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, 2002       Commission File Number 0-22597

                                  CIMNET, 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 $4,152,508.

      The aggregate market value of the voting stock held by non-affiliates of
the Issuer as of March 27, 2003 was approximately $967,850 (based upon a closing
price of $.44 per share).

      The number of outstanding shares of the Issuer's common stock as of March
27, 2003 was 6,292,321 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 2003.
<PAGE>

                                  CIMNET, INC.

                                Table of Contents

                                                                           Page
                                                                           ----

                                     PART I


BUSINESS.....................................................................1

PROPERTIES..................................................................22

LEGAL PROCEEDINGS...........................................................22

SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS..........................22

                                    PART II

MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.......23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.......................................................24

FINANCIAL STATEMENTS........................................................31

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE .......................................................31

                                    PART III

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT OF THE REGISTRANT....................32

EXECUTIVE COMPENSATION......................................................32

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS.............................................32

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS..............................32

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K..........32

CONTROLS AND PROCEDURES.....................................................33

PRINCIPAL ACCOUNTANT FEES AND SERVICES......................................33


                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 "will,"
"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.
<PAGE>


                                     PART I
                                     ------


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

      We have been in the business of developing, marketing and installing
software for the manufacturing sector since 1984. Our software products allow
manufacturing companies to schedule and monitor work flow in real time and
reduce operating costs by improving the quality of products being produced. We
believe that integrating live production information with the systems and people
that manage the supply chain is vital to improving manufacturing productivity
and decreasing the time it takes to deliver products to market. Cimnet's
products are key components for manufacturers moving to a make-to-order or a
collaborative manufacturing strategy.

      Our proprietary products Folders(TM), Factelligence(TM), Infolink and DNC
Professional(TM) are used by process and discrete manufacturers in the
aerospace, automotive, pharmaceutical, medical device, food and beverage and
consumer packaged goods industries. We believe that our products are unique
because they are user-configurable. As a result, this makes our products more
valuable to our customers when compared with more cumbersome systems that
require custom programming and specialized support staff.

      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 drive
manufacturing standards and enable production to eliminate variability in
complex manufacturing operations. Cimnet's products operate on Windows(R) 95,
98, 2000, XP and NT.

      Cimnet is proud to report that many of its clients are leading
manufacturers, including GE Power Systems, Johnson & Johnson, Raytheon, Timken,
Nestle Foods, Barber Foods, Caterpillar, Coca Cola and Andersen Windows. During
the year ended December 31, 2002, one of our customers accounted for more than
33% of our total revenues.

Launch of Factelligence(TM)

      In March 2002, we launched our Factelligence(TM) product. Leveraging our
experience from our Folders(TM), Infolink and DNC Professional(TM) products, we
developed and brought to market Factelligence(TM), a web based, user
configurable Manufacturing Execution System (MES) designed 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
review real-time, web centric information system which 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 more aggressive deadlines.
<PAGE>



Microsoft Business Solutions - Axapta

      In October 2002, we agreed to jointly market and distribute our
Factelligence(TM) product with Axapta, a product owned and sold by Microsoft
Business Solutions. The combined product is designed for manufacturing
businesses in the $100 to $800 million revenue range and will be distributed and
implemented by a select group of our reselling partners as well as reselling
partners of Microsoft Business Solutions.

      The combined Axapta/Factelligence(TM) product is expected to provide
customers a complete ERP (enterprise resource planning) and MES product for the
cost of an ERP software product. Further, the goal is to reduce the expense of
managing a complex and costly integration of an ERP product (Axapta) and an MES
product (Factelligence(TM)) because both products operate on the Microsoft.net
platform and will be fully integrated upon installation at a customer's
manufacturing facility. The Company and Microsoft intend to target customers
primarily located in North America and Europe for sales of the joint
Axapta/Factelligence(TM) product. By utilizing the vast network of Microsoft
resellers, the Company hopes to expand greatly its installation base of
Factelligence(TM) in mid-tier manufacturing facilities.

Transactions with GE Power Systems

      During the first half of 2001, we received purchase orders from the Power
Systems division of the General Electric Company (GEPS) for our manufacturing
execution system software and certain implementation, training and other
services related thereto. In connection with such purchase orders, we agreed to
an investment by GEPS in the capital stock of our Company.

      On August 31, 2001, we entered into a Preferred Stock and Warrant Purchase
Agreement (the "Purchase Agreement") with General Electric Company, a New York
corporation acting through GEPS (the "Purchaser"), pursuant to which we issued
746,965 shares of our Series A Convertible Preferred Stock and a common stock
purchase warrant exercisable for up to a total of 300,000 shares of the
Company's common stock (the "Warrant") in exchange for an investment by the
Purchaser of $1,000,000. On the same day, the Purchaser also exercised the
Warrant for 100,000 shares of our common stock, and we received cash proceeds of
$133,000.

      In order to issue the shares of Series A Convertible Preferred Stock, we
filed a Certificate of Designation with the Secretary of State of the State of
Delaware establishing certain preferences, limitations and relative rights.

      The warrant issued to the Purchaser entitles it to purchase up to 300,000
shares of our common stock, of which 100,000 shares were already exercised and
100,000 shares vested on each of January 1, 2002 and January 1, 2003. The
Warrants are exercisable during the 3 year period following the applicable
vesting date.

      In addition, we granted the Purchaser certain demand and piggyback
registration rights with respect to the shares of common stock issuable upon the
conversion of the Series A Preferred Stock and upon the exercise of the
warrants. We filed a registration statement covering the resale of 1,046,965

                                     - 2 -
<PAGE>

shares of our common stock which became effective in April 2002. The Company is
also obligated under the terms of the Purchase Agreement to cause a nominee of
the Purchaser to be elected to our Board of Directors. In addition, John
Richardson, our founder, President, Chief Executive Officer and principal
stockholder entered into a Voting Agreement pursuant to which he agreed to vote
the shares of common stock beneficially owned by him in favor of the election of
the Purchaser's nominee to the Company's Board of Directors. The Purchaser
agreed to waive its right to appoint a nominee to our Board of Directors in May
2002.

RealTime Acquisition

      On April 14, 2000, Cimnet, Inc. (the "Company") and the stockholders (the
"RealTime Stockholders") of RealTime Information Systems, PTY ("RealTime"), an
Australian company engaged in the business of creating and developing software
for shop floor control, entered into a Stock Purchase Agreement (the "Purchase
Agreement"). Contemporaneous with the execution and delivery of the Purchase
Agreement, the Company and the RealTime Stockholders closed the transaction
contemplated by the Purchase Agreement. Under the terms of the Purchase
Agreement, the Company acquired all of the outstanding capital stock of RealTime
in exchange for (i) the payment by the Company of a total of $10,000 and (ii)
the issuance of 1,194,131 shares of the Company's common stock. The transaction
was accounted for under the purchase method of accounting. The Company recorded
goodwill of $2,676,387. As a result of these transactions, (a) the Company owned
all of the outstanding shares of capital stock of RealTime and (b) Messrs. Ian
Stone, Anthony Crouch and Grant Kelly were issued 571,550, 510,312, and 112,269
shares of Cimnet common stock, respectively. In addition, Messrs. Stone and
Crouch executed employment agreements with the Company. After developing the
Company's Infolink product, the Company dissolved RealTime in January 2001 and
Mr. Stone resigned as an employee of the Company on April 5, 2002.

      Realtime Information Systems, based in Raleigh, NC prior to the merger
with Cimnet, developed and marketed a configurable Manufacturing Execution
System (MES) known as Infolink. First released in 1995, Infolink was the first
fully configurable MES that required no custom code for implementation. Infolink
is a Windows(R) NT-based, client-server application that provides an extensive
range of capabilities including genealogy/traceability, downtime and waste
monitoring, job scheduling and Key Performance Indicators (KPIs). Realtime's
major focus included sales and marketing to the Food and Beverage and Consumer
Packaged Goods industries.

Industry Background

      In the rush to become an "e-business" many manufacturers have focused on
creating sophisticated web sites, and implementing expensive customer
relationship management (CRM) and enterprise resources planning (ERP) systems,
only to find that their highly integrated supply chain breaks down on the
factory floor. The focus on top-level systems has caused them to neglect the
factory floor. This scenario is a detrimental oversight. Antiquated factory
floor technology impedes the new Web-enabled system they have attempted to
create. In these situations factory floor execution must catch up to the
e-business technology on the front end.

                                     - 3 -
<PAGE>

      Enterprise resources planning (ERP) systems are supposed to provide the
total answer. Manufacturers have spent millions implementing them only to
discover that while ERP systems are very effective, they do have shortcomings
and limitations. Some manufacturers have discovered that it takes their shop
floor personnel as much, or more, time to enter information from a production
process into the ERP system than it did to run the process itself. Other
manufacturers have sophisticated factory floor infrastructure in place and
software systems that control and procure data from their production machinery.
However, these systems are not capable of exchanging data with an ERP system.
This scenario creates an informational gap on the factory floor.

      The solution to these issues lies in another layer of software.
Manufacturing Execution Systems (MES) are designed to seamlessly blend
information from the factory floor with the enterprise business systems and
provide the supply chain with real-time ability to track production and order
status. MES fill a need in the manufacturing environment and provide a critical
link that closes the information gap between the factory floor and the front
office within the integrated enterprise.

      Process manufacturers were some of the first companies to discover the
benefits of MES. They have used them for years to provide traceability, quality
and process control, and real-time event monitoring. In the highly regulated
world of food, pharmaceuticals, and chemicals, these systems are the backbone of
the manufacturing process.

      Dynamic business climates and evolving technologies have given MES a
broader scope. Discrete manufacturers are feeling the pressure to shift to a
make-to-order model. They are learning that success in e-business involves much
more than publishing a web site and enabling customers to order online. It
requires a supply chain that can share information in real time and a
manufacturing process that is fast, flexible, capable of minimizing inventory
levels, and can provide real-time information regarding work in process. For
these reasons discrete manufacturers are becoming increasingly interested in
MES. The make-to-order business model shifts the focus to the factory floor. The
visibility and management of order status is in the factory, and not in the
distribution warehouse.

      The e-business strategy has brought attention to the factory floor in
other ways as well. Customers now expect a customized product in a matter of a
few days or weeks. Therefore, manufacturers need to be able to rapidly take
input from the customer and be able to dynamically adapt their manufacturing
operation. Detailed shop floor information in real time also grows in value as
more and more companies outsource subassemblies for their products or produce
subassemblies for others. This is exactly the kind of information that an MES
can provide. MES are capable of providing visibility to all levels of the supply
chain.

      MES provide the solutions many manufacturers need to facilitate the
transition to a flexible make-to-order model, optimize performance economies in
their production processes, and integrate their supply chains in order to
achieve e-business objectives. MES provide infrastructure so smaller lots can be
manufactured cost effectively. They can also reduce set-up times, allow for
quick rerouting of work orders, and reduce the paper trail on the factory floor.

                                     - 4 -
<PAGE>

      A MES typically provides visibility into production processes, management
of orders and production schedules, electronically communicates production data
to factory floor employees, and communicates production results back to an ERP
system. It keeps records of production and inventory, tracks work in process,
and manages production flow. It also provides traceability for quality control
and regulatory compliance. MES typically creates a collaborative environment
that allows manufacturers to provide visibility about production status to their
supply chains.

      A solid e-business strategy is essential for survival in today's business
environment. However, implementing an e-business strategy is more involved than
simply installing customer relationship management (CRM) software and developing
a sophisticated Web Site to procure customer orders more effectively. An effort
must also be made to determine how to deliver on the orders in an efficient
manner.

      Many now believe that in the world of e-business, faster, better, and
cheaper are no longer perceived as a competitive advantage. They are considered
the cost of doing business. Companies that meet these demands are capable of
becoming leaders. To meet these objectives manufacturers need quantitative
information about every aspect of the production process. MES can provide that
data.

      In the e-business environment, we believe the ability to rapidly produce a
top quality product is the benchmark of a market leader. Manufacturers can
address increasing pressures from customers by maximize the constant flow of
relevant data throughout their organization. MES is the way to achieve that
goal. Full utilization of an MES can yield a wealth of information that can help
to facilitate better decision-making at the factory floor and enterprise level.

The Current Market

      During the last few years, many manufacturers have installed new ERP
systems to better manage their financial and logistics systems within their
respective businesses. Unfortunately, many of these companies are now finding
that their factory productivity remains poor. In addition, the onset of
eCommerce has highlighted the need for factories to provide more predictable
production output times and more consistent product quality. Coordinating new
supply chain planning systems into an efficient factory is necessary in order to
compete in the new Internet driven environment.

      These significant changes are coming at a time when many factories are
being forced to reduce their information technology and engineering staffs. We
believe that manufacturers need to create an efficient factory, where the ERP
systems coordinate with the manufacturing process which require minimal support
staff.

      To serve these customers, CIMNET initially created the first configurable
systems called Folders(TM) and Infolink which were the basis for the Company's
current Factelligence(TM) product. These Manufacturing Execution Systems assist
in the management of manufacturing shop floor operations while building accurate
manufacturing information to be fed electronically into the enterprise business

                                     - 5 -
<PAGE>

layer. Our software tools help to improve quality control, and to reduce waste,
machine downtime and operator errors.

      While the generic term MES is widely used, the MES market has historically
been fragmented with vendors who develop custom software to suit the current
needs of each client. This has led to expensive solutions that are difficult to
maintain and expand.

      To compete with the typical MES provider, our products have been designed
to be installed in smaller phases and to be expanded as financial resources
permit. Cimnet products can be installed by third party resellers and are
suitable for wider distribution through a much larger indirect sales channel.

      We believe that this approach will provide us with a broader customer
base, when compared with larger, more cumbersome systems that require custom
programming and specialized support staff.

                        MES Market Growth Roller Coaster
                    As Reported by AMR Research, March 2003

30%

25%

20%                          [GRAPHIC OMITTED]

15%

10%

 5%

 0%
      1997      1998      1999      2000      2001      2002

                                     - 6 -
<PAGE>



Products and Services

      Cimnet develops and markets collaborative MES enterprise software and
provides consulting, education, and support services for the manufacturing
automation markets. These software products provide customers real-time
applications that enable interactive interfaces to manufacturing operations.
These applications disseminate, collect and consolidate information about manual
or automated processes from ERP(Enterprise Resource Planning), HMI(Human Machine
Interface)/SCADA(Supervisory Control And Data Acquisition) and other systems
from single or multiple sites throughout an enterprise. The real-time
information provided by the Company's products is intended to enable customers
to reduce operating costs, improve product quality and increase overall
throughput and productivity.

      Our current software products, sold under the CIMNET trademark offer our
customers upward growth and add-on options, allowing the software to expand with
the business of our customers.

      Since the release of Factelligence(TM) in March 2002, we have has expanded
our reseller and integration base with partners in the US and Europe. This
integration channel includes U.S. and international support for the
implementation of Factelligence(TM) and related products.

      Cimnet formed a relationship with Microsoft Business Solutions in 2002 to
integrate Factelligence(TM) with Axapta. The combined product will be
distributed by Cimnet and Microsoft Business Solutions Channel. The Cimnet
development team is currently working to finish the integration between the two
products. It is expected that the integration will be completed during the
second quarter of 2003.

Our Software Products

      Factelligence(TM) 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.

      Factelligence(TM) 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.

                                     - 7 -
<PAGE>

      (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 shifts. 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
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 products, operate complex processes
or approve on 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.

      (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(TM) configuration and historical data with common ERP, document
management, maintenance and supply chain management systems.

      (l)    Factory Connector. The Factory Connector integrates
Factelligence(TM) 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
setpoints and acquire live process and quality data.

                                     - 8 -
<PAGE>

      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), one of our major products, is a 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.

      Folders(TM): Folders(TM) is Windows(R)-based MES software targeted at
customers with 200 or more employees, offering manufacturing companies paperless
factory capabilities for mixed database/operating system environments, including
Windows(R) and UNIX based network and database servers. Folders(TM) offers DNC,
SPC, job and labor tracking, reporting, scheduling, document distribution and
viewing as well as electronic machine tool monitoring.

      Wherever paper is used to transfer information or collect data within a
production environment, Folders(TM) can help replace it with instantaneous data
communication on the network. Folders(TM) assembles electronic production
information, such as part programs, part drawings, setup sheets, and tooling
lists, into a single "electronic folder". Operators at their workstations can
immediately access all information to do their jobs by simply clicking on a part
number, work center ID, or operation. Virtually any paperwork now being sent to
the production floor can be transferred electronically.

      By using Folders(TM), production management can gain control over
mission-critical workflow because of its receipt of the most up-to-date
information available at the work center when and where it is needed. Other
advantages of using Folders(TM) are:

     o    Improved document management,
     o    Reduction of scrap,
     o    Optimized processes reporting, and assistance with ISO 9000 compliance
          and certification.

                                     - 9 -
<PAGE>

Sales and Marketing

      We sell our products primarily through a direct sales force and through
relationships with distributors and integrators. Currently, CIMNET has
approximately 10 integration partners worldwide promoting and installing CIMNET
products and 6 distribution partners selling only software solutions. The sales
process generally ranges from one to nine months depending on the level of
education prospective customers need regarding the use and benefits of our
products. CIMNET has seen the average sales cycle increase to an average of 7
months over the last year due to the current economic environment. As of March
15, 2003, our direct sales organization consisted of 7 employees.

      A key element of our market penetration strategy is the formation of
relationships with database and third party software vendors for strategic
functionality gaps. CIMNET has such relationships with Oracle, Microsoft,
Lighthouse Systems and Microsoft Business Solutions. We believe these
relationships increase our market exposure and presence, generate qualified
opportunities for us to sell our products and assist us in implementing our
products. Strategic software relationships are intended to provide CIMNET
opportunities to penetrate an emerging market where either additional vertical
products or services are needed to secure the sale or an understanding or
expertise in a particular vertical market is needed to sell effectively. As of
March 15, 2003, we had 1 employee devoted to developing corporate partnerships
and strategic alliances.

      In terms of marketing our company and products, CIMNET utilizes the
Internet as the main source of lead generation and market exposure. CIMNET uses
several search engines, advertisers and the creation of industry focused white
papers to market our products and services. In addition, CIMNET uses industry
experts such as AMR Research for market guidance and strategic goal setting. As
of March 15, 2003, we had 1 consultant devoted to managing the marketing efforts
for the company.

Training/Implementation

      We offer our customers classroom, on-site and WebEx Internet training in
areas such as statistical process control (SPC), distributed numerical control
(DNC) and MES as they relate to the use of our software. We employ trainers to
teach these courses and have created multi-media compact disks to provide our
customers training alternatives. CIMNET has trained several integration partners
on our MES offerings to allow those partners to assist with end user customer
training if required.

      CIMNET is staffed to provide our customers complete installation services
for all of our software, as well as consulting services for installing and
configuring computers and networks purchased from third parties. However, in
2002, CIMNET began to utilize third party integration partners to assist with
implementations and project management. CIMNET's key training and implementation
personnel typically support implementations as consultants, technical leads or

                                     - 10 -
<PAGE>

trainers with the main integration team consisting of personnel from our third
party partners. As of March 27, 2003, we had 9 employees dedicated to providing
training and implementation services. A typical implementation engagement lasts
one to six months and involves the planning, configuration, testing and
implementation of the products. These services are generally billed on a time
and project basis. We believe that these implementation projects not only help
ensure a company's success with our products, but also allow our systems
engineers to gain industry-specific knowledge that can be leveraged in future
projects and products.

      In terms of technical support and customer service, the implementation
team has employees dedicated to these tasks. Our customers have a choice of
support options depending on the level of service desired. We maintain a
technical support hotline staffed by engineers from 8:00 a.m. to 5:00 p.m., EST,
Monday through Friday, from our corporate headquarters in Robesonia,
Pennsylvania.

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 to our customers annual maintenance contracts for all of our
hardware and software products. The hardware maintenance contract provides our
customer 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 15, 2003, we had 12 employees and 2 contract developers
engaged in research and development activities. During the years ended December
31, 2002, 2001 and 2000, we spent $2,004,906, $1,963,929 and $921,886,

                                     - 11 -
<PAGE>

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;
     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;
     o    customer service and 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 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 products. For example Cimnet's
competitors at the DNC market include InterCim, Greco Systems and Predator. In
the MES marketspace, Cimnet's key competitors include Camstar, Datasweep,
Wonderware and Rockwell Automation. 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.

                                     - 12 -
<PAGE>

      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.

      We attempt to avoid infringing known intellectual property and proprietary
rights of third parties in its 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 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" trademark lapsed. However, in August
1999, we filed another application with the Patent and Trademark Office for the
"Cimnet" trademark, and reinstatement of our ownership of the trademark was
obtained.

      Cimnet currently licenses technology from third parties that it
incorporates into its products. For example, Cimnet licenses AutoVue from
Cimmetry Systems, and Oracle database software from Oracle. There can be no
assurance that technology from these providers or others will continue to be
available to us on commercially reasonable terms, if at all. The loss or
inability to access such technology could result in delays in development and
introduction of new products or enhancements by us until equivalent or
replacement technology could be accessed, if available, or developed, if
feasible, by Cimnet, which could have a material adverse effect on our business,
operating results and financial condition. 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 customers resulting
from these claims, will not be asserted or prosecuted against Cimnet. 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.

                                     - 13 -
<PAGE>

Historical Information

      Our predecessor corporation, Western Technology & Research, Inc. ("Western
Tech"), was organized on September 19, 1984 under the laws of the State of
Wyoming to engage in investment and business development operations related to
mineral research and exploration. The primary area of mineral exploration
concerned small (less than 10 acres) jade mining leaseholds in Wyoming, which
were never brought to the development stage. Western Tech also held options on
both minor gold and minor oil & gas prospects, which were never exercised, and
the options were assigned to third-parties for nominal consideration. All of
these activities had ceased before 1990. All jade mine claims were allowed to
expire in 1993, for non-payment of rental fees, as approved by unanimous action
of the Board of Directors on August 19, 1993.

      Western Tech never engaged in an active trade or business. On October 15,
1996, the board of directors determined that Western Tech should become active
in seeking potential operating businesses and business opportunities with the
intent to acquire or merge with such businesses. Western Tech then began to
consider and investigate potential business opportunities. The management of
Western Tech commenced a proactive review of all potential business
opportunities by means of their personal contacts and prior experience.

      As of December 30, 1998, Western Tech, Cimnet, Inc. ("Cimnet") and Cimnet
Acquisition Corp. ("Cimnet Acquisition"), a subsidiary of Western Tech, entered
into an Agreement and Plan of Merger, pursuant to which Cimnet Acquisition
merged with and into Cimnet (the "Merger") on March 2, 1999. The merger was
accounted for as a reverse acquisition followed by a recapitalization. As a
result of the Merger:

     o    Cimnet became a wholly owned subsidiary of Western Tech;
     o    the stockholders of Cimnet became the beneficial owners of an
          aggregate of 4,430,000 shares of the Western Tech's common stock or
          85.5% of the total shares of the common stock outstanding; and
     o    the existing members of the Board of Directors of Western Tech
          resigned and a new board of directors was appointed consisting of John
          D. Richardson, David Birk and Andrew Roosevelt.

      Previously, Messrs. Zennith S. Merrit and Thomas M. Hockaday were the
directors of Western Tech. Also, as a result of the Merger, Mr. Richardson
became the beneficial owner of 3,645,000 shares of Western Tech common stock, or
approximately 71% of the shares of common stock outstanding. On June 8, 1999, a
majority of the Western Tech's stockholders approved a change in corporate
domicile from Wyoming to Delaware by merging Western Tech with and into Cimnet.
As a result, as of June 22, 1999 Western Tech became a Delaware corporation, its
name changed to Cimnet, Inc. and the symbol for our common stock on the OTC
Bulletin Board changed to "CIMK".

Employees

      As of March 27, 2003, we had 31 employees, including 12 in research and
development of new software; 9 in applications engineering; 6 in sales and
marketing; 1 in developing corporate partnerships and strategic alliances, and 3

                                     - 14 -
<PAGE>

in operations and order processing. In addition we have 2 consultants working on
research and development of new software and 1 working in marketing.

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, 2002 and December 31, 2001 we
reported a net loss of ($789,254) and a net profit of $1,381,760 respectively.
Through December 31, 2002, our accumulated deficit equaled ($825,663). Although
we reported a profit during the 2001 fiscal year, we cannot be certain that we
will return to 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.

      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. 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. The economic uncertainty caused by the military action in Iraq will
likely further depress technology spending. 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, 2002, one customer accounted for more than 33% of our total revenue
and during the year ended December 31, 2001 the same customer accounted for
approximately 73.6% 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

                                     - 15 -
<PAGE>

training and integration costs. These implementations also include a substantial
commitment of resources by our customers or their consultants over an extended
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.

      Our Business Will Be Adversely Affected If Manufacturing Automation
Software Solutions Are Not Widely Adopted. Our products address a relatively new
market for manufacturing automation software operating on personal computers.
Therefore, our future success depends substantially upon the adoption by
manufacturers of our software. The failure of this market to further develop, or
a delay in the development of this market, would have a material adverse effect
on our business, financial condition and operating results. The manufacturing
industry in the United States has experienced, and is expected to continue to
experience, a significant shift to overseas facilities which because of
geographical and language barriers makes it more difficult for us to sell our
products and services. In addition, our software could lose its viability due to
delays in the development or adoption of new standards and protocols in the
manufacturing industry.

      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

                                     - 16 -
<PAGE>

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:

     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.

      We Have A Very Limited Number Of Products And We May Not Be Able To
Develop New Products Or Enhance Existing Products On A Timely Basis. We sell a
small number of software products for manufacturing automation applications. We
introduced the initial version of CIMNET Folders in September, 1994. Revenues
from the family of products and related services have grown rapidly representing
over 22%, 85% and 69% of the Company's total revenues during 2000, 2001 and 2002
respectively. We expect that revenues from these products will continue to
account for a substantial portion of our revenues. The life cycles of our
products are difficult to estimate due in large measure to the relatively recent
emergence of the market for our products, the future effect of product
enhancements and future competition. Declines in demand for these products,
whether as a result of competition, technological change or otherwise, or price
reductions would have a material adverse effect on the Company's operating
results.

      To be competitive, we must develop and introduce on a timely basis new
products and product enhancements which meet the needs of companies seeking to
deploy PC based manufacturing automation software applications. We have in the
past failed to ship certain new products or product enhancements by our planned
shipment date. If we fail to develop and introduce new products and enhancements
successfully and on a timely basis, it could have a material adverse effect on
our business, operating results and financial condition.

      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. The loss of the services of Mr. Richardson could have a material

                                     - 17 -
<PAGE>

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 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" and "Factelligence(TM)" Trademarks May Infringe
The Trademark Rights Of Other Companies. Our use of "CIMNET" and
"Factelligence(TM)" 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 to pay damages and/or to enter into royalty or license
agreements to continue to use a product name. Cimnet may be required to stop

                                     - 18 -
<PAGE>

using the name "Cimnet", "Factelligence(TM)" 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.

      In June 1992, our predecessor company, J.N.L. Industries, Inc. registered
the Cimnet 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 trademark lapsed. However, in August
1999, we filed another application with the Patent and Trademark Office for the
"Cimnet" trademark, and reinstatement of our ownership of the trademark was
obtained. We have not filed a trademark application for the "Factelligence(TM)"
trademark.

      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 limited 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 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.

                                     - 19 -
<PAGE>

      We May Not Be Able To Comply In A Timely Manner With All Of The Recently
Enacted Or Proposed Corporate Governance Provisions. Beginning with the
enactment of the Sarbanes-Oxley Act of 2002 in July 2002, a significant number
of new corporate governance requirements have been adopted or proposed. We
believe that we currently comply with all of the requirements that have become
effective thus far, and with many of the requirements that will become effective
in the future. Although we currently expect to comply with all current and
future requirements, we may not be successful in complying with these
requirements at all times in the future. In addition, certain of these
requirements will require us to make changes to our corporate governance
practices. For example, one NASDAQ proposal (which may become applicable to
companies listed on the OTC Bulletin Board, or its successor, the BBX Exchange)
under review by the Securities and Exchange Commission will require that a
majority of our Board of Directors be composed of independent directors by our
2004 Annual Meeting of Stockholders. Currently, only one of the four members of
our Board of Directors is, as opposed to are considered to be independent. We
may not be able to attract a sufficient number of directors in the future to
satisfy this requirement, if enacted and if it becomes applicable to our
company. Additionally, the Commission recently passed a final rule that requires
companies to disclose whether a member of their Audit Committee satisfies
certain criteria as a "financial expert." Although we currently have one Audit
Committee member that satisfies this requirement and expect this to continue, we
may not be able to satisfy this, or other, corporate governance requirements at
all times in the future, and our failure to do so could cause the Commission or
NASDAQ to take disciplinary actions against us, including an action to delist
our stock from the OTC Bulletin Board or any other exchange or electronic
trading system where our shares of common stock trade.

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.

                                     - 20 -
<PAGE>

      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 48.7% of the
outstanding shares of common stock. As a result, he will be able to control 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, could deprive our stockholders of an opportunity to receive a premium
for their common stock as part of a sale of Cimnet and might affect the market
price of our common stock.

      Future Sales By Existing Security Holders Could Depress The Market Price
Of Our Common Stock. If our existing stockholders sell a large number of shares
of our common stock, the market price of the common stock could decline
significantly. Moreover, the perception in the public market that our existing
stockholders might sell shares of common stock could depress the market price of
the 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

                                     - 21 -
<PAGE>

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.

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, except as set forth
below:

      On or about December 26, 2001, a lawsuit was commenced in the United
States District Court for the Eastern District of Pennsylvania captioned
Greenwood Partners, L.P. v. Cimnet, Inc. and John Richardson 01-CV.6624(JW). The
Company and John Richardson are named as defendants in the action. The plaintiff
seeks unspecified damages arising from Cimnet's alleged breach of a contract
pursuant to which Cimnet allegedly agreed to pay the plaintiff securities in
exchange for consulting services that the plaintiff allegedly provided to
Cimnet. In the alternative, the plaintiff seeks damages for unjust enrichment or
specific performance of the alleged contract. In addition, the plaintiff seeks
unspecified compensatory and punitive damages on the theory that Cimnet's
conduct amounts to a violation of the Securities Exchange Act of 1934, as
amended. Cimnet has filed an Answer denying the substantive allegations of the
Complaint and interposing a variety of affirmative defenses. The parties have
completed discovery and we have filed a motion for summary judgment and
Plaintiff has filed a memorandum in opposition to our motion.

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, 2002.

                                     - 22 -
<PAGE>

                                     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 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, 2002 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
                            ----   ---                           ----   ---
         2002                                  2001
         ----                                  ----

      Quarter ended                        Quarter ended
      March 31, 2002       $2.30  $1.55    March 31, 2001       $1.94  $ .28

      Quarter ended                        Quarter ended
      June 30, 2002        $1.80  $1.30    June 30, 2001        $1.90  $ .97

      Quarter ended                        Quarter ended
      September 30, 2002   $1.18  $0.57    September 30, 2001   $2.20  $1.10

      Quarter ended                        Quarter ended
      December 31, 2002    $1.01  $0.41    December 31, 2001    $2.05  $1.20

      On March 14, 2003, the final quoted prices as reported by the OTC Bulletin
Board was $0.50 for each share of Common Stock. As of March 14, 2003, there were
6,292,321 shares of Common Stock outstanding, held of record by approximately
111 record holders.

Equity Compensation Plan Information

      Information regarding equity compensation plans, including stockholder
approved plans and non-stockholder approved plans is set forth in the Company's
proxy statement to be filed pursuant to Regulation 14A under the Securities
Exchange Act of 1934.

                                     - 23 -
<PAGE>

Recent Sales of Unregistered Securities

      During the year ended December 31, 2002, the Company did not sell any
equity securities that were not registered under the Securities Act of 1933, as
amended.

Item 6.      MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
             -------------------------------------------------
             CONDITION AND RESULTS 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.

Application of Critical Accounting Policies:

      Disclosure of the Company's significant accounting policies is included in
Note 2 to the 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.

      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.

                                     - 24 -
<PAGE>

      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. The Company was also required to
complete a transitional impairment test within six months from the date of
adoption. During the second quarter of 2002, the Company completed the
transitional impairment test. The estimated fair value of the Company exceeded
its book value. As a result, no write-down of goodwill was required as of
January 1, 2002. Additionally, such a review must be performed on an annual
basis and, based upon such review, management determined that no write-down of
goodwill was required as of December 31, 2002 (See Note 2 to the financial
statements)

      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.

      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. Stock compensation
expense and sales discounts recognized for non-employee legal and consulting
services and customer purchases totaled $22,918 and $327,037 for the years ended
December 31, 2002 and 2001, 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 $80,367 and

                                     - 25 -
<PAGE>

$80,220 for the years ended December 31, 2002 and 2001, 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 (
See Note 12 ).

      This section presents a review of the Company's financial condition and
results of operations and should be read in conjunction with the consolidated
financial statements of the Company and the notes included elsewhere herein.

RESULTS OF OPERATIONS

Year Ended December 31, 2002 Compared To Year Ended December 31, 2001

      Net Sales for the year ended December 31, 2002 were $4,152,508, a decrease
of 50.8% or $4,284,075 over net sales for the year ended December 31, 2001. This
decrease is the result of reduced orders for our Manufacturing Execution System
(MES) software from one major customer. Sales to this customer were $1,391,831
and $6,210,047 for the years ending December 31, 2002 and 2001 respectively.

      Costs of goods sold for 2002 were $432,159 compared to $1,230,589 for
2001, a decrease of $798,430 or 64.9%. This decrease in costs of goods sold is
related to the decrease of net sales by 50.8% and to the related decrease in
costs associated with the engagement of third party field engineers for the
implementation of the Company's software products.

      Gross Profit for 2002 was $3,720,349 compared to $7,205,994 for 2001, a
decrease of $3,485,645 or 48.4%. This decrease is primarily due to the decrease
in net sales. The percentage of cost of goods sold was 10.4% of net sales in
2002 as compared to 14.6% of net sales in 2001. This decrease is due to the
related substantial decrease in costs associated with the engagement of third
party field engineers for the implementation of the Company's software products.

      Selling, general and administrative expenses for 2002 were $3,183,885 or
76.7 % of net sales compared to $2,562,061 or 30.4% of net sales, for 2001.
Specifically the changes in the following categories were primarily attributable
to these increases: Salaries increased by $225,243 and employee benefits
increased by $18,482, both due to an increase in the number of employees, and
commission expense decreased by $151,602 due to the decrease in gross revenue.
Advertising costs increased by $156,731 due to the Company's marketing efforts
for its new product, "Factelligence(TM)". Travel and entertainment costs
increased by $87,204 due to traveling to trade shows, and traveling for
promotion of the new product, "Factelligence(TM)", and the Company not being
able to recover certain travel costs from customers on certain of its
installations. Trade show expenses increased by $96,575 as a result of the
Company attending several trade shows and incurring the associated expenses for
these shows. Depreciation expense increased by $68,858 as a result of the
Company's purchase of a partial ownership interest in an aircraft at the end of
2001 and other property and equipment acquired during 2002.

      Stock compensation relating to employee compensation, consulting and legal
services decreased by $221,972. This decrease is attributable to an amendment to
a common stock purchase warrant held by a marketing firm during 2002. As a

                                     - 26 -
<PAGE>

result, the Company expensed $52,000 relating to the issuance of such common
stock purchase warrants during 2002 as compared to $277,297 for the issuance of
such warrants in 2001.

      Research and development in 2002 were $2,004,906 or 48.3% of net sales
compared to $1,963,929 or 23.3% of net sales in 2001. The primary reason for
this increase is due to salaries increasing by $368,252 and employee benefits
increasing by $5,149. This is due to an increase in the number of software
developers engaged in the design of the Company's new product,
"Factelligence(TM)". Other research and development expenses decreased by
$337,782 as compared to 2001. This decrease is due to certain independent
contractors previously being engaged as independent contractor being directly
employed by the Company in 2002.

      Commencing in 2002, the Company is no longer amortizing goodwill.
Amortization expense for 2001 was $178,424 or 2.1% of net sales. This change was
attributable to the Company's adoption of Statement of Financial Accounting
Standards No. 142, "Goodwill and Other Intangible Assets", under which the
Company no longer amortizes goodwill. For further discussion of this change, see
Note 2 to the Company's financial statements.

      Loss from operations for 2002 was ($1,626,727) compared to an income of
$2,121,323 in 2001, a decrease of $3,748,050. This decrease is predominantly due
to the previously discussed increase in operating expenses along with the
decrease in net sales.

      Interest expense for 2002 was $19,821 or 0.5% of net sales, compared to
interest expense of $13,994 or 0.2% of net sales for 2001. In 2002 other income
included realized gains 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 to $13,272 or 0.3% of net sales, on the cash
balance with the bank. In 2001 other income included realized gains on the sale
of securities of $41,740 or 0.50% of net sales and interest earned in the amount
of $21,379 or 0.30% of net income on the cash balance with the bank. The
increase in realized gains on the sale of securities was attributable to a full
year of such activity in 2002 compared to minimal activity in 2001. There was no
rental revenue in 2001.

      Provision (benefit) for income taxes for 2002 was ($708,070) compared to
$788,688 in 2001 due primarily to the fact that the Company recorded a net loss
in 2002. (See Note 5 to the financial statements.)

      The net loss for 2002 was ($789,254) or ($0.15) per share of common stock
(basic and diluted) as compared to net income of $1,381,760 or $0.22 and 0.20
per share of common stock (basic and diluted, respectively) in 2001.

Year Ended December 31, 2001 Compared To Year Ended December 31, 2000

      Net Sales for the year ended December 31, 2001 increased by 177.3% or
$5,393,922 over net sales for the year ended December 31, 2000. This increase is
the result of Cimnet receiving substantial orders from one customer for its
Manufacturing Execution System (MES) software and continuing business with its

                                     - 27 -
<PAGE>

new and existing customers. This one customer accounted for 73.6% of net sales
for the year ended December 31, 2001.

      Costs of goods sold for 2001 were $1,230,589 compared to $448,921 for
2000, an increase of $781,668 or 174.1%. This increase in costs of goods sold is
related to the increase of net sales by 177.3% and to the engagement of third
party field engineers for the implementation of orders received.

      Gross Profit for 2001 was $7,205,994 compared to $2,593,740 for 2000, an
increase of $4,612,254 or 177.8%. This increase is related to the increase of
net sales by 177.3%. The relative percentage of cost of goods to net sales
remained consistent at approximately 15% for 2001 and 2000.

      Selling, general and administrative expenses (including stock
compensation-employees consulting and legal services) for 2001 were $2,942,318
or 34.9 % of net sales compared to $2,232,648 or 73.4% of net sales, for 2000.
These amounts include non-cash expenses of $380,257 and $79,116 in 2001 and
2000, respectively, relating to stock compensation for employees, consulting and
legal services. Total research and development expenses were $1,963,929 or 23.3%
of net sales compared to $921,886 or 30.3% of net sales for 2000. The increase
in selling, general and administrative expenses is due to an increase in
personnel and the expenses associated with sales growth. The increase in
research and development expenses is due to the development of a new generation
of MES software.

      Amortization expense for 2001 was $178,424 or 2.1% of net sales compared
to $133,818 or 4.4% of net sales for 2000. This increase in amortization of
goodwill is attributable to a full year of amortization expense being included
in 2001.

      Income from operations for 2001 was $2,121,323 compared to a loss of
($694,612) in 2000, an increase of $2,815,935. This increase is the result of
Cimnet receiving substantial orders for its MES software from one customer.

      Interest expense for 2001 was $13,994 or 0.2% of net sales and interest
income was $21,379 or 0.3% of net sales, compared to interest expense of $21,357
or 0.7% of net sales for 2000. This decrease in interest expense and the
existence of interest income is due to positive cash flow resulting from the
177.3% increase in net sales enabling payment on the credit line and investment
of excess cash. See "Liquidity and Capital Resources."

      Net income for 2001 included $41,740 of realized gains on the sale of
available for sale securities, compared to no realized gains in 2000. No amounts
were invested in available for sale securities during 2000.

      Income tax expense was $788,688 or 9.3% of net sales for 2001, as compared
to an income tax benefit of $67,307 or 2.2% of net sales for 2000. The increase
in income tax expense is attributable to the increase in pretax income of
$2,886,417.

                                     - 28 -
<PAGE>

      Net income for 2001 was $1,381,760 or $0.20 per share of common stock
(basic and diluted, respectively), as compared to a loss of ($648,662) or
($0.11) per share of common stock (basic and diluted), in 2000.

Liquidity And Capital Resources

      At December 31, 2002, the Company had current assets of $2,357,462
compared to $4,257,896 at December 31, 2001. This decrease is primarily due to a
decrease of $975,328 in cash to subsidize the increase in operating costs, a
decrease of $265,417 in available for sale securities, and a decrease of
$1,173,371 in accounts receivable, primarily as a result of the reduced sales to
one customer in 2002. Current liabilities decreased by $607,036 in 2002 from
2001. This decrease is due to the paying down of accounts payable with cash
provided from collections on accounts receivable, the decrease in deferred
income of $211,733 which is due to a significant contract not being present at
December 31, 2002 that was ongoing at December 31, 2001, the decrease in the
accrued income tax liability due to tax payments being made during 2002, the
current year loss and the expected benefits of research and development tax
credits to be received.

Operating Activities

      Cash provided by (used in) operations for fiscal 2002 and 2001 was
($619,077) and $852,917, respectively. The decrease in cash provided by
operations in 2002 was primarily due to a decrease in net income of $2,171,014
versus 2001.

      Cash provided by (used in) operations for fiscal 2001 and 2000 was
$852,917 and ($159,476), respectively. The increase in cash provided by
operations in 2001 was primarily due an increase in net income of $2,030,422
versus 2000.

Investing Activities

      Investing activities consumed $318,958 and $686,718 in 2002 and 2001,
respectively. During 2002 the Company purchased and constructed $249,848 of
property and equipment as compared to $203,492 in 2001. The Company increased
its investment in a limited partnership by $25,000 in 2002, and also consumed
$44,110 in cash related to net transactions in available for sale securities, as
compared to $455,726 during 2001.

Financing Activities

      Financing activities consumed $37,293 in 2002 compared to providing
$919,003 in 2001, a decrease of $956,296. This decrease is due to the Company's
obtaining proceeds from the issuance of preferred stock of $1,000,000 and the
exercise of common stock purchase warrants for $100,000, during September of
2001, while no such transactions occurred in 2002.

                                     - 29 -
<PAGE>

Capital Resources

      The Company has a line of credit with a bank. As of December 31, 2002, the
Company had no outstanding balance on its line of credit and $300,000 of unused
credit available, subject to a borrowing base formula. The Company has met all
financial covenants in its loan documents.

Contractual Obligations
<TABLE>
<CAPTION>

                                       Due In Less   Due In     Due in    Due after
                            Total      Than 1 Year  1-3 Years  4-5 Years   5 Years
                            -----      -----------  ---------  ---------   --------

<S>                         <C>           <C>        <C>        <C>        <C>
Long-term debt              $241,676      $ 54,443   $102,355   $ 84,878   $      0

Capital lease obligations      1,036         1,036          0          0          0

Operating leases              40,865        22,290     18,575          0          0
                            -------------------------------------------------------

                            $283,577      $ 77,769   $120,930   $ 84,878   $      0
                            ========      ========   ========   ========   ========
</TABLE>


      The Company has no investment in or financial relationship with any
unconsolidated entities that are reasonably likely to have a material effect on
liquidity or the availability of capital resources. The Company is however,
jointly and severably liable for the total outstanding debt on an aircraft for
which the Company holds a 25% interest, should the other interest holders fail
to honor their obligations. The total amount outstanding on this obligation was
$888,424 at December 31, 2002. The Company has not historically paid dividends
on shares of its capital stock and does not anticipate paying any dividends
during the next year.

      The Company has no material commitments for capital expenditures and
believes that its cash from operations, existing balances and available credit
line will be sufficient to satisfy the needs of its operations and its capital
commitments for the foreseeable future. However, if the need arose, the Company
would seek to obtain capital from such sources as continuing debt financing or
equity financing.

Recently Issued Accounting Standards

      In June of 2001, the Financial Accounting Standards Board issued Statement
No. 143, "Accounting for Asset Retirement Obligations," which addresses the
financial accounting and reporting for obligations associated with the
retirement of tangible long-lived assets and the associated asset retirement
costs. This Statement requires that the fair value of a liability for an asset
retirement obligation be recognized in the period in which it is incurred if a
reasonable estimate of fair value can be made. The associated asset retirement
costs are capitalized as part of the carrying amount of the long-lived asset.
This Statement became effective for the Company on January 1, 2003 and did not
have a significant impact on the Company's financial condition or results of
operations.

      In July 2002, the Financial Accounting Standards Board issued Statement
No. 146, "Accounting for Costs Associated with Exit or Disposal Activities,"
which nullifies EITF Issue 94-3, "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain

                                     - 30 -
<PAGE>

Costs Incurred in a Restructuring). This Statement delays recognition of these
costs until liabilities are incurred, rather than at the date of commitment to
the plan, and requires fair value measurements. It does not impact the
recognition of liabilities incurred in connection with a business combination or
the disposal of long-lived assets. The provisions of this Statement are
effective for exit or disposal activities initiated after December 31, 2002 and
are not expected to have a significant impact on the Company's financial
condition or results of operations.

