SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                     _______

                                   FORM 10-KSB

[X]         ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            EXCHANGE ACT OF 1934

[ ]         TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
            AND EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2004       Commission File Number 0-22597

                                 CIMNET(R), INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                    Delaware                              52-2075851
         ---------------------------------            -------------------
         (State or other jurisdiction                  (I.R.S. employer
         of incorporation or organization)            identification no.)

    946 West Penn Avenue, Robesonia, PA                      19551
  ----------------------------------------                ----------
  (Address of principal executive offices)                (Zip Code)

Registrant's telephone number, including area code:  (610) 693-3114
Securities registered pursuant to Section 12(b) of the Act:
                                            None

Securities registered pursuant to Section 12(g) of the Act:
                           Common Stock, par value $.0001 per share

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

            Check if there is no disclosure of delinquent filers pursuant to
Item 405 of Regulation S-B is not contained herein, and will not 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. [ ]

            Revenues for the Issuer's most recent fiscal year are $2,390,957.

            The aggregate market value of the voting stock held by
non-affiliates of the Issuer as of March 22, 2005 was approximately $2,667,638
(based upon a closing price of $.80 per share).

            The number of outstanding shares of the Issuer's common stock as of
March 22, 2005 was 7,293,859 shares.

                      DOCUMENTS INCORPORATED BY REFERENCE:

            Part III incorporates certain information by reference from the
Registrant's Definitive Proxy Statement for the Registrant's Annual Meeting of
Stockholders to be held during the second quarter of 2005.

<PAGE>

                                 CIMNET(R), INC.

                                Table of Contents

                                                                            Page
                                                                            ----

PART I........................................................................3

         Item  1. BUSINESS....................................................3
         Item  2. PROPERTIES.................................................22
         Item  3. LEGAL PROCEEDINGS..........................................23
         Item  4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.........23

PART II......................................................................23

         Item  5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
                    STOCKHOLDER MATTERS......................................23
         Item  6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN
                    OF OPERATIONS............................................26
         Item  7.   FINANCIAL STATEMENTS.....................................33
         Item  8.   CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
                    ACCOUNTING AND FINANCIAL DISCLOSURE......................33
         Item  8.A. CONTROLS AND PROCEDURES..................................31
         Item  8.B. OTHER INFORMATION........................................31

PART III.....................................................................33

         Item  9.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS
                    AND CONTROL PERSONS; COMPLIANCE WITH SECTION
                    16(a) OF THE EXCHANGE ACT OF THE REGISTRANT..............33
         Item  10.  EXECUTIVE COMPENSATION...................................34
         Item  11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
                    AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS...........34
         Item  12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS...........34
         Item  13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K..................34
         Item  14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES...................34

PART IV......................................................................35

         Item  15.  EXHIBITS AND FINANCIAL STATEMENTS........................35
         Item  16.  SIGNATURES...............................................36

<PAGE>

                SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Annual Report on Form 10-KSB
constitute "forward-looking statements" within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.
All statements included in this Annual Report, other than statements of
historical facts, regarding our strategy, future operations, financial position,
estimated revenues, projected costs, prospects, plans and objectives are
forward-looking statements. When used in this Annual Report, the words
"believe," "anticipate," "intend," "estimate," "expect," "project" and similar
expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words. We cannot
guarantee future results, levels of activity, performance or achievements, and
you should not place undue reliance on our forward-looking statements. Our
actual results could differ materially from those anticipated in these
forward-looking statements as a result of various factors, including the risks
described in Part I - Risk Factors, and elsewhere in this Annual Report. Our
forward-looking statements do not reflect the potential impact of any future
acquisitions, mergers, dispositions, joint ventures or strategic investments. In
addition, any forward-looking statements represent our expectation only as of
the day this Annual Report was first filed with the SEC and should not be relied
on as representing our expectations as of any subsequent date. While we may
elect to update forward-looking statements at some point in the future, we
specifically disclaim any obligation to do so, even if our expectations change.

                                       2
<PAGE>

                                     PART I
                                     ------

Item     1.   BUSINESS
              --------

         CIMNET(R) is a leading developer and marketer of process improvement
software solutions for the global manufacturing industry. Since the Company's
founding in 1984, CIMNET(R) has provided manufacturers with information and
communication software solutions for their production environment. The Company's
software solutions manage the collaboration between process information on the
shop floor and financial/logistical information in the office and supply chain.
In addition, CIMNET's(R) software solutions control and enhance a company's
production process inputs, improving manufacturing flexibility and lowering
production costs.

         Factelligence(R) is the Company's lead software solution and is used
for both discrete and process manufacturing. Factelligence(R) has been designed
for the aerospace, automotive, assembly, metals manufacturing, pharmaceutical,
medical devices, biotech, food and beverage and consumer packaged goods
industries.

         Our products utilize Microsoft and Oracle database technology to
electronically manage production schedules, documents, product quality, machine
efficiency, material yields and labor time and attendance. They help drive
manufacturing standards and enable production to eliminate variability in
complex manufacturing operations. CIMNET's(R) products operate on Windows(R) 95,
98, 2000, XP and NT.

         CIMNET(R) is proud to report that many of its clients are leading
manufacturers, including GE Power Systems, Alcoa, Johnson & Johnson, Raytheon,
Timken, Nestle Foods, Barber Foods, Caterpillar, Coca Cola and Andersen Windows.
During the year ended December 31, 2004, one of our customers accounted for
approximately 14% of our total revenues.

     Recent Developments

         In March 2005, our Factelligence(R) Industrial Portal(TM) (
Factelligence IP) software was selected by a Fortune 100 Metals Company, for use
in their manufacturing facilities. As part of the selection, the Company and the
Fortune 100 Metals Company executed license and service agreements for the
purchase of Factelligence(R) software and services to be rendered in various of
the Fortune 100 Metals Company's facilities, globally. As of March 23, 2005, the
Company has received the first two purchase orders against the global
agreements.

         As of December 2004, the Company borrowed $130,000 from John
Richardson, the Company's Chief Executive Officer and founder. In exchange for
the loan, Mr. Richardson received a secured demand note from the Company in the
aggregate principal amount of $130,000 and a security interest in the assets of
the Company. In addition, the Company granted Mr. Richardson a first priority
preferred security interest in the Company's software programs. The secured
demand note is payable upon demand from Mr. Richardson and bears interest at the
prime rate plus 1%. This note is subordinated to the Company's line of credit
with its bank lender.

                                       3
<PAGE>

         In July 2004, the Company sold units ("Units") in a private placement
transaction to a limited number of investors. Each Unit consisted of 100,000
shares of Common Stock and 100,000 Class A Common Stock Purchase Warrants (the
"Class A Warrants"), and sold for a purchase price of $50,000 per unit. The
Company paid no commissions or other fees and received proceeds of $360,000 from
the offering. The Class A Warrants are exercisable for a period of five (5)
years at an exercise price of $1.00 per share. The investors in the Units have
piggyback registration rights which included certain officers and directors:
Lynn Richardson, the wife of John Richardson, the Chief Executive Officer of the
Company (2 Units); Karl Gerhart, a director of the Company (1 Unit); and J.
Jeffrey Fox, a director of the Company (1/5 Unit).

         In July 2004, the Company entered into a Revolving Credit Agreement
with Sundaresh Ramayya, a director of the Company, pursuant to which Mr. Ramayya
has agreed to lend to the Company up to $2 million, but not more than $150,000
under any borrowing request submitted by the Company. The Company has agreed to
pay interest on any outstanding amount at a rate of 4% per annum, payable
quarterly, and the outstanding principal amount shall be due and payable on the
maturity date which is on the second anniversary of the Agreement (unless
accelerated upon an event of default). However, Mr. Ramayya has the right to
terminate the Revolving Credit Agreement upon 15 days prior written notice to
the Company at which time the obligation of Mr. Ramayya to lend to the Company
terminates. There were no fees or expenses paid by the Company in connection
with the execution of the Revolving Credit Agreement. Currently, the Company has
not yet borrowed any funds under this facility. The line of credit expires July
2006. The Chief Executive Officer of the Company has agreed to pledge his shares
in the Company as collateral for any sums borrowed under this facility

         In March 2004, we entered into an Amended and Restated Technology
License Agreement with Advanced Worx 112 (Proprietary) Ltd., a South African
corporation doing business as Adroit Technologies, pursuant to which the Company
received a license to exploit Adroit's viznet technology.

Launch of Factelligence Industrial Portal

         After three years in development the Company has launched a
revolutionary new product. Factelligence IP is the industry's first
comprehensive "Suite" of completely integrated Manufacturing Execution, Business
Intelligence and HMI/SCADA software built on Microsoft's .NET technology. We
believe Factelligence IP fills an unmet market need by bringing together, under
a single brand, an interoperable, feature-rich set of tools capable of
revolutionizing factory floor management, using the evolving industry-standard
Microsoft technology. Factelligence IP uses a modular approach to package
CIMNET's applications; Manufacturing Execution Systems (MES), Human Machine
Interface, Supervisory Control and Data Acquisition (HMI/SCADA), and Business
Intelligence (BI).

         Factelligence(R) is a configurable MES for companies looking to prepare
or enhance their factories for growth into make-to-order, lean, outsourced or
collaborative manufacturing strategies. It enables customers to build a
real-time, web centric information system that enhances supply chain visibility.
Using direct links into manufacturing equipment, it provides current information
on each step of the manufacturing process. This information allows customers to
make decisions that help develop a more efficient factory and to meet aggressive
deadlines.

                                       4
<PAGE>

         Factelligence(R) comprises the following modules or "managers".

         (a)  Production Manager. The Production Manager is used to record
production of goods. This includes scrapping of products and recording of serial
numbers. System security also forms part of this core module. Using Production
Manager, supervisors can adjust their production plans to meet changing
requirements and immediately broadcast the new schedule to shop floor operators.
Managers can access the production status real time through their web browsers.

         (b)  Product Definition Manager. The Product Definition Manager defines
the detailed BOM, recipes, product specifications and documentation with
revision control and security. The complete product definition is then available
to the shop floor in an easy-to-view format.

         (c)  Tracking Manager. The Tracking Manager records material
consumption, lot genealogy, shop floor inventory and Work In Progress (WIP).
Detailed status screens and reports enable instant visibility to track virtually
all aspects of shop floor operations.

         (d)  Labor and Shift Manager. The Labor and Shift Manager records labor
times and location of operators for each job and shift. Further, it assists
managers in planning complex shift schedules including planned downtime for each
machine.

         (e)  DNC Manager. The management of valuable machine tools by the DNC
Manager provides a reliable method to upload and download programs to customers'
machines. DNC Manager includes a powerful g-code editor to centrally create and
edit machining designs.

         (f)  Folders Manager. "Paperless" manufacturing is well within a
customer's reach with the Folders Manager. This module provides for the
definition of electronic folders for presentation of important computer assisted
design drawings, tooling instructions and multimedia to manufacturing operators.

         (g)  Procedure Step Manager. Procedure Step Manager assists customers
in designing complex standard operating procedures to guide operators through
their assembly or validated process. It includes instruction, data entry,
electronic signature and process control steps. This manager integrates with
other document management and plant control systems.

         (h)  Certification Manager. The Certification Manager defines which
people have the authority to make important product decisions, operate complex
processes or approve quality results.

         (i)  Datalog Manager. The Datalog Manager defines data archiving
schemes to record key process and quality data. Information is archived against
the specific job, line and other production domains.

                                       5
<PAGE>

         (j)  Machine Utilization Manager. By using the Machine Utilization
Manager operators can capture full equipment history and see machine status to
improve utilization performance.

         (k)  Supply Chain Connector. The Supply Chain Connector integrates all
Factelligence(R) configuration and historical data with common ERP, document
management, maintenance and supply chain management systems.

         (l)  Factory Connector. The Factory Connector integrates
Factelligence(R) into the plant control system. Interfaces to popular HMI (Human
Machine Interface) systems and OPC (OLE (Object Linking and Embedding) for
Process Control) servers provide full read-write capabilities to download set
points and acquire live process and quality data.

         DNC Professional(TM): DNC refers to the technology used to connect
groups of NC (Numerically-Controlled) or CNC (Computer-Numerically Controlled)
machine tools to computer systems. Using digital instructions, these machines
produce a wide variety of precision parts, such as engine components, aircraft
parts, joint prostheses, and molds for other parts. DNC allows the transmission
of part programs to and from computers and machine tools.

         DNC Professional(TM), is the company's DNC system that provides a wide
variety of features and benefits to its users, including the ability to view and
edit electronically all of the documents and data that are required to perform
certain manufacturing functions. It also organizes these documents and data
utilizing a database (Oracle, Microsoft SQL Server, or dBase) that allows shop
floor personnel the ability to easily locate pertinent information easily and
quickly.

         DNC Professional(TM) is an ideal DNC solution for manufacturers to
enhance their CNC operations. It installs easily onto existing networks and
industry standard hardware, making it almost immediately productive.
Easy-to-use, and operating under Windows(R) 95, 98, 2000 and NT, the software
prompts the operators with the appropriate job queue and documents to assure
that components are manufactured within the proper sequence and with the correct
information. The information that the operators can view includes machine code,
textual instructions, and graphical instructions with full multi-media
capabilities.

         We believe that DNC Professional(TM) was the first networked DNC system
that functioned in a mixed database/operating system environment. This open
system approach provides companies with existing hardware and networks to
upgrade to our fully functional MES solutions.

Industry Analysis

         We believe the factory floor is one of the few remaining domains within
Corporate America that has not effectively been integrated with the rest of the
organization. Increasing pressure on manufacturers for mass customization, lean
production techniques and reduced product deliveries times can only be
accomplished by better integrating the factory floor with the rest of the
company's "front-office" systems.

                                       6
<PAGE>

         CIMNET(R)'s Manufacturing Execution Systems and other software
solutions that address these challenges are more broadly known throughout the
industry as Collaborative Production Management (CPM) solutions. While the
Company refers to its' solutions using more traditional nomenclature,
Manufacturing Execution System (MES) and Collaborative Production Management
(CPM) are used interchangeably. The CPM concept encompasses a suite of
applications that includes visibility of real-time production status,
traceability and genealogy of manufactured product, performance analysis of
production operations, paperless management of the production process, and
operator instructions in the form of routings, ECNs (Engineering Change
Notices), BOMs (Bill of Materials), engineering documentation, and assembly
drawings. Increasingly, CPM also plays a platform or infrastructure role,
pulling together all plant operations systems and synchronizing them with
business systems.

         CPM is the application of collaborative manufacturing principles to the
management of manufacturing processes. Collaborative Production Management
normally refers to the synchronizing, executing, tracking, reporting and
optimizing of manufacturing processes. Production management systems are not
standalone. While performing the production-centric functions of planning,
controlling, optimizing, and informing, they must integrate with plant floor
control systems and business systems.

         The transition in the nature of manufactured goods from one of long,
homogeneous production runs to shorter, more customized products has created the
need for new and improved manufacturing processes. The challenge is best
exemplified by Ford Motor Company's goal to sell automobiles over the Internet.
Ford plans to be able to build and deliver a new automobile to a customer's
Internet-communicated specifications in a matter of weeks, if not days. To
achieve this objective, manufacturers must develop better links between the
demand for its products on the front end (website, e-mail, etc.) and the factory
floor resources used to produce those products (manufacturing plants, supply
chain) on the other end. CPM products, and specifically the Company's Suite of
software solutions, are specifically designed for this purpose. The complex CPM
software is programmed to optimize coordination between functions throughout the
organization, and functions on the factory floor. The coordination provided by
CPM software is instrumental if companies want to achieve their objective of
mass customization of manufactured products.

