At March 21, 2003, the Company had 342 holders of record of its common stock. Some shares are held by various investment and other firms in street name. The Company estimates the number of beneficial owners of the Company's common stock at March 21, 2003 to be 400.

The market price of the Company's common stock has been nominal with little trading volume during the year.

The Company has never paid a cash dividend on its shares of common stock and does not expect to do so in the foreseeable future. After March 31, 2000 and prior to the redemption of the Series A and Series C Preferred Stock by the Company, the Company did not pay any dividends to the holders thereof. Any obligation to pay accrued dividends to the holders the Series A and Series C Preferred Stock was cancelled in connection with the redemption of these shares by the Company.

The following information should be read in conjunction with the historical financial information and the notes thereto included in Items 6 and 8 of this 10-KSB.

This Management's Discussion and Analysis section and other parts of this Annual Report on Form 10-KSB contain forward-looking statements within the meaning of the Securities Act of 1933, as amended, and the Securities Exchange Act of 1934, as amended, that involve risks and uncertainties. The Company's actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed below and in Part I, Item 1."Business" and Part II, Item 6, "Plan of Operation.". The forward-looking statements contained herein are made as of the date hereof, and management assumes no obligation to update such forward-looking statements. Actual results could differ materially from those anticipated in such forward-looking statements.

Critical Accounting Policies

Management considers the following to be critical accounting policies:

The Company accounts for employee stock transactions in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has adopted the proforma disclosure requirements of SFAS 123, "Accounting for Stock-Based Compensation." Accordingly, any excess of fair market value of stock issued to employees over exercise prices has been recorded as compensation expense and additional paid in capital.

For the Years Ended December 31, 2002 and December 31, 2001

As a result of the sale in June 2001 by the Company of substantially all of its assets (including all of its revenue generating assets) to TMP and the prior sales of the Company's Internet services businesses, the Company no longer is engaged in any business in which it was engaged during its three fiscal years ended June 30, 1998, 1999 and 2000, its six-month transition period ending December 31, 2000 or its fiscal year ended December 31, 2001. During 2002, the Company engaged principally in market investigation and feasibility analysis with respect to its current business with only limited potential client company discussions. The Company also carried out a stockholder-approved recapitalization of its corporate structure without which its current plan of operation would not be possible. This recapitalization required that the Company amend its certificate of incorporation. As a result, the Company generated no revenue from the business it is now actively engaged in during the fiscal year ended December 31, 2002. See Plan of Operation, below.

Accordingly, management does not believe that it is informative or useful to compare the results of operations of the Company in 2002 when it was preparing to enter into a new business with a business that it conducted until June 20, 2001 but which it no longer owns.

Liquidity and Capital Resources

As of December 31, 2002, the Company had negative working capital of $107,518 compared to positive working capital of $650,009 as of December 31, 2001.

The Company has minimal fixed expenses and minimal operating costs. The Company's officers voluntarily terminated their employment agreements with the Company effective December 31, 2002 and will be paid solely from revenues generated from future transactions in an amount approved by the independent compensation committee of the board of directors. The Company's lease for its premises has expired but the Company continues to occupy this office space on a month-to-month basis. The Company will be able to operate through the end of 2003 without generating any additional revenue from the business it is currently conducting. See Part 1, Item 1. "Business."

The Company earned $6,591 of interest income in its fiscal year ended December 31, 2002.

The number of underwritten initial public offerings has declined precipitously since 2000. The total number of IPOs in 2001 and 2002 (153) was 38% of the number in 2000 alone (406). January of 2003 marked the first month since the 1970s when there was not an IPO, and the first IPO of 2003 closed on February 12, 2003. Underwritten IPO opportunities are, have been for a considerable period of time, and are expected to remain for the foreseeable future, virtually non-existent for small and microcap companies. Nevertheless, small and microcap companies have significant need for capital, the prospects for which are enhanced if their securities trade so that investors have a specific measure of value and liquidity. Other small companies do not necessarily need capital but believe that the timing is right to engage in "rollup" transactions, using in part their publicly traded securities as acquisition currency.

For most companies, the only option in today's economy has been to go public through a reverse merger, risking, in the process, regulatory scrutiny, balance sheet issues and investor skepticism . The Company offers an alternative that management believes is more satisfactory for private companies and more satisfactory for the investing public because the client company shares are registered prior to any distribution.

Cytation's "Dividend Distribution Program" offers companies a means to attain public company status under the Securities Act of 1933 and the Securities Exchange Act of 1934 and to meet applicable exchange listing standards (Nasdaq, the American Stock Exchange, the OTCBB and the new Bulletin Board Exchange) through a straightforward, "front-door" program. This program, which does not involve an underwriting of securities or the sale of securities to the general public, enables companies to provide full disclosure to the investing public in accordance with SEC rules and regulations while, at the same time, permitting them to preserve their corporate history and avoid the need to locate, negotiate and consummate a merger with a previously unknown corporate entity. Cytation accomplishes these important objectives by leveraging its status as a reporting company and its management's public company and securities industry expertise.

The Company provides a broad range of services as part of its overall agreement with client companies. These services are:

• assist in the selection of competent corporate and securities counsel and independent auditors experienced in SEC practice and procedure

• develop strategies, assist in applying, and provide the stockholder distribution and base necessary, for listing on the OTCBB, the BBX, NASDAQ or the American Stock Exchange, including advice with respect to meeting applicable initial and maintenance listing requirements and

• assist client companies' outside legal counsel in the preparation and filing with the SEC of a registration statement, generally on Form SB-2

• assist client companies' outside legal counsel and auditors with respect to SEC Staff comments on the registration statement

• assist client companies in preparing for an audit of their financial statements in connection with the registration statement

• assist client companies in obtaining market makers

• assist client companies with respect to obtaining a "manual exemption" from filing requirements under state securities laws

• evaluate opportunities for research on client companies

• evaluate general client company profile materials

• advise client company management regarding general private to public company transition issues and matters

• introduce client companies to possible institutional sources of private financing

The Company does not provide investor relations or financial public relations services or assist client companies in selecting investor relations or a financial public relations services provider. Nor does the Company underwrite client companies' securities. Management of the Company will not take management or director positions with any client company, and the Company will not provide consulting services related to the management or operation of client businesses.

The Company is compensated in cash and client company stock for its services. It is expected that stock consideration received and retained by the Company will be sold over an extended period of time. All transactions in the securities of client companies are effected by unaffiliated members of the National Association of Securities Dealers in open market transactions.

A more complete description of the Company's business may be found at www.cytation.com.

The Company does not need to perform any product research and development to carry out its plan of operation. Nor does the Company need to acquire or dispose of any plant and equipment to carry out its plan of operation. The Company believes that its number of employees will remain at three.

In April 2002, the FASB issued Statement No. 145, Rescission of FASB Statements No. 4, 44, and 62, Amendment of FASB Statement No. 13, and Technical Corrections (SFAS 145). SFAS 145 will require gains and losses on extinguishments of debt to be classified as income or loss from continuing operations rather than as extraordinary items as previously required under Statement of Financial Accounting Standards No. 4 (SFAS 4). Extraordinary treatment will be required for certain extinguishments as provided in APB Opinion No. 30. SFAS 145 also amends Statement of Financial Accounting Standards No. 13 to require certain modifications to capital leases be treated as a sale-leaseback and modifies the accounting for sub-leases when the original lessee remains a secondary obligor (or guarantor). SFAS 145 is effective for financial statements issued after May 15, 2002, and with respect to the impact of the reporting requirements of changes made to SFAS 4 for fiscal years beginning after May 15, 2002. The adoption of the applicable provisions of SFAS 145 did not have an effect the Company's financial statements.

In June 2002, the FASB issued Statement of Financial Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities (SFAS 146). SFAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. SFAS 146 requires that the initial measurement of a liability be at fair value. The Company plans to adopt SFAS 146 effective October 1, 2002 and does not expect that the adoption will have a material impact on its results of operations and financial position.

In October 2002, the FASB issued Statement No. 147, Acquisitions of Certain Financial Institutions - an amendment of FASB Statements No. 72 and 144 and FASB Interpretation No. 9 (SFAS 147). SFAS 147 removes acquisitions of financial institutions from the scope of both Statement 72 and Interpretation 9 and requires that those transactions be accounted for in accordance with FASB Statements No. 141, Business Combinations, and No. 142, Goodwill and Other Intangible Assets. Thus, the requirement in paragraph 5 of Statement 72 to recognize (and subsequently amortize) any excess of the fair value of liabilities assumed over the fair value of tangible and identifiable intangible assets acquired as an unidentifiable intangible asset no longer applies to acquisitions within the scope of this Statement. In addition, this Statement amends FASB Statement No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, to include in its scope long-term customer-relationship intangible assets of financial institutions such as depositor- and borrower-relationship intangible assets and credit cardholder intangible assets. Consequently, those intangible assets are subject to the same undiscounted cash flow recoverability test and impairment loss recognition and measurement provisions that Statement 144 requires for other long-lived assets that are held and used. SFAS 147 is effective October 1, 2002. The adoption of the applicable provisions of SFAS 147 did not have an effect on the Company's financial statements.

In December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation - Transition and Disclosure - an amendment of FASB Statement No. 123 (SFAS 148). SFAS 148 amends SFAS 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this Statement amends the disclosure requirements of SFAS 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results. SFAS 148 also requires that those effects be disclosed more prominently by specifying the form, content, and location of those disclosures.

This report on Form 10-KSB contains forward-looking statements within the meaning of the Securities Act of 1933, as amended and the Securities Exchange Act of 1934, as amended. Our future results of operations could vary significantly from the results anticipated by such forward-looking statements as a result of various factors, including those set forth as follows and elsewhere in this annual report on Form 10-KSB.

DEPENDENCE ON KEY PERSONNEL

The business in which the Company is now engaged utilizes the specific skills of current management. If either of the senior executives of the Company were to terminate his employment with the Company, it would not be possible to pursue this opportunity or to fulfill agreements, if any, that the Company may have entered into with finding qualified replacement personnel. There is a limited number of personnel with the requisite skills to serve in these positions. The loss of the services of either of these key employees could have a material adverse effect on the Company's business, operating results and financial condition. The Company does not maintain a key person life insurance policy covering any of its officers.

FLUCTUATIONS IN OPERATING RESULTS

The Company has experienced and expects to continue to experience fluctuations in its quarterly and annual operating results.

POSSIBLE FUTURE VOLATILITY OF STOCK PRICE AND TRADING VOLUME

The market price and trading volume of the Company's common stock has been nominal during 2002. Historically, however, the market price and trading volume of the Company's common stock has been volatile, and it is possible that the market price and trading volume will again be volatile if, and to the extent that, the Company is successful in executing its new business plan. In addition, in recent years the stock market in general, and the market for small companies in particular, has experienced extreme price fluctuations (and recently, severe declines) which have often been unrelated to the operating performance of affected companies. Such fluctuations could adversely affect the market price of the Company's common stock.

We have considered the provisions of Financial Reporting Release No. 48 "Disclosures of Accounting Policies for Derivative Financial Instruments and Derivative Commodity Instruments, and Disclosures of Quantitative and Qualitative Information about Market Risk Inherent in Derivative Commodity Instruments." We have no holdings of derivative financial or commodity instruments at December 31, 2002.

We are exposed to financial market risks, including changes in interest rates. To reduce these risks to some extent, we invest excess cash in a managed portfolio of corporate and government bond instruments with maturities of 18 months or less. We do not use any financial instruments for speculative or trading purposes.

Our Financial Statements and related Report of Independent Auditors are presented in the following pages. The Financial Statements filed in this Item 7 are as follows:

None.

CYTATION CORPORATION
(FORMERLY COLLEGELINK.COM INCORPORATED)

FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

CONTENTS

REPORT OF INDEPENDENT AUDITORS

FINANCIAL STATEMENTS

          Balance Sheets
          Statements of Operations
          Statements of Cash Flows
          Statements of Changes in Stockholders' Equity

NOTES TO FINANCIAL STATEMENTS

March 12, 2003

The Board of Directors and Stockholders,

We have audited the accompanying balance sheets of as of and the related statements of operations, changes in stockholders' equity (deficit), and cash flow for the years then ended. These financial statements are the responsibility of the company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

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

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

/s/ Radin Glass & Co., LLP
Certified Public Accountants
New York, NY

1. Business

Until June 20, 2001, (the "Company") provided an extensive range of in-school and online services directed at high school students and their parents, high school guidance counselors, college admissions officers and corporations which targeted the teen marketplace.

On June 20, 2001, the Company sold substantially all of its assets to TMP Worldwide Inc. ("TMP"). As consideration for the sale, TMP paid the Company approximately $4,202,000 in cash and assumed approximately $3,062,000 of the Company's liabilities. Among the liabilities that TMP assumed were notes issued by the Company to TMP in the aggregate principal amount of $1,000,000. The Company recorded a gain of $778,005 in connection with this transaction. On June 21, 2001, the Company changed its name from CollegeLink.com Incorporated to Cytation Corporation.

2. Summary of Significant Accounting Policies

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

b.  Property and Equipment - Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets ranging from three to seven years for equipment, auto and furniture. Leasehold improvements are amortized over the term of the lease or the estimated life of the improvement, whichever is shorter. Whenever assets are sold or retired, their cost and related accumulated depreciation are removed from the appropriate accounts. Any gains and losses on dispositions are recorded in current operations.

c.  Fair Value of Financial Instruments - The carrying amounts reported in the balance sheet for cash, trade receivables, accounts payable and accrued expenses approximate fair value based on the short-term maturity of these instruments

d.  Income Taxes - The Company utilizes the liability method of accounting for income taxes as set forth in SFAS 109, "Accounting for Income Taxes." Under the liability method, deferred taxes are determined based on the difference between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse.

e.   Advertising Costs - Advertising costs are expensed as incurred. Total advertising costs amounted to $-0- and $131,157 for the years ended .

f.  Revenue Recognition - Revenues were recognized when services are performed. For the college and high school programs, the Company recognized revenue over the program life, which generally was five to six months, taking into account the number of presentations completed and to be completed and contracts price. Deferred revenue represented unearned revenue for the uncompleted programs at the balance sheet date based upon number of presentations not yet completed. Prepaid program fees represented fees received in advances for programs not yet started.

g.   Employee Stock Options and Shares Issued for Services - The Company accounts for employee stock transactions in accordance with APB Opinion No. 25, "Accounting for Stock Issued to Employees." The Company has adopted the proforma disclosure requirements of SFAS 123, "Accounting for Stock-Based Compensation." Accordingly, any excess of fair market value of stock issued to employees over exercise prices has been recorded as compensation expense and additional paid in capital.

h.   Loss Per Share - The Company adopted the provision of SFAS No. 128, "Earnings per Share". SFAS No. 128 eliminates the presentation of primary and fully dilutive earnings per share ("EPS") and requires presentation of basic and diluted EPS. Basic EPS is computed by dividing income (loss) available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based on the weighted-average number of shares of common stock and common stock equivalents outstanding for the period. Common stock equivalents are excluded in the computation of diluted EPS for the years ended as such inclusion is antidilutive. The computations of basic and diluted EPS, after giving retroactive effects of the reverse stock split (see Note 5b), from continuing operations were as follows:

		2002		2001
Net Loss	$	1,170,037	$	2,872,069
Preferred Stock Dividend Earned		206,324		275,099
Net Loss Attributable to Common Shares		1,376,361		3,147,168
Weighted Average Common Shares Outstanding		249,052		236,382
Net Loss per Share (Basic and Diluted)	$	5.53	$	13.31
		=======		========

i.  Accounting for Long-Lived Assets - The Company reviews long-lived assets, certain identifiable assets and any goodwill related to those assets for impairment whenever circumstances and situations change such that there is an indication that the carrying amounts may not be recoverable. At December 31, 2000, the Company believed that there was an impairment on its goodwill and other intangible assets (see Note 5 for further discussion). At , the Company believed that there had been no impairment of its long-lived assets.

j.  Reporting of Segments - The Company adopted No. 131, "Disclosures about Segments of an Enterprise and Related Information". SFAS No. 131 establishes the criteria for determining an operating segment and establishes the disclosure requirements for reporting information about operating segments. The Company had determined that under SFAS No. 131, it operated in one segment of service.

k.  Cash and Cash Equivalents - For purposes of the statement of cash flows, the Company considers all short-term investments with an original maturity of three months or less to be cash equivalents. The Company may have cash balances in the bank in excess of the maximum amount insured by the FDIC through the period.

l.  Website Development Costs - The Company follows EITF 00-2 as to its website development costs.  EITF 00-2 requires certain website development costs to be expensed and others to be capitalized.  The Company capitalized website development costs of $-0- and $6,810 during the years ended , respectively in accordance with EITF 00-2. The capitalized costs were payroll and payroll taxes paid to the programmers after the planning stage. The website development costs is amortized over three years.  Total amortization expense for the years ended  were $-0- and $66,399, respectively. 

m.  Cash in Escrow Account - In connection with the sale to TMP (see Note 1), the Company deposited $420,224 into an interest-bearing escrow account.  These funds, net of any claims made against the escrow and paid in accordance with the terms of the Escrow Agreement, were released to the Company in December 2002.

(A)   In December 31, 2002, this note became uncollectible and therefore was written off.

4.  Property and Equipment

Property and equipment at and consist of the following:

Depreciation expense for the years ended was $13,920 and $103,292, respectively. In June 2001, property and equipment with a net book value of approximately $471,000 was sold to TMP (see Note 1).

5. Stockholders' Equity

The Company's authorized shares consisted of 110,000,000 shares, divided into 100,000,000 shares of common stock, par value $.001 per share and 10,000,000 shares of preferred stock, par value $.01 per share. In November 2002, the Company amended its certificate of incorporation in connection with the reverse stock split (see b. below). The Company's authorized shares now consist of 3,140,000 shares, divided into 2,000,000 shares of common stock, par value $.001 per share and 1,140,000 shares of preferred stock, par value $.01 per share.

b.   Reverse Stock Split

In September 2002, the stockholders and the board of directors approved and authorized a 1-for-150 reverse stock split of the Company's common stock. In November 2002, the Company's certificate of incorporation was amended to provide for this reverse split. Stockholders' equity (deficit) has been restated to give retroactive recognition to the stock split for all periods presented. In addition, all references to number of shares, per share amounts, stock option data, and market prices of common stock have been restated to reflect the reverse stock split.

c.   Series A Convertible Preferred Stock

In April 1999, the Company received $3,100,000 in exchange for 775,000 shares of 6% cumulative preferred stock designated as "Series A Convertible Preferred Stock" ("Preferred A") from two investors. "Preferred A" has a stated value of $4.00 per share, a par value of $.01 per share and dividends payable quarterly when and if declared by the Company's board of directors. Any holder of Preferred A may at any time convert stock into the common stock of the Company at a ratio of one share of common stock for each share of Preferred A. The Company may require conversion on or after the first anniversary of the initial purchase if the closing bid price for its common shares exceeds $6.00 for twenty consecutive trading days. If a special event occurs, as defined, the holders of the issued and outstanding Preferred A are entitled to receive $4.00 for each share of Preferred A before any distribution of the assets of the Company shall be made to the holders of any other capital stock.

During the year ended June 30, 2000, the Company issued additional 365,000 shares of its Preferred A for $1,484,980.

On November 2, 2001, a related entity (the "Related Entity") acquired 1,025,000 shares of Preferred A from three holders (the "Holders") for an aggregate purchase price of $10,250. In connection with this transaction, the Company issued to the Holders two-year warrants (the "Company Warrants") to purchase 6,833 shares of the Company's common stock at an exercise price of $1.50 per share. The Company Warrants were valued under the Black-Scholes method at $1.50 per share. The Related Entity also issued to the Company a two-year warrant to purchase 6,833 shares of the Company's common stock from it at an exercise price of $1.50 per share (the "Related Entity Warrant") so that if the Company Warrants were exercised by the Holders, the Company could acquire the shares from the Related Entity at the same price through the exercise by the Company of the Related Entity Warrant.

On September 30, 2002, the Company acquired all 1,140,000 shares of Preferred A for an aggregate purchase price of $11,400. In connection with this transaction, the Company issued to the preferred stockholders, except the Related Entity, two-year warrants to purchase 767 shares of the Company's common stock at an exercise price of $1.50 per share. These warrants ware in all respects (other than the issue and expiration dates) the same as the Company Warrants and were valued under the Black-Scholes method at $1.50 per share. The Related Entity Warrant was canceled in connection with this transaction. The holders of Preferred A waived their right to any unpaid dividends.

d.   Series C Convertible Preferred Stock

In September 1999, the Company received $4,000,000 in exchange for 1,000,000 shares of 6% cumulative preferred stock designated as "Series C Convertible Preferred Stock" ("Preferred C") from PNC Bank Corp. Preferred C has a stated value of $4.00 per share, a par value of $0.01 per share and dividends payable quarterly. The Preferred C holder has the similar preference of Preferred A (see c. above).

During the year ended December 31, 2001, the Company acquired all 1,000,000 shares of the Preferred C for an aggregate purchase price of $20,000. The holder waived its right to any unpaid dividends.

In a separate transaction that closed on the same day as the sale to assets to TMP (see Note 1), the Company paid approximately $849,000 to two former officers in consideration of consulting fees, bonuses and the redemption of 10,833 shares of the Company's common stock. Such shares were canceled immediately.

f.   Options and Warrants

During the year ended December 31, 2001, the Company granted certain employees and directors options to purchase 157,316 shares of its common stock at an exercise price $0.15 per share, which was below the market value of the stock on the grant date. Accordingly, the Company recorded compensation costs of $212,376.

Weighted average exercise prices for options outstanding at was $-0- and $777, respectively. Total exercisable options at was -0- and 1,167 shares, respectively.

The following table summarizes the changes in options outstanding and the related price ranges for shares of the Company's common stock:

On November 2, 2001, in connection with the purchase of Preferred A by the Related Entity, the Company issued to the Holders two-year warrants to purchase 6,833 shares of the Company's common stock at an exercise price of $1.50 per share (see c. above). These warrants are valued at $10,250 under the Black-Scholes option-pricing model. On September 30, 2002, the Company acquired all Preferred A from all holders. In connection with the acquisition, the Company issued to all holders, except the Related Entity, two-year warrants to purchase 767 shares of the Company's common stock at an exercise price of $1.50 per share (see c. above). These warrants are valued at $1,150 under the Black-Scholes option-pricing model.

The changes in warrants outstanding and related price ranges are as follows:

For disclosure purposes in accordance with SFAS No. 123, the fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted-average assumptions used for stock options granted during the periods:

If the Company recognized compensation cost for the employee stock option plan in accordance with SFAS No. 123, the Company's pro forma net loss and loss per share would have been approximately, $2,896,000 and $12.25, respectively, for the year ended December 31, 2001. The pro forma net loss and loss per share for the year ended are the same as the loss per share indicated on Note 2h above.

6.  Commitments and Contingencies

a.  The Company had a two-year lease agreement expired on December 31, 2002. The Company rents its office on a month-to-month basis currently. Rent expense was approximately $23,000 and $63,000 for the years ended , respectively.

b.  Effective July 1, 2001, the Company entered into three-year employment agreements with two officers who are principal stockholders of the Company.  On October 15, 2001, the Company advanced to tow officers $375,000 and $225,000, respectively, as an inducement for the officers to remain with the Company through at least January 2, 2003.  These advances were converted to a continuation bonus on January 2, 2003.  Such advances have been recorded as deferred compensation and amortized over fifteen months. These agreements were terminated by mutual consent of the Company and the two officers effective December 31, 2002, although the two officers continue to be employed by the Company.

c.  On March 20, 2000, the Company entered into a forty-two (42) month agreement with a consultant to provide services as requested by the Company. The Company agreed to pay the consultant $133,000 a year through September 1, 2000 and $54,000 annually through September 1, 2003, plus stock option and other benefits. In February 2002, the consultant filed a demand for arbitration arising under his termination of the consulting agreement and other matters, in which he claimed that the Company owed him $239,059 plus interest. In December 2002, the Company and the consultant resolved this matter, and all payments made by the Company were included in general and administrative expenses.

d.  In October 2001, the Company settled a purported class action lawsuit filed against the Company in April 2001 by a small group of its stockholders. The settlement amount was $400,000, of which the Company's insurance company contributed $200,000.

The Company accounts for its income taxes under SFAS No. 109, "Accounting for Income Taxes" which requires the recognition of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of assets and liabilities, and for the expected future tax benefit to be derived from tax loss and tax credit carryforwards. At , the Company had net operating loss carryforwards of approximately $20,000,000 and $19,000,000, expiring 2011 through 2023. SFAS No. 109 additionally requires the establishment of a valuation allowance to reflect the likelihood of realization of deferred tax assets. At , a valuation allowance for the full amount of the deferred tax asset was recorded because of operating losses incurred and the uncertainties as to the amount of taxable income that would be generated in the future years. In addition, the utilization of such net operating losses is subject to certain limitations under Federal income tax laws.

The components of the net deferred tax asset consist of the following at :