10-K 1 d64449_10k.txt ANNUAL REPORT UNITED STATES 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 March 31, 2005 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 0-15596 SITI-SITES.COM, INC. (Exact name of registrant as specified in its charter) Delaware 75-1940923 (State of incorporation) (I.R.S. Employer Identification No.) 47 Beech Road, Englewood, New Jersey 07631 (Address of principal executive offices) (Zip Code) 111 Lake Avenue, Suite #7, Tuckahoe, New York 10707 (Address of Chief Financial Officer) (Zip Code)

(212) 925-1181 (Registrant's telephone number, including area code) 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) has been subject to such filing requirements for the past 90 days. YES |X| NO |_| Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Section 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court. 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. |_| The aggregate market value of the voting Common Stock (par value $0.001 per share) held by non-affiliates as of June 24, 2005 was approximately $230,370 based on the last price at which the Common Stock was sold on June 24, 2005 of $.03 as reported by the National Quotation Bureau. 29,978,178 shares of Common Stock were outstanding as of June 24, 2005. The following documents are incorporated herein by reference: (1) Quarterly Report to security holders on Form 10-Q for the quarter ended December, 2004 (the "Form 10-Q for 12/31/04"); (2) Annual Report to security holders on Form 10-K for the year ended March 31, 2004 (the "Form 10-K for 2004"); (3) Annual Report to security holders on Form 10-K for the year ended March 31, 2003 (the "Form 10-K for 2003"); Such documents are referred to in Parts I, II, III and IV of this Annual Report on Form 10-K in several places. The registrant is now an inactive entity and its reports on Form 10-K for the years ended March 31, 2005 and 2004 are unaudited. (See Item 1. Business) ANNUAL REPORT ON FORM 10-K MARCH 31, 2005 PART I PAGE ------ ---- ITEM 1. BUSINESS 1 ITEM 2. PROPERTIES 7 ITEM 3. LEGAL PROCEEDINGS 7 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF 7 SECURITY HOLDERS PART II ------- ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK 8 AND RELATED STOCKHOLDER MATTERS ITEM 6. SELECTED FINANCIAL DATA 10 ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND STATUS OF LIQUIDATION 10 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK 12 ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA 12 ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 12 PART III -------- ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 13 ITEM 11. EXECUTIVE COMPENSATION 14 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16 PART IV ------- ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K 17 Forward-Looking Statements This Annual Report on Form 10-K contains forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to statements related to pending discussions, business objectives and strategy of the Company. Such forward-looking statements are based on current expectations, estimates and projections about the Company's industry, management's beliefs and certain assumptions made by the Company's management. Words such as "anticipates," "expects," "intends," "plans," "believes," "seeks," "estimates," variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed, forecasted, or contemplated by any such forward-looking statements. Factors that could cause actual events or results to differ materially include, among others, those set forth in "Risk Factors." Given these uncertainties, investors are cautioned not to place undue reliance on any such forward-looking statements. Unless required by law, the Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events or otherwise. However, readers should carefully review the risk factors set forth in other reports or documents the Company files from time to time with the Securities and Exchange Commission (the "SEC"), particularly the Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K. PART I ITEM 1. BUSINESS Introduction Siti-Sites.com, Inc., a Delaware corporation (referred to as "SITI" or the "Company") previously operated as an Internet media company with three websites for the marketing of news and services. The Company's websites related entirely to the music industry. SITI incurred losses continuously since their inception in 1999. Following conclusion of the second fiscal quarter ended September 30, 2001, management who were its primary investors (investing approximately $4.1 million 1998-2002), intended to continue operations by investing approximately $600,000 in further equity capital in the Company. But on November 13, 2001 they determined that such limited funding would not accomplish a meaningful result for the investors or the Company and terminated discussions of such financing plan. The Company commenced procedures to prepare to liquidate its assets effective January 1, 2002. Asset Liquidation. The Company's only substantial liability, consisting of the remaining nine months on its lease for office premises at 594 Broadway in New York City, was amicably settled, and terminated as of December 31, 2001. Concurrently office furniture and unnecessary computers were sold, and all employees were terminated in November, 2001. A team of two software consultants were paid in December, 2001 and January, 2002, to complete the Company's Artist Promotion System. Attempts were to be made to license portions thereof, working with a marketing consultant. However, complications in completing the software resulted in management terminating these consulting relationships, with a view to restarting them, if possible, when specific marketing or sale opportunities present themselves. The Company shut down all of its websites effective February 1, 2002. Certain former employees and directors purchased excess furniture and equipment from the Company for a total of approximately $19,000. The balance of the furniture was sold to an unrelated third party for approximately $5,000. Financing. The Company required a small financing to complete its employee terminations, asset liquidation and provide for ongoing corporate expenses. Major investors in the Company provided $110,000 in equity funds, purchasing 4,400,000 shares of common stock at $.025 per share, in a private offering as of December 7, 2001 in varying amounts parallel to their respective option holdings. Each purchasing investor was further required to surrender all of his 1 outstanding options to purchase common stock of the Company, acquired in making each previous investment. These consisted of options for a total of 4,400,000 shares, previously exercisable at prices ranging from $.15 to $2.50 per share, and expiring between 2003 and 2006. All of such options are now cancelled and terminated, reducing all outstanding stock options by over 90%. This surrender and cancellation was intended to make future merger, sale or other business possibilities for the Company easier to achieve. The Company has options, previously held by employees in 1998 (before current major investors purchased control), which still remain outstanding, for the purchase of 41,500 shares, exercisable at prices ranging from $1.69 to $2.15 per share, expiring in 2007. The Company's stock was trading at $.03 per share with nominal volume, during the seven-day offer/closing period in December, 2001. The shares sold to major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. There was also substantial business risk to the purchasers because the Company has no continuing operations and was being liquidated. Other financings of this type followed 2002-2005 described below. The Company continues to seek merger or sale possibilities with operating businesses who perceive value in a merger with the Company as a publicly traded corporate shell with approximately 5,400 shareholders. Several such transactions have been discussed in 2002 - 2004, but none of them have gone to completion. The format the Company now plans to use is to form a subsidiary, "reverse merge" a suitable candidate into such subsidiary and then distribute the Company's shares retained therein (ranging from 15% to 5%, depending on the business involved) to all of the Company's shareholders under a full S-1 Registration Statement filed with the SEC. The candidates so far have not had the capital base, or lacked other factors justifying this type of transaction. But the format enables the Company to handle such transactions more than once, if their business merit justifies "going public" in this manner. In October and November, 2003 Lawrence M. Powers, Chairman/CEO made two loans to the Company for a total of $22,000, maturing October 30, 2004, at 6% interest per annum, payable with principal at maturity. The funding was to finance ongoing activity of the Company. Financing occurred in January-February, 2004. The major investors in the Company agreed to provide an additional $63,000 in equity funds, consisting of $41,000 in cash, and the cancellation and conversion to common stock of the Chairman/CEO's recent loans of $22,000. The total financing was applied to the purchase of 1,260,000 shares of common stock at $.05 per share by these major investors. This stock purchase transaction did not complete until June, 2004. The financing was to cover ongoing corporate expenses, including major litigation filed by the Company in November, 2003 against former attorneys and executives to recover proceeds from its former cell-phone patents. See "Litigation". 2 Effective January 6, 2005, Siti-Sites.com, Inc, ("Siti", the "Company") completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 1,700,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.02 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 800,000 $ 40,000 Robert Ingenito 300,000 $ 15,000 John DiNozzi 300,000 $ 15,000 John Iannitto 150,000 $ 7,500 Steven Gross 150,000 $ 7,500 Effective May 10. 2005 the Company completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 3,500,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.03 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 1,300,000 $ 65,000 Robert Ingenito 550,000 $ 27,500 John DiNozzi 550,000 $ 27,500 John Iannitto 550,000 $ 27,500 Steven Gross 550,000 $ 27,500 In June, 2005 Chairman Powers advanced $50,000 to the Company to finance its operating and litigation costs. The loan will not bear interest initially and is repayable on demand. Previous 2002-2004 Financing. The Company Chairman/CEO Lawrence M. Powers and another investor, in order to finance ongoing corporate expenses, purchased an additional 1,800,000 shares of common stock of the Company (1,200,000 and 600,000 shares, respectively) as of July 26, 2002, at $.025 per share. (This was the same price paid by six shareholder investors in December, 2001, to finance ongoing corporate expenses at that time.) The Company's stock was trading at $.05 per share during the week ending July 26, 2002 with nominal volume. The shares sold to these two existing investors were not registered under the Securities Act of 1933, were purchased for investment requiring "legended" certificates and are not readily marketable because of such legending and the nominal trading volume in SITI stock, which factors generally result in substantial discounts in purchase value. There are also several other business risks to the purchasers, because the Company has no ongoing operations, and is seeking merger or sale possibilities with operating businesses, to make use of the Company's publicly traded status with approximately 5,400 shareholders. Depressed stock market conditions for smaller companies "going public" in 2002 - 2004 increased the difficulties in arranging any such transactions. 3 The Company Chairman/CEO Lawrence M. Powers, in order to finance ongoing corporate expenses, purchased an additional 1,500,000 shares of common stock of the Company as of October 23, 2002, at $.02 per share. The Company's stock was trading at $.02 per share for most of the three weeks preceding October 23, 2002 with nominal volume. The shares sold to Mr. Powers were not registered under the Securities Act of 1933, were purchased for investment requiring "legended" certificates and are not readily marketable because of such legending and the nominal trading volume in SITI stock, which factors generally result in substantial discounts in purchase value. The several other business risks to the purchaser described above are continuing. The $63,000 equity financing in January-February, 2004, described above, was negotiated when the common stock of the Company had been trading ( at nominal volume) for several months at $.07 per share, but as of February 6, 2004 the common stock was trading at $.05 per share, and that price was used to complete the financing, resulting in the 1,260,000 new shares being issued. The shares being sold to major investors were not registered under the securities act of 1933, were purchased for investment requiring "legended" certificates, and are not readily marketable because of such legending and the nominal trading volume in SITI stock. As earlier stated, such factors generally result in substantial discounts in purchase value. The several other business risks to the purchasers described in all earlier financings above, are also continuing. Those risks are increased by the ongoing cash costs of the patent recovery litigation, which will continue for a substantial period and require more major investor financing. The future risks to all shareholders further include a "one-third contingent fee agreement", based solely on results achieved, with Special Litigation Counsel, Green, Schaaf & Jacobson for handling the litigation through trial and appeal. This arrangement, while currently advantageous to the Company, will necessarily reduce any net proceeds to the Company from the litigation. See "Litigation". The Company's Chairman/CEO Powers, who is also General Counsel to the Company, has been active in the lengthy investigation in the suit. He will continue to spend substantial time working closely with litigation counsel as this matter continues, without charging any current cash fees for his own time and commitment. At the conclusion of the matter, he will review the results achieved with the Company's other major investors and the board of directors, and make reasonable charges for his legal services. Audited Financial Statements. As a result of the asset liquidation and reasons discussed below, the Company's management has determined that it is an "inactive entity" under SEC accounting rules (See also "Form 10-K for 2004, Item 1. Business - Inactive Entity"), and is not therefore required to file audited financial statements. This step conserves working capital. The Company meets all of the criteria as set forth below except as noted: (a) Gross receipts from all sources for the fiscal years ended March 31, 2005 and 2004 were not in excess of $100,000; (b) For fiscal 2004 and 2005, the registrant has not purchased or sold any of its own stock, granted options therefore, or levied assessments upon outstanding stock; (1) (c) Expenditures for all purposes for the fiscal years ended March 31, 2005 and 2004 were not in excess of $100,000; (2) (d) No material change in the business has occurred during the 2004 and 2005 fiscal years, including any bankruptcy, reorganization, readjustment or succession or any material acquisition or disposition of plants, mines, mining equipment, mine rights or leases; and (e) No exchange upon which the shares are listed, or governmental authority having jurisdiction, requires the furnishing to it or the publication of audited financial statements. 