         The Company's software solution and implementation experience encompass
a wide variety of healthy manufacturing industries including food & beverage,
pharmaceutical, bio-tech, medical devices, automotive, aerospace and consumer
packaged goods. These industries are all under competitive pressures to reduce
manufacturing costs through better utilization of resources, reduction in
inventories, elimination of scrap/waste, and improvements in labor productivity
and the entire supply chain. In addition, certain industries, such as
pharmaceutical and food and beverage, are facing heightened regulation,
especially the FDA's 21 CFR Part 11 concerning Electronic Recordkeeping and
Electronic Signatures.

                                       7
<PAGE>

                             [GRAPHIC CHART OMITTED]
                            Total Addressable Market
(millions)

    2001**        2002**        2003         2004*         2005*         2006*
----------    ----------    ----------    ----------    ----------    ----------
$ 3,162.26    $ 3,351.00    $ 3,749.20    $ 4,180.51    $ 4,654.17    $ 5,185.99

**estimated
*forecast
Figure 1 Source: ARC Advisory Group

         According to the latest ARC Advisory Group statistics, the Company's
total addressable market is expected to increase to approximately $5.2 billion
in 2006, a compound annual growth rate of 11% over the next several years (See
Figure 1). CIMNET(R)'s competitors include other independent software solutions
providers like the Company, as well as divisions of large organizations.

                                       8
<PAGE>

                             [GRAPHIC CHART OMITTED]
                                 CPM - Discrete
(millions)

  2001**       2002**        2003          2004*          2005*         2006*
--------     --------      --------      --------       --------      --------
$ 449.60     $ 485.00      $ 519.50      $ 597.43      $ 687.04       $ 790.09

**estimated
*forecast
Figure 2 Source:  ARC Advisory Group

         The United States has an extremely large manufacturing sector and, due
to constraints such as product shelf-life and transportation costs, certain
industries will always need to locate their factories close to their products'
end markets. While these factors ensure the continued existence of many
manufacturing industries, the survival of individual plants, and individual
companies for that matter, still depends on their ability to improve
productivity and efficiency. Companies are now realizing that a more competitive
plant is not simply a function of the latest equipment or the largest facility.
An efficient, effective plant is more likely the result of better coordination
with the supply chain, reduced waste and increased speed, among other reasons.

         Therefore, despite concerns about the demise of the United States
manufacturing sector, there is an abundant, growing and accessible market for
the Company's factory floor automation software solutions both domestically and,
as the Company's business grows, internationally.

                                       9
<PAGE>

                             [GRAPHIC CHART OMITTED]
                                 CPM - Process
(millions)

  2001          2002           2003         2004*         2005*         2006*
--------      --------     ----------    ----------    ----------    ----------
$ 963.00      $ 969.00     $ 1,100.00    $ 1,221.00    $ 1,355.31    $ 1,504.39

*forecast
Figure 3 Source: ARC Advisory Group

         The fragmented nature of the market arose as result of the diverse
information technology needs of various manufacturing industries, and there
remains less standardization across products than what is typically found in
many other applications. Historically, many solutions were originally developed
by industry generalists, such as food and beverage, or pharmaceuticals software
programmers that developed various customized products for their clients in
response to specific requests. They then packaged their factory automation
product and sold it to other companies in the same industry. Solutions providers
also tended to develop products for specific applications, such as HMI/SCADA or
CPM. Therefore, having come at the market from a variety of different
directions, no one company, or group of companies, has been able to dominate the
market.

                                       10
<PAGE>

                             [GRAPHIC CHART OMITTED]
                       Enterprise Performance Management
(millions)

      2002            2003             2004*          2005*           2006*
   ----------      ----------       ----------     ----------      ----------
   $ 1,442.30      $ 1,642.70       $ 1,838.18     $ 2,056.92      $ 2,301.70

*forecast
Figure 4 Source: ARC Advisory Group

         Figures 2 and 3 illustrate how the Company's core Manufacturing
Execution System (or Collaborative Production Management) solutions address an
existing $1.8 billion market that is expected to grow to $2.3 billion by 2006.
The Company's innovative new HMI/SCADA solution addresses a separate $500
million Human Machine INTERFACE MARKET (Figure 5) that is expected to grow
better than 7% per year. In Q1 2005, the Company released its Business
Intelligence module, a new solution targeted at the $1.8 billion Enterprise
Performance Management market. While these markets have traditionally been
served by their own set of focused solutions providers, the Company's
Factelligence IP Suite intends to unify them. As the manufacturing sector
recovers and competitive pressures mount, overall spending on total factory
floor automation software spending is expected to increase at an 11% rate.

                                       11
<PAGE>

                             [GRAPHIC CHART OMITTED]
                             HUMAN MACHINE INTERFACE
(millions)

  2001           2002          2003          2004*         2005*         2006*
--------       --------      --------      --------      --------      --------
$ 414.20       $ 454.70      $ 487.00      $ 523.90      $ 554.90      $ 589.80

*forecast
Figure 5 Source: ARC Advisory Group

         The factory floor automation software solution market is essentially in
its infancy. However, there are signs that growth may be on the verge of
accelerating. The recent manufacturing slump of 2001 - 2003 appears to have
stabilized. In addition, it appears companies are lifting the IT spending
moratorium that severely constrained technology spending the last few years.

         Technology infrastructure that can reduce costs and improve
competitiveness is experiencing renewed demand.

         This confluence of events is creating opportunity for factory
automation software solutions providers with leading edge products that are easy
to implement, simple to operate and that provide better control of the factory
floor.

         The competitive pressures on manufacturers has intensified and is on
the precipice of creating a demand for software solutions that can improve a
manufacturers' ability to efficiently coordinate customer orders into the
manufacturing supply chain. The Company's Factelligence(R) software solution
provides manufacturers in a variety of industries with a configurable,
out-of-the-box answer to their need to improve their competitiveness.

Sales and Marketing

     In 2005, the Company plans to substantially change its sales and marketing
approach. The Company's new marketing strategy will capitalize on:

1)   The strength of its new Factelligence IP Suite ,

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<PAGE>

2)   An increased number of stand-alone software solutions, such as HMI/SCADA,
MES and Business Intelligence facilitated by the Company's modular
Factelligence,

3)   Products targeted to a broader range of customer budgets, primarily
oriented towards introductory products selling for considerably less than the
cost of a historical Company implementation, and,

4)   Market disruptions in the software solution distribution network being
created by the vertical integration plans of some of the industry's most
prominent competitors.

         Historically, the Company has marketed its software solutions primarily
through its own direct sales force. The Company also markets through a limited
number of licensed reseller agreements with CPM distributors and systems
integrators. Recently, market coverage has been provided by the Company's 5
direct sales employees and approximately 6 integration partners worldwide. The
Company also has an employee dedicated to developing corporate partnerships and
strategic alliances.

         A representative CIMNET(R) software sale may typically cost between
$100,000 and $500,000, or more, per site. However, the customer may ultimately
spend five times that amount in new hardware, integration services and other
ancillary and complementary technology expenses required to effect an
implementation. Because the purchase of an MES system frequently entails a
significant customer investment, the Company's sales cycle can range from six to
eighteen months. CIMNET(R) has seen the average sales cycle increase to an
average of 12 months over the last year, due in part to the recent economic
conditions affecting the manufacturing sector.

         The Company's marketing strategy is to introduce its Factelligence IP
and its constituent software solution modules quickly and broadly to the market.
The marketing plan will significantly expand the distribution network and market
the Factelligence Suite in both packaged form (where a customer would buy all of
the constituent component MES, HMI/SCADA and BI modules) as well as in limited
form, such as individual modules, or limited number of seat licenses. The
availability of the set of modules available in modular form will provide the
Company with software solutions at price points that appeal to manufacturers
with a limited factory floor automation budget, but which generally make a much
quicker purchase decision.

         The Company will expand its marketing reach utilizing a unique
multi-channel distribution strategy consisting of: (1) an expanded and
strengthened direct sales force; (2) a number of new strategic
alliances/partnership agreements with factory automation software providers and;
(3) a completely new distribution channel created through agreements with
established factory floor automation software distributors and integrators. The
Company believes that a multi-channel distribution strategy will provide far
greater marketing reach and deeper penetration of a broader range of industry
vertical market segments.

                                       13
<PAGE>

Maintenance and Support

         We believe that high quality customer service and support are integral
components of the application solutions we offer. Therefore, we offer a range of
fee-based training, installation, consulting, and maintenance services to
facilitate the installation and use of our software.

         We offer annual maintenance contracts for all of our hardware and
software products to our customers. The hardware maintenance contract provides
our customers with next-day replacement of the hardware product that has failed
regardless of the reason. Purchasers of our software maintenance contracts are
provided with free software updates, new releases on physical media on an
average of two times per year, and internet access to our web site to obtain
information on latest software releases and new features from us.

         Hardware and software maintenance contracts include unlimited telephone
support. For customers not covered by a maintenance contract, we offer telephone
technical support, which can be purchased per incident or for a flat annual fee.

Research and Development

         We devote a substantial portion of our resources to developing new
products and product features, extending and improving our products and
technology, and researching new technological initiatives in the market for
manufacturing automation software. This market is characterized by rapid
technological change, new product introductions and enhancements, evolving
industry standards and rapidly changing customer requirements. The introduction
of products incorporating new technologies and the emergence of new industry
standards could render existing products obsolete and unmarketable. Our future
success will depend in part on our ability to anticipate changes, enhance our
current products, develop and introduce new products that keep pace with
technological advancements and address the increasingly sophisticated needs of
our customers.

         As of March 30, 2005, we had 13 employees and 1 consultant engaged in
research and development activities. During the years ended December 31, 2004,
2003, and 2002, we spent $1,083,849, $1,621,835, and $2,004,906, respectively,
on research and development. We expect to continue to commit significant
resources to research and development in the future. To date, no research and
development costs have been capitalized. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

Competition

         The market for our products is rapidly evolving, and is expected to
become increasingly competitive as current competitors expand their product
offerings and new companies enter the market. The principal competitive factors
in the PC based manufacturing automation software market include:

         o        Adherence to emerging operating system standards;

                                       14
<PAGE>

         o        Comprehensive applications;
         o        Adaptability, flexibility and scalability;
         o        Real-time, interactive capability internally and with vendors
                  and suppliers
         o        Integration with a variety of communications media;
         o        Ease of use;
         o        Ease of implementation; and
         o        Customer service, support and price.

         Although we believe that we currently compete favorably with respect to
these factors, there can be no assurance that we can maintain our competitive
position against current and potential competitors, especially those with longer
operating histories, greater name recognition and substantially greater
financial, technical, marketing, management, service, support and other
resources.

         CIMNET's(R) current competitors include a number of companies offering
one or more solutions for the manufacturing software automation market, some of
which are directly competitive with CIMNET's(R) products. For example
CIMNET's(R) competitors at the DNC market include InterCim, Greco Systems and
Predator. In the MES market space, CIMNET's(R) key competitors include Camstar,
Datasweep, Wonderware, Siemens and GE Fanuc. We also may face competition from
systems integrators and consulting firms which design and develop custom
software and systems. Some of these firms may possess industry-specific
expertise or reputations among potential customers for offering solutions to a
manufacturing need.

Intellectual Property and Proprietary Rights

         Our success and competitiveness are dependent to a significant degree
on the protection of our proprietary technology. We rely primarily on a
combination of copyrights, trademarks, licenses, trade secret laws and
restrictions on disclosure to protect our intellectual property and proprietary
rights. We generally control access to and distribution of our documentation and
other proprietary information. Despite these precautions, others may be able to
copy or reverse engineer aspects of our products, to obtain and use information
that we regard as proprietary or to independently develop similar technology.
Any such actions by competitors could have a material adverse effect on our
business, operating results and financial condition.

         In addition, the laws of some foreign countries do not protect our
proprietary rights to the same extent as do the laws of the United States, and
effective patent, copyright, trademark and trade secret protection may not be
available in these jurisdictions.

         Litigation may be necessary in the future to enforce or defend our
intellectual property and proprietary rights, to protect our trade secrets or to
determine the validity and scope of the intellectual property and proprietary
rights of others. This litigation, whether successful or unsuccessful, could
result in substantial costs and diversion of management and technical resources,
either of which could have a material adverse effect on our business, operating
results and financial condition.

                                       15
<PAGE>

         We attempt to avoid infringing known intellectual property and
proprietary rights of third parties in our product development efforts. However,
we have not conducted and do not conduct comprehensive patent searches to
determine whether the technology used in products infringes patents held by
third parties. In addition, product development is inherently uncertain in a
rapidly evolving technological environment in which there may be numerous patent
applications pending, many of them which are confidential when filed, with
regard to similar technologies.

         In June 1992, our predecessor company, J.N.L. Industries, Inc.
registered the CIMNET(R) trademark with the U.S. Patent and Trademark Office for
International Class 9. In order to maintain the effectiveness of a trademark
registration, the Patent and Trademark Office requires that an affidavit be
filed with the Patent and Trademark Office within the fifth year following
registration confirming continued use of the trademark. We failed to file an
affidavit in 1997, and therefore, our registration of the "CIMNET(R)" trademark
lapsed. However, in August 1999, we filed another application with the Patent
and Trademark Office for the "CIMNET(R)" trademark, and reinstatement of our
ownership of the trademark was obtained.

         In January of 2002, CIMNET(R) filed an application to register the
Factelligence(R) trademark with the U.S. Patent and Trademark Office for
International Class 9. Registration of the Factelligence(R) trademark was
granted to CIMNET(R) in December of 2003.

         There can be no assurance that infringement or invalidity claims
arising from the incorporation of third party technology, and claims for
indemnification from CIMNET's(R) customers resulting from these claims, will not
be asserted or prosecuted against CIMNET(R). These claims, even if not
meritorious, could result in the expenditure of significant financial and
managerial resources in addition to potential product redevelopment costs and
delays, all of which could materially adversely affect our business, operating
results and financial condition.

Employees

         As of March 30, 2005, we had 23 employees, including 13 in research and
development of new software, and implementation; 6 in sales and marketing; 1 in
developing corporate partnerships and strategic alliances, and 3 in operations
and order processing. In addition we have 1 consultant working on research and
development of new software.

Risk Factors

         In addition to other information in this Annual Report on Form 10-KSB,
the following important factors should be carefully considered in evaluating the
Company and its business because such factors currently have a significant
impact on the Company's business, prospects, financial condition and results of
operations.

Risks Related To Our Business
-----------------------------

         We Have Incurred Substantial Losses And We May Not Be Profitable In The
Future. During the fiscal years ended December 31, 2004 and 2003, we reported a
net loss of $1,203,578 and $2,052,396, respectively. Through December 31, 2004,
our accumulated deficit equaled $4,316,064. Although we reported a net profit
during the 2001 fiscal year, we cannot be certain that we will return to

                                       16
<PAGE>

profitability in the future. Failure to return to profitability may adversely
affect our ability to conduct business and the market price of our common stock.

         We May Need Additional Capital, and We Cannot Be Sure That Additional
Financing Will Be Available. Historically, we have funded our operating losses
and capital expenditures through proceeds from private equity and debt
financings. During 2004, we issued shares of our common stock and common stock
purchase warrants in a private placement and borrowed funds from John
Richardson, our Chief Executive Officer and founder, to fund our on going
operations. See "Recent Developments". Although we currently anticipate that our
available funds and cash flow from operations will be sufficient to meet our
cash needs for the immediate future, we may require additional financing. Our
ability to obtain financing will depend, among other things, on our development
efforts, business plans, operating performance and condition of the capital
markets at the time we seek financing. We cannot assure you that additional
financing will be available to us on favorable terms when required, or at all.
If we raise additional funds through the issuance of equity, equity-linked or
debt securities, those securities may have rights, preferences or privileges
senior to the rights of our common stock, and our stockholders may experience
dilution. If adequate funds are not available, the Company may be required to
delay, scale back or eliminate its operational plans. Our inability to obtain
additional financing could have a material adverse effect on the Company's
business, financial condition, prospects and results of operations.

