MICROS TO MAINFRAMES INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

[X] ANNUAL REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended March 31, 2003

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________

Commission file number: 0-22122

MICROS-TO-MAINFRAMES, INC.
(Exact name of registrant as specified in its charter)

New York 13-3354896
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification
No.)

614 Corporate Way, Valley Cottage, New York 10989
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (845) 268-5000

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

Securities registered pursuant to Section 12(g) of the Act: Common Stock,
par value $0.001 per share

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 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 the
proxy statement incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K.[ ]

Indicate by check whether the registrant is an accelerated filer
(As defined in Rule 12b-2 of the Act). Yes[ ] No[X]

The aggregate market value of the voting stock held by
non-affiliates of the registrant, as of September 30, 2002 was
$3,552,377 (assuming solely for purposes of this calculation that all
directors and officers of the registrant are "affiliates" and that no
other person is an "affiliates" of the registrant").

The number of shares outstanding of the registrant's Common
Stock, par value $.001 per share, as of June 20, 2003 was 4,723,152

Documents Incorporated by Reference: None

Private Securities Litigation Reform Act Safe Harbor Statement

This Annual Report on Form 10-K of Micros-To-Mainframes, Inc.
(collectively with its subsidiaries, "MTM" or the "Company") contains
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements include, without limitation, statements regarding the
adoption by businesses of new technology solutions and the use by
businesses of outsourced solutions, such as those offered by the
Company, in connection with such adoption. Readers are cautioned that
such forward-looking statements, as well as others made by the
Company, which may be identified by words such as "may", "could",
"will," "expect," "anticipate," "believe", "continue," "estimate,"
"project," "intend," and similar expressions, are only predictions
and are subject to risks and uncertainties that could cause the
Company's actual results and financial position to differ materially
from the forward looking statement. Such risks and uncertainties
include, without limitation:

A significant decline in demand for the Company's services due to the
current slowdown in IT spending and general economic conditions
associated with providing information technology and engineering
services;

The Company's ability to continue to attract, train and retain
personnel qualified to meet the requirements of its clients;

Possible adverse effects on the market price of the Company's common
stock due to the resale into the market of significant amounts of
common stock;

The Company's ability to obtain financing on satisfactory terms;

The Company's ability to remain competitive in the intense IT markets
which it serves;

The risk of claims being made against the Company associated with
providing temporary staffing services;

The Company's ability to manage significant amounts of information,
and periodically expand and upgrade its information processing
capabilities;

The Company's ability to remain in compliance with federal and state
wage and hour laws and regulations;

The accuracy of the Company's predictions as to the future need for
the Company's services;

Uncertainties relating to the allocation of costs and expenses to
each of the Company's operating segments;

The costs of conducting and the outcome of litigation involving the
Company; and

Other economic, competitive and governmental factors affecting the
Company's operations, markets, products and services.

Readers are cautioned not to place undue reliance on these forward-
looking statements, which speak only as of the date made. The Company
undertakes no obligation to publicly revise any of these forward-
looking statements.

Part I

ITEM 1. BUSINESS

GENERAL:

Micros-to-Mainframes, Inc. and its subsidiaries, MTM
Advanced Technology, Inc., PTI Corporation (formerly known as Pivot
Technologies,Inc.)("Pivot"), and Data.Com RESULTS, Inc.
("Data.Com"), serve as a single source provider of advanced
technology solutions to small, mid-size and large corporate clients.
These solutions include design and consulting services,
communication services and products, Internet/Intranet development
services, and network and security managed services. In addition, the
Company delivers total processing solution's to its customers by
providing computer hardware and software, systems design,
installation, consulting, maintenance and integration of
microcomputer products, including the design and implementation of
wide area networks ("WAN's") and local area networks ("LANs"). A
network is the integration of two or more computers and their
components into a system that allows multiple users to share the same
information, communicate with the mainframe (a computer with large
capacity used primarily for massive data storage and processing) or
central networking system and all other computers and peripheral
equipment.

The Company sells, installs and services microcomputers,
microcomputer software products, supplies, accessories and custom
designed microcomputer systems. MTM is an authorized direct dealer
and value added reseller. The Company also serves as a systems
integrator, by integrating into a single working system a group of
hardware and software products from more than 40 major computer
vendors, including Hewlett Packard/Compaq Computer Company, IBM
Corporation, Dell Computer Corporation, NEC Technologies, Inc., ISS
Technology Inc., Citrix Systems, Inc., Cisco Systems, Inc., Novell,
Inc., Microsoft Corporation, 3COM Corporation and Symantec
Corporation. The Company also serves as a managed service provider
(MSP) providing automated remote network, system and security
management solutions and related consulting and engineering services.

MTM provides its customers, which consist of certain Fortune
500 corporations and others which the Company believes are mostly in
the Fortune 2000 category (hereinafter referred to as "Fortune 2000
corporations"), municipalities and educational institutions in the
tri-state, New York City metropolitan area, with a wide range of
related outsourced customer support services, including network
analysis and design, network service management, systems
configuration, physical installation, software loading, application
training, continuing education, maintenance and repair services.

The outsourcing of computer services is a rapidly growing trend
whereby a client company obtains all or a portion of its data
processing requirements from a systems integrator, such as MTM, that
specializes in the computer service, product or application required
by the client. The focus of the Company's growth strategy revolves
around the Company's outsourced support services, which include
contract programming, network consulting and staff leasing in
addition to systems integration. Since 1991, the Company has evolved
to become a provider of IT professional services, and providing
customer managed services and is focusing its current marketing
efforts in such areas. Such services account for approximately 38%
of the Company's revenues for the fiscal year ended March 31, 2003
("Fiscal 2003"), small portion of these revenues derived from
maintenance and repair services.

The Company's software support services include network and
mainframe connectivity (communication between computers and networks)
consulting, hardware and software maintenance, network management,
videoconferencing consulting and trouble-shooting support. The
Company's clients have access to person-to-person support services
administered by a staff of highly trained support engineers,
generally via a toll-free 800-telephone call. The Company's clients
also have access to MTM's consulting services for LAN and WAN
planning, detailed systems design, gateway (a device which allows
computer users to access data from networks to the mainframes or by
telephone), bridge (a device which allows computer users to
communicate between networks and provides an expansion route for the
existing network) and security/disaster recovery.

The Company reorganized its operations in its fiscal year ended
March 31, 2000 ("Fiscal 2000"). All of the services inclusive of
high-end hardware previously offered by the Company, including those
provided by MTM, Pivot, the Advanced Technologies Group and Data.Com,
are now reported as one unit. The service business accounted for over
$20,984,000 in revenues in Fiscal 2003.