4 (1) During the last two fiscal years, the Company had no source of funding to cover its expenses which were almost entirely audit, stock transfer expenses and litigation expenses. Chairman/CEO Powers, who may be deemed to beneficially own approximately 48% of the Company's outstanding stock, and other existing investors provided funding to the Company. All of the shares issued are legended and none of the investors, has any intention of selling the stock publicly in the foreseeable future. (See also "Form 10-K for 2004, Item 1. Business - Inactive Entity") (2) For fiscal 2004, operating expenses of approximately $216,000 included approximately $155,000 of contributed services and rent. The Company recorded such $155,000 as a contribution of capital because there was no cash outlay for such expenses. For fiscal 2005, operating expenses of approximately $295,000 included approximately $155,000 of contributed services and rent which were recorded as contributions of capital because there was no cash outlay for such expenses. Audited financial statements are planned to be resumed when events or transactions justify the expense. The Company expects to continue filing unaudited quarterly and annual financial statements with the SEC. Management Background - 2005 Lawrence M. Powers, Investor and Chairman/CEO of the Company, is a businessman and securities lawyer who helped build several large public companies as a lawyer, director and financial adviser, and later as a chairman/chief executive officer. Most recently, he founded and built Spartech Corporation (NYSE), now a $1.2 billion plastics manufacturing group assembled from many small businesses, starting as Chairman of a previously bankrupt shell corporation (1978) with few assets, which he reorganized with other investors, becoming CEO in 1984. Raising some $200 million during his tenure, he, together with the management team he assembled, built one of the largest plastic processing companies in the U.S. by 1992 (12 plants). Spartech has now become a world leader (45 plants) since his retirement. He remained on the board until 1995. The core management team he previously assembled at Spartech Corporation remained in place, building it to its present value. Mr. Powers was educated at Yale Law School, and senior executive programs at Harvard Business School (between 1980-1998) and most recently, in its Information Technology management program. His specialty has, for decades, been developing strategies and financing, combined with acquisitions and strategic partnerships. He and his family have invested over $3 million in SITI equity. Toni Ann Tantillo was elected a Director of the Company in May, 2004. Ms. Tantillo is a Certified Public Accountant in New York, and has been effectively handling accounting, regulatory filings and other business matters for the Company for the past eight years. She has been its Chief Financial Officer since 1999; is also its Vice-President, Secretary and Treasurer; and she worked as an independent consultant to SITI after its change of control in December, 1998. She was also the Controller of SITI from 1995 to December, 1998 under its prior management. Ms. Tantillo age 37 has conducted her own private accounting practice since 1998. Her client base and experience includes an international public relations firm, an importer/exporter of steel, a publication firm and many small businesses. Gladys Powers was elected as a Director of the Company in August, 2004. She has been married to the Chairman/CEO nearly 50 years. She is 77 years old and is generally familiar with all of the Company's activities as a result of regular briefings by Mr. Powers, and her occasional help in reviewing drafts of many Company materials and published articles for Siti over the past five years. She is a trained author, having earlier written several television dramatic plays, documentaries and stage plays, with several New York workshops and a substantial Off-Broadway production. She received her B.A. at the University of Washington in Seattle, attended graduate literature and writing programs at Oxford, the Sorbonne, at Columbia University and in a fellowship at the Yale Drama School. She is currently working on screen plays at her home offices. Mrs. Powers is expected to be an active participant in the business of the Board of Directors because of her substantial stock interest in Siti through Lawrence Powers and her son, Barclay. Her shareholder interest is coupled with her knowledge of all present Company activity, and her experience in reviewing with Mr. Powers his various business ventures, and knowing his partners and associates, over a lengthy career since 1956. 5 Employees As of June 24, 2005, the Company had 1 employee in operations and general administration (Ms. Tantillo). SITI executive, Mr. Powers, has been working without cash compensation since 1998 and expects to do so for at least the year ended March 31, 2006. The Company has recorded an administrative expense and a capital contribution of $125,000 to account for the value of services provided by executive management (Mr. Powers) of the Company during the year ended March 31, 2005, as in prior fiscal years. None of the Company's employees were represented by any collective bargaining unit, 1998-2005. The Company believes that its relations with its past and present employees are good. Risk Factors The Company's plan is the continued cessation of its past business activities, to pursue its patent litigation and to seek reverse mergers to acquire stock in other companies (followed by spin-off of the shares to SITI shareholders), that perceive value in thereby becoming a publicly traded corporation. Risk factors may affect the Company's opportunities to merge with or sell to other operating businesses. In addition to the other information in this Annual Report on Form10-K, and the risk factors listed in the Forms10-K for 2003 and 2004, new and different risk factors can be anticipated within any operating business which the Company acquires, or becomes part of, through merger or sale. It is not possible to identify these new and different risk factors until such transactions are negotiated and completed, because the operating businesses will be in different areas from the Internet music business described in prior Forms10-K. Reference is made to Risk Factors in the Company's Form 10-K for 2002, incorporated herein by reference. Future Mergers or Sales Will Cause Dilution or Adversely Affect Results As part of the Company's business strategy, the Company is seeking by merger or sale to acquire other operating businesses which perceive value in becoming a publicly traded corporation. The Company has no current agreements or commitments with respect to any merger or acquisition transactions and there can be no assurance that the Company will enter into any such agreements or commitments. In the event of such future transactions, the Company could (i) issue equity securities that would dilute current stockholders' percentage ownership in the Company or otherwise impact upon it, very substantially because the owners of the operating business will require full control of the Company or its subsidiary used in the transaction; (ii) could directly or in the spin-off subsidiary incur substantial debt; or (iii) assume contingent liabilities. Such actions could cause the Company's operating results or the price of the Company's common stock to decline. In addition, the Company or subsidiary may not be able to successfully integrate any businesses, products, technologies or personnel that may thus be acquired or be part of the subsidiary in the future. The only certainty in any such transaction is that the shareholders of the Company will own only a minor portion of the operating business thus acquired, new management will operate such business and it will be an entirely different operation from that described in prior Forms10-K filed by SITI. The Company May Need to Obtain Additional Financing Management believes that current cash and cash equivalents will not be sufficient to meet the Company's anticipated cash needs for working capital and capital expenditures for the nine months ended December 31, 2005. If shareholder Powers remains satisfied with the search for mergers or sales transactions described above, and now in process, he presently intends to invest the amounts necessary to continue such efforts in fiscal 2006. Market Listing; Volatility of Stock Price The Company's common stock has been traded on the OTC Bulletin Board and there are approximately 3.5 million shares in the "public float" for trading purposes. The market for the Company's common stock has been relatively illiquid and subject to wide fluctuations. There can be no assurance that an active public market for the common stock 6 will develop or be sustained particularly with the Company's future direction by merger or sale, with an as yet unknown operating business, remaining uncertain. Further, the market price of the Company's common stock may be highly volatile based on quarterly variations in operating results, acquisitions by the Company, investment or other losses, announcements of technological innovations or new products by the Company or its competitors, or other events or factors. ITEM 2. PROPERTIES During the fiscal year 2005, the Company's management has operated the Company's administrative business out of their personal offices, and finds the present arrangements sufficient. As a result of the use of personal offices, the Company recorded a charge of $30,000 as rental expense and increased paid in capital by that amount for the fiscal year ended March 31, 2005 thereby displaying no cash outlay of these funds. ITEM 3. LEGAL PROCEEDINGS The Company filed a civil suit in the United States District Court for the Southern District of New York on November 12, 2003, withdrawn in April, 2004 and re-filed in New York State Supreme Court in New York County, Commercial Division. The Company's Complaint alleges that its patent attorneys and departing patent licensing executives, in late 1998 and thereafter, purchased its valuable patents on cell-phone technology for $24,000 by concealing their nature and value. The defendants have realized at least $10 million in gross proceeds therefrom, to date. The Company's claims arise from a period when it was previously named Spectrum Information Technologies, Inc. The claims all stem from the alleged breach of fiduciary duties by the defendants. The claims were under investigation by the Company under counsel's supervision, in the second half of 2003. The Company is seeking damages in excess of $10 million, a court-ordered trust on future proceeds from its former patents and return of the patents. This is complex litigation, expected to be contested vigorously by several defense firms and to continue for several years. No assurance can be given as to the ultimate outcome thereof. Martin M. Green, Esq. and his firm of Green, Schaaf & Jacobson, P.C. based in Clayton, Missouri, have been retained as the Company's Special Counsel, for the litigation and ultimate trial of this matter. The Company has retained Gary Cooper, Esq. and Cooper & McCann, LLP. as its New York Counsel. As of the date of this report the Company knows of no pending or threatened legal actions against the Company that would have a material impact on the operations or financial condition of the Company. Defaults by EZCD.com as to its investment representations, and its content and technology sharing agreement with the Company in 2000 have been resolved in the EZCD.com bankruptcy liquidation, and the Company in May 2004, recovered approximately $30,000. There is no further recovery expected. From time to time since 1998, the Company had been a party to other legal disputes incidental and not material to its business. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS None. 7 PART II ITEM 5. MARKET FOR THE REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER MATTERS The common stock of the Company, par value $0.001 per share (the "Common Stock"), was traded in the NASDAQ System from 1987 through April, 1995. NASDAQ delisted the Company from the National Market System because the Company failed to meet certain net tangible asset and bid and ask price criteria in April, 1995 as it went into reorganization. After 1997 the Common Stock was traded on the NASD OTC Bulletin Board, until June 2003. The stock is currently being traded in The Pink Sheets under the symbol SITN.PK. There are currently 7 registered market makers for the Common Stock. If the Company engages in any reverse-merger transaction it anticipates that the resulting subsidiary spin-off to shareholders will be, at the least, a Bulletin Board stock in terms of size and listing requirements. In March, 1997, the Company's Reorganization Plan became effective, which included a 75:1 reverse stock split. On that day, the Company's reorganized common stock became eligible for trading under the symbol "SITI", which symbol was modified by NASDAQ to "SITN.OB" in January, 2000. The range of high and low closing bid prices for the Common Stock for the fiscal years 2005 and 2004 are set forth below. The National Quotation Bureau provided this information which may not reflect actual transactions. HIGH AND LOW BID PRICES