         The Demand For Manufacturing Software Has Weakened Significantly And
Demand Will Likely Remain Weak For Some Time Because Of The Current Economic
Climate. The market for our manufacturing software has changed rapidly over the
last two years. The market for advanced manufacturing automation software
expanded dramatically during 2000 and part of 2001, but declined significantly
in 2002 and 2003. Since the second half of 2001, many companies have experienced
financial difficulties or uncertainty, and as a result have canceled or delayed
spending on technology initiatives. These companies typically are not
demonstrating the same urgency regarding technology initiatives that existed
during the economic expansion that stalled in 2001. This trend has worsened for
some companies following the September 11, 2001 terrorist attacks in the United
States and the accounting scandals involving Enron, Worldcom and other
companies. If companies continue to cancel or delay their business and
technology initiatives because of the current economic climate, or for other
reasons, our business, financial condition and results of operations will
continue to be materially and adversely affected.

         Our Quarterly Operating Results May Fluctuate Because We Depend On A
Small Number Of Large Orders From A Limited Number Of Customers. We derive a
significant portion of our software license revenue in each quarter from a small
number of relatively large orders. Our operating results for a particular fiscal
period could be materially adversely affected if we are unable to complete one
or more substantial license sales planned for that period. During the year ended
December 31, 2004, one customer accounted for approximately 13.57% of our total
revenue and during the year ended December 31, 2003 the same customer accounted
for approximately 24% of our total revenue. In addition, the purchase and
implementation of our products typically involve a significant cost to our
customers, including the purchase of related hardware and software, as well as
training and integration costs. These implementations also include a substantial
commitment of resources by our customers or their consultants over an extended

                                       17
<PAGE>

period of time. As a result, our sales cycle is relatively long. Our services
revenue, which is largely correlated with our license revenue, has fluctuated
and may fluctuate in the future due to significant consulting and implementation
services performed in a quarter.

         We Have Significant Fixed Operating Costs, Which May Be Difficult To
Adjust In Response To Unanticipated Fluctuations In Revenues. A high percentage
of our operating expenses, particularly personnel, rent and depreciation, are
generally fixed in advance of any particular quarter. As a result, an
unanticipated decrease in the number or average size of, or an unanticipated
delay in the scheduling for, our software sales may cause significant variations
in operating results in any particular quarter and could have a material adverse
effect on operations for that quarter.

         An unanticipated termination or decrease in size or scope of product
sales, a client's decision not to proceed with a purchase we anticipated or the
completion during a quarter of several major sales could require us to maintain
underutilized employees and could have a material adverse effect on our
business, financial condition and results of operations. Our revenues and
earnings may also fluctuate from quarter to quarter because of such factors as:

         o    the contractual terms and timing of completion of software product
              sales;
         o    any delays incurred during software test periods;
         o    loss of key highly skilled personnel necessary to complete
              software sales and implementations; and
         o    general economic conditions.

         Intense Competition From Other Software Companies May Adversely Affect
Our Financial Condition And Operating Results. The market for personal computer
based manufacturing automation software applications is intensely competitive.
If we are unable to compete effectively, our business, financial condition and
operating results would be materially adversely affected. Many of our current
and potential competitors have longer operating histories, greater name
recognition and substantially greater financial, technical, marketing,
management, service, support and other resources than we do. Therefore, they may
be able to respond more quickly than we can to new or changing opportunities,
technologies, standards or customer requirements. In addition, we expect that
new competitors will enter the market with competing products as the size and
visibility of the market opportunity increases. We also expect that competition
will increase as a result of software industry consolidations and formations of
alliances among industry participants. Increased competition could result in
pricing pressures, reduced margins or the failure of our products to achieve or
maintain market acceptance.

         Manufacturers May Decrease Or Delay Their Use Of Automation Software As
A Means For Improving Productivity. Our future success depends heavily on the
acceptance and use of manufacturing automation software as a means for
manufacturers to enhance productivity and to otherwise streamline operations. We
develop and implement manufacturing automation software. If use of this software
does not grow, or grows more slowly than expected, our revenues could be less
than we anticipate and our business, financial condition and results of
operations could be materially adversely affected. Manufacturers may delay
adoption of manufacturing automation software for a number of reasons,
including:

                                       18
<PAGE>

         o    inability to implement and sustain profitable business models
              using our software;
         o    inadequate network infrastructure or other hardware necessary to
              run our software;
         o    delays in the development or adoption of new technical standards
              and protocols required to handle increased levels of usage;
         o    adoption of new laws and regulations applicable to new
              technologies and electronic commerce by federal, state or
              international governments that hinder the growth of new
              technologies; or
         o    failure of manufacturers to record sufficient sales to warrant
              improving their manufacturing facilities.

         Loss Of Key Personnel Could Adversely Affect Our Business. Our future
success depends to a significant degree on the skills, experience and efforts of
John D. Richardson, III, our founder, Chairman of the Board and Chief Executive
Officer, Anthony Crouch our Chief Technology Officer, and Jason Dietrich our
Vice President of Sales. The loss of the services of Mr. Richardson, Mr. Crouch
or Mr. Dietrich could have a material adverse effect on our business, operating
results and financial condition. We also depend on the ability of our executive
officers and other members of senior management to work effectively as a team.
The loss of one or more of our executive officers and other members of senior
management could have a material adverse effect on our business, operating
results and financial condition.

         We May Be Unable To Hire And Retain The Skilled Personnel We Need To
Succeed. Qualified personnel are in great demand throughout the software
industry. The demand for qualified personnel is particularly acute in our area
because of a limited supply of skilled workers within commuting distance of our
headquarters in Robesonia, Pennsylvania. Our success depends in large part upon
our ability to attract, train, motivate and retain highly skilled employees,
particularly marketing personnel, software engineers and other senior personnel.
Our failure to attract and retain the highly- trained technical personnel that
are integral to our product development, sales and marketing and support teams
may limit the rate at which we can develop new products or product enhancements.
This could have a material adverse effect on our business, operating results and
financial condition.

         We May Be Unable To Protect Our Proprietary Technology Rights. Our
success depends to a significant degree upon the protection of our software and
other proprietary technology rights. We rely on trade secret, copyright and
trademark laws and confidentiality agreements with employees and third-parties,
all of which offer only limited protection. Moreover, the laws of other
countries in which we market our products may afford little or no effective
protection of our proprietary technology. The reverse engineering, unauthorized
copying or other misappropriation of our proprietary technology could enable
third parties to benefit from our technology without paying us for it. This
could have a material adverse effect on our business, operating results and
financial condition. If we resort to legal proceedings to enforce our
intellectual property rights, the proceedings could be burdensome and expensive
and could involve a high degree of risk.

         Claims By Other Companies That Our Products Infringe Their Copyrights
Or Patents Could Adversely Affect Our Financial Condition. If any of our
products violate third party proprietary rights, we may be required to engineer
our products or seek to obtain licenses from third parties to continue offering

                                       19
<PAGE>

our products without substantial reengineering. Any efforts to reengineer our
products or obtain licenses from third parties may not be successful and, in any
case, would substantially increase our costs and have a material adverse effect
on our business, operating results and financial condition. We do not conduct
comprehensive patent searches to determine whether the technology used in our
products infringes patents held by third parties. In addition, product
development is inherently uncertain in a rapidly evolving technological
environment in which there may be numerous patent applications pending, many of
which are confidential when filed, with regard to similar technologies. See
"Business -- Intellectual Property and Proprietary Rights."

         Our Use of the "CIMNET(R)" and "Factelligence(R)" Trademarks May
Infringe the Trademark Rights of Other Companies. Our use of "CIMNET(R)" and
"Factelligence(R)" as well as the use of other names, may result in costly
litigation, divert management's attention and resources, cause product shipment
delays or require CIMNET(R) to pay damages and/or to enter into royalty or
license agreements to continue to use a product name. CIMNET(R) may be required
to stop using the name "CIMNET(R)", "Factelligence(R)" or other names currently
used for its products. Any of these events could have a material adverse effect
on our business, operating results and financial condition.

         We May Lose Access To Third-Party Technology Used In Our Products. We
incorporate into our products technology licensed from third parties, such as
Oracle Corp. The loss of access to this technology could result in delays in the
development and introduction of new products or enhancements until equivalent or
replacement technology could be accessed, if available, or developed internally,
if feasible. These delays could have a material adverse effect on our business,
operating results and financial condition. It is possible that technology from
others will not be available to us on commercially reasonable terms, if at all.

         Our Business Could Be Adversely Affected If Our Products Fail To
Perform Properly. Software products as complex as ours may contain undetected
errors, or bugs, which result in product failures, or otherwise fail to perform
in accordance with customer expectations. Our products may be particularly
susceptible to bugs or performance degradation because of the emerging nature of
manufacturing automation software technologies. Product performance problems
could result in loss of or delay in revenue, loss of market share, failure to
achieve market acceptance, diversion of development resources or injury to our
reputation, any of which could have a material adverse effect on our business,
operating results and financial condition. We warrant some of our products for
one year, providing customers a right to refund a portion of the license fee if
we are unable to correct an error in the product. To date, no customer has
requested a refund under the warranty provisions. However, if we are required to
refund significant portions of license fees, our business, operating results and
financial condition could be materially adversely affected.

         We Could Incur Substantial Costs As A Result Of Product Liability
Claims Relating To Our Customers' Critical Business Operations. Our products are
frequently critical to the operations of our customers' businesses. Despite
employing software license agreements that significantly limit our liability, if
one of our products fails, a customer may assert a claim for substantial damages
against us, regardless of our responsibility for such failure. Product liability
claims could require us to spend significant time and money in litigation or to

                                       20
<PAGE>

pay significant damages. Although we maintain general liability insurance,
including coverage for errors and omissions, there can be no assurance that such
coverage will continue to be available on reasonable terms or will be available
in amounts sufficient to cover one or more large claims, or that the insurer
will not disclaim coverage as to any future claim.

Risks Related To Our Common Stock
---------------------------------

         Disappointing Quarterly Revenue Or Operating Results Could Cause The
Price Of Our Common Stock To Fall. Our quarterly revenue and operating results
are difficult to predict and may fluctuate significantly from quarter to
quarter. If our quarterly revenue or operating results fall below the
expectations of investors or securities analysts, the price of our common stock
could fall substantially.

         Our quarterly revenue may fluctuate as a result of a variety of
factors, including the following:

         o    the market for manufacturing automation software operating on
              personal computers is in its preliminary stage of development and
              it is therefore difficult to accurately predict customer demand;
              and

         o    The sales cycle for our products and services varies substantially
              from customer to customer, and we expect the sales cycle to be
              long.

         As a result, we have difficulty determining whether and when we will
receive license revenue from a particular customer. In addition, because our
revenue from implementation, maintenance and training services is largely
correlated with our license revenue, a decline in license revenue could also
cause a decline in our services revenue in the same quarter or in subsequent
quarters.

         Most of our expenses, such as employee compensation and rent, are
relatively fixed in the short term. Moreover, our expense levels are based, in
part, on our expectations regarding future revenue levels. As a result, if
revenue for a particular quarter is below our expectations, we could not
proportionately reduce operating expenses for that quarter, and therefore this
revenue shortfall would have a disproportionate effect on our expected operating
results for that quarter.

         Our Common Stock Is Particularly Subject To Volatility Because Of The
Industry That We Are In. The stock market in general has recently experienced
extreme price and volume fluctuations. In addition, the market prices of
securities of technology companies, particularly software companies, have been
extremely volatile, and have experienced fluctuations that have often been
unrelated or disproportionate to the operating performance of such companies.
These broad market fluctuations could adversely affect the market price of our
common stock

         The Significant Control Over Stockholder Voting Matters Which May Be
Exercised By Our Executive Officers And Directors Will Deprive You Of The
Ability To Influence Corporate Actions. John D. Richardson, our founder, Chief
Executive Officer and Chairman of the Board controls approximately 44.7% of the
outstanding shares of common stock. As a result, he will be able to exercise

                                       21
<PAGE>

significant control over all matters requiring stockholder approval, including
the election of directors and approval of significant corporate transactions.
This concentration of ownership may have the effect of delaying, preventing or
deterring a change in control of CIMNET(R), could deprive our stockholders of an
opportunity to receive a premium for their common stock as part of a sale of
CIMNET(R) and might affect the market price of our common stock.

         Future Sales By Existing Security Holders Or Issuances Of Securities By
The Company Could Depress The Market Price Of Our Common Stock. If the Company
or our existing stockholders sell a large number of shares of our common stock
(or securities convertible into or, exercisable for, shares of common stock),
the market price of our common stock could decline significantly. Moreover, the
perception in the public market that the Company or our existing stockholders
might sell shares of common stock could depress the market price of our common
stock.

         We Are Subject To Anti-Takeover Provisions And The Terms And Conditions
Of Our Preferred Stock Financing That Could Delay Or Prevent An Acquisition And
Could Adversely Affect The Price Of Our Common Stock. Our certificate of
incorporation and bylaws, certain provisions of Delaware law and the certificate
of designation governing the rights, preferences and privileges of our Series A
Preferred Stock may make it difficult in some respects to cause a change in
control of our company and replace incumbent management. For example, the holder
of our Series A Preferred Stock has the right to designate one member of our
board of directors, and it also has a number of voting rights pursuant to the
terms of the certificate of designation which could potentially delay, defer or
prevent a change of control. In particular, the holders of our Series A
preferred stock have the right to approve a number of actions by us, including
some types of mergers, consolidations, acquisitions and similar transactions,
and this right may create a potentially discouraging effect on, among other
things, any third party's interest in completing these types of transactions
with us. Consequently, the terms and conditions under which we issued our
preferred stock, coupled with the existence of other anti-takeover provisions,
may collectively have a negative impact on the price of our common stock, may
discourage third-party bidders from making a bid for our company or may reduce
any premiums paid to our stockholders for their common stock.

         In addition, our board of directors has the authority to fix the rights
and preferences of, and to issue shares of, our preferred stock, which may have
the effect of delaying or preventing a change in control of our company without
action by our stockholders.


Item     2.   PROPERTIES.
              -----------

         Our principal facility is a 7,500 square foot building in Robesonia,
Pennsylvania. We believe that our current facility is adequate to meet our
current business requirements, and that suitable additional space will be
available as needed. The building is owned by John D. Richardson, our founder,
Chief Executive Officer and Chairman of the Board and leased on a year to year
basis. The monthly rent paid by the Company to Mr. Richardson is $10,000 which
we consider to be no greater than market rate for comparable space.

                                       22
<PAGE>

Item     3.   LEGAL PROCEEDINGS.
              ------------------

         We are not presently a party to any material legal proceedings nor are
any material legal proceedings presently threatened against us.

Item     4.   SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
              ---------------------------------------------------

         No matters were submitted to a vote of the holders of the Company's
Common Stock during the last quarter of its fiscal year ended December 31, 2004.

                                     PART II
                                     -------

Item     5.   MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
              MATTERS.
              -------------------------------------------------------------

         Our shares of Common Stock were quoted since May 28, 1998 on the OTC
Bulletin Board under the symbol "WTNR" and since July 2, 1999 under the symbol
"CIMK". However, the trading market for our Common Stock is extremely limited.
CIMNET(R) has not historically paid dividends on shares of its common stock and
does not anticipate paying dividends on its shares of common stock during the
next year.