Although the Company believes that these operations will
continue to grow, there can be no assurance that the Company will be
able to obtain the financing necessary to fund this growth or that
the service operations will obtain the business to increase the
Company's revenues and profitability. The Company is presently
reviewing various options with its financial advisors for additional
financing, subject to market conditions, in order to increase the
sales and profitability of its operations.

The Company was incorporated on May 12, 1986 in the State of New York.

INDUSTRY

The microcomputer industry has become a multi-billion dollar
industry since its development in the late 1970's. Today, industry
participants face intense competition, the challenge of constant
technological advancement and the ongoing need for business process
optimization. Companies are turning to IT solutions to compete more
effectively. As a result, the ability of solutions provider to
integrate and align information technologies with new business
objectives has become critical for survival.

Although many companies have recognized the importance of
optimizing IT systems and products to support business processes in
competing in today's challenging climate, the process of designing,
developing and implementing IT solutions has become increasingly
complex. With the prevailing economic conditions, many customers have
nonetheless elected to defer updating their IT system as well as
failing to reinvests in their computer infrastructures. Many
companies are focusing now on making the most effective use of
existing computer systems. Many of the Company's clients are facing
challenging economic times. This is creating uncertainty in their
ability to pursue technology projects, which had previously been
considered a competitive imperative. Many companies are not hiring
and reducing their own permanent staff and reducing the demand for
consulting services in attempts to maintain profitability. This has a
direct impact on MTM's revenues.

The current economic environment has further challenged many
companies to evaluate investment or funding choices and business
critical applications. IT managers must integrate and manage
computing environments consisting of multiple computing platforms,
operating systems, databases and networking protocols and off-the-
shelf software applications to support business objectives. Companies
also need to keep pace with new developments in technology, which
often render existing equipment and internal skills obsolete. At the

same time, external economic factors have caused many organizations
to focus on core competencies and trim workforces in the IT
management area. Accordingly, these organizations often lack the
quantity, quality and variety of IT skills necessary to design and
support IT solutions. IT managers are charged with supporting
increasingly complex systems and applications of significant
strategic value, while working under budgetary, personnel and
expertise constraints within their own organizations.

The Company believes the strongest demand for MTM's IT services
is among companies which typically lack the time and technical
resources to satisfy all of their IT needs internally. These
companies typically require sophisticated, experienced IT assistance
to achieve their business objectives. These companies often rely on
IT service providers to help implement and manage their systems.
However, many of these companies rely on multiple providers for their
IT needs. Generally, the Company believes that this reliance on
multiple providers results from the fact that larger IT service
providers do not target these companies, while smaller IT service
providers lack sufficient breadth of services or industry knowledge
to satisfy all of these companies' needs.

These companies purchase computer hardware from a number of
sources, including manufacturer authorized dealers and value-added
resellers, such as MTM, retail stores and, with increasing
importance, directly from manufacturers through direct telemarketing
and mail order organizations. Direct sales have benefited from
microcomputer users becoming more computer literate, the emergence of
industry standards and increased inter-changeability of peripherals.
As a result of the foregoing, the microcomputer dealer distribution
channel is currently undergoing additional market segmentation into
dealers such as the Company, which are systems integrators, which
offer one-stop total solution for outsourcing.

PRODUCTS

The Company markets microcomputers, printers, displays, video
conferencing products, LAN and WAN products, plotters, software and
other peripheral products. MTM is an authorized sales and service
dealership of microcomputer equipment and related products supplied
primarily by major manufacturers, including, but not limited to,
Hewlett Packard/Compaq Computer Company, IBM Corporation, Dell
Computer Corporation, NEC Technologies, Inc., ISS Technology Inc.,
Citrix Systems, Inc., Cisco Systems, Inc., Canon USA, Inc., Novell,
Inc., Microsoft Corporation, 3COM Corporation and Symantec
Corporation.

MTM purchases certain products from distributors selling to
other dealers at prices generally lower than the Company could obtain
directly from suppliers. The Company also obtains products from a
number of suppliers, including independent distributors, on an
individual purchase order basis rather than through dealership
agreements. MTM will also order specific products from other
manufacturers to satisfy a particular customer requirement. The
Company regularly evaluates new products, both internally and through
evaluations with its customers. See "Business - Suppliers."

The microcomputer industry is characterized by numerous hardware
systems that utilize different and often incompatible standards for
hardware and software. The Company has the capability to design
systems and support services, which include products or components
manufactured by numerous manufacturers that address most applicable
industry standards.

The Company is an authorized dealership for the various
standardized LAN systems, including those provided by Cisco, Citrix,
Novell, 3COM, Microsoft, IBM and others. In addition, the Company
sells and services LAN and WAN products produced by the various

manufacturers. LAN and WAN systems allow various microcomputers to
communicate with other computers in a group and with other
microcomputers in other LANs and WANs. The Company's clients have
access to the Company's Connectivity and Communication Laboratory
described below where they can test, design and create LANs and WANs.

OUTSOURCED SUPPORT SERVICES

MTM support services include a wide range of services designed
for its customers' corporate planners and management needing a single
source for technical support issues, such as local and wide area
networks, gateways, routers, bridges, system conversion planning,
hardware and software specifications, database and database server
development and implementation, videoconferencing, disaster recovery,
network system management and security monitoring and management.

The outsourcing of computer services is a rapidly growing trend
in which a client company obtains all or a portion of its data
processing requirements from a systems integrator, such as the
Company, that specializes in the computer service, product or
application required by the client.

The Company believes that it is generally more cost-effective
and more efficient for its clients to purchase outsourcing services
from the Company than for them to provide equivalent services by
hiring their own service and support personnel.

The following services provide the Company's clients with the
ability to outsource virtually all of their support requirements with
one company for a wide variety of their microcomputer hardware and
software needs. These services generally provide the Company's
clients with access via an 800-telephone call to person-to-person
support services administered by a staff of highly trained support
engineers in the Company's Advanced Technology Group. There are
presently 115 technical support persons under the supervision of a
Data Communications Manager working in this area. This group is
responsible for systems design and the implementation of technology
and the management of advanced technology projects including LANs,
WANs and data communications problem solving for clients.

NETWORK AND MAINFRAME CONNECTIVITY CONSULTING

MTM and its staff of networking consultants offer a high level
of expertise at all levels of computer technology to provide
management information services (MIS) departments with consulting
services ranging from connectivity to enhancements, feasibility and
implementation. These services address critical issues such as
performance, reliability and compatibility with proven strategies and
products. MTM offers research and planning insight at all levels of
information flow from mainframes to mini to micro computers and
within each system. These consulting services provide clients with
access to a variety of options in designing and maintaining systems.