~~Summary~~2004 ~~Compensation~~2004 ~~Table~~Low ~~Long-Term~~High ~~Compensation~~Low ~~Payouts~~High ~~Annual~~First ~~Compensation~~Quarter Grants & Awards Other Restricted Shares Name and Annual Stock Underlying LTIP All other Principal Position Year Salary Bonus Comp. Awards Options Payouts Comp ------------------ ---- ------ ----- ----- ------ ------- ------- ---- Lawrence M. Powers 2003 125,000(16/04) -$0-.03 -$0-.03 ~~-0-~~First ~~-0-~~Quarter ~~-0- -0- Chairman and Chief 2002 125,000~~(16/03) -$0-.03 -$0-.03 ~~-0-~~Second ~~-0-~~Quarter ~~-0- -0- Executive Officer 2001 125,000~~(19/04) -0-.02 -0-.03 ~~-0-~~Second ~~-0-~~Quarter ~~-0- -0- Robert Ingenito~~ (49/03) ~~2003 -~~0-.00 -0-.05 ~~-0-~~Third ~~-0-~~Quarter ~~-0- -0- -0- Director 2002 67,333~~(112/04) -0-.02 -0-.03 ~~-0-~~Third ~~-0-~~Quarter ~~-0- -0- 2001 100,000~~(112/03) -0-.03 -0-.07 ~~-0-~~Fourth ~~-0-~~Quarter ~~-0- -0- John Iannitto~~ (4) 2003 -0- -0- -0- -0- -0- -0- -0- Former Vice-President 2002 49,750(1) -0- -0- -0- -0- -0- -0- 2001 75,000(1) -0- -0- -0- -0- -0- -0- Toni Ann Tantillo 2003 13,000 -0- -0- -0- -0- -0- -0- Chief Financial Officer, 2002 65,325 -0- -0- -0- -0- -0- -0- Vice-President, 2001 69,874 1,375(2) -0- -0- -0- -0- -0- Secretary and Treasurer Theodore Mazola (4) 2003 -0- -0- -0- -0- -0- -0- -0- Former Vice-President, 2002 60,729 -0- -0- -0- -0- -0- -0- Technical Director 2001 68,000 2,000(2) -0- -0- -0- -0- -0- Steven Zuckerman (4) 2003 -0- -0- -0- -0- -0- -0- -0- Former Vice-President, 2002 5,000(3/05) -0-.03 -0-.05 ~~-0-~~Fourth ~~-0-~~Quarter ~~-0- -0- Technical Director 2001 68,000~~(3/04) ~~16,813(2) -~~0-.03 -0~~- -0- -0- -0-~~.08

On June 24, 2005, the last reported bid and ask prices of the Common Stock were $.03 and $.07, respectively. As of June 24, 2005 there were approximately 5,400 holders of record of the Company's Common Stock (which amounts do not include the number of shareholders whose shares are held of record by brokerage houses but include each brokerage house as one shareholder). The Company has paid no dividends for the fiscal years ended March 31, 2005, 2004 and 2003 and the Company has no current plans to pay cash dividends in the foreseeable future. The Company plans to retain earnings, if any, to finance the Company's operations. Payment of cash dividends, if any, in the future will be determined by the Company's Board of Directors in light of future earnings, capital requirements, financial condition and other relevant considerations. Recent Sales of Unregistered Securities For a discussion of sales of unregistered securities by the Company during the 2003 fiscal year see the Form 10-K for 2003, "Part II. Item 2. Changes in Securities." For a discussion of sales of unregistered securities by the Company during the 2004 fiscal year see the Form 10-K for 2004, "Part II. Item 2. Changes in Securities." 8 In February, 2004, the major investors in the Company agreed to provide an additional $63,000 in equity funds, consisting of $41,000 in cash, and the cancellation and conversion to common stock of the Chairman/CEO's recent loans of $22,000. The total financing was applied to the purchase of 1,260,000 shares of common stock at $.05 per share by these major investors. In May 2004, Ms. Tantillo, in connection with her services as a Director, Ms. Tantillo agreed to purchase 100,000 shares of SITI common stock at $.03 per share, its current trading price, payable over ten months. A similar agreement is planned for July, 2005. Effective January 6, 2005, Siti-Sites.com, Inc, ("Siti", the "Company") completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 1,700,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.02 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 800,000 $ 40,000 Robert Ingenito 300,000 $ 15,000 John DiNozzi 300,000 $ 15,000 John Iannitto 150,000 $ 7,500 Steven Gross 150,000 $ 7,500 Effective May 10. 2005 the Company completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 3,500,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.03 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 1,300,000 $ 65,000 Robert Ingenito 550,000 $ 27,500 John DiNozzi 550,000 $ 27,500 John Iannitto 550,000 $ 27,500 Steven Gross 550,000 $ 27,500 All of the shares of Common Stock issued by the Company during the 2003, 2004 and 2005 fiscal years as described above, were issued in reliance upon the exemption from registration provided under Section 4(2) of the Securities Act, on the basis that such transactions did not involve any public offering. The stockholders who received such shares of the Company had access to all relevant information regarding the Company necessary to evaluate the investment, and each such stockholder represented that the Common Stock was being acquired for investment only. There was no general solicitation or advertising involved, and the Company used reasonable care to ensure that such stockholders were not underwriters. 9 ITEM 6. SELECTED FINANCIAL DATA The following selected financial data of the Company as of and for the periods indicated below are derived from the financial statements of the Company. The information presented below should be read in conjunction with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included as Item 7, the financial statements and related footnotes included as Item 8 in the Form 10-K and the footnotes accompanying the tables. Effective January 1, 2002, the Company adopted the liquidation basis of accounting and as a result the selected financial data from fiscal 2002 only reflects operating activity through December 31, 2001. STATEMENT OF CHANGES IN NET ASSETS DATA (LIQUIDATION BASIS OF ACCOUNTING)