         The following table sets forth the range of high and low bid quotations
for our Common Stock, for the two year period ended December 31, 2004 as
reported by the OTC Bulletin Board. The quotes represent inter-dealer prices
without adjustment or mark-ups, mark-downs or commissions and may not
necessarily represent actual transactions. In the future, the trading volume of
our common stock may be extremely limited (or non-existent). As a result, the
liquidity of an investment in our common stock may be adversely affected.

                                  Common Stock


                               High   Low                            High   Low
                               ----   ---                            ----   ---
              2004                                 2003
              ----                                 ----

         Quarter ended                        Quarter ended
         March 31, 2004       $1.08   $.62    March 31, 2003        $ .75  $ .43

         Quarter ended                        Quarter ended
         June 30, 2004        $.94    $.27    June 30, 2003         $ .75  $ .43

         Quarter ended                        Quarter ended
         September 30, 2004   $.70    $.38    September 30, 2003    $ .80  $0.65

         Quarter ended                        Quarter ended
         December 31, 2004    $.57    $.37    December 31, 2003     $1.55  $0.65

                                       23
<PAGE>

         On March 22, 2005, the final quoted prices as reported by the OTC
Bulletin Board was $.80 for each share of Common Stock. As of March 22, 2005,
there were 7,293,859 shares of Common Stock outstanding, held of record by
approximately 74 record holders.

Equity Compensation Plan Information

         The following table summarizes our equity compensation plans as of
December 31, 2004:
<TABLE>
<CAPTION>
                                      Equity Compensation Plan Information
                                      ------------------------------------

                                                                   (b)                      (c)
                                           (a)               Weighted-average  Number of securities remaining
                                 Number of securities to    exercise price of  available for future issuance
                                be issued upon exercise of     outstanding     under equity compensation plans
                                   outstanding options,     options, warrants      (excluding securities
Plan category                      warrants and rights          and rights        reflected in column (a)
=============================   ==========================  =================  ===============================
<S>                                      <C>                       <C>                     <C>
Equity compensation plans or
arrangements approved by
security holders                         1,072,500                 $1.00                   1,644,612

Equity compensation plans or
arrangements not approved by
security holders                           200,000                 $2.00                          --

Total                                    1,272,500                 $1.15                   1,644,612
---------------------------------------------------------------------------------------------------------------
</TABLE>
Recent Sales of Unregistered Securities

         During the years ended December 31, 2004 and 2003, the Company sold the
following equity securities that were not registered under the Securities Act of
1933, as amended:

         In August 2004, the Company issued in a private transaction pursuant to
Section 4(2) of the Securities Act of 1933, as amended, 20,000 shares of its
Common Stock to a financial advisor for services rendered.

         In July 2004, the Company sold units ("Units") in a private placement
transaction to a limited number of investors. Each Unit consisted of 100,000
shares of Common Stock and 100,000 Class A Common Stock Purchase Warrants (the
"Class A Warrants"), and sold for a purchase price of $50,000 per unit. The
Company paid no commissions or other fees and received proceeds of $360,000 from
the offering. The Class A Warrants are exercisable for a period of five (5)
years at an exercise price of $1.00 per share. The investors in the Units have
piggyback registration rights, and included certain officers and directors: Lynn
Richardson, the wife of John Richardson, the Chief Executive Officer of the

                                       24
<PAGE>

Company (2 Units); Karl Gerhart, a director of the Company (1 Unit); and J.
Jeffrey Fox, a director of the Company (1/5 Unit).

         In November, 2003, the Company issued in a private transaction pursuant
to Section 4(2) of the Securities Act of 1933, as amended, 161,538 shares of its
Common Stock to Lipman Capital Group, Inc. in connection with its cashless
exercise of a warrant issued to Lipman Capital in January, 2001. Lipman Capital
entered into a Market Access Program Marketing Agreement with the Company in
January, 2001 pursuant to which Lipman Capital provided the Company with
investor relations services.

         In December, 2003, the Company issued in a private placement
transaction pursuant to Section 4(2) of the Securities Act of 1933, as amended,
100,000 shares of common stock and 100,000 common stock purchase warrants to a
partner of the Company's outside law firm for an aggregate purchase price of
$75,000 which was paid in cash. The warrants contain cashless exercise and
certain customary anti-dilution provisions. The warrants are exercisable at any
time during a ten (10) year period ending on December 31, 2013 at an exercise
price of $1.00 per share.

Stock Options
-------------

         On January 16, 2003, the Company granted options to purchase a total of
120,000 shares of the Company's common stock to certain members of management.
The options are exercisable at $.57 per share, one third of which vest on each
of the first three anniversaries of the grant date, and expire on January 15,
2013.

         On May 20, 2003, the Company granted options to purchase 12,500 shares
of the Company's common stock to each of Karl Gerhart and David Birk as
compensation for serving as a director of the Company. The options are
exercisable at $.65 per share for a period of five (5) years commencing on May
21, 2004.

         On August 12, 2003, the Company granted options to purchase 10,000
shares of the Company's common stock to an employee. The options are exercisable
at $.65 per share, one third of which vest on each of the first three
anniversaries of the grant date, and expire on August 11, 2013.

         On May 24, 2004, the Company granted options to purchase 12,500 shares
of the Company's common stock to each of J. Jeffrey Fox and Sundaresh Ramayya as
compensation for serving as a director of the Company. The options are
exercisable at $.33 per share for a period of five (5) years commencing on May
24, 2005.

                                       25
<PAGE>

Item     6.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION OR
              PLAN OF OPERATIONS
              --------------------------------------------------------------

Statements in this "management's discussion and analysis of financial condition
and results of operations" and elsewhere in this document as well as statements
made in press releases and oral statements that may be made by the company or by
officers, directors or employees of the company acting on the company's behalf
that are not statements of historical or current fact constitute "forward
looking statements" within the meaning of the private securities litigation
reform act of 1995. Such forward-looking statements involve known and unknown
risks, uncertainties and other unknown factors that could cause the actual
results of the company to be materially different from the historical results or
from any future results expressed or implied by such forward-looking statements.
In addition to statements which explicitly describe such risks and
uncertainties, readers are urged to consider statements labeled with the terms
"believes", "belief", "expects", "intends", "anticipates" or "plans" to be
uncertain forward-looking statements. The forward looking statements contained
herein are also subject generally to other risks and uncertainties that are
described from time to time in the company's reports and registration statements
filed with the Securities and Exchange Commission.

RESULTS OF OPERATIONS

Year Ended December 31, 2004 Compared To Year Ended December 31, 2003

         Net Sales for the year ended December 31, 2004 were $2,390,957, an
increase of 1.9% or $45,063 over net sales for the year ended December 31, 2003.

         Costs of goods sold for 2004 were $283,567 compared to $280,077 for
2003, an increase of $3,490 or 1.2% which corresponds with the increase in net
sales.

         Gross profit for 2004 was $2,107,390 compared to $2,065,817 for 2003,
an increase of $41,573 or 2.0% which is consistent with the increase in net
sales and cost of goods sold.

         Selling, general and administrative expenses for 2004 were $1,923,231
or 80.4 % of net sales compared to $2,275,973 or 97.0% of net sales, for 2003, a
decrease of $352,742 or 15.5%. This decrease is due to the continuation and
enhancement of cost cutting measures started by the Company in 2003. The
decrease is primarily attributable to the changes in the following categories:
salaries decreased by $157,260 due to cuts in the number of employees and
reduced salaries; commissions decreased by $51,475 due to modifications in
commission structures; legal expenses decreased by $51,150, travel and
entertainment costs decreased by $52,412; however these decreases in the above
mentioned areas was offset by increases in some other areas; specifically
advertising and marketing increased by $86,528 due to the promotions of new
products.

         Stock compensation relating to employee compensation, consulting and
legal services decreased by $72,651, which resulted from a decrease in the
number of options that vested during 2004. Additionally, in 2003, options with a
value of $36,000, were issued to the Company's legal counsel.

                                       26
<PAGE>

         In 2004 development costs were $1,083,849 compared to $1,621,835 in
2003, a decrease of $537,986 or 33.8% from the previous year. This is primarily
due to a decrease in the number of employees, and also due to the Company not
utilizing any contract employees for research and development purposes during
2004. Specifically, salary expense decreased by $406,530 in 2004, a decrease of
29.5% from 2003.

         Loss from operations for 2004 was ($954,413) compared to ($1,959,365)
in 2003, a decrease of $1,004,952 or 51.3% from the previous year. This decrease
is primarily due to the reduction of salary expense for both the selling,
general and administrative, and the research and development areas, as
previously discussed.

         Net interest expense for 2004 was $22,888 or 1.0% of net sales,
compared to net interest expense of $5,947 or 0.3% of net sales for 2003. In
2004 the Company had borrowed on the credit line throughout the year and
therefore paid interest during all twelve months, whereas in 2003 the Company
had borrowed on the credit line only during the last five months of the year,
thus incurring less interest expense. In addition, in 2004 there was only $1,092
earned interest on the short term investments and cash balances held with the
bank, whereas, in 2003 other income also included interest earned and dividend
income, in the amount of $6,675, on the short term investments and cash balance
held with the bank.

         Realized loss on the sale of securities was approximately $115,000
versus approximately $176,000 in 2003. These losses arose as the Company sold
its interests in its available for sale securities as cash flow needs arose in
operations. At December 31, 2004, the Company no longer holds any investments in
securities available for sale.

         During 2004, the Company disposed of its interest in a limited
partnership, gave up its interest in an aircraft and was relieved of its portion
of a note payable associated with the aircraft. These transactions generated a
loss of approximately $129,000 for the year ended December 31, 2004. Also,
rental income in 2003 included a full year of rental income associated with the
aircraft, whereas 2004 includes rental activity only through the date at
disposition.

         There was no income tax benefit in 2004 compared to the income tax
benefit of ($36,357) for 2003. The income tax benefit was not recognized due to
the uncertainty of the Company's ability to realize net operating loss
carry-forwards that are available to offset taxable income in future years. The
Company has approximately $1.4 million of deferred tax assets the majority of
which have been reserved at December 31, 2004. The necessity to carry all or a
portion of this allowance will be considered as circumstances change over future
periods.

         Net loss for 2004 was ($1,203,578) or ($0.19) per share of common stock
(basic and diluted) as compared to a net loss of ($2,052,396) or ($0.35) per
share (basic and diluted) of common stock in 2003. This decrease in loss is
primarily due to the reduction of salary expense for both the selling, general
and administrative, and the research and development areas along with reductions
in other operating expenses as a result of cost cutting measures taken by the
Company.

                                       27
<PAGE>

Year Ended December 31, 2003 Compared To Year Ended December 31, 2002

         Net Sales for the year ended December 31, 2003 were $2,345,894, a
decrease of 43.5% or $1,806,614 under net sales for the year ended December 31,
2002. This decrease is due to the down-turn in the manufacturing market place,
CIMNET(R) not having enough available capital to do effective marketing and the
result of reduced orders for our Manufacturing Execution System (MES) software
from one major customer. Sales to this customer were $567,434 and $1,391,831 for
the years ending December 31, 2003 and 2002 respectively.

         Costs of goods sold for 2003 were $280,077 compared to $432,159 for
2002, a decrease of $152,082 or 35.2%. This decrease in costs of goods sold is
related to the decrease in net sales of 43.5% and to the related decrease in
costs associated with the engagement of outside field engineers for the
implementation of the Company's software products.

         Gross Profit for 2003 was $2,065,817 compared to $3,720,349 for 2002, a
decrease of $1,654,532 or 44.5%. This decrease is primarily due to the decrease
in net sales. The percentage of cost of goods sold was 11.9% of net sales in
2003 as compared to 10.4% of net sales in 2002.

         Selling, general and administrative expenses for 2003 were $2,275,973
or 97.0 % of net sales compared to $3,183,885 or 76.7% of net sales, for 2002.
Specifically, the increase in selling, general and administrative expenses as a
percentage of net sales is due to the decrease by 43.5% in net sales in 2003. In
terms of the net change there was a decrease of $907,912 or 28.5% in selling,
general and administrative expenses in 2003 versus that of 2002. This decrease
is due to cost cutback measures taken by the Company in response to the decrease
in revenue. The decrease is primarily attributable to the changes in the
following categories: salaries decreased by $407,044 and employee benefits
decreased by $31,861, both due to a decrease in the number of employees;
commissions decreased by $36,440 due to the decrease in sales; advertising costs
decreased by $224,109 due to cut backs in marketing; travel and entertainment
costs decreased by $101,391 due to reductions in travel and entertainment; trade
show expenses decreased by $95,440 as a result of the Company attending less
trade shows and the decrease in the associated expenses for these shows.

         Stock compensation relating to employee compensation, consulting and
legal services decreased by $30,911, which resulted from a decrease in the fair
market value and the number of options that vested during 2003.

         Research and development costs remained high in comparison to sales as
we remain dedicated to providing world class software. In 2003 development costs
were $1,621,835 compared to $2,004,906 in 2002, a decrease of $383,071. This
decrease is primarily due to previously independently employed contractors being
either directly employed by the Company in 2003 and a shift to develop .NET
infrastructure with our partner in South Africa.

         Loss from operations for 2003 was ($1,959,365) compared to ($1,626,727)
in 2002, an increase of $332,628. This increased loss is predominantly due to
the previously discussed decrease in net sales while maintaining an aggressive
development schedule.

         Interest expense for 2003 was $12,621 or 0.5% of net sales, compared to
interest expense of $19,821 or 0.5% of net sales for 2002. In 2003, other income
(loss) included a realized loss on the sale of securities of ($176,006) or 7.5%
of net sales and rental revenue of $52,565 or 2.2% of net sales. Other income in

                                       28
<PAGE>

2003 also included interest earned and dividend income, in the amount of $6,675
or 0.3% of net sales, on the short term investments and cash balance held with
the bank. In 2002, other income included a realized gain on the sale of
securities of $83,387 or 2.0% of net sales and rental revenue of $52,565 or 1.3%
of net sales, in addition to interest earned, in the amount of $13,272 or 0.3%
of net sales, on the cash balance held with the bank.

         The income tax benefit for 2003 was ($36,357) compared to ($708,070) in
2002. The income tax benefit recognized during 2003 has been reduced by an
increase in the valuation allowance of $906,248. This valuation allowance was
increased due to the uncertainty of the Company's ability to realize net
operating loss carry-forwards that are available to offset taxable income in
future years.

         Net loss for 2003 was ($2,052,396) or ($0.35) per share of common stock
(basic and diluted) as compared to a net loss of ($789,254) or ($0.15) per share
(basic and diluted) of common stock in 2002. The increased loss is primarily
attributable to lower revenues versus the prior year, as previously noted, as
well as the recording of a valuation allowance associated with the Company's
deferred tax assets, primarily attributable to net operating loss
carry-forwards. Based upon the operating results of the past two years, it has
been determined that a valuation allowance is appropriate as of December 31,
2003, however, the necessity to carry all or a portion of this allowance will be
considered as circumstances change over the coming periods.

Liquidity and Capital Resources

         At December 31, 2004, the Company had current assets of $773,663 versus
$1,145,866 at December 31, 2003, a decrease of $372,203 or 32.5%. This reduction
is the result of the current year loss and utilization of funds in operations
and various fluctuations, the most significant of which are the decrease in
securities available for sale by $201,016, a decrease in other receivables by
$75,000, and a decrease in income taxes receivable and deferred income tax
assets by $106,607.

         In July 2004, the Company discontinued its ownership interest in
Reading Air Charter LLC and a related aircraft. As a result of these
transactions the Company recorded a reduction of $77,500 in its investment in
the joint venture which was included in other assets. Also, during 2004, the
Company invested $50,000 in a software sub-licensing agreement which is included
in other assets at December 31, 2004.

