. from the University of Toledo in 1980 and a M.D. from
the Medical College of Ohio in 1985. He completed his fellowship in vascular
interventional radiology in 1991 at Georgetown University Hospital.

K. DALE BOLEY.

Dale Boley has been a member of the Board of Directors since July 1999. From
1992 to October of 1996, Mr. Boley was a production operator at Teleflex
Automotive in Van Wert, Ohio. From 1996 to 1997, Mr. Boley was a sales agent
with Sharron Realty Associates in Van Wert, Ohio. In addition, since January of
1999, Mr. Boley has been a Manager of Van Hague Elevator Company. Mr. Boley
attended Lima Technical College focusing on computers and received a P.C. in
Microcomputers Sales and Marketing in 1991.


<PAGE>


ROBERT J. HAYES.

Robert J. Hayes became a member of the Board of Directors in March 2000. As
Senior Vice President for Fitch USA, Mr. Hayes directs the Mechanical and
Electrical Engineering Groups. In addition, he participates in programs
involving all phases of product design, from conceptualization through
production. Mr. Hayes' project involvement includes work for such clients as
BioImage (a Kodak company), Ciba Corning Diagnostics Corp., Compaq, Diebold,
Lear Siegler Seymour, Rubbermaid, Lionel and Valentine Research. He is named on
numerous design and utility patents. Mr. Hayes holds a B.S. in Mechanical
Engineering from Cleveland State University.

MARTHA A. MOLONEY.

Martha A. Moloney became a member of the Board of Directors in March 2000. From
1972 to 1977, Ms. Moloney was Vice President and Board member at Steger Schowel,
a restaurant supply distribution company. Since 1990, Ms. Moloney has been in
private practice while concurrently serving as a Counselor with Catholic
Charities at numerous area hospitals. Ms. Moloney holds a B.A. in Psychology
from Maryville University and a M.SW. From St. Louis University.

DARRYL STOLPER.

Darryl Stolper became a member of the Board of Directors in March 2000. From
1980 to the present, Mr. Stolper has worked at Paul Revere Secondary School
where he is department Chairman for, and Teacher of, American History. A
historian and writer, Mr. Stolper has been published in numerous periodicals
including Reel West and Blues Unlimited. Mr. Stolper is recognized as an
authority in music recording history, and has served as a consultant to Rhino
Records and provided expert testimony in numerous legal cases. Since 1985, Mr.
Stolper has served as an elected member of the Pacific Palisades, California
Board of Governors. Mr. Stolper holds a B.A. in Physical Anthropology and
American History from California State University, Northridge and M.A. in
American Studies from Pepperdine University.

Item 10. Executive Compensation

The following table shows compensation for each person who served in the
capacity of Chief Executive Officer during the years set forth and any other
executive who earned a total of more than $100,000 in compensation in such
years.

<TABLE>
<CAPTION>
                                                                              No. of shares
Name and                                                                      Underlying         Other Annual
Principal Position                 Year        Salary          Bonus          Options            Compensation
---------------------------------- ----------- --------------- -------------- ------------------ -----------------
<S>                                <C>         <C>             <C>            <C>              <C>
Conrad A.H. Jelinger               2000        $  44,793       $   --         500,000          $     --
CEO, President, Chairman,          1999          177,428           --             --                 --
interim CFO                        1998          157,860           --             --                 --
</TABLE>