~~Weighted Shares Average Subject to Exercise Options Price~~ ------------------------------ ~~Outstanding~~For atthe year For the year For the year For the three ended ended ended months ended March 31, ~~2002~~2005 atMarch ~~$1.69-$2.15~~31, ~~per~~2004 ~~share~~March 4131,~~500~~ ~~$2.13~~2003 ~~Granted~~March 31, ~~exercised~~2002 ~~and extinguished~~ -- $ -- ---------------------------------------------------------------------------------------------------------------------------- ~~Outstanding~~(Amounts in thousands, except per share amounts) Net assets in liquidation at ~~March~~beginning of period 29 28 11 64 Reduction to net assets in liquidation: Operating expenses and accrual of estimated costs (295) (217) (260) (110) Addition to net assets in liquidation: Issuance of common stock 88 63 75 3 Refund of charges 31, ~~2003~~-- at17 ~~$1.69~~-~~$2.15~~- ~~per~~Contribution ~~share~~of ~~41,500~~management's ~~$2.13~~services ~~======================~~and rent 155 155 185 46 Insurance recovery from World Trade Center attack -- -- -- 8 Net assets in liquidation at end of period 8 29 28 11

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND STATUS OF LIQUIDATION Organization SITI has been seeking merger or sale possibilities with operating businesses who perceive value in a merger with the Company as a publicly traded corporate shell. The Company was an Internet media company with three websites for the marketing of news and services. The Company's websites related entirely to the music industry. The Company changed its corporate name to SITI-Sites.com, Inc. from Spectrum Information Technologies, Inc. after its Annual Meeting of Stockholders on December 14, 1999, and its former stock symbol "SITI" is now "SITN.PK". In view of the Company's determination to seek other business opportunities to create shareholder value, the following information relating to the results of the Company's prior discontinued operations should not be relied upon as an indication of future performance. All of the Company's operations prior to January 1, 2002 are discontinued operations and the Company adopted the liquidation basis of accounting, effective January 1, 2002. (See Status of Liquidation). 10 STATUS OF LIQUIDATION SITI continues to seek merger or sale possibilities with operating businesses who perceive value in a merger with the Company as a publicly traded corporate shell. There can be no assurance these of any merger or sale occurring or such transaction will be viable for the Company. There are also several other business risks to any purchasers of Company stock, because the Company has no ongoing operations, is in liquidation, and is seeking merger or sale possibilities with operating businesses, to make use of the Company's publicly traded status with approximately 5,400 shareholders. But current stock market conditions for "going public" increase the difficulties in arranging any such transactions. LIQUIDITY AND CAPITAL RESOURCES The Company's primary objective is to conserve its cash while pursuing the patent litigation and seeking merger or sale possibilities. As of March 31, 2005, the Company's net assets totaled approximately $8,000. As of March 31, 2004, the Company's net assets totaled approximately $29,000. As of March 31, 2003, the Company had net assets of approximately $28,000. As of March 31, 2005, the Company's total assets were approximately $ 27,000 which consisted solely of cash. During the fiscal year ended March 31, 2005, the Company incurred approximately $295,000 in operating expenses. Such expenses were composed primarily of management's contribution of their services and rent of approximately $155,000. The Company further incurred legal fees of approximately $90,000 as a direct result of the patent litigation. Stock transfer agent fees totaled approximately $24,000 for the twelve months ended March 31, 2005. Salary and related expenses to one employee for the fiscal year ended March 31, 2005 were approximately $17,000. The remaining $9,000 in operating expenses paid during the fiscal year ended March 31, 2005 related primarily to general office expenses. As of March 31, 2004 and 2003, the Company's total assets were approximately $34,000 and $41,000, respectively, represented primarily by cash. During the fiscal year ended March 31, 2004, the Company incurred approximately $216,000 in operating expenses consisting primarily of management's contribution of their services and rent of approximately $155,000. Legal fees totaled approximately $13,000 for the twelve months ended March 31, 2004. Such fees are the direct result of the patent litigation. Stock transfer agent fees totaled approximately $24,000 for the twelve months ended March 31, 2004. Salary and related expenses to one employee for the fiscal year ended March 31, 2004 were approximately $14,000. The remaining $10,000 in operating expenses paid during the fiscal year ended March 31, 2004 related primarily to general office expenses. During the fiscal year ended March 31, 2003, the Company incurred approximately $260,000 in operating expenses consisting primarily of management's contribution of their services and rent of approximately $185,000. Accounting fees totaled approximately $28,000 for the twelve months ended March 31, 2003. Stock transfer agent fees totaled approximately $24,000 for the twelve months ended March 31, 2003. Salary and related expenses to one employee for the twelve months ended March 31, 2003 were approximately $15,000. The remaining $8,000 in operating expenses paid during the fiscal year ended March 31, 2003 related primarily to general office expenses. As of March 31, 2003, the Company's liabilities were approximately $13,000 consisting primarily of its obligations for professional fees associated with its fiscal 2003 accounting needs. Management, primarily the Chairman/CEO, continues to work without any cash compensation. Management further continues to use personal offices to continue its plan. 11 LIQUIDATION BASIS OF ACCOUNTING The financial statements for the fiscal periods ending prior to and including December 31, 2001 were prepared on the going concern basis of accounting, which contemplates realization of assets and satisfaction of liabilities in the normal course of business. As a result of Management's Plan for Liquidation and the imminent nature of the liquidation, the Company adopted the liquidation basis of accounting effective January 1, 2002. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted. Since the Company is in liquidation without continuing operations, the need to present quarterly Statements of Operations and Comprehensive Loss as well as a Statement of Cash Flows is eliminated. However, the prior year's financial statements are presented since the Company did not adopt this method of accounting until January 1, 2002. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts necessarily requires many estimates and assumptions. In addition, there are substantial risks and uncertainties associated with carrying out the liquidation of the Corporation's existing operations. The valuations presented in the accompanying Statement of Net Assets in Liquidation represent estimates, based on present facts and circumstances, of the net realizable values of assets and costs associated with carrying out the dissolution and liquidation plan based on the assumptions set forth below. The actual values and costs are expected to differ from the amounts shown herein and could be greater or lesser than the amounts recorded. Accordingly, it is not possible to predict the aggregate amount that will ultimately be distributable to shareholders and no assurance can be given that the amount to be received in liquidation will equal or exceed the net assets in liquidation per share in the accompanying Statement of Net assets in Liquidation or the price or prices at which the Common Stock has generally traded or is expected to trade in the future. The cautionary statements regarding estimates of net assets in liquidation set forth in the Forward-Looking Statements portion of this report are incorporated herein by reference. INFLATION The Company does not believe that the relatively moderate rates of inflation in recent years have had a significant effect on its net revenue and profitability. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The company had no short-term investments as of March 31, 2005 and 2004. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA Information called for by this item is set forth in the Company's consolidated financial statements and supplementary data contained in this report, and can be found at the pages listed in the following index on page F-1. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE The Registrant notified its auditors, McGladrey & Pullen, LLP in 2003 that it was planning to change its status to an Inactive Registrant which would no longer require their services as auditors (subject to further review by management of applicable regulations, discussed herein at page 3 "Inactive Entity", while the Form 10-K was being prepared). On June 25, 2003, the Registrant formerly notified McGladrey & Pullen, LLP that it was terminating McGladrey & Pullen, LLP as auditors for the Company. 12 PART III ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT Directors and Executive Officers of the Company The following table sets forth information with respect to the directors and executive officers of the Company:

~~Outstanding~~Name ~~and~~Age ~~Weighted~~Position ~~Average~~with ~~Weighted~~the ~~Range~~Company Lawrence M. Powers 73 Chairman of ~~Exercisable~~the atBoard, ~~Remaining~~Chief ~~Contractual~~Executive ~~Average~~Officer ~~Exercise~~Gladys ~~Exercise~~Powers ~~Prices~~77 ~~March~~Director ~~31,~~Toni ~~2003~~Ann ~~Life~~Tantillo ~~(Years)~~38 ~~Price~~Director, ~~----------------------------------------------------------------------------------~~Chief ~~$1.69~~Financial toOfficer, ~~$2.15~~Vice 41President,~~500~~ ~~4.39~~Secretary ~~$2.13~~and Treasurer