CONNECTIVITY AND COMMUNICATION LABORATORY

The Company's Advanced Technology Group seeks to serve
customers' increasing communications requirements, including their
need to share data and resources using LANs and WANs. The Company
offers an array of connectivity services, including LAN and WAN
system design and configuration, videoconferencing consulting, user
training and installation. In addition, the Company has established
a Connectivity and Communication Laboratory in its executive offices.
This state-of-the-art facility provides a multi-vendor environment to
test connectivity networks, create multi-vendor LANs and WANs and
solution prototypes, perform feasibility studies, perform pre-release
and new connectivity product testing, perform product compatibility
testing, product bulletproofing, procedures development, product
evaluation and optimization, replication, diagnosis and solution of

service problems and to generally provide a basis to address support
issues.

The Company's lab features several different LAN and WAN
operating systems for the entire spectrum of computer sizes from such
manufacturers as Microsoft, Novell, IBM, Citrix, Compaq-SANS, and
Cisco.

NETWORK MANAGEMENT AND FINE-TUNING

The Company's Advanced Technology Group provides services
designed to resolve complex network and data communications
management issues for clients with existing multiple networks and/or
sites currently utilizing communication servers, gateways to host
computers and bridges linking multiple servers (a primary storage
device, normally a PC in a network). These services include network
security planning and implementation, data integrity and redundancy,
network fine-tuning and auditing, performance testing, evaluation and
optimization, corporate electronic mail and site management. Pivot
provides automated remote network services, security, and systems
monitoring and management on both a proactive and reactive basis.

1-800-PRODUCT SUPPORT

The Company's experienced support engineers provide product
support to resolve specific operating system and application
problems. The Company's toll-free 800-telephone support line can be
used for such problems as application software, installation
assistance, error message handling or shared device problems. The
applications supported include spreadsheets, word processing
packages, communications, network and PC operating systems, graphics,
databases and various utilities.

The Company provides its clients with instant access to the
latest product support resources for known problems and resolutions,
updates and release information.

NETWORK TRAINING AND CONSULTING

The Company's Advanced Technology Group provides the Company's
clients and their corporate management, as well as its own
engineering and sales personnel, with technical support and training.
The Company's support engineers have generally been trained by major
computer vendors and receive additional training from courses given
by computer vendors, as well as by the Company's Data Communications
Manager, on an as needed basis and also in order to maintain their
certifications with their respective vendors. The Company offers
comprehensive training sessions for its customers featuring
instruction by manufacturer-trained customer support representatives.
This department assists in post-sale customer inquiries and network
consultation and support via a toll-free 800 telephone number. The
Company also offers customer-training seminars for various
microcomputer hardware and software products at its own facilities
and at customer sites.

PRODUCT MAINTENANCE

The Company offers contracts to its customers for both on-site
and off-site complete product maintenance and repair services. These
maintenance contracts generally provide for the Company to maintain
microcomputer equipment at the customer's location during regular
business hours. Most maintenance contracts are renewable annually.
In addition, the Company provides authorized warranty service and
repair for equipment sold by it and by others. The service
department fulfills warranty requirements and offers extended
maintenance and repair agreements after the expiration of
manufacturers' warranties. The service department maintains a part
inventories for the products distributed by the Company and is
staffed by manufacturer-certified field engineers.

REMOTE NETWORK SERVICES

The Company, through Pivot Technologies, Inc., provides remote
network services to its clients. Remote network services are
designed to monitor local, wide area and private virtual networks
remotely from Pivot's offices at 614 Corporate Way in Valley Cottage,
New York.

DIAGNOSTICS

The Company ships one of its trouble-shooting tools (e.g., HP
Advisor, Novell LANalyzer or Network Analyzer) to a client to allow
dial-in access for trouble-shooting network hardware and software
related problems. By displaying and capturing network traffic, the
Company's experienced systems engineers can analyze and determine the
network problem. In addition, through a remote dial-in system, the
Company's systems engineers can access a client's network problems.
Diagnostics is also provided utilizing the Pivot remote network
management system.

DATABASE

MTM has access to state-of-the-art technical databases, which
provide it with information concerning technological advances from
major vendors. This assists the Company in trouble-shooting as it
receives up-to-date product information from a wide variety of
vendors. The Company has either been licensed, contracted or
authorized to use Novell's technical database which Novell engineers
use for research and network diagnosis, as well as technical
information from IBM, Compaq, Cisco, Microsoft, NEC, 3COM, and Fore
Systems, Inc. These databases provide the Company with technological
advances from major vendors as soon as the information is published.
These, in turn, allow the Company flexibility to shift rapidly to
vendors whose products are expected to increase in demand as a result
of technological advances.

INSTALLATION SERVICE PROVIDER

The Company entered into a Master Services Agreement (the
"Services Agreement") with Dell Marketing L.P. ("Dell") on April 15,
1999 to become a designated Dell installation service provider.
Under the Services Agreement, the Company became Dell's subcontractor
for the purpose of providing certain services to Dell customers,
including, among other things, installation services for
workstations, desktops and notebooks, systems upgrades, customer
orientation and virus checks in exchange for a fee to be paid by Dell
for such services. The Services Agreement is currently automatically
renewable for additional one-year terms on each expiration date
unless either party gives a written notice of termination at least
one hundred twenty days prior to the expiration date of the then
current term.

ACCESSORY PRODUCTS

The Company has formed new purchasing relationships with several
computer supply vendors, through which it resells diskettes, data
tape, compact disks, toner, ribbons and other related computer
supplies. The Company does not believe that it is dependent on any
one vendor of computer supplies, and the loss of any such vendor
would not have a material adverse impact on the Company.

MARKETING AND SALES

The Company's marketing efforts are focused on Fortune 2000
corporations, professional firms, and governmental and educational
institutions. The Company has recently begun also to focus on the
mid-tier corporate market ($50,000,000 to $750,000,000) revenue based

companies. Except for major corporate accounts, these customers
generally do not have internal computer support personnel. Management
believes that the increasing complexity of microcomputer systems,
increased usage of microcomputers in the workplace and the trend
toward network interconnecting will cause business and institutional
customers to require significant levels of outsourced customer
support services, such as those provided by the Company. The Company
believes that these customers are increasingly relying on their
dealers and suppliers to provide, in addition to competitive pricing,
an one-stop solution-based approach to their data processing
requirements. The Company uses such an approach, which addresses
purchasing, compatibility, maintenance, support, training and
obsolescence.

