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

                                   FORM 10-KSB

Annual report under Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended December 31, 2003

Commission file Number 0-29525

                               DEBT RESOLVE, INC.
                 (Name of Small Business Issuer in its charter)

        Delaware                                            33-0889197
        --------                                            ----------
(State of incorporation)                            (I.R.S. Employer Id. No.)

        707 Westchester Avenue, Suite 409, White Plains, New York 10604
        ---------------------------------------------------------------
                    (Address or principal executive offices)

Issuer's telephone number (914) 949-5500

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

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

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

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

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

The registrant's revenues for its most recent fiscal year were $ 0.

As of March 25, 2004, the aggregate market value of the voting stock held by
non-affiliates of the registrant was approximately $ 0, and the number of shares
outstanding of the registrant's only class of common stock, $.001 par value per
share, was 29,029,000.


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                                TABLE OF CONTENTS

PART I                                                                         2

Item 1.  Description of business                                               2
Item 2.  Description of property                                               7
Item 3.  Legal proceedings                                                     7
Item 4.  Submission of matters to a vote of security holders                   7

PART II                                                                        7

Item 5.  Market for registrant's common equity and
           related stockholder matters                                         7
Item 6.  Management's discussion and analysis or plan of operation             7
Item 7.  Financial statements                                                  9
Item 8.  Changes in and disagreements with accountants on
           accounting and financial disclosure                                24
Item 8A. Controls and procedures                                              24

PART III                                                                      24

Item 9.  Directors, executive officers, promoters and control
           persons; Compliance with Section 16(a) of the Exchange Act         24
Item 10. Executive compensation                                               27
Item 11. Security ownership of certain beneficial owners
           and management                                                     29
Item 12. Certain relationships and related transactions                       29
Item 13. Exhibits and reports on Form 8-K                                     29
Item 14. Principal accountant fees and services                               29

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PART I

ITEM 1.  Description of business

Organization
------------

Debt Resolve, Inc., formerly Lombardia Acquisition Corp. (the "Company"), is a
Delaware corporation and was formed on April 21, 1997.

The Company was inactive and had no significant assets, liabilities or
operations through February 24, 2003.

On February 24, 2003, Charles S. Brofman, James D. Burchetta and Michael S.
Harris (collectively, the "Principal Shareholders") purchased 22,500,000
newly-issued shares of the Company's common stock, representing 84.6% of the
then outstanding shares, pursuant to a Stock Purchase Agreement effective
January 13, 2003 between the Company and each of the Principal Shareholders. The
Company received an aggregate cash payment of $22,500 in consideration for the
sale of such shares to the Principal Shareholders.

On February 24, 2003, in accordance with the Company's by-laws for filling
newly-created board vacancies, Danilo Cacciamatta, the sole existing director,
appointed Messrs. Brofman, Burchetta, Harris and Lawrence E. Dwyer, Jr. to the
board of directors of the Company. Mr. Burchetta was named Co-Chairman of the
Board and Chief Executive Officer, Mr. Brofman was named non-executive
Co-Chairman of the Board, Mr. Harris was named Executive Vice President and
General Counsel, and Mr. Cacciamatta resigned his position as Chief Executive
Officer. On April 7, 2003, William M. Mooney, Jr. was elected to the board of
directors. Effective June 9, 2003, Alan M. Silberstein was elected to the board
of directors and was appointed the Company's President and Chief Operating
Officer.

On May 7, 2003, following approvals by the Board of Directors and holders of a
majority of the Company's common stock, the Company's Certificate of
Incorporation was amended to change the Company's corporate name to Debt
Resolve, Inc. and increase the number of the Company's authorized shares of
common stock from 20,000,000 to 50,000,000 shares.

Development stage activities
----------------------------

Since February 24, 2003, the Company has devoted substantially all of its
efforts to planning and budgeting, research and development activities, and
raising capital. In the early part of 2004, the Company substantially completed
the development of an online system for the settlement of credit card and other
consumer debt and has begun marketing its service to banks and other creditors.

Business overview
-----------------

The Company has substantially completed the development of, and in the early
part of 2004 has begun marketing, an online system (the "Debt Resolve System")
that provides tools for the collection of consumer and other debt, with an
emphasis on the dignity of the consumer. The Company offers its service as an
Application Service Provider ("ASP"), enabling the introduction of this
collection option with no modifications to its customer's existing collections
computer systems. The Company's service is highlighted by the use of the
Internet as a tool for communication, resolution, settlement and payment. The
Debt Resolve System features, at its core, a patented online bidding system.

The Debt Resolve System was originally conceived by its Co-Chairmen, James D.
Burchetta and Charles S. Brofman, who were the co-founders of Cybersettle, Inc.,
the first company to settle insurance claims over the Internet, and who are the
co-inventors of the patented double blind bidding system. Cybersettle's system,
which has been in use for five years, has been used to successfully settle over
$700 million in insurance claims.

Initially, the Company intends to market its service to credit card issuers,
their collection agencies, and the buyers of their defaulted debt in the United
States. Eventually, the Company intends to market its service to other segments
served by the collections industry worldwide.

The Debt Resolve System uses a patented process featuring an automated blind
bidding mechanism that provides a tool to creditors, debtors, and their agents
that is intended to increase the efficiency and speed of the debt settlement
process. The system facilitates settlements acceptable to both creditors and
debtors by matching the debtor's offers to acceptable minimum payment amounts
provided by their creditors.

The Company has developed a suite of modules to complement the Debt Resolve
System. These modules include DR Prevent (TM) for early-stage collections,
C-Pay (TM) (for online collections), DR Control (TM) (for system
administration), and C-Mail (TM) (a secure e-mail methodology).

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The Company is currently in negotiations with a number of potential clients to
test the Debt Resolve System with their portfolios. As of the date of this
report, one potential client has implemented the Debt Resolve System, on a test
basis, with a limited sample of accounts.

Competition
-----------

The Company is not aware of any similar product being offered or contemplated
within its target market at the present time. Presently, technology-based
products introduced by other participants in this market have been related to
consumer information, credit and collections scoring.

The Company's competitive strategy is to seek to gain a competitive advantage by
being the first company to offer an online debt collection system, which is
based on intellectual property rights granted by the United States and
international patent authorities. The Company holds a license to specific rights
in U.S. Patent Number 6,330,551, and related extensions. The Company's licensed
rights also extend to patents that have been issued in 15 foreign countries,
including the United Kingdom, and are pending in 28 other countries. Several
companies offer collection management and payment software systems designed to
support direct-mail and telephone-based collection efforts. These companies are
likely to add some form of Internet-based payment mechanism to their systems.
They may also add some form of automated settlement mechanism to their systems,
although such systems may be limited by the breadth of the patent upon which the
Debt Resolve System is based. The Company intends to continuously enhance and
extend its product offerings and develop significant expertise in customer
behavior with respect to online debt payment to remain ahead of these potential
competitors.

Although the Company is not aware of any similar product being offered or
contemplated within its target market at the present time, management recognizes
that the Company, through its marketing efforts, is educating the collections
industry about the benefits of aggressively integrating the Internet into its
practices and, as such, may attract competitors, would-be competitors or
look-alike products.

Limited license agreement
-------------------------

On February 20, 2003, the Company entered into a Limited License Agreement (the
"License") with Messrs. Brofman and Burchetta (together, the "Licensors") for
the licensed usage (the "Licensed Usage") of the intellectual property rights
relating to U.S. Patent No. 6,330,551 issued by the U.S. Patent and Trademark
Office on December 11, 2001 (the "Patent") for "Computerized Dispute and
Resolution System and Method." The Licensed Usage is limited to the creation of
software and other code enabling an automated system used solely for the
settlement and collection of credit card receivables and other consumer debt,
and specifically excludes the settlement and collection of insurance claims, tax
and other municipal fees of all types. The License provides for a royalty fee,
payable to the Licensors, of ten percent (10%) of the Company's annual gross
revenues attributable to the Licensed Usage commencing July 1, 2003 and
continuing until the expiration of the Patent in 2018. The minimum annual
royalty for any fiscal year is $600,000. Under certain circumstances, if Mr.
Burchetta is no longer employed as a director and officer of the Company, or if
Mr. Brofman is no longer retained as a consultant to the Company, the minimum
annual royalty fee for any fiscal year will be $3,000,000. The Licensors may
terminate the License if, among other reasons, the Company had not developed and
produced a fully functional and commercially usable system contemplated by the
License on or before September 30, 2003 (which was extended to March 31, 2004),
or the Company's annual gross revenues during any calendar year do not exceed
$500,000 through December 31, 2004, or the Company's annual gross revenues do
not exceed one hundred and ten percent (110%) of the Company's annual gross
revenues for the immediately preceding calendar year (the `Minimum Annual Gross
Revenue Clause").

In February 2004, the License was amended (the "Amendment") to modify the
royalty fee obligations and the termination rights. Pursuant to the Amendment,
the Company will pay a royalty fee to the Licensors as follows: (1) in 2004, the
Company will pay no royalties; (2) in 2005, the Company will pay a royalty fee
of 10% of the Company's annual gross revenues attributable to the use of the
patented computerized dispute resolution system and method (the "Fee"); (3) in
2006, the Company will pay the Fee with a minimum guaranteed royalty payment of
$300,000; and (4) in 2007 and thereafter, the Company will pay the Fee with a
minimum guaranteed royalty payment of $600,000 annually, subject to certain
conditions relating to the Licensors' continued affiliation with the Company, or
potentially as much as $3,000,000 in the aggregate, depending on the
circumstances of their separation from the Company.

In addition, pursuant to the Amendment, if the Company fails to meet the Minimum
Annual Gross Revenue Clause, the Licensors may not terminate the License prior
to January 1, 2006, provided that the Company has not breached its obligations
to pay the Fee.

Government regulation
---------------------

The Company's activities are currently subject to no particular regulation by
governmental agencies other than that routinely imposed on corporate businesses.
However, the Company's potential clients, such as credit card issuers, are in
highly regulated industries. The relationship of a customer and a creditor is
regulated by federal, state and local consumer credit and protection laws and
regulations. Significant laws include the Fair Debt Collection Practices Act,
Federal Truth-In-Lending Act, Fair Credit Billing Act, and Gramm-Leach-Bliley
Act, as well as applicable comparable statutes in the states and municipalities
in which customers reside or in which the banks or other financial institutions

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that originated the credit account are located. Failure of these parties to
comply with applicable federal, state and local laws and regulations could have
a negative impact on the Company. Applicable laws and regulations may limit the
Company's ability to collect amounts owing with respect to receivables,
regardless of any act or omission on the part of the Company. The Company also
cannot predict the impact of future regulations on either the Company or its
potential clients. The Company is not a collection agency and does not operate
as such.

Research and development activities
-----------------------------------

During 2003, the Company employed up to four full-time employees and consultants
involved in the development of the Debt Resolve System. The Company estimates
that approximately 3,500 hours were spent in 2003 on research and development
activities.

Employees
---------

As of December 31, 2003, the Company had eight full-time employees and one
part-time employee.

Forward looking statements - factors that may affect future results
-------------------------------------------------------------------
This report contains forward looking statements within the meaning of that term
in the Private Securities Litigation Reform Act of 1995 (Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934).
Additional written or oral forward looking statements may be made by the Company
from time to time, in filings with the Securities and Exchange Commission or
otherwise. Statements contained in this report that are not historical facts are
forward looking statements made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. Forward looking statements may
include, but are not limited to, projections of revenue, income or loss and
capital expenditures, statements regarding future operations, financing needs,
plans for acquisition or sale of assets or businesses and consolidation of
operations of newly acquired businesses, and plans relating to products or
services of the Company, assessments of materiality, predictions of future
events and the effects of pending and possible litigation, as well as
assumptions relating to the foregoing. In addition, when used in this
discussion, the words "anticipates", "believes", "estimates", "expects",
"intends", "plans" and variations thereof and similar expressions are intended
to identify forward looking statements.

Forward looking statements are inherently subject to risks and uncertainties,
some of which cannot be predicted or quantified based on current expectations.
Consequently, future events and results could differ materially from those set
forth in, contemplated by, or underlying the forward looking statements
contained in this report. Statements in this report, particularly in "Item 1.
Description of business", "Item 3. Legal proceedings", "Item 6. Management's
discussion and analysis or plan of operation", and the Notes to Financial
Statements describe certain factors, among others, that could contribute to or
cause such differences.

Some of the factors that may affect future results are discussed below.

The Company has a limited operating history and anticipates future losses and
negative cash flow. The Company has a limited operating history on which its
business and prospects can be evaluated. One should consider the risks,
uncertainties, expenses and difficulties frequently encountered by development
stage enterprises, particularly companies in new and rapidly evolving markets
like the Internet, using new and unproven business models. These risks relate to
the Company's ability to:
         o        adapt its business model to changing circumstances;
         o        enter into relationships with banks, other financial
                  institutions and collection agencies;
         o        manage growth in its operations;
         o        implement sales and marketing initiatives;
         o        continue to develop and upgrade its dispute resolution
                  technology and network;
         o        attract, retain and motivate qualified personnel; and
         o        respond to actions by potential competitors.

The Company cannot be certain that its business strategy will be successful or
that it will successfully address these and other risks and uncertainties. In
addition, the Company expects to incur operating losses and experience negative
cash flow in 2004. The Company anticipates losses will also increase
significantly from current levels as it incurs additional costs and expenses
related to:
         o        increasing brand awareness and general marketing;
         o        sales and distribution activities;
         o        improving technology and system architecture;
         o        employment of additional personnel; and
         o        scaling up customer service.

The Company's ability to achieve profitability will depend on its capacity to
generate net sales while maintaining reasonable expense levels. The Company
cannot be certain that if it were to achieve profitability, it would be able to
sustain or increase profitability on a quarterly or annual basis.

The Company's future operating results are unpredictable and may fluctuate
significantly. The Company's annual and quarterly operating results may
fluctuate significantly due to a variety of factors, many of which are outside
of its control, including:
         o        demand for its Debt Resolve system;
         o        the value, timing and renewal of contracts;
         o        the amount and timing of operating costs and capital
                  expenditures relating to its operations and development of its
                  technology;
         o        the ability to successfully execute its sales and marketing
                  strategy;
         o        the introduction of competitive products;
         o        the performance of its dispute resolution technology;
         o        changes in its management team and key personnel;
         o        changes in government regulations affecting the receivables
                  recovery and collection industry; and
         o        general economic conditions.

These factors, together with no operating history and an unproven business
model, make it difficult to accurately forecast the Company's future revenues or
results of operations. The Company also has no meaningful historical financial
data upon which to base planned operating expenses. A substantial portion of the
Company's operating expenses will be related to personnel costs, marketing
programs and overhead, which cannot be adjusted quickly.

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The Company will depend on entering into relationships with banks, other
financial institutions, debt buyers, other consumer billing companies and
collection agencies. In order to provide the Debt Resolve System, the Company
will depend on bank and other financial institution representatives to initiate
the process by registering the delinquent consumer debt claim along with the
settlement offers. The loss of this source of submitted claims would harm its
business. The Company cannot be certain that it will be able to enter into
relationships with banks, other financial institutions and collection agencies
in the future nor can the Company be certain that it will be able to establish
these relationships on favorable terms. The failure to add and retain new
customers to its service base would materially adversely affect its business,
financial condition and operating results.

The Company's future success is dependent on increased acceptance of the
Internet by creditors and consumers as a medium for dispute resolution. The use
of the Internet for dispute resolution is new and rapidly developing. The
adoption of online debt collection requires the acceptance of a new way of
conducting business, exchanging information and resolving disputes by creditors
and consumers that have historically relied on traditional dispute resolution
methods. If acceptance of online dispute resolution by these participants does
not increase, the Company's business, financial condition and operating results
could be materially adversely affected.

The Company may fail to manage growth in its operations. The Company is
expanding the scope of its operations and is increasing the number of its
employees accordingly. This growth has placed, and its anticipated future
operations will continue to place, a significant strain on its management,
information systems and other resources. Failure to effectively manage growth,
particularly failure to rapidly increase the size and effectiveness of its sales
force, could have a material adverse effect on its business, financial condition
and operating results.

The Company's future success also depends on its ability to attract and retain
highly qualified technical, sales, marketing and managerial personnel.
Competition for such personnel is intense, and there is a limited number of
persons with knowledge of, and experience in, the Internet and consumer debt
dispute resolution. Its current employees may also voluntarily terminate their
employment at any time. Finally, the Company's ability to manage growth in its
operations will depend in part on implementing operational, financial and
management controls, reporting systems and procedures.

The Company's business model depends on successful marketing of its services.
Marketing the Company's services in order to grow its customer base is crucial
to the success of its business. Currently, the Company is targeting its
marketing efforts towards consumer charge accounts generated in the United
States. To continue its growth, the Company will have to achieve market
penetration in this segment and expand its service base to include international
consumer charge accounts. The Company has no experience marketing its services
and may not be able to successfully implement its sales and marketing
initiatives. The Company may be unable to hire, retain, integrate and motivate
sales and marketing personnel. New sales and marketing personnel may also
require a substantial period of time to become effective. There can be no
assurance that marketing efforts will be successful or that the Company will be
able to build the base of creditors and consumers who use its services.

If the Company is unable to build brand recognition, demand for services will be
limited. The Company believes that building brand awareness of the Debt Resolve
System is critical to increasing demand for its services. Brand recognition is a
key differentiating factor among providers of online services, and the Company
believes this will become increasingly important as competition is introduced in
its target market. In order to increase brand awareness, the Company must
succeed in its marketing efforts, provide high-quality service, and increase the
number of creditors and consumers using its services. If initial users do not
perceive the Company's services to be of high quality, the value of its brand
could be diluted, which could decrease the attractiveness of its services to
creditors and consumers. If the Company fails to promote and maintain its brand
successfully or incurs significant expenses in promoting its brand and fails to
generate a corresponding increase in revenue as a result of its branding
efforts, its business, financial condition and operating results could be
materially adversely affected.

The Company depends upon key personnel. The Company depends on the continued
services and performance of its executive officers and other key personnel,
particularly James D. Burchetta, its Co-Chairman and Chief Executive Officer and
Alan M. Silberstein, its President and Chief Operating Officer. The Company has
employment agreements with Mr. Burchetta, as well as with Michael S. Harris, its
Executive Vice President and General Counsel, and John M. Porta, its Executive
Vice President and Chief Financial Officer. The employment agreements for
Messrs. Burchetta and Harris will be in effect until January 13, 2008. If the
Company loses the services of Mr. Burchetta or any of its other executive
officers and key employees, its business could be materially adversely affected.

The Company's network is susceptible to failures. The Company is exposed to the
risk of network failure, both through its own systems and those of its service
providers. While its utilization of redundant transmission systems can improve
its network's reliability, the Company cannot be certain that the network will
avoid downtime. Its systems and operations are vulnerable to damage or
interruption from fire, flood, power loss, telecommunications failure,
break-ins, terrorist acts, earthquake and similar events. Substantially all of

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the Company's computer and communications hardware systems will be in leased
facilities in White Plains, New York. The Company has no formal disaster
recovery plan, and its business insurance may not adequately compensate it for
losses that may occur. The occurrence of a natural disaster or unanticipated
problems at its facilities could cause interruptions or delays in distribution
of content and loss of data.

The Company also relies on third parties to facilitate network transmissions.
There are no assurances that these transmissions will remain either reliable or
secure. Any transmission problems, particularly if those problems persist or
recur frequently, could result in lost business from creditors and consumers.
Network failures of any sort may have a material adverse effect on its business,
financial condition and operating results.

The Company may fail to compete successfully. Competitors may emerge in the
online consumer debt settlement market. Larger, well-established and
well-financed entities may invest in or form joint ventures to serve this market
as the use of the Internet and other online services increases. Increased
competition from these or other competitors could adversely affect its business.

The Company might not be able to protect its intellectual property and may face
infringement claims. The Company relies on its intellectual property to protect
its proprietary rights, and considers its intellectual property to be critical
to its success. The unauthorized use or other misappropriation of its
intellectual property by others could diminish the value of its proprietary
rights or reputation. If this were to occur, its business could be materially
and adversely affected.

The Company currently does not hold patents on its consumer debt-related
product, but it does license technology for its proposed product from Charles S.
Brofman and James D. Burchetta, two of the directors of the Company, whose
patented technology will in the future be incorporated into the Company's
products.

Policing and enforcement against the unauthorized use of its intellectual
property rights could also entail significant expenses and could prove difficult
or impossible. There can be no assurance that third parties will not bring
claims of copyright or trademark infringement or patent violation against the
Company. Any such claims, with or without merit, could be time consuming to
defend, result in costly litigation, divert management attention, require the
Company to enter into costly royalty or licensing arrangements or prevent it
from continuing to provide services.

The Company's officers and directors retain significant control over the
Company.
Executive officers, directors and
entities affiliated with the Company, in the aggregate, beneficially own
almost 90% of its outstanding common stock on a fully-diluted basis. As a
result, these stockholders, if acting together, would be able to significantly
influence all matters requiring approval by its stockholders, including the
election of directors and the approval of mergers or other business combination
transactions.

The Company will need additional capital. The Company needs additional capital
immediately. If funds are raised through the issuance of equity or debt
securities, such additional securities may have powers, designations,
preferences or rights senior to the shares of common stock and its stockholders
may experience additional dilution. The Company cannot be certain that
additional financing will be available to it on favorable terms when required,
if at all. The failure to raise needed funds on sufficiently favorable terms
could have a material adverse effect on its business, financial condition and
operating results.

The Company will be indirectly impacted by consumer credit and debt collection
practices law. The Company's activities are currently subject to no particular
regulation by governmental agencies other than that routinely imposed on
corporate businesses. However, a number of The Company's potential clients, such
as credit card issuers, are in highly regulated industries. The Company will be
indirectly impacted by consumer credit and debt collection practices laws. The
relationship of a customer and a creditor is extensively regulated by federal,
state and local consumer credit and protection laws and regulations. Significant
laws include the Fair Debt Collection Practices Act, Federal Truth-In-Lending
Act and Fair Credit Billing Act, as well as applicable comparable statutes and
municipalities in the states in which customers reside or in which the banks or
other financing institutions that originated the credit account are located.
Failure of these parties to comply with applicable federal, state and local laws
and regulations could have a negative impact on Debt Resolve. Applicable laws
and regulations may limit the Company's ability to collect amounts owing with
respect to receivables, regardless of any act or omission on the part of the
Company. No assurance can be given that any indemnities received from the
financial institutions which originated the credit account will be adequate to
protect the Company from losses on the receivables or liabilities to customers.
Any new laws or rulings that may be adopted, and existing consumer credit and
protection laws may adversely affect the Company's ability to collect the
receivables. In addition, the failure of the Company and its affiliates to
comply with such requirements could adversely affect the Company's ability to
enforce the receivables and result in liability.

The Company depends on the Internet and the development of the Internet's
infrastructure. The Company's success will depend in large part on continued
growth in the use of the Internet, particularly for legal matters such as
consumer debt settlement. There are critical issues concerning the commercial
use of the Internet that remain unresolved. Those issues that the Company
expects to affect the development of the market for its system include:

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         o        security;
         o        reliability;
         o        cost;
         o        ease of access;
         o        quality of service; and
         o        increases in available bandwidth.

The Company faces potential liability arising from the storage of personal
information concerning disputed claims and other privacy concerns. Any
penetration of the Company's network security or other misappropriation of
consumers' personal information could subject it to liability. Claims could also
be based on other misuses of personal information, such as for unauthorized
marketing purposes. These claims could result in litigation. In addition, the
Federal Trade Commission and several states have investigated the use by certain
Internet companies of personal information. The Company could incur
unanticipated expenses, especially in connection with its settlement database,
if new regulations regarding the use of personal information are introduced.

Government regulation of the Internet could inhibit growth of the Internet. The
Company could be adversely impacted indirectly by legislation or regulation that
fundamentally alters the attractiveness or cost-effectiveness of utilizing the
Internet, including the cost of transmitting over various forms of network
architecture, such as telephone networks or cable systems, or the imposition of
various forms of taxation on Internet-related activities. Regulators continue to
evaluate the best telecommunications policy regarding the transmission of
Internet traffic.

The Company is authorized to issue 10,000,000 shares of $.001 par value
preferred stock ("Preferred Stock"). The Preferred Stock may be issued from time
to time in one or more series. And, the Board of Directors, without action by
the holders of the Common Stock, may fix or alter the voting rights, redemption
provision, (including sinking fund provisions), dividend rights, dividend rates,
liquidation preferences, conversion rights and any other rights preferences,
privileges and restrictions of any wholly unissued series of Preferred Stock.
The Board of Directors, without stockholder approval, can issue shares of
Preferred Stock with rights that could adversely affect the rights of the
holders of Common Stock. No shares of Preferred Stock are outstanding, and the
Company has no present plans to issue any such shares. The issuance of shares of
Preferred Stock could adversely affect the voting power and other rights of the
holders of common stock and could have the effect of delaying, deferring or
preventing a change in control of the Company or other corporate actions.

ITEM 2.  Description of property

The Company leases approximately 2,419 square feet of office space at 707
Westchester Avenue, Suite 409, White Plains, New York 10604. The Company leases
this space for $5,594 per month under a lease through
July 2005.

ITEM 3.  Legal proceedings

None.

ITEM 4.  Submission of matters to a vote of security holders

None.

PART II

ITEM 5.  Market for common equity and related shareholder matters

As of March 25, 2004, there was no public market for the securities of the
Company.

During 2003, the Company issued an aggregate of 1,785,000 shares of its common
stock in a series of private placement closings at a price of $1.00 per share to
47 "accredited investors" as that term is defined in Rule 501(a) under the
Securities Act of 1933. These issuances were exempt from registration pursuant
to Section 4(2) of the Securities Act and Regulation D (Rule 506) promulgated
thereunder. No underwriting discounts or commissions were paid in association
with the private placement sales.

As of March 25, 2004, there were 77 record holders of the Company's common
stock.

The Company has not paid any cash dividends since its inception and does not
contemplate paying dividends in the foreseeable future. It is anticipated that
earnings, if any, will be retained for the operation of the Company's business.

ITEM 6.  Management's discussion and analysis or plan of operation

Since February 24, 2003, we have devoted substantially all of our efforts to
planning and budgeting, research and development activities, and raising
capital. In the early part of 2004, we substantially completed the development

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of an online system for the settlement of credit card and other consumer debt
and have begun marketing our service to banks and other creditors.

Initially, we intend to market our service to credit card issuers, their
collection agencies, and the buyers of their defaulted debt in the United
States. Eventually, we intend to market our service to other segments served by
the collections industry worldwide. We are currently in negotiations with a
number of potential clients to test the Debt Resolve System with their
portfolios. As of the date of this report, one potential client has implemented
the Debt Resolve System, on a test basis, with a limited sample of accounts.

We have financed our activities to date through our management's contributions
of cash and forgiveness of compensation, the forgiveness of royalty and
consulting fees, advances from two shareholders, and the proceeds from sales of
our common stock in a private placement.

As of December 31, 2003 and March 21, 2004, our working capital totaled $785,693
and $522,352, respectively. We believe that our working capital as of the date
of this Report is not sufficient to fund our plan of operations over the next 12
months. We intend to continue seeking to raise additional capital over the next
12 months through private equity investments. However, we have no agreements or
commitments concerning the sale of our equity securities and there can be no
assurance we will be able to raise sufficient additional capital as needed to
execute our business plan.

2003 costs and expenses
-----------------------

Payroll and related expenses. Payroll and related expenses totaled $742,845 for
the year ended December 31, 2003. These expenses primarily consist of
compensation incurred in connection with employment agreements with members of
the executive management team. As described in Item 10 below and in Notes 4 and
6 to the financial statements, three executives waived the entire amount of
their compensation during 2003 and were not paid, resulting in a capital
contribution of $586,167.

General and administrative expenses. General and administrative expenses totaled
$1,255,498 for the year ended December 31, 2003. These expenses consist of
$600,000 for the royalty fee incurred in connection with the limited license
agreement, $396,613 for consulting fees incurred in connection with business
advisory and marketing services, and $258,855 for other general expenses,
primarily consisting of legal fees, occupancy costs and travel related expenses.
As described in Notes 4, 6 and 8 to the financial statements, the Licensors
waived the entire amount of the royalty fee for 2003 and were not paid,
resulting in a capital contribution of $600,000. As described in Item 10 below
and in Notes 4 and 8 to the financial statements, two directors waived the
entire amount of their consulting fees during 2003 and were not paid, resulting
in a capital contribution of $267,400.

Research and development expenses. Research and development expenses totaled
$453,301 for the year ended December 31, 2003. These expenses consist of payroll
and related expenses and consulting fees incurred in connection with employees
and consultants involved in the development of the Company's software product.

We are classified as a development stage company because, to date, we have
devoted substantially all of our efforts to planning and budgeting, research and
development activities, and raising the capital necessary to execute our
business plan. There can be no assurance that we will be successful in
implementing our business plan.

Critical accounting policies
----------------------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
the accompanying notes. These estimates and assumptions are based on
management's judgment and available information and, consequently, actual
results could be different from these estimates. We believe that the most
critical accounting policy concerns the doubt about the Company's ability to
continue as a going concern. This and our other critical accounting policies are
described in note 2 to our financial statements.

                                       8


<PAGE>

ITEM 7.  Financial statements

                               DEBT RESOLVE, INC.
                          (a development stage company)

                              FINANCIAL STATEMENTS
                                December 31, 2003

                          INDEX TO FINANCIAL STATEMENTS

     Report of Independent Auditors                                      10

     Balance Sheets                                                      11

     Statements of Operations                                            12

     Statements of Stockholders' Equity                                  13

     Statements of Cash Flows                                            14

     Notes to Financial Statements                                       15

                                       9


<PAGE>

                         REPORT OF INDEPENDENT AUDITORS
                         ------------------------------

March 26, 2004

Board of Directors
Debt Resolve, Inc.
707 Westchester Avenue, Suite 409
White Plains, NY 10604

Gentlemen:

We have audited the balance sheet of Debt Resolve, Inc. as of December 31, 2003,
and the related statement of operations, shareholders' equity, and cash flows
for the year 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 audit. The financial statements of Debt
Resolve, Inc. (then named Lombardia Acquisition Corp.) as of December 31, 2002,
were audited by other auditors whose report dated March 17, 2003 on those
statements included an explanatory paragraph stating that the Company's need for
an infusion of additional capital raised substantial doubt about its ability to
continue as a going concern discussed in Note 4 to the financial statements.

We conducted our audit in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the 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 that our audit provides a
reasonable basis for our opinion.

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

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 2 to the
financial statements, the Company's working capital is not sufficient to fund
its plan of operations over the next 12 months and this raises substantial doubt
about its ability to continue as a going concern. Management's plan in this
regard is also described in Note 2. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.

/s/ Becher, Della Torre, Gitto & Company

Ridgewood, NJ
March 25, 2004

                                       10


<PAGE>

<TABLE>
                                  DEBT RESOLVE, INC.
                            (A Development Stage Company)
                                    Balance Sheets
<CAPTION>

                                                                December 31,
                                                            2002             2003
                                                        ------------     ------------
                         ASSETS
<S>                                                     <C>              <C>
Current assets:
   Cash                                                 $        --      $ 1,040,210
   Prepaid expenses and other current assets                     --           32,062
                                                        ------------     ------------
      Total current assets                                       --        1,072,272

Fixed assets, net                                                --           90,517
                                                        ------------     ------------
Total assets                                            $        --      $ 1,162,789
                                                        ============     ============

          LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:
   Accounts payable                                     $        --      $    95,643
   Accrued compensation expenses                                 --           95,667
   Accrued expenses                                              --           85,269
   Income taxes payable                                          --            1,372
   Loan payable to shareholder                                   --           10,000
                                                        ------------     ------------
      Total liabilities                                          --          287,951
                                                        ------------     ------------

Commitments and contingencies                                    --               --

Shareholders' equity:
   Preferred stock, 10,000,000 shares authorized,
      $.001 par value, none issued and outstanding               --               --
   Common stock, 20,000,000 and 50,000,000 shares
      authorized, respectively, $0.001 par value,
      500,000 and 29,020,000 shares
      issued and outstanding, respectively                      500           29,020
   Additional paid in capital                                 5,242        3,314,463
   Deficit accumulated during the development stage          (5,742)      (2,468,645)
                                                        ------------     ------------
      Total shareholders' equity                                 --          874,838
                                                        ------------     ------------
Total liabilities and shareholders' equity              $        --      $ 1,162,789
                                                        ============     ============

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

                                         11
</TABLE>


<PAGE>

<TABLE>
                                                 DEBT RESOLVE, INC.
                                           (A Development Stage Company)
                                              Statements of Operations
<CAPTION>

                                                                                                      Cumulative
                                                                                                    from inception
                                                                                                   (April 21, 1997)
                                                         Year ended December 31,                    to December 31,
                                           ----------------------------------------------------     --------------
                                                2001               2002               2003               2003
                                           --------------     --------------     --------------     --------------
<S>                                        <C>                <C>                <C>                <C>
Costs and expenses:
   Payroll and related expenses                       --                 --      $     742,845      $     742,845
   General and administrative expenses     $       1,225      $       2,401          1,255,498          1,261,240
   Research and development expenses                  --                 --            453,301            453,301
   Depreciation expense                               --                 --             13,865             13,865
                                           --------------     --------------     --------------     --------------
Total expenses                                     1,225              2,401          2,465,509          2,471,251
   Interest income                                    --                 --              3,978              3,978
                                           --------------     --------------     --------------     --------------
Loss before taxes                          $      (1,225)     $      (2,401)     $  (2,461,531)     $  (2,467,273)

Income taxes                                                                             1,372              1,372
                                           --------------     --------------     --------------     --------------
Net loss                                   $      (1,225)     $      (2,401)     $  (2,462,903)     $  (2,468,645)
                                           ==============     ==============     ==============     ==============
Basic and diluted net loss per common
  share                                    $          --      $          --      $       (0.09)
                                           ==============     ==============     ==============
Basic and diluted weighted average
  number of common shares outstanding            500,000            500,000         26,668,753
                                           ==============     ==============     ==============

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

                                                        12
</TABLE>


<PAGE>
<TABLE>
                                                         DEBT RESOLVE, INC.
                                                    (A Development Stage Company)
                                                 Statements of Shareholders' Equity
                                        From Inception (April 21, 1997) to December 31, 2003
<CAPTION>

                                                                                                           Deficit
                                      Preferred Stock               Common stock                         accumulated
                                --------------------------  ---------------------------    Additional    during the
                                 Number of                   Number of                       paid in     development
                                  shares         Amount        shares         Amount         capital        stage           Total
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
<S>                                      <C>  <C>            <C>           <C>            <C>            <C>            <C>
INCEPTION, APRIL 21, 1997                --   $        --            --    $        --    $        --    $        --    $        --
Issuance of common stock                 --            --       500,000            500             --             --            500
Net loss                                 --            --            --             --             --           (330)          (330)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 1997             --            --       500,000            500             --           (330)           170
Capital contribution                                   --            --             --             --             20             20
Net loss                                 --            --            --             --             --           (190)          (190)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 1998             --            --       500,000            500             20           (520)            --
Capital contribution                                   --            --             --             --            209            209
Net loss                                 --            --            --             --             --           (209)          (209)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 1999             --            --       500,000            500            229           (729)            --
Capital contribution                                   --            --             --             --          1,387          1,387
Net loss                                 --            --            --             --             --         (1,387)        (1,387)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2000             --            --       500,000            500          1,616         (2,116)            --
Capital contribution                                   --            --             --             --          1,225          1,225
Net loss                                 --            --            --             --             --         (1,225)        (1,225)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2001             --            --       500,000            500          2,841         (3,341)            --
Capital contribution                     --            --            --             --          2,401             --          2,401
Net loss                                 --            --            --             --             --         (2,401)        (2,401)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2002             --            --       500,000            500          5,242         (5,742)            --

Sales of Common stock to
  principal shareholders                 --            --    22,500,000         22,500             --             --         22,500

Sales of Common stock                    --            --     3,600,000          3,600             --             --          3,600

Common stock issued to pay
  consulting fees                        --            --       135,000            135         26,865             --         27,000

Common stock issued to pay
  compensation                           --            --       145,000            145         28,855             --         29,000

Conversion of loan into
  Common stock                           --            --       500,000            500         99,500             --        100,000

Conversion of loan into
  Common stock                           --            --        50,000             50          9,950             --         10,000

Rescinded Common stock issued
  to pay compensation                    --            --      (145,000)          (145)       (28,855)            --        (29,000)

Rescinded conversion of loan
  into Common stock                      --            --       (50,000)           (50)        (9,950)            --        (10,000)

Capital contributed from the
  waiver of accrued compensa-
  tion and consulting fees               --            --            --             --        853,567             --        853,567

Capital contributed from the
  waiver of royalty fee                  --            --            --             --        600,000             --        600,000

Sales of Common stock in
  private placement                      --            --     1,785,000          1,785      1,783,215             --      1,785,000

Offering costs of private
  placement                              --            --            --             --        (53,926)            --        (53,926)

Net loss                                 --            --            --             --             --     (2,462,903)    (2,462,903)
                                ------------  ------------  ------------   ------------   ------------   ------------   ------------
Balance at December 31, 2003             --   $        --    29,020,000    $    29,020    $ 3,314,463    $(2,468,645)   $   874,838
                                ============  ============  ============   ============   ============   ============   ============

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

                                                                 13
</TABLE>


<PAGE>
<TABLE>
                                                  DEBT RESOLVE, INC.
                                             (A Development Stage Company)
                                               Statements of Cash Flows
<CAPTION>

                                                                                                           Cumulative
                                                                                                         from inception
                                                                                                        (April 21, 1997)
                                                                   Year ended December 31,               to December 31,
                                                       ----------------------------------------------     ------------
                                                           2001             2002             2003             2003
                                                       ------------     ------------     ------------     ------------
<S>                                                    <C>              <C>              <C>              <C>
Cash flows from operating activities:
Net loss                                               $    (1,225)     $    (2,401)     $(2,462,903)     $(2,468,645)
Adjustments to reconcile net loss to net cash
     used by operating activities:
   Depreciation                                                 --               --           13,865           13,865
   Common stock issued in lieu of compensation                  --               --           27,000           27,000
   Deferred offering expenses                                   --               --               --               --
   Increase in prepaid expenses                                 --               --          (32,062)         (32,062)
   Increase in accounts payable                                 --               --           95,643           95,643
   Increase in accrued expenses                                 --               --          180,936          180,936
   Increase in income taxes payable                             --               --            1,372            1,372
                                                       ------------     ------------     ------------     ------------
      Net cash used in operating activities                 (1,225)          (2,401)      (2,176,149)      (2,181,891)
                                                       ------------     ------------     ------------     ------------
Cash flows from investing activities:
   Purchases of fixed assets                                    --               --         (104,382)        (104,382)
                                                       ------------     ------------     ------------     ------------
      Net cash used in investing activities                     --               --         (104,382)        (104,382)
                                                       ------------     ------------     ------------     ------------
Cash flows from financing activities
   Issuance of common stock                                     --               --        1,757,174        1,757,674
   Capital contributions                                     1,225            2,401        1,453,567        1,458,809
   Shareholders' loans                                          --               --          110,000          110,000
                                                       ------------     ------------     ------------     ------------
      Net cash provided by financing activities              1,225            2,401        3,320,741        3,326,483
                                                       ------------     ------------     ------------     ------------
Net increase in cash                                            --               --        1,040,210        1,040,210

Cash at beginning of period                                     --               --               --               --
                                                       ------------     ------------     ------------     ------------
Cash at end of period                                  $        --      $        --      $ 1,040,210      $ 1,040,210
                                                       ============     ============     ============     ============

There were no cash payments for interest or taxes

Non cash investing and financing activities
  Conversion of shareholder's loan to common stock     $        --      $        --      $   100,000      $   100,000
                                                       ===========      ===========      ===========      ===========

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

                                                          14
</TABLE>


<PAGE>

                               DEBT RESOLVE, INC.
                          (A Development Stage Company)
                          Notes to Financial Statements
                                December 31, 2003

1.       ORGANIZATION AND DEVELOPMENT STAGE ACTIVITIES:
         ----------------------------------------------

         Organization
         ------------

Debt Resolve, Inc., formerly Lombardia Acquisition Corp. (the "Company"), is a
Delaware corporation and was formed on April 21, 1997. The Company was inactive
and had no significant assets, liabilities or operations through February 24,
2003.

On February 24, 2003, Charles S. Brofman, James D. Burchetta and Michael S.
Harris (collectively, the "Principal Shareholders") purchased 22,500,000
newly-issued shares of the Company's common stock, representing 84.6% of the
then outstanding shares, pursuant to a Stock Purchase Agreement effective
January 13, 2003 between the Company and each of the Principal Shareholders. The
Company received an aggregate cash payment of $22,500 in consideration for the
sale of such shares to the Principal Shareholders.

On February 24, 2003, in accordance with the Company's by-laws for filling
newly-created board vacancies, Danilo Cacciamatta, the sole existing director,
appointed Messrs. Brofman, Burchetta, Harris and Lawrence E. Dwyer, Jr. to the
board of directors of the Company. Mr. Burchetta was named Co-Chairman of the
Board and Chief Executive Officer, Mr. Brofman was named non-executive
Co-Chairman of the Board, Mr. Harris was named Executive Vice President and
General Counsel, and Mr. Cacciamatta resigned his position as Chief Executive
Officer. On April 7, 2003, William M. Mooney, Jr. was elected to the board of
directors. Effective June 9, 2003, Alan M. Silberstein was elected to the board
of directors and was appointed the Company's President and Chief Operating
Officer.

On May 7, 2003, following approvals by the Board of Directors and holders of a
majority of the Company's common stock, the Company's Certificate of
Incorporation was amended to change the Company's corporate name to Debt
Resolve, Inc. and increase the number of the Company's authorized shares of
common stock from 20,000,000 to 50,000,000 shares.

         Development stage activities
         ----------------------------

Since February 24, 2003, the Company has devoted substantially all of its
efforts to planning and budgeting, research and development activities, and
raising capital. In the early part of 2004, the Company substantially completed
the development of an online system for the settlement of credit card and other
consumer debt and has begun marketing its service to banks and other creditors.

2.       SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

         Going concern
         -------------

The accompanying financial statements have been prepared in conformity with
generally accepted accounting principles, which contemplate continuation of the
Company as a going concern. The Company's working capital is not sufficient to
fund its plan of operations over the next 12 months. This factor raises
substantial doubt about the Company's ability to continue as a going concern.
The Company is seeking to raise additional capital through private equity
investments. However, there can be no assurance that the Company will be able to
raise sufficient additional capital as needed to execute its business plan.

         Development stage enterprise
         ----------------------------

In accordance with Statement of Financial Accounting Standards No. 7, ACCOUNTING
AND REPORTING BY DEVELOPMENT STAGE ENTERPRISES, the Company is considered to be
in the development stage since it is devoting substantially all of its efforts
to establishing a new business and its planned principal operations have not
commenced.

                                       15


<PAGE>

         Use of estimates
         ----------------

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
the accompanying notes. These estimates and assumptions are based on
management's judgment and available information and, consequently, actual
results could be different from these estimates.

         Research and development expenses
         ---------------------------------

Research and development expenses consist primarily of payroll and related
expenses and consulting fees incurred in connection with employees and
consultants involved in the development of the Company's proposed online
software product. The Company follows the guidelines of AICPA Statement of
Position 98-1, ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE DEVELOPED OR
OBTAINED FOR INTERNAL USE, Statement of Financial Accounting Standards No. 86,
ACCOUNTING FOR THE COSTS OF COMPUTER SOFTWARE TO BE SOLD, LEASED, OR OTHERWISE
MARKETED, and Statement of Financial Accounting Standards No. 2, ACCOUNTING FOR
RESEARCH AND DEVELOPMENT COSTS. Since the Company intends to market its proposed
online product and since it is still in the process of developing its product,
these costs have been charged to expense as incurred and classified as research
and development expenses.

         Property and equipment
         ----------------------

Property and equipment is stated at cost, less accumulated depreciation.
Depreciation is provided over the estimated useful life of each class of assets
using the straight-line method. Expenditures for maintenance and repairs are
charged to expense as incurred. Additions and betterments that substantially
extend the useful life of the asset are capitalized. Upon the sale, retirement,
or other disposition of property and equipment, the cost and related accumulated
depreciation are removed from the balance sheet, and any gain or loss on the
transaction is included in the statement of operations.

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

In accordance with Statement of Financial Accounting Standards No. 109,
ACCOUNTING FOR INCOME TAXES, the Company uses an asset and liability approach
for financial accounting and reporting for income taxes. The basic principles of
accounting for income taxes are: (a) a current tax liability or asset is
recognized for the estimated taxes payable or refundable on tax returns for the
current year; (b) a deferred tax liability or asset is recognized for the
estimated future tax effects attributable to temporary differences and
carryforwards; (c) the measurement of current and deferred tax liabilities and
assets is based on provisions of the enacted tax law and the effects of future
changes in tax laws or rates are not anticipated; and (d) the measurement of
deferred tax assets is reduced, if necessary, by the amount of any tax benefits
that, based on available evidence, are not expected to be realized.

         Stock-based compensation
         ------------------------

Stock options issued under stock-based compensation plans are accounted for
under the recognition and measurement principles of Accounting Principles Board
Opinion No. 25, ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES, and related
Interpretations. No stock-based employee compensation cost is reflected in the
net loss, as all options granted under these plans had an exercise price equal
to the market value of the underlying common stock, as determined by the board
of directors, on the date of grant. Statement of Financial Accounting Standards
No. 148, ACCOUNTING FOR STOCK-BASED COMPENSATION- TRANSITION AND DISCLOSURE- AN
AMENDMENT OF FASB STATEMENT NO. 123, requires the disclosure of the effect on
net loss and loss per share had the Company applied the fair value recognition
provisions of FASB Statement No. 123, ACCOUNTING FOR STOCK-BASED COMPENSATION,
to stock-based employee compensation. The fair value of each option granted is
estimated as of the grant date using the Black-Scholes option pricing model with
the following assumptions: dividend yield of 0%, expected volatility of 0%,
risk-free interest rates for individual options ranging from 1.66% to 4.12%
based on the closing U.S. Treasury Yield Curve Rate on the date of the grant for
U.S. Treasury securities with a time to maturity equal to or approximately equal
to the expected life of each option, and an expected life of each option,
ranging from three to ten years, equal to the time from the date of the grant to
its expiration date. Since there is no public market for the Company's stock,
its expected volatility cannot be estimated and is not considered in estimating
the fair value of each option. For purposes of pro forma disclosures, the
estimated fair value of the options granted is amortized to expense over the
option vesting periods. During 2003, the Company granted options to purchase a
total of 4,268,333 shares of common stock. As of December 31, 2003, there were
options to purchase 4,268,333 shares outstanding, of which 3,118,333 had vested.
As of December 31, 2003, the weighted average exercise price and the weighted
average expected life of the options granted were $0.57 and 8.44 years,
respectively. The following table illustrates the pro forma effects on net loss
and net loss per common share for the years ended December 31, 2001, 2002 and
2003 as if the Company had applied the fair value recognition provisions of FASB
Statement No. 123 to stock-based compensation.

                                       16


<PAGE>

<TABLE>
<CAPTION>
                                                              Year ended December 31,
                                                 -----------------------------------------------
                                                      2001             2002             2003
                                                 -------------    -------------    -------------
<S>                                              <C>              <C>              <C>
Net loss - as reported                           $     (1,225)    $     (2,401)    $ (2,462,903)

Pro forma compensation cost, net of taxes                  --               --          366,166
                                                 -------------    -------------    -------------
Net loss - pro forma                             $     (1,225)    $     (2,401)    $ (2,829,069)
                                                 =============    =============    =============
Basic and diluted net loss per common share
  - as reported                                  $         --     $         --     $      (0.09)
                                                 =============    =============    =============
Basic and diluted net loss per common share
  - pro forma                                    $         --     $         --     $      (0.11)
                                                 =============    =============    =============

Basic and diluted weighted average number of
  common shares outstanding                           500,000          500,000       26,668,753
                                                 =============    =============    =============
Basic and diluted weighted average number of
  common shares outstanding - pro forma               500,000          500,000       26,668,753
                                                 =============    =============    =============
</TABLE>

         Basic and diluted net loss per share
         ------------------------------------

Net loss per share is calculated in accordance with Statement of Financial
Accounting Standards No. 128, EARNINGS PER SHARE, which superseded Accounting
Principles Board Opinion No. 15, EARNINGS PER SHARE. Basic net loss per share
was computed by dividing the net loss by the weighted average number of common
shares outstanding. Diluted net loss per share was computed based on the
assumption that all dilutive convertible shares, stock options and warrants were
converted or exercised. Dilution is computed by applying the treasury stock
method. Under this method, options and warrants are assumed to be exercised at
the beginning of the period (or at the time of issuance, if later), and as if
funds obtained thereby were used to purchase common stock at the average market
price during the period.

The following table shows the calculation of the numerator and denominator, as
well as the number of common stock equivalents that would have been included in
the denominator if they were dilutive.

                                             Year ended December 31,
                                 -----------------------------------------------
                                      2001             2002             2003
                                 -------------    -------------    -------------

Numerator
 Net loss                        $     (1,225)    $     (2,401)    $ (2,462,903)
                                 =============    =============    =============

Denominator
  Weighted average common
    shares outstanding                500,000          500,000       26,668,753
                                 =============    =============    =============

Incremental common shares
(not included in denominator
of diluted earnings per share
calculation due to their anti-
dilutive nature) attributable
to exercise/conversion of:
   Outstanding options                     --               --          465,797
   Preferred stock                         --               --               --
                                 -------------    -------------    -------------
                                           --               --          465,797
                                 =============    =============    =============

                                       17


<PAGE>

3.       PROPERTY AND EQUIPMENT:
         -----------------------

                                                                December 31,
                                       Useful life                  2003
                                       -----------               ----------
Computer equipment                       3 years                 $  60,976
Computer software                        3 years                     1,919
Office equipment                         3 years                     2,191
Furniture and fixtures                   5 years                    24,250
Leasehold improvements                  Lease term                  15,046
                                                                 ----------
                                                                   104,382
Less: accumulated depreciation                                     (13,865)
                                                                 ----------
                                                                 $  90,517
                                                                 ==========

Depreciation expense totaled $13,865 for the year ended December 31, 2003.

4.       SHAREHOLDERS' EQUITY:
         ---------------------

On February 24, 2003, the Principal Shareholders purchased 22,500,000
newly-issued shares of the Company's common stock, representing 84.6% of the
then outstanding shares, pursuant to a Stock Purchase Agreement effective
January 13, 2003 between the Company and each of the Principal Stockholders. The
Company received an aggregate cash payment of $22,500 in consideration for the
sale of such shares to the Principal Shareholders. On February 14, 2003, but
effective January 13, 2003, five other individuals, consisting of consultants to
the Company and members of the Company's management team, purchased an aggregate
of 3,600,000 newly-issued shares of the Company's common stock for an aggregate
cash payment of $3,600.

In April 2003 and May 2003, the Company issued 135,000 shares and 500,000
shares, respectively, of its common stock at $0.20 per share (representing fair
value at that time as determined by the board of directors) to a consultant to
the Company as full consideration for $27,000 in accrued consulting fees and as
repayment for a $100,000 loan.

In April 2003 and May 2003, the Company agreed to issue 145,000 shares and
50,000 shares, respectively, of its common stock at $0.20 per share
(representing fair value at that time as determined by the board of directors)
to its former Chief Financial Officer, Mr. Cacciamatta, as full consideration
for $29,000 in accrued compensation and as repayment for a $10,000 loan. In
August 2003, Mr. Cacciamatta, in accordance with the terms of his agreement,
rescinded his acceptance of the Company's common stock as full consideration for
his accrued compensation and repayment for his loan. Because the shares of the
Company's common stock were never formally issued to him in connection with this
transaction, the Company has reversed the original transaction as of the
effective rescission date, and has restored the original accrued compensation
expense and loan payable to shareholder amounts (see Note 8).

Five executive officers and members of the board of directors of the Company
waived the entire amount of their compensation and consulting fees accrued under
the terms of their employment and consulting agreements for 2003, aggregating
$853,567, resulting in a capital contribution of $853,567.

Effective September 30 and December 31, 2003, Messrs. Brofman and Burchetta
waived the entire amount of their royalty fee (see Note 6) accrued under the
terms of their Limited License agreement for the three months ended September 30
and December 31, 2003, aggregating $600,000, resulting in a capital contribution
of $600,000.

During 2003, the Company issued an aggregate of 1,785,000 shares of its common
stock in a series of private placement closings at a price of $1.00 per share.

During the 2003, the Company charged $53,926 of offering costs relating to the
private placement of its common stock to Additional paid-in capital.

                                       18


<PAGE>

5.       STOCK OPTIONS:
         --------------

The following table summarizes stock option activity:

                                                                       Weighted
                                                                       average
                                                                       exercise
                                                       Number of       price per
                                                        options          share
                                                      -----------     ----------

         Outstanding at January 1, 2001                       --      $      --

         Granted                                              --             --
         Exercised                                            --             --
         Forfeited                                            --             --
         Expired                                              --             --
                                                      -----------     ----------
         Outstanding at December 31, 2001                     --             --

         Granted                                              --             --
         Exercised                                            --             --
         Forfeited                                            --             --
         Expired                                              --             --
                                                      -----------     ----------
         Outstanding at December 31, 2002                     --             --

         Granted                                       4,268,333           0.57
         Exercised                                            --             --
         Forfeited                                            --             --
         Expired                                              --             --
                                                      -----------     ----------
         Outstanding at December 31, 2003              4,268,333      $    0.57
                                                      ===========     ==========

The following table summarizes information about stock options outstanding as of
December 31, 2003:

<TABLE>
<CAPTION>
                              Stock options outstanding          Stock options excercisable
                       ---------------------------------------   --------------------------
                                       Weighted     Weighted                    Weighted
                                       average      average                     average
          Exercise      Number of     remaining     exercise      Number of     exercise
            price         shares         life        price          shares       price
         -----------   -----------   -----------   -----------   -----------   -----------
<S>      <C>            <C>                <C>     <C>            <C>          <C>
         $     0.20       435,000          9.27    $     0.20       435,000    $     0.20
         $     0.50     3,000,000          9.45    $     0.50     2,000,000    $     0.50
         $     1.00       833,333          4.38    $     1.00       683,333    $     1.00
                       -----------   -----------   -----------   -----------   -----------
                        4,268,333          8.44    $     0.57     3,118,333    $     0.57
                       ===========   ===========   ===========   ===========   ===========
</TABLE>

6.       COMMITMENTS AND CONTINGENCIES:
         ------------------------------

         Limited license agreement
         -------------------------

On February 20, 2003, the Company entered into a Limited License Agreement (the
"License") with Messrs. Brofman and Burchetta (together, the "Licensors") for
the licensed usage (the "Licensed Usage") of the intellectual property rights
relating to U.S. Patent No. 6,330,551 issued by the U.S. Patent and Trademark
Office on December 11, 2001 (the "Patent") for "Computerized Dispute and
Resolution System and Method." The Licensed Usage is limited to the creation of
software and other code enabling an automated system used solely for the
settlement and collection of credit card receivables and other consumer debt,
and specifically excludes the settlement and collection of insurance claims, tax
and other municipal fees of all types. The License provides for a royalty fee,
payable to the Licensors, of ten percent (10%) of the Company's annual gross
revenues attributable to the Licensed Usage commencing July 1, 2003 and
continuing until the expiration of the Patent. The minimum annual royalty for

                                       19


<PAGE>

any fiscal year is $600,000. Under certain circumstances, if Mr. Burchetta is no
longer employed as a director and officer of the Company, or if Mr. Brofman is
no longer retained as a consultant to the Company, the minimum annual royalty
fee for any fiscal year will be $3,000,000. The Licensors may terminate the
License if, among other reasons, the Company had not developed and produced a
fully functional and commercially usable system contemplated by the License on
or before September 30, 2003 (which has been extended to March 31, 2004), or the
Company's annual gross revenues during any calendar year do not exceed $500,000
through December 31, 2004, or the Company's annual gross revenues do not exceed
one hundred and ten percent (110%) of the Company's annual gross revenues for
the immediately preceding calendar year (the `Minimum Annual Gross Revenue
Clause"). Certain terms of the License were amended in February 2004 (see Note
9).

Royalty fee expense, which is included in general and administrative expenses,
totaled $600,000 for the year ended December 31, 2003. The Licensors waived the
entire amount of the royalty fee for the year ended December 31, 2003, resulting
in a capital contribution of $600,000.

         Employment agreements
         ---------------------

The Company has entered into employment agreements with five executives. Future
aggregate minimum compensation under these agreements as of December 31, 2003 is
as follows:

         2004               $  870,000
         2005                  480,000
         2006                  480,000
         2007                  480,000
         2008                   28,500
                            -----------
         Total              $2,338,500
                            ===========

The employment agreements with Messrs. Burchetta, Harris and Silberstein are
effective through January 13, 2008, January 13 2008, and December 31, 2004,
respectively. These agreements provide each executive with an initial annual
compensation of $240,000 and contain provisions for annual increases based on
"cost-of-living" changes. The employment agreements with Messrs. Burchetta and
Harris contain provisions under which their annual compensation may increase to
$600,000 if the Company achieves certain operating milestones and also provide
for additional compensation based on the value of a transaction that results in
a change of control, as that term is defined in their agreements. Compensation
expense under the agreements with Messrs. Burchetta, Harris and Silberstein
totaled $586,167 for the year ended December 31, 2003. Messrs. Burchetta, Harris
and Silberstein are three of the executives mentioned in Note 4 above, who
waived the entire amount of their compensation during 2003. The employment
agreements with Messrs. Burchetta, Harris and Silberstein were amended in
February 2004 (see Note 9).

In addition to the agreements above, the Company also had an employment
agreement with Mr. Cacciamatta which expired on December 31, 2003. The
employment agreement provided for annual compensation of $100,000. Mr.
Cacciamatta resigned from the board of directors and as Chief Financial Officer
effective October 1, 2003. Compensation expense under the agreement with Mr.
Cacciamatta totaled $95,667 for the year ended December 31, 2003, including
$25,000 for accrued severance. The entire amount of Mr. Cacciamatta's
compensation for 2003 was unpaid as of December 31, 2003 and is included in
accrued compensation expenses. The Company and Mr. Cacciamatta have not agreed
to the terms of payment of Mr. Cacciamatta's unpaid compensation.

         Consulting agreements
         ---------------------

The Company has entered into seven consulting agreements for business advisory
and marketing services. Future aggregate minimum compensation under these
agreements as of December 31, 2003 is as follows:

         2004                $244,823
         2005                 240,000
         2006                 240,000
         2007                 240,000
         2008                  18,000
                             ---------
         Total               $982,823
                             =========

In February 2004, the consulting agreement with Mr. Brofman was terminated (see
Notes 8 and 9).

                                       20


<PAGE>

         Office lease
         ------------

The Company leases office facilities under a non-cancelable operating lease
through July 2004. Rent expense and utilities for the year ended December 31,
2003 was $39,603. Future aggregate minimum lease payments as of December 31,
2003 are $39,158 for 2004. In March 2004, the lease agreement was amended to
extend the termination date from July 31, 2004 to July 31, 2005. As a result of
the amendment, the minimum lease payments will be $67,128 in 2004 and $39,158 in
2005.

7.       INCOME TAXES:
         -------------

For U.S. federal income tax purposes, expenses of the Company have been
capitalized as start-up costs and are subject to amortization once business
begins.

The reconciliation of the statutory U.S. federal income tax rate to the
Company's effective income tax rate is as follows:

<TABLE>
<CAPTION>
                                                               Year ended December 31,
                                                        -------------------------------------
                                                            2001          2002        2003
                                                        -----------  -----------  -----------
<S>                                                        <C>         <C>          <C>
         Statutory federal income tax rate (benefit)       (35.00)%    (35.00)%     (35.00)%
         Nondeductible expenses:
          Waived compensation and consulting fee            --          --           12.14
          Waived royalty fee                                --          --            8.53
         Deferred start-up costs not recognized
          due to valuation allowance                        35.00       35.00        14.33
                                                        -----------  -----------  -----------
         Effective tax rate                                  0.00%       0.00%        0.00%
                                                        ===========  ===========  ===========

</TABLE>

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets for financial reporting purposes and the
amount used for income tax purposes. The Company's deferred tax assets are as
follows:
                                                    December 31,
                                             -------------------------
                                                 2002           2003
                                             ----------     ----------
         Deferred tax asset:
         Deferred start-up costs
             Federal                         $   2,010      $ 352,662
             State                                   0         87,913
         Less: valuation allowance              (2,010)      (440,575)
                                             ----------     ----------
         Net deferred tax asset              $      --      $      --
                                             ==========     ==========

         Increase in valuation allowance     $     840      $ 438,565
                                             ==========     ==========

Due to the uncertainty surrounding the realization of the benefit of deferred
start-up costs, the Company provided a valuation allowance for the entire amount
of the deferred tax asset at December 31, 2002 and 2003.

8.       TRANSACTIONS WITH RELATED PARTIES:
         ----------------------------------

As described in Note 6 above, on February 20, 2003, the Company entered into a
Limited License Agreement with Messrs. Brofman and Burchetta, directors of the
Company, which provides for a royalty fee payable to the Licensors, subject to
minimum annual amounts, and which contains certain termination rights of the
Licensors. Certain terms of the License were amended in February 2004 (see Note
9).

Effective January 13, 2003, the Company entered into a consulting agreement with
Mr. Brofman as non-executive Co-Chairman of the Board. The agreement, which is
effective through January 2008, provides for an initial annual consulting fee of
$240,000, provides for annual increases based on "cost-of-living" changes in the
Consumer Price Index, and contains provisions under which the annual consulting
fee may increase to $600,000 if the Company achieves certain operating
milestones. The agreement also provides for an additional fee based on the value

                                       21


<PAGE>

of a transaction that results in a change of control, as that term is defined in
the agreement. The consulting fee expense under this agreement, which is
included in general and administrative expenses, totaled $222,000 for year ended
December 31, 2003. Mr. Brofman is one of the individuals mentioned in Note 4
above, who waived the entire amount of his consulting fee during 2003. In
February 2004, the consulting agreement with Mr. Brofman was terminated (see
Note 9).

In March 2003, the Company's former Chief Financial Officer, Mr. Cacciamatta,
provided the Company with a $10,000 loan. As described in Note 4, the Company
agreed to issue 50,000 shares of its common stock at $0.20 per share
(representing fair value at that time as determined by the board of directors)
as repayment for the loan. However, Mr. Cacciamatta later rescinded his
acceptance of the Company's common stock as repayment for the loan and the
Company reversed the original transaction and restored the original loan payable
to shareholder amount. There is no formal loan agreement and the Company and Mr.
Cacciamatta have not agreed upon any terms for payment of interest or repayment
of the loan.

Mr. Harris's wife has provided bookkeeping services to the Company since July
2003. During 2003, Mrs. Harris's fees totaled $8,275 and are included in general
and administrative expenses. Her fees for 2003 were paid in January 2004 and are
included in accounts payable as of December 31, 2003.

9.       SUBSEQUENT EVENTS:
         ------------------

         Limited license agreement
         -------------------------

In February 2004, the License was amended (the "Amendment") to modify the
royalty fee obligations and the termination rights. Pursuant to the Amendment,
the Company will pay a royalty fee to the Licensors as follows: (1) in 2004, the
Company will pay no royalties; (2) in 2005, the Company will pay a royalty fee
of 10% of the Company's annual gross revenues attributable to the use of the
patented computerized dispute resolution system and method (the "Fee"); (3) in
2006, the Company will pay the Fee with a minimum guaranteed royalty payment of
$300,000; and (4) in 2007 and thereafter, the Company will pay the Fee with a
minimum guaranteed royalty payment of $600,000 annually, subject to certain
conditions relating to the Licensors' continued affiliation with the Company, or
potentially as much as $3,000,000 in the aggregate, depending on the
circumstances of their separation from the Company. In addition, pursuant to the
Amendment, if the Company fails to meet the Minimum Annual Gross Revenue Clause,
the Licensors may not terminate the License prior to January 1, 2006, provided
that the Company has not breached its obligations to pay the Fee.

         Employment agreements
         ---------------------

Messrs. Burchetta, Harris and Silberstein each amended their employment
agreements on February 25, 2004, with each agreeing to modify their respective
level of compensation, subject to the Company meeting certain financial and
performance milestones. The employment agreements, as amended, provide that the
base salary for each of Messrs. Burchetta, Harris and Silberstein will be as
follows: (1) if at the date of any salary payment, the aggregate amount of the
Company's net cash on hand provided from operating activities and net cash
and/or investments on hand provided from financing activities is sufficient to
cover the Company's projected cash flow requirements (as established by the
Company's Board of Directors in good faith from time to time) for the following
succeeding 12 months (the "Project Cash Requirement"), the annual base salary
will be $150,000; and (2) if at the date of any salary payment, the Company's
net cash on hand provided from operating activities is sufficient to cover the
Company's Projected Cash Requirement, the annual base salary will be $240,000,
and increased to $450,000 upon the later to occur of (a) January 1, 2004 and (b)
the date upon which the Company completes the sale or license of its system with
respect to 400,000 consumer credit accounts. Since the annual base salaries of
Messrs. Burchetta, Harris and Silberstein are subject to the Company meeting
these specified financial and performance milestones, any salary payments to
Messrs. Burchetta, Harris and Silberstein will be allocated equally among each
of them at the time payment is made.

         Consulting agreement
         --------------------

On February 20, 2003, Charles S. Brofman entered into a consulting agreement
with the Company under which he would serve as the Company's non-executive
Co-Chairman of the Board. The Company and Mr. Brofman mutually agreed to
terminate the consulting agreement on February 25, 2004. Although the consulting
agreement has been terminated, Mr. Brofman will continue to serve as the
Co-Chairman of the Board.

                                       22


<PAGE>

10.      RECENTLY ISSUED AND PROPOSED ACCOUNTING PRONOUNCEMENTS:
         -------------------------------------------------------

In December 2003, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 132 (revised 2003), EMPLOYERS'
DISCLOSURES ABOUT PENSIONS AND OTHER POSTRETIREMENT BENEFITS -- AN AMENDMENT OF
FASB STATEMENTS NO. 87, 88, AND 106 ("SFAS 132"). SFAS 132 revises employers'
disclosures about pension plans and other postretirement benefit plans.
Currently, the Company does not have a pension plan or postretirement benefit
plan and adoption of SFAS 132 had no effect on the Company's financial position
or results of operations.

In May 2003, FASB issued Statement of Financial Accounting Standards No. 150,
ACCOUNTING FOR CERTAIN FINANCIAL INSTRUMENTS WITH CHARACTERISTICS OF BOTH
LIABILITIES AND EQUITY ("SFAS 150"). SFAS 150 establishes standards for how an
issuer classifies and measures certain financial instruments with
characteristics of both liabilities and equity. Currently, the Company does not
have any financial instruments with characteristics of both liabilities and
equity and adoption of SFAS 150 had no effect on the Company's financial
position or results of operations.

In April 2003, FASB issued Statement of Financial Accounting Standards No. 149,
AMENDMENT OF STATEMENT 133 ON DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
("SFAS 149"). SFAS 149 amends and clarifies financial accounting and reporting
for derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives) and for hedging
activities under FASB Statement No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS
AND HEDGING ACTIVITIES. Currently, the Company does not have any DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES and adoption of SFAS 149 had no effect on the
Company's financial position or results of operations.

                                       23


<PAGE>

ITEM 8. Changes in and disagreements with accountants on accounting and
financial disclosure

On January 7, 2004, the Company replaced Baron Accountancy Corporation as its
independent accountant. Baron Accountancy Corporation had been previously
engaged as the principal accountant to audit the Company's financial statements.
The reason for the replacement of Baron Accountancy Corporation was that during
2003, the Company moved the location of its principal offices from Irvine, CA to
White Plains, NY. The Company believes that it is in its best interests to
engage an independent accounting firm located closer to its new principal
offices. Therefore, the Company retained Becher, Della Torre, Gitto & Company as
its new independent accountant effective January 7, 2004. Becher, Della Torre,
Gitto & Company is located at 76 North Walnut Street, Ridgewood, NJ 07450.

Baron Accountancy Corporation's reports on the Company's financial statements
for the past two years did not contain adverse opinions or disclaimers of
opinion, and neither report was qualified or modified as to uncertainty, audit
scope or accounting principles, except that their reports for each of the last
two fiscal years included an explanatory paragraph stating that the Company's
need for an infusion of additional capital raised substantial doubt about its
ability to continue as a going concern.

The decision to change accountants was approved by the Company's Board of
Directors.

During the Company's two most recent fiscal years, and the subsequent interim
periods, prior to January 7, 2004, there were no disagreements with Baron
Accountancy Corporation on any matter of accounting principles or practices,
financial statement disclosure, auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of Baron Accountancy
Corporation, as the case may be, would have caused it to make reference to the
subject matter of the disagreement in connection with its reports.

ITEM 8A.  Controls and procedures

Our management, with participation of our chief executive officer and chief
financial officer, conducted an evaluation of the effectiveness of our
disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e),
as of December 31, 2003. Based on that evaluation, our chief executive officer
and chief financial officer concluded that our disclosure controls and
procedures were effective in reaching a reasonable level of assurance that
management is timely alerted to material information relating to us during the
period when our periodic reports are being prepared.

Our management, with participation of our chief executive officer and chief
financial officer, also conducted an evaluation of our internal control over
financial reporting, as defined in Exchange Act Rule 13a-15(f), to determine
whether any changes occurred during the quarter ended December 31, 2003, that
have materially affected, or are reasonably likely to materially affect, our
internal control over financial reporting. Based on that evaluation, there were
no such changes during the quarter ended December 31, 2003.

A control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of a control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all controls
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within our company have been
detected. Because of the inherent limitations in a cost-effective control
system, misstatements due to error or fraud may occur and not be detected.

PART III

ITEM 9. Directors, executive officers, promoters and control persons; Compliance
with Section 16(a) of the Exchange Act

                                       24


<PAGE>

Directors and executive officers of the Company with certain information
regarding them:

<TABLE>
<CAPTION>
                                                                                         Shares of                 Percent of
                                                                                        common stock              common stock
                                                                                        beneficially              beneficially
           Name             Age              Position                                      owned                     owned
------------------------------------------------------------------------------------------------------------------------------
<S>                         <C> <C>                                                         <C>                       <C>
James D. Burchetta          54  Chief Executive Officer, Director                          10,000,000                 34.46%
------------------------------------------------------------------------------------------------------------------------------
Charles S. Brofman          47  Director                                                   10,000,000                 34.46%
------------------------------------------------------------------------------------------------------------------------------
Michael S. Harris           54  Executive Vice President, General
                                Counsel, Secretary, Director                                2,500,000                  8.61%
------------------------------------------------------------------------------------------------------------------------------
Alan M. Silberstein         56  President, Chief Operating
                                Officer, Director                                              25,000                  0.09%
------------------------------------------------------------------------------------------------------------------------------
Lawrence E. Dwyer, Jr.      60  Director                                                    1,000,000                  3.45%
------------------------------------------------------------------------------------------------------------------------------
William M. Mooney, Jr.      63  Director                                                      100,000                  0.34%
------------------------------------------------------------------------------------------------------------------------------
John M. Porta               44  Executive Vice President, Chief
                                Financial Officer                                                  --                  0.00%
------------------------------------------------------------------------------------------------------------------------------
All directors and director nominee as a group (6 persons)                                  23,625,000                 81.41%
------------------------------------------------------------------------------------------------------------------------------
</TABLE>

Directors hold office until a successor is elected and qualified or until their
earlier resignation in the manner provided in the Bylaws of the Company.

JAMES D. BURCHETTA was appointed Co-Chairman of the Board and Chief Executive
Officer of Debt Resolve as of January 13, 2003. Mr. Burchetta was the co-founder
of Cybersettle, Inc., the first company to settle insurance claims over the
Internet, and served as its Chairman of the Board and Co-Chief Executive Officer
from 1997 to August 2000 and as its Vice Chairman from August 2000 to February
2002. Prior to founding Cybersettle, Mr. Burchetta was a Senior Partner in the
New York law firm of Burchetta, Brofman, Collins & Hanley, LLP where he
practiced insurance and corporate finance law. Mr. Burchetta received a J.D.
degree from Fordham University Law School in 1973 and is a member of the New
York State Bar. Mr. Burchetta has extensive experience and is a frequent speaker
at venture capital conferences in the area of e-commerce.

CHARLES S. BROFMAN was appointed non-executive Co-Chairman of the Board of Debt
Resolve as of January 13, 2003. Mr. Brofman was the co-founder of Cybersettle,
and has served as a director and its President and Co-Chief Executive Officer
since 1997, becoming its Chief Executive Officer in August 2000. Prior to
founding Cybersettle, Mr. Brofman was a Senior Partner in the New York law firm
of Burchetta, Brofman, Collins & Hanley, LLP and, prior to that, was an
Assistant District Attorney in New York. Mr. Brofman received a J.D. degree from
Fordham University Law School in 1981 and is a member of the New York State Bar.

MICHAEL S. HARRIS was appointed Executive Vice President, General Counsel and
Secretary of Debt Resolve as of January 13, 2003. Mr. Harris was, until May
2002, the Senior Vice President, General Counsel and Corporate Secretary of The
Thomson Corporation, an $8.0 billion publicly-held international information
company, where he held executive-level positions since 1989. At Thomson, Mr.
Harris was responsible for negotiating and completing hundreds of tactical and
strategic acquisitions in the information and publishing industries, including
West Publishing, Harcourt General and Primark. Mr. Harris began his legal career
at Skadden, Arps, Slate, Meagher & Flom in New York. Mr. Harris received a B.A.
degree from New York University with honors and a J.D. degree from St. John's
University School of Law in 1974, and is a member of the New York and
Connecticut Bars.

ALAN M. SILBERSTEIN was elected President and Chief Operating Officer and a
member of Debt Resolve's Board of Directors in June 2003. Mr. Silberstein has
worked in the financial services sector for over 30 years, most recently as
President and CEO of Western Union. He headed consumer banking at Midlantic Bank
(now PNC) and Chemical Bank (now JPMorgan Chase) with executive experience in
consumer credit, technology and operations. Mr. Silberstein received a B.S.
degree in Engineering from Columbia University and an M.B.A. from Harvard
University in 1972.

LAWRENCE E. DWYER, JR. was elected a director in February 2003. Mr. Dwyer is the
former President of The Westchester County Association Inc., having served from
1994 to 2003, and is active in local, state and national politics. The
Westchester County Association is a member of the Business Council of New York
State and its membership includes many Fortune 500 companies. Mr. Dwyer also
presently serves on two regional task forces for New York Governor George
Pataki. Mr. Dwyer has been the Chairman of the Westchester, Nassau & Suffolk
Municipal Officials Association, New York State Ethics Advisory Board and
presently serves on the Board of Directors of the Lubin School of Business at
Pace University, The Westchester Land Trust, Westchester Business Accelerator,
Transportation Management Organization, The Lyndhurst Council, The Westchester
Housing Fund and Westchester Community College Foundation. Mr. Dwyer received a
Master's degree in education and a Master's of Arts degree in Administration
from Teachers College, Columbia University.

                                       25


<PAGE>

WILLIAM M. MOONEY, JR. was elected a director in April 2003. Mr. Mooney
currently serves as a Senior Vice President at Independence Community Bank,
where he is responsible for all of the bank's business activities in Westchester
and Connecticut. Mr. Mooney has been involved in the banking sector in an
executive capacity for over 30 years. Prior to joining Independence, he served
for four years as an Executive Vice President and member of the Management
Committee of Union State Bank, responsible for retail banking, branch banking
and all marketing activity, as well as business development and government
relations. Mr. Mooney also spent 23 years at Chemical Bank, and, following its
merger with Chase Manhattan Bank, at Chase Manhattan, where he was a Senior Vice
President with responsibilities including oversight of all retail business
(including the bank's branches in Rockland, Westchester and New York City), as
well as mid and small business lending activities. Mr. Mooney has been very
active in the community and was the President of the Westchester Partnership for
Economic Development. He also held the position of Chairman for the Westchester
County Association, past Chairman of the United Way Westchester and Chairman of
St. Thomas Aquinas College. He has served on the Board of Trustees for New York
Medical College, St. Agnes Hospital, the Board of Dominican Sisters, the
Hispanic Chamber of Commerce and is a former Trustee of the Council for the
Arts. Mr. Mooney received a B.A. degree in Business Administration from
Manhattan College. He also attended the Harvard Management Program and the
Darden Graduate School at the University of Virginia.

JOHN M. PORTA was appointed Executive Vice President and Chief Financial Officer
in September 2003 on a part-time basis and also serves as part-time Chief
Financial Officer of First Index Group. From 1999 to 2002, Mr. Porta was
Divisional Chief Financial Officer of the technology-based Outsourcing Division
of NCO Group, Inc. and was Chief Financial Officer of JDR Holdings, Inc. from
1993 until 1999 when NCO acquired JDR. Mr. Porta began his career at Price
Waterhouse. Mr. Porta received a B.S. degree in Business and Economics from
Lehigh University.

                                       26


<PAGE>

ITEM 10.  Executive Compensation

<TABLE>
                                                     Summary compensation table
<CAPTION>
                                                                                  Restricted   Securities   Long-term
                                                                  Other annual      stock      underlying   incentive     All other
     Name and                         Salary           Bonus      compensation      awards    options/SARs    plan      compensation
 principal position        Year         ($)              ($)           ($)             ($)          (#)     payouts ($)      ($)
------------------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------------------
<S>                        <C>        <C>            <C>           <C>             <C>        <C>           <C>           <C>
James D. Burchetta
  - Chief Executive
    Officer
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $222,000(a)    $    --       $      --       $    --           --     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
Charles S. Brofman
  - Director
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $     --       $    --       $ 222,000(a)    $    --           --     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
Michael S. Harris
  - Executive Vice
    President, General
    Counsel, Secretary
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $229,500(a)    $    --       $      --       $    --           --     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
Alan M. Silberstein
  - President, Chief
    Operating Officer
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $134,667(a)    $    --       $      --       $    --    3,000,000     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
Lawrence E. Dwyer, Jr.
  - Director
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $     --       $    --       $  45,400(a)    $    --      183,333     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
William M. Mooney, Jr.
  - Director
                           2001       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $    --           --     $    --       $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $     --       $    --       $      --       $    --      435,000     $    --       $      --
------------------------------------------------------------------------------------------------------------------------------------
John M. Porta
  - Executive Vice
    President, Chief
    Financial Officer
                           2001       $     --       $    --       $      --       $      --           --    $    --      $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $      --           --    $    --      $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $     --(b)    $    --       $      --       $      --      200,000    $    --      $      --
------------------------------------------------------------------------------------------------------------------------------------
Danilo Cacciamatta
  - former Chief
    Financial Officer,
    former Director
                           2001       $     --       $    --       $      --       $      --           --    $    --      $      --
                        ------------------------------------------------------------------------------------------------------------
                           2002       $     --       $    --       $      --       $      --           --    $    --      $      --
                        ------------------------------------------------------------------------------------------------------------
                           2003       $ 95,667(c)    $    --       $      --       $      --           --    $    --      $      --
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
                                                                 27


<PAGE>

(a) Messrs. Burchetta, Harris and Silberstein have employment agreements with
Company, waived their compensation during the year ended December 31, 2003 and
were not paid. Messrs. Brofman and Dwyer have consulting agreements with the
Company, waived their fees during the year ended December 31, 2003 and were not
paid. The agreements with Messrs. Burchetta, Harris, Silberstein and Brofman are
described in Item 7 above in Notes 6, 8 and 9 to the financial statements. The
consulting agreement with Mr. Dwyer provided for a consulting fee of $4,000 per
month, which Mr. Dwyer waived for 2003. This agreement expired in January 2004
and was not renewed. (b) Mr. Porta has an employment agreement with the Company
through December 31, 2004. The agreement provides that Mr. Porta will work on a
part-time basis without compensation until the Company requires his services on
a full-time basis. At that time, the parties will discuss in good faith a cash
compensation amount. (c) Mr. Cacciamatta resigned from the board of directors
and as Chief Financial Officer effective October 1, 2003. Compensation expense
under the agreement with Mr. Cacciamatta totaled $95,667 for the year ended
December 31, 2003, including $25,000 for accrued severance. The entire amount of
Mr. Cacciamatta's compensation for 2003 was unpaid as of December 31, 2003 and
is included in accrued compensation expenses in the financial statements. The
Company and Mr. Cacciamatta have not agreed to the terms of payment of Mr.
Cacciamatta's unpaid compensation.

The following table sets forth certain information regarding stock options
granted during 2003 to the named directors and executive officers during the
year ended December 31, 2003.

<TABLE>
                                         Option/SAR grants in the last fiscal year

                                                     Individual grants
<CAPTION>
                                                                    % of toal
                                                                    options/SARS
                                      Number of securities          granted to               Exercise
                                      underlying opions/SARs        employees                 or base         Expiration
    Name                                   granted (#)              in fiscal year          price ($/sh)        date
--------------------------------------------------------------------------------------------------------------------------
<S>                                         <C>                          <C>                   <C>             <C>
William M. Mooney, Jr.                        435,000                    10.19%                $ 0.20           4/7/2013
--------------------------------------------------------------------------------------------------------------------------

Alan M. Silberstein                         3,000,000                    70.29%                $ 0.50           6/9/2013
--------------------------------------------------------------------------------------------------------------------------

Lawrence E. Dwyer, Jr.                        183,333                     4.30%                $ 1.00           7/1/2006
--------------------------------------------------------------------------------------------------------------------------

John M. Porta                                 200,000                     4.69%                $ 1.00          9/25/2013
--------------------------------------------------------------------------------------------------------------------------
</TABLE>

The following table sets forth certain information regarding stock options
exercised during 2003 by the named directors and executive officers and the
number and value of options held by those executives at December 31, 2003. The
values of unexercised in-the-money stock options shown below are presented
pursuant to SEC rules. There is no assurance that the values of unexercised
in-the-money options shown below will be realized.

<TABLE>
                     Aggregated option/SAR exercises in last fisacal year and fiscal year end option/SAR values
<CAPTION>

                                                                      Number of securities
                                                                     underlying unexercised             Value of unexcercised
                                                                     options/SARs at fiscal            in-the-money options/SARs
                                                                      fiscal year end (#)              at fiscal year end ($) (a)
------------------------------------------------------------------------------------------------------------------------------------
                           Shares acquired      Value
      Name                  on exercise (#)   realized ($)        Exercisable    Unexercisable      Exercisable       Unexercisable
------------------------------------------------------------------------------------------------------------------------------------
<S>                               <C>          <C>                 <C>               <C>            <C>                  <C>
William M. Mooney, Jr.            -            $       -             435,000                 -      $   348,000          $       -
------------------------------------------------------------------------------------------------------------------------------------

Alan M. Silberstein               -            $       -           2,000,000         1,000,000      $ 1,000,000          $ 500,000
------------------------------------------------------------------------------------------------------------------------------------

Lawrence E. Dwyer, Jr.            -            $       -             183,333                 -      $         -          $       -
------------------------------------------------------------------------------------------------------------------------------------

John M. Porta                     -            $       -              50,000           150,000      $         -          $       -
------------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(a) Based on most recent sale price of common stock in private placement sales
of $1.00 per share

                                                                 28


<PAGE>

Long-term incentive plans
-------------------------

The Company currently has no long-term incentive plans.

ITEM 11. Security ownership of certain beneficial owners and management

Item 9 above lists the ownership of the Company's common stock by all directors.
There are no other owners of more than 5% of the Company's common stock.

ITEM 12.  Certain relationships and related transactions

Under the caption LIMITED LICENSE AGREEMENT in Item 1 above, is a description of
the limited license agreement between the Company and Messrs. Burchetta and
Brofman. Transactions with related parties are also described in Item 7 above in
Note 8 to the financial statements.

ITEM 13.  Exhibits and reports on Form 8-K

(a)  Exhibits
     --------

3.1      Certificate of Incorporation of the Company (1) 3.2 Bylaws of the
         Company (1)
4.1      Specimen of Common Stock Certificate (1)
10.3     Amendment to Limited License Agreement, dated February 25, 2004,
         between the Company and James D. Burchetta and Charles S. Brofman

10.4     Amendments to Employment Agreements, dated February 25, 2004, between
         the Company and James D. Burchetta, Michael S. Harris and Alan M.
         Silberstein
31.1     Certification required by Rule 13(a)-14(a).
32.1     Certification required by Rule 13(a)-14(b) and 18 U.S.C. Section 1350.
99.1     Certifications pursuant to Sec. 906

(1)      Previously included as an exhibit to the Company's Registration
         Statement on Form 10-SB filed with the SEC on February 15, 2000.

(b) Reports on Form 8-K
    -------------------

Form 8-K filed with the SEC on January 12, 2004 to report a change in
registrant's certifying accountant.

ITEM 14. Principal accountant fees and services

Baron Accountancy Corporation served as the Company's independent auditors for
the year ended December 31, 2002. As described in Item 8 above, Changes in and
disagreements with accountants on accounting and financial disclosure, effective
January 7, 2004, the Company has engaged Becher, Della Torre, Gitto & Company as
its new independent auditors for the year ended December 31, 2003.

Audit fees
----------

Audit fees are those fees billed for professional services rendered for the
audit of the annual financial statements and review of the financial statements
included in Form 10-QSB. The aggregate amount of the audit fees billed by Baron
Accountancy Corporation was $250 in 2002 and $750 in 2003. The aggregate amount
of the audit fees billed by Becher, Della Torre, Gitto & Company was $25,000 in
2003.

Audit related fees
------------------

No audit related fees were billed by the Company's independent auditors in 2002
and 2003.

                                       29


<PAGE>

Tax fees
--------

Tax fees are those fees billed for professional services rendered for tax
compliance, including preparation of corporate federal and state income tax
returns, tax advice and tax planning. No tax fees were billed by Baron
Accountancy Corporation in 2002. The aggregate amount of the tax fees billed by
Becher, Della Torre, Gitto & Company was $4,800 in 2003.

All other fees
--------------

No other fees were billed by the Company's independent auditors in 2002 and
2003.

Audit committee
---------------

The members of the Company's audit committee are Messrs. Brofman, Dwyer and
Mooney. The Company's board of directors and audit committee approved the
decision to change the Company's independent auditors for the year ending
December 31, 2003 and approved the services rendered and fees charged by the
Company's new independent auditors. The audit committee has reviewed and
discussed the audited financial statements of the Company for the year ended
December 31, 2003 with management. In addition, the audit committee has
discussed with Becher, Della Torre, Gitto & Company, the Company's independent
auditors, the matters required to be discussed by Statement of Auditing
Standards No. 61 (Communications with Audit Committee). The audit committee also
has received the written disclosures and the letter from Becher, Della Torre,
Gitto & Company as required by the Independence Standards Board Standard No. 1
(Independence Discussions with Audit Committees) and the audit committee has
discussed the independence of Becher, Della Torre, Gitto & Company with that
firm.

Based on the audit committee's review of the matters noted above and its
discussions with the Company's independent auditors and the Company's
management, the audit committee recommended to the board of directors that the
audited financial statements be included in the Company's annual report on Form
10-KSB for the year ended December 31, 2003.

                                       30


<PAGE>

                                    SIGNATURES

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

                                            Debt Resolve, Inc.

Dated: March 25, 2004                       By: /s/ John M. Porta
                                                -------------------------
                                                John M. Porta,
                                                Chief Financial 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 and
in the capacities and on the dates indicated.

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

/s/ James D. Burchetta      Chief Executive Officer,             March 25, 2004
-----------------------       Co-Chairman
    James D. Burchetta

/s/ John M. Porta           Chief Financial Officer              March 25, 2004
-----------------------
    John M. Porta

/s/ Charles S. Brofman      Director, Co-Chairman                March 25, 2004
----------------------
    Charles S. Brofman

/s/ Michael S. Harris       Director, General Counsel            March 25, 2004
----------------------        and Secretary
    Michael S. Harris

/s/ Alan M. Silberstein     Director, President and              March 25, 2004
-----------------------       Chief Operating Officer
    Alan M. Silberstein

/s/ Lawrence E. Dwyer, Jr.  Director                             March 25, 2004
--------------------------
    Lawrence E. Dwyer, Jr.

/s/ William M. Mooney, Jr.  Director                             March 25, 2004
--------------------------
    William M. Mooney, Jr.

                                       31