Business Experience of Directors and Executive Officers Lawrence M. Powers, 73, has served as the Company's Chairman of the Board and Chief Executive Officer since the change of control transaction in December, 1998. Mr. Powers has been a private investor since 1992. Beginning in 1978 and continuing to his retirement in 1992, he built Spartech Corporation (NYSE), from a previously bankrupt corporation with few assets, into what has become a $1.2 billion plastics manufacturing group operating 45 plants. Raising some $200 million during his tenure, he and Spartech's key managers built one of the largest plastic processing companies in the U.S. by 1992 (12 plants at the time). The management team he assembled has continued successfully. He remained on the board of Spartech until 1995. Mr. Powers, a securities lawyer in New York from 1957 through 1981, was educated at Yale Law School and senior executive programs at Harvard Business School. Gladys Powers was elected as a Director of the Company in August, 2004. She has been married to the Chairman/CEO nearly 50 years. She is 77 years old and is generally familiar with all of the Company's activities as a result of regular briefings by Mr. Powers, and her occasional help in reviewing drafts of many Company materials and published articles for Siti over the past five years. She is a trained author, having earlier written several television dramatic plays, documentaries and stage plays, with several New York workshops and a substantial Off-Broadway production. She received her B.A. at the University of Washington in Seattle, attended graduate literature and writing programs at Oxford, the Sorbonne, at Columbia University and in a fellowship at the Yale Drama School. She is currently working on screen plays at her home offices. Mrs. Powers is expected to be an active participant in the business of the Board of Directors because of her substantial stock interest in Siti through Lawrence Powers and her son, Barclay. Her shareholder interest is coupled with her knowledge of all present Company activity, and her experience in reviewing with Mr. Powers his various business ventures, and knowing his partners and associates, over a lengthy career since 1956. Toni Ann Tantillo was elected a Director of the Company in May 2004. Ms. Tantillo is a Certified Public Accountant in New York, and has been effectively handling accounting, regulatory filings and other business matters for the Company for the past eight years. She has been its Chief Financial Officer since 1999; is also its Vice-President, Secretary and Treasurer; and she worked as an independent consultant to SITI after its change of control in December, 1998. She was also the controller of SITI from 1995 to December, 1998 under its prior management. Ms. Tantillo, age 37 has conducted her own private accounting practice since 1998. Her client base and experience includes an international public relations firm, an importer/exporter of steel, a publication firm and many small businesses. 13 Compliance with Section 16 of the Exchange Act Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers and directors, and persons who beneficially own more than 10% of the Company's common stock (collectively, "Reporting Persons"), to file reports of ownership and changes in ownership with the SEC. Reporting Persons are required by SEC regulations to furnish the Company with copies of all such reports. To the Company's knowledge, based on a review of such reports to the Company and certain representations of the Reporting Persons, the Company believes that during the 2004 fiscal year, all Reporting Persons timely complied with all applicable Section 16(a) filing requirements. ITEM 11. EXECUTIVE COMPENSATION Compensation of Executive Officers The following table sets forth the total annual compensation paid, or accrued by the Company for services in all capacities for Mr. Lawrence M. Powers in fiscal 2005, 2004 and 2003, who served as Chief Executive Officer and one individuals who was among the highest paid employees for fiscal years 2003, 2004 and 2005.

~~Weighted~~Summary Compensation Table Long-Term Compensation Payouts Annual Compensation Grants & Awards Other Restricted Shares ~~Average~~Name ~~Subject~~and toAnnual ~~Exercise~~Stock Underlying LTIP All other Principal Position Year Salary Bonus Comp. Awards Options ~~Price~~Payouts Comp ------------------ ---- ------ ~~Outstanding~~----- at----- ~~March~~------ 31------- ------- ---- Lawrence M. Powers 2005 125,000(1) ~~2002~~-0- at-0- $-0~~.875~~-~~$2.15~~ ~~per~~-0- ~~share~~-0- 40-0- Chairman and Chief 2004 125,000 $(1~~.19~~) ~~Granted~~-0- -0- -0- -0- -0- -0- Executive Officer 2003 125,000(1) ~~exercised~~-0- ~~and~~-0- ~~extinguished~~-0- -0- $-0- -0- Toni Ann Tantillo (3) 2005 17,000 -0- -0- -0- -0- -0- -0- Director, 2004 12,000 -0- -0- -0- -0- -0- -0- ~~Outstanding~~Chief atFinancial ~~March~~Officer 312003 13,000 ~~2003~~-0- at-0- $-0~~.875~~-~~$2.15~~ ~~per~~-0- ~~share~~-0- 40-0- Vice-President,~~000~~ ~~$1.19~~Secretary ~~========================~~and Treasurer

(1) Amounts include Mr. Powers', contribution of services charged against earnings. Mr. Powers did not receive any compensation for his services during fiscal 2003, 2004 and 2005. Option Grants in Last Year There were no options granted during the fiscal years ended March 31, 2003 and March 31, 2004 and March 31, 2005. 14 Option Exercises and Year-End Values There were no options exercised by the Named Executive Officers during the 2005 fiscal year. Any options held by such individuals were purchased in connection with stock purchase agreements. (See "Item 5. Market for the Registrant's Common Equity and Related Stockholder Matters.") Compensation of Directors At present, the Board does not award compensation to its directors. Employment Agreements At present the Company does not maintain employment agreements or other arrangements with its executive officers. Mr. Powers continues to work without compensation and expects to continue in such a manner in fiscal 2005. For a full discussion on former employment agreements, refer to the Form 10-K for fiscal 2003. At present, the Company does not have a Compensation Committee. 15 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information, as of June 24, 2005, as to the beneficial ownership of the Company's common stock (including shares which may be acquired within sixty days pursuant to stock options) by (1) each person or group of affiliated persons known by the Company to own beneficially more than 5% of the outstanding shares of the Company's common stock, (2) the Named Executive Officers, (3) each of the Company's directors, and (4) all directors and executive officers of the Company as a group. Unless otherwise noted, the Company believes that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned. Shares of Common Stock Beneficially Owned Name of Owner Number Percent of Class -------------------------------------------------------------------------------- Lawrence M. Powers 13,836,666(1) 46.2% 47 Beech Road Englewood, NJ 07631 Robert Ingenito (former director) 5,526,667(2) 18.4% 80 Ruland Road Melville, NY 11747-6200 Barclay V. Powers (former director) 4,818,333 19.4% 665 Walther Way Los Angeles, CA 90049 John Iannitto (former officer) 2,780,000(3) 9.3% D/B/A RSI Marketing 171 Madison Avenue New York, NY 10016 Toni Ann Tantillo 155,834(4) * 115 Whitman Road Yonkers, NY 10710 Current Directors and 13,992,500(4) 46.7% Executive Officers as a Group (2 persons): ---------------------- * Less than 1% (1) Consists solely of shares. All options were cancelled pursuant to the November 28, 2001 offer to key investors. Shares and options held by Mr. Lawrence Powers also include 4,818,333 shares held by his son, Barclay V. Powers, as to which Lawrence Powers disclaims voting or investment power therein. (2) Consists solely of shares. All options were cancelled pursuant to the November 28, 2001 offer to key investors. Shares held by Mr. Ingenito also include 2,596,667 shares held by John DiNozzi. (3) Consists solely of shares held by RSI Marketing, a sole proprietorship owned by John Iannitto. All options were cancelled pursuant to the November 28, 2001 offer to key investors. (4) Consists solely of shares. 16 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (a) The following documents are filed as part of this Annual Report on Form 10-K: 1. Consolidated Financial Statements: The consolidated financial statements filed as a part of this report are listed in the "Index to Consolidated Financial Statements" at Item 8. 2. Consolidated Financial Statement Schedules: The consolidated financial statement schedule filed as part of this report is listed in the "Index to Consolidated Financial Statements " at Item 8. Schedules other than that listed on the accompanying Index to Consolidated Financial Statements are omitted for the reason that they are either not required, not applicable, or the required information is included in the consolidated financial statements or notes thereto. 3. Exhibits 2.1 Acquisition Agreement Between the Company and Tropia, Inc. (4) 3.1 Certificate of Incorporation of SITI-Sites.com, Inc. as amended. (3) 3.2 Amended and Restated Bylaws of SITI-Sites.com, Inc., as amended (3) 3.3 Restated Certificate of Incorporation of the Company (3) 3.4 Restated Bylaws of the Company. (3) 10.1 Investment and Business Development Agreement Among the Company, Minutemeals.com, Inc., Joseph Langhan and Donald Moore, dated March 19, 1999 (5) 10.2 Stock Purchase Agreement Between the Company and Powers & Co. dated December 11, 1998 (5) 10.3 Stock Purchase Agreement Between the Company and Robert Ingenito dated December 12, 1998 (5) 10.4 Stock Purchase Agreement Between the Company and Steven Gross dated December 12, 1998 (5) 10.5 Option Agreement Entered Into Between the Company and Maurice W. Schonfeld (5) 10.6 Termination Agreement Dated as of May 28, 1999 Among the Company, Minutemeals.com, Inc., Joseph Langhan, and Donald Moore (5) 10.7 Stock Purchase Agreement dated July 26, 1999 (Powers) (3) 10.8 Content and Technology Sharing Agreement dated December 23, 1999, between the Company and Volatile Media, Inc. (6) 10.9 Stock Purchase Agreement dated December 23, 1999 (Powers and Ingenito) (2) 10.10 Option Agreement dated December 23, 1999 Entered Into Between the Company and Lawrence M. Powers (2) 10.11 Option Agreement dated December 23, 1999 Entered Into Between the Company and Robert Ingenito (2) 10.12 Subscription Agreement dated February 8, 2000 Between the Company and Volatile Media, Inc. (6) 10.13 SITI-Sites.com, Inc. 1999 Stock Option Plan (6) 10.14 Purchase Agreement dated January 3, 2000, between the Company and Theodore Mazola (7) 10.15 Purchase Agreement-2 dated January 3, 2000, among the Company and Theodore Mazola and Steven Zuckerman(7) 10.16 Letter Agreement dated January 3, 2000, executed by New York Music Expo, Inc. in favor of the Company(7) 17 10.17 Settlement Agreement Dated May 1, 2000 Among the Company and Jonathan Blank, Ari Blank and Arjun Nayyer (2) 10.18 Stock Purchase Agreement dated June 8, 2000 (Powers, Ingenito and Iannitto) (2) 10.19 Employment Arrangements Agreement dated June 12, 2000 Entered Into Between the Company and Messrs. Robert Ingenito and John Iannitto (2) 10.20 Stock Option Agreement Dated June 8, 2000, Entered Into Between the Company and Lawrence Powers (2) 10.21 Stock Option Agreement Dated June 8, 2000, Entered Into Between the Company and Robert Ingenito (2) 10.22 Stock Option Agreement Dated June 8, 2000, Entered Into Between the Company and John Iannitto (2) 10.23 Stock Purchase Agreement dated June 13, 2000 (Colvil Investments, LLC purchase) (2) 10.24 Stock Option Agreement Dated June 13, 2000, Entered Into Between the Company and Colvil Investments, LLC (2) 10.25 Stock Purchase Agreement dated June 16, 2000 (Steven Gross purchase) (2) 10.26 Stock Option Agreement Dated June 16, 2000, Entered Into Between the Company and Steven Gross (2) 31 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32 Certification Pursuant To 18 U.S.C. Section 1350, As Adopted Pursuant To Section 906 Of The Sarbanes-Oxley Act of 2002 Notes: (1) Filed Herewith. (2) Previously Filed as an Exhibit to the Company's Annual Report on Form 10-K for the Fiscal Year ended March 31, 2000, and incorporated herein by reference (3) Previously Filed as an Exhibit to the Company's Definitive Proxy Statement Effective December 14, 1999, and incorporated herein by reference. (4) Previously Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the Quarter ended June 30, 1999, and incorporated herein by reference. (5) Previously Filed as an Exhibit to the Company's Annual Report on Form 10-K for the Fiscal Year ended March 31, 1999, and incorporated herein by reference. (6) Previously Filed as an Exhibit to the Company's Quarterly Report on Form 10-Q for the quarter ended December 31, 1999. (7) Previously Filed as an Exhibit to the Company's Current Report on Form 8-K dated January 18, 2000. (b) Reports on Form 8-K: There were no reports filed on Form 8-K for the three months ended March 31, 2005. 18 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SITI-SITES.COM, INC. Dated: June 30, 2005 By /s/ Toni Ann Tantillo --------------------------------------------- Toni Ann Tantillo (Director, Chief Financial Officer, Vice President, Secretary and Treasurer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated. Dated: June 30, 2005 By /s/ Lawrence M. Powers --------------------------------------------- Lawrence M. Powers (Chief Executive Officer and Chairman of the Board of Directors) Dated: June 30, 2005 By /s/ Gladys Powers --------------------------------------------- Gladys Powers (Director) 19 SITI-Sites.com, Inc. and Subsidiary Index to Consolidated Financial Statements Unaudited Financial Statements for the Fiscal Years Ended March 31, 2005 and March 31, 2004: Statement of Net Assets in Liquidation as of March 31, 2005 and March 31, 2004 (Unaudited) F-2 Statement of Changes in Net Assets in Liquidation for the Twelve Months Ended March 31, 2005 and March 31, 2004 (Unaudited) F-3 Notes to Consolidated Financial Statements for the Twelve Months Ended March 31, 2005 and March 31, 2004 (Unaudited) F-4 - F-11

F-1 SITI-Sites.com, Inc. Statement of Net Assets in Liquidation March 31, 2005 March 31, 2004 (Amounts in thousands) (Unaudited) (Unaudited) ------------------------------------------------------------------------------- Assets Current assets: Cash and cash equivalents $ 27 $ 34 Receivables and other assets -- -- ------------------------ Total current assets 27 34 ------------------------ Property and Equipment, net -- -- ------------------------ Total assets $ 27 $ 34 ======================== Liabilities: Current Liabilities Accounts payable and accrued liabilities $ 19 $ 5 ------------------------ Total current liabilities 19 5 ------------------------ Total liabilities 19 5 ======================== Net Assets in Liquidation $ 8 $ 29 ======================== See accompanying notes to consolidated financial statements. F-2

~~Outstanding~~Twelve ~~and~~Twelve ~~Weighted~~Months ~~Average~~Ended ~~Weighted~~Months ~~Range~~Ended ofSITI-Sites.com, ~~Exercisable~~Inc. atMarch ~~Remaining~~31, ~~Contractual~~March ~~Average~~31, ~~Exercise~~Statement ~~Exercise~~of ~~Prices~~Changes ~~March~~in ~~31,~~Net ~~2003~~Assets ~~Life~~in Liquidation 2005 2004 (~~Years~~Amounts in thousands) ~~Price~~(Unaudited) (Unaudited) ------------ ------------ Net assets in liquidation at beginning of period $ 29 $ 28 Reductions to net assets in liquidation: Operating expenses and accrual of estimated costs (295) (217) Increases to net assets in liquidation: Refund of charges 31 -- Issuance of common stock 88 63 Contribution of management's services and rent 155 155 -----------------------~~---------------------------------~~ ~~$0.875~~Net toassets ~~$2.15~~in ~~40,000~~liquidation ~~5.15~~at end of period $~~1.19~~ 8 $ 29 =======================

See accompanying notes to consolidated financial statements. F-3 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR THE TWELVE MONTHS ENDED MARCH 31, 2005 and MARCH 31, 2004 (UNAUDITED) 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) MANAGEMENT'S PLAN FOR LIQUIDATION Siti-Sites.com, Inc., a Delaware corporation (referred to as "SITI" or the "Company") previously operated as an Internet media company with three websites for the marketing of news and services. The Company's websites related entirely to the music industry. SITI incurred losses continuously since their inception in 1999. Following conclusion of the second fiscal quarter ended September 30, 2001, management who were its primary investors (investing approximately $4.1 million 1998-2002), intended to continue operations by investing approximately $600,000 in further equity capital in the Company. But on November 13, 2001 they determined that such limited funding would not accomplish a meaningful result for the investors or the Company and terminated discussions of such financing plan. The Company commenced procedures to prepare to liquidate its assets effective January 1, 2002. Asset Liquidation. The Company's only substantial liability, consisting of the remaining nine months on its lease for office premises at 594 Broadway in New York City, was amicably settled, and terminated as of December 31, 2001. Concurrently office furniture and unnecessary computers were sold, and all employees were terminated in November, 2001. A team of two software consultants were paid in December, 2001 and January, 2002, to complete the Company's Artist Promotion System. Attempts were to be made to license portions thereof, working with a marketing consultant. However, complications in completing the software resulted in management terminating these consulting relationships, with a view to restarting them, if possible, when specific marketing or sale opportunities present themselves. The Company shut down all of its websites effective February 1, 2002. Certain former employees and directors purchased excess furniture and equipment from the Company for a total of approximately $19,000. The balance of the furniture was sold to an unrelated third party for approximately $5,000. Financing. The Company required a small financing to complete its employee terminations, asset liquidation and provide for ongoing corporate expenses. Major investors in the Company provided $110,000 in equity funds, purchasing 4,400,000 shares of common stock at $.025 per share, in a private offering as of December 7, 2001 in varying amounts parallel to their respective option holdings. Each purchasing investor was further required to surrender all of his outstanding options to purchase common stock of the Company, acquired in making each previous investment. These consisted of options for a total of 4,400,000 shares, previously exercisable at prices ranging from $.15 to $2.50 per share, and expiring between 2003 and 2006. All of such options are now cancelled and terminated, reducing all outstanding stock options by over 90%. This surrender and cancellation was intended to make future merger, sale or other business possibilities for the Company easier to achieve. The Company has options, previously held by employees in 1998 (before current major investors purchased control), which still remain outstanding, for the purchase of 41,500 shares, exercisable at prices ranging from $1.69 to $2.15 per share, expiring in 2007. The Company's stock was trading at $.03 per share with nominal volume, during the seven-day offer/closing period in December, 2001. The shares sold to major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. There was also substantial business risk to the purchasers because the Company has no continuing operations and was being liquidated. Other financings of this type followed 2002-2004 described below. The Company continues to seek merger or sale possibilities with operating businesses who perceive value in a merger with the Company as a publicly traded corporate shell with approximately 5,400 shareholders. Several such transactions have been discussed in 2002 - 2004, but none of them have gone to completion. The format the Company now plans to use is to form a subsidiary, "reverse merge" a suitable candidate into such subsidiary and then distribute the Company's shares retained therein (ranging from 15% to 5%, depending on the business involved) to all of the Company's shareholders under a full S-1 Registration Statement filed with the SEC. The candidates so far have not had F-4 the capital base, or lacked other factors justifying this type of transaction. But the format enables the Company to handle such transactions more than once, if their business merit justifies "going public" in this manner. In October and November, 2003 Lawrence M. Powers, Chairman/CEO made two loans to the Company for a total of $22,000, maturing October 30, 2004, at 6% interest per annum, payable with principal at maturity. The funding was to finance ongoing activity of the Company. Financing occurred in January-February, 2004. The major investors in the Company agreed to provide an additional $63,000 in equity funds, consisting of $41,000 in cash, and the cancellation and conversion to common stock of the Chairman/CEO's recent loans of $22,000. The total financing was applied to the purchase of 1,260,000 shares of common stock at $.05 per share by these major investors. This stock purchase transaction did not complete until June, 2004. The financing was to cover ongoing corporate expenses, including major litigation filed by the Company in November, 2003 against former attorneys and executives to recover proceeds from its former cell-phone patents. See "Litigation". Effective January 6, 2005, Siti-Sites.com, Inc, ("Siti", the "Company") completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 1,700,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.02 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 800,000 $ 40,000 Robert Ingenito 300,000 $ 15,000 John DiNozzi 300,000 $ 15,000 John Iannitto 150,000 $ 7,500 Steven Gross 150,000 $ 7,500 Effective May 10. 2005 the Company completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 3,500,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.03 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 1,300,000 $ 65,000 Robert Ingenito 550,000 $ 27,500 John DiNozzi 550,000 $ 27,500 John Iannitto 550,000 $ 27,500 Steven Gross 550,000 $ 27,500 Previous 2002-2004 Financing. The Company Chairman/CEO Lawrence M. Powers and another investor, in order to finance ongoing corporate expenses, purchased an additional 1,800,000 shares of common stock of the Company (1,200,000 and 600,000 shares, respectively) as of July 26, 2002, at $.025 per share. (This was the same price paid by six shareholder investors in December, 2001, to finance ongoing corporate expenses at that time.) The Company's stock was F-5 trading at $.05 per share during the week ending July 26, 2002 with nominal volume. The shares sold to these two existing investors were not registered under the Securities Act of 1933, were purchased for investment requiring "legended" certificates and are not readily marketable because of such legending and the nominal trading volume in SITI stock, which factors generally result in substantial discounts in purchase value. There are also several other business risks to the purchasers, because the Company has no ongoing operations, and is seeking merger or sale possibilities with operating businesses, to make use of the Company's publicly traded status with approximately 5,400 shareholders. Depressed stock market conditions for smaller companies "going public" in 2002 - 2004 increased the difficulties in arranging any such transactions. The Company Chairman/CEO Lawrence M. Powers, in order to finance ongoing corporate expenses, purchased an additional 1,500,000 shares of common stock of the Company as of October 23, 2002, at $.02 per share. The Company's stock was trading at $.02 per share for most of the three weeks preceding October 23, 2002 with nominal volume. The shares sold to Mr. Powers were not registered under the Securities Act of 1933, were purchased for investment requiring "legended" certificates and are not readily marketable because of such legending and the nominal trading volume in SITI stock, which factors generally result in substantial discounts in purchase value. The several other business risks to the purchaser described above are continuing. The $63,000 equity financing in January-February, 2004, described above, was negotiated when the common stock of the Company had been trading ( at nominal volume) for several months at $.07 per share, but as of February 6, 2004 the common stock was trading at $.05 per share, and that price was used to complete the financing, resulting in the 1,260,000 new shares being issued. The shares being sold to major investors were not registered under the securities act of 1933, were purchased for investment requiring "legended" certificates, and are not readily marketable because of such legending and the nominal trading volume in SITI stock. As earlier stated, such factors generally result in substantial discounts in purchase value. The several other business risks to the purchasers described in all earlier financings above, are also continuing. Those risks are increased by the ongoing cash costs of the patent recovery litigation, which will continue for a substantial period and require more major investor financing. The future risks to all shareholders further include a "one-third contingent fee agreement", based solely on results achieved, with Special Litigation Counsel, Green, Schaaf & Jacobson for handling the litigation through trial and appeal. This arrangement, while currently advantageous to the Company, will necessarily reduce any net proceeds to the Company from the litigation. See "Litigation". The Company's Chairman/CEO Powers, who is also General Counsel to the Company, has been active in the lengthy investigation in the suit. He will continue to spend substantial time working closely with litigation counsel as this matter continues, without charging any current cash fees for his own time and commitment. At the conclusion of the matter, he will review the results achieved with the Company's other major investors and the board of directors, and make reasonable charges for his legal services. Audited Financial Statements. As a result of the asset liquidation and reasons discussed below, the Company's management has determined that it is an "inactive entity" under SEC accounting rules (See also "Form 10-K for 2004, Item 1. Business - Inactive Entity"), and is not therefore required to file audited financial statements. This step conserves working capital. The Company meets all of the criteria as set forth below except as noted: (a) Gross receipts from all sources for the fiscal years ended March 31, 2005 and 2004 were not in excess of $100,000; (b) For fiscal 2004 and 2005, the registrant has not purchased or sold any of its own stock, granted options therefore, or levied assessments upon outstanding stock; (1) (c) Expenditures for all purposes for the fiscal years ended March 31, 2005 and 2004 were not in excess of $100,000; (2) F-6 (d) No material change in the business has occurred during the 2004 and 2005 fiscal years, including any bankruptcy, reorganization, readjustment or succession or any material acquisition or disposition of plants, mines, mining equipment, mine rights or leases; and (e) No exchange upon which the shares are listed, or governmental authority having jurisdiction, requires the furnishing to it or the publication of audited financial statements. (1) During the last two fiscal years, the Company had no source of funding to cover its expenses which were almost entirely audit, stock transfer expenses and litigation expenses. Chairman/CEO Powers, who may be deemed to beneficially own approximately 48% of the Company's outstanding stock, and other existing investors provided funding to the Company. All of the shares issued are legended and none of the investors, has any intention of selling the stock publicly in the foreseeable future. (See also "Form 10-K for 2004, Item 1. Business - Inactive Entity") (2) For fiscal 2004, operating expenses of approximately $216,000 included approximately $155,000 of contributed services and rent. The Company recorded such $155,000 as a contribution of capital because there was no cash outlay for such expenses. For fiscal 2005, operating expenses of approximately $295,000 included approximately $155,000 of contributed services and rent which were recorded as contributions of capital because there was no cash outlay for such expenses. Audited financial statements are planned to be resumed when events or transactions justify the expense. The Company expects to continue filing unaudited quarterly and annual financial statements with the SEC. (b) CHANGE TO LIQUIDATION BASIS OF ACCOUNTING During the quarter ended December 31, 2001, the Company decided to liquidate its operations and adopted the liquidation basis of accounting effective January 1, 2002. Under the liquidation basis of accounting, assets are stated at their estimated net realizable values and liabilities are stated at their estimated settlement amounts, which estimates will be periodically reviewed and adjusted. Since the Company is in liquidation without continuing operations, the need to present quarterly Statements of Operations and Comprehensive Loss as well as a Statement of Cash Flows, is eliminated. However, the prior year's financial statements for the comparable quarter are presented, since the Company did not adopt this method of accounting until January 1, 2002. The valuation of assets at their net realizable value and liabilities at their anticipated settlement amounts necessarily requires many estimates and assumptions. In addition, there are substantial risks and uncertainties associated with carrying out the liquidation of the Corporation's existing operations. The valuations presented in the accompanying Statement of Net Assets in Liquidation represent estimates, based on present facts and circumstances, of the net realizable values of assets and costs associated with carrying out the dissolution and liquidation plan based on the assumptions set forth below. The actual values and costs are expected to differ from the amounts shown herein and could be greater or lesser than the amounts recorded. Accordingly, it is not possible to predict the aggregate amount that will ultimately be distributable to shareholders and no assurance can be given that the amount to be received in liquidation will equal or exceed the net assets in liquidation per share in the accompanying Statement of Net assets in Liquidation or the price or prices at which the Common Stock has generally traded or is expected to trade in the future. The cautionary statements regarding estimates of net assets in liquidation set forth in the Forward-Looking Statements portion of this report are incorporated herein by reference. (c) RECENT HISTORY The accompanying financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair presentation of the results of operations for the periods shown. (d) USE OF ESTIMATES In preparing financial statements in conformity with accounting principles generally accepted in the United States F-7 of America, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and revenues and expenses during the reporting period. Actual results could differ from those estimates. (e) CASH AND CASH EQUIVALENTS Cash and cash equivalents include the Company's cash balances and short-term investments that mature in 90 days or less from the original date of maturity. Cash and cash equivalents are carried at cost plus accrued interest, which approximates market. 2. STOCKHOLDERS' EQUITY (a) STOCK AND OPTION ISSUANCES The Company has issued common stock and options under the provisions of: (i) 1996 STOCK INCENTIVE PLAN The 1996 Stock Incentive Plan authorized the issuance of 276,079 shares of Reorganized SITI Common Stock, or options to purchase such common stock, to employees, officers, and directors of the Company. Pursuant to this Plan, the three non-executive directors who were in the employ of the Company on the Effective Date were specifically allocated an aggregate of 34,077 shares to be distributed as follows: 300 shares on the Effective Date, 11,259 during June 1998, 11,259 during November 1998 and 11,259 during June 1999. During fiscal 1998, 7,400 shares with a fair market value of $9,250 were distributed to employees and directors of the Company as additional compensation. Total options, under the plan, granted to employees and officers of the Company with various vesting periods and performance criteria totaled 209,815, and such Plan is no longer in operation. F-8 Additional information as follows:

Weighted Shares ~~Average~~ Subject ~~Exercise~~Average to ~~Price~~ Options Exercise Price -------------- -------------- Outstanding at March 31, ~~2002~~2003 at $01.3569-$2.15 per share 41,500 $0 2.3513 ~~300,000~~ Granted, exercised and extinguished -- $~~0.00~~ 0-- --------- --------- Outstanding at March 31, 2004 at $1.69-$2.15 per share 41,500 $ 2.13 Granted, exercised and extinguished -- $ -- --------- --------- Outstanding at March 31, ~~2003~~2005 at $01.3569-$2.15 per share 41,500 $0 2.3513 ~~300,000~~ ========= =========~~========~~

The following table summarizes information about stock options outstanding and exercisable at March 31, 2005:

Outstanding and Weighted Average Weighted Range of Exercise Exercisable at Remaining Contractual Average Exercise ~~Exercise~~ Prices March 31, ~~2003~~2005 Life (Years) Price ------------------------------------------------------------------------------------------------------ $01.3569 ~~per~~to ~~share~~$2.15 ~~300~~41,~~000~~500 2.7038 $02.3513

(ii) 1998 CONSULTANT STOCK INCENTIVE PLAN The 1998 Consultant Stock Incentive Plan authorizes the issuance of 100,000 shares of Reorganized SITI Common Stock, or options to purchase such Common Stock, to non-employees and consultants of the Company. There were no options granted during fiscal 2004 and 2005.

~~Class~~Weighted ~~A Convertible Preferred Treasury Stock Common Stock Stock ----------- ------------- --------------- Accumulated Other Paid-in Accumulated Comprehensive~~ Shares $Average ~~Shares~~Subject $to ~~Capital~~Exercise ~~Deficit~~Options ~~Shares~~Price ~~$ Income Total~~ ----------~~--------------------------------------------------------------------------------~~ ---------~~---------------------------------------------------------------------------------~~ ~~Balance,~~Outstanding at March 31, ~~2000~~2003 -at $0.875 - ~~9,812~~ $2.15 10per $share 7540,~~938~~000 $ ~~(74,270) 62 $ (311) $ 4 $~~ 1~~,371~~.19 ~~Net loss - - - - - (2~~Granted,~~002)~~ -exercised -and -extinguished ~~(2,002) Issuance of common stock~~ - - ~~5,705~~$ ~~6 1,280~~ - - - - ~~1,286 Unrealized gain on marketable securities~~ - - - - - - - - ~~(1) (1) Contribution of services by management~~ - - - - ~~268~~ - - - - ~~268~~Outstanding ~~Settlement~~at ~~agreement - - - - - - 60 (19) - (19) ------------------------------------------------------------------------------------------ Balance,~~ March 31, ~~2001~~2004 -at $0.875 - $2.15~~,517~~ $per 16share ~~$ 77~~40,~~486~~000 $ ~~(76,272) 112 $(330) $ 3 $ 903 Net loss - - - - - (~~1~~,159)~~.19 ~~- - - (1~~Granted,~~159)~~ ~~Issuance~~exercised ofand ~~common~~extinguished ~~stock~~ - - ~~4,501~~$ ~~4 123~~ - - - - ~~127 Unrealized gain on marketable securities~~ - - - - - - - - ~~(3) (3) Contribution of services by management~~ - - - - ~~196~~ - - - - ~~196~~Outstanding ~~------------------------------------------------------------------------------------------~~at ~~Balance,~~March ~~December~~ 31, ~~2001~~2005 -at $0.875 - ~~20,018~~ $2.15 20per $share 7740,~~805~~000 $ ~~(77,431)~~1.19 ~~112 $ (330) $ - $ 64~~ ========= =========~~========================================================================~~

The following table summarizes information about non-employee and consultant stock options outstanding and exercisable at March 31, 2005:

~~Nine~~Outstanding Months Ended Year Ended December 31, March 31, 2001 2001 --------------------------------------------------------------------------------------------------------- Cash flow from operating activities: Net loss $(1,159) $(2,002) Adjustments to reconcile net loss to net cash used by continuing activities: Impairment provision on assets 157 134 Gain on litigation settlement -- (19) Gain on sale of marketable securities (5) (29) Depreciation and ~~amortization~~Weighted 8Average 92Weighted ~~Loss~~Range ~~on sale~~ of ~~assets~~Exercise 74Exercisable --at ~~Compensation~~Remaining toContractual ~~employees~~Average ~~and~~Exercise ~~consultants~~Prices ~~via~~March stock and options 8 6 Contribution of services by management 65 53 (Increase)decrease in: Receivables and other assets 18 5 Increase(decrease) in: Accounts payable (5) 3 Accrued liabilities (90) (81) Income on discontinued operations 604 131,~~281~~ ~~-------~~2005 ~~-------~~Life ~~Net cash used by continuing operations~~ (~~325~~Years) ~~(557)~~Price ~~Net cash used by discontinued operations (510) (813)~~ ------------------------------------------------------------------------------------------------------~~---~~ ~~Net~~$0.875 ~~cash~~to used by operating activities (835) (1,370) --------------------------------------------------------------------------------------------------------- Cash flows from investing activities: Capitalization of Artist Promotion Services (157) -- Proceeds from sale of marketable securities 626 $2~~,233~~.15 ~~Proceeds from sale of property and equipment 24 -- Purchase of marketable securities -- (2~~40,~~339)~~000 ~~Purchase~~3.14 of property and equipment (2) (47) --------------------------------------------------------------------------------------------------------- Net cash provided (used) by investing activities 491 (153) --------------------------------------------------------------------------------------------------------- Cash flow from financing activities: Proceeds from the issuance of common stock 110 1,150 --------------------------------------------------------------------------------------------------------- Net cash provided by financing activities 110 1,150 --------------------------------------------------------------------------------------------------------- Net decrease in cash and cash equivalents (234) (373) Cash and cash equivalents, beginning of period 320 693 --------------------------------------------------------------------------------------------------------- Total cash and cash equivalents, end of period (excluding cash amounts in net assets of discontinued operations) $ ~~86 $ 320 ======= =======~~1.19

(iii) SEVERANCE OPTIONS In connection with the change of control transaction described in Note 1(a), the Company's prior management granted options to acquire an aggregate of 300,000 shares of Reorganized SITI Common Stock as part of a severance package for employees, officers and/or directors of the Company who were resigning and executing settlement agreements in connection with the change of control transaction. This plan was implemented concurrently with the December 11, 1998 stock purchase agreement between the Company and Powers & Co. (a sole proprietorship owned by Lawrence M. Powers) and the option agreements were executed on December 11, 1998. These options expired December 11, 2003. F-9 Additional information as follows:

3. COMMITMENTS AND CONTINGENCIES Management uses its personal offices to conduct business for the Company. As a result, no rent has been paid during the fiscal year ended March 31, 2004 and March 31, 2005. However, as a result of the contribution of rent, a charge was recorded to rent and paid in capital of approximately $30,000 for each fiscal year. 4. LITIGATION The Company filed a civil suit in the United States District Court for the Southern District of New York on November 12, 2003, withdrawn in April, 2004 and re-filed in New York State Supreme Court in New York County, Commercial Division. The Company's Complaint alleges that its patent attorneys and departing patent licensing executives, in late 1998 and thereafter, purchased its valuable patents on cell-phone technology for $24,000 by concealing their nature and value. The defendants have realized at least $10 million in gross proceeds therefrom, to date. The Company's claims arise from a period when it was previously named Spectrum Information Technologies, Inc. The claims all stem from the alleged breach of fiduciary duties by the defendants. The claims were under investigation by the Company under counsel's supervision, in the second half of 2003. The Company is seeking damages in excess of $10 million, a court-ordered trust on future proceeds from its former patents and return of the patents. This is complex litigation, expected to be contested vigorously by several defense firms and to continue for several years. No assurance can be given as to the ultimate outcome thereof. Martin M. Green, Esq. and his firm of Green, Schaaf & Jacobson, P.C. based in Clayton, Missouri, have been retained as the Company's Special Counsel, for the litigation and ultimate trial of this matter. The Company has retained Gary Cooper, Esq. and Cooper & McCann, LLP. as its New York Counsel. As of the date of this report the Company knows of no pending or threatened legal actions against the Company that would have a material impact on the operations or financial condition of the Company. Defaults by EZCD.com as to its investment representations, and its content and technology sharing agreement with the Company in 2000 have been resolved in the EZCD.com bankruptcy liquidation, and the Company in May 2004, recovered approximately $30,000. There is no further recovery expected. From time to time since 1998, the Company had been a party to other legal disputes incidental and not material to its business. F-10 5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES As of March 31, 2005 and 2004, accounts payable and accrued liabilities were comprised of the following: 2005 2004 ------ ------ (Amounts in thousands) Accrued professional fees $ 14 $ 2 Accounts payable 5 3 ------ ------ $ 19 $ 5 ====== ====== 6. SUBSEQUENT EVENT Effective May 10. 2005 the Company completed another round of financing by the major investors of the Company in order to finance its operating and litigation costs. Certain investors including Chairman Lawrence Powers purchased a total of 3,500,000 shares at $.05 per share. The shares purchased by the major investors were not registered under the Securities Act of 1933, were purchased for investment and are not readily marketable, which factors generally result in discounts in purchase value. However, no discounts were taken and, at the time of the investment, the stock was trading at approximately $.03 per share for seven days preceding this transaction. The following is a list of the participants: Name Shares Purchased Amount Lawrence M. Powers 1,300,000 $ 65,000 Robert Ingenito 550,000 $ 27,500 John DiNozzi 550,000 $ 27,500 John Iannitto 550,000 $ 27,500 Steven Gross 550,000 $ 27,500 In June, 2005 Chairman Powers advanced $50,000 to the Company to finance its operating and litigation costs. The loan will not bear interest initially and is repayable on demand. F-11

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