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

      See Financial Statements following Item 15 of this Annual Report on Form
10-KSB.

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

      On October 4, 2001, Grant Thornton LLP ("Grant Thornton") was dismissed as
the independent accountants for the Company. The reports of Grant Thornton on
the Company's financial statements within the two most recent fiscal years or
any subsequent interim period contain no adverse opinion or disclaimer of
opinion and were not qualified or modified as to uncertainty, audit scope or
accounting principles.

      The Company's Board of Directors approved the dismissal of Grant Thornton.

      During the two most recent fiscal years and any subsequent interim period
preceding Grant Thornton's dismissal, there were no disagreement(s) with Grant
Thornton on any matter of accounting principles or practice, financial statement
disclosure or auditing scope or procedure, which disagreement(s), if not
resolved to the satisfaction of Grant Thornton, would have caused it to make
reference to the subject matter of the disagreement(s) in connection with its
report.

      No "reportable events" (as defined in Item 304 (a) (1) (v) of Regulation
S-K) occurred during the Company's two most recent fiscal years and any
subsequent interim period preceding the accounting firm of Grant Thornton's
dismissal.

      The Company has requested that Grant Thornton furnish it with a letter
addressed to the Securities and Exchange Commission stating whether or not Grant
Thornton agrees with the above statements. A copy of such letter is attached
hereto as Exhibit 16.1.

      The Company engaged Beard Miller Company LLP ("Beard Miller"), as its new
independent accountants as of October 5, 2001. Prior to such date, the Company
did not consult with Beard Miller regarding (i) the application of accounting
principles to a specified transaction, either completed or proposed, (ii) the
type of audit opinion that might be rendered by Beard Miller on the Company's
financial statements, or (iii) any other matter that was the subject of a
disagreement between the Company and its auditor (as defined in Item
304(a)(1)(iv) of Regulation S-K and its related instructions) or a reportable
event (as described in Item 304(a)(1)(v) of Regulation S-K).

                                     - 31 -
<PAGE>

                                    PART III

Item  9.     DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
             ----------------------------------------------------
             PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE
             ------------------------------------------------------
             ACT 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.

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 AND FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
             -------------------------------------------------------------------

(a) Exhibits.
Exhibits

3.01*        Certificate of Incorporation of Cimnet.
3.02*        By-laws, as amended, of Cimnet.

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'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.

                                     - 32 -
<PAGE>

10.07*       2002 Stock Option Plan.
99.1         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.    CONTROLS AND PROCEDURES.
             -----------------------

      Within the 90 days prior to the date of this report, the Company carried
out an evaluation, under the supervision and with the participation of the
Company's management, including the Company's Chief Executive Officer and
Principal Accounting Officer, of the effectiveness of the design and operation
of the Company's disclosure controls and procedures, as defined in Exchange Act
Rules 13a-14(c) and 15d-14(c). Based upon that evaluation, the Company's Chief
Executive Officer and Principal Accounting Officer concluded that the Company's
disclosure controls and procedures are effective in enabling the Company to
record, process, summarize and report information required to be included in the
Company's periodic SEC filings within the required time period.

      There have been no significant changes in the Company's internal controls
or in other factors that could significantly affect internal controls subsequent
to the date the Company carried out its evaluation.

Item  15.    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.

                                     - 33 -
<PAGE>

CIMNET, INC.

                                TABLE OF CONTENTS

                                                                        PAGE NO.

FINANCIAL STATEMENTS:

   Independent Auditor's Report                                           F-1
   Balance Sheets                                                         F-2
   Statements of Operations                                               F-4
   Statements of Changes in Stockholders' Equity                          F-5
   Statements of Cash Flows                                               F-6
   Notes to Financial Statements                                          F-8


<PAGE>

                          INDEPENDENT AUDITOR'S REPORT

To the Shareholders
Cimnet, Inc.
Robesonia, Pennsylvania

         We have audited the accompanying balance sheets of Cimnet, Inc. as of
December 31, 2002 and 2001, 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 auditing standards generally
accepted in the United States of America. 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, 2002 and 2001, 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.

         As discussed in Note 2 to the financial statements, the Company adopted
Statement of Financial Accounting Standards No. 142, "Goodwill and Other
Intangible Assets," as of January 1, 2002, which changed its method of
accounting for goodwill and other intangible assets.


                                       /s/ Beard Miller Company LLP

Reading, Pennsylvania
January 16, 2003


                                      F-1
<PAGE>


CIMNET, INC.
--------------------------------------------------------------------------------
BALANCE SHEETS

<TABLE>
<CAPTION>

                                     ASSETS

                                                                            DECEMBER 31,
                                                                   ----------------------------
                                                                       2002            2001
                                                                   ------------    ------------
<S>                                                                <C>             <C>
CURRENT ASSETS
   Cash and cash equivalents                                       $    117,825    $  1,093,153
   Available for sale securities                                        209,598         475,015
   Accounts receivable, net of allowance for doubtful accounts
       2002 $53,493; 2001 $60,000                                     1,049,345       2,222,716
   Inventories                                                          107,030         135,987
   Prepaid expenses                                                      60,853         108,023
   Income taxes receivable                                              540,818               0
   Deferred income tax assets                                           271,993         223,002
                                                                   ------------    ------------

       Total Current Assets                                           2,357,462       4,257,896
                                                                   ------------    ------------

PROPERTY AND EQUIPMENT, NET                                             708,730         578,986
                                                                   ------------    ------------

GOODWILL                                                              2,364,145       2,364,145
                                                                   ------------    ------------

OTHER ASSETS                                                             52,500          27,500
                                                                   ------------    ------------


         Total Assets                                              $  5,482,837    $  7,228,527
                                                                   ============    ============
</TABLE>

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

                                      F-2
<PAGE>

--------------------------------------------------------------------------------
<TABLE>
<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY

                                                                                   December 31,
                                                                          ---------------------------
                                                                              2002           2001
                                                                          ------------   ------------
<S>                                                                       <C>            <C>
CURRENT LIABILITIES

   Current portion of long-term debt                                      $     55,479   $     42,913
   Accounts payable                                                             84,792        332,799
   Accrued expenses                                                            180,838         98,623
   Accrued income taxes                                                              0        242,077
   Deferred income                                                             889,401      1,101,134
                                                                          ------------   ------------

         Total Current Liabilities                                           1,210,510      1,817,546

LONG-TERM DEBT, NET OF CURRENT PORTION                                         187,233        216,254

DEFERRED INCOME TAX LIABILITY                                                   74,565         16,968
                                                                          ------------   ------------

         Total Liabilities                                                   1,472,308      2,050,768
                                                                          ------------   ------------

STOCKHOLDERS' EQUITY

   Common stock, $.0001 par value; 15,000,000 shares authorized; shares            629            628
       issued and outstanding 2002 6,292,321; 2001 6,282,321
   Preferred stock, $.0001 8% cumulative convertible; 5,000,000 shares
       authorized; 746,965 shares issued and outstanding                            75             75
   Paid-in capital                                                           5,391,109      5,321,764
   Retained earnings (deficit)                                                (825,663)        88,269
   Accumulated other comprehensive loss                                       (415,366)       (13,605)
   Deferred stock compensation                                                (140,255)      (219,372)
                                                                          ------------   ------------

         Total Stockholders' Equity                                          4,010,529      5,177,759
                                                                          ------------   ------------

         Total Liabilities and Stockholders' Equity                       $  5,482,837   $  7,228,527
                                                                          ============   ============
</TABLE>
--------------------------------------------------------------------------------
                                      F-3
<PAGE>

CIMNET, INC.

--------------------------------------------------------------------------------
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>

                                                                    Years Ended December 31,
                                                                   --------------------------
                                                                      2002           2001
                                                                   -----------    -----------
<S>                                                                <C>            <C>
NET SALES                                                          $ 4,152,508    $ 8,436,583

COST OF GOODS SOLD                                                     432,159      1,230,589
                                                                   -----------    -----------

         Gross Profit                                                3,720,349      7,205,994
                                                                   -----------    -----------
OPERATING EXPENSES

   Selling, general and administrative                               3,183,885      2,562,061
   Stock compensation - employees, consulting and legal services       158,285        380,257
   Research and development                                          2,004,906      1,963,929
   Amortization of goodwill                                                  0        178,424
                                                                   -----------    -----------

         Total Operating Expenses                                    5,347,076      5,084,671
                                                                   -----------    -----------

         Operating Income (Loss)                                    (1,626,727)     2,121,323
                                                                   -----------    -----------
OTHER INCOME (EXPENSES)

   Interest income (expense), net                                       (6,549)         7,385
   Rental income                                                        52,565              0
   Realized gain on the sale of available for sale securities           83,387         41,740
                                                                   -----------    -----------

         Total Other Income                                            129,403         49,125
                                                                   -----------    -----------

         Income (Loss) Before Income Tax Expense (Benefit)          (1,497,324)     2,170,448

INCOME TAX EXPENSE (BENEFIT)                                          (708,070)       788,688
                                                                   -----------    -----------

         Net Income (Loss)                                           ($789,254)   $ 1,381,760
                                                                   ===========    ===========

NET INCOME (LOSS) PER COMMON SHARE - BASIC                              ($0.15)   $      0.22
                                                                   ===========    ===========

NET INCOME (LOSS) PER COMMON SHARE - DILUTED                            ($0.15)   $      0.20
                                                                   ===========    ===========
</TABLE>

See notes to financial statements.

--------------------------------------------------------------------------------
                                       F-4
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Years Ended December 31, 2002 and 2001
<TABLE>
<CAPTION>

                                                  Common Stock              Preferred Stock
                                            ------------------------   -------------------------     Paid-in
                                              Shares        Amount       Shares        Amount        Capital
                                            ---------    -----------   -----------   -----------   -----------
<S>                                        <C>          <C>              <C>        <C>           <C>
BALANCE, DECEMBER 31, 2000                  6,093,131    $       609             0   $         0   $ 3,789,805

 Comprehensive income:

    Net income                                      0              0             0             0             0
    Change in unrealized loss on
      available for sale securities                 0              0             0             0             0

   Total Comprehensive Income


 Stock compensation expense                    30,619              3             0             0        54,193
 Consulting and legal service expense,
    fair value of options and warrants
    granted                                         0              0             0             0       300,037
 Change in fair value of stock warrants
    issued for sales commitments                    0              0             0             0        27,000
 Issuance of shares of 8% cumulative
    convertible preferred stock and
    warrants                                        0              0       746,965            75       999,925
 Dividends and accretion on preferred
    stock                                           0              0             0             0        14,892
 Exercise of stock options and warrants       158,571             16             0             0       135,912
                                          -----------    -----------   -----------   -----------   -----------

BALANCE, DECEMBER 31, 2001                  6,282,321            628       746,965            75     5,321,764

 Comprehensive income:

    Net loss                                        0              0             0             0             0
    Change in unrealized loss on
       available for sale securities                0              0             0             0             0