Item 11. Security Ownership of Certain Beneficial Owners and Management

Item 12. Certain Relationships and Related Transactions

Item 13. Exhibits and Reports on Form 8-K

(a)      Exhibits

<TABLE>
<CAPTION>
Exhibit
Number                                                                  Document
------------- -------------------------------------------------------------------------------------------------------------------
<S>           <C>
2.1           Articles of Merger for the Merger of Unitrend, Inc., and Server Systems Technologies, Inc.  (incorporated by
              reference from the Company's Form 10-12B filed March 30, 2000)
2.2           Articles of Merger for the Merger of Unitrend, Inc., an Ohio corporation, and Unitrend, Inc., a Nevada corporation
              .  (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
3.1           Articles of Incorporation of Unitrend, Inc. and Amendments  .  (incorporated by reference from the Company's Form
              10-12B filed March 30, 2000)
3.2           By-Laws of Unitrend, Inc.  .  (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
4.1           Lock-up Agreement between Unitrend, Inc. and Eric Jelinger  .  (incorporated by reference from the Company's Form
              10-12B filed March 30, 2000)
10.1          1999 Equity Incentive Plan  .  (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
10.2          Form Stock Option Agreement (Employee)  .  (incorporated by reference from the Company's Form 10-12B filed March 30,
              2000)
10.3          Form Stock Option Agreement (Non-Employee/Non-Qualified)  .  (incorporated by reference from the Company's
</TABLE>


<PAGE>


<TABLE>
<S>           <C>
              Form 10-12B filed March 30, 2000)
10.4          Cash Incentive Plan  .  (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
10.5          Employment Agreement, Non-compete Agreement and Trade Secret Agreement between the Company and Conrad A.H. Jelinger
              (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
10.6          Employment Agreement, Non-compete Agreement and Trade Secret Agreement  between the Company and Kathleen M. Novak
              (incorporated by reference from the Company's Form 10-12B filed March 30, 2000)
10.8          Option Agreements between the Company and Kathleen M. Novak  (incorporated by reference from the Company's Form
              10-12B filed March 30, 2000)
10.10         Option Agreements between the Company and Martha Moloney  (incorporated by reference from the Company's Form 10-12B
              filed March 30, 2000)
10.11         Promissory Note for the purchase of the property located at 4665 W. Bancroft, Toledo, Ohio  (incorporated by
              reference from the Company's Form 10-12B filed March 30, 2000)
10.12         Mortgage for the property located at 4665 W. Bancroft, Toledo, Ohio  (incorporated by reference from the Company's
              Form 10-12B filed March 30, 2000)
10.13         Promissory Note from the Company given to Conrad Jelinger for the year ending 1998  (incorporated by reference from
              the Company's Form 10-12B filed March 30, 2000)
10.14         Promissory Note from the Company given to Conrad Jelinger for the year ending 1999  (incorporated by reference from
              the Company's Form 10-12B filed March 30, 2000)
10.15         Joint Venture Agreement between Unitrend, Inc., and Jon Osborne(incorporated by reference from the Company's Form
              10-12B filed March 30, 2000)
10.16         Promissory Note given to the Company from Osborne Manufacturing, for the year ending 1998 (incorporated by reference
              from the Company's Form 10-12B filed March 30, 2000)
10.17         Promissory Note given to the Company from Osborne Manufacturing, for the year ending 1999 (incorporated by reference
              from the Company's Form 10-12B filed March 30, 2000)
</TABLE>



<PAGE>



                                   SIGNATURES

Pursuant to the requirements of Section 15(d) of the Securities Exchanges Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.

                                 UNITREND, INC.

Date: December 20, 2001    By: /s/  Conrad A.H. Jelinger
      -----------------        -------------------------
                               Conrad A.H. Jelinger, President, Chief Executive
                               Officer, Chairman, interim CFO and Director
                               (Duly Authorized Representative)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons in the capacities and on the
dates indicated.

/s/  Conrad A.H. Jelinger
--------------------------------------
Conrad A.H. Jelinger, President, Chief
Executive Officer, Chairman, interim
CFO and Director (Principal Executive
and Financial Officer)

Date:  December 20, 2001


/s/  Eric V. Jelinger                       /s/  K. Dale Boley
--------------------------------------      ------------------------------------
Eric V. Jelinger, Director                  K. Dale Boley, Director

Date:  December 20, 2001                    Date:  December 20, 2001


                                            /s/  Martha A. Moloney
--------------------------------------      ------------------------------------
Robert J. Hayes, Director                   Martha A. Moloney, Director

Date:                                       Date:  December 20, 2001



--------------------------------------
Darryl Stolper, Director

Date: