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

                                  FORM 10-K

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED
FEBRUARY 28, 2001

OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM
______________ TO ______________

                      COMMISSION FILE NUMBER: 0-31591

                             ZYDANT CORPORATION
          (Exact name of registrant as specified in its charter)


                Nevada                                         65-0036344
(State or jurisdiction of incorporation                    I.R.S. Employer
             or organization)                            Identification No.)

  2525 South Shore Boulevard, Suite 309, League City, Texas            77573
           (Address of principal executive offices)                  (Zip Code)

                 Registrant's telephone number: (281) 334-5940

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

Securities registered pursuant to Section 12(g) of the Act:
Common stock, $.001 par value

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

Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K [X].

The aggregate market value of the voting stock held by non-
affiliates of the Registrant as of June 13, 2001: Common stock,
par value $0.001 per share -- $2,173,973.  As of June 13, 2001,
the Registrant had 15,206,936 shares of common stock issued and
outstanding.

                            TABLE OF CONTENTS

PART I                                                            PAGE

ITEM 1.  BUSINESS                                                    3
ITEM 2.  PROPERTIES                                                 23
ITEM 3.  LEGAL PROCEEDINGS                                          23
ITEM 4.  SUBMISSION TO MATTERS TO VOTE OF SECURITY HOLDERS          23

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY
         AND RELATED STOCKHOLDER MATTERS                            23

ITEM 6.  SELECTED FINANCIAL DATA                                    26

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
         FINANCIAL CONDITION AND RESULTS OF OPERATIONS              27

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
         RISK                                                       31

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                31

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
         ON ACCOUNTING AND FINANCIAL DISCLOSURE                     31

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT        32

ITEM 11.  EXECUTIVE COMPENSATION                                    33

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
          OWNERS AND MANAGEMENT                                     37

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS            38

PART IV

ITEM 14.  EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO
          FINANCIAL STATEMENTS                                      40

SIGNATURES                                                          41

PART I

ITEM 1.  BUSINESS

Development of Our Company.

Zydant, formerly known as PalmWorks, Inc. was organized
under the laws of the State of NewYork in June 1971 under the
name The Bolton Group, Ltd.  We underwent several name changes
until June 1994, when we changed our name to Titan Resources,
Inc.  In March 1998, we entered into an asset purchase agreement
with Mobilelink Communications, Inc. ("Mobilelink") (a related
party owned by a stockholder of ours), for the rights and title
to all Mobilelink's intellectual property (software and other
intangibles) in exchange for 220,000 (post 1-for-100 reverse
stock split) of our common shares.

In September 1999, our board of directors adopted a
resolution whereby it approved a 1-for-100 reverse stock split
of the issued and outstanding shares of common stock.  In
October 1999, we acquired all the capital stock of PalmWorks,
Inc., a non-operating privately held Nevada corporation
("PalmWorks-Nevada"), in exchange for 3,650,000 shares of our
pursuant to a tax free stock-for-stock acquisition.  The
combination with PalmWorks-Nevada has been accounted for in a
manner similar to a pooling of interests, as the companies were
under common control in August 1999, the date of inception of
PalmWorks-Nevada.

Under accounting principles generally accepted in the
United States, the acquisition of PalmWorks-Nevada is considered
to be a reorganization in substance, rather than a business
combination since PalmWorks-Nevada had no assets, liabilities or
operations, and the Company has since re-domiciled in the State
of Nevada through PalmWorks-Nevada, as further discussed below.
Accordingly, the accounting for the acquisition has been
accounted for at historical cost in a manner similar to a
pooling of interests ("as-if pooling of interest accounting"),
and no goodwill was recorded.

The acquisition of intellectual property from Mobilelink in
March 1998 established a new business for us.  During fiscal
year 2000, we wrote off this intellectual property from
Mobilelink  totaling $440,000 because it did not see future
value in this asset, and has proceeded in the development of
their own software technology development. Therefore, we are
considered to be a development stage company since our planned
principal operations have not commenced.

In April 2000, we re-domiciled from the State of New York
to the State of Nevada under a plan and agreement filed in both
states whereby the named surviving corporation was PalmWorks-
Nevada.  As a result of the merger our articles of incorporation
provided for 25,000,000 shares of common stock authorized for
issuance at a par value of $.001 per share.

In August 2000, a Certificate of Amendment to the Articles
of Incorporation changed our name to Zivia, Inc.  In October
2000, a Certificate of Amendment to the Articles of
Incorporation changed our name to Zydant Corporation.

Business of Our Company.

We are a development stage company that plans to provide
wireless application deployment services to users of a wide
variety of hand-held personal digital assistants, or PDAs.  Our
services will provide subscribers real-time information services
and access to online applications that allow PDA users to
interact with their corporate applications and perform time-
critical activities.

Zydant specializes in application deployment services for
the Wireless Personal Digital Assistant devices ("WPDA"). Our
patent pending software technology serves as a bridge that links
WPDA users to powerful server-based applications that manage
both business and consumer information.

Zydant deployment services will offer today's mobile
workforce access to their company's enterprise data as well as
personalized applications including airline schedules, news,
hotel reservations and financial market data.

Applications currently exist on centrally located servers
that manage this important data.  These server-based
applications, which are known as Host Applications, may reside
at the user's corporate headquarters, on the Internet, or at a
third party data management facility. While many corporations
would like to give mobile users access to these applications, it
is a costly initial investment and time consuming for them to
build and maintain the necessary infrastructure.  Zydant's
deployment service offering helps eliminate the cost to entry
barrier, with a monthly subscription based model.

Zydant technology will provide an efficient and cost
effective solution, allowing mobile users to interact with
server-based systems via a method known as application
deployment. Application deployment allows the Host Application
to dynamically control the appearance and behavior of the WPDA
user interface. Based on open system standards, Zydant
technology uses the Host Application logic to present data to
the WPDA and to react to user input.

Zydant services are built around our unique patent pending
technology, and can be personalized for specific user
preferences.  In order to establish a model of recurring
revenue, Zydant services will be offered to our customers on a
subscription basis.

The Need for Specialized Wireless Information Services and Cross
Platform Application Deployment Solutions.

While the wireless data services market is developing
rapidly, widespread adoption of
wireless data services has been hindered by a number of factors,
including the following:

the cost and effort required of independent software vendors to
deploy their applications over a wireless data network;

incompatible mobile devices and wireless carrier networks;

the high cost and inefficiencies associated with using
wireless data networks;

an inability to access and transmit data over wireless
networks at adequate speeds;

data security concerns;

memory and battery constrained devices;

a lack of effective technology solutions and personnel with
the expertise to effectively develop and deploy information
services and applications over wireless data systems.

In addition, most of the content and applications existing
today are not designed for delivery over the Internet to a
handheld computer, but rather to a traditional web browser.  We
believe there is a lack of solutions focused on the deployment
of information services and applications specifically for the
wireless PDA user base.  As a result of these challenges, a
significant opportunity exists for an effective wireless
application deployment service that can provide an efficient
and cost effective solution; supporting new applications, as
well as, investments in legacy applications. Zydant offers an
application deployment solution that does not require a large up
front investment, it is easy-to-use, cost-effective, and
reliable.

Our Solution

Zydant's Patent Pending Application Deployment Technology
combines the flexibility of a browser-based technology with the
functionality of a dedicated client.  Using efficient protocol
methods, the Zydant Application Client has the ability to
present multiple applications that have the crisp look and feel
of a dedicated client.  This technology also allows applications
to be dynamically updated from the Zydant Application Server, so
there is no need to download a new client for each version
update, there is no need to interact at the desktop, no need to
sync, no need to remove an existing application in the end user
suite in order to download another application.

By keeping the development interface on a high level,
deployment of existing Host Applications is straightforward,
requiring less technical skills for our clients, while
decreasing their time to implement.  Zydant Application
Deployment technology is based on open system standards that
allow deployment across a broad range of devices.  Its
architecture is built around object oriented design so that
flexibility and extensibility are inherent.  These combined
advantages position the Zydant Application Deployment Technology
to be rapidly adopted as the leading application deployment
method for WPDAs

The Zydant Application Deployment technology is built
around three key elements:

Zydant Application Client

Zydant Application Deployment Server

Zydant Deployment Tools

The Zydant Application Client resides on the users Wireless
device, and the Zydant Application Deployment Server runs on the
Internet-based host computer. These pieces work together to
provide connectivity of the Wireless device to its server-based
Host Application counterpart.  The Zydant Application Client is
based on 'thin-client' technology.  The term 'thin-client' is an
industry-wide term meaning that a minimal amount of application
logic is present on the client device.  An example of 'thin-
client' technology is the popular web browser class of
applications such as Netscape or Microsoft Internet Explorer.
Where web browsers are designed to access page-oriented
information located on the World Wide Web, the Zydant
Application Client is designed specifically to access Host
Applications and to create an interactive environment between
the user and that application, a client-server relationship. The
Zydant Application Client is very efficient, it uses a high-
performance binary interface between the client and the server
to define what the user-interface should look like and how it
should act. The user-interface information is sent to the client
device separately from the data, or information, that is
displayed by the application. At runtime, only the minimal
amount of data flows between the client and the Host Server
application, this results in a substantial speed increase over
conventional web browsers and other Markup Language based thin-
clients. Applications deployed via Zydant services can take
advantage of the particular device's processing power, native
menu buttons, and customized pull-down menu boxes.  This gives
the application more functionality, as well as a crisp,
interactive look and feel. Additionally, while a browser updates
information page by page, Zydant's technology updates the user
interface field by field.  This creates a much more dynamic user
experience, much like a dedicated client application.  Built on
open Internet standards, Zydant technologies provide a low-cost,
extremely flexible application deployment solution.  The Zydant
Deployment Tools provide an easy way to create and maintain
deployed applications.  By combining the flexibility of a
browser-based application with the functionality of a dedicated
application, Zydant services minimize corporate application
deployment costs while providing the Wireless device end user
with highly interactive access to server-based Host
Applications.

The Zydant Application Deployment Server works as an
intermediary between the Zydant Application Client and the Host
Application.  The Zydant Deployment Server is responsible for
connecting the Wireless device with the user-requested Host
Application, and controlling the user interface for the Zydant
Application Client. When a Wireless user requests access to a
Host Application, the Zydant Application Deployment Server
contacts the Host Application and establishes communication
between the Host Application and the Wireless device.
Application Authorization and Security Verification ensure that
only intended users have access to the Host Application.  The
Host Application is presented to the Wireless user via the
Zydant Application Client, honoring all of the User Preference
Controls.  Host Application updates are downloaded to the Zydant
Application Client as soon as they become available to the
Zydant Application Deployment Server.  The Zydant Application
Deployment Server also maintains the necessary records for
Zydant's billing management system.  Zydant services operate on
open Internet standards, and so are not dependent on the
transport method used.  This means that as packet data transport
technologies evolve, Zydant services will be able to utilize the
most efficient and ubiquitous methods available.
The Zydant Deployment Tool is an easy-to-use tool for
deploying Host Applications to WPDAs, without the need for
developing specific client programs.  The corporate programmer
can quickly design screen layouts from his desktop PC.  The
developer can assign both client-side and server-side functions
to action controls, allowing the client application to run at
think-speed while utilizing the computing power of the server.
This easy to use gateway into the Zydant Application Deployment
Server allows rapid deployment of enterprise applications to
WPDAs by corporate programmers.  Empowering system integrators
and corporate developers with the tools to quickly deploy
applications themselves drastically reduces the cost barrier to
entry into the Wireless data market.  Built on open Internet
standards, Zydant services provide a low-cost, extremely
flexible application deployment solution.  The Zydant Deployment
Tools provide an easy way to create and maintain deployed
applications.  By combining the flexibility of a browser-based
application with the functionality of a dedicated application,
Zydant services minimize corporate application deployment costs
while providing the Wireless device user with highly interactive
access to server-based Host Applications.
Portability and Extensibility have been designed into
Zydant Technology from the point of conception. Zydant Client
Technology currently runs on PalmOS based PDAs, but because it
has been engineered using Object Oriented techniques and is
written in the C++ language, it can be easily ported to run on
Microsoft PocketPC, Win32 and other operating systems. In
addition to being readily portable to other platforms, Zydant
Client Technology can also be easily extended to take advantage
of specific user interface or operating systems features of a
given client operating system. The Zydant Application Deployment
Language compiler is designed to be readily extensible to allow
new language features to be added and since the compiler outputs
a common format file for all client operating systems, the
compiler needs very little reconfiguration to adapt to new
target client devices.

While Zydant Technology was originally targeted at the
rapidly growing WPDA market place, we have also taken into
consideration the potential for utilizing Zydant Application
Deployment technology on the online desktop PC or Laptop as
well. We believe there is a strong future for application
deployment to all types of devices and have engineered Zydant
Technology to be adaptable to a very broad potential
marketplace.

Our Strategy

Zydant Corporation plans to empower enterprises that must
extend hosted network applications to their workers, wherever
they are.  We have aligned our business strategy to aggressively
penetrate this market opportunity by building subscription
services based on our patent pending application deployment
technology.

Zydant believes that the future of Internet computing is
through application deployment.  The ability to run truly
interactive applications will increase the power of the Internet
far beyond web browsing.

Zydant also believes in the recurring revenue model.
Enterprises don't necessarily want to own the software; they
want the service that the software can give them.  This model
provides the enterprise with an extremely low cost barrier to
entry as well as supporting a simple and flexible budget plan.
Zydant's business model is designed to generate multiple
recurring revenue streams based on the Zydant Application
Deployment Server. This revenue model is structured around the
use of our application deployment technology to provide
subscription based services to our customers.  These services
are built around our ability to provide the connecting link
between WPDAs and hosted applications or information servers

Customers

Zydant will provide application deployment services to the
following categories of customers:

Enterprise or Corporations; their workers or end users

Independent Software Vendors (ISVs); their corporate
clients; end users

Internet Content Providers (CPs);  their clients or end users

Application Service Providers (ASPs); their clients or end users

Zydant's customers will include Corporations who wish to
allow their employees or customers access to enterprise data or
applications located on their servers. This might include sales
or order entry/tracking, inventory management, field service, or
enterprise scheduling systems.  Billing will be directed toward
the corporation on a per-user, flat monthly rate, or metered
usage basis.

Third party vertical and horizontal application providers,
commonly known as ISVs make up another source of Zydant revenue.
ISVs commonly have applications serving multiple client bases.
These applications may reside on the ISV's server, a hosted
server, or the ISV client's server.  Zydant can bill either the
ISV or the ISV clients for these services.

The third principle source of revenue for Zydant
application deployment services includes Internet Content
Providers and Application Service Providers who may have
existing web applications targeting horizontal markets.  These
web applications may include news, financial market data,
airline flight schedules, and movie locations and show times.
These services may be made available to corporate or third party
subscribers as a suite of user services.  Revenue for these
services may come from the content provider and/or the end user.

Sales and Marketing

We also plan to enter into strategic marketing
relationships with other companies to provide opportunities to
cross-market our products with the products and services of our
strategic partners, which may likely include our competitors.
We intend to create an awareness of our company brand name
and to educate the market about the features of our services
that differentiate them from our competitors. We plan to
accomplish this goal through a media campaign and participation
in trade shows and industry seminars.


Zydant will market its products and services worldwide
through:

direct marketing;

Zydant's website;

Targeted Internet advertising;

Independent Software Vendors;

Content Providers;

Application Service Providers;

our competitors;

our business partners

Our marketing effort includes participation in industry
trade shows, trade publications, exploiting the power of multi-
media through interactive CD, audio and video, seminar
presentations, industry technology summits, targeted
advertising, public relations campaigns, corporate subscription
promotions, customer surveys and testimonials, and the promotion
of our products and services through our web site and satisfied
customers.

Our marketing and advertising campaigns comprise a
substantial portion of our annual budget.  Our marketing and
sales programs will be monitored to assure quality and integrity
as well as overall effectiveness and profitability.  We believe
that when supported consistently over time, this strategy serves
to strengthen our brand and our position as an industry leader.

We believe that continuing to build the Zydant brand is
vital to the expansion of our customer base and the maintenance
and development of our market.  A component of our brand
enhancement strategy is to expand our use of tightly focused
advertising campaigns, both in Wireless-related publications and
in general purpose media in order to attract new customers to
Zydant deployment solutions and services.

Customer Service and Billing

We plan to contract with third parties to provide customer
service, billing, and product fulfillment services.  Our
customer service program will enable our subscribers to contact
us through toll free telephone, fax, web site, or e-mail.
Subscribers will be able to access our web site to obtain
answers to frequently asked questions and information about our
services.

During our second quarter of fiscal year ending February
28, 2001, our company had entered into a letter of intent to
acquire PDA Data, a joint venture between Excellular
Incorporated and Covault Corporation, and had planned to enter
into a services agreement with Excellular, to provide customer
and billing support .  We have retracted our letter of intent
and do not intend to continue our pursuit for an acquisition,
service agreement or any business arrangements with PDA Data,
Exellular Incorporated, or Covault Corporation; following
initial due diligence and a shift in our business plan.

Competition

The market for wireless Internet services is becoming
increasingly competitive, although the corporate and consumer
base is still in need of an effective application deployment
solution.  The widespread adoption of industry standards in the
wireless data communications market may make it easier for new
market entrants and existing competitors to introduce competing
services.  Zydant plans to continue its technology development
solutions using industry standards.  If we enter into agreements
with wireless carriers and data providers, we do not anticipate
that any of those agreements will be on an exclusive basis.
Although our application deployment technology is patent
pending, with time and capital, it would be possible for
competitors to replicate our services.  We expect that we will
compete primarily on the basis of time to market, effective and
efficient functionality,  customer service, and price.

Competitive Technologies

Existing Wireless computing technologies can be divided
into three main camps:

Browser technologies based on markup languages

PQAs based on Palm Computing's Web Clipping technology

Dedicated applications written for a specific purpose

Browser Technology consists of a thin client that
interprets a markup language such as Hyper Text Mark Up Language
("HTML") or Wireless Markup Language ("WML") or Wireless
Application Protocol ("WAP").  Examples of traditional desktop
thin clients include browsers such as Netscape and Microsoft
Explorer. This technology allows a web page to be viewed on
different makes of desktop systems running different types of
browser clients.  Browser-based technologies are appropriate for
page-oriented information display purposes such as surfing the
World Wide Web, where the Host Application is not highly
interactive, and where the size of the display screen is large
enough to facilitate the page-oriented information effectively.

Palm Query Applications ("PQA"s) are based on Palm
Computing's Web Clipping technology.  PQAs rely on a client
program written specifically for the Palm Operating System
("OS") based device to access a site on the World Wide Web in
order to retrieve information such as news, sports, and weather.
Each PQA requires a separate client query application to be
developed that contains the screens and query forms used within
the PQA.  The query is sent through the Palm.net Web Clipping
Proxy server, which forwards the request and interprets the
reply.  The results are presented in a page-oriented format,
much like a browser.  PQAs are limited by the fact that they are
available only for Palm OS based devices.

Dedicated applications for WPDAs are developed using a low-
level programming language such as C.  These applications are
sometimes called "thick" or "intelligent" clients because the
majority of the program logic is held locally on the device.
These thick client applications have a much crisper look and
feel to them.  Instead of presenting a page-oriented format like
a browser, the screens can be updated on a field-by-field basis.
Thick clients can submit queries to Host Applications for data
retrieval, and are usually very efficient since less data must
be transmitted to update the fields.  The downside of dedicated
applications is that a separate program must be developed for
each different application, requiring experienced developers and
a longer time to market.  Like a PQA, a thick client must be
downloaded to all devices each time there is a version update.

Competitive Companies

At Zydant we strive to know our competitors and what path
they take across the new Wireless frontier.  We realize that
this list is not all-inclusive and that there will always be new
competitors breaking into the market:

Aether Systems, Inc. (NASDAQ: AETH) is the industry leader
in providing wireless data products and services.  Founded
in 1996, Aether allows enterprises and individuals to
receive real-time data on handheld wireless devices, using
virtually any data network, any operating system and any
hardware platform.  They seek to maximize recurring revenue
by developing wireless data services for a variety of
industries and market segments in the United States and
internationally.  Aether Capital has established, or
invested in, the following companies:  OmniSky, Sila
Communications, Mindsurf, Veristar, and Novatel Wireless.
Clients include Charles Schwab, National Discount Brokers,
Allegiance Health Care, United States Postal Service,
Office Depot and Nissan, among many others.

Palm, Inc.(NASDAQ: PALM) launched a revolution with the
Palm VII and Palm.Net service in May of 1999.  Palm.Net is
a wireless service created exclusively for the Palm VII
wireless device.  With Palm.net service, Web and Internet
information is delivered to the Palm VII using web-clipping
applications, known as PQAs.  Even though Palm.net
service's main focus is in the consumer market, Palm
partners with consultants and system integrators who
contract with enterprises to build wireless solutions. Some
of Palm's partners include Symbol Technologies, Oracle,
Sybase, and SAP.

Pumatech, Inc. (NASDAQ:PUMA), formerly known as Puma
Technology, Inc., emerged on the Silicon  Valley landscape
in 1993.  Pumatech develops, markets and supports mobile
device management and synchronization software designed to
improve the productivity of handheld computers, smart
phones, and other wireless personal communications
platforms.  They now offer a comprehensive application
suite, the Mobile Application Platform (MAP), for the
delivery of personalized content to any mobile device.
They recently announced a subscription-based offering
called Intellisync.com, which is based on this platform.
Pumatech also markets Satellite Forms, a visual rapid
application development (RAD) tool for devices base on the
Palm OS platform.  Satellite Forms enables software
developers to extend custom enterprise applications to
handheld computers, and to seamlessly integrate these
handheld solutions with enterprise data from Oracle, DB2,
Lotus Notes, Microsoft Access, and many other databases.
Partners include Veritas, Xircom, Odyssey Software, and
Information Builders' Middleware Technology Group.

EpicData International Inc.was founded in 1975 as a
supplier of fully integrated data collection products for
the Enterprise Resource Planning (ERP) marketplace,
EpicData International Inc. (Toronto Stock Exchange: EKD)
provides the components for seamless integration within and
across the supply chain - wireless technologies, e-
fulfillment solutions, electronic data capture, middleware
software, and implementation services.  Within their
Wireless Technologies, they partnered with Symbol
Technologies to develop an integrated data collection and
enterprise solution featuring Java-based wireless
technology for the manufacturing market called eXpresso.
eXpresso is an application development platform and
programming interface for creating and enabling mobile
enterprise applications.   A few of their customers include
the City of Vancouver and Pratt & Whitney.

Sybase, Inc.(NASDAQ:SYBS) has been recognized as a
technology innovator and leader. iAnywhere  Solutions, Inc.
is Sybase's mobile and wireless division.  iAnywhere
Solutions' m-Business Platform is an integraged, end-to-end
software platform for extending the reach of e-Business
applications, enterprise data, and content to mobile and
wireless devices.  Customers include Northeast Utilities,
PixelPoint, Creative Solutions Unlimited, Inc. and MEDS.

Air2Web is based in Atlanta, Georgia, Air2Web provides
enterprises with a platform for the development of wireless
applications.  The Air2Web Always Interactive suite of
services enables organizations to create, deploy, and
deliver their branded applications to consumers using all
types of wireless devices, from WAP and SMS phones, to
pagers, and pervasive computing devices.  Air2Web's
customers include UPS, ING Barings, Digital Insight,
Vertical One, FANSonly, and Total Sports.  Air2Web is a
privately held company.

JP Mobile, Inc., formerly JP Systems, Inc., was founded in
1995 in Dallas, Texas. JP Mobile, Inc. provides enterprises
with reliable, data-center-ready and proven mobile
information services. JP Mobile's SureWaveT Mobile Server
is designed to perform in mission-critical data-center
environments and enables enterprise legacy platforms and
applications to work with all kinds of mobile devices and
network protocols. JP Mobile's customers include the NYSE,
who deliver messages on the trading floor through the
SureWaveT Mobile Server, and OmniSky, recently recognized
by Business Week for their JP Mobile powered email service.
JP Mobile, Inc. is a privately held company.

Many of our existing and potential competitors may have
substantially greater financial, technical, marketing and
distribution resources than we do.

All of these companies have greater name recognition and
more established relationships with our target customers.
Furthermore, these competitors may be able to adopt more
aggressive pricing policies and offer customers more attractive
terms than we can.

Intellectual Property

The Zydant patent pending technology abstract:  A system
and methods through which interactive, device independent
applications can be deployed to portable devices while limiting
bandwidth requirements.  The invention includes an application
deployment tool, which provides a RAD environment through which
applications can be developed, an application manager, which
allows modified applications to be transmitted to a portable
device while requiring less bandwidth, and an application
client, for running applications on a portable device.

We have applications pending for the trademarks "We're not
a company. We,re a culture!", "Empowering humanity through
technology", "Zydant", "The power of Z", and our corporate
logos.  To our knowledge, there has not yet been any opposition
to the marks, although we realize that until this process is
completed the registration marks may be challenged.

Other Assets

We own a 15% working interest in petroleum exploration
permit PEP38721, covering approximately 29,000 acres of the
Taranaki Basin on the North Island of New Zealand.  This asset
was the property of Titan Resources, Inc. a predecessor of our
company, and is now our asset as a result of Titan's merger with
our company in October 1999.  GEL Exploration of Houston, Texas
is the operator of the permit.  Exploration work including a
drill and sidetrack began in August of 2000.  There were some
gas and oil finds in the exploration drilling completed between
August and November of 2000. Our company has invested
approximately $497, 000 in this asset during fiscal year ending
February 28, 2001. During May 2000, we issued a $300,000 note
payable to Northwest Capital Partners for working capital
purposes and we used this capital to support our 15% working
interest in permit PEP38721, these funds were used for the first
exploration drill, Crusaders 1.  The note does not bear interest
and is due February 2002. In August of 2000 our company invested
$97,000 of its working capital to support our 15% working
interest in permit PEP38721, these funds were used for an
exploration sidetrack drill, Crusaders 1A.  GEL Exploration has
shipped much of their drilling equipment from Houston, TX  to
New Zealand to help minimize the costs of exploration, and has
re-engineered previous seismic as well as performed new seismic
on much of the permit area.

The company has not yet realized any return value from this
asset.  Although the company recognizes the potential for future
value from this asset, it cannot afford further investment in
this asset.  Furthermore the company  does not feel that
continued support to this asset fits within the scope of  the
company's business plan. Therefore, the company is currently
pursuing the sale of this asset.

The company does not intend to invest additional capital in
this asset and does not intend to pursue further this type of
business activity.

Government Regulation

We currently are not subject to direct federal, state or
local, government regulation, other than regulations that apply
to businesses generally. Once we commence our service offerings,
we also could be adversely affected by developments in
regulations that govern or may in the future govern the
Internet, the allocation of radio frequencies, or the placement
of cellular towers.  Changes in these regulations also could
create uncertainty in the marketplace, which could reduce demand
for our services or increase the cost of doing business as a
result of costs of litigation or increased service delivery cost
or could in some other manner have a material adverse effect on
our business, financial condition or results of operations.

We do not plan to collect sales or other taxes with respect
to the sale of services or products in states and countries
where we believe we are not required to do so.  We will collect
sales and other taxes in the states in which we have offices and
are required by law to do so.  One or more jurisdictions have
sought to impose sales or other tax obligations on companies
that engage in online commerce within their jurisdictions.  A
successful assertion by one or more jurisdictions that we should
collect sales or other taxes on our products and services, or
remit payment of sales or other taxes for prior periods, could
have a material adverse effect on our business, financial
condition or results of operations.

Risk Factors in Connection with Plan of Business

An investment in our common stock involves a high degree of
risk.  Prospective investors should consider carefully the
following, in addition to the other information contained in
this report, before purchasing any of our common stock.

We have incurred substantial losses, our ability to
generate revenue to support our operations is uncertain,
and our independent certified public accountants have
issued a qualified opinion on our financial statements.
We have not generated revenue, have incurred substantial
losses since our inception, and currently are experiencing a
substantial cash flow deficiency from operations.  We expect to
incur substantial additional losses for the foreseeable future.
We incurred net losses of approximately $1,158,264 during fiscal
2001, $10,380,000 during fiscal 2000, and $745,000 during fiscal
1999.  As of June 13, 2001, we had working capital of
approximately ($36,154) and an accumulated deficit of
approximately $13,100,000.  Our ability to generate significant
revenue is uncertain, and we may never achieve profitability.
The report by our independent certified public accountants on
our financial statements for the year ended February 29, 2001
states that we have not commenced our planned operations, have
suffered recurring losses, and have no revenue from operations,
all of which raise substantial doubt about our ability to
continue as a going concern.  Our consolidated financial
statements do not include any adjustments that might result from
the outcome of this uncertainty.

We have not yet introduced our application deployment
services, have not yet generated revenue, and have a very
limited operating history upon which you can evaluate our
potential for future success.

We have not yet introduced our application deployment
services.  We have not generated revenue and have a very limited
operating history on which you can evaluate our potential for
future success.  You should evaluate our company in light of the
expenses, delays, uncertainties, and complications typically
encountered by early-stage businesses, many of which will be
beyond our control.  These risks include the following:

lack of sufficient capital;

unanticipated problems, delays, and expenses relating
to product development and implementation;

marketing difficulties;

competition;

technological changes; and

uncertain market acceptance of our application
deployment services.

As a result of our limited operating history, our plan for
rapid growth, and the increasingly competitive nature of the
markets in which we will operate, our historical financial data
is of limited value in evaluating our future revenue and
operating expenses.  Our planned expense levels will be based in
part on our expectations concerning future revenue, which is
difficult to forecast accurately based on our stage of
development.  We may be unable to adjust spending in a timely
manner to compensate for any unexpected shortfall in revenue.
Further, business development and marketing expenses may
increase significantly as we expand operations.  To the extent
that these expenses precede or are not rapidly followed by a
corresponding increase in revenue, our business, operating
results, and financial condition will suffer.

Unless users of wireless personal digital assistants
continue to access the Internet, our services will not
generate revenue.

Our future success will depend upon a continued increase in
the use of wireless devices to access applications and
information via the Internet and upon the continued development
of wireless devices as a medium for the delivery of network-
based information content and services.  In particular, our
success will require that future users of wireless personal
digital assistants, or PDAs, and other devices increasingly use
those devices to obtain Internet-based and other network-based
applications and information. We cannot predict whether this use
will continue to increase or whether corporations and consumer
wireless device users will be willing to pay profit-supporting
prices for Internet-based and other network-based deployment
services.

If we do not find additional sources of capital, we may be
required to reduce the scope of our business activities
until we can obtain other financing.

We anticipate incurring substantial losses in the future
and will likely require significant additional financing in the
future in order to satisfy our cash requirements.  Our need for
additional capital to finance our operations and growth will be
greater should, among other things, our revenue or expense
estimates prove to be incorrect, particularly if we do not find
additional sources of capital.  If we do not find additional
sources of capital, we may be required to reduce the scope of
our business activities until other financing can be obtained.
We cannot predict the timing or amount of our capital
requirements at this time.  Our actual funding requirements may
differ materially as a result of many factors, including the
success of our service launch, the development of new products
and technologies, and the proposed growth of our company.  We
may not be able to obtain additional financing in sufficient
amounts or on acceptable terms when needed, which could
adversely affect our operations, development and market
prospects.

Our success depends on our ability to adapt to
technological changes.  If we fail to adapt to those
changes, our application and information deployment
services may become obsolete.

We compete in an industry that is evolving rapidly.  The
wireless data services industry is characterized by the
development of new technology, evolving industry standards, the
introduction of new products and services, and changing customer
demands.  The emerging nature of the Internet and the large
number of companies offering Internet-based products and
services intensify these characteristics.  Our success will
depend on our ability to adapt our application deployment
services to rapidly changing technologies and industry
standards, to improve continually the performance of our
application deployment technology, and to respond quickly to the
shifting demands of the marketplace.  In addition, we could
incur substantial costs if we need to make substantial
modifications to our application deployment technology to
respond to the widespread adoption of new or changing
technologies. We may fail to adapt to technological changes or
the demands of the marketplace.

We face a number of related risks generally encountered by
companies in the wireless application and information deployment
services industry, including the following:

the uncertainty of market acceptance of commercial
services using our online application and wireless
information deployment services;

our need to initiate and expand our marketing, sales,
distribution, and support organizations;

our ability to anticipate and respond to market
competition; and

our need to manage expanding operations.

Any failure by us to anticipate or respond adequately to
technological developments, customer requirements, or new
software design or development could reduce our opportunities to
generate revenue.

Open industry standards may create a more competitive
market for our online applications and wireless information
deployment services, resulting in lower operating margins
for our business.

The wireless market, is becoming increasingly competitive.
The widespread adoption of open industry standards may make it
easier for new market entrants and existing competitors to
introduce products and services that compete with our deployment
technology services.  We expect that we will compete primarily
on the basis of time to market, functionality, quality, breadth
of new application deployment offerings, customer service, and
price of our services.  We may not be able to compete
effectively. on these or other bases.  Many of our competitors
have significantly greater financial, marketing, and other
resources, generate greater revenue, and have greater name
recognition and experience than we do.  Some of our competitors
are emerging wireless Internet service providers that already
have similar competing services in the market.

Any online applications or wireless information deployment
services we provide may contain defects or errors that could
result in lost revenue or increased service costs.

Any online applications and wireless information deployment
services we provide will be complex and must meet stringent
technical requirements.  We must develop our application
deployment technology and services to keep pace with the rapidly
changing wireless and wireless data industries. Our software
technology may contain undetected errors or defects, especially
when first introduced or when upgraded, which could result in
lost revenue.

Our wireless application deployment services may not be
broadly accepted by the market.  We propose to offer wireless
application deployment services and online applications over the
Internet to wireless PDAs.  This market is growing rapidly, but
is still in the early stage of development.  It is difficult to
predict the rate at which this market will continue to grow,
because this market is relatively new and current and future
competitors are likely to introduce competing services. Any
application deployment services that we provide may not
experience broad market acceptance.  Any market acceptance for
our application deployment services may not develop in a timely
manner or may not be sustainable.  New or increased competition
may result in market saturation, more competitive pricing, or
lower margins.  Critical issues concerning development and use
of our proposed services remain unresolved and may impact the
growth of these services.  These issues include, among others,
the practicality and functionality of our application deployment
technology solutions and our ability to enable application
interface with wireless PDAs.  Our opportunities to generate
revenue would be limited and any goodwill would be lost if the
markets for our proposed services fail to grow, grow more slowly
than anticipated, become more competitive, or if our proposed
services are not accepted by targeted customers even if a
substantial market develops.

Security risks of electronic commerce may deter future use
of our products and services that would reduce our
opportunities to generate revenue.

A fundamental requirement to conducting Internet-based
communications is the secure transmission of confidential
information over public networks.  Failure to prevent security
breaches of our network, or well-publicized security breaches
affecting the Internet in general, could deter consumers,
retailers, and manufacturers from conducting electronic
transactions that transmit confidential information.  Advances
in computer capabilities, new discoveries in the field of
cryptography, and other developments may result in a compromise
or breach of the algorithms we plan to use to protect content
and transactions in connection with our services.  Anyone that
is able to circumvent our security measures could misappropriate
proprietary confidential user information or cause interruptions
in operations.  There may be significant cost requirements to
protect against security breaches or to alleviate problems
caused by breaches.  Any of these occurrences could increase our
costs and result in lost revenue.

Legal uncertainties surround the development of the
Internet, and compliance with any newly adopted laws may
prove difficult for our company and may harm our business.
The laws governing Internet transactions remain largely
unsettled.  The adoption or modification of laws or regulations
relating to the Internet could adversely effect our business,
operating results, and financial condition by increasing our
costs and administrative expenses.  It may take years to
determine whether and how existing laws such as those governing
intellectual property, privacy, libel, consumer protection, and
taxation apply to the Internet.  Laws and regulations directly
applicable to communications or commerce over the Internet are
becoming more prevalent.  We must comply with new regulations in
the United States, as well as any other regulations adopted by
other countries in which we may do business.  The growth and
development of the market for online commerce may prompt calls
for more stringent consumer protection laws, both in the United
States and abroad, as well as new laws governing the taxation of
Internet commerce.  Compliance with any newly adopted laws may
prove difficult for our company and may harm our business,
operating results, and financial condition.

Our proposed growth and expansion could harm our business.
Over the next several months, we may add new employees,
introduce new systems, and effect other changes to address our
rapid growth.  The resulting strain on our managerial,
operational, financial, and other resources could be
significant.  During the next several months, we plan to
solidify agreements with business partner  relationships.  Our
ability to achieve and maintain profitability will depend, in
part, upon the ability of senior management to manage
effectively the growth of our company.  Any failure to manage
our proposed growth and expansion could result in lost
opportunities to generate revenue or increased costs due to
inefficiencies in our business.

The loss of any of our key executives or our failure to
attract, integrate, motivate, and retain additional key
employees with Internet, wireless data, and technology
experience could harm our business.

Our success depends to a large degree upon the skills of
our senior management team and current key employees and upon
our ability to identify, hire, and retain additional sales,
marketing, technical, and financial personnel.  Because of the
technical nature of our wireless deployment service and the
dynamic market in which we will compete, our performance will
depend on attracting and retaining highly qualified employees.
Competition for these personnel in the wireless data and
technology industries is intense and identifying personnel with
experience in both industries is even more difficult.  We are in
a relatively new market, and there may be a limited availability
of people with the appropriate combination of skills needed to
provide the services that our subscribers will require.

We depend particularly upon James T. Voss, Chief Executive
Officer and President, and Ellen S. Eckler, Executive Vice
President and Chief Financial Officer.  We do not maintain key
person life insurance for any of our officers or key employees.
Although we have employment agreements with our two executive
officers and our six other employees, those agreements do not
require our executives or our employees to enter non-competition
agreements with us, and those executives or employees could
leave our company to form or join a competitor.  Although our
officers and employees are bound by Non-Disclosure and Insider
Policies; the loss of our key executives, the use of proprietary
or trade secret data by former employees who compete with us, or
the failure to attract, integrate, motivate, and retain
additional key employees could delay the execution of our
business plan, which result in lost revenue and goodwill.

Investors may not be able to exercise control over our
company as a result of management's and other principal
stockholders' ownership.

The current executive officers and directors of our company
beneficially own approximately 56% of our outstanding common
stock.  As a result, the executive officers and directors of our
company will be able to significantly influence the management
and affairs of our company and all matters requiring stockholder
approval, including the election of directors and approval of
significant corporate transactions.  This concentration of
ownership could have the effect of delaying or preventing a
change in control of our company, even when a change of control
is in the best interests of stockholders.  Control by management
might adversely affect the market price of the common stock and
the voting and other rights of our company's other stockholders.

Indemnification, of directors and officers may result in
expenditures.

Our articles of incorporation and the bylaws provide for
indemnification of our officers and directors.  In addition, the
Nevada Revised Statutes provide for permissive indemnification
of officers and directors and we may provide indemnification
under such provisions.  Any limitation on the liability of any
director, or indemnification of directors, officer, or
employees, could result in substantial expenditures being made
by the company in covering any liability of such persons or in
indemnifying them.

Any future acquisitions or mergers could divert
management's time and attention, dilute the voting power of
existing stockholders, and harm our business.
As part of our growth strategy, we may acquire or merge
complementary businesses and assets.  Acquisitions or mergers
that we may make in the future could result in the diversion of
time and personnel from our business.  We may also issue shares
of common stock or other securities in connection with
acquisitions or mergers , which could result in the dilution of
the voting power of existing stockholders and could have a
dilutive effect on earnings per share.  Any acquisitions or
mergers would be accompanied by other risks commonly encountered
in these types of transactions, including the following:

difficulties integrating the operations and personnel
of acquired or merged

companies or assets;

additional financial resources required to fund the
expanded operations of acquired companies;

potential disruption of our business;

our ability to maximize our financial and strategic
position by incorporating acquired technology or
businesses with our product and service offerings;

difficulty of maintaining uniform standards, controls,
procedures, and policies;

potential loss of key employees of our company and/or
acquired companies;

impairment of employee and customer relationships as a
result of changes in management;

increased liabilities due to acquired companies or
assets; and

significant expenses we may incur to consummate
acquisitions or mergers.

Rights to acquire shares of common stock will result in
dilution to other holders of common stock and may enable
holders of options to acquire shares of common stock at
prices below fair market value.

As of June 13, 2001, we have 15,206,936 outstanding shares
of common stock.  In addition, during the last two fiscal years
ended February 28, 2001, we have granted options to our
directors, officers, and employees to purchase 2,407,000 shares
of common stock with exercise prices ranging from $.15 to $2.00
per share, warrants to purchase 28,000 shares of common stock
with an exercise price ranging from $2.00 to $2.50 per share,
and warrants to purchase 2,378 shares of common stock with
exercise $32.00 per share.

Holders of these securities  may have the opportunity to
profit from an increase in the market price of our common stock,
with resulting dilution in the interests of the holders of our
common stock.  For example, during September 1999 we entered
into a consulting agreement with Northwest Capital Partners,
LLC, one of our affiliates, in which we granted to Northwest
options to purchase 1,000,000 shares of our common stock at an
exercise price of $0.01 per share.  During January 2000, the
options vested and Northwest exercised all 1,000,000 options.
The existence of these stock options and warrants could
adversely affect the terms on which we can obtain additional
financing, and the holders can be expected to exercise these
securities at a time when, in all likelihood, we would be able
to obtain additional capital by offering shares of common stock
on terms more favorable to us than those provided by the
exercise of these securities.

Our executive officers and key employees have the right to
purchase additional shares of our common stock at a
discounted rate, which will result in continued dilution to
existing stockholders, possible unfavorable accounting
treatment, and possible downward pressure on the market
price of our common stock.

Our company does not yet offer an Employee Stock Purchase
Plan, however our employment agreements with our executive
officers and our key employees provide the option to purchase
additional shares of our common stock at the end of each
quarter, so long as these purchases do not exceed 25% of the
employee's salary for that quarter.  The employee may purchase
these shares at a price equal to 15% below the lowest fair
market value of our common stock during the quarter ended.  To
the extent these employees decide to acquire additional shares
at discounted prices, existing stockholders will experience
further dilution.  In addition, we may be required to record
compensation expense in an amount equal to the discount of the
purchases, if any.  The existence of these agreements could
adversely affect the terms on which we can obtain additional
financing and may have an adverse impact on the fair market
value of our common stock.

Our shareholders do not have cumulative voting
Holders of the shares are not entitled to accumulate their
votes for the election of directors or otherwise. Accordingly,
the holders of a majority of the shares present at a meeting of
shareholders will be able to elect all of our directors, and the
minority shareholders will not be able to elect a representative
to the board of directors.

We do not plan to pay cash dividends for the foreseeable
Future.

The board of directors does not anticipate paying cash
dividends on the shares for the foreseeable future and intends
to retain any future earnings to finance the growth of the
business.  Payment of dividends, if any, will depend, among
other factors, on earnings, capital requirements, and our
general operating and financial condition, and will be subject
to legal limitations on the payment of dividends out of paid-in
capital.

Our common stock is a "penny stock," and compliance with
requirements for dealing in penny stocks may make it
difficult for holders of our common stock to resell their
shares.

Our common stock currently is deemed to be "penny stock" as
that term is defined in Rule 3a51-1 under the Securities
Exchange Act of 1934, or Exchange Act.  Section 15(g) of the
Exchange Act and Rule 15g-2 under the Exchange Act require
broker/dealers dealing in penny stocks to provide potential
investors with a document disclosing the risks of penny stocks
and to obtain manually signed and dated written receipt of the
document before effecting a transaction in a penny stock for the
investor's account.  Compliance with these requirements may make
it more difficult for holders of our common stock to resell
their shares to third parties or otherwise, which could have a
material adverse affect on the liquidity and market price of our
common stock.  Penny stocks are stocks

with a price of less than $5.00 per share that are not
traded on a "recognized" national exchange;

whose prices are not quoted on the Nasdaq automated
quotation system; or

issued by companies with net tangible assets less than
$2.0 million (if the issuer has been in continuous
operation for at least three years) or $5.0 million
(if in continuous operation for less than three
years), or with average revenue of less than $6.0
million for the last three years.

Failure to maintain market makers could affect our listing
on the Bulletin Board.

If we are unable to maintain National Association of
Securities Dealers, Inc. member broker/dealers as market makers
on the Bulletin Board, the liquidity of the common stock could
be impaired, not only in the number of shares of common stock
which could be bought and sold, but also through possible delays
in the timing of transactions, and lower prices for the common
stock than might otherwise prevail.  Furthermore, the lack of
market makers could result in persons being unable to buy or
sell shares of the common stock on any secondary market.  There
can be no assurance we will be able to maintain such market makers.

Shares of common stock eligible for sale in the public
market may adversely affect the market price of our common stock.

Sales of substantial amounts of common stock by
stockholders in the public market, or even the potential for
these sales, are likely to adversely affect the market price of
our common stock and could impair our ability to raise capital
by selling equity securities.  As of the date of this report,
approximately 6,169,332 of the 15,206,936 shares of common stock
currently outstanding were freely transferable without
restriction or further registration under the securities laws,
unless held by "affiliates" of our company, as that term is
defined under the securities laws.  We also have outstanding
approximately 9,037,604 restricted shares of common stock, as
that term is defined under Rule 144 under the securities laws,
that are eligible for sale in the public market, subject to
compliance with the holding period, volume limitations, and
other requirements of Rule 144.  Moreover, the exercise of
outstanding options and warrants will result in additional
outstanding shares of common stock and will create additional
potential for sales of additional shares of common stock in the
public market.

The price of our common stock has been volatile, putting
our company at risk of securities class action litigation.

The trading volume of our common stock historically has
been limited and sporadic, and the stock prices have been
volatile.  Since October of 1999, our common stock has traded at
prices ranging from $0.18 to $19.88. Following an overall drop
in the market with dramatic affects to technology stock, our
stock traded at prices ranging from a high of $18.00 in March of
2000 to a low of .32 on June 12, 2001. Because we are a
development stage company, our stock price is subject to
considerable risk.  In the past, securities class action
litigation has often been brought against a company following
periods of volatility in the market price of its securities.  We
may in the future be the target of similar litigation.
Regardless of its outcome, securities litigation may result in
substantial costs and divert management's attention and
resources, which could harm our business and results of
operations.  The price at which our common stock will trade in
the future may be highly volatile and may fluctuate as a result
of various factors, many of which are beyond our control.

ITEM 2.  PROPERTIES

We lease our current corporate headquarters, which are
located in an approximately 4,300 square-foot facility in League
City, Texas.  The lease expires in July 2001, our real estate
broker is currently negotiating a lease renewal with a space
reduction to approximately 2,400 square-feet. The facility
includes executive,  administrative, and developer offices, and
a network operations center.

At February 28, 2001, we owned furniture and fixtures
valued at $	35,235.  We also owned computers, equipment and
software valued at $154,210.

ITEM 3.  LEGAL PROCEEDINGS

The Registrant is not a party to any material pending legal
proceedings and, to the best of its knowledge, no such action by
or against the Registrant has been threatened.

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

None.

PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

Our common stock has been quoted on the Over the Counter
Bulletin Board under the symbol "ZYDT" since October 2000 and as
"PMWK" since September 1999. The following table sets forth the
high and low sales price of our common stock for the calendar
quarters indicated as reported on the Over the Counter Bulletin
Board (quotations reflect inter-dealer prices, without retail
mark-up, mark-down, or commission, and may not necessarily
represent actual transactions).

                                                 High      Low
Year ended December 31, 1999
Fourth quarter                                   $ 5.81   $0.93

Year ended December 31, 2000
First quarter                                   $19.88    $4.00
Second quarter                                  $ 7.13    $2.25
Third quarter                                   $ 4.63    $2.50
Fourth quarter                                  $ 3.06    $0.16

Year ended December 31, 2001
First quarter                                   $ 0.59    $0.18
Second quarter (through June 13, 2001)          $ 0.15    $0.37

Holders of Common Equity.

As of June 13, 2001, there were approximately 292 holders
of record of our common stock.

Dividend Policy

The holders of common stock will be entitled to receive
dividends, if any, as may be declared by our board of directors
from time to time out of legally available funds.  Payments of
any cash dividends in the future will depend on our financial
condition, results of operations, and capital requirements as
well as other factors deemed relevant by our board of directors.
For the foreseeable future, we intend to retain any future
earnings to finance our operations and we do not anticipate
paying any cash dividends with respect to our common stock.
Equity Securities Sold Without Registration.

We have made the following sales of unregistered securities
during the fiscal year ended February 28, 2001:

At various times during the fiscal year, we sold a total of
265,000 shares of common stock to three accredited investors
for a total consideration of $600,000 (weighted average price
per share of $2.26).  This offering was undertaken under Rule
506 of Regulation D by the fact that:

the sales were made to accredited investors as defined
in Rule 502;

we gave the purchasers the opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering and to obtain any
additional information which the company possessed or
could acquire without unreasonable effort or expense
that is necessary to verify the accuracy of
information furnished;

at a reasonable time prior to the sale of securities,
we advised the purchasers of the limitations on resale
in the manner contained in paragraph Rule 502(d)2 of
this section;

neither we nor any person acting on our behalf sold
the securities by any form of general solicitation or
general advertising; and

we exercised reasonable care to assure that the
purchasers of the securities are not underwriters
within the meaning of section 2(11) of the Act in
compliance with Rule 502(d).

At various times during the fiscal year, we issued a total of
31,905 shares of common stock to two accredited investors in
exchange for legal and consulting services in the total amount
of $97,500 (weighted average price per share of $3.06).  This
offering was undertaken under Rule 506 of Regulation D by the
fact that:

the sales were made to accredited investors as defined
in Rule 502;

we gave the purchasers the opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering and to obtain any
additional information which the company possessed or
could acquire without unreasonable effort or expense
that is necessary to verify the accuracy of
information furnished;

at a reasonable time prior to the sale of securities,
we advised the purchasers of the limitations on resale
in the manner contained in paragraph Rule 502(d)2 of
this section;

neither we nor any person acting on our behalf sold
the securities by any form of general solicitation or
general advertising; and

we exercised reasonable care to assure that the
purchasers of the securities are not underwriters
within the meaning of section 2(11) of the Act in
compliance with Rule 502(d).

On January 17, 2001, we issued stock options covering a total
of 780,000 shares of common stock, exercisable either at $0.15
per share or $0.38 per share, for services rendered to us in
the amount of $134,145.  This offering was undertaken under
Rule 506 of Regulation D by the fact that:

the sales were made to sophisticated investors as
defined in Rule 502;

we supplied the investors the financial and non-
financial information on us as required by Rule 502 of
this section.

we gave the purchasers the opportunity to ask
questions and receive answers concerning the terms and
conditions of the offering and to obtain any
additional information which the company possessed or
could acquire without unreasonable effort or expense
that is necessary to verify the accuracy of
information furnished;

at a reasonable time prior to the sale of securities,
we advised the purchasers of the limitations on resale
in the manner contained in paragraph Rule 502(d)2 of
this section;

neither we nor any person acting on our behalf sold
the securities by any form of general solicitation or
general advertising; and

we exercised reasonable care to assure that the
purchasers of the securities are not underwriters
within the meaning of section 2(11) of the Act in
compliance with Rule 502(d).

Use of Proceeds

Not applicable.

ITEM 6.  SELECTED FINANCIAL DATA

The selected consolidated financial data presented below
under the captions "Consolidated Statements of Operations Data"
for the years ended February 29, 2000 and February 28, 2001 and
"Consolidated Balance Sheet Data" as of February 29, 2000 and
February 28, 2001 are derived from the consolidated financial
statements of Zydant Corporation (formerly PalmWorks, Inc.),
which have been audited by L.L. Bradford & Company, independent
certified public accountants.  The "Consolidated Statement of
Operations Data" presented below for the years ended February
28, 1997, February 28, 1998, and February 28, 1999 and
"Consolidated Balance Sheet Data" as of February 28, 1997,
February 28, 1998, and February 28, 1999 are derived from the
consolidated financial statements of Zydant Corporation, which
have been audited by Bob Stephens & Associates, P.C.,
independent certified public accountants.

                                    Year Ended
                         Feb 28    Feb 28    Feb 28    Feb 29    Feb 28
                          1997      1998      1999      2000      2001

Consolidated
Statements of
Operations Data:
Revenue                    4,088         -          -         -          -
Operating
Expenses                 596,000    19,798    899,984  9,943,000   1,329,118
Other income
(loss), net                 (360)        -    155,453   (437,383)   (170,854)
Net loss                (592,272)  (19,798)  (744,531)(10,380,383) 1,158,264
Net loss per
common share -
basic and diluted          (0.04)    (0.13)     (2.37)     (2.23)      (0.08)
Weighted average
number of common
shares outstanding       156,115   156,115    314,737  4,661,865   15,206,963

Consolidated
Balance Sheet
Data
(at end of period):
Working capital
(deficit)                225,411  (136,543)  (753,156)   628,467     (36,154)
Total assets             267,351   266,631    649,642  1,120,589     814,329
Total liabilities        377,703   361,780    755,203    199,330     353,834
Stockholders'
equity (deficit)        (110,352)  (95,149)  (105,561)   921,259     460,495

The consolidated financial statements as of February 28, 1997,
February 28, 1998, February 28, 1999, February 29, 2000, and
February 28, 2001, and the reports thereon are included
elsewhere in this report.  The consolidated selected data should
be read in conjunction with the consolidated financial
statements for the years indicated, the related notes, and the
independent auditors' reports, which contain an explanatory
paragraph that states that our recurring losses from operations
and net capital deficiency raise substantial doubt about our
ability to continue as a going concern, appearing elsewhere in
this report.  The consolidated financial statements do not
include any adjustments that might result from the outcome of
that uncertainty.  The following data should be read in
conjunction with the "Plan of Operation" and our consolidated
financial statements and notes thereto included elsewhere in
this report.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Overview

We are a development stage company that plans to provide
wireless Internet deployment services  to end users of a wide
variety of hand-held personal digital assistants, or PDAs.  Our
company was organized in June 1971 under the laws of the state
of New York under the name The Bolton Group, Ltd.  Our company
engaged in various businesses and underwent several name changes
between 1971 and 1994, when we changed our name to Titan
Resources, Inc.  Between June 1994 and 1997, as Titan Resources,
we owned and operated an industrial mining and sales operation
and other oil interests through our subsidiary American Monarch
Energy Corp.  Beginning in March 1997 and continuing to March
1998, we had no assets or operations In March 1998, we entered
into an asset purchase agreement with Mobilelink Communications,
for the rights and title to all of Mobilelink's intellectual
property, consisting of software and other intangibles, in
exchange for 220,000 shares of our company and 5% of the gross
sales of licenses of the intellectual property (which was to be
paid to Affiliated Resources Corporation, from which Mobilelink
originally purchased the intellectual property).  We formed a
subsidiary, Titan Wireless, Inc., in March 1998 and immediately
placed all of the acquired intellectual property from Mobilelink
into the subsidiary in exchange for 100% of the issued stock of
the subsidiary.  We own 100% of the issued and outstanding stock
of Titan Wireless, Inc.

We have been in the development stage since we purchased
the assets of Mobilelink in March 1998.  During October 1999 we
acquired all the capital stock of PalmWorks, Inc., a non-
operating privately held Nevada corporation pursuant to a stock-
for-stock acquisition.  Since that time, we have reincorporated
our company in Nevada, and have changed our name to Zydant
Corporation in an effort to further distinguish our company from
our competitors.  During fiscal 2000, we determined that our
investment in the intellectual property of Mobilelink was a non-
viable asset with no future benefits to our company, and we
wrote-off that investment resulting in a loss of $440,000. We
have developed our own patent pending software technology for
the deployment of online applications.  We plan to offer our
deployment solution service on a subscription basis.

During November 1999, through the settlement of a lawsuit
involving Titan Resources, we acquired an undivided 15% working
interest in petroleum exploration permit PEP38721 covering
approximately 29,000 acres of the Taranaki Basin on the North
Island of New Zealand.  GEL Exploration of Houston, Texas is the
operator of the permit.  Exploration work including a drill and
sidetrack began in August of 2000.  There were some gas and oil
finds in the exploration drilling completed between August and
November of 2000. Our company has invested approximately $497,
000 in this asset during fiscal year ending February 28, 2001.
During May 2000, we issued a $300,000 note payable to Northwest
Capital Partners for working capital purposes and we used this
capital to support our 15% working interest in permit PEP38721,
these funds were used for the first exploration drill, Crusaders
1.  The note does not bear interest and is due February 2002. In
August of 2000 our company invested $97,000 of its working
capital to support our 15% working interest in permit PEP38721,
these funds were used for an exploration sidetrack drill,
Crusaders 1A.  GEL Exploration has shipped much of their
drilling equipment from Houston, TX  to New Zealand to help
minimize the costs of exploration, and has re-engineered
previous seismic as well as performed new seismic on much of the
permit area.

The company has not yet realized any return value from this
asset.  Although the company recognizes the potential for future
value from this asset, it recognizes that any further investment
in this asset would not support the company's business plan.
Therefore, the company is currently pursuing the sale of this
asset.  The company does not intend to invest additional capital
in this asset and does not intend to pursue further this type of
business activity.

Fiscal Year Ended February 28, 2001 Compared with Fiscal Year
Ended February 29, 2000.

Our company realized substantial increases in total
operating costs over the last two years, resulting in net losses
of approximately $1,158,264 for the year ended February 28,
2001, compared to $10,380,000 for the year ended February 29,
2000.  During year ended February 29, 2000 we  realized $9.1
million  For year ended February 28, 2001 our total operating
costs were approximately $1,329,118compared to $9,943,000 for
year ended February 29, 2000.  Operating costs were
substantially higher in year ended February 29, 2000 over
February 28, 2001 primarily due to consulting fees of
approximately $9,113,000.  These fees arose from our consulting
agreement with Northwest Capital Partners under which we paid
Northwest non-cash compensation upon Northwest achieving certain
financial milestones for our company.  Accordingly, the
consulting fees recorded relate primarily to the value of (a)
1,500,000 shares of common stock issued in connection with our
company becoming a publicly traded company, and (b) options to
purchase 1,000,000 shares of common stock at an exercise price
of $0.01 issued in connection with our company obtaining a
market capitalization of $100 million.  The shares of common
stock were determined to have a value of approximately $7.0
million and the value of the options were determined to have a
value of approximately $1.8 million.  The increase in operating
expenses over the two year period ending February 28, 2001 also
relates to costs realized in the building of company
infrastructure for wireless Internet application deployment
services.  These costs include an increase in overall payroll
compensation and related taxes of approximately $323,863 and an
increase in professional fees of approximately $66,096 for the
year ended February 28, 2001, compared with the year ended
February 29, 2000.

During the fiscal year ended February 28, 2001 we reported
other income of approximately $171,000 and for year ended
February 29, 2000 we reported other income (loss) approximating
$(438,000).  For the year ended February 29, 20001, other (loss)
of approximately ($438,000) was primarily due to the write-off
of $440,000 relating to intellectual property that we acquired
from Mobilelink in March 1998, which we ultimately determined
had no value to our company.

Liquidity and Capital Resources

Liquidity is a measure of a company's ability to meet
potential cash requirements, including ongoing commitments to
research and development activities and for general purposes.
Our cash for research and development and general operating
expenses is primarily obtained through cash flows from financing
activities.

We have significant ongoing liquidity needs to support our
existing business and research and development activities.  Our
liquidity is actively managed on a periodic basis and our
financial status, including our liquidity, is reviewed
periodically by our management.  This process is intended to
ensure the maintenance of sufficient funds to meet the needs of
our company.

During the fiscal year ended February 28, 2001, we realized
a net (loss) of approximately ($1,158,264).  We used
approximately $1,329,100 of cash in operating activities.  For
year ended February 29, 2000 we reported approximately
$9,943,000  in operating expenses, primarily due to our net loss
offset by approximately $9,202,000 of expenses paid with common
stock, and the non-cash loss on investment of $440,000 related
to the write-off of the intellectual property acquired from
Mobilelink discussed above.

Capital expenses for fiscal year ended February 28, 2001
were approximately $413,812, compared to approximately $110,700
for fiscal year ended February 29, 2000.  The increase in
Capital expenses was primarily related to the purchase of
computer hardware, software, and office furniture, the majority
of which was acquired during fiscal year ended February 28,
2001.

During February 2001, we raised approximately $650,000
thousand from the issuance of 265,000 shares of common stock.
This funding was used as working capital to support our
operations.

On February 28, 2001, we had a cash balance of
approximately $166,032 and working capital of approximately
$118,000.

During April 2000, we secured a revolving note with
Northwest Capital Partners for $1.0 million. The revolving note
bears interest at the prime rate, with interest payable
quarterly, and matures in January 2002.  The revolving note is
secured by all of our tangible and intangible assets.  We may
prepay the note from time to time without penalty.  No amounts
are outstanding under the revolving note. We not been able to
draw on this note from Northwest Capital Partners due to the
lack of availability of funds.

We plan to raise equity capital through private placements
of our common stock in the near future.  We believe that
approximately $5.0 million of operating capital should satisfy
our need for capital during the next 12 months based upon our
current operating capital requirements and business plan.  This
additional capital should be sufficient to allow us to expand
our operations and execute our business plan.

We believe that the successful completion of the equity
financing described above will provide us with sufficient
capital needed to further develop our infrastructure and support
our operations over the next 12 months.  We have forecasted
approximately $4.9 million in operating expenses through
September 2001.  These operating expenses include

approximately $1.1 million in payroll expense related to
our increased staffing requirements;

approximately $1.0 million for legal, professional, and
insurance expenses related to our company becoming a
"reporting company;" and

approximately $2.0 million in marketing and advertising
related to our introductory marketing campaign.

We anticipate incurring substantial losses in the future
and will likely require significant additional financing in the
future in order to satisfy our cash requirements.  We intend to
raise additional capital through debt and equity financings to
fund our continued growth.  In order for us to execute our
business plan and realize revenue, we expect to incur a
substantial increase in our operating expenses.  Our need for
additional capital to finance our operations and growth will be
greater should, among other things, our revenue or expense
estimates prove to be incorrect, particularly if we do not find
additional sources of capital.  If we do not find additional
sources of capital, we may be required to reduce the scope of
our business activities until other financing can be obtained.
We cannot predict the timing or amount of our capital
requirements at this time.  We may not be able to obtain
additional financing in sufficient amounts or on acceptable
terms when needed, which could adversely affect our operating
results, prospects and projections.

Employees

As of June 13, 2001, we had 5 full-time employees,
including our two executive officers. Three of our employees are
involved in technical development services and network
administration and two are involved in administration, and
finance.  None of our employees are covered by any collective
bargaining agreements with us, and we believe that the
relationship with our employees is good.

Forward Looking Statements

The foregoing management's discussion and analysis of
financial condition and results of operations, and other
portions of this document, contain "forward looking statements"
within the meaning of Rule 175 under the Securities Act of 1933,
as amended, and Rule 3b-6 under the Securities Act of 1934, as
amended, including statements regarding, among other items, the
Registrant's business strategies, continued growth in the
Registrant's markets, projections, and anticipated trends in the
Registrant's business and the industry in which it operates.
The words "believe," "expect," "anticipate," "intends,"
"forecast," "project," and similar expressions identify forward-
looking statements.  These forward-looking statements are based
largely on the Registrant's expectations and are subject to a
number of risks and uncertainties, certain of which are beyond
the Registrant's control.  The Registrant cautions that these
statements are further qualified by important factors that could
cause actual results to differ materially from those in the
forward looking statements, including, among others, the
following: reduced or lack of increase in demand for the
Registrant's products, competitive pricing pressures, changes in
the market price of ingredients used in the Registrant's
products and the level of expenses incurred in the Registrant's
operations.  In light of these risks and uncertainties, there
can be no assurance that the forward-looking information
contained herein will in fact transpire or prove to be accurate.
The Registrant disclaims any intent or obligation to update
"forward looking statements."

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Reference is made to the financial statements, the notes
thereto, and the report thereon, commencing after the signature
page.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE

Effective in April 2000, the independent accountants who
were previously engaged as the principal accountants to audit
our financial statements, Bob Stephens & Associates, P.C., was
dismissed.  This dismissal was approved by the Board of
Directors.  This accountants' report on the financial statements
for the fiscal years ended February 28, 1998 and 1999 neither
contained an adverse opinion or a disclaimer of opinion, nor was
qualified or modified as to uncertainty, audit scope, or
accounting principles; however, the reports did state that our
losses and accumulated deficit raise substantial doubts about
our ability to continue as a going concern.

During our two most recent fiscal years and any subsequent
interim period preceding such dismissal, there were no
disagreements with the former accountants on any matter of
accounting principles or practices, financial statement
disclosure, or auditing scope or procedure.  In addition, there
were no "reportable events" as described in Item
304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred
within our two most recent fiscal years and the subsequent
interim period preceding the former accountants' resignation.

In April 2000, the firm of L.L. Bradford & Company has been
engaged to serve as the new principal accountants to audit the
Registrant's financial statements.  The decision to retain this
firm was approved by the Board of Directors.  During the
Registrant's two most recent fiscal years, and the subsequent
interim period prior to engaging those accountants, neither the
Registrant (nor someone on its behalf) consulted the newly
engaged accountants regarding any matter.

PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Directors and Executive Officers

The names, ages, and respective positions of our directors
and executive officers are set forth below.  The directors named
below will serve until the next annual meeting of the
stockholders or until their successors are duly elected and have
qualified.  Directors are elected  for a  one-year  term  at
the  annual stockholders'  meeting.  Officers will hold their
positions at the will of the board of directors, absent any
employment  agreement, of which none currently exist or are
contemplated.  There are no arrangements, agreements or
understandings between non-management shareholders and
management under which non-management shareholders may directly
or indirectly participate in or influence the management of our
affairs.  We have no other promoters or control persons. There
are no legal proceedings involving our officers and directors.

James T. Voss, Chairman of the Board/CEO/Director.

Mr. Voss, age 52, has served as our Chairman of the Board,
Chief Executive Officer, and President since October 1999.  From
July 1998 until October 1999, Mr. Voss served as the Senior
Systems Engineer of our company.  Mr. Voss has over 25 years of
systems and software experience.  Prior to joining our company,
Mr. Voss served as an engineering consultant for software
systems for Contact Network, Inc. from November 1997 until April
1998.  Mr. Voss served as the Chief Technology Officer for
SunTech Processing Systems from August 1997 until November 1997.
Mr. Voss served as the Senior Systems Analyst for Computer
Language Research, Inc. from September 1993 until August 1997.
Mr. Voss has also served in various positions with Digital Image
Systems Company, AT&T, and NEC America.

Ellen S. Eckler, Executive Vice President/CFO/Secretary.

Ms. Eckler, age 47, has served as our Executive Vice
President, Chief Financial Officer, and Secretary and as a
director since October 1999.  Ms. Eckler served as our Chief
Accountant between April 1999 and October 1999.  Ms. Eckler has
over 20 years of experience working with various Silicon Valley
technology companies.  Prior to joining our company, Ms. Eckler
was the President and owner of SkyLonda Total Business Solutions
from January 1996 to July 1998.  Ms. Eckler served as Vice
President of Marketing for IBM from January 1994 until January
1996.  Ms. Eckler has also served in various senior management
positions with the County of San Mateo, Redwood City,
California, Intel Corp., FileNet, and Teledyne.

Brent Nelson, Director.

Mr. Nelson, age 40, has served as a director of our company
since June 1994, when he became a director of Titan Resources,
Inc., our predecessor.  Mr. Nelson has more than 15 years of
experience in investment banking and corporate finance
establishing, acquiring, and selling a range of companies in the
businesses of real estate development, natural resources, and
import/export trade.  Mr. Nelson founded Pan Pacific Containers
in 1995 and founded and has been the Managing Director of
Northwest Capital Partners, LLC, a Bellevue, Washington based
venture capital company since 1995.  Mr. Nelson also serves on
the board of directors of CybeRecord, Inc., Eclipse
Entertainment Group, Inc., Interactive Objects, Inc., Mobile PET
Systems, Inc., and Polar Cargo Systems, Inc., all of which are
public companies.  Mr. Nelson advises our company with respect
to financial and corporate affairs.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934
requires the Registrant's directors,  certain officers and
persons holding 10% or more of the Registrant's common stock to
file reports regarding their ownership and regarding their
acquisitions and dispositions of the Registrant's common stock
with the Securities and Exchange Commission.  Such persons are
required by SEC regulations to furnish the Registrant with
copies of all Section 16(a) forms they file.

Based solely upon a review of Forms 3 and 4 and amendments
thereto furnished to the registrant under Rule 16a-3(d) during
fiscal 2000, Forms 5 with respect to fiscal 2000, and certain
written representations from executive officers and directors,
we are unaware that any required reports were not timely filed.

ITEM 11.  EXECUTIVE COMPENSATION

Summary of Cash and Other Compensation

The following table sets forth certain information
concerning the compensation for the fiscal years ended February
28, 1999, February 29, 2000, and February 28, 2001 earned by our
Chief Executive Officer, who was the only executive officer
whose cash salary and bonus exceeded $100,000 during fiscal
2000.  The following table also sets forth certain information
concerning our interim Chief Executive Officer during fiscal 2000:


                    Summary Compensation Table
                                                Long Term Compensation
                                                       Awards
Name and                                          Restricted   Securities
Principal       Fiscal  Salary    Bonus($)        Stock        Underlying
Position(1)     Year    ($)(2)                    Award        Options
Principal
Position (1)

James T. Voss   2001  $114,000          -                 -     250,000
Chief Executive 2000   105,760    $4,500(5)               -     400,000
Officer         1999    31,528(5)       -                 -           -
and President(3)

Brent Nelson    2001         -        700                 -     300,000
Interim Chief   2000         -      3,500(5)    1,500,000(9) 1,200,000(10)
Executive       1999         -          -               -            -
Officer (8)

Ellen
Eckler..........2001   114,000          -               -      250,000
Executive Vice  2000   111,000      4,500(5)            -      500,000
President       1999    30,216(7)       -               -            -
And CFO (4)

(1)  We consider Mr. Voss and Ms. Eckler to be our executive
officers.  Ms. Eckler's cash salary and bonus did not
exceed $100,000 during fiscal 2001.

(2)  Mr. Voss also received certain perquisites, the value of
which did not exceed 10% of their salary during fiscal
2001.

(3)  Mr. Voss became our President and Chief Executive Officer
beginning in October 1999.  Mr. Voss served as the Senior
Systems Engineer of our company between July 1998 and
October 1999.

(4)  Ms. Eckler became our Executive Vice President and Chief
Financial Officer beginning in October 1999.  Ms. Eckler
served as Chief Accountant of our company between April of
1999 and October of 1999.

(5)  Mr. Voss, Mr. Nelson and Ms. Eckler received a laptop as a
bonus in January of 2000.  Mr. Nelson received a wireless
Palm V as a bonus in June of 2000.

(6)  Amounts earned by Mr. Voss during fiscal 1999 are based on
an annual salary of $75,000.

(7)  Amounts earned by Ms. Eckler during fiscal 1999 are based
on an annual salary of $75,000.

(8)  Mr. Nelson served as our interim Chief Executive Officer
from January 1999 to October 1999. Mr. Nelson did not
receive any cash compensation during his service as interim
Chief Executive Officer of our company.

(9)  Mr. Nelson is the Managing Director of Northwest Capital
Partners, LLC.  After his term as our interim Chief
Executive Officer, we entered into a three-year consulting
agreement with Northwest to advise us financially and
assist us in arranging financing for our business
operations.  Northwest achieved certain milestones related
to services to our company, and pursuant to the agreement
we issued to Northwest 1,500,000 shares of our common
stock.  See "Certain Transactions - Consulting Agreement."

(10)  Pursuant to our consulting agreement with Northwest, we
granted Northwest options to purchase 1,000,000 shares of
our common stock at an exercise price of $0.01 per share.
The options become exercisable at any time upon our market
capitalization achieving a value of at least $100 million.
During January 2000, this milestone was met and Northwest
exercised all 1,000,000 options.  See "Certain Transactions
- Consulting Agreement." Amount also represents options to
purchase 100,000 shares of common stock at an exercise
price of $1.00 per share and 100,000 shares of common stock
at an exercise price of $2.50 per share.  Mr. Nelson was
granted these options for his service as a director of our company.

Option Grants

The following table provides information on stock options
granted to the officers listed during the fiscal year ended
February 28, 2001:

                  OPTION GRANTS IN LAST FISCAL YEAR

            Number of    % of total                               Potential
            securities   options                                  Realizable
            underlying   granted to    Exercise   Market  Expira  Value at
            options      employees in  price      Price   ion     Assumed
                                       ($/SH)     on the  Date    Ann Rates
Name        granted (#)  fiscal year              date of         of Stock
                                                  Grant           Price
                                                                  Apprecia
                                                                  tion
                                                                  For
                                                                  Optional
                                                                  Term (1)
                                                                  5%     10%

James T.
Voss       100,000             15%      $  .37     $ .37  01/17/05 $1,850 3,700
           150,000             23%      $  .15     $ .37  01/17/05 $1,125 2,250

Brent
Nelson     100,000             15%      $  .37     $ .37  01/17/05 $1,850 3,700

Ellen
Eckler..   100,000             15%      $  .37     $ .37  01/17/05 $1,850 3,700
           150,000             23%      $  .15     $ .37  01/17/05 $1,125 2,250

(1)  Potential gains are net of the exercise price, but before
taxes associated with the exercise.  The amounts represent
hypothetical gains that could be achieved for the
respective options if exercised at the end of the option
term.  The assumed 5% and 10% rates of stock price
appreciation are provided in accordance with the rules of
the Securities and Exchange Commission and do not represent
our estimate or projection of the future price of our
common stock.  Actual gains, if any, on stock option
exercises will depend upon the future market prices of our
common stock.

Year-end Option Values

The following table provides information regarding options
exercised in the last fiscal year by the officers listed and the
value of each listed officer's unexercised options as of
February 28, 2001:

          Aggregated Option Exercises in Last Fiscal Year and
                 Option Values As Of February 29, 2000

         AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
                    AND FY-END OPTION/SAR VALUES

            Shares acquired  Value       Number of           Value of
            On Exercise      Realized    securities          unexercised
                               ($)       underlying          in-the-money
                                         Unexercised         options at
                                         options             FY-end ($)(1)
                                         at FY-end(#)        Exer   Unexer
Name                                     Exer    Unexer

James T.
Voss              -            -         650,000           $180,000

Brent
Nelson            -            -         300,000           $ 90,000

Ellen S.
Eckler            -            -         750,000           $210,000

(1)  Calculated based upon the closing price of our common stock
as quoted on the OTCBB on February 28, 2001 of $0.30 per
share.

Recent Grants of Stock Options

Not Applicable.

Employment Arrangements

We currently are a party to employment agreements with
James T. Voss and Ellen S. Eckler.  In addition to the
provisions of the individual employment agreements as described
below, the employment agreements generally require us to

reimburse each executive for all travel, entertainment, and
other ordinary and necessary expenses incurred in connection
with our business and their duties under their respective
employment agreements;

indemnify each executive from certain claims arising out of
his or her employment that may be asserted against him or her
by third parties; and

provide other benefit plans that we make generally available
to all of our officers.

Both employment agreements have a term through October 28,
2001, and each agreement automatically renews for successive
one-year terms unless either party terminates by giving the
other party at least 30 days' written notice.  Mr. Voss's
employment agreement provides for him to serve as our Chief
Executive Officer and President.  The employment agreement
provides for Mr. Voss to receive an annual salary of $114,000,
subject to adjustment from time to time by our Board of
Directors.  Ms. Eckler's employment agreement provides for her
to serve as our Executive Vice President and Chief Financial
Officer.  The employment agreement provides for Ms. Eckler to
receive an annual salary of $114,000, subject to adjustment from
time to time by our Board of Directors.  In addition, the
employment agreements provide that Mr. Voss and Ms. Eckler will
be eligible to receive discretionary bonuses or other
compensation in amounts determined by our Board of Directors.

If we terminate the employment agreement "for cause," as
defined in the agreement, or if the executive terminates the
employment agreement without "good reason," as defined in the
agreement, the executive will not receive any further
compensation under the employment agreement and any unvested
options will be cancelled.  If we terminate the executive's
employment other than for cause or if the executive terminates
the agreement for good reason, the employment agreement requires
us to pay the executive one year's salary.

The company does not yet have an Employee Stock Purchase
Plan, however, the employment agreements also provide each
executive with the option to purchase additional shares of our
common stock at the end of each quarter, so long as these
purchases not to exceed 25% of the executive's salary for that
quarter.  The executive may purchase these shares at a price
equal to 15% below the lowest fair market value of our common
stock during the quarter ended.  In the event our company is
acquired, any common stock or options that were granted to Mr.
Voss or Ms. Eckler that remain unvested as of that date will
become fully vested and exercisable.

The employment agreements also prohibit the executives from
disclosing confidential information obtained while employed by
us.  Our executive officers and other key personnel are eligible
to receive stock options under our 2000 Stock Option Plan.
Compensation Committee Interlocks and Insider Participation
Our board of directors historically has made all
compensation decisions relating to our executive officers. We
expect to appoint a compensation committee that will consist
primarily of non-employee members of our board of directors.
Once formed, the compensation committee will make all
compensation decisions regarding our executive officers.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information
regarding the shares of our common stock beneficially owned as
of June 13, 2001 by (i) each director; (ii) the executive
officers set forth in the Summary Compensation Table under the
section entitled "Executive Compensation;" (iii) all of our
directors and executive officers as a group; and (iv) each other
person who is known by us to beneficially own or to exercise
voting or dispositive control over more than 5% of our common
stock.

Name and Address of Beneficial Owner (1)      Number of Shares   Approximate
                                              and Nature of      Percentage
                                              Beneficial         of
                                              Ownership(3)       Outstanding
                                                                 Shares(3)

James T. Voss                                 3,075,500(4)         20.0%
Ellen S. Eckler                               2,470,000(5)         16.3%
Brent Nelson                                  3,100,000(6)         20.0%
Directors and executive officers as a
group (3 persons)                                                  56.3%

Non-management 5% Stockholders

Northwest Capital Partners, LLC(7)            2,550,000            17.1%

*  Less than one percent.

(1)  Beneficial ownership information is based on
information provided to us, and the beneficial owner has no
obligation to inform us of or otherwise report any changes
in beneficial ownership.  Except as indicated, and subject
to community property laws when applicable, the persons
named in the table above have sole voting and investment
power with respect to all shares of common stock shown as
beneficially owned by them.  Each director or officer may
be reached through our offices at 2525 South Shore
Boulevard, Suite 309, League City, Texas, 77573.

(2)  The percentages shown are calculated based upon
15,206,936 shares of common stock outstanding on June 13,
2001.  The numbers and percentages shown include the shares
of common stock actually owned as of June 13, 2001 and the
shares of common stock that the person or group had the
right to acquire within 60 days of June 13, 2001.  In
calculating the percentage of ownership, all shares of
common stock that the identified person or group had the
right to acquire within 60 days of June 13, 2001 upon the
exercise of options and warrants are deemed to be
outstanding for the purpose of computing the percentage of
the shares of common stock owned by the person or group,
but are not deemed to be outstanding for the purpose of
computing the percentage of the shares of common stock
owned by any other person.

(3)  Includes vested options.

(4)  Includes vested options to purchase 650,000 shares of
common stock.

(5)  Includes vested options to purchase 750,000 shares of
common stock.

(6)  Includes vested options to purchase 300,000 shares of
common stock.

(7)  Mr. Nelson is a control person of Northwest Capital
Partners, LLC.  The amount listed as shares beneficially
owned by Mr. Nelson includes vested options to purchase
300,000 shares of common stock and 2,500,000 shares held by
Northwest.  Amounts also include 15,000 shares of common
stock held in trust for the benefit of Mr. Nelson's
children. Mr. Nelson has agreed to sell to three of his
business associates up to an aggregate of 1,100,000 shares
of common stock at a price of $0.01 per share at any time
prior to November 2001.  The address of Northwest Capital
Partners LLC is 10900 8th Street, Suite 900, Bellevue,
Washington, 98004.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Consulting Agreement

Brent Nelson, a director of our company, is the Managing
Director of Northwest Capital Partners, LLC. During September
1999, we entered into a three-year consulting agreement under
which Northwest agreed to advise us financially and assist us in
arranging financing for our business operations.  Northwest has
a right of first refusal to consult with us regarding financings
throughout the duration of its term.  The consulting agreement
provides for payment of monthly consulting fees to Northwest in
the amount of $5,000 per month.  The fee provision is subject to
extension for 36 months upon the closing of certain financing
transactions set forth in the consulting agreement.  In
addition, the consulting agreement required us to issue to
Northwest 1,500,000 shares of our common stock if Northwest
achieved certain milestones related to locating $1.0 million of
financing for our company or upon us becoming a public company.
Northwest met all milestones, and has been issued all of those
shares.  Pursuant to the agreement, we granted Northwest options
to purchase 1,000,000 shares of our common stock at an exercise
price of $0.01 per share.  The options became exercisable upon
our market capitalization achieving a value of at least $100
million.  During January 2000, this milestone was met and
Northwest exercised all 1,000,000 options.  We granted certain
"piggy-back" registration rights with respect to the shares of
common stock underlying the options.  Under these registration
rights, Northwest will have the right to register these shares
if we propose to register any securities under the securities
laws.  Northwest's obligations under the consulting agreement
are subject to certain conditions to be performed by us,
including refraining from modifying our capital structure
without Northwest's prior written consent.  In addition, the
consulting agreement provides that for three years following the
date our common stock began trading on the OTCBB in September
1999, if we propose an offering of securities or any of our
officers or directors who hold 5% or more of our common stock
desire to transfer their shares of our common stock to a third party:

the first right of refusal for the shares will belong to
our executive officers;

the second right of refusal for the shares will belong to
us or the other executive officers and directors who own at
least 5% of our common stock, as applicable;

the third right of refusal for the shares will belong to
Northwest; and

the fourth right of refusal for the shares will belong to
the other non-selling executive officers and directors who
own at least 5% of our common stock.

In addition, the consulting agreement provides that our
officers and directors will use their "best efforts" to cause
each holder of at least 5% of our common stock to enter into a
lock-up agreement with Northwest whereby the holder will not
sell any shares on the OTCBB for one year after our common stock
began trading on the OTCBB in September 1999.  Any lock-up
agreement, however, will allow each holder to sell up to 1,000
shares every three months beginning in March 2000.

The consulting agreement also provides that Northwest is
entitled to nominate a director to our board of directors for a
period of five years.  Northwest has nominated Mr. Nelson to the board.

We or Northwest may terminate the consulting agreement upon
written notice to the other party if:

the terminating party reasonably determines that the other
party or any of its directors, officers, or controlling
stockholders have engaged in any unlawful, wrongful, or
fraudulent act against us or our stockholders; or

the terminating party determines that any material fact
concerning the other party represented is misstated or
untrue or that the other party has intentionally failed to
provide the terminating party with material facts
concerning the other party.

Either party may terminate the consulting agreement at any
time in the event of

war;

any material adverse change in our business;

any proceeding against us or Northwest where an unfavorable
decision would have a material adverse effect on our
business; or

adverse market conditions of which event the terminating
party may determine in its sole discretion.

If Northwest terminates the agreement based on any of the above
factors, Northwest will be entitled to accrued fees, expense
reimbursements, and shares of common stock otherwise payable
under the agreement.

Notes payable

From time to time, Northwest has provided us with working
capital for our operations evidenced by notes payable to
Northwest.  Northwest issued to us notes payable for $101,000
during fiscal 1999, and $200,075 during fiscal 2000.  We repaid
Northwest $151,820 during fiscal 2000.  During October 1999,
Northwest agreed to convert $143,575 of principal amount of the
notes into 300,000 shares of common stock.  Northwest issued to
us notes payable for $300,00 during April of 2000.  As of June
13, 2001, we owed Northwest principal on the notes payable of
$305,680.  The notes do not bear interest, are payable in full
by February 28, 2002 and we are not required to make periodic
payments on the notes.

During April 2000, Northwest made available to us $1.0
million to be used for operating expenses and other working
capital pursuant to a revolving note payable.  The revolving
note bears interest at the prime rate, with interest payable
quarterly, and matures in January 2002.  The revolving note is
secured by all of our tangible and intangible assets.  We may
prepay the notes from time to time without penalty.  No amounts
are outstanding under the revolving note.  We have not been able
to draw on this note from Northwest Capital Partners due to lack
of available capital.

PART IV

ITEM 14.  EXHIBITS, REPORTS ON FORM 8-K, AND INDEX TO
CONSOLIDATED FINANCIAL STATEMENTS.

Exhibits.

Exhibits included or incorporated by reference in this
document are set forth in the Exhibit Index.

Reports on Form 8-K.

No reports on Form 8-K were filed during the last quarter
of the fiscal year covered by this report.

Index to Consolidated Financial Statements.                          Page

Report of Independent Certified Public Accountants                     42

Consolidated Balance Sheets as of February 28, 2001
and February 29, 2000                                                  43

Consolidated Statements of Operations for the Years
Ended February 28, 2001, February 29, 2000, and
February 28, 1999, and for the Period From
March 1, 1998 (inception) to February 28, 2001                         44

Consolidated Statements of Changes in Stockholders'
Equity for the Years Ended February 28, 2001,
February 29, 2000, and February 28, 1999                               45

Consolidated Statements of Cash Flows for the
Years Ended February 28, 2001, February 29, 2000,
and February 28, 1999, and for the Period From
March 1, 1998 (inception) to February 28, 2001                         47

Notes to Consolidated Financial Statements                             49

                                 SIGNATURES

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

Date: June 25, 2001                          ZYDANT CORPORATION

                                             By: /s/  James T. Voss
                                             James T. Voss, Chairman of
                                             the Board of Directors, Chief
                                             Executive Officer, and  President

In accordance with 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 date indicated.

Signature                          Title                             Date

/s/  James T. Voss             Chairman of the Board of           June 25, 2001
James T. Voss                  Directors, Chief Executive
                               Officer, and President
                              (Principal Executive Officer)

/s/ Ellen S. Eckler            Executive Vice President,          June 25, 2001
Ellen S. Eckler                Chief Financial Officer,
                               Secretary, and Director
                              (Principal Accounting and
                               Financial Officer)

/s/  Brent Nelson              Director                           June 25, 2001
Brent Nelson


L.L. Bradford & Company, LLC
Certified Public Accountants & Consultants
2901 El Camino Avenue, Suite 105
Las Vegas, Nevada 89102
(702) 735-5030  facsimile (702) 735-4854

                REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Board of Directors
Zydant Corporation (formerly PalmWorks, Inc.) (A Development
Stage Company)
Houston, Texas

We have audited the accompanying consolidated balance sheets of
Zydant Corporation (formerly PalmWorks, Inc.) (A Development
Stage Company) as of February 28, 2001 and February 29, 2000,
and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended February
28, 2001, February 29, 2000 and for the period from March 1,
1998 through February 28, 2001.  These consolidated financial
statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these
consolidated financial statements based on our audit.  The
consolidated financial statements of Zydant Corporation
(formerly PalmWorks, Inc.) (A Development Stage Company) for the
year ended February 28, 1999 were audited by other auditors
whose report dated December 20, 1999, expressed an unqualified
opinion on those statements.

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

In our opinion, the consolidated financial statements referred
to above present fairly, in all material respects, the financial
position of Zydant Corporation (formerly PalmWorks, Inc.) (A
Development Stage Company) as of February 28, 2001 and February
29, 2000, and the results of its activities and cash flows for
the years then ended in conformity with accounting principles
generally accepted in the United States.

The accompanying consolidated financial statements have been
prepared assuming that the Company will continue as a going
concern.  As discussed in Note 10 to the consolidated financial
statements, the Company has not commenced its planned operations
and has suffered recurring losses with no revenues from
operations, all of which raises substantial doubt about its
ability to continue as a going concern.  Management's plans in
regards to these matters are also described in Note 10.  The
consolidated financial statements do not include any adjustments
that might result from the outcome of this uncertainty.

/s/ L.L. Bradford & Company, LLC
L.L. Bradford & Company, LLC
May 25, 2001
Las Vegas, Nevada

                               ZYDANT CORPORATION
                            (formerly PalmWorks, Inc.)
                           (A Development Stage Company)
                           CONSOLIDATED BALANCE SHEETS

                                                February 28     February 29
                                                   2001             2000

                                      ASSETS

Current assets
Cash                                            $   166,032         817,797
Due from related party, net                               -          10,000
Total current assets                                166,032         827,797

Fixed assets, net                                    94,270         137,792

Other asset                                         554,027         155,000

Total assets                                        814,329       1,120,589

                   LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
Accounts payable and accrued liabilities             48,154         193,650
Due to related party                                305,680           5,680
Total current liabilities                           353,834         199,330

Total liabilities                                   353,834         199,330

Commitments and contingencies                             -               -

Stockholders' equity
Common stock, $0.001 par value;
25,000,000 shares authorized, 15,196,936 and
14,900,031 issued and outstanding, for fiscal
year 2001 and 2000, respectively                    15,197           14,900
Additional paid-in capital                      13,679,083       12,847,735
Accumulated deficit prior to the
development stage                                 (816,462)        (816,462)
Accumulated deficit during the
development stage                              (12,417,323)     (11,124,914)
Total stockholders' equity                         460,495          921,259

Total liabilities and stockholders' equity         814,329        1,120,589

See Accompanying Notes to Consolidated Financial Statements

                                ZYDANT CORPORATION
                           (formerly PalmWorks, Inc.)
                         (A Development Stage Company)
                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                                                    March 1
                                                                    1998
                                                                    (Inception)
                                  For the year ended                through
                             Feb 28       Feb 28      Feb 28        Feb 28
                              2001         2000        1999         2001

Revenue                             -              -           -            -

Operating expenses
Professional fees             382,089         315,993    168,702      866,784
Wages and payroll taxes       672,807         252,194          -      925,001
Consulting and
contract labor                 37,395       9,112,700    289,169    9,439,264
Depreciation                   57,988          25,563     13,100       96,651
Interest expense                  489           7,755     14,500       22,744
Advertising                    18,901           4,070     76,685       99,656
General and
Administrative                293,594         224,725    337,828      856,147
Total operating expenses    1,463,263       9,943,000    899,984   12,306,247

Net loss from operations   (1,463,263)     (9,943,000)  (899,984) (12,306,247)

Other income (expense)
Forgiveness of debt                 -               -    306,019      306,019
Related party bad debts       (10,000)              -   (169,172)    (179,172)
Interest income                27,925           2,617          -       30,542
Gain (loss) on sale of
fixed assets                     (319)              -     18,606       18,287
Loss on investments                 -        (440,000)         -     (440,000)
Other income                  153,248               -          -      153,248
Total other income (expense)  170,854        (437,383)   155,453     (111,076)

Net loss before
provision for income taxes (1,292,409)    (10,380,383)  (744,531) (12,417,323)

Provision for income
Taxes                               -               -          -            -

Net loss                   (1,292,409)    (10,380,383)  (744,531) (12,417,323)

Basic and diluted loss
per common share                (0.09)          (2.23)     (2.37)       (1.53)

Basic and diluted
weighted average
Common shares
Outstanding               15,102,955        4,661,865    314,737    8,139,052

See Accompanying Notes to Consolidated Financial Statements

                                ZYDANT CORPORATION
                           (formerly PalmWorks, Inc.)
                         (A Development Stage Company)
               CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

                                                   Accumu     Accumu
                                                   Lated      lated     Total
                                                   Deficit    Deficit   Stock
                       Common Stock      Add'l     Prior      During    holders
                   Number       Amount   Paid in   to the     the       equity
                   Of                    Capital   Develop    Develop
                   Shares                          ment       ment
                                                   Stage      Stage

Balance
February 28 1998   156,115        156    721,157 (816,462)          -  (95,149)


Common stock
issued for
assets, $2.00      220,000        220    439,780        -           -   440,000

Common stock
issued for
cash, $4.46         56,000         56    249,944        -           -   250,000

Common stock
issued for
expenses, $3.70
weighted average
price per share     11,930         12     44,107       -           -    44,119

Net loss                 -          -          -       -    (744,531) (744,531)

Balance
February 28 1999  444,045         444  1,454,988  (816,462) (744,531) (105,561)

Common stock
options
issued for
expenses,
$0.17 weighted
average
price per
option                 -           -   7,221,600        -         -   7,221,600

Common shares
issued for
cash, $1.50    1,200,000       1,200   1,798,800        -         -   1,800,000

Common shares
issued for
acquisition
of
PalmWorks,
Inc. a
Nevada
Corporation
$0.01         3,650,000        3,650     32,850        -          -     36,500

Common shares
issued for
consulting
agreement
$1.18         1,500,000        1,500  1,769,700        -          -   1,771,200

Common stock
issued for
expenses
$1.40
weighted
average price
per share       123,986          124    172,876        -          -     173,000

Common stock
issued
for
principal
payments
on debt
$0.06         6,982,000       6,982     387,921        -          -     394,903

Common stock
options
exercised at
$0.01 per
share         1,000,000       1,000       9,000        -          -      10,000

Net loss           -           -           -        -   (10,380,383)(10,380,383)

Balance
February 29
2000         14,900,031    14,900 12,847,735 (816,462)  (11,124,914)    921,259

Common stock
issued for
cash, $2.26
weighted
average
price
per share       265,000       265    599,735       -             -      600,000

Common stock
issued for
expenses
$3.06
weighted
average price
per share        31,905        32     97,468       -             -       97,500

Common stock
options
issued for
expenses,
$4.22
weighted
average
price per
share                -          -    134,145       -            -       134,145

Net loss             -          -          -       -   (1,292,409)   (1,292,409)

Balance
February 28
2001        15,196,936     15,197 13,679,083 (816,462 (12,417,323)       460,495

See Accompanying Notes to Consolidated Financial Statements

                                  ZYDANT CORPORATION
                              (formerly PalmWorks, Inc.)
                             (A Development Stage Company)
                         CONSOLIDATED STATEMENTS OF CASH FLOWS


                                                                    March 1
                                                                    1998
                                                                    (Inception)
                                  For the year ended                through
                             Feb 28       Feb 28      Feb 28        Feb 28
                              2001         2000        1999         2001

Cash flows from operating
activities:
Net loss                   (1,292,409)  (10,380,383)     (744,531) (12,417,323)
Adjustments to reconcile
net loss to net
cash used by operating
activities:
Common stock and options
issued for expenses          231,645      9,202,300        44,119    9,478,064
(Gain) loss on sale of
equipment                        319              -       (18,606)     (18,287)
Depreciation                  57,988         25,563        13,100       96,651
Related party bad debts       10,000              -       169,172      179,172
Loss on investment                 -        440,000             -      440,000
Forgiveness of debt                -              -      (306,019)    (306,019)
Changes in operating assets
and liabilities:
Decrease in accounts
Receivable                         -              -           304          304
(Increase) decrease in due
from related party                 -        (10,000)            -      (10,000)
Increase (decrease) in
accounts payable
and accrued liabilities     (145,496)        (9,253)      202,903       48,154
Increase (decrease) in due
to related parties           300,000        (96,417)      522,300      725,883
Net cash used by operating
Activities                  (837,953)      (828,190)     (117,258)  (1,783,401)

Cash flows from investing
activities:
Purchase of fixed assets     (16,835)      (110,760)      (65,695)    (193,290)
Purchase of other asset     (399,027)             -      (125,000)    (524,027)
Proceeds from sale of fixed
Assets                         2,050              -        60,000       62,050
Net cash used by investing
activities                  (413,812)      (110,760)     (130,695)    (655,267)

Cash flows from financing
activities:
Proceeds from issuance of
common stock                 600,000      1,810,000       250,000    2,660,000
Principal payments on notes
Payable                            -        (55,300)            -      (55,300)
Net cash provided by
financing activities         600,000      1,754,700       250,000    2,604,700

Net increase (decrease)
in cash                     (651,765)       815,750         2,047      166,032

Cash, beginning of period    817,797          2,047             -            -

Cash, end of period          166,032        817,797         2,047      166,032

Supplemental disclosure
of cash flow:
Cash paid for interest            -               -             -            -

Cash paid for income
Taxes                             -               -             -            -

Schedule of non-cash
financing activities:
Principal payments on
notes payable through
the issuance of common
stock                             -         394,903             -      394,903

Common stock issued
for the acquisition
of assets                         -               -       440,000      440,000

See Accompanying Notes to Consolidated Financial Statements

                    ZYDANT CORPORATION (FORMERLY PALMWORKS, INC.)
                           (A Development Stage Company)
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  BUSINESS, HISTORY AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business - Zydant Corporation (formerly PalmWorks, Inc.)
(hereinafter referred to as the "Company" or "Zydant") is a
development stage company that plans to provide wireless
application deployment services to end users of a wide variety
of hand-held personal digital assistants ("PDA"s), and other
remote Internet enabled devices.  Zydant's services will provide
subscribers real-time information services and access to online
applications that allow end users to interact with their
corporate applications and perform time-critical activities.
Zydant specializes in application deployment services for the
Wireless Personal Digital Assistant devices ("WPDA"). Zydant's
patent pending software technology serves as a bridge that links
WPDA users to powerful server-based applications that manage
both business and consumer information.

History - Zydant, formerly known as PalmWorks, Inc. was
organized under the laws of the State of NewYork in June 1971
under the name The Bolton Group, Ltd.  The Company underwent
several name changes until June 1994, when it changed its name
to Titan Resources, Inc.  In March 1998, the Company entered
into an asset purchase agreement with Mobilelink Communications,
Inc. ("Mobilelink") (a related party owned by a stockholder of
the Company), for the rights and title to all Mobilelink's
intellectual property (software and other intangibles) in
exchange for 220,000 (post 1-for-100 reverse stock split) common
shares of the Company.

In September 1999, the Company's Board of Directors adopted a
resolution whereby it approved a 1-for-100 reverse stock split
of the issued and outstanding shares of common stock.
Accordingly, the accompanying financial statements have been
retroactively restated to reflect the 1-for-100 reverse stock
split as if such reverse stock split occurred as of the
Company's date of inception.

In October 1999, the Company acquired all the capital stock of
PalmWorks, Inc., a non-operating privately held Nevada
corporation ("PalmWorks-Nevada"), in exchange for 3,650,000
shares of the Company's common stock pursuant to a tax free
stock-for-stock acquisition.  The combination with PalmWorks-
Nevada has been accounted for in a manner similar to a pooling
of interests, as the companies were under common control in
August 1999, the date of inception of PalmWorks-Nevada.

Under accounting principles generally accepted in the United
States, the acquisition of PalmWorks-Nevada is considered to be
a reorganization in substance, rather than a business
combination since PalmWorks-Nevada had no assets, liabilities or
operations, and the Company has since re-domiciled in the State
of Nevada through PalmWorks-Nevada, as further discussed below.
Accordingly, the accounting for the acquisition has been
accounted for at historical cost in a manner similar to a
pooling of interests ("as-if pooling of interest accounting"),
and no goodwill was recorded.

The acquisition of intellectual property from Mobilelink in
March 1998 established a new business for the Company.  During
fiscal year 2000, the Company wrote off this intellectual
property from Mobilelink  totaling $440,000 because it did not
see future value in this asset, and has proceeded in the
development of their own software technology development.

Therefore, the Company is considered to be a development stage
company since its planned principal operations have not commenced.

In April 2000, the Company re-domiciled from the State of New
York to the State of Nevada under a plan and agreement filed in
both states whereby the named surviving corporation was
PalmWorks-Nevada.  As a result of the merger the Company's
articles of incorporation provided for 25,000,000 shares of
common stock authorized for issuance at a par value of $.001 per share.

In August 2000, a Certificate of Amendment to the Articles of
Incorporation changed the name of the Company to Zivia, Inc.  In
October 2000, a Certificate of Amendment to the Articles of
Incorporation changed the name of the Company to Zydant Corporation.

Principles of consolidation - The consolidated financial
statements include the accounts of the Company and its
subsidiaries.  All significant intercompany balances and
transactions have been eliminated in consolidation.

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

Fixed assets - Fixed assets are stated at cost less accumulated
depreciation.  Depreciation is provided principally on the
straight-line method over the estimated useful lives of the
assets, which are generally 3 to 5 years.  The cost of repairs
and maintenance is charged to expense as incurred.  Expenditures
for property betterments and renewals are capitalized.  Upon
sale or other disposition of a depreciable asset, cost and
accumulated depreciation are removed from the accounts and any
gain or loss is reflected in other income (expense).

The Company periodically evaluates whether events and
circumstances have occurred that may warrant revision of the
estimated useful lives of fixed assets or whether the remaining
balance of fixed assets should be evaluated for possible
impairment.  The Company uses an estimate of the related
undiscounted cash flows over the remaining life of the fixed
assets in measuring their recoverability.

Earnings (loss) per share - Basic earnings (loss) per share
excludes any dilutive effects of options, warrants and
convertible securities.  Basic earnings (loss) per share is
computed using the weighted-average number of outstanding common
shares during the applicable period.  Diluted earnings per share
is computed using the weighted average number of common and
common stock equivalent shares outstanding during the period.
Common stock equivalent shares are excluded from the computation
if their effect is antidilutive.

Comprehensive income - The Company has no components of other
comprehensive income.  Accordingly, net income (loss) equals
comprehensive income for all periods.

Advertising costs - The Company recognizes advertising expenses
in accordance with Statement of Position 93-7 "Reporting on
Advertising Costs."  Accordingly, the Company expenses the costs
of producing advertisements at the time production occurs, and
expenses the costs of communication advertising in the period in
which the advertising space or airtime is used.  Advertising
costs were incurred for the years ended February 28, 2000,
February 29, 1999, and February 28, 1998, in the amounts of
$18,901, $4,070, and $76,685, respectively.

Stock-based compensation - The Company accounts for stock-based
employee compensation arrangements in accordance with provisions
of Accounting Principles Board ("APB") Opinion No. 25,
"Accounting for Stock Issued to Employees," and complies with
the disclosure provisions of Statements of Financial Accounting
Standards (SFAS) No. 123, "Accounting for Stock-Based
Compensation."  Under APB No. 25, compensation expense is based
on the difference, if any, on the date of the grant, between the
fair value of the Company's stock and the exercise price.  The
Company accounts for stock issued to non-employees in accordance
with the provisions of SFAS No. 123 and the Emerging Issues Task
Force ("EITF") Issue No. 96-18.

Income taxes - The Company accounts for its income taxes in
accordance with SFAS No. 109, which requires recognition of
deferred tax assets and liabilities for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities
and their respective tax bases and tax credit carry-forwards.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered
or settled.  The effect on deferred tax assets and liabilities
of a change in tax rates is recognized in income in the period
that includes the enactment date.

Impairment of long-lived assets to be disposed - The Company
continually monitors events and changes in circumstances that
could indicate carrying amounts of long-lived assets may not be
recoverable.  When such events or changes in circumstances are
present, the Company assesses the recoverability of long-lived
assets by determining whether the carrying value of the assets
will be recovered through undiscounted expected future cash
flows.  If the total of the future cash flows is less than the
carrying amount of those assets, the Company recognizes an
impairment loss based on the excess of the carrying amount over
the fair value of the assets.  Assets to be disposed of are
reported at the lower of the carrying amount or the fair value
less costs to sell.

Recent accounting pronouncements - In June 1998, the Financial
Accounting Standards Board ("FASB") issued SFAS No. 133,
"Accounting for Derivatives and Hedging Activities."  SFAS No.
133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities.  In
July 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities-Deferral of the
Effective Date of FASB Statement No. 133," which deferred the
effective date until the first fiscal quarter ending on or after
June 30, 2000.  The Company will adopt SFAS No. 133 in its
quarter ending May 31, 2000.  The Company has not engaged in
significant hedging activities or invested in derivative
instruments.

In December 1999, the Securities and Exchange Commission ("SEC")
issued Staff Accounting Bulletin ("SAB") No. 101, "Revenue
Recognition in Financial Statements."  SAB No. 101 provides
guidance for revenue recognition under certain circumstances.
The Company believes that the implementation of SAB No. 101 will
not have a material impact on its consolidated financial
statements.

In November 1999, the EITF commenced discussions on EITF No. 99-
17, "Accounting for Advertising Barter Transactions."  The EITF
provides guidance on the recognition of Internet barter
advertising revenues and expenses under various circumstances.
The EITF reached a conclusion that revenues and expenses from
advertising barter transactions should be recognized at the fair
value of the advertising surrendered or received only when an
entity has a historical practice of receiving or paying cash for
similar advertising transactions.  The Company does not expect
that the adoption of EITF No. 99-17 will not have a material
impact on its consolidated financial statements.

Reclassifications - Certain prior year balances have been
reclassified to conform to the current year presentation.

2.  FIXED ASSETS

Fixed assets consist of the following:

                                           February 28     February 29
                                              2001           2000

Furniture and fixtures                     $    35,235     $    37,886
Computers, equipment and software              154,210         138,569
                                               189,445         176,455
Less: accumulated depreciation                  95,175          38,663

Fixed assets, net                               94,270         137,792

3.  OTHER ASSETS

Other assets of $554,027 and $155,000 as of February 28, 2001
and February 29, 2000, respectively, consists of a 15% working
interest in a petroleum exploration permit covering
approximately 29,000 acres of the Taranaki Basin on the North
Island of New Zealand.  During fiscal year 2001, the Company
contributed an additional $399,027 to support the exploration
costs incurred.  Management believes that this capitalized
working interest in a petroleum exploration permit may provide
future revenue benefits, however has determined to discontinue
future additional investment in this asset since it does not
compliment the Company's current business direction.  The
Company is currently pursuing the sale of this asset.  For the
years ended February 28, 2001 and February 29, 2000,
amortization expense has not been recorded for the capitalized
working interest in the petroleum permit since revenues related
to the permit have not been recognized for these periods.

4.  RELATED PARTY TRANSACTIONS

As of February 29, 2000, the balance due from related party
totaling $10,000 consisted of amounts loaned to a stockholder of
the Company, unsecured, bearing no interest, and due on demand.
As of February 28, 2001, the Company fully allowed for the $10,000.

As of February 28, 2001 and February 29, 2000, the balances due
to related party totaling $305,680 and $5,680, respectively,
consists of advances from Northwest Capital Partners, LLC (an
entity wholly owned by a director and stockholder of the
Company), unsecured, bearing no interest, and is due February 2002.

The Company has a consulting agreement with Northwest Capital
Partners, LLC (an entity owned by a director and shareholder of
the Company) (hereinafter referred to as the "consultant").  The
consultant's primary goal was to assist the Company in obtaining
equity financing.  The agreement provides for (a) monthly
payments of $5,000; (b) issuance of 1,500,00 shares of the
Company's common stock to be issued at the time the Company goes
public or at the closing of the first interim financing; and (c)
an option to purchase 1,000,000 shares of the Company's common
stock at an exercise price of $0.01 per share which can be
exercised at any time upon the Company achieving a market
capitalization of at least $100,000,000.  Compensation expense
associated with the 1,500,000 shares and 1,000,000 options were
based on a value of $1.18 and $7.05 per share, respectively.
The value of the 1,500,000 shares and 1,000,000 options were
based on the then-market price of the Company's common stock and
weighted average price of the Company's common stock during the
15-day period prior to and after the date the options were
earned, respectively.  The Company then discounted both the
then-market closing price and weighted average price, because
the shares issued and options to purchase shares were restricted
and volume of trading of the Company's common stock that was not
restricted was relatively low.  The resulting compensation
expense recognized for the stock and option issuance was
$1,771,200 and $7,046,000, respectively for the year ended
February 29, 2000.

5.  OTHER INCOME

During 2000, the Company's management reviewed outstanding
payables and determined that certain payables had been absolved
of future liability.  The absolved payables were recorded as
other income of approximately $150,000.

6.  STOCKHOLDERS' EQUITY

Stock options - At the discretion of the Company's Board of
Directors, stock option grants have been awarded to certain
officers, employees, and non-employees.  The outstanding options
as of February 28, 2001, have a term of 4 years from the date of
grant for options to the officers and employees, and a term of 4
years from the date of grant for options to non-employees.
Options granted to the officers, employees, and non-employees
generally vest and become exercisable with the following vesting
schedule: 20% at the date of grant, 20% every six months, and
fully vested in two years.

Stock option activity - The following table summarizes the
Company's stock option activity:

                                                Number     Weighted
                                                  Of       Average
                                                Shares     Exercise
                                                           Price

Balance, March 1, 1997                               -     $       -
Options granted and assumed                          -             -
Options canceled                                     -             -
Options exercised                                    -             -

Balance, February 28, 1998                           -             -
Options granted and assumed                      1,893         27.94
Options canceled                                     -             -
Options exercised                                    -             -

Balance, February 28, 1999                       1,893         27.94
Options granted and assumed                  2,800,000          1.19
Options canceled                                     -             -
Options exercised                            1,000,000          0.01

Balance, February 29, 2000                   1,801,893          1.86
Options granted and assumed                    780,000          0.25
Options canceled                               224,893          1.70
Options exercised                                    -             -

Balance, February 28, 2001                   2,357,000          1.34

The following table summarizes information about options
outstanding and exercisable at February 28, 2001:

       Shares Underlying Options Outstanding            Shares Underlying
                           Weighted                    Options Exercisable
           Shares          Average                     Shares
           Underlying      Remaining     Weighted      Underlying    Weighted
Range of   Options         Contractual   Average       Options       Average
Exercise   Outstanding     Life          Exercise      Exercisable   Exercise
Prices                                   Price                       Price

$0.15 -        607,000     4.0 years     $0.25             640,000   $0.25
$0.375
$1.00-       1,700,000     4.0 years     $1.76           1,700,000   $1.76
$2.50

$0.15 -      2,357,000     4.0 years     $1.34           2,340,000   $1.35
$2.50

Pro forma disclosure - SFAS No. 123 requires companies that
follow APB No. 25 to provide a pro forma disclosure of the
impact of applying the fair value method of SFAS No. 123.
Accordingly, had compensation cost been recognized based on the
fair value of options granted at the date of grant in fiscal
years 2000 and 1999, the pro forma amounts of the Company's net
loss and net loss per share for the years ended February 28,
2001, February 29, 2000, and February 28, 1999 would have been
as follows:

                                 February 28    February 29    February 28
                                   2001           2000           1999

Net loss - as reported           $(1,292,409)   $(10,380,383)  $(744,531)
Net loss - pro forma             $(1,450,116)   $(11,156,931)  $(748,284)
Basic and diluted loss per share
- as reported                    $     (0.09)   $      (2.23)  $   (2.37)
Basic and diluted loss per share
- pro forma                      $     (0.10)   $      (2.39)  $   (2.38)

The fair value for each option granted was estimated at the
date of grant using the Black-Scholes option pricing model,
assuming no expected dividends and the following weighted
average assumptions:

                                 February 28    February 29    February 28
                                   2001           2000           1999

Average risk-free interest rates        6.37%           5.5%          4.7%
Average expected life (in years)           2            4.5             5
Volatility                               295%           60%            60%

The weighted average fair value of options granted with exercise
prices at the current fair value of the underlying stock during
fiscal years 2001, 2000 and 1999 were $93,488, $381,049 and
$3,753, respectively.  During fiscal years 2001, 2000 and 1999,
some options were granted with exercise prices that were below
the current fair value of the underlying stock.  The weighted
average fair value of options granted with exercise prices below
the current fair value of the underlying stock during fiscal
years 2001, 2000 and 1999 were $64,219, $395,489 and $0.00,
respectively.

Potential common stock with the antidilutive effect - As of
February 28, 2001, February 29, 2000, and February 28, 1999,
options on 2,340,000, 1,801,893, and 1,893 shares of common
stock, respectively, were not included in computing earnings per
share because their effects were antidilutive.

7.  INCOME TAXES

The Company did not record any current or deferred income tax
provision or benefit for any of the periods presented due to
continuing net losses and nominal differences.

The Company has provided a full valuation allowance on the
deferred tax asset, consisting primarily of net operating
losses, because of uncertainty regarding realizability.

As of February 28, 2001, the Company had a cumulative net
operating loss of approximately $3,760,000.  Utilization of the
net operating loss, which begins to expire at various times
starting in 2009, may be subject to certain limitations under
Section 382 of the Internal Revenue Code of 1986, as amended,
and other limitations under state and foreign tax laws.  To the
extent that net operating losses, when realized, relate to stock
option deductions of approximately $9,200,000, the resulting
benefits will be credited to the stockholders.

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts
used for income tax purposes.  Significant components of the
Company's deferred tax assets are approximately as follows:

                                 February 28    February 29    February 28
                                   2001           2000           1999
Net operating loss               $(1,276,945)   $  (916,285)   $(515,737)
Depreciation                               -              -            -
Total deferred tax assets         (1,276,945)      (916,285)    (515,737)
Valuation allowance for deferred
tax assets                         1,276,945        916,285      515,737

Net deferred tax assets          $         -    $         -    $       -

8.  FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of cash, accounts payable, accrued
liabilities, due to/from related parties, and notes payable
approximate fair value because of the short-term maturity of
these instruments.

9.  COMMITMENTS AND CONTINGENCIES

Operating leases - The Company operates from a leased facility
under a non-cancelable operating lease.  For the years ended
February 28, 2001, February 29, 2000 and 1999, total rent
expense for the leased facility approximated $78,179, $78,179,
and $78,179, respectively.

Future minimum rental payments required under the operating
lease for the facility as of February 28, 2001 are as follows:

Year
2002     $32,575

10.  GOING CONCERN

The Company incurred a net loss of approximately $1,292,000 for
the year ended February 28, 2001.  The Company has not commenced
its planned operations and has recurring net losses along with
no recorded revenues.  Those factors create an uncertainty about
the Company's ability to continue as a going concern.  The
Company's management has developed a plan to complete the
development of technology products and services to generate
future revenues.  The Company will also seek additional sources
of capital through equity or debt offering, but there can be no
assurance that the Company will be successful in accomplishing
its objectives.

The ability of the Company to continue as a going concern is
dependent on additional sources of capital and the success of
the Company's plan.  The financial statements do not include any
adjustments that might be necessary if the Company is unable to
continue as a going concern.

                              EXHIBIT INDEX

Exhibit           Description
No.

2     Agreement of Merger and Plan of Merger and
      Reorganization dated April 17, 2000 by and between Palm
      Works, Inc., a New York corporation and the Registrant
     (incorporated by reference to Exhibit 2.2 of the Form
      S-1/A filed on July 5, 2000).

3.1   Articles of Incorporation of the Registrant, dated July
      26, 1999 (incorporated by reference to Exhibit 3.1 of
      the Form S-1 filed on May 4, 2000).

3.2   Bylaws of the Registrant, dated April 20, 2000
     (incorporated by reference to Exhibit 3.2 of the Form
      S-1 filed on May 4, 2000).

4.1   Specimen of Common Stock Certificate (incorporated by
      reference to Exhibit 4.1 of the Form S-1/A filed on
      July 5, 2000).

4.2   2000 Equity Incentive Compensation Plan, dated
      December 1, 2000 (see below).

10.1  Lease Agreement dated July 1, 1998 between the
      Registrant and American National Insurance Company
     (incorporated by reference to Exhibit 10.1 of the Form
      S-1/A filed on July 5, 2000).

10.2  Consulting Agreement dated September 28, 1999 between
      the Registrant and Northwest Capital Partners, L.L.C
     (incorporated by reference to Exhibit 10.2 of the Form
      S-1 filed on May 4, 2000).

10.3  Compensation Agreement dated October 28, 1999 between
      the Registrant and James T. Voss (incorporated by
      reference to Exhibit 10.3 of the Form S-1 filed on May
      4, 2000).

10.4  Compensation Agreement dated October 28, 1999 between
      the Registrant and Ellen S. Eckler (incorporated by
      reference to Exhibit 10.4 of the Form S-1 filed on May
      4, 2000).

10.5  Loan Agreement, Revolving Note, and Security Agreement
      between the Registrant and Northwest Capital Partners,
      L.L.C (incorporated by reference to Exhibit 10.5 of the
      Form S-1/A filed on July 5, 2000).

10.6  Letter of intent from the Registrant to Excellular
      Incorporated and Covault Corporation re: PDA Data
     (incorporated by reference to Exhibit 10.6 of the Form
      S-1/A filed on July 5, 2000).

16    Letter from Bob Stephens & Associates, P.C. to the
      Commission re: Change in Certifying Accountant
     (incorporated by reference to Exhibit 16.1 of the Form
      S-1/A filed on July 5, 2000).

21   Subsidiaries of the Registrant (see below).

                                EX-3.2

                      CERTIFICATE OF AMENDMENT
                    TO ARTICLES OF INCORPORATION

1.  Name of corporation: Palm Works, Inc.

2.  The articles have been amended as follows (provide article
numbers if applicable):

FIRST: The name of the corporation is:

          Zivia, Inc.

3.  The vote by which the stockholders holding shares in the
corporation entitling them to exercise a least a majority of the
voting power, or such greater proportion of the voting power as
may be required in the case of a vote by classes or series, or
as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is: 7,865,000
of 14,920,0331 *.

4.  Signatures (Required):


/s/  James T. Voss                            /s/  Ellen S. Eckler
President                   and               Secretary

*  If any proposed amendment would alter or change any
preference or any relative or other right given to any class or
series of outstanding shares, then the amendment must be
approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a
majority of the voting power of each class or series affected by
the amendment regardless of limitations or restrictions on the
voting power thereof.

IMPORTANT:  Failure to include any of the above information and
remit the proper fees may cause this filing to be rejected.

                               EX-3.3

                      CERTIFICATE OF AMENDMENT
                    TO ARTICLES OF INCORPORATION

1.  Name of corporation: Zivia, Inc.

2.  The articles have been amended as follows (provide article
numbers if applicable):

FIRST: The name of the corporation is:

         Zydant Corporation

3.  The vote by which the stockholders holding shares in the
corporation entitling them to exercise a least a majority of the
voting power, or such greater proportion of the voting power as
may be required in the case of a vote by classes or series, or
as may be required by the provisions of the articles of
incorporation have voted in favor of the amendment is: 7,865,000
of 14,920,0331 *.

4.  Signatures (Required):


/s/  James T. Voss                         /s/  Ellen S. Eckler
President                    and           Secretary

*  If any proposed amendment would alter or change any
preference or any relative or other right given to any class or
series of outstanding shares, then the amendment must be
approved by the vote, in addition to the affirmative vote
otherwise required, of the holders of shares representing a
majority of the voting power of each class or series affected by
the amendment regardless of limitations or restrictions on the
voting power thereof.

IMPORTANT:  Failure to include any of the above information and
remit the proper fees may cause this filing to be rejected.

                                 EX-4.2

                         Zydant Corporation
             2000 EQUITY INCENTIVE COMPENSATION PLAN

1.  Purpose  TC  . The purpose of this 2000 EQUITY
INCENTIVE COMPENSATION PLAN (the "Plan") is to assist
Zydant Corporation, a Nevada corporation (the "Company")
and its subsidiaries in attracting, motivating, retaining
and rewarding high-quality executives and other employees,
officers, directors and independent contractors by enabling
such persons to acquire or increase a proprietary interest
in the Company in order to strengthen the mutuality of
interests between such persons and the Company's
stockholders, and providing such persons with annual and
long term performance incentives to expend their maximum
efforts in the creation of shareholder value. In the event
that the Company is or becomes a Publicly Held Corporation
(as hereinafter defined), the Plan is intended to qualify
certain compensation awarded under the Plan for tax
deductibility under Section 162(m) of the Code (as
hereafter defined) to the extent deemed appropriate by the
Committee (or any successor committee) of the Board of
Directors of the Company.

2.  Definitions  TC  . For purposes of the Plan, the
following terms shall be defined as set forth below, in
addition to such terms defined in Section 1 hereof.

(a)  "Annual Incentive Award" means a
conditional right granted to a Participant under
Section 8(c) hereof to receive a cash payment, Stock
or other Award, unless otherwise determined by the
Committee, after the end of a specified fiscal year.

(b)  "Award" means any Option, SAR
(including Limited SAR), Restricted Stock, Deferred
Stock, Stock granted as a bonus or in lieu of another
award, Dividend Equivalent, Other Stock-Based Award,
Performance Award or Annual Incentive Award, together
with any other right or interest, granted to a
Participant under the Plan.

(c)  "Beneficiary" means the person,
persons, trust or trusts which have been designated by
a Participant in his or her most recent written
beneficiary designation filed with the Committee to
receive the benefits specified under the Plan upon
such Participant's death or to which Awards or other
rights are transferred if and to the extent permitted
under Section 10(b) hereof. If, upon a Participant's
death, there is no designated Beneficiary or surviving
designated Beneficiary, then the term Beneficiary
means the person, persons, trust or trusts entitled by
will or the laws of descent and distribution to
receive such benefits.

(d)  "Beneficial Owner", "Beneficially
Owning" and "Beneficial Ownership" shall have the
meanings ascribed to such terms in Rule 13d3 under the
Exchange Act and any successor to such Rule.

(e)  "Board" means the Company's Board of Directors.

(f)  "Cause" shall, with respect to any
Participant, have the equivalent meaning (or the same
meaning as "cause" or "for cause") set forth in any
employment agreement between the Participant and the
Company or Parent Corporation or Subsidiary or, in the
absence of any such agreement, such term shall mean
(i) the failure by the Participant to perform his or
her duties as assigned by the Company (or Parent
Corporation or Subsidiary) in a reasonable manner,
(ii) any violation or breach by the Participant of his
or her employment agreement with the Company (or
Parent Corporation or Subsidiary), if any, (iii) any
violation or breach by the Participant of his or her
non-competition and/or non-disclosure agreement with
the Company (or Parent Corporation or Subsidiary), if
any, (iv) any act by the Participant of dishonesty or
bad faith with respect to the Company (or Parent
Corporation or Subsidiary), (v) chronic addition to
alcohol, drugs or other similar substances affecting
the Participant's work performance, or (vi) the
commission by the Participant of any act, misdemeanor,
or crime reflecting unfavorably upon the Participant
or the Company. The good faith determination by the
Committee of whether the Participant's employment was
terminated by the Company for "Cause" shall be final
and binding for all purposes hereunder.

(g)  "Change in Control" means a Change in
Control as defined with related terms in Section 9 of the Plan.

(h)  "Change in Control Price" means the
amount calculated in accordance with Section 9(c) of the Plan.

(i)  "Code" means the Internal Revenue Code
of 1986, as amended from time to time, including
regulations thereunder and successor provisions and
regulations thereto.

(j)  "Committee" means a committee
designated by the Board to administer the Plan;
provided, however, that the Committee shall consist of
at least two directors, and, in the event the Company
is or becomes a Publicly Held Corporation (as
hereinafter defined), each member of which shall be
(i) a "non-employee director" within the meaning of
Rule 16b-3 under the Exchange Act, unless
administration of the Plan by "non-employee directors"
is not then required in order for exemptions under
Rule 16b-3 to apply to transactions under the Plan,
and (ii) an "outside director" within the meaning of
Section 162(m) of the Code, unless administration of
the Plan by "outside directors" is not then required
in order to qualify for tax deductibility under
Section 162(m) of the Code.

(k)  "Corporate Transaction" means a
Corporate Transaction as defined in Section 9(b)(i) of the Plan.

(l)  "Covered Employee" means an Eligible
Person who is a Covered Employee as specified in
Section 8(e) of the Plan.

(m)  "Deferred Stock" means a right, granted
to a Participant under Section 6(e) hereof, to receive
Stock, cash or a combination thereof at the end of a
specified deferral period.

(n)  "Director" means a member of the Board.

(o)  "Disability" means a permanent and
total disability (within the meaning of Section 22(e)
of the Code), as determined by a medical doctor
satisfactory to the Committee.

(p)  "Dividend Equivalent" means a right,
granted to a Participant under Section 6(g) hereof, to
receive cash, Stock, other Awards or other property
equal in value to dividends paid with respect to a
specified number of shares of Stock, or other periodic
payments.

(q)  "Effective Date" means the effective
date of the Plan, which shall be December 1, 2000.

(r)  "Eligible Person" means each Executive
Officer of the Company (as defined under the Exchange
Act) and other officers, Directors and employees of
the Company or of any Subsidiary, and independent
contractors with the Company or any Subsidiary. The
foregoing notwithstanding, only employees of the
Company or any Subsidiary shall be Eligible Persons
for purposes of receiving any Incentive Stock Options.
An employee on leave of absence may be considered as
still in the employ of the Company or a Subsidiary for
purposes of eligibility for participation in the Plan.

(s)  "Exchange Act" means the Securities
Exchange Act of 1934, as amended from time to time,
including rules thereunder and successor provisions
and rules thereto.

(t)  "Executive Officer" means an executive
officer of the Company as defined under the Exchange Act.

(u)  "Fair Market Value" means the fair
market value of Stock, Awards or other property as
determined by the Committee or the Board, or under
procedures established by the Committee or the Board.
Unless otherwise determined by the Committee or the
Board, the Fair Market Value of Stock as of any given
date shall be the closing sale price per share
reported on a consolidated basis for stock listed on
the principal stock exchange or market on which Stock
is traded on the date as of which such value is being
determined or, if there is no sale on that date, then
on the last previous day on which a sale was reported.

(v)  "Good Reason" shall, with respect to
any Participant, have the equivalent meaning (or the
same meaning as "good reason" or "for good reason")
set forth in any employment agreement between the
Participant and the Company or Parent Corporation or
Subsidiary or, in the absence of any such agreement,
such term shall mean (i) the assignment to the
Participant of any duties inconsistent in any respect
with the Participant's position (including status,
offices, titles and reporting requirements),
authority, duties or responsibilities as assigned by
the Company (or Parent Corporation or Subsidiary), or
any other action by the Company (or Parent Corporation
or Subsidiary) which results in a diminution in such
position, authority, duties or responsibilities,
excluding for this purpose an isolated, insubstantial
and inadvertent action not taken in bad faith and
which is remedied by the Company (or Parent
Corporation or Subsidiary) promptly after receipt of
notice thereof given by the Participant; (ii) any
failure by the Company (or Parent Corporation or
Subsidiary) to comply with its obligations to the
Participant as agreed upon, other than an isolated,
insubstantial and inadvertent failure not occurring in
bad faith and which is remedied by the Company (or
Parent Corporation or Subsidiary) promptly after
receipt of notice thereof given by the Participant;
(iii) the Company's (or Parent Corporation's or
Subsidiary's) requiring the Participant to be based at
any office or location outside of fifty miles from the
location of employment as of the date of Award, except
for travel reasonably required in the performance of
the Participant's responsibilities; (iv) any purported
termination by the Company (or Parent Corporation or
Subsidiary) of the Participant's employment otherwise
than for Cause as defined in Section 2(f), or by
reason of the Participant's Disability as defined in
Section 2(o), prior to the Expiration Date.

(w)  "Incentive Stock Option" or "ISO" means
any Option intended to be designated as an incentive
stock option within the meaning of Section 422 of the
Code or any successor provision thereto.

(x)  "Incumbent Board" means the Incumbent
Board as defined in Section 9(b)(ii) of the Plan.

(y)  "Limited SAR" means a right granted to
a Participant under Section 6(c) hereof.

(z)  "Option" means a right granted to a
Participant under Section 6(b) hereof, to purchase
Stock or other Awards at a specified price during
specified time periods.

(aa)  "Other Stock-Based Awards" means Awards
granted to a Participant under Section 6(h) hereof.

(bb)  "Parent Corporation" means any
corporation (other than the Company) in an unbroken
chain of corporations ending with the Company, if each
of the corporations in the chain (other than the
Company) owns stock possessing 50% or more of the
combined voting power of all classes of stock in one
of the other corporations in the chain.

(cc)  "Participant" means a person who has
been granted an Award under the Plan which remains
outstanding, including a person who is no longer an
Eligible Person.

(dd)  "Performance Award" means a right,
granted to an Eligible Person under Section 8 hereof,
to receive Awards based upon performance criteria
specified by the Committee or the Board.

(ee)  "Person" shall have the meaning
ascribed to such term in Section 3(a)(9) of the
Exchange Act and used in Sections 13(d) and 14(d)
thereof, and shall include a "group" as defined in
Section 13(d) thereof.

(ff)  "Publicly Held Corporation" shall mean
a publicly held corporation as that term is used under
Section 162(m)(2) of the Code.

(gg)  "Restricted Stock" means Stock granted
to a Participant under Section 6(d) hereof, that is
subject to certain restrictions and to a risk of
forfeiture.

(hh)  "Rule 16b-3" and "Rule 16a-1(c)(3)"
means Rule 16b-3 and Rule 16a-1(c)(3), as from time to
time in effect and applicable to the Plan and
Participants, promulgated by the Securities and
Exchange Commission under Section 16 of the Exchange Act.

(ii)  "Stock" means the Company's Common
Stock, and such other securities as may be substituted
(or resubstituted) for Stock pursuant to Section 10(c) hereof.

(jj)  "Stock Appreciation Rights" or "SAR"
means a right granted to a Participant under Section
6(c) hereof.

(kk)  "Subsidiary" means any corporation or
other entity in which the Company has a direct or
indirect ownership interest of 50% or more of the
total combined voting power of the then outstanding
securities or interests of such corporation or other
entity entitled to vote generally in the election of
directors or in which the Company has the right to
receive 50% or more of the distribution of profits or
50% or more of the assets on liquidation or
dissolution.

3.  Administration  TC  .

(a)  Authority of the Committee  TC  . The
Plan shall be administered by the Committee; provided,
however, that except as otherwise expressly provided
in this Plan or, during the period that the Company is
a Publicly Held Corporation, in order to comply with
Code Section 162(m) or Rule 16b-3 under the Exchange
Act, the Board may exercise any power or authority
granted to the Committee under this Plan. The
Committee or the Board shall have full and final
authority, in each case subject to and consistent with
the provisions of the Plan, to select Eligible Persons
to become Participants, grant Awards, determine the
type, number and other terms and conditions of, and
all other matters relating to, Awards, prescribe Award
agreements (which need not be identical for each
Participant) and rules and regulations for the
administration of the Plan, construe and interpret the
Plan and Award agreements and correct defects, supply
omissions or reconcile inconsistencies therein, and to
make all other decisions and determinations as the
Committee or the Board may deem necessary or advisable
for the administration of the Plan. In exercising any
discretion granted to the Committee or the Board under
the Plan or pursuant to any Award, the Committee or
the Board shall not be required to follow past
practices, act in a manner consistent with past
practices, or treat any Eligible Person in a manner
consistent with the treatment of other Eligible Persons.

(b)  Manner of Exercise of Committee
Authority  TC  . In the event that the Company is or
becomes a Publicly Held Corporation, the Committee,
and not the Board, shall exercise sole and exclusive
discretion on any matter relating to a Participant
then subject to Section 16 of the Exchange Act with
respect to the Company to the extent necessary in
order that transactions by such Participant shall be
exempt under Rule 16b-3 under the Exchange Act. Any
action of the Committee or the Board shall be final,
conclusive and binding on all persons, including the
Company, its subsidiaries, Participants,
Beneficiaries, transferees under Section 10(b) hereof
or other persons claiming rights from or through a
Participant, and stockholders. The express grant of
any specific power to the Committee or the Board, and
the taking of any action by the Committee or the
Board, shall not be construed as limiting any power or
authority of the Committee or the Board. The Committee
or the Board may delegate to officers or managers of
the Company or any subsidiary, or committees thereof,
the authority, subject to such terms as the Committee
or the Board shall determine, (i) to perform
administrative functions, (ii) with respect to
Participants not subject to Section 16 of the Exchange
Act, to perform such other functions as the Committee
or the Board may determine, and (iii) with respect to
Participants subject to Section 16, to perform such
other functions of the Committee or the Board as the
Committee or the Board may determine to the extent
performance of such functions will not result in the
loss of an exemption under Rule 16b-3 otherwise
available for transactions by such persons, in each
case to the extent permitted under applicable law and
subject to the requirements set forth in Section 8(d).
The Committee or the Board may appoint agents to
assist it in administering the Plan.

(c)  Limitation of Liability  TC  . The
Committee and the Board, and each member thereof,
shall be entitled to, in good faith, rely or act upon
any report or other information furnished to him or
her by any executive officer, other officer or
employee of the Company or a Subsidiary, the Company's
independent auditors, consultants or any other agents
assisting in the administration of the Plan. Members
of the Committee and the Board, and any officer or
employee of the Company or a subsidiary acting at the
direction or on behalf of the Committee or the Board,
shall not be personally liable for any action or
determination taken or made in good faith with respect
to the Plan, and shall, to the extent permitted by
law, be fully indemnified and protected by the Company
with respect to any such action or determination.

4.  Stock Subject to Plan  TC  .

(a)  Limitation on Overall Number of Shares
Subject to Awards  TC  . Subject to adjustment as
provided in Section 10(c) hereof, the total number of
shares of Stock reserved and available for delivery in
connection with Awards under the Plan shall be the sum
of (i) 5,000,000, plus (ii) the number of shares with
respect to Awards previously granted under the Plan
that terminate without being exercised, expire, are
forfeited or canceled, and the number of shares of
Stock that are surrendered in payment of any Awards or
any tax withholding with regard thereto. Any shares of
Stock delivered under the Plan may consist, in whole
or in part, of authorized and unissued shares or
treasury shares. Subject to adjustment as provided in
Section 10(c) hereof, in no event shall the aggregate
number of shares of Stock which may be issued pursuant
to ISOs exceed 5,000,000 shares.

(b)  Application of Limitations  TC  . The
limitation contained in Section 4(a) shall apply not
only to Awards that are settleable by the delivery of
shares of Stock but also to Awards relating to shares
of Stock but settleable only in cash (such as cash-
only SARs). The Committee or the Board may adopt
reasonable counting procedures to ensure appropriate
counting, avoid double counting (as, for example, in
the case of tandem or substitute awards) and make
adjustments if the number of shares of Stock actually
delivered differs from the number of shares previously
counted in connection with an Award.

5.  Eligibility; Per-Person Award Limitations  TC  .
Awards may be granted under the Plan only to Eligible
Persons. In each fiscal year during any part of which the
Plan is in effect, an Eligible Person may not be granted
Awards relating to more than 200,000 shares of Stock,
subject to adjustment as provided in Section 10(c), under
each of Sections 6(b), 6(c), 6(d), 6(e), 6(f), 6(g), 6(h),
8(b) and 8(c). In addition, the maximum amount that may be
earned as an Annual Incentive Award or other cash Award in
any fiscal year by any one Participant shall be $2,000,000,
and the maximum amount that may be earned as a Performance
Award or other cash Award in respect of a performance
period by any one Participant shall be $5,000,000.

6.  Specific Terms of Awards  TC  .

(a)  General  TC  . Awards may be granted on
the terms and conditions set forth in this Section 6.
In addition, the Committee or the Board may impose on
any Award or the exercise thereof, at the date of
grant or thereafter (subject to Section 10(e)), such
additional terms and conditions, not inconsistent with
the provisions of the Plan, as the Committee or the
Board shall determine, including terms requiring
forfeiture of Awards in the event of termination of
employment by the Participant and terms permitting a
Participant to make elections relating to his or her
Award. The Committee or the Board shall retain full
power and discretion to accelerate, waive or modify,
at any time, any term or condition of an Award that is
not mandatory under the Plan. Except in cases in which
the Committee or the Board is authorized to require
other forms of consideration under the Plan, or to the
extent other forms of consideration must be paid to
satisfy the requirements of Nevada law, no
consideration other than services may be required for
the grant (but not the exercise) of any Award.

(b)  Options  TC  . The Committee and the
Board each is authorized to grant Options to
Participants on the following terms and conditions:

(i)  Exercise Price. The exercise price per share
of Stock purchasable under an Option shall be
determined by the Committee or the Board, provided
that such exercise price shall not, in the case of
Incentive Stock Options, be less than 100% of the Fair
Market Value of the Stock on the date of grant of the
Option and shall not, in any event, be less than the
par value of a share of Stock on the date of grant of
such Option. If an employee owns or is deemed to own
(by reason of the attribution rules applicable under
Section 424(d) of the Code) more than 10% of the
combined voting power of all classes of stock of the
Company or any Parent Corporation or Subsidiary and an
Incentive Stock Option is granted to such employee,
the option price of such Incentive Stock Option (to
the extent required by the Code at the time of grant)
shall be no less than 110% of the Fair Market Value of
the Stock on the date such Incentive Stock Option is granted.

(ii)  Time and Method of Exercise. The Committee
or the Board shall determine the time or times at
which or the circumstances under which an Option may
be exercised in whole or in part (including based on
achievement of performance goals and/or future service
requirements), the time or times at which Options
shall cease to be or become exercisable following
termination of employment or upon other conditions,
the methods by which such exercise price may be paid
or deemed to be paid (including in the discretion of
the Committee or the Board a cashless exercise
procedure), the form of such payment, including,
without limitation, cash, Stock, other Awards or
awards granted under other plans of the Company or any
subsidiary, or other property (including notes or
other contractual obligations of Participants to make
payment on a deferred basis), and the methods by or
forms in which Stock will be delivered or deemed to be
delivered to Participants.

(iii)  ISOs. The terms of any ISO granted under the
Plan shall comply in all respects with the provisions
of Section 422 of the Code. Anything in the Plan to
the contrary notwithstanding, no term of the Plan
relating to ISOs (including any SAR in tandem
therewith) shall be interpreted, amended or altered,
nor shall any discretion or authority granted under
the Plan be exercised, so as to disqualify either the
Plan or any ISO under Section 422 of the Code, unless
the Participant has first requested the change that
will result in such disqualification. Thus, if and to
the extent required to comply with Section 422 of the
Code, Options granted as Incentive Stock Options shall
be subject to the following special terms and
conditions:

(A)  The Option shall not be
exercisable more than ten years after the
date such Incentive Stock Option is granted;
provided, however, that if a Participant
owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the
Code) more than 10% of the combined voting
power of all classes of stock of the Company
or any Parent Corporation and the Incentive
Stock Option is granted to such Participant,
the term of the Incentive Stock Option shall
be (to the extent required by the Code at
the time of the grant) for no more than five
years from the date of grant; and

(B)  The aggregate Fair Market
Value (determined as of the date the
Incentive Stock Option is granted) of the
shares of stock with respect to which
Incentive Stock Options granted under the
Plan and all other option plans of the
Company or its Parent Corporation during any
calendar year exercisable for the first time
by the Participant during any calendar year
shall not (to the extent required by the
Code at the time of the grant) exceed $100,000.

(iv)  Repurchase Rights. The Committee and the
Board shall have the discretion to grant Options which
are exercisable for unvested shares of Common Stock.
Should the Optionee cease to be employed with or
perform services to the Company (or a Parent
Corporation or Subsidiary) while holding such unvested
shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any
or all of those unvested shares. The terms upon which
such repurchase right shall be exercisable (including
the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares)
shall be established by the Committee or the Board and
set forth in the document evidencing such repurchase right.

(c)  Stock Appreciation Rights  TC  . The
Committee and the Board each is authorized to grant
SARs to Participants on the following terms and
conditions:

(i)  Right to Payment. A SAR shall confer on the
Participant to whom it is granted a right to receive,
upon exercise thereof, the excess of (A) the Fair
Market Value of one share of stock on the date of
exercise (or, in the case of a "Limited SAR" that may
be exercised only in the event of a Change in Control,
the Fair Market Value determined by reference to the
Change in Control Price, as defined under Section 9(c)
hereof), over (B) the grant price of the SAR as
determined by the Committee or the Board. The grant
price of an SAR shall not be less than the Fair Market
Value of a share of Stock on the date of grant except
as provided under Section 7(a) hereof.

(ii)  Other Terms. The Committee or the Board
shall determine at the date of grant or thereafter,
the time or times at which and the circumstances under
which a SAR may be exercised in whole or in part
(including based on achievement of performance goals
and/or future service requirements), the time or times
at which SARs shall cease to be or become exercisable
following termination of employment or upon other
conditions, the method of exercise, method of
settlement, form of consideration payable in
settlement, method by or forms in which Stock will be
delivered or deemed to be delivered to Participants,
whether or not a SAR shall be in tandem or in
combination with any other Award, and any other terms
and conditions of any SAR. Limited SARs that may only
be exercised in connection with a Change in Control or
other event as specified by the Committee or the
Board, may be granted on such terms, not inconsistent
with this Section 6(c), as the Committee or the Board
may determine. SARs and Limited SARs may be either
freestanding or in tandem with other Awards.

(d)  Restricted Stock  TC  . The Committee
and the Board each is authorized to grant Restricted
Stock to Participants on the following terms and
conditions:

(i)  Grant and Restrictions. Restricted Stock
shall be subject to such restrictions on
transferability, risk of forfeiture and other
restrictions, if any, as the Committee or the Board
may impose, which restrictions may lapse separately or
in combination at such times, under such circumstances
(including based on achievement of performance goals
and/or future service requirements), in such
installments or otherwise, as the Committee or the
Board may determine at the date of grant or
thereafter. Except to the extent restricted under the
terms of the Plan and any Award agreement relating to
the Restricted Stock, a Participant granted Restricted
Stock shall have all of the rights of a stockholder,
including the right to vote the Restricted Stock and
the right to receive dividends thereon (subject to any
mandatory reinvestment or other requirement imposed by
the Committee or the Board). During the restricted
period applicable to the Restricted Stock, subject to
Section 10(b) below, the Restricted Stock may not be
sold, transferred, pledged, hypothecated, margined or
otherwise encumbered by the Participant.

(ii)  Forfeiture. Except as otherwise determined
by the Committee or the Board at the time of the
Award, upon termination of a Participant's employment
during the applicable restriction period, the
Participant's Restricted Stock that is at that time
subject to restrictions shall be forfeited and
reacquired by the Company; provided that the Committee
or the Board may provide, by rule or regulation or in
any Award agreement, or may determine in any
individual case, that restrictions or forfeiture
conditions relating to Restricted Stock shall be
waived in whole or in part in the event of
terminations resulting from specified causes, and the
Committee or the Board may in other cases waive in
whole or in part the forfeiture of Restricted Stock.

(iii)  Certificates for Stock. Restricted Stock
granted under the Plan may be evidenced in such manner
as the Committee or the Board shall determine. If
certificates representing Restricted Stock are
registered in the name of the Participant, the
Committee or the Board may require that such
certificates bear an appropriate legend referring to
the terms, conditions and restrictions applicable to
such Restricted Stock, that the Company retain
physical possession of the certificates, and that the
Participant deliver a stock power to the Company,
endorsed in blank, relating to the Restricted Stock.

(iv)  Dividends and Splits. As a condition to the
grant of an Award of Restricted Stock, the Committee
or the Board may require that any cash dividends paid
on a share of Restricted Stock be automatically
reinvested in additional shares of Restricted Stock or
applied to the purchase of additional Awards under the
Plan. Unless otherwise determined by the Committee or
the Board, Stock distributed in connection with a
Stock split or Stock dividend, and other property
distributed as a dividend, shall be subject to
restrictions and a risk of forfeiture to the same
extent as the Restricted Stock with respect to which
such Stock or other property has been distributed.

(e)  Deferred Stock  TC  . The Committee and
the Board each is authorized to grant Deferred Stock
to Participants, which are rights to receive Stock,
cash, or a combination thereof at the end of a
specified deferral period, subject to the following
terms and conditions:

(i)  Award and Restrictions. Satisfaction of an
Award of Deferred Stock shall occur upon expiration of
the deferral period specified for such Deferred Stock
by the Committee or the Board (or, if permitted by the
Committee or the Board, as elected by the
Participant). In addition, Deferred Stock shall be
subject to such restrictions (which may include a risk
of forfeiture) as the Committee or the Board may
impose, if any, which restrictions may lapse at the
expiration of the deferral period or at earlier
specified times (including based on achievement of
performance goals and/or future service requirements),
separately or in combination, in installments or
otherwise, as the Committee or the Board may
determine. Deferred Stock may be satisfied by delivery
of Stock, cash equal to the Fair Market Value of the
specified number of shares of Stock covered by the
Deferred Stock, or a combination thereof, as
determined by the Committee or the Board at the date
of grant or thereafter. Prior to satisfaction of an
Award of Deferred Stock, an Award of Deferred Stock
carries no voting or dividend or other rights
associated with share ownership.

(ii)  Forfeiture. Except as otherwise determined
by the Committee or the Board, upon termination of a
Participant's employment during the applicable
deferral period thereof to which forfeiture conditions
apply (as provided in the Award agreement evidencing
the Deferred Stock), the Participant's Deferred Stock
that is at that time subject to deferral (other than a
deferral at the election of the Participant) shall be
forfeited; provided that the Committee or the Board
may provide, by rule or regulation or in any Award
agreement, or may determine in any individual case,
that restrictions or forfeiture conditions relating to
Deferred Stock shall be waived in whole or in part in
the event of terminations resulting from specified
causes, and the Committee or the Board may in other
cases waive in whole or in part the forfeiture of
Deferred Stock.

(iii)  Dividend Equivalents. Unless otherwise
determined by the Committee or the Board at date of
grant, Dividend Equivalents on the specified number of
shares of Stock covered by an Award of Deferred Stock
shall be either (A) paid with respect to such Deferred
Stock at the dividend payment date in cash or in
shares of unrestricted Stock having a Fair Market
Value equal to the amount of such dividends, or (B)
deferred with respect to such Deferred Stock and the
amount or value thereof automatically deemed
reinvested in additional Deferred Stock, other Awards
or other investment vehicles, as the Committee or the
Board shall determine or permit the Participant to elect.

(f)  Bonus Stock and Awards in Lieu of
Obligations  TC  . The Committee and the Board each is
authorized to grant Stock as a bonus, or to grant
Stock or other Awards in lieu of Company obligations
to pay cash or deliver other property under the Plan
or under other plans or compensatory arrangements,
provided that, in the case of Participants subject to
Section 16 of the Exchange Act, the amount of such
grants remains within the discretion of the Committee
to the extent necessary to ensure that acquisitions of
Stock or other Awards are exempt from liability under
Section 16(b) of the Exchange Act. Stock or Awards
granted hereunder shall be subject to such other terms
as shall be determined by the Committee or the Board.

(g)  Dividend Equivalents  TC  . The
Committee and the Board each is authorized to grant
Dividend Equivalents to a Participant entitling the
Participant to receive cash, Stock, other Awards, or
other property equal in value to dividends paid with
respect to a specified number of shares of Stock, or
other periodic payments. Dividend Equivalents may be
awarded on a free-standing basis or in connection with
another Award. The Committee or the Board may provide
that Dividend Equivalents shall be paid or distributed
when accrued or shall be deemed to have been
reinvested in additional Stock, Awards, or other
investment vehicles, and subject to such restrictions
on transferability and risks of forfeiture, as the
Committee or the Board may specify.

(h)  Other Stock-Based Awards  TC  . The
Committee and the Board each is authorized, subject to
limitations under applicable law, to grant to
Participants such other Awards that may be denominated
or payable in, valued in whole or in part by reference
to, or otherwise based on, or related to, Stock, as
deemed by the Committee or the Board to be consistent
with the purposes of the Plan, including, without
limitation, convertible or exchangeable debt
securities, other rights convertible or exchangeable
into Stock, purchase rights for Stock, Awards with
value and payment contingent upon performance of the
Company or any other factors designated by the
Committee or the Board, and Awards valued by reference
to the book value of Stock or the value of securities
of or the performance of specified subsidiaries or
business units. The Committee or the Board shall
determine the terms and conditions of such Awards.
Stock delivered pursuant to an Award in the nature of
a purchase right granted under this Section 6(h) shall
be purchased for such consideration (including without
limitation loans from the Company or a Parent
Corporation or a Subsidiary), paid for at such times,
by such methods, and in such forms, including, without
limitation, cash, Stock, other Awards or other
property, as the Committee or the Board shall
determine. The Committee and the Board shall have the
discretion to grant such other Awards which are
exercisable for unvested shares of Common Stock.
Should the Optionee cease to be employed with or
perform services to the Company (or a Parent
Corporation or Subsidiary) while holding such unvested
shares, the Company shall have the right to
repurchase, at the exercise price paid per share, any
or all of those unvested shares. The terms upon which
such repurchase right shall be exercisable (including
the period and procedure for exercise and the
appropriate vesting schedule for the purchased shares)
shall be established by the Committee or the Board and
set forth in the document evidencing such repurchase
right. Cash awards, as an element of or supplement to
any other Award under the Plan, may also be granted
pursuant to this Section 6(h).

7.  Certain Provisions Applicable to Awards  TC  .

(a)  Stand-Alone, Additional, Tandem, and
Substitute Awards  TC  . Awards granted under the Plan
may, in the discretion of the Committee or the Board,
be granted either alone or in addition to, in tandem
with, or in substitution or exchange for, any other
Award or any award granted under another plan of the
Company, any subsidiary, or any business entity to be
acquired by the Company or a subsidiary, or any other
right of a Participant to receive payment from the
Company or any subsidiary. Such additional, tandem,
and substitute or exchange Awards may be granted at
any time. If an Award is granted in substitution or
exchange for another Award or award, the Committee or
the Board shall require the surrender of such other
Award or award in consideration for the grant of the
new Award. In addition, Awards may be granted in lieu
of cash compensation, including in lieu of cash
amounts payable under other plans of the Company or
any subsidiary, in which the value of Stock subject to
the Award is equivalent in value to the cash
compensation (for example, Deferred Stock or
Restricted Stock), or in which the exercise price,
grant price or purchase price of the Award in the
nature of a right that may be exercised is equal to
the Fair Market Value of the underlying Stock minus
the value of the cash compensation surrendered (for
example, Options granted with an exercise price
"discounted" by the amount of the cash compensation
surrendered).

(b)  Term of Awards  TC  . The term of each
Award shall be for such period as may be determined by
the Committee or the Board; provided that in no event
shall the term of any Option or SAR exceed a period of
ten years (or such shorter term as may be required in
respect of an ISO under Section 422 of the Code).

(c)  Form and Timing of Payment Under
Awards; Deferrals  TC  . Subject to the terms of the
Plan and any applicable Award agreement, payments to
be made by the Company or a subsidiary upon the
exercise of an Option or other Award or settlement of
an Award may be made in such forms as the Committee or
the Board shall determine, including, without
limitation, cash, other Awards or other property, and
may be made in a single payment or transfer, in
installments, or on a deferred basis. The settlement
of any Award may be accelerated, and cash paid in lieu
of Stock in connection with such settlement, in the
discretion of the Committee or the Board or upon
occurrence of one or more specified events (in
addition to a Change in Control). Installment or
deferred payments may be required by the Committee or
the Board (subject to Section 10(e) of the Plan) or
permitted at the election of the Participant on terms
and conditions established by the Committee or the
Board. Payments may include, without limitation,
provisions for the payment or crediting of a
reasonable interest rate on installment or deferred
payments or the grant or crediting of Dividend
Equivalents or other amounts in respect of installment
or deferred payments denominated in Stock.

(d)  Exemptions from Section 16(b)
Liability  TC  . If and to the extent that the Company
is or becomes a Publicly Held Corporation, it is the
intent of the Company that this Plan comply in all
respects with applicable provisions of Rule 16b-3 or
Rule 16a-1(c)(3) to the extent necessary to ensure
that neither the grant of any Awards to nor other
transaction by a Participant who is subject to Section
16 of the Exchange Act is subject to liability under
Section 16(b) thereof (except for transactions
acknowledged in writing to be non-exempt by such
Participant). Accordingly, if any provision of this
Plan or any Award agreement does not comply with the
requirements of Rule 16b-3 or Rule 16a-1(c)(3) as then
applicable to any such transaction, such provision
will be construed or deemed amended to the extent
necessary to conform to the applicable requirements of
Rule 16b-3 or Rule 16a-1(c)(3) so that such
Participant shall avoid liability under Section 16(b).
In addition, the purchase price of any Award
conferring a right to purchase Stock shall be not less
than any specified percentage of the Fair Market Value
of Stock at the date of grant of the Award then
required in order to comply with Rule 16b-3.

8.  Performance and Annual Incentive Awards  TC  .

(a)  Performance Conditions  TC  . The right
of a Participant to exercise or receive a grant or
settlement of any Award, and the timing thereof, may
be subject to such performance conditions as may be
specified by the Committee or the Board. The Committee
or the Board may use such business criteria and other
measures of performance as it may deem appropriate in
establishing any performance conditions, and may
exercise its discretion to reduce the amounts payable
under any Award subject to performance conditions,
except as limited under Sections 8(b) and 8(c) hereof
in the case of a Performance Award or Annual Incentive
Award intended to qualify under Code Section 162(m).
At such times as the Company is a Publicly Held
Corporation, if and to the extent required under Code
Section 162(m), any power or authority relating to a
Performance Award or Annual Incentive Award intended
to qualify under Code Section 162(m), shall be
exercised by the Committee and not the Board.

(b)  Performance Awards Granted to
Designated Covered Employees  TC  . If and to the
extent that the Committee determines that a
Performance Award to be granted to an Eligible Person
who is designated by the Committee as likely to be a
Covered Employee should qualify as "performance-based
compensation" for purposes of Code Section 162(m), the
grant, exercise and/or settlement of such Performance
Award shall be contingent upon achievement of
preestablished performance goals and other terms set
forth in this Section 8(b).

(i)  Performance Goals Generally. The performance
goals for such Performance Awards shall consist of one
or more business criteria and a targeted level or
levels of performance with respect to each of such
criteria, as specified by the Committee consistent
with this Section 8(b). Performance goals shall be
objective and shall otherwise meet the requirements of
Code Section 162(m) and regulations thereunder
including the requirement that the level or levels of
performance targeted by the Committee result in the
achievement of performance goals being "substantially
uncertain." The Committee may determine that such
Performance Awards shall be granted, exercised and/or
settled upon achievement of any one performance goal
or that two or more of the performance goals must be
achieved as a condition to grant, exercise and/or
settlement of such Performance Awards. Performance
goals may differ for Performance Awards granted to any
one Participant or to different Participants.

(ii)  Business Criteria. One or more of the
following business criteria for the Company, on a
consolidated basis, and/or specified subsidiaries or
business units of the Company (except with respect to
the total stockholder return and earnings per share
criteria), shall be used exclusively by the Committee
in establishing performance goals for such Performance
Awards: (1) total stockholder return; (2) such total
stockholder return as compared to total return (on a
comparable basis) of a publicly available index such
as, but not limited to, the Standard & Poor's 500
Stock Index or the S&P Specialty Retailer Index; (3)
net income; (4) pretax earnings; (5) earnings before
interest expense, taxes, depreciation and
amortization; (6) pretax operating earnings after
interest expense and before bonuses, service fees, and
extraordinary or special items; (7) operating margin;
(8) earnings per share; (9) return on equity; (10)
return on capital; (11) return on investment; (12)
operating earnings; (13) working capital or inventory;
and (14) ratio of debt to stockholders' equity. One or
more of the foregoing business criteria shall also be
exclusively used in establishing performance goals for
Annual Incentive Awards granted to a Covered Employee
under Section 8(c) hereof that are intended to qualify
as "performanced-based compensation under Code Section
162(m).

(iii)  Performance Period; Timing For Establishing
Performance Goals. Achievement of performance goals in
respect of such Performance Awards shall be measured
over a performance period of up to ten years, as
specified by the Committee. Performance goals shall be
established not later than 90 days after the beginning
of any performance period applicable to such
Performance Awards, or at such other date as may be
required or permitted for "performance-based
compensation" under Code Section 162(m).

(iv)  Performance Award Pool. The Committee may
establish a Performance Award pool, which shall be an
unfunded pool, for purposes of measuring Company
performance in connection with Performance Awards. The
amount of such Performance Award pool shall be based
upon the achievement of a performance goal or goals
based on one or more of the business criteria set
forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Performance
Award pool as a percentage of any of such business
criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such
business criteria.

(v)  Settlement of Performance Awards; Other
Terms. Settlement of such Performance Awards shall be
in cash, Stock, other Awards or other property, in the
discretion of the Committee. The Committee may, in its
discretion, reduce the amount of a settlement
otherwise to be made in connection with such
Performance Awards. The Committee shall specify the
circumstances in which such Performance Awards shall
be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a
performance period or settlement of Performance
Awards.

(c)  Annual Incentive Awards Granted to
Designated Covered Employees  TC  . The Committee may,
within its discretion, grant one or more Annual
Incentive Awards to any Eligible Person, subject to
the terms and conditions set forth in this Section 8(c).

(i)  Annual Incentive Award Pool. The Committee
may establish an Annual Incentive Award pool, which
shall be an unfunded pool, for purposes of measuring
Company performance in connection with Annual
Incentive Awards. In the case of Annual Incentive
Awards intended to qualify as "performance-based
compensation" for purposes of Code Section 162(m), the
amount of such Annual Incentive Award pool shall be
based upon the achievement of a performance goal or
goals based on one or more of the business criteria
set forth in Section 8(b)(ii) hereof during the given
performance period, as specified by the Committee in
accordance with Section 8(b)(iii) hereof. The
Committee may specify the amount of the Annual
Incentive Award pool as a percentage of any such
business criteria, a percentage thereof in excess of a
threshold amount, or as another amount which need not
bear a strictly mathematical relationship to such
business criteria.

(ii)  Potential Annual Incentive Awards. Not later
than the end of the 90th day of each fiscal year, or
at such other date as may be required or permitted in
the case of Awards intended to be "performance-based
compensation" under Code Section 162(m), the Committee
shall determine the Eligible Persons who will
potentially receive Annual Incentive Awards, and the
amounts potentially payable thereunder, for that
fiscal year, either out of an Annual Incentive Award
pool established by such date under Section 8(c)(i)
hereof or as individual Annual Incentive Awards. In
the case of individual Annual Incentive Awards
intended to qualify under Code Section 162(m), the
amount potentially payable shall be based upon the
achievement of a performance goal or goals based on
one or more of the business criteria set forth in
Section 8(b)(ii) hereof in the given performance year,
as specified by the Committee; in other cases, such
amount shall be based on such criteria as shall be
established by the Committee. In all cases, the
maximum Annual Incentive Award of any Participant
shall be subject to the limitation set forth in
Section 5 hereof.

(iii)  Payout of Annual Incentive Awards. After the
end of each fiscal year, the Committee shall determine
the amount, if any, of (A) the Annual Incentive Award
pool, and the maximum amount of potential Annual
Incentive Award payable to each Participant in the
Annual Incentive Award pool, or (B) the amount of
potential Annual Incentive Award otherwise payable to
each Participant. The Committee may, in its
discretion, determine that the amount payable to any
Participant as an Annual Incentive Award shall be
reduced from the amount of his or her potential Annual
Incentive Award, including a determination to make no
Award whatsoever. The Committee shall specify the
circumstances in which an Annual Incentive Award shall
be paid or forfeited in the event of termination of
employment by the Participant prior to the end of a
fiscal year or settlement of such Annual Incentive Award.

(d)  Written Determinations  TC  . All
determinations by the Committee as to the
establishment of performance goals, the amount of any
Performance Award pool or potential individual
Performance Awards and as to the achievement of
performance goals relating to Performance Awards under
Section 8(b), and the amount of any Annual Incentive
Award pool or potential individual Annual Incentive
Awards and the amount of final Annual Incentive Awards
under Section 8(c), shall be made in writing in the
case of any Award intended to qualify under Code
Section 162(m). The Committee may not delegate any
responsibility relating to such Performance Awards or
Annual Incentive Awards if and to the extent required
to comply with Code Section 162(m).

(e)  Status of Section 8(b) and Section 8(c)
Awards under Code Section 162(m)  TC  . It is the
intent of the Company that Performance Awards and
Annual Incentive Awards under Section 8(b) and 8(c)
hereof granted to persons who are designated by the
Committee as likely to be Covered Employees within the
meaning of Code Section 162(m) and regulations
thereunder shall, if so designated by the Committee,
constitute "qualified performance-based compensation"
within the meaning of Code Section 162(m) and
regulations thereunder. Accordingly, the terms of
Sections 8(b), (c), (d) and (e), including the
definitions of Covered Employee and other terms used
therein, shall be interpreted in a manner consistent
with Code Section 162(m) and regulations thereunder.
The foregoing notwithstanding, because the Committee
cannot determine with certainty whether a given
Participant will be a Covered Employee with respect to
a fiscal year that has not yet been completed, the
term Covered Employee as used herein shall mean only a
person designated by the Committee, at the time of
grant of Performance Awards or an Annual Incentive
Award, as likely to be a Covered Employee with respect
to that fiscal year. If any provision of the Plan or
any agreement relating to such Performance Awards or
Annual Incentive Awards does not comply or is
inconsistent with the requirements of Code Section
162(m) or regulations thereunder, such provision shall
be construed or deemed amended to the extent necessary
to conform to such requirements.

9.  Change in Control  TC  .

(a)  Effect of "Change in Control."  TC   If
and to the extent provided in the Award, in the event
of a "Change in Control," as defined in Section 9(b):

(i)  The Committee may, within its discretion,
accelerate the vesting and exercisability of any Award
carrying a right to exercise that was not previously
vested and exercisable as of the time of the Change in
Control, subject to applicable restrictions set forth
in Section 10(a) hereof;

(ii)  The Committee may, within its discretion,
accelerate the exercisability of any limited SARs (and
other SARs if so provided by their terms) and provide
for the settlement of such SARs for amounts, in cash,
determined by reference to the Change in Control Price;

(iii)  The Committee may, within its discretion,
lapse the restrictions, deferral of settlement, and
forfeiture conditions applicable to any other Award
granted under the Plan and such Awards may be deemed
fully vested as of the time of the Change in Control,
except to the extent of any waiver by the Participant
and subject to applicable restrictions set forth in
Section 10(a) hereof; and

(iv)  With respect to any such outstanding Award
subject to achievement of performance goals and
conditions under the Plan, the Committee may, within
its discretion, deem such performance goals and other
conditions as having been met as of the date of the
Change in Control.

(b)  Definition of "Change in Control."  TC
A "Change in Control" shall be deemed to have
occurred upon:

(i)  Approval by the shareholders of the Company
of a reorganization, merger, consolidation or other
form of corporate transaction or series of
transactions, in each case, with respect to which
persons who were the shareholders of the Company
immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately
thereafter, own more than 50% of the combined voting
power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated
company's then outstanding voting securities, or a
liquidation or dissolution of the Company or the sale
of all or substantially all of the assets of the
Company (unless such reorganization, merger,
consolidation or other corporate transaction,
liquidation, dissolution or sale (any such event being
referred to as a "Corporate Transaction") is
subsequently abandoned);

(ii)  Individuals who, as of the date on which the
Award is granted, constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board, provided that any person
becoming a director subsequent to the date on which
the Award was granted whose election, or nomination
for election by the Company's shareholders, was
approved by a vote of at least a majority of the
directors then comprising the Incumbent Board (other
than an election or nomination of an individual whose
initial assumption of office is in connection with an
actual or threatened election contest relating to the
election of the Directors of the Company, as such
terms are used in Rule 14a11 of Regulation 14A
promulgated under the Securities Exchange Act) shall
be, for purposes of this Agreement, considered as
though such person were a member of the Incumbent
Board; or

(iii)  the acquisition (other than from the
Company) by any person, entity or "group", within the
meaning of Section 13(d)(3) or 14(d)(2) of the
Securities Exchange Act, of more than 50% of either
the then outstanding shares of the Company's Common
Stock or the combined voting power of the Company's
then outstanding voting securities entitled to vote
generally in the election of directors (hereinafter
referred to as the ownership of a "Controlling
Interest") excluding, for this purpose, any
acquisitions by (1) the Company or its Subsidiaries,
(2) any person, entity or "group" that as of the date
on which the Award is granted owns beneficial
ownership (within the meaning of Rule 13d-3
promulgated under the Securities Exchange Act) of a
Controlling Interest or (3) any employee benefit plan
of the Company or its Subsidiaries.

(c)  Definition of "Change in Control
Price."  TC   The "Change in Control Price" means an
amount in cash equal to the higher of (i) the amount
of cash and fair market value of property that is the
highest price per share paid (including extraordinary
dividends) in any Corporate Transaction triggering the
Change in Control under Section 9(b)(i) hereof or any
liquidation of shares following a sale of
substantially all of the assets of the Company, or
(ii) the highest Fair Market Value per share at any
time during the 60-day period preceding and the 60-day
period following the Change in Control.

10.  General Provisions  TC  .

(a)  Compliance With Legal and Other
Requirements  TC  . The Company may, to the extent
deemed necessary or advisable by the Committee or the
Board, postpone the issuance or delivery of Stock or
payment of other benefits under any Award until
completion of such registration or qualification of
such Stock or other required action under any federal
or state law, rule or regulation, listing or other
required action with respect to any stock exchange or
automated quotation system upon which the Stock or
other Company securities are listed or quoted, or
compliance with any other obligation of the Company,
as the Committee or the Board, may consider
appropriate, and may require any Participant to make
such representations, furnish such information and
comply with or be subject to such other conditions as
it may consider appropriate in connection with the
issuance or delivery of Stock or payment of other
benefits in compliance with applicable laws, rules,
and regulations, listing requirements, or other
obligations. The foregoing notwithstanding, in
connection with a Change in Control, the Company shall
take or cause to be taken no action, and shall
undertake or permit to arise no legal or contractual
obligation, that results or would result in any
postponement of the issuance or delivery of Stock or
payment of benefits under any Award or the imposition
of any other conditions on such issuance, delivery or
payment, to the extent that such postponement or other
condition would represent a greater burden on a
Participant than existed on the 90th day preceding the
Change in Control.

(b)  Limits on Transferability;
Beneficiaries  TC  . No Award or other right or
interest of a Participant under the Plan, including
any Award or right which constitutes a derivative
security as generally defined in Rule 16a1(c) under
the Exchange Act, shall be pledged, hypothecated or
otherwise encumbered or subject to any lien,
obligation or liability of such Participant to any
party (other than the Company or a Subsidiary), or
assigned or transferred by such Participant otherwise
than by will or the laws of descent and distribution
or to a Beneficiary upon the death of a Participant,
and such Awards or rights that may be exercisable
shall be exercised during the lifetime of the
Participant only by the Participant or his or her
guardian or legal representative, except that Awards
and other rights (other than ISOs and SARs in tandem
therewith) may be transferred to one or more
Beneficiaries or other transferees during the lifetime
of the Participant, and may be exercised by such
transferees in accordance with the terms of such
Award, but only if and to the extent such transfers
and exercises are permitted by the Committee or the
Board pursuant to the express terms of an Award
agreement (subject to any terms and conditions which
the Committee or the Board may impose thereon, and
further subject to any prohibitions or restrictions on
such transfers pursuant to Rule 16b-3). A Beneficiary,
transferee, or other person claiming any rights under
the Plan from or through any Participant shall be
subject to all terms and conditions of the Plan and
any Award agreement applicable to such Participant,
except as otherwise determined by the Committee or the
Board, and to any additional terms and conditions
deemed necessary or appropriate by the Committee or
the Board.

(c)  Adjustments  TC  . In the event that
any dividend or other distribution (whether in the
form of cash, Stock, or other property),
recapitalization, forward or reverse split,
reorganization, merger, consolidation, spin-off,
combination, repurchase, share exchange, liquidation,
dissolution or other similar corporate transaction or
event affects the Stock such that a substitution or
adjustment is determined by the Committee or the Board
to be appropriate in order to prevent dilution or
enlargement of the rights of Participants under the
Plan, then the Committee or the Board shall, in such
manner as it may deem equitable, substitute or adjust
any or all of (i) the number and kind of shares of
Stock which may be delivered in connection with Awards
granted thereafter, (ii) the number and kind of shares
of Stock by which annual per-person Award limitations
are measured under Section 5 hereof, (iii) the number
and kind of shares of Stock subject to or deliverable
in respect of outstanding Awards and (iv) the exercise
price, grant price or purchase price relating to any
Award and/or make provision for payment of cash or
other property in respect of any outstanding Award. In
addition, the Committee (and the Board if and only to
the extent such authority is not required to be
exercised by the Committee to comply with Code Section
162(m)) is authorized to make adjustments in the terms
and conditions of, and the criteria included in,
Awards (including Performance Awards and performance
goals, and Annual Incentive Awards and any Annual
Incentive Award pool or performance goals relating
thereto) in recognition of unusual or nonrecurring
events (including, without limitation, events
described in the preceding sentence, as well as
acquisitions and dispositions of businesses and
assets) affecting the Company, any Subsidiary or any
business unit, or the financial statements of the
Company or any Subsidiary, or in response to changes
in applicable laws, regulations, accounting
principles, tax rates and regulations or business
conditions or in view of the Committee's assessment of
the business strategy of the Company, any Subsidiary
or business unit thereof, performance of comparable
organizations, economic and business conditions,
personal performance of a Participant, and any other
circumstances deemed relevant; provided that no such
adjustment shall be authorized or made if and to the
extent that such authority or the making of such
adjustment would cause Options, SARs, Performance
Awards granted under Section 8(b) hereof or Annual
Incentive Awards granted under Section 8(c) hereof to
Participants designated by the Committee as Covered
Employees and intended to qualify as "performance-
based compensation" under Code Section 162(m) and the
regulations thereunder to otherwise fail to qualify as
"performance-based compensation" under Code Section
162(m) and regulations thereunder.

(d)  Taxes  TC  . The Company and any
Subsidiary is authorized to withhold from any Award
granted, any payment relating to an Award under the
Plan, including from a distribution of Stock, or any
payroll or other payment to a Participant, amounts of
withholding and other taxes due or potentially payable
in connection with any transaction involving an Award,
and to take such other action as the Committee or the
Board may deem advisable to enable the Company and
Participants to satisfy obligations for the payment of
withholding taxes and other tax obligations relating
to any Award. This authority shall include authority
to withhold or receive Stock or other property and to
make cash payments in respect thereof in satisfaction
of a Participant's tax obligations, either on a
mandatory or elective basis in the discretion of the Committee.

(e)  Changes to the Plan and Awards  TC  .
The Board may amend, alter, suspend, discontinue or
terminate the Plan, or the Committee's authority to
grant Awards under the Plan, without the consent of
stockholders or Participants, except that any
amendment or alteration to the Plan shall be subject
to the approval of the Company's stockholders not
later than the annual meeting next following such
Board action if such stockholder approval is required
by any federal or state law or regulation (including,
without limitation, Rule 16b-3 or Code Section 162(m))
or the rules of any stock exchange or automated
quotation system on which the Stock may then be listed
or quoted, and the Board may otherwise, in its
discretion, determine to submit other such changes to
the Plan to stockholders for approval; provided that,
without the consent of an affected Participant, no
such Board action may materially and adversely affect
the rights of such Participant under any previously
granted and outstanding Award. The Committee or the
Board may waive any conditions or rights under, or
amend, alter, suspend, discontinue or terminate any
Award theretofore granted and any Award agreement
relating thereto, except as otherwise provided in the
Plan; provided that, without the consent of an
affected Participant, no such Committee or the Board
action may materially and adversely affect the rights
of such Participant under such Award. Notwithstanding
anything in the Plan to the contrary, if any right
under this Plan would cause a transaction to be
ineligible for pooling of interest accounting that
would, but for the right hereunder, be eligible for
such accounting treatment, the Committee or the Board
may modify or adjust the right so that pooling of
interest accounting shall be available, including the
substitution of Stock having a Fair Market Value equal
to the cash otherwise payable hereunder for the right
which caused the transaction to be ineligible for
pooling of interest accounting.

(f)  Limitation on Rights Conferred Under
Plan  TC  . Neither the Plan nor any action taken
hereunder shall be construed as (i) giving any
Eligible Person or Participant the right to continue
as an Eligible Person or Participant or in the employ
of the Company or a Subsidiary; (ii) interfering in
any way with the right of the Company or a Subsidiary
to terminate any Eligible Person's or Participant's
employment at any time, (iii) giving an Eligible
Person or Participant any claim to be granted any
Award under the Plan or to be treated uniformly with
other Participants and employees, or (iv) conferring
on a Participant any of the rights of a stockholder of
the Company unless and until the Participant is duly
issued or transferred shares of Stock in accordance
with the terms of an Award.

(g)  Unfunded Status of Awards; Creation of
Trusts  TC  . The Plan is intended to constitute an
"unfunded" plan for incentive and deferred
compensation. With respect to any payments not yet
made to a Participant or obligation to deliver Stock
pursuant to an Award, nothing contained in the Plan or
any Award shall give any such Participant any rights
that are greater than those of a general creditor of
the Company; provided that the Committee may authorize
the creation of trusts and deposit therein cash,
Stock, other Awards or other property, or make other
arrangements to meet the Company's obligations under
the Plan. Such trusts or other arrangements shall be
consistent with the "unfunded" status of the Plan
unless the Committee otherwise determines with the
consent of each affected Participant. The trustee of
such trusts may be authorized to dispose of trust
assets and reinvest the proceeds in alternative
investments, subject to such terms and conditions as
the Committee or the Board may specify and in
accordance with applicable law.

(h)  Nonexclusivity of the Plan  TC  .
Neither the adoption of the Plan by the Board nor its
submission to the stockholders of the Company for
approval shall be construed as creating any
limitations on the power of the Board or a committee
thereof to adopt such other incentive arrangements as
it may deem desirable including incentive arrangements
and awards which do not qualify under Code Section
162(m).

(i)  Payments in the Event of Forfeitures;
Fractional Shares  TC  . Unless otherwise determined
by the Committee or the Board, in the event of a
forfeiture of an Award with respect to which a
Participant paid cash or other consideration, the
Participant shall be repaid the amount of such cash or
other consideration. No fractional shares of Stock
shall be issued or delivered pursuant to the Plan or
any Award. The Committee or the Board shall determine
whether cash, other Awards or other property shall be
issued or paid in lieu of such fractional shares or
whether such fractional shares or any rights thereto
shall be forfeited or otherwise eliminated.

(j)  Governing Law  TC  . The validity,
construction and effect of the Plan, any rules and
regulations under the Plan, and any Award agreement
shall be determined in accordance with the laws of the
State of Nevada without giving effect to principles of
conflicts of laws, and applicable federal law.

(k)  Plan Effective Date and Stockholder
Approval; Termination of Plan  TC  . The Plan shall
become effective on the Effective Date, subject to
subsequent approval within 12 months of its adoption
by the Board by stockholders of the Company eligible
to vote in the election of directors, by a vote
sufficient to meet the requirements of Code Sections
162(m) (if applicable) and 422, Rule 16b-3 under the
Exchange Act (if applicable), applicable NASDAQ
requirements, and other laws, regulations, and
obligations of the Company applicable to the Plan.
Awards may be granted subject to stockholder approval,
but may not be exercised or otherwise settled in the
event stockholder approval is not obtained. The Plan
shall terminate at such time as no shares of Common
Stock remain available for issuance under the Plan and
the Company has no further rights or obligations with
respect to outstanding Awards under the Plan.

                             EX-21

                 SUBSIDIARIES OF THE REGISTRANT

PalmWorks, Inc., a Nevada corporation.