         Current liabilities were $1,847,547 at December 31, 2004 versus
$1,714,299 at December 31, 2003, an increase of $132,248. This increase is
primarily due to the incurrence of a demand loan payable of $130,000 and
additional accrued dividends of $80,00, net of the current portion of the note
payable on the aircraft, for which the Company was relieved of its liability
upon relinquishing its interest in the aircraft.

Operating Activities

Cash used in operations for fiscal 2004 and 2003 was ($654,167) and ($294,091),
respectively. This increase of $360,076 in the cash used by operations was
primarily attributable to the following changes: a decrease of only $95,736 in
accounts receivables in 2004 in contrast to a decrease of $752,708 in 2003, a

                                       29
<PAGE>

decrease in deferred income of $63,611 in 2004 versus an increase of $76,576 in
2003 and the receipt of income tax refunds of approximately $400,000 more in
2003 than in 2004.

Investing Activities

         Cash provided by investing activities was $199,441 in 2004 as compared
to $38,847 in 2003. This change is primarily due to the proceeds of $260,364
received from the sale of available for sale securities, versus proceeds from a
similar transaction in 2003 of only $76,576.

Financing Activities

Financing activities provided $472,738 in 2004 compared to $275,060 in 2003, an
increase of $197,678 in cash provided by financing. This increase resulted from
the funds from $360,000 raised from issuance of common stock through a private
placement and $130,000 from a demand note borrowing from a stockholder.

Capital Resources

     The Company has a line of credit available with its bank. As of December
31, 2004, the Company had $158,932 available on its line of credit. At December
31, 2004, the Company was in violation of one of the financial covenants in its
loan document. The Bank waived this violation at December 31, 2004. The line is
renewed until April 30, 2005.

     In March 2004, the Company engaged Noble International Investments, Inc.
("Noble") to render certain financial advisory and investment banking services
to the Company, and at the Company's option, to serve as a placement agent with
respect to the Company's debt and/or equity securities. The Agreement terminates
120 days after the date of execution, but the Company has an on-going obligation
to compensate Noble in the event that a party introduced to the Company by Noble
invests in the Company's securities during the two year period following the
date of the agreement.

     In July 2004, the Company entered into a Revolving Credit Agreement with
Sundaresh Ramayya, a director of the Company, pursuant to which Mr. Ramayya has
agreed to lend to the Company up to $2 million, but not more than $150,000 under
any borrowing request submitted by the Company. The Company has agreed to pay
interest on any outstanding amount at a rate of 4% per annum, payable quarterly,
and the outstanding principal amount shall be due and payable on the maturity
date which is on the second anniversary of the Agreement (unless accelerated
upon an event of default). However, Mr. Ramayya has the right to terminate the
Revolving Credit Agreement upon 15 days prior written notice to the Company at
which time the obligation of Mr. Ramayya to lend to the Company terminates.
There were no fees or expenses paid by the Company in connection with the
execution of the Revolving Credit Agreement and as of December 31, 2004, there
is no outstanding balance there under.

     In July 2004, the Company sold units ("Units") in a private placement
transaction to a limited number of investors. Each Unit consisted of 100,000
shares of Common Stock and 100,000 Class A Common Stock Purchase Warrants (the
"Class A Warrants"), and sold for a purchase price of $50,000 per unit. The

                                       30
<PAGE>

Company paid no commissions or other fees and received proceeds of $360,000 from
the offering. The Class A Warrants are exercisable for a period of five (5)
years at an exercise price of $1.00 per share. The investors in the Units have
piggyback registration rights, and included certain officers and directors: Lynn
Richardson, the wife of John Richardson, the Chief Executive Officer of the
Company (2 Units); Karl Gerhart, a director of the Company (1 Unit); and J.
Jeffrey Fox, a director of the Company (1/5 Unit). The proceeds of this private
placement will be used by the Company for working capital purposes.

         In August 2004, the Company entered into an agreement with a consultant
to assist it in raising capital from identified prospects for a period of six
months. The agreement includes a non-refundable retainer consisting of 20,000
shares of Company's common stock, as well as a success fee of 8% of the capital
raised. In addition, the Company granted to the consultant an option to purchase
8% of any security sold to such introduced investors on the same terms and
conditions for a period of five years.

         In December 2004, the Company borrowed $130,000 in the form of a demand
note payable with a director. The secured demand note is payable upon demand
from the director and bears interest at the prime rate plus 1%. This note is
subordinated to the Company's line of credit with its bank lender.

         The Company has no material commitments for capital expenditures at
December 31, 2004 and believes that its cash from operations, existing balances
and available credit lines will be sufficient to satisfy the needs of its
operations and its capital commitments for the near future.


Application of Critical Accounting Policies:

         Disclosure of the Company's significant accounting policies is included
in Note 2 to the audited financial statements. Certain of these policies are
particularly sensitive requiring judgments, estimates and assumptions to be made
by management. Senior management has discussed the development of such
estimates, and related Management Discussion and Analysis disclosure, with the
board of directors. The following accounting policies are the ones identified by
management to be critical to the results of operations:

         Revenue Recognition - The Company generates revenue principally from
the following sources:

         Software and Hardware: Revenues are recorded when software or hardware
products are shipped and are recorded net of allowance for estimated returns,
price concessions and other discounts. A change in these estimates could impact
the results of operations in future periods.

         Services: Revenues for services (installation, engineering and
training) are recognized when services are completed.

         Maintenance Agreements: Maintenance agreements generally require the
Company to provide technical support and certain software updates to customers.

                                       31
<PAGE>

Revenue on technical support and software update rights is recognized ratably
over the term of the maintenance agreement.

         The Company follows the provisions of the American Institute of
Certified Public Accountants (AICPA) Statement of Position 97-2, "Software
Revenue Recognition," as well as the SEC staff Accounting Bulletin 101, "Revenue
Recognition in Financial Statements."

         Goodwill - Effective January 1, 2002, the Company adopted Statement of
Financial Accounting Standards ("SFAS") No. 142, "Goodwill and Other Intangible
Assets." Under SFAS No. 142, goodwill and other intangible assets with
indefinite lives are no longer amortized but are reviewed annually or more
frequently if impairment indicators arise. Based upon such review, management
determined that no write-down of goodwill was required as of December 31, 2004.

         Software Development Costs - Under the criteria set forth in SFAS No.
86, "Accounting for Costs of Computer Software to be Sold, Leased or Otherwise
Marketed," capitalization of software development costs begins upon the
establishment of technological feasibility of the product. The establishment of
technological feasibility and the ongoing assessment of the recoverability of
these costs require considerable judgment by management with respect to certain
external factors, including but not limited to, anticipated future gross product
revenue, estimated economic product lives, and changes in software and hardware
technology. Amounts that would have been capitalized under this statement after
consideration of the above factors were immaterial and, therefore no software
development costs have been capitalized by the Company during 2004.

         Costs incurred internally to develop computer software products and the
costs to acquire externally developed software products (which have no
alternative future use) to be sold, leased or otherwise marketed are charged to
expense as research and development until the technological feasibility of the
product has been established. Costs incurred after technological feasibility has
been established for software development, maintenance and product enhancements
and acquisition costs are included in cost of goods sold.

         Stock Options and Warrants - Under SFAS No. 123, "Accounting for
Stock-Based Compensation," a fair value-based method for valuing stock-based
compensation is set forth that entities may use, which measures compensation
cost at the grant date based on the fair value of the award.

         SFAS No. 123 permits entities to continue accounting for employee stock
options and similar equity instruments under Accounting Principles Board (APB)
Opinion 25, "Accounting for Stock Issued to Employees." The Company accounts for
its employee stock option plans under APB Opinion No. 25. Entities that continue
to account for stock options using APB Opinion 25 are required to make pro forma
disclosures of net income and earnings per share, as if the fair-value based
method of accounting defined in SFAS No. 123 had been applied. The ability for
companies to continue to choose to account for employee equity instruments under
the guidance of APB Opinion No. 25 is currently receiving much scrutiny. Should

                                       32
<PAGE>

the Company be required to account for such employee equity instruments in a
different manner, such a change could have a material impact to the results of
operations for the Company.

Item     7.   FINANCIAL STATEMENTS
              --------------------

         See Financial Statements following Item 14 of this Annual Report on
Form 10-KSB.

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

         None.

Item     8A.  CONTROLS AND PROCEDURES
              -----------------------

         We maintain disclosure controls and procedures that are designed to
ensure that information required to be disclosed in our Exchange Act reports is
recorded, processed, summarized and reported within the time periods specified
in the Securities and Exchange Commission's rules and forms and that such
information is accumulated and communicated to our management, including our
Chief Executive Officer and Principal Accounting Officer, as appropriate, to
allow for timely decisions regarding required disclosure. In designing and
evaluating the disclosure controls and procedures, management recognizes that
any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving the desired control objectives,
and management is required to apply its judgment in evaluating the cost-benefit
relationship of possible controls and procedures.

         As required by SEC Rule 13a-15(b), we carried out an evaluation as of
December 31, 2004, under the supervision and with the participation of our
management, including our Chief Executive Officer and Principal Accounting
Officer, of the effectiveness of the design and operation of our disclosure
controls and procedures as of the end of the year covered by this report. Based
on the foregoing, our Chief Executive Officer and Principal Accounting Officer
concluded that our disclosure controls and procedures were effective at the
reasonable assurance level.

         There has been no change in our internal controls over financial
reporting during our fiscal year ended December 31, 2004 that has materially
affected, or is reasonably likely to materially affect, our internal controls
over financial reporting.

Item     8.B. OTHER INFORMATION
              -----------------

         None.


                                    PART III
                                    --------

Item     9.   DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
              ---------------------------------------------------

         Incorporated herein by reference to the Company's proxy statement to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

                                       33
<PAGE>

Item     10.  EXECUTIVE COMPENSATION
              ----------------------

         Incorporated herein by reference to the Company's proxy statement to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

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

         Incorporated herein by reference to the Company's proxy statement to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item     12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
              ----------------------------------------------

         Incorporated herein by reference to the Company's proxy statement to be
filed pursuant to Regulation 14A under the Securities Exchange Act of 1934.

Item     13.  EXHIBITS, LISTS AND REPORTS ON FORM 8-K
              ---------------------------------------

(a) Exhibits.
Exhibits

3.01*         Certificate of Incorporation of CIMNET(R).
3.02*         By-laws, as amended, of CIMNET(R).
3.03*         Certificate of Designation of the Rights, Preferences and
              Limitations of Series A Convertible Preferred Stock of the
              Company.
4.01*         Specimen Certificate for shares of CIMNET(R)'s Common Stock.
10.01*        1999 Stock Plan, as amended.
10.02*        Lease Agreement for the executive offices.
10.03*        Preferred Stock and Warrant Purchase Agreement dated as of August
              31, 2001 by and between the Company and the Purchaser.
10.04*        Common Stock Purchase Warrant dated as of August 31, 2001 issued
              by the Company to the Purchaser.
10.05*        Registration Rights Agreement dated as of August 31, 2001 by and
              between the Company and the Purchaser.
10.06*        Voting Agreement dated as of August 31, 2001 by and among the
              Purchaser, the Company and John D. Richardson.
10.07*        2002 Stock Option Plan, as amended.
31.0          Certification of Chief Executive Officer and Principal Accounting
              Officer Pursuant to Section 302 of Sarbanes-Oxley of 2002.
32.0          Certification of Chief Executive Officer and Principal Accounting
              Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

--------------
* Previously filed with the Securities and Exchange Commission.

(b) Reports on Form 8-K

         None.

Item     14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES
              --------------------------------------

         Incorporated herein by reference to the Company's proxy statement to be
filed pursuant to Regulation 14A under the Securities and Exchange Act of 1934.

                                       34
<PAGE>

                                  CIMNET, INC.

                                FINANCIAL REPORT


                                DECEMBER 31, 2004

<PAGE>

TABLE OF CONTENTS
December 31, 2004





                                                                        PAGE NO.

FINANCIAL STATEMENTS:

         Table of Contents.................................................36
         Report of Independent Registered Public Accounting Firm...........37
         Balance Sheets....................................................38
         Statements of Operations..........................................40
         Statements of Changes in Stockholders' Equity.....................41
         Statements of Cash Flows..........................................42
         Notes to Financial Statements.....................................44

<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders
Cimnet, Inc.


         We have audited the accompanying balance sheets of Cimnet, Inc. as of
December 31, 2004 and 2003, and the related statements of operations,
stockholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

         We conducted our audits in accordance with standards of the Public
Company Accounting Oversight Board (United States). Those standards require than
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the 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 our audits
provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Cimnet, Inc. as of
December 31, 2004 and 2003, and the results of its operations and its cash flows
for the years then ended, in conformity with accounting principles generally
accepted in the United States of America.

                        /s/ BEARD MILLER COMPANY LLP
                        ----------------------------
                            Beard Miller Company LLP



Reading, Pennsylvania
March 15, 2005

                                       37
<PAGE>

CIMNET, INC.
================================================================================
BALANCE SHEETS
December 31, 2004 and 2003


                                                             2004        2003
                                                          ----------  ----------
                                    ASSETS
CURRENT ASSETS

     Cash and cash equivalents                            $  155,653  $  137,641
     Securities available for sale                                 0     201,016
     Accounts receivable, net of allowance
         for doubtful accounts 2004 $16,470; 2003 $17,022    312,924     333,108
     Other receivable                                              0      75,000
     Inventories                                              98,430      94,841
     Prepaid expenses                                         66,237      57,254
     Income taxes receivable                                       0      98,313
     Deferred income tax assets                              140,419     148,713
                                                          ----------  ----------

         Total Current Assets                                773,663   1,145,886

PROPERTY AND EQUIPMENT, NET                                  310,731     575,865

GOODWILL                                                   2,364,145   2,364,145

OTHER ASSETS                                                  50,000      77,500
                                                          ----------  ----------

         Total Assets                                     $3,498,539  $4,163,396
                                                          ==========  ==========

See notes to financial statements.
--------------------------------------------------------------------------------

                                       38
<PAGE>
<TABLE>
<CAPTION>
                                                                           2004           2003
                                                                        -----------   -----------
                     LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
<S>                                                                     <C>           <C>
     Line of credit                                                     $   341,068   $   331,000
     Demand note payable, stockholder                                       130,000             0
     Current portion of capital lease obligation                             10,010             0
     Current portion of long-term debt                                            0        59,067
     Accounts payable                                                       133,770       103,287
     Accrued expenses                                                        64,333        68,968
     Dividends payable on preferred stock                                   266,000       186,000
     Deferred income                                                        902,366       965,977
                                                                        -----------   -----------

         Total Current Liabilities                                        1,847,547     1,714,299

LONG-TERM DEBT, NET OF CURRENT PORTION                                            0       127,705

CAPITAL LEASE OBLIGATION, NET OF CURRENT PORTION                             21,974             0
                                                                        -----------   -----------

         Total Liabilities                                                1,869,521     1,842,004
                                                                        -----------   -----------

STOCKHOLDERS' EQUITY

     Common stock, $.0001 par value; 15,000,000 shares authorized;
         shares issued and outstanding 2004 7,293,859; 2003 6,553,859           729           655
     Preferred stock, $.0001 8% cumulative convertible; 5,000,000
         shares authorized; 746,965 shares issued and outstanding                75            75
     Paid-in capital                                                      5,945,813     5,557,761
     Accumulated deficit                                                 (4,316,064)   (3,002,737)
     Accumulated other comprehensive loss                                         0      (174,481)
     Deferred stock compensation                                             (1,535)      (59,881)
                                                                        -----------   -----------

         Total Stockholders' Equity                                       1,629,018     2,321,392
                                                                        -----------   -----------

         Total Liabilities and Stockholders' Equity                     $ 3,498,539   $ 4,163,396
                                                                        ===========   ===========
</TABLE>

--------------------------------------------------------------------------------
                                       39
<PAGE>

CIMNET, INC.
================================================================================
STATEMENTS OF OPERATIONS
Years Ended December 31, 2004 and 2003
<TABLE>
<CAPTION>
                                                                        2004            2003
                                                                     -----------    -----------
<S>                                                                  <C>            <C>
NET SALES                                                            $ 2,390,957    $ 2,345,894

COST OF GOODS SOLD                                                       283,567        280,077
                                                                     -----------    -----------

         Gross Profit                                                  2,107,390      2,065,817
                                                                     -----------    -----------

OPERATING EXPENSES
     Selling, general and administrative                               1,923,231      2,275,973
     Stock compensation - employees, consulting and legal services        54,723        127,374
     Research and development                                          1,083,849      1,621,835
                                                                     -----------    -----------

         Total Operating Expenses                                      3,061,803      4,025,182
                                                                     -----------    -----------

         Operating Loss                                                 (954,413)    (1,959,365)
                                                                     -----------    -----------

OTHER INCOME (EXPENSES)

     Interest expense, net                                               (22,888)        (5,947)
     Rental income                                                        17,521         52,565
     Loss on disposition of investment in limited partnership
       and equipment                                                    (128,663)             0
     Realized loss on the sale of available for sale securities         (115,135)      (176,006)
                                                                     -----------    -----------

         Total Other Income (Expenses)                                  (249,165)      (129,388)
                                                                     -----------    -----------

         Loss before Income Tax Benefit                               (1,203,578)    (2,088,753)

INCOME TAX BENEFIT                                                             0        (36,357)
                                                                     -----------    -----------

         Net Loss                                                    ($1,203,578)   ($2,052,396)
                                                                     ===========    ===========

NET LOSS PER COMMON SHARE - BASIC                                    ($     0.19)   ($     0.35)
                                                                     ===========    ===========

NET LOSS PER COMMON SHARE - DILUTED                                  ($     0.19)   ($     0.35)
                                                                     ===========    ===========
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
                                       40
<PAGE>
CIMNET, INC.
================================================================================
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 2004 and 2003
<TABLE>
<CAPTION>
                                                                                                            Accumulated
                                        Common Stock   Preferred Stock             Retained       Other      Deferred
                                    ------------------ ---------------   Paid-in   Earnings   Comprehensive    Stock
                                       Shares   Amount  Shares  Amount   Capital   (Deficit)      Loss      Compensation   Total
                                    ----------- ------ -------- ------ ---------- ----------- ------------- ------------ ----------
<S>                                   <C>       <C>    <C>      <C>    <C>        <C>          <C>           <C>         <C>
BALANCE - DECEMBER 31, 2002           6,292,321 $ 629  746,965  $  75  $5,391,109 ($  825,663) ($ 415,366)   ($140,255)  $4,010,529
                                                                                                                         ----------

 Comprehensive loss:
    Net loss                                  0     0        0      0           0  (2,052,396)          0            0   (2,052,396)
    Change in unrealized loss on
       available for sale securities          0     0        0      0           0           0     240,885            0      240,885
                                                                                                                         ----------

   Total Comprehensive Loss                                                                                              (1,811,511)
                                                                                                                         ----------

 Stock compensation expense                   0     0        0      0           0           0           0       80,374       80,374
 Consulting and legal service
      expense, fair value of
      options and warrants granted            0     0        0      0      47,000           0           0            0       47,000
 Issuance of common stock               100,000    10        0      0      74,990           0           0            0       75,000
 Dividends and accretion on
    preferred stock                           0     0        0      0      44,678    (124,678)          0            0      (80,000)
 Exercise of stock warrants             161,538    16        0      0         (16)          0           0            0            0
                                    ----------- -----  -------  -----  ---------- -----------  ----------   ----------   ----------

BALANCE - DECEMBER 31, 2003           6,553,859   655  746,965     75   5,557,761  (3,002,737)   (174,481)     (59,881)   2,321,392
                                                                                                                         ----------

 Comprehensive loss:
    Net loss                                  0     0        0      0           0  (1,203,578)          0            0   (1,203,578)
    Change in unrealized loss on
       available for sale securities          0     0        0      0           0           0     174,481            0      174,481
                                                                                                                        -----------

   Total Comprehensive Loss                                                                                              (1,029,097)
                                                                                                                        -----------

 Stock compensation expense                   0     0        0      0           0           0           0       43,723       43,723
 Consulting and legal service
      expense, fair value of shares
      of common stock, options and
      warrants granted                   20,000     2        0      0      12,998           0           0            0       13,000
 Issuance of common stock               720,000    72        0      0     359,928           0           0            0      360,000
 Dividends and accretion on
    preferred stock                           0     0        0      0      29,749    (109,749)          0            0      (80,000)
 Forfeiture of unvested
    stock options                             0     0        0      0     (14,623)          0           0       14,623            0
                                    ----------- -----  -------  -----  ---------- -----------  ----------   ----------  -----------

BALANCE - DECEMBER 31, 2004           7,293,859 $ 729  746,965  $  75  $5,945,813 ($4,316,064) $        0   ($   1,535) $ 1,629,018
                                    =========== =====  =======  =====  ========== ===========  ==========   ==========  ===========
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
                                       41
<PAGE>

CIMNET, INC.
================================================================================
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2004 and 2003
<TABLE>
<CAPTION>
                                                                          2004        2003
                                                                        --------    --------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                                       <C>        <C>
     Net loss
     Adjustments to reconcile net loss to net cash
         used in operating activities:
            Depreciation and amortization                                 97,434     142,479
            Realized loss on sale of securities                          115,135     176,006
            Loss on disposition of investment in limited
               partnership and equipment                                 128,663           0
            Provision for doubtful accounts                                 (552)    (36,471)
            Provision for deferred income taxes                            8,294      48,715
            Stock issued, consulting services                             11,000           0
            Stock options, employees                                      43,723      80,374
            Stock options and warrants, consulting and legal services      2,000      47,000
            (Increase) decrease in assets:
               Accounts receivable                                        95,736     752,708
               Inventories                                                (3,589)     12,189
               Prepaid expenses                                           (8,983)      3,599
               Income taxes receivable                                    98,313     442,505
            Increase (decrease) in liabilities:
               Accounts payable                                           30,483      18,495
               Accrued expenses                                           (4,635)     (5,870)
               Deferred income                                           (63,611)     76,576
                                                                        --------    --------

              Net Cash Used in Operating Activities                     (654,167)   (294,091)
                                                                        --------    --------

CASH FLOWS FROM INVESTING ACTIVITIES

     Investment in limited partnership                                    (7,000)    (25,000)
     Purchase of software licensing agreement                            (50,000)          0
     Purchase of property and equipment                                   (3,921)     (9,614)
     Proceeds from the sale of available for sale securities             260,362      73,461
                                                                        --------    --------

              Net Cash Provided by Investing Activities                  199,441      38,847
                                                                        --------    --------
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
                                       42
<PAGE>

CIMNET, INC.
================================================================================
STATEMENTS OF CASH FLOWS
Years Ended December 31, 2004 and 2003
<TABLE>
<CAPTION>
                                                               2004          2003
                                                             ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES
<S>                                                          <C>          <C>
     Principal payments on long-term borrowings              ($ 27,330)   ($ 55,940)
     Proceeds from demand note payable, stockholder            130,000            0
     Proceeds from issuance of common stock and warrants       360,000            0
     Net borrowings on line of credit                           10,068      331,000
                                                             ---------    ---------

              Net Cash Provided by Financing Activities        472,738      275,060
                                                             ---------    ---------

              Net Increase in Cash and Cash Equivalents

CASH AND CASH EQUIVALENTS - BEGINNING                          137,641      117,825
                                                             ---------    ---------

CASH AND CASH EQUIVALENTS - ENDING                           $ 155,653    $ 137,641
                                                             =========    =========

SUPPLEMENTARY CASH FLOWS INFORMATION

     Interest paid                                           $  23,980    $  12,621
                                                             =========    =========

     Income taxes refunded                                   $ 125,684    $ 532,375
                                                             =========    =========

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING
     AND FINANCING ACTIVITIES

     Equipment acquired through capital lease obligation     $  31,984    $       0
                                                             =========    =========

     Issuance of common stock and related other receivable   $       0    $  75,000
                                                             =========    =========

     Debt forgiven on disposal of equipment                  $ 159,442    $       0
     Net book value of equipment disposed                     (203,605)           0
     Net book value of investment in limited partnership       (84,500)           0
                                                             ---------    ---------

              Loss on Disposition of Investment in Limited
                  Partnership and Equipment                  ($128,663)   $       0
                                                             =========    =========
</TABLE>
See notes to financial statements.
--------------------------------------------------------------------------------
                                       43
<PAGE>

CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003



NOTE 1 - NATURE OF BUSINESS

              Cimnet, Inc. (the Company) is in the business of the development,
         sale and maintenance of computer integrated manufacturing software. The
         Company also is engaged in the resale of hardware that is incidental to
         the operation of its software products. The Company's software is a
         manufacturing execution system, which enables factories to monitor work
         flows and manufacturing processes. The Company's office is located in
         Robesonia, Pennsylvania, and the Company has sales throughout the
         United States and abroad. Approximately 79% and 86% of the sales for
         the years ended December 31, 2004 and 2003, respectively, were
         throughout the United States. Credit is granted on terms that the
         Company establishes for individual customers.


NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

              Revenue Recognition

                  The Company generates revenue principally from the following
                  sources:

                      Software and Hardware

                           Revenues are recorded when software or hardware
                           products are shipped and are recorded net of
                           allowance for estimated returns, price concessions
                           and other discounts.

                      Services

                           Revenues for services (installation, engineering and
                           training) are recognized when services are completed.

                      Maintenance Agreements

                           Maintenance agreements generally require the Company
                           to provide technical support and certain software
                           updates to customers. Revenue on technical support
                           and software update rights is recognized ratably over
                           the term of the maintenance agreement.

                  The Company follows the provisions of the American Institute
                  of Certified Public Accountants (AICPA) Statement of Position
                  97-2, "Software Revenue Recognition," as well as the SEC staff
                  Accounting Bulletin 101, "Revenue Recognition in Financial
                  Statements."

--------------------------------------------------------------------------------
                                       44
<PAGE>

CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003



NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Accounts Receivable

                  Accounts receivable are stated at outstanding balances, less
                  an allowance for doubtful accounts. The allowance for doubtful
                  accounts is established through provisions charged against
                  income. Accounts deemed to be uncollectible are charged
                  against the allowance and subsequent recoveries, if any, are
                  credited to the allowance. The allowance for doubtful accounts
                  is maintained at a level considered adequate to provide for
                  losses that can be reasonably anticipated. Management's
                  periodic evaluation of the adequacy of the allowance is based
                  on past experience, aging of the receivables, adverse
                  situations that may affect a customer's ability to pay,
                  current economic conditions and other relevant factors. This
                  evaluation is inherently subjective as it requires estimates
                  that may be susceptible to significant change. Unpaid balances
                  remaining after the stated payment terms are considered past
                  due.

              Securities

                  Securities classified as available for sale are those
                  securities that the Company intends to hold for an indefinite
                  period of time but not necessarily to maturity. Securities
                  available for sale are carried at fair value. Unrealized gains
                  or losses are included in other comprehensive income. Realized
                  gains or losses, determined on the basis of the cost of the
                  specific securities sold, are included in earnings.

              Inventories

                  Inventories, which consist entirely of hardware purchased for
                  resale, are stated at the lower of average cost (first-in,
                  first-out method) or market.

              Property and Equipment

                  Property and equipment are stated at cost. Depreciation on
                  equipment is computed by the declining-balance method over the
                  equipment's estimated useful lives. Improvements to leased
                  property are amortized over the lesser of the life of the
                  lease or the lives of the improvements. An aircraft was being
                  amortized over seven years under the straight-line method and
                  software is being amortized over three years under the
                  straight-line method.

                  Expenditures for betterments and additions are capitalized,
                  while maintenance and repairs are charged to expense when
                  incurred. When depreciable property is retired or otherwise
                  disposed of, the related assets and accumulated depreciation
                  are removed from the accounts and any resultant gain or loss
                  is reflected in earnings.

              Other Assets

                  During 2004, the Company disposed of its 25% investment in
                  Reading Air Charter, LLC (RAC). Prior to this disposition, the
                  Company accounted for this investment utilizing the equity
                  method of accounting. Under this method, the net income of RAC
                  was recognized as income in the Company's income statements
                  and added to the investment account, and distributions
                  received from RAC were treated as a reduction of the
                  investment account. Allocation of RAC's profits was governed
                  by a Partnership Agreement, although it was generally based on
                  the ownership percentage of each of the partners. RAC's
                  operations for the periods ended December 31, 2004 and 2003
                  were not material.

--------------------------------------------------------------------------------
                                       45
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Other Assets (Continued)

                  Concurrent with this investment, the Company acquired a 25%
                  interest in an aircraft that is leased to RAC (see Note 8).
                  The Company relinquished their interest in the aircraft
                  coincident with the disposition of this investment.

                  As a result of the Company's disposition of this investment
                  and aircraft, a loss was recognized amounting to $128,663 for
                  the year ended December 31, 2004.

                  On January 23, 2004, the Company entered into a Technology
                  License Agreement with ADROIT, a South African Company. That
                  agreement was amended and restated on March 17, 2004. As a
                  result, the Company will obtain an irrevocable license to
                  market ADROIT's VIZNET software, including the right to
                  sublicense this product to third parties. The Company is
                  required to pay ADROIT $100,000 in accordance with the terms
                  of the agreement. This agreement will remain in effect for
                  five years and holds terms for annual renewals. As of December
                  31, 2004, the Company has paid $50,000 of this obligation. The
                  Company will begin to amortize this Agreement when it obtains
                  the licensed product.

              Goodwill

                  Effective as of January 1, 2002, the Company adopted Statement
                  of Financial Accounting Standards ("SFAS") No. 142, "Goodwill
                  and Other Intangible Assets." Under SFAS No. 142, goodwill and
                  other intangible assets with indefinite lives are no longer
                  amortized but are reviewed annually, or more frequently if
                  impairment indicators arise. Based upon such review,
                  management determined that no write-down of goodwill was
                  required as of December 31, 2004 and 2003.

              Deferred Income

                  Deferred income represents prepayments on maintenance
                  contracts and advance billings on software and hardware sales.
                  Income on maintenance contracts is recognized over the life of
                  the contract. Income on advance billings is recognized as work
                  progresses and expenses are incurred.

              Income Taxes

                  The Company accounts for its income taxes under the liability
                  method specified by SFAS No. 109, "Accounting for Income
                  Taxes." Deferred tax assets and liabilities are determined
                  based on the difference between the financial statement and
                  tax bases of assets and liabilities as measured by the enacted
                  tax rates which will be in effect when these differences
                  reverse. Deferred tax expense is the result of changes in
                  deferred tax assets and liabilities. Deferred tax assets are
                  reduced by a valuation allowance when, in the opinion of
                  management, it is more likely than not that some portion of
                  the deferred tax assets will not be realized.

--------------------------------------------------------------------------------
                                       46
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Net Income (Loss) per Common Share

                  The Company reports earnings per share in accordance with the
                  provisions of SFAS No. 128, "Earnings Per Share." SFAS No. 128
                  requires presentation of basic and diluted earnings per share
                  in conjunction with the disclosure of the methodology used in
                  computing such earnings per share. Basic earnings per share
                  excludes dilution and is computed by dividing income available
                  to common stockholders by the weighted average common shares
                  outstanding during the period. Diluted earnings per share
                  takes into account the potential dilution that could occur if
                  securities or other contracts to issue common stock were
                  exercised and converted into common stock.

              Stock Based Compensation

                  The Financial Accounting Standards Board's SFAS No. 123,
                  "Accounting for Stock-Based Compensation," contains a fair
                  value-based method for valuing stock-based compensation that
                  entities may use, which measures compensation cost at the
                  grant date based on the fair value of the award. Stock
                  compensation expense and sales discounts recognized for
                  nonemployee legal and consulting services and customer
                  purchases totaled $13,000 and $47,000 for the years ended
                  December 31, 2004 and 2003, respectively.

                  SFAS No. 123 permits entities to continue accounting for
                  employee stock options and similar equity instruments under
                  Accounting Principles Board (APB) Opinion 25, "Accounting for
                  Stock Issued to Employees." The Company accounts for its
                  employee stock option plans under APB Opinion No. 25.
                  Compensation expense recognized for stock options issued to
                  employees with an exercise price less than the fair market
                  value of the related common stock amounted to $43,723 and
                  $80,374 for the years ended December 31, 2004 and 2003,
                  respectively. Entities that continue to account for stock
                  options using APB Opinion 25 are required to make pro forma
                  disclosures of net income and earnings per share, as if the
                  fair value-based method of accounting defined in SFAS No. 123
                  had been applied.

--------------------------------------------------------------------------------
                                       47
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Stock Based Compensation (Continued)

                  Had compensation cost for the options been determined based on
                  the fair value of the employee options at the grant dates
                  consistent with the method of SFAS No. 123, the Company's net
                  income and net income per share of common stock would have
                  been reduced to the pro forma amounts indicated below:
<TABLE>
<CAPTION>
                                                                         2004           2003
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
                   Net loss:
                        As reported                                   ($1,203,578)   ($2,052,396)
                        Add stock based employee compensation
                            expense included in reported net loss,
                            net of related tax effects                     43,723         80,374
                        Deduct total stock-based employee
                            compensation expense determined
                            under fair value based method for
                            all awards, net of related tax effect        (135,971)      (259,523)
                                                                      -----------    -----------

                        Pro forma net loss                            ($1,295,826)   ($2,231,545)
                                                                      ===========    ===========

                   Net income per share of common stock, basic:
                        As reported                                   ($     0.19)   ($     0.35)
                        Pro forma                                     ($     0.20)   ($     0.37)

                   Net income per share of common stock, diluted:
                        As reported                                   ($     0.19)   ($     0.35)
                        Pro forma                                     ($     0.20)   ($     0.37)
</TABLE>
                  The fair value of each option grant is estimated on the date
                  of grant using the Black-Scholes options-pricing model with
                  the following weighted average assumptions used for grants in
                  2004 and 2003: dividend yield of 0% for both years, expected
                  volatility of 97% and 87%, the average risk-free interest rate
                  of 3.90% and 2.99% for 2004 and 2003; and expected lives of
                  6.83 years for the directors and 7.0 years for consulting
                  options, in 2004 and 2003, respectively.

              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 and disclosure of contingent assets and
                  liabilities at the date of the financial statements and the
                  reported amounts of revenues and expenses during the reporting
                  period. Actual results could differ from those estimates.

--------------------------------------------------------------------------------
                                       48
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Cash and Cash Equivalents

                  The Company considers all investments with an original
                  maturity of three months or less to be cash equivalents.

              Software Development Costs

                  Under the criteria set forth in SFAS No. 86, "Accounting for
                  the Costs of Computer Software to be Sold, Leased or Otherwise
                  Marketed," capitalization of software development costs begins
                  upon the establishment of technological feasibility of the
                  product. The establishment of technological feasibility and
                  the ongoing assessment of the recoverability of these costs
                  require considerable judgment by management with respect to
                  certain external factors, including but not limited to,
                  anticipated future gross product revenue, estimated economic
                  product lives, and changes in software and hardware
                  technology. Amounts that would have been capitalized under
                  this statement after consideration of the above factors were
                  immaterial and, therefore, no software development costs have
                  been capitalized by the Company.

                  Costs incurred internally to develop computer software
                  products and the costs to acquire externally developed
                  software products (which have no alternative future use) to be
                  sold, leased or otherwise marketed are charged to expense as
                  research and development until the technological feasibility
                  of the product has been established. Costs incurred after
                  technological feasibility have been established for software
                  development, maintenance and product enhancements and
                  acquisition costs are included in cost of goods sold.

              Advertising Costs

                  The Company expenses the cost of advertising the first time
                  advertising takes place. Advertising expense for the years
                  ended December 31, 2004 and 2003 was $132,208 and $45,880,
                  respectively.

              Comprehensive Income

                  Accounting principles generally require that recognized
                  revenue, expenses, gains and losses be included in net income.
                  Certain changes in assets and liabilities, such as unrealized
                  gains and losses on available for sale securities, are
                  reported as a separate component of the equity section of the
                  balance sheet. Such items, along with net income, are the
                  components of comprehensive income.

--------------------------------------------------------------------------------
                                       49
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

              Comprehensive Income (Continued)

                  The components of other comprehensive income (loss) and
                  related tax effects are as follows:
<TABLE>
<CAPTION>
                                                                         2004         2003
                                                                      ----------   ----------
<S>                                                                   <C>          <C>
                   Unrealized holding gains arising during the year   $   59,346   $   64,879
                   Reclassification adjustment for losses realized
                     in net income                                       115,135      176,006
                                                                      ----------   ----------

                   Net decrease in unrealized losses                     174,481      240,885

                   Tax effect                                                  0            0
                                                                      ----------   ----------

                          Net of Tax Amount                           $  174,481   $  240,885
                                                                      ==========   ==========
</TABLE>
              Recently Issued Accounting Standards

                  In December 2004, the Financial Accounting Standards Board
                  (FASB) issued Statement No. 123(R), "Share-Based Payment."
                  Statement No. 123(R) revised Statement No. 123, "Accounting
                  for Stock-Based Compensation," and supersedes APB Opinion No.
                  25, "Accounting for Stock Issued to Employees," and its
                  related implementation guidance. Statement No. 123(R) will
                  require compensation costs related to share-based payment
                  transactions to be recognized in the financial statements
                  (with limited exceptions). The amount of compensation costs
                  will be measured based on the grant-date fair value of the
                  equity or liability instruments issued. Compensation cost will
                  be recognized over the period that an employee provides
                  service in exchange for the award. This statement is effective
                  for the Company as of the beginning of the first interim or
                  annual reporting period that begins after December 15, 2005.
                  The Company is currently evaluating the impact that this
                  standard will have on its results of operations and financial
                  position.

                  In November 2004, the FASB issued Statement No. 151,
                  "Inventory Costs, an amendment of ARB No. 43, Chapter 4,"
                  (SFAS 151) which clarifies the types of costs that should be
                  expensed rather than capitalized as inventory. This statement
                  also clarifies the circumstances under which fixed overhead
                  costs associated with operating facilities involved in
                  inventory processing should be capitalized. The provisions of
                  SFAS 151 are effective for fiscal years beginning after June
                  25, 2005. The Company has not determined the impact, if any,
                  that this statement will have on its financial position or
                  results of operations.

              Reclassification

                  Certain reclassifications have been made to the 2003 financial
                  statements in order for them to conform to their 2004
                  presentation. These reclassifications had no impact on the
                  2003 results of operations.

--------------------------------------------------------------------------------
                                       50
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 3 - SECURITIES

              No securities were held by the Company at December 31, 2004. The
         amortized cost and approximate fair value of securities as of December
         31, 2003 is summarized as follows:
<TABLE>
<CAPTION>
                                                       Gross       Gross
                                          Amortized  Unrealized  Unrealized     Fair
                                            Cost       Gains       Losses       Value
                                          ---------  ----------  ----------  ----------
<S>                                       <C>         <C>         <C>        <C>
          December 31, 2003
              Securities available for
                sale, equity securities   $ 375,497   $      0    ($174,481) $  201,016
                                          =========   ========   ==========  ==========
</TABLE>
              There were no gross realized gains on sales of available for sale
         securities for the years ended December 31, 2004 or 2003. The gross
         realized losses on sales of available for sale securities totaled
         $115,135 and $176,006 for the years ending December 31, 2004 and 2003,
         respectively. The cost of securities sold is determined by specific
         identification.


NOTE 4 - PROPERTY AND EQUIPMENT

              Property and equipment consisted of the following at December 31,
              2004 and 2003:

                                                                     Estimated
                                               2004         2003    Useful Lives
                                            ----------  ----------  ------------
          Furniture, fixtures and equipment $  736,476  $  700,572  3 - 10 years
          Aircraft - 25% interest                    0     328,900     7 years
          Leasehold improvements               314,150     314,150  7 - 40 years
          Computer software                     55,026      55,026     3 years
                                            ----------  ----------

                                             1,105,652   1,398,648
          Accumulated depreciation and
            amortization                      (794,921)   (822,783)
                                            ----------  ----------

                                            $  310,731  $  575,865
                                            ==========  ==========

              Depreciation and amortization related to property and equipment
         amounted to $97,434 and $142,479 for the years ended December 31, 2004
         and 2003, respectively.

--------------------------------------------------------------------------------
                                       51
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 5 - INCOME TAXES

         The benefit for income taxes for the years ended December 31, 2004 and
2003 was as follows:
<TABLE>
<CAPTION>
                                                                2004         2003
                                                            -----------  -----------
<S>                                                         <C>          <C>
                   Federal:
                        Current                             ($    8,294) ($   85,072)
                        Deferred                                  8,294       48,715
                                                            -----------  -----------

                                                            $         0  ($   36,357)
                                                            ===========  ===========

         A reconciliation of income tax expense at the U.S. federal statutory
income tax rate to actual income tax expense is as follows:

                                                                2004         2003
                                                            -----------  -----------
                   Pretax at statutory rate                 ($  409,217) ($  710,176)
                   State taxes, net of federal benefit          (62,380)    (180,884)
                   Valuation allowance                          284,513      906,248
                   Other                                        187,084      (51,545)
                                                            -----------  -----------

                                                            $         0  ($   36,357)
                                                            ===========  ===========

         The net deferred tax asset for the years ended December 31, 2004 and
2003 consists of the following:

                                                                2004         2003
                                                            -----------  -----------
                   Deferred tax assets:
                        Deferred stock compensation         $   174,103  $   262,192
                        Allowance for doubtful accounts           6,489        6,707
                        Accrued vacation                         15,082       17,938
                        Research and development credits        140,419      148,713
                        Net operating loss carry forwards     1,096,480      743,713
                                                            -----------  -----------

                                                              1,432,573    1,179,263

                        Valuation allowance                  (1,266,515)    (982,002)
                                                            -----------  -----------

                          Total Deferred Tax Asset              166,058      197,261

                   Deferred tax liabilities,
                        depreciation expense                    (25,639)     (48,548)
                                                            -----------  -----------

                          Net Deferred Tax Asset            $   140,419  $   148,713
                                                            ===========  ===========
</TABLE>

--------------------------------------------------------------------------------
                                       52
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 5 - INCOME TAXES (CONTINUED)

              The Company increased the valuation allowance by $284,513 and
         $906,248 during 2004 and 2003, based upon the results of operations. At
         December 31, 2004, the Company has a federal net operating loss carry
         forward of approximately $2,500,000 for which a deferred tax asset was
         recorded, with a corresponding valuation allowance. This net operating
         loss carry forward expires at varying times through 2025. At December
         31, 2004, the Company has state net operating loss carry forwards of
         approximately $2,500,000 for which a deferred tax asset was recorded,
         with a corresponding valuation allowance. The state net operating loss
         carry forwards expire in 2022 through 2025.


NOTE 6 - LINE OF CREDIT

              The Company has a $500,000 line of credit with a bank. Interest is
         payable monthly at the bank's prime interest rate plus .50%. The
         balance of outstanding borrowings was $341,068 and $331,000 at December
         31, 2004 and 2003, respectively. The line of credit expires on April
         30, 2005. The line of credit is collateralized by a first lien security
         interest in all business assets and an unlimited personal guarantee of
         a shareholder. This line includes a financial covenant that requires
         the Company to maintain a certain tangible net worth. The Company was
         not in compliance with this covenant at December 31, 2004, however, a
         waiver of this covenant was obtained from the bank.

              The Company has a $2,000,000 revolving credit agreement with a
         Director. Interest is payable quarterly at an interest rate of 4.00%
         per annum. The balance of outstanding borrowings was $-0- at December
         31, 2004. The line of credit expires July 2006. The line of credit is
         collateralized by the Chief Executive Officer and President's shares of
         common stock in the Company.


NOTE 7 - DEMAND NOTE PAYABLE, STOCKHOLDER

              The Company has a $130,000 demand note payable with a Director.
         Interest is payable monthly at a rate of prime plus 1.00%. The balance
         of outstanding borrowings was $130,000 at December 31, 2004. The demand
         note is collateralized by a security interest in substantially all
         business assets and a first priority preferred security interest in the
         Company's software programs. This note is subordinated to the bank's
         line of credit (Note 6).


NOTE 8 - LONG-TERM DEBT

              The long-term debt of $186,772 at December 31, 2003 was satisfied
         during 2004 in the form of payments and forgiveness associated with the
         release of the Company's interest in the aircraft to which this debt
         related (see Note 2).

--------------------------------------------------------------------------------
                                       53
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 9 - CAPITAL LEASE OBLIGATIONS

              During 2004, the Company entered into a three-year lease agreement
         for the use of equipment. The lease, which qualifies as a capital lease
         obligation, requires monthly payments of $973 through December 2007.

              The following amounts represent annual lease payments by year and
         in the aggregate including amounts which represent interest and current
         maturities at December 31, 2004:

                            Years ending:
                                 2005                                  $ 11,676
                                 2006                                    11,676
                                 2007                                    11,676
                                                                       --------

                                                                         35,028
                                 Amounts representing interest           (3,044)
                                                                       --------

                                                                         31,984
                                 Current maturities                     (10,010)
                                                                       --------

                                                                       $ 21,974
                                                                       ========

              The following amounts are included in property and equipment
         related to the above lease at December 31, 2004:

                            Equipment                                  $ 31,984
                            Accumulated depreciation                          0
                                                                       --------

                                                                       $ 31,984
                                                                       ========

--------------------------------------------------------------------------------
                                       54
<PAGE>

CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 10 - EARNINGS PER SHARE

              The Company's calculation of earnings per share is as follows:
<TABLE>
<CAPTION>
                                                                    2004           2003
                                                                -----------    -----------
<S>                                                             <C>            <C>
                   NET LOSS                                     ($1,203,578)   ($2,052,396)
                        Preferred stock dividends                   (80,000)       (80,000)
                        Preferred stock discount accretion          (29,749)       (44,678)
                                                                -----------    -----------

                   NET LOSS APPLICABLE TO COMMON STOCKHOLDERS   ($1,313,327)   ($2,177,074)
                                                                ===========    ===========

                   AVERAGE BASIC SHARES OUTSTANDING               6,923,750      6,317,653
                        Assumed conversion of preferred stock             0              0
                        Effect of dilutive options and warrants           0              0
                                                                -----------    -----------

                   AVERAGE DILUTED SHARES OUTSTANDING             6,923,750      6,317,653
                                                                ===========    ===========

                   NET LOSS PER COMMON SHARE
                        Basic                                   ($    0.19)    ($    0.35)
                                                                ===========    ===========

                        Diluted                                 ($    0.19)    ($    0.35)
                                                                ===========    ===========
</TABLE>
              A total of 2,442,500 common stock options and warrants and 746,965
         shares of convertible preferred stock were not included in the
         computation of diluted earnings per share because of their
         anti-dilutive effect for the year ended December 31, 2004.