The Company has approximately 300 active clients. The Company's
customers are well diversified in such industries as securities,
financial institutions, pharmaceuticals, manufacturing, distribution,
law and accounting firms as well as municipalities and educational
institutions. For Fiscal 2003 Fiscal 2002, approximately 18% and
12% of its revenue was from one customer, Verizon Wireless. The Company
entered into a three-year desktop maintenance and support contract
with Verizon Wireless, the contract expires in April 2005 and is
renewable each year thereafter. For Fiscal 2003, Fiscal 2002 and
Fiscal 2001, approximately 12%, 12% and 19%, respectively, of the
Company's total revenues were derived from sales to UBS/PaineWebber,
Incorporated ("UBS/PaineWebber"). Even though the Company's
agreement with UBS/ PaineWebber terminated on February 28, 1998, the
Company is continuing to do business with UBS/ PaineWebber on
generally the same terms as the expired agreement. The Company is
continuing its efforts to negotiate a new agreement with UBS/
PaineWebber. In Fiscal 2003, Fiscal 2002 and Fiscal 2001, A.I. Credit
Corp. ("A.I. Credit") accounted for 8%, 10% and 17%, respectively, of
the Company's revenue. The Company has been working under an oral
agreement with A.I. Credit to purchase computer hardware and
services. While the Company believes it will be able to maintain its
relationship with, Verizon Wireless,UBS/ PaineWebber and A.I. Credit, no
assurance thereof can be given. In any event, sales to Verizon
Wireless, USB/PaineWebber and A.I. Credit are negotiated on a case-
by-case basis. Although the Company's customer base has increased,
the loss of Verizon Wireless, USB/PaineWebber or A.I. Credit, would
be expected to have a material adverse effect on the Company's
operations.

As of June 15, 2003, the Company employed 25 salespersons, sales
assistants and marketing persons who are paid salaries, commissions
and/or a combination of both. The Company's sales executives
regularly call on management at companies seeking solutions for their
computer problems. While the Company's marketing activities are
focused on Fortune 2000 corporations located in the tri-state New
York City metropolitan area and throughout New England, the Company
sells its products and services to branch offices of its customers
throughout the United States. The Company also relies on customer
referrals from its major suppliers and manufacturers who often
receive requests for a systems integrator to design and install their
systems.

The Company's sales executives generally participate in weekly
training concerning various topics, including product knowledge,
industry information and sales techniques. The Company's ability to
successfully expand its business will depend, in part, on its ability
to attract, hire and retain highly skilled and motivated marketing
and sales personnel, of which there can be no assurance.

MTM also makes joint sales presentations with certain of the
Company's major suppliers to existing and prospective customers.
Certain of these suppliers' customer fulfillment option programs
allow customers who purchase directly from the supplier to apply
purchases from MTM to their purchase obligations under those
agreements. As a result, these customers have the flexibility of
purchasing products from the Company to take advantage of MTM's added
services and its ability to integrate multiple manufacturers'

products. Most major manufacturers have instituted either a
moratorium or a selective authorization procedure on the approval of
additional authorized dealership locations. While in effect, such
policies may preclude the Company and certain of its competitors from
becoming authorized dealers for new vendors.

SUPPLIERS

The Company purchases microcomputers and related products
directly from numerous suppliers as either an authorized dealer or a
value added reseller. The Company has entered into authorization
agreements with its major suppliers. Typically, these agreements
provide that MTM has been appointed, on a non-exclusive basis, as an
authorized dealer and systems integrator of specified products of the
supplier at specified locations. Most of the authorization
agreements provide that the supplier may terminate the agreement with
or without cause upon 30 to 90 days notice or immediately upon the
occurrence of certain events. In addition, although each agreement
is generally subject to renewal on an annual basis, there can be no
assurance that such agreements will be renewed. The Company believes
that its relationships with its major suppliers are good.

Sales of Hewlett Packard /Compaq products accounted for
approximately 45%, 22% and 18% of the Company's revenues during
Fiscal 2003, Fiscal 2002 and Fiscal 2001, respectively. Sales of Dell
Computer ("Dell") products have accounted for approximately 27%,10%
and 22% of the Company's revenues during Fiscal 2003, Fiscal 2002
and Fiscal 2001, respectively. No other supplier's products
accounted for 10% or more of the Company's revenue during Fiscal
2003, Fiscal 2002 or Fiscal 2001. Substantially all of the Company's
hardware products, with the exception of Dell products were purchased
through suppliers and directly from the hardware manufacturer. The
Company's sales of products purchased through Ingram Micro, Inc.
("Ingram") accounted for approximately 47%, 28% and 32% during Fiscal
2003, Fiscal 2002 and Fiscal 2001, respectively. The Company's sales
of products purchased through Tech Data Corporation ("Tech Data")
accounted for approximately 26%, 25% and 33% during Fiscal 2003,
Fiscal 2002 and Fiscal 2001, respectively. Management does not
believe that a termination of any one supplier's agreement or
distributor's agreement, other than Dell, Compaq or Hewlett Packard
would have a material adverse effect on the Company.

The Company's future results of operations are dependent upon
continued demand for microcomputer products. Distributors and
integrators in the microcomputer industry currently face a number of
adverse business conditions, including price and gross profit margin
pressures and market consolidation. During the past five years, all
major hardware vendors have instituted extremely aggressive price
reductions in response to lower component costs and discount pricing
by certain microcomputer manufacturers. The increased price
competition among major hardware vendors has resulted in declining
gross margins for many microcomputer distributors and may result in a
reduction in existing vendor subsidies. The Company believes that
these current conditions, which are forcing certain of the Company's
direct competitors out of business, may present the Company with
opportunities to expand its business. There can be no assurance,
however, that the Company will be able to continue to compete
effectively in this industry.

Pursuant to the terms of most of its authorized dealership
agreements, the Company furnishes firm purchase orders 30 to 90 days
in advance of shipment. Under the terms of these agreements, the
Company is generally liable for up to a 5% restocking fee to many
manufacturers, suppliers for the return of previously received
merchandise. The Company has not experienced any significant
cancellation penalties or restocking fees.

The Company receives certain discretionary cost subsidies,
typical for the industry, from certain major suppliers to promote

sales and support activities relating to their products. It has used
these funds to subsidize marketing, advertising and its Connectivity
and Communication Laboratory.

MTM's current arrangements with major suppliers generally
provide protection for up to two months against declines in the
wholesale price of microcomputers and related products in the
Company's inventory. These arrangements typically take the form of a
cash payment or a credit against future purchases in an amount equal
to the difference between the price actually paid by the Company for
its inventory of that supplier's products and the new dealer price.

The Company's suppliers permit the Company to pass through to
its customers all warranties and return policies applicable to the
suppliers' products. To date, the Company has experienced little
return of product and has been reimbursed by the suppliers for most
warranty work done for its customers. All service work after the
expiration of the warranty period is at the customer's expense. The
Company offers service contracts of varying lengths under which the
Company agrees to be responsible for all service costs for a fixed
term in exchange for a set fee paid by the customer.

Software and other related products are purchased from numerous
industry suppliers. As is customary, the Company does not have any
long-term agreements or commitments with these suppliers, because
competitive sources of supply are generally available for such
products.

In response to discounted pricing by certain microcomputer
manufacturers, all major CPU hardware suppliers have instituted
aggressive price reductions. The heightened price competition among
hardware suppliers has resulted in declining gross margins for many
microcomputer resellers. Although discounted prices have enabled the
Company to increase its sales volume in recent years, it has resulted
in lower gross margins for some of the Company's product lines.
Network services and service-related hardware products, however, have
had improving margins. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

TECH DATA CORPORATION AND INGRAM MICRO, INC.

The Company entered into a Program Agreement with Ingram as of
December 5, 1997. Either party may terminate such agreement with
or without cause upon thirty (30) days prior notice. Pursuant to the
agreement, Ingram provides a supplemental program to provide the
Company (and other similarly situated companies contracting with
Ingram) with services designed to assist the reseller in marketing
and distributing Ingram's products. The Company also agreed to name
Ingram as its primary supplier and to purchase from Ingram at least
65% of its total product purchased from wholesale distributors. No
assurance can be given that such agreement will not be terminated by
Ingram.

The Company's agreement with Tech Data was for a one year term
commencing January 15, 1997, subject to an automatic three month
renewal. Such agreement was terminable upon 30 day prior notice.
Even though the term has expired, the Company continues to conduct
business with Tech Data on substantially the same terms as the
original agreement. The agreement generally sets forth the price to
be charged the Company for purchases based on a percentage above a
stated cost to Tech Data. Even though the Company has no reason to
believe that Tech Data will not continue to do business on
substantially similar terms as provided in the agreement, no
assurance thereof can be given.

DELL COMPUTER

The Company entered into a Service Agreement with Dell on April
15, 1999. Under the Service Agreement, the Company became Dell's

subcontractor for the purpose of providing certain services to Dell
customers, including, among other things, installation services for
workstations, desktops and notebooks, systems upgrades, customer
orientation and virus checks in exchange for a fee to be paid by Dell
for such services. The Service Agreement is for a three year term,
or unless otherwise terminated pursuant to the Service Agreement, and
is automatically renewed for additional one year terms on each
expiration date unless a written notice of termination is given by
either party at least one hundred twenty days prior to the expiration
date of the then current term. There has been no notice of
termination.

COMPETITION

The microcomputer market is highly competitive. The Company is
in direct competition with local, regional and national distributors
of microcomputer products and related services. Several of these
competitors offer most of the same basic products as does the
Company. The Company competes with other resellers and believes its
prices and delivery terms are competitive. Many competitors may sell
their products at lower prices than the Company, but the Company
believes, generally do not offer the same range of support services
after installation of equipment that the Company offers to its
customers.

In addition, the tri-state New York City Metropolitan area and
New England, to which the Company markets its products and services,
are particularly characterized by highly discounted pricing on
microcomputer products from various sources of competition. The
Company faces competition from microcomputer suppliers that sell
their products through direct sales forces and from manufacturers and
distributors that emphasize mail order and telemarketing.

Depending on the customer, the principal areas of competition
may include price, pre-sales and post-sales technical support and
service, availability of inventory and breadth of product line. The
Company has an insignificant market share of sales in the
microcomputer industry and the service markets, which the Company
serves. Certain of the Company's competitors at the regional and
national level are substantially larger, have more personnel, have
materially greater financial and marketing resources than the Company
and operate within a larger geographic area than does the Company.

Management believes that the Company will continue to be able to
compete effectively against its various competitors by combining fair
pricing with a wide range of customer support services designed to
provide its customers with high-end technological services,
multi-vendor technical support, maintenance of their computer product
needs, a dedicated, trained staff of salespersons and technicians,
complete solutions for single user, multi-user or network systems and
specialized vertical market software.

The Company generally delivers products from inventory to its
customers within one to two weeks of its receipt of purchase orders.
As a result, the Company believes that its backlog of unfilled
customer orders is not material.

PROPRIETARY INFORMATION

The Company holds no patents, but has several trademarks and
service marks related to its Pivot operations. The Company also may
affix copyright notices on its support service, training and service
manuals. While such protection may become important to the Company,
it is not considered essential to the success of its business. The
Company relies on the know-how, experience and capabilities of its
management, sales and service personnel. The Company requires some
of its employees to sign confidentiality or non-competition
agreements.

EMPLOYEES

As of June 15, 2003, the Company employed 140 persons, all but
one of whom are full-time personnel. Of these employees, three are in
management, twenty five are in sales and marketing, ninety seven are
in technical support, two are in distribution, five are in finance
and seven are in administration. A union represents none of the
Company's personnel, and the Company considers its employee relations
to be good.

ITEM 2. PROPERTIES

The Company's executive offices and warehouse are located in
approximately 11,000 square feet of space at a two-story facility
leased at 614 Corporate Way, Valley Cottage, New York. The lease
is terminable on four months notice and expires on August 31, 2004.
The cost to terminate this lease is not material to the Company.
Approximately 35% of such space is devoted to marketing and telephone
sales, 15% to service and customer support, 10% to administration,
10% to the Connectivity and Communication Lab and 30% to warehouse
space. The Company does not maintain a retail showroom. The current
monthly rental payment is approximately $10,094. Even though no
assurance can be given, the Company anticipates no difficulty in
renewing the lease at the current market rate.

The Company entered into a lease on June 17, 1998 for 8,433
square feet of office space at 270 Madison Avenue. The monthly rent
for the space is currently approximately $23,200 and expires on
October 31, 2003. The Company also leases approximately 8,100 square
feet of office and warehouse space (only about 10% of this property
is devoted to warehouse space) in Rocky Hill, Connecticut. The
monthly payment on this lease is approximately $5,600. The lease is
terminable on six months' notice after August 2002 and expires on
July 31, 2004. The cost to terminate this lease is not material to
the Company. Even though no assurance can be given, the Company
anticipates no difficulty in renewing the lease at the current market
rate. In connection with the acquisition of Pivot, the Company
assumed Pivot's lease dated August 4, 1997 and renewed on October 13,
2000 for approximately 8,700 square feet at 614 Corporate Way, Valley
Cottage, New York. This lease expires on October 31,2002. The
monthly rent for such space is approximately $7,291. Even though no
assurance can be given, the Company anticipates no difficulty in
renewing the lease at the current market rate.

The Company is also responsible for real estate taxes,
insurance, utilities and maintenance expenses concerning these
premises. These expenses totaled approximately $260,000 in Fiscal
2003.

ITEM 3. LEGAL PROCEEDINGS

On or about April 1, 2003, Andrew J. Maxwell, trustee (the
"Trustee") of the Chapter 7 bankruptcy case of Marchfirst, Inc. and
its subsidiaries and affiliates (collectively, the "Debtor"), filed a
complaint (the "Complaint") against MTM in the United States
Bankruptcy Court, Northern District of Illinois, Eastern Division.
On or about April 12, 2001 (the "Petition Date"), the Debtor filed
petitions for relief under Chapter 11 of Title 11 of the United
States Code (the "Bankruptcy Code"). The Debtor's bankruptcy case
was thereafter converted to a Chapter 7 bankruptcy case on or about
April 26, 2001. During the ninety days preceding the petition filing
date, the Debtor transferred to MTM an aggregate of approximately
$212,040.33 (the "Transfer") on account of debts owed by the Debtor
to MTM. The Complaint alleges that the Transfer constituted a
preference within the meaning of Section 547(b) of the Bankruptcy
Code, and seeks return of the Transfer, together with interest and

costs incurred by the Trustee in bringing suit, including attorney's
fees, to the extent permitted by law. MTM has answered the Complaint
denying liability, and asserting affirmative defenses under Sections
547(c)(2) and (4) of the Bankruptcy Code, commonly known as the
"ordinary course of business" and "new value" defenses. The Company
believes that a loss is not probable and has not accrued this amount
in the accompanying financial statements.

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

None.

PART II

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

The Common Stock of the Company is listed on NASDAQ SmallCap under
the symbol "MTMC".

The following table sets forth the high and low sale prices of the
Common Stock for each quarterly period within the last two fiscal years as
reported by NASDAQ.

High Low
FISCAL YEAR ---- -----
ENDED MARCH 31, 2002
----------------------
April 1 - June 30, 2001 $1.350 $0.750
July 1 - September 30, 2001 $1.550 $0.900
October 1 - December 31, 2001 $1.600 $1.150
January 1 - March 31, 2002 $1.850 $1.300

FISCAL YEAR
ENDED MARCH 31, 2003
----------------------
April 1 - June 30, 2002 $1.800 $0.850
July 1 - September 30, 2002 $1.450 $0.720
October 1 - December 31, 2002 $0.950 $0.550
January 1 - March 31, 2003 $0.780 $0.530

As of June 4, 2003, the Company had 103 record holders and an excess of
1,600 beneficial holders, of Common Stock.

The Company has not paid any cash dividends on Common Stock to date
and does not anticipate paying any in the foreseeable future. The Board of
Directors intends to retain earnings, if any, to support the growth of the
Company's business.

The following table sets forth certain information as of the fiscal year
ended March 31, 2003 with respect to the Company's compensation plans
(including individual compensation arrangements) pursuant to Item 201(d) of
Regulation S-K.

EQUITY COMPENSATION PLAN INFORMATION TABLE

_______________________________________________________________________________________________________

Plan Category Number of securities to Weighted-average Number of securities
be issued upon exercise exercise price of remaining available for
of outstanding options, outstanding options, future issuance under.
warrants and rights warrants and rights equity compensation
plans (excluding
securities reflected in
column (a))
- --------------------------------------------------------------------------------------------------------
Equity compensation
plans approved by
security holders 1,327,234 $2.04 406,000
________________________________________________________________________________________________________
Equity compensation
plans not approved by
security holders - - -
________________________________________________________________________________________________________

Total 1,327,234 $2.04 406,000
________________________________________________________________________________________________________

ITEM 6. SELECTED FINANCIAL DATA

The following selected financial data for the fiscal years ended
March 31,2003, 2002, 2001, 2000 and 1999, are derived from the
financial statements of the Company. The data should be read in
conjunction with the consolidated financial statements, related notes
and other financial information included herein.

Income Statement Data:

Year Ended March 31,

2003 2002 2001 2000 1999

(In Thousands, except earnings per share)
- -----------------------------------------------------------------------------

Net revenues $ 55,456 $ 75,450 $80,172 $72,823 $69,031

Cost of products sold 32,139 50,662 53,674 48,137 44,250

Cost of services provided 13,272 13,017 14,900 14,232 15,585

Selling, general and
administrative expenses 11,484 11,077 13,431 9,922 8,615

Severance and other costs of
terminated employees - - 677 - -

Interest expense 286 459 439 177 18

Other Income 98 37 69 36 953 (1)

Income (loss) from operations
before income taxes (1,627) 272 (2,880) 391 1,516

Net income (loss) (1,211) 389 (2,279) 223 910

Net income (loss)
per common share:
Basic $ (0.26) $ 0.08 $ (0.45) $ 0.05 $ 0.21
Diluted $ (0.26) $ 0.08 $ (0.45) $ 0.05 $ 0.21

Weighted average number
of common and common
equivalent shares used in
calculation:
Basic 4,734 5,033 5,013 4,769 4,415
Dilute 4,734 5,043 5,013 4,901 4,437

Balance Sheet Data:
At March 31,

2003 2002 2001 2000 1999
(In thousands)

- --------------------------------------------------------------------------------
Working capital $6,256 $8,409 $7,835 $10,202 $10,630

Total assets 22,954 26,386 30,248 24,950 22,950

Total liabilities 9,713 11,581 15,584 8,965 9,279

Retained earnings(deficit) (2,096) (885) (1,273) 1,006 783

Shareholders' Equity 13,242 14,806 14,664 15,985 13,670

_______________________

(1) Includes $810,000 contractual payment from BTG and interest
income of $107,000.

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

The following discussion and analysis of our results of operations and
financial position should be read in conjunction with our
consolidated financial statements included elsewhere in this report.

Use of Estimates in Financial Statements. In preparing financial
statements in conformity with accounting principles generally
accepted in the United States of America, management makes estimates
and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts
of revenues and expenses during the reporting period. Accounting
estimates in these financial statements include reserves for trade
accounts receivable and vendor accounts receivable. Actual results
could differ from those estimates.

Overview

MTM is a provider of business and technology solutions, designed to
enhance and maximize the performance of its customers through the
adaptation and deployment of advanced information technology and
engineering services. The Company offices are located in the Tri-
State New York City, Metropolitan area. The Company delivers a total
processing solution by providing computer hardware and software
sales, systems design, installation, consulting, maintenance and
integration of microcomputer products, including the design and
implementation of wide area networks ("WAN's") and local area
networks ("LANs"). The Company sells, installs and services
microcomputers, microcomputer software products, supplies,

accessories and custom designed microcomputer systems. MTM is an
authorized direct dealer and value added reseller. The Company also
serves as a systems integrator, for a client by integrating into a
single working system, a group of hardware and software products from
more than 40 major computer vendors The Company provides a
diversified and extensive range of service offerings and computer
products.

The Company's customers consist of clients in banking and finance,
insurance, pharmaceutical, utility, technology, manufacturing,
distribution, and education and government sectors. The Company
believes that the breadth of services it offers fosters long-term
client relationships, affords cross-selling opportunities and
minimizes the Company's dependence on any single technology or
industry sector.

Many of the Company's clients are facing challenging economic times.
This is creating uncertainty in their ability to pursue technology
projects, which had previously been considered a competitive
imperative. Many companies have laid off portions of their employees
and have reduced investing in new computer systems, and greatly
reduced the demand for consulting services in attempts to maintain
profitability. This has had a direct impact on the Company's revenue.

The Company presently realizes revenue from client engagements that
range from the placement of contract and temporary technical
consulting to project assignments that entail the delivery of end-to-
end solutions. These services are primarily provided to the client at
hourly rates that are established for each of the Company's employees
based upon their skill level, experience and the type of work
performed. The Company also provides project management and
consulting work which are billed either by an agreed upon fixed fee
or hourly rates, or a combination of both. The billing rates and
profit margins for project management and solutions services are
higher than those for professional consulting services. The Company
generally endeavors to expand its sales of higher margin solution and
project management services. The majority of the Company's services
are provided under purchase orders. Contracts are utilized on more
of the complex assignments where the engagements are for longer terms
or where precise documentation on the nature and scope of the
assignment is necessary. Contracts, although they normally relate to
longer-term and more complex engagements, generally do not obligate
the customer to purchase a minimum level of services and are
generally terminable by the customer on 60 to 90 days' notice.
Revenues are recognized when services are provided.

Costs of services and related products consist primarily of salaries,
cost of outsourced labor and products to complete the projects.
Selling, general and administrative expenses consist primarily of
salaries and benefits of personnel responsible for administrative,
finance, operative, sales and marketing activities and all other
corporate overhead expenses. Corporate overhead expenses include
rent, telephone charges, insurance premiums, accounting and legal
fees, deprecation and amortization expenses. Depreciation primarily
relates to the fixed assets and amortization related to a capital
lease.

Revenue Recognition

The Company derives its revenues from several sources. The Company's
segments perform service engineering services, and resale of
computers and related products. The Information Technology Services
segments also perform project services. The services segment also
includes revenue from sales of high-end computers products.

The Company recognizes revenue in accordance with SAB 101. For
all revenue billed, the revenue recognition criteria were met and
accordingly, no deferred revenue has been recorded.

The Company recognizes revenue from sales of hardware when the
rights and risks of ownership have passed to the customer, which is
upon shipment or receipt by the customer, depending on the terms of
the sales contract. Revenue from sales of software not requiring
significant modification or customization is recognized upon
delivery or installation. Revenue from services is recognized upon
performance and acceptance after consideration of all the terms and
conditions of the customer contract. Service contracts generally do
not extend over one year, and are billed periodically as services
are performed. Revenue from both products and services is recognized
provided that persuasive evidence of an arrangement exists, the
sales price is fixed and determinable, and collection of the
resulting receivable is reasonably assured. Revenue arrangements
generally do not include specific customer acceptance criteria. For
arrangements with multiple deliverables, delivered items are
accounted for separately provided that the delivered item has value
to the customer on a stand alone basis and there is objective and
reliable evidence of the fair value of the undelivered items.

The Company periodically receives discretionary cost reimbursements
from suppliers. These reimbursements are accounted for as
reductions to cost of sales.

Critical Accounting Policies

The discussion and analysis of our financial condition and results
of operations are based upon the Company's consolidated financial
statements, which have been prepared in accordance with accounting
principles generally accepted in the United States of America. The
preparation of these financial statements requires the Company to
make estimates and judgments that affect the reported amount of
assets and liabilities, revenues and expenses, and related disclosure
of contingent assets and liabilities at the date of the Company's
financial statements. Actual results may differ from these estimates
under different assumptions or conditions.

Critical accounting policies are defined as those that are reflective
of significant judgments and uncertainties, and potentially result in
materially different results under different assumptions and
conditions. The Company believes that its critical accounting
policies include those described below.

Goodwill and Intangibles

The Company recorded goodwill as a result of the acquisition by
the Company of PTI Corporation (formerly known as PIVOT
Technologies, Inc.), and Data.Com Results, Inc. The Company
determined the fair value of both companies' operations through a
discounted cash flow method. This analysis was based on a
projection of future sales and earnings for a discrete period of
three years plus an assumed average growth rate for all years
beyond the initial projected period.

We develop our budgets based on recent sales data for existing
products, planned timing of new product launches, and customer
commitments related to existing and newly developed products. In
estimating future revenue and growth rates, we used our internal
budgets and make comparisons to other competitors.

We believe that the accounting estimate related to goodwill
impairment is a "critical accounting estimate" because: (1) it is
highly susceptible to change from period to period since it requires

Company management to make assumptions about future sales, cost of
sales, and growth rates over the next five years of the acquired
entity; and (2) the impact that recognizing an impairment would have
on the assets reported on our balance sheet, as well as our net
income, would be material. Management's assumptions about future
sales prices, future sales volumes, and growth rates require
significant judgment because actual sales prices and volumes have
fluctuated in the past and are expected to continue to do so. If
Management's assumptions change, then the Company could be required
to recognize an impairment loss, equal to the difference between the
fair value of the goodwill and the reported amount of the goodwill.
Management has discussed the development and selection of this
critical accounting estimate with the Company's Audit Committee and
independent auditors.

Accounts Receivable

The Company performs ongoing credit evaluations of its customers and
adjusts credit limits based on payment history and the customer's
current credit worthiness, as determined by a review of their current
credit information. The Company continuously monitors collections and
payments from its customers and maintains a provision for estimated
credit losses based on historical experience and any specific
customer collection issues that have been identified. While such
credit losses have historically been within the Company's
expectations and the provisions established, the Company could not
guarantee that it will continue to experience the same credit loss
rates that it has in the past.

RESULTS OF OPERATIONS

The Company reported a loss from operations of approximately
$1,627,000 before an income tax benefit for the year ended March 31,
2003, compared with income from operations before income taxes of
approximately $272,000 in the prior year. The decrease in income from
operations before income taxes is primarily due to (a)a decrease in
sales of approximately $19,994,000. (b) Gross profit decrease due to
a decrease of revenues of approximately $1,726,000. (c) Selling,
general and administrative expenses increased approximately $407,000,
(d) Offset by other income from a prior year insurance claim
increased approximately $61,000. (e) Interest expense decreased
approximately $173,000, due to lower interest rates.

The following discussion and analysis should be read in
conjunction with the Consolidated Financial Statements and Notes
thereto appearing elsewhere in this Annual Report.

The following table sets forth for the periods indicated certain
items in the Company's consolidated statements of operations
expressed as a percentage of total revenue for that period:

Year Ended March 31,

2003 2002 2000

Product revenue 62.16% 73.08% 72.10%
Services 37.84 26.92 27.90
- ----------------------------------------------------------------------
Net revenue 100.00 100.00 100.00

Cost of products and services 81.89 84.40 85.53
- ----------------------------------------------------------------------
Gross Profit 18.11 15.60 14.47

Selling, general and
administrative expenses 20.71 14.68 16.76

Severance and other costs of
terminated employees -- -- 0.84

Interest expense 0.52 0.61 0.54

Other income 0.18 0.05 0.08

Income (loss) from operations
before provision (benefit)
for income taxes (2.93) 0.36 (3.59)

Net income (loss) (2.19) 0.52 (2.84)

The following table sets forth revenues and cost of revenues by
product and service as a percentage of each category:

Year Ended March 31,

2003 2002 2001
- ---------------------------------------------------------------------

Product
Revenues 100.00% 100.00% 100.00%
Cost of products sold 93.24 91.88 92.85
- ---------------------------------------------------------------------
Gross Profit 6.76% 8.12% 7.15%

Service Revenues

Revenues 100.00% 100.00% 100.00%
Cost of service revenues 63.25 64.10 66.61
- ---------------------------------------------------------------------
Gross Profit 36.75% 35.90% 33.39%

Year Ended March 31, 2003 and 2002

Sales

The Company had net revenue of approximately $55,456,000 for
Fiscal 2003 as compared with approximately $75,450,000 for the Fiscal
2002.

Sales by Product and Service

Product revenue decreased approximately $20,671,000, or 37%, offset
by an increase of service revenue of $676,000, or 3%, in Fiscal 2003.
The products revenue decline was primarily attributable to a
softness in the "IT" Market and a softness in the overall economic
conditions, resulting in a hesitancy by customers to launch new
capital spending programs. The increase in services and related
revenue is due to the Company's emphasis on promoting its services
segment of business.

Gross Profit

Gross profit in Fiscal 2003 decreased to approximately
$10,045,000 from approximately $11,770,000 in Fiscal 2002, a decrease
of 15%. Gross profit margins increased to 18.1% in Fiscal 2003 as
compared to 15.6% in the prior year.

Gross profit by Product and Service

The gross profit margins from product revenue decreased to 6.8%
in Fiscal 2003 compared to 8.1% in Fiscal 2002. The decrease in gross
profit margins from product sales is related to the competitive
market, which resulted in an adverse impact on selling prices.

The gross profit margins from service sales increased to 36.8% in
Fiscal 2003 compared to 35.9% in Fiscal 2002. The increase in gross
profit margins from service sales primarily is a result of a decrease
in the use of outside contractors to perform certain services and the
increased utilization in the use of the Company's technical and
engineering staff. The Company expects to continue to hire
additional professional technicians and engineers for its consulting
and service business in order to meet the expected demand in the
outsourcing and services business for the coming year and will
continue to lower its dependency on third party service
subcontractors in the future. To the extent necessary, the Company
will continue to use subcontractors.

The Company continues to face competitive market pressures which
impact the gross profit on its product revenue and service related
revenue. The Company currently faces a number of adverse business
conditions, including price and gross profit margin pressures, market
consolidation and a slow down in the general economy. In recent
years, all major hardware vendors have instituted extremely
aggressive price reductions in response to lower component costs and
discount pricing by certain microcomputer manufacturers. The
increased price competition among major hardware vendors has resulted
in declining gross profit margins for many microcomputer
distributors, including the Company, and may result in a reduction in
existing vendor subsidies in the future. The Company believes that
these current conditions, which are forcing certain of the Company's
direct competitors out of business, may present the Company with
opportunities to expand its business. There can be no assurance,
however, that the Company will be able to continue to compete
effectively in this industry, given the intense price reductions and
competition currently existing in the microcomputer industry.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased to
approximately $11,484,000 in Fiscal 2003 from approximately
$11,077,000 in Fiscal 2002, or 4%. The increase is primarily

attributable to an increase in depreciation of $284,000, bad debt
expense increase of approximately $538,000, telephone expense
increase of approximately $120,000, and occupancy related expense
increases of approximately $50,000. This was offset by a decrease in
payroll of approximately $376,000 in Fiscal 2003, resulting from a
planned layoff of employees.

Other Income
Other income increased to approximately $98,000 in Fiscal 2003
from approximately $37,000 in Fiscal 2002. This increase is primarily
due to the collection of a prior year insurance recovery claim.

Interest Expenses

Interest expense decreased in Fiscal 2003 to approximately
$286,000 from approximately $459,000 in the prior year. The major
loan borrowing interest rate was 3.75% at for Fiscal 2003 and 4.25%
at March 31,2002. The average loan balance for Fiscal 2003 was
approximately $4.5 million as compared to approximately $6.1 million
for Fiscal 2002. This is due to the decreased borrowing necessary to
finance sales, which decreased approximately $20 million in Fiscal
2003.

Income Taxes

A credit of $416,000 for income taxes from continuing operations
has been recorded at an effective rate of 26% for Fiscal 2003 as
compared to a credit of $116,600, at an effective rate of 43% for
Fiscal 2002. Although realization was not assured, the Company
believed it was more likely than not that part of its deferred tax
asset would be realized, and, accordingly, had provided a reserve
against the deferred tax asset.

During Fiscal 2002, the Company carried back approximately
$2,475,000 of net operating losses, which were available to offset
taxable income through 1997. This resulted in income tax refunds
aggregating $838,000 received during Fiscal 2003. The Company has net
operating loss carryforwards of (1) $2,296,000 to offset federal
taxable income and (2) $5,223,000 of available state carryforwards to