   Total Comprehensive Loss


 Stock compensation expense                         0              0             0             0             0
 Consulting and legal service expense,
    fair value of options and warrants
    granted                                         0              0             0             0        77,918
 Change in fair value of stock warrants
    issued for sales commitments                    0              0             0             0       (55,000)
 Issuance of stock options                          0              0             0             0         1,250
 Dividends and accretion on preferred
    stock                                           0              0             0             0        44,678
 Exercise of stock options                     10,000              1             0             0           499
                                          -----------    -----------   -----------   -----------   -----------
BALANCE, DECEMBER 31, 2002                  6,292,321    $       629       746,965   $        75   $ 5,391,109
                                          ===========    ===========   ===========   ===========   ===========
</TABLE>
<TABLE>
<CAPTION>


                                                         Accumulated
                                            Retained       Other          Deferred
                                            Earnings    Comprehensive      Stock
                                           (Deficit)        Loss        Compensation      Total
                                          -----------    -----------    -----------    -----------
<S>                                       <C>            <C>            <C>            <C>
BALANCE, DECEMBER 31, 2000                ($1,252,599)   $         0      ($299,592)   $ 2,238,223
                                                                                       -----------
 Comprehensive income:

    Net income                              1,381,760              0              0      1,381,760
    Change in unrealized loss on
      available for sale securities                 0        (13,605)                      (13,605)
                                                                                       -----------
   Total Comprehensive Income                                                            1,368,155
                                                                                       -----------

 Stock compensation expense                         0              0         80,220        134,416
 Consulting and legal service expense,
    fair value of options and warrants
    granted                                         0              0              0        300,037
 Change in fair value of stock warrants
    issued for sales commitments                    0              0              0         27,000
 Issuance of shares of 8% cumulative
    convertible preferred stock and
    warrants                                        0              0              0      1,000,000
 Dividends and accretion on preferred
    stock                                     (40,892)             0              0        (26,000)
 Exercise of stock options and warrants             0              0              0        135,928
                                          -----------    -----------    -----------    -----------

BALANCE, DECEMBER 31, 2001                     88,269        (13,605)      (219,372)     5,177,759
                                                                                       -----------
 Comprehensive income:

    Net loss                                 (789,254)             0              0       (789,254)
    Change in unrealized loss on
       available for sale securities                0       (401,761)             0       (401,761)
                                                                                       -----------
   Total Comprehensive Loss                                                             (1,191,015)
                                                                                       -----------

 Stock compensation expense                         0              0         80,367         80,367
 Consulting and legal service expense,
    fair value of options and warrants
    granted                                         0              0              0         77,918
 Change in fair value of stock warrants
    issued for sales commitments                    0              0              0        (55,000)
 Issuance of stock options                          0              0         (1,250)             0
 Dividends and accretion on preferred
    stock                                    (124,678)             0              0        (80,000)
 Exercise of stock options                          0              0              0            500
                                          -----------    -----------    -----------    -----------
BALANCE, DECEMBER 31, 2002                  ($825,663)     ($415,366)     ($140,255)   $ 4,010,529
                                          ===========    ===========    ===========    ===========
</TABLE>

See notes to financial statements.
--------------------------------------------------------------------------------
                                       F-5
<PAGE>


CIMNET, INC.
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>

                                                                        Years Ended December 31,
                                                                      --------------------------
                                                                         2002            2001
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES
     Net income (loss)                                                ($  789,254)   $ 1,381,760
     Adjustments to reconcile net income (loss) to net cash
       provided by (used in) operating activities:
         Depreciation and amortization                                    141,442        251,009
         Realized gain on sale of securities                              (83,387)       (41,740)
         Provision for doubtful accounts                                   (6,507)        60,000
         Provision for deferred income taxes                                 (240)      (150,234)
         Loss on disposal of property and equipment                             0          1,890
         Stock warrants - sales commitments                               (55,000)        27,000
         Stock options - employees                                         80,367         80,220
         Stock options and warrants - consulting and legal services        77,918        300,037
         Stock granted - employee                                               0         54,196
         (Increase) decrease in assets:
            Accounts receivable                                         1,179,878     (1,936,792)
            Inventories                                                    28,957        (81,029)
            Prepaid expenses                                               47,170        (55,770)
            Income taxes receivable                                      (540,818)        86,340
         Increase (decrease) in liabilities:
            Accounts payable                                             (248,008)       158,910
            Accrued expenses                                                2,215        (77,650)
            Accrued income taxes                                         (242,077)       242,077
            Deferred income                                              (211,733)       562,693
            Due to related party                                                0        (10,000)
                                                                      -----------    -----------

         Net Cash Provided by (Used in) Operating Activities             (619,077)       852,917
                                                                      -----------    -----------

CASH FLOWS FROM INVESTING ACTIVITIES

     Investment in limited partnership                                    (25,000)       (27,500)
     Purchase of property and equipment                                  (249,848)      (203,492)
     Purchase of available for sale securities                         (1,288,992)      (948,645)
     Proceeds from the sale of available for sale securities            1,244,882        492,919
                                                                      -----------    -----------

         Net Cash Used in Investing Activities                           (318,958)      (686,718)
                                                                      -----------    -----------
</TABLE>

See notes to financial statements.
--------------------------------------------------------------------------------
                                       F-6
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------
STATEMENTS OF CASH FLOWS (CONTINUED)
<TABLE>
<CAPTION>

                                                                       Years Ended December 31,
                                                                      --------------------------
                                                                         2002            2001
                                                                      -----------    -----------
<S>                                                                   <C>            <C>
CASH FLOWS FROM FINANCING ACTIVITIES

     Principal payments on long-term borrowings                          ($37,793)       ($8,425)
     Proceeds on exercise of stock options and stock warrants                 500        135,928
     Proceeds from issuance of preferred stock and warrants                     0      1,000,000
     Net payments on line of credit                                             0       (208,500)
                                                                      -----------    -----------

         Net Cash Provided by (Used in) Financing Activities              (37,293)       919,003
                                                                      -----------    -----------

         Net Increase (Decrease) in Cash and Cash Equivalents            (975,328)     1,085,202

CASH AND CASH EQUIVALENTS - BEGINNING                                   1,093,153          7,951
                                                                      -----------    -----------

CASH AND CASH EQUIVALENTS - ENDING                                    $   117,825    $ 1,093,153

                                                                      ===========    ===========
SUPPLEMENTARY CASH FLOWS INFORMATION

     Interest paid                                                    $    19,821    $    15,743
                                                                      ===========    ===========

     Income taxes paid, net of refunds 2002 $59,075; 2001 $28,000     $    74,357    $   624,560
                                                                      ===========    ===========

SUPPLEMENTARY SCHEDULE OF NONCASH INVESTING
     AND FINANCING ACTIVITIES

     Issuance of employee stock options                               $     1,250    $         0
                                                                      ===========    ===========

     Purchase of interest in aircraft and assumption of related debt  $         0    $   255,750
                                                                      ===========    ===========

     Purchase of equipment through seller financing                   $    21,338    $         0
                                                                      ===========    ===========
</TABLE>

See notes to financial statements.
--------------------------------------------------------------------------------
                                       F-7
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTES TO FINANCIAL STATEMENTS

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 82% and 84% of the sales for
         the years ended December 31, 2002 and 2001, 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."

--------------------------------------------------------------------------------
                                      F-8
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

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, agings 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, net of the related deferred tax effect.
             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 is 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.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           Other Assets

             The Company is accounting for its 25% investment in Reading Air
             Charter, LLC (RAC) by the equity method of accounting and has
             included this amount in other assets at December 31, 2002 and 2001.
             Under this method, the net income of RAC is recognized as income in
             the Company's income statements and added to the investment
             account, and distributions received from RAC are treated as a
             reduction of the investment account. Allocation of RAC's profits is
             governed by a Partnership Agreement, although it is generally based
             on the ownership percentage of each of the partners. The Company
             invested in RAC on December 3, 2001 and its operations for the
             periods ended December 31, 2002 and 2001 were not material.

                                      -9-
<PAGE>
CIMNET, INC.
--------------------------------------------------------------------------------

             Concurrent with entering this investment, the Company acquired a
             25% interest in an aircraft that is leased to RAC (see Note 9).

           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. The Company was also required to complete a transitional
             impairment test within six months from the date of adoption. During
             the second quarter of 2002, the Company completed the transitional
             impairment test. The estimated fair value of the Company exceeded
             its book value. As a result, no write-down of goodwill was required
             as of January 1, 2002. Additionally, such a review must be
             performed on an annual basis and, based upon such review,
             management determined that no write-down of goodwill was required
             as of December 31, 2002.

             The following table reflects pro forma results of operations of the
             Company, giving effect to SFAS No. 142, as if it were adopted on
             January 1, 2001:
<TABLE>
<CAPTION>

                                                                           Years Ended December 31,
                                                                          --------------------------
                                                                              2002           2001
                                                                          -----------    -----------
<S>                                                                       <C>            <C>
             Net income (loss), as reported                               ($  789,254)   $ 1,381,760
             Add back amortization expense                                          0        178,424
                                                                          -----------    -----------
                    Pro Forma Net Income (Loss) Available to Common
                        Stockholders - Diluted                               (789,254)     1,560,184

             Preferred stock dividends                                        (80,000)       (26,000)
             Preferred stock discount accretion                               (44,678)       (14,892)
                                                                          -----------    -----------
                    Pro Forma Net Income (Loss) Available to Common
                        Stockholders - Basic                                ($913,932)   $ 1,519,292
                                                                          ===========    ===========
</TABLE>

--------------------------------------------------------------------------------
                                      F-10
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           Goodwill (Continued)

                                                     Years Ended December 31,
                                                     ------------------------
                                                        2002           2001
                                                     ----------     ---------
             Basic net income per common share:
                  As reported                         ($  0.15)      $   0.22
                  Pro forma                           ($  0.15)      $   0.25

             Diluted net income per common share:
                  As reported                         ($  0.15)      $   0.20
                  Pro forma                           ($  0.15)      $   0.23

           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.

           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 Options and Warrants

             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 $22,918 and
             $327,037 for the years ended December 31, 2002 and 2001,
             respectively.

--------------------------------------------------------------------------------
                                      F-11
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

             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
             $80,367 and $80,220 for the years ended December 31, 2002 and 2001,
             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.

           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.

           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.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           Software Development Costs (Continued)

             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, except for prepaid advertising. Prepaid
             advertising consists principally of the costs of developing
             advertising materials including sales literature and catalogs.
             These costs are expensed on a monthly basis over the estimated

--------------------------------------------------------------------------------
                                      F-12
<PAGE>
CIMNET, INC.
--------------------------------------------------------------------------------

             useful life of the materials, generally over 12 to 24 months. At
             December 31, 2002 and 2001, $85 and $1,728 of advertising costs,
             respectively, were included in prepaid expenses. Advertising
             expense for the years ended December 31, 2002 and 2001 was $269,988
             and $113,258, 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.

             The components of other comprehensive income (loss) and related tax
             effects are as follows:
<TABLE>
<CAPTION>

                                                                                  Years Ended December 31,
                                                                                 -------------------------
                                                                                    2002           2001
                                                                                 ----------     ----------
<S>                                                                              <C>            <C>
             Unrealized holding losses arising during the year                   $  309,528     $   22,451

             Reclassification adjustment for gains realized in net income            83,387              0
                                                                                 ----------     ----------

             Net unrealized losses                                                  392,915         22,451

             Tax effect                                                               8,846         (8,846)
                                                                                 ----------     ----------

                    Net of Tax Amount                                            $  401,761     $   13,605
                                                                                 ==========     ==========
</TABLE>

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

           Recently Issued Accounting Standards

             In June of 2001, the Financial Accounting Standards Board issued
             Statement No. 143, "Accounting for Asset Retirement Obligations,"
             which addresses the financial accounting and reporting for
             obligations associated with the retirement of tangible long-lived
             assets and the associated asset retirement costs. This Statement
             requires that the fair value of a liability for an asset retirement
             obligation be recognized in the period in which it is incurred if a
             reasonable estimate of fair value can be made. The associated asset
             retirement costs are capitalized as part of the carrying amount of
             the long-lived asset. This Statement became effective for the
             Company on January 1, 2003 and did not have a significant impact on
             the Company's financial condition or results of operations.

             In July 2002, the Financial Accounting Standards Board issued
             Statement No. 146, "Accounting for Costs Associated with Exit or
             Disposal Activities," which nullifies EITF Issue 94-3, "Liability
             Recognition for Certain Employee Termination Benefits and Other
             Costs to Exit an Activity (including Certain Costs Incurred in a
             Restructuring)." This Statement delays recognition of these costs
             until liabilities are incurred, rather than at the date of
             commitment to the plan, and requires fair value measurement. It
             does not impact the recognition of liabilities incurred in
             connection with a business combination or the disposal of
             long-lived assets. The provisions of this Statement are effective
             for exit or disposal activities initiated after December 31, 2002
             and are not expected to have a significant impact on the Company's
             financial condition or results of operations.

--------------------------------------------------------------------------------
                                      F-13
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 3 - SECURITIES

             The amortized cost and approximate fair value of securities as of
           December 31, 2002 and 2001 is summarized as follows:
<TABLE>
<CAPTION>


                                                             Gross          Gross
                                            Amortized      Unrealized     Unrealized        Fair
                                               Cost          Gains          Losses          Value
                                            ----------     ----------     ----------     ----------
<S>                                         <C>            <C>            <C>            <C>
             December 31, 2002
                Available for sale
                  securities, equity
                  securities                $  624,964     $        0     ($ 415,366)    $  209,598
                                            ==========     ==========     ==========     ==========
             December 31, 2001
                Available for sale
                  securities, equity
                  securities                $  497,466     $   13,065      ($ 35,516)    $  475,015
                                            ==========     ==========     ==========     ==========
</TABLE>

             The gross realized gains on sales of available for sale securities
           totaled $83,387 and $41,740, respectively, for the years ended
           December 31, 2002 and 2001. There were no realized losses during
           either year.

NOTE 4 - PROPERTY AND EQUIPMENT

             Property and equipment consisted of the following at December 31,
           2002 and 2001:
<TABLE>
<CAPTION>

                                                                                          Estimated
                                                               2002           2001       Useful Lives
                                                           ------------   ------------   ------------
<S>                                                        <C>            <C>            <C>
             Furniture, fixtures and equipment             $    690,956   $    559,750   3 - 10 years
             Aircraft - 25% interest                            328,900        328,900     7 years
             Leasehold improvements                             314,152        211,676   7 - 40 years
             Computer software                                   55,026         17,522     3 years
                                                           ------------   ------------

                                                              1,389,034      1,117,848

             Accumulated depreciation and amortization         (680,304)      (538,862)
                                                           ------------   ------------

                                                           $    708,730   $    578,986
                                                           ============   ============
</TABLE>

             Depreciation and amortization related to property and equipment
           amounted to $141,442 and $72,585 for the years ended December 31,
           2002 and 2001, respectively.

--------------------------------------------------------------------------------
                                      F-14
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 5 - INCOME TAXES
<TABLE>
<CAPTION>

             The provision (benefit) for income taxes for the years ended
           December 31, 2002 and 2001 was as follows:

                                                                         2002           2001
                                                                     ------------   ------------
<S>                                                                     <C>         <C>
             Federal:

               Current                                                  ($707,830)  $    810,371
               Deferred                                                      (240)      (129,735)

             State:

               Current                                                          0        128,551
               Deferred                                                         0        (20,499)
                                                                     ------------   ------------

                                                                        ($708,070)  $    788,688
                                                                     ============   ============

</TABLE>

NOTE 5 - INCOME TAXES (CONTINUED)

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

                                                                         2002             2001
                                                                     ------------   ------------
<S>                                                                  <C>            <C>
             Pretax at statutory rate                                   ($509,090)  $    747,132
             State taxes, net of federal benefit                          (75,754)       108,052
             Benefit of research and development credits                 (143,414)             0
             Goodwill                                                           0         60,664
             Valuation allowance                                           75,754       (179,382)
             Other                                                        (55,566)        52,222
                                                                     ------------   ------------

                                                                        ($708,070)  $    788,688
                                                                     ============   ============
</TABLE>

             Income tax expense includes $32,854 and $16,446 in 2002 and 2001,
           respectively, of income tax expense related to net realized
           securities gains.

             The net deferred tax asset for the years ended December 31, 2002
           and 2001 consists of the following:
<TABLE>
<CAPTION>

                                                                         2002           2001
                                                                     ------------   ------------
<S>                                                                  <C>            <C>
             Deferred tax assets:

               Deferred stock compensation                           $    230,524   $    173,784
               Allowance for doubtful accounts                             21,076         23,640
               Accrued vacation                                            20,393         16,732
               Unrealized losses on securities available for sale               0          8,846
               Net operating loss carryforward                             75,754              0
                                                                     ------------   ------------

                                                                          347,747        223,002

               Valuation allowance                                        (75,754)             0
                                                                     ------------   ------------

                 Total Deferred Tax Asset                                 271,993        223,002
                                                                     ------------   ------------
             Deferred tax liabilities,

               Depreciation expense                                       (74,565)       (16,968)
                                                                     ------------   ------------

                 Net Deferred Tax Asset                              $    197,428   $    206,034
                                                                     ============   ============
</TABLE>

--------------------------------------------------------------------------------
                                      F-15
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 5 - INCOME TAXES (CONTINUED)

             The Company decreased the valuation allowance by $179,382 during
           2001, based upon the 2001 results of operations. At December 31,
           2002, the Company has a state net operating loss carryforward of
           $1,402,000 for which a deferred tax asset was recorded, with a
           corresponding valuation allowance. This net operating loss
           carryforward expires in 2022.

             The deferred tax amounts mentioned above have been classified on
           the accompanying balance sheets as of December 31, 2002 and 2001 as
           follows:
<TABLE>
<CAPTION>

                                                                         2002           2001
                                                                     ------------   ------------
<S>                                                                  <C>            <C>
             Deferred tax assets, current                            $    271,993   $    223,002
             Deferred tax liability, noncurrent                           (74,565)       (16,968)
                                                                     ------------   ------------

                                                                     $    197,428   $    206,034
                                                                     ============   ============
</TABLE>

NOTE 6 - LINE OF CREDIT

             The Company has a $300,000 line of credit with a bank subject to a
           borrowing base formula. Interest is payable monthly at the bank's
           prime interest rate plus .75%. There were no outstanding borrowings
           at December 31, 2002 and 2001. The line of credit expires on May 31,
           2003. The line of credit is collateralized by a first lien security
           interest in all business assets. This line contains a financial
           covenant that the Company maintain a certain tangible net worth. The
           Company was in compliance with this covenant at December 31, 2002.

NOTE 7 - LONG-TERM DEBT

             Long-term debt consisted of the following at December 31, 2002 and
           2001:
<TABLE>
<CAPTION>

                                                                                   2002           2001
                                                                               ------------   ----------
<S>                                                                            <C>            <C>
             Note payable, representing 25% of an obligation
               outstanding, secured by an aircraft, payable in fixed
               monthly installments of $4,381 including interest at
               3.04% plus a variable per annum rate equal to the rate
               listed for "1-Month" Commercial Paper (4.35% at
               December 31, 2002) through August 2008 (see Notes 2
               and 4)                                                          $    222,106   $  255,750

             Note payable, secured by equipment, payable in fixed monthly
               principal installments of $889 plus interest at the
               bank's prime rate plus 0.5% (4.75% at December 31, 2002)
               through October 2004                                                  19,570            0

             Capital lease obligations for various equipment; interest
               rate imputed at 19.63%; payable in monthly installments
               of $235 through May 2003; collateralized by the
               equipment under capital lease                                          1,036        3,417
                                                                               ------------   ----------

                                                                                    242,712      259,167

             Current portion                                                        (55,479)     (42,913)
                                                                               ------------   ----------

                                                                               $    187,233   $  216,254
                                                                               ============   ==========
</TABLE>
--------------------------------------------------------------------------------
                                      F-16
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

             The future minimum payments required on the notes payable at
           December 31, 2002 are as follows:

               2003                                        $     54,443
               2004                                              54,609
               2005                                              47,746
               2006                                              49,864
               2007                                              35,014
                                                           ------------

                                                           $    241,676
                                                           ============

NOTE 7 - LONG-TERM DEBT (CONTINUED)

             Future minimum payments required under the lease obligations at
           December 31, 2002 are as follows:

               2003                                        $      1,175

               Amount representing interest                        (139)
                                                           ------------
                Present value of minimum lease
                     payments                              $      1,036
                                                           ============

             Interest expense for the years ended December 31, 2002 and 2001 was
           $19,821 and $13,994, respectively.

NOTE 8 - EARNINGS PER SHARE

              The Company's calculation of earnings per share is as follows:
<TABLE>
<CAPTION>

                                                                            December 31,
                                                                     ---------------------------
                                                                         2002            2001
                                                                     ------------   ------------
<S>                                                                       <C>            <C>
           NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS -
                  DILUTED                                               ($789,254)  $  1,381,760
                  Preferred stock dividends                               (80,000)       (26,000)
                  Preferred stock discount accretion                      (44,678)       (14,892)
                                                                     ------------   ------------

             NET INCOME (LOSS) AVAILABLE TO COMMON STOCKHOLDERS -
                  BASIC                                                 ($913,932)  $  1,340,868
                                                                     ============   ============

             AVERAGE BASIC SHARES OUTSTANDING                           6,290,627      6,182,988
                  Assumed conversion of preferred stock                         0        234,464
                  Effect of dilutive options and warrants                       0        410,142
                                                                     ------------   ------------

             AVERAGE DILUTED SHARES OUTSTANDING                         6,290,627      6,827,594
                                                                     ============   ============

             NET INCOME (LOSS) PER COMMON SHARE

                  Basic                                                    ($0.15)  $       0.22
                                                                     ============   ============

                  Diluted                                                  ($0.15)  $       0.20
                                                                     ============   ============
</TABLE>
--------------------------------------------------------------------------------
                                      F-17
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 8 - EARNINGS PER SHARE (CONTINUED)

             A total of 1,602,500 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, 2002.

             Options to purchase 260,000 shares of common stock with exercise
           prices ranging from $1.50 to $2.00 per share were not included in the
           computation of 2001 net income per share due to exercise price
           exceeding the average market price of these options.

NOTE 9 - 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, 2002 and 2001, the
           Company conducted transactions with the related party which were
           immaterial, both individually and in the aggregate.

             The Company rents space from the Company's stockholders on a year
           to year basis. Rent expense for 2002 and 2001 relating to this
           arrangement was $120,000 and $90,000, respectively.

             The Company owns a 25% interest in Reading Air Charter, LLC (RAC).
           During the year ended December 31, 2002, the Company leased to RAC
           its portion of an aircraft for total rental income of $52,565. No
           rents were received during 2001.

             The Company pays RAC a monthly fee for the use of RAC's services.
           Total fees paid to RAC during 2002 amounted to $78,000. No fees were
           paid during 2001.

NOTE 10 - 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, 2002 and 2001 were $32,654 and $23,675,
           respectively.

--------------------------------------------------------------------------------
                                      F-18
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 11 - 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 are 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 vest on January 1, 2003 and each of these
           warrants are 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 2002 and 2001 was $0.26 and $1.39, respectively. The grant
           date fair value of the warrants issued during 2001 was $0.50 per
           warrant. No warrants were granted during 2002. Total marketing
           expense related to the vested warrants amounted to $52,000 and
           $277,297 for the years ended December 31, 2002 and 2001,
           respectively. The warrants that vested during 2001 expire on December
           31, 2006. 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 is being accreted over
           a period of three years. Such accretion was $44,676 and $14,892 for
           the years ended December 31, 2002 and 2001, 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 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 issuance. Net sales for the
           years ended December 31, 2002 and 2001 include additional income of
           $55,000 and expense of $27,000 for sales discounts relating to the
           change in the fair value of the warrants that vested on January 1,
           2003 and 2002, respectively, from the fair value calculated on the
           date of issuance.

             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 year ended December 31, 2002 and 2001, dividends in the amount of
           $80,000 and $26,000, respectively, were accrued related to the Series
           A Preferred Shares outstanding. At December 31, 2002 and 2001, the
           per share amount of dividends in arrearages amounted to $0.14 and
           $0.03, respectively.

--------------------------------------------------------------------------------
                                      F-19
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 11 - STOCKHOLDERS' EQUITY (CONTINUED)

             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 Stock holders:

             (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.

             The shares of Series A Preferred Stock shall be redeemable, at the
           option of the holders, for 115% of the original purchase price, plus
           all accrued and unpaid dividends, if the Company fails to file a
           registration statement within 180 days following the Closing Date
           relating to the resale of the shares of common stock issuable upon
           the conversion of the Series A Preferred Stock and upon exercise of
           the Warrants.

--------------------------------------------------------------------------------
                                      F-20

<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 12 - 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 1,000,000 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, 2002, no options
           have been granted under this Plan.

             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, 2002, 1,142,500 options have been granted under the
           1999 plan of which 737,500 have been granted below market price. At
           December 31, 2001, 1,010,000 options were granted, of which 725,000
           had been granted below market price. Compensation expense related to
           these options was $80,367 and $80,220 for employees and directors,
           and $25,918 and $22,740 for legal counsel for the years ended
           December 31, 2002 and 2001, respectively.

             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>

                                                                         2002           2001
                                                                     ------------   ------------
<S>                                                                  <C>            <C>
             Net income (loss):

                  As reported                                           ($789,254)  $  1,381,760
                  Add stock based employee compensation expense
                      included in reported net income (loss), net
                      of related tax effects                               80,367         80,220
                  Deduct total stock-based employee compensation
                      expense determined under fair value based
                      method for all awards, net of related tax
                      effect                                             (234,805)      (233,138)
                                                                     ------------   ------------

                  Pro forma                                             ($943,692)  $  1,228,842
                                                                     ============   ============
</TABLE>

--------------------------------------------------------------------------------
                                      F-21
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 12 - STOCK OPTION PLAN (CONTINUED)
<TABLE>
<CAPTION>

                                                                         2002           2001
                                                                     ------------   ------------
<S>                                                                    <C>        <C>
             Net income per share of common stock, basic:

                As reported                                                ($0.15)  $       0.22
                Pro forma                                                  ($0.17)  $       0.19

             Net income per share of common stock, diluted:

                As reported                                                ($0.15)  $       0.20
                Pro forma                                                  ($0.17)  $       0.18

</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 2002 and
           2001: dividend yield of 0% for both years, expected volatility of 94%
           and 142%, the average risk-free interest rate of 2.89% and 4.78% for
           2002 and 2001; and expected lives of 6.83 years for the directors and
           7.0 years for consulting options, in 2002 and 2001, respectively.

             A summary of the status of the 1999 plan as of December 31, 2002
           and 2001 is presented below:
<TABLE>
<CAPTION>

                                                           2002                           2001
                                                 -------------------------      ------------------------
                                                                 Weighted                      Weighted
                                                                 Average                       Average
                                                                 Exercise                      Exercise
                                                   Shares         Price          Shares         Price
                                                 ----------     ----------      ---------     ----------
<S>                                                 <C>         <C>             <C>           <C>
Outstanding, beginning of year                      980,000     $     1.09      1,085,000     $     1.07
     Granted                                         32,500           1.42         25,000           1.32
     Forfeited                                            0           0.00        (71,429)         (1.25)
     Exercised                                      (10,000)         (0.05)       (58,571)         (0.64)
                                                 ----------     ----------     ----------     ----------

Outstanding, end of year                          1,002,500     $     1.11        980,000     $     1.09
                                                 ==========     ==========     ==========     ==========

Options exercisable at year-end                     595,366     $     1.11        375,557     $     0.58
                                                 ==========     ==========     ==========     ==========

Weighted average fair value of options
     granted during the year                                    $     0.50                    $     0.89
                                                                ==========                    ==========
</TABLE>


--------------------------------------------------------------------------------
                                      F-22
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

NOTE 12 - STOCK OPTION PLAN (CONTINUED)

             The following table summarizes information about options
           outstanding at December 31, 2002 and 2001:
<TABLE>
<CAPTION>

                                 2002                                               2002
                           Options Outstanding                               Options Exercisable
-------------------------------------------------------------------     ------------------------------
                                      Weighted
                      Number          Average             Weighted          Number           Weighted
   Range of        Outstanding at    Remaining            Average       Outstanding at      Average
   Exercise         December 31,    Contractual           Exercise        December 31,       Exercise
    Prices              2002        Life (Years)            Price            2002            Price
---------------    -------------    ------------         ----------     --------------    -----------
<S>                      <C>                <C>               <C>              <C>              <C>
     $0.05               185,000            4.96              $0.05            106,700          $0.05
 $0.60 - $0.90            25,000            5.60               0.72             13,840           0.70
 $0.91 - $1.50           592,500            4.89               1.15            366,426           1.18
 $1.51 - $2.00           200,000            5.25               2.00            108,400           2.00
                   -------------                                        -------------

                       1,002,500                                               595,366
                   =============                                        ==============
</TABLE>
<TABLE>
<CAPTION>

                                 2001                                               2001
                           Options Outstanding                               Options Exercisable
-------------------------------------------------------------------     ------------------------------
                                      Weighted
                      Number          Average             Weighted          Number           Weighted
   Range of        Outstanding at    Remaining            Average       Outstanding at      Average
   Exercise         December 31,    Contractual           Exercise        December 31,       Exercise
    Prices              2001        Life (Years)            Price            2001            Price
---------------    -------------    ------------         ----------     --------------    -----------
<S>                      <C>                <C>               <C>              <C>              <C>
     $0.05               195,000            6.17              $0.05             60,674          $0.05
 $0.60 - $0.90            25,000            6.63               0.72              8,756           0.68
 $0.91 - $1.50           560,000            6.59               1.14            239,461           1.14
 $1.51 - $2.00           200,000            6.25               2.00             66,666           2.00
                   -------------                                         -------------

                         980,000                                               375,557
                   =============                                         =============
</TABLE>


NOTE 13 - COMMITMENTS AND CONTINGENCIES

             The Company leases various office equipment and a vehicle which are
           classified as operating leases. The following is a schedule by years
           of minimum rental payments under such operating leases that expire at
           various dates through 2004.

           Years ending December 31:

                 2003                            $     22,290
                 2004                                  18,575
                                                 ------------

                                                 $     40,865
                                                 ============

             During 2001, the Company obtained a 25% interest in an aircraft and
           assumed 25% of the related outstanding debt (Note 7). The Company is
           jointly and severably liable for the total outstanding debt should
           the other 75% of the aircraft ownership fail to honor their
           obligations. The total amount outstanding on this obligation was
           $888,424 at December 31, 2002.

--------------------------------------------------------------------------------
                                      F-23
<PAGE>

CIMNET, INC.
--------------------------------------------------------------------------------

             Total rental expense under all leases for the years ended December
           31, 2002 and 2001 was $156,845 and $155,925, respectively.

             Cimnet, Inc. is 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 14 - CONCENTRATION OF RISK

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

             During 2002, the Company had sales to one customer totaling
           $1,391,831 of which $112,565 was outstanding at December 31, 2002.
           During 2001, the Company had sales to one customer totaling
           $6,210,048 of which $1,257,882 was outstanding at December 31, 2001.
           No other significant concentrations existed at December 31, 2002 and
           2001.


--------------------------------------------------------------------------------
                                      F-24
<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  28,  2003

                                       CIMNET, INC.

                                       By: /s/ JOHN D. RICHARDSON
                                           -------------------------------------
                                           John D. Richardson
                                           Chairman of the Board,
                                           Chief Executive Officer
                                           and Chief 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.
<TABLE>
<CAPTION>

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

<S>                        <C>                                        <C>
/s/ John D. Richardson     Chairman of the Board, Chief Executive     March 28, 2003
-----------------------    Officer and Chief Accounting Officer
John D. Richardson

/s/ William Nyman          Director and Vice President                March 28, 2003
-----------------------    of Integration Services
William Nyman

/s/ David Birk             Director                                   March 28, 2003
-----------------------
David Birk

/s/ Karl Gerhart           Director                                   March 28, 2003
-----------------------
Karl Gerhart

</TABLE>

<PAGE>

                                  CERTIFICATION

     Pursuant to Section 302 of the Sarbanes Oxley Act of 2002, I, John D.
Richardson, certify that:

     1.  I have reviewed this annual report on Form 10-KSB of Cimnet, Inc. (the
         "Company");

     2.  Based on my knowledge, this annual report does not contain any untrue
         statement of a material fact or omit to state a material fact necessary
         to make the statements made, in light of the circumstances under which
         such statements were made, not misleading with respect to the period
         covered by this annual report;

     3.  Based on my knowledge, the financial statements, and other financial
         information included in this annual report, fairly present in all
         material respects the financial condition, results of operations and
         cash flows of the Company as of, and for, the periods presented in this
         annual report;

     4.  I am responsible for establishing and maintaining disclosure controls
         and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for
         the Company and I have:

         a)    designed such internal controls to ensure that material
               information relating to the Company is made known to me by others
               within the Company, particularly during the period in which this
               annual report is being prepared;

         b)    evaluated the effectiveness of the Company's internal controls as
               of a date within 90 days prior to the filing date of this annual
               report (the "Evaluation Date"); and

         c)    presented in this annual report my conclusions about the
               effectiveness of the disclosure controls and procedures based on
               my evaluation as of the Evaluation Date.

     5.  I have disclosed, based on our most recent evaluation, to the Company's
         auditors and the audit committee of the Company's board of directors:

         a)    all significant deficiencies (if any) in the design or operation
               of internal controls which could adversely affect the Company's
               ability to record, process, summarize and report financial data
               and have identified for the registrant's auditors any material
               weaknesses in internal controls; and

         b)    any fraud, whether or not material, that involves management or
               other employees who have a significant role in the Company's
               internal controls.

<PAGE>

     6.  I have indicated in the annual report whether or not there were
         significant changes in internal controls or in other factors that could
         significantly affect internal controls subsequent to the date of our
         most recent evaluation, including any corrective actions with regard to
         significant deficiencies and material weaknesses.


Date:  March 28, 2003

/s/ JOHN D. RICHARDSON
---------------------------------
John D. Richardson
Chief Executive Officer and Principal Accounting Officer