              A total of 1,677,500 common stock options and warrants and 746,965
         shares of convertible preferred stock were not included in the
         computation of diluted earnings per share because of their
         anti-dilutive effect for the year ended December 31, 2003.


NOTE 11 - RELATED PARTY TRANSACTIONS

              The Company is affiliated with High Printing and Graphics, Inc.
         The Company's President owns a 50% interest in High Printing and
         Graphics, Inc. During the years ended December 31, 2004 and 2003, the
         Company conducted transactions with the related party which were
         immaterial, both individually and in the aggregate.

              The Company rents space from certain of the Company's stockholders
         on a month-to-month basis. Rent expense for 2004 and 2003 relating to
         this arrangement was $120,000 each year.

--------------------------------------------------------------------------------
                                       55
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 11 - RELATED PARTY TRANSACTIONS (CONTINUED)

              The Company owned a 25% interest in Reading Air Charter, LLC
         (RAC). During the years ended December 31, 2004 and 2003, the Company
         leased to RAC its portion of an aircraft for total rental income of
         $17,521 and $52,565 for the years ended December 31, 2004 and 2003,
         respectively. The interest was disposed of during 2004. (See Note 2)

              Prior to disposition of this interest, the Company paid RAC a
         monthly fee for the use of RAC's services. Total fees paid to RAC
         during 2004 and 2003 were $25,200 and $78,000, respectively.


NOTE 12 - EMPLOYEE DEFERRED SALARY PLAN

              The Company has an employee savings plan subject to the provisions
         of Section 401(k) of the Internal Revenue Code. Under the terms of the
         Plan, the Company will match 25% of the participant's contribution, up
         to 6% of the participant's compensation. The total Company
         contributions included in the statements of operations for the years
         ended December 31, 2004 and 2003 were $21,411 and $31,757,
         respectively.


NOTE 13 - STOCKHOLDERS' EQUITY

              In January 2001, the Company entered into a two-year agreement
         with a marketing firm in which a total of 400,000 stock warrants were
         issued. The agreement called for 16,667 warrants to vest per month at
         an exercise price of $0.25 per share. 200,000 warrants were vested at
         December 31, 2001 and each of these warrants is exercisable for one
         share of common stock at an exercise price of $0.25 per share. During
         2002, the Company amended this marketing agreement whereby the
         remaining 200,000 warrants vested on January 1, 2003 and each of these
         warrants is exercisable for one share of common stock at an exercise
         price of $2.00 per share. The weighted-average fair value of warrants
         vesting in 2003 was $.26. The grant date fair value of the warrants
         issued during 2001 was $0.50 per warrant. No warrants were granted
         during 2004 or 2003. The warrants that vested during 2001 were
         exercised on November 6, 2003. As a result, 161,538 shares of common
         stock were issued and 38,462 warrants were forfeited. The warrants that
         vested on January 1, 2003 expire on January 1, 2008.

              In August 2001, the Company issued 746,965 shares of its Series A
         Convertible Preferred Stock and 300,000 Common Stock Purchase Warrants
         for $1,000,000. Approximately $134,000 of the $1,000,000 purchase price
         has been allocated to the fair value of the warrants, generating a
         discount on preferred stock that was being accreted over a period of
         three years. Such accretion was $29,749 and $44,678 for the years ended
         December 31, 2004 and 2003, respectively. The warrants are exercisable
         at the fair market value of the Company's stock on the vesting dates.
         100,000 warrants vested immediately and were exercised in 2001 for
         $133,000. 100,000 warrants vested on January 1, 2002 and the remaining
         100,000 warrants vested on January 1, 2003. These warrants are
         exercisable at $2.00 and $1.75 per warrant for the warrants that vested
         on January 1, 2002 and 2003, respectively. The warrants expire three
         years from date of vesting. The warrants that vested on January 1,
         2002, expired on January 1, 2005.

--------------------------------------------------------------------------------
                                       56
<PAGE>

CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 13 - STOCKHOLDERS' EQUITY (CONTINUED)

              Each of the preferred shares is convertible into shares of the
         Company's common stock at a conversion price of $1.33875, subject to
         certain anti-dilution adjustments. The holders of the Series A
         Preferred Shares are entitled to receive an annual cumulative dividend
         on each share of the Series A Preferred Shares equal to 8% of the
         Issuance Price ($1.33875) payable quarterly on the fifteenth day
         following the end of each fiscal quarter, in kind, in the form of
         additional shares of the Series A Preferred Stock, or at the election
         of the Company in cash; provided, however, that dividends on the Series
         A Preferred Shares: will cease to accrue and will not be payable for
         any year during which the Fair Market Value (as defined) of the Common
         Stock, as of the anniversary date of August 17, increases by an amount
         equal to or greater than 8% over the Fair Market Value of the Common
         Stock as of the preceding August 17 and will permanently cease to
         accrue, and dividends accrued and unpaid with respect to any partial
         dividend period prior to such date will not be payable, if the Fair
         Market Value of the Common Stock, at any time after the effectiveness
         date of the initial registration covering the public resale of the
         shares of Common Stock issuable upon the exercise of the Series A
         Preferred Shares equals or exceeds the average Closing Price (as
         defined) multiplied by 2 for the 25 day period following the effective
         date of the Initial Registration. For the years ended December 31, 2004
         and 2003, dividends in the amount of $80,000 were accrued related to
         the Series A Preferred Shares outstanding. At December 31, 2004 and
         2003, the per share amount of dividends in arrearages amounted to $0.36
         and $0.25, respectively.

              In the event of any liquidation, dissolution or winding up of the
         Company, either voluntary or involuntary, the holders of the Series A
         Preferred Shares shall be entitled to receive, prior and in preference
         to any distribution of any of the assets of the Company to the holders
         of Common Stock by reason of ownership thereof, an amount per share
         equal to the sum of $1.33785 for each outstanding share of Series A
         Preferred Stock plus accrued and unpaid dividends.

              The holders of the Series A Preferred Stock shall have the
         following rights with the Common Stockholders:

              (a)   Vote on an as-converted basis, with the Common Stock on all
                    matters submitted to a vote of stockholders;

              (b)   Vote as a separate class where provided under Delaware law
                    or the Company's charter or by-laws;

              (c)   To elect one member of the Company's Board of Directors so
                    long as not less than 375,000 shares of the Series A
                    Preferred Stock are issued and outstanding, and

              (d)   The Company agrees that it shall not take any of the
                    following actions without affirmative vote of the holders of
                    the majority of the Series A Preferred Stock: issue any
                    further preferred shares or other securities of the Company
                    with the liquidation rights equal to or superior to those of
                    the outstanding Series A Preferred Stock, or amend the
                    Certificate of Designation in any manner that would directly
                    and adversely affect the Series A Preferred Stock.

--------------------------------------------------------------------------------
                                       57
<PAGE>

CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 13 - STOCKHOLDERS' EQUITY (CONTINUED)

              During July 2004, the Company carried out a private placement in
         which units were offered at $50,000 per unit, with each unit consisting
         of 100,000 shares of the Company's common stock and 100,000 warrants
         for the purchase of the Company's common stock. Each warrant entitles
         the holder to purchase one share of common stock at a price of $1.00
         per share for a period of five years that commenced on the closing date
         of the offering. As a result of this offering, the Company issued
         720,000 common shares and warrants and recognized $360,000 during 2004.

              Also in July 2004, the Company issued 20,000 shares of its common
         stock, valued at $11,000 to a company in the form of a non-refundable
         retainer for its services to assist the Company in raising capital on a
         non-exclusive basis for a period of six months.

              In December 2003, the Company entered into an agreement with its
         outside legal counsel in which 100,000 shares of common stock and
         100,000 stock warrants were issued at a cost of $75,000. These warrants
         are exercisable at any time on or after January 1, 2004 and on or prior
         to close of business on December 31, 2013, at an exercise price of $1
         per share of common stock.


NOTE 14 - STOCK OPTION PLAN

              During 2002, the stockholders approved the adoption of the 2002
         stock option plan (the 2002 Plan). The purpose of the 2002 Plan is to
         provide a means whereby directors and selected employees, officers,
         agents, consultants and independent contractors of the Company may be
         granted incentive stock options and/or nonqualified stock options to
         purchase shares of common stock in order to attract and retain the
         services or advice of such directors, employees, officers, agents,
         consultants and independent contractors. A total of 1,600,000 shares of
         common stock have been made available. The options under this plan vest
         as dictated in the individual stock option agreements and expire five
         years from date of grant for a 10% stockholder and ten years from date
         of grant for all others. At December 31, 2004 and 2003, 180,000 and
         155,000, respectively, options have been granted under this Plan, all
         of which were granted at market value.

              During 1999, the stockholders approved the adoption of the 1999
         stock option plan (the 1999 Plan). The purpose of the 1999 Plan is to
         provide a means whereby directors and selected employees, officers,
         agents, consultants and independent contractors of the Company may be
         granted incentive stock options and/or nonqualified stock options to
         purchase shares of common stock in order to attract and retain the
         services or advice of such directors, employees, officers, agents,
         consultants and independent contractors. A total of 1,300,000 shares of
         common stock have been made available. The options under this Plan vest
         over a five-year period, in 20% increments on each successive
         anniversary of the date of the grant, with varying expiration dates.

              At December 31, 2004, 1,182,500 options have been granted under
         the 1999 plan of which 737,500 options have been granted below market
         price and for which 140,000 options have been exercised through
         December 31, 2004.

--------------------------------------------------------------------------------
                                       58
<PAGE>
CIMNET, INC.
================================================================================
NOTES TO FINANCIAL STATEMENTS
December 31, 2004 and 2003

NOTE 14 - STOCK OPTION PLAN (CONTINUED)

              At December 31, 2003, 1,162,500 options have been granted under
         the 1999 plan of which 737,500 have been granted below market price and
         for which 140,000 options have been exercised through December 31,
         2003. Compensation expense related to these options was $43,723 and
         $80,374 for employees and directors, and $2,000 and $47,000 for legal
         counsel for the years ended December 31, 2004 and 2003, respectively.

              A summary of the status of the Company's stock option plans as of
         December 31, 2004 and 2003 is presented below:
<TABLE>
<CAPTION>
                                                   2004                      2003
                                         -----------------------   ----------------------
                                                        Weighted                 Weighted
                                                        Average                  Average
                                                        Exercise                 Exercise
                                            Shares       Price        Shares      Price
                                         -----------    --------   -----------   --------
<S>                                           <C>          <C>         <C>          <C>
Outstanding, beginning of year             1,177,500      $1.05      1,002,500   $  1.11
     Granted                                  45,000       0.85        175,000      0.69
     Forfeited                              (150,000)      1.35              0      0.00
                                         -----------    -------    -----------   -------

Outstanding, end of year                   1,072,500    $  1.00      1,177,500   $  1.05
                                         ===========    =======    ===========   =======

Options exercisable at year-end            1,005,484    $  1.02        886,594   $  1.08
                                         ===========    =======    ===========   =======

Weighted average fair value of options
     granted during the year                            $  0.60                  $  0.47
                                                        =======                   =======
</TABLE>
              The following table summarizes information about options
         outstanding at December 31, 2004 and 2003:
<TABLE>
<CAPTION>
                             2004                                            2004
                     Options Outstanding                             Options Exercisable
-------------------------------------------------------------   ----------------------------
                                        Weighted     Weighted                       Weighted
                        Number          Average      Average         Number         Average
   Range of         Outstanding at    Contractual    Exercise    Outstanding at     Exercise
Exercise Prices   December 31, 2004   Life (Years)     Price    December 31, 2004    Price
---------------   -----------------   ------------   --------   -----------------   --------
<S>                     <C>               <C>          <C>            <C>            <C>
     $0.05              135,000           2.96         $0.05          135,000        $0.05
 $0.33 - $0.90          205,000           4.07          0.57          149,026         0.59
 $0.91 - $1.50          632,500           2.97          1.18          626,458         1.17
 $1.51 - $2.00          100,000           3.25          2.00           95,000         2.00
                     ----------                                    ----------

                      1,072,500                                     1,005,484
                     ==========                                    ==========
</TABLE>
--------------------------------------------------------------------------------
                                       59
<PAGE>

NOTE 14 - STOCK OPTION PLAN (CONTINUED)

<TABLE>
<CAPTION>
                             2003                                            2003
                     Options Outstanding                             Options Exercisable
-------------------------------------------------------------   ----------------------------
                                        Weighted     Weighted                       Weighted
                        Number          Average      Average         Number         Average
   Range of         Outstanding at    Contractual    Exercise    Outstanding at     Exercise
Exercise Prices   December 31, 2003   Life (Years)     Price    December 31, 2003    Price
---------------   -----------------   ------------   --------   -----------------   --------
<S>                     <C>               <C>          <C>            <C>            <C>
     $0.05              185,000           3.96         $0.05          149,333        $0.05
 $0.57 - $0.90          180,000           4.94          0.61           73,970         0.62
 $0.91 - $1.50          612,500           3.90          1.17          513,291         1.17
 $1.51 - $2.00          200,000           4.25          2.00          150,000         2.00
                     ----------                                    ----------

                      1,177,500                                       886,594
                     ==========                                    ==========
</TABLE>
NOTE 15 - COMMITMENTS AND CONTINGENCIES

              The Company leased various office equipment and a vehicle which
         were classified as operating leases. All leases expired in 2004. Total
         expense under these operating leases amounted to $14,860 for the year
         ending December 31, 2004.

              Total rental expense under all leases for the years ended December
         31, 2004 and 2003 was $137,927 and $143,831, respectively. (See Note
         11)

              Cimnet, Inc. is at times involved in ordinary and routine
         litigation incidental to its business. The Company is not party to any
         pending legal proceedings that, in the opinion of management, would
         have a material adverse effect on the results of its operations or
         financial position.


NOTE 16 - CONCENTRATION OF RISK

              Financial instruments which potentially subject the Company to
         concentrations of credit risk consist principally of cash which may, at
         times, exceed FDIC limits and trade accounts receivable.

              During 2004, the Company had sales to one customer totaling
         $324,500 of which $104,940 was outstanding at December 31, 2004. During
         2003, the Company had sales to one customer totaling $567,434 of which
         $65,948 was outstanding at December 31, 2003. No other significant
         concentrations existed at December 31, 2004 and 2003.

--------------------------------------------------------------------------------
                                       60
<PAGE>


                                    SIGNATURE

         Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Dated:   Robesonia, Pennsylvania
         March 30, 2005

                        CIMNET(R), INC.


                        By:  /s/ JOHN D. RICHARDSON
                             --------------------------------------------------
                                 John D. Richardson
                                 Chairman of the Board, Chief Executive Officer
                                 and Principal Accounting Officer

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

Signature                             Title                           Date
---------                             -----                           ----

/s/ JOHN D. RICHARDSON      Chairman of the Board,               March 30, 2005
----------------------      Chief Executive Officer
John D. Richardson          and Principal Accounting Officer


/s/ WILLIAM NYMAN           Director and Vice President          March 30, 2005
----------------------      of Integration Services
William Nyman


/s/ DAVID BIRK              Director                             March 30, 2005
----------------------
David Birk


/s/ KARL GERHART            Director                             March 30, 2005
----------------------
Karl Gerhart

/s/ JEFFREY FOX             Director                             March 30, 2005
----------------------
J.Jeffrey Fox

/s/ SUNDARESH RAMAYYA       Director                             March 30, 2005
----------------------
Sundaresh  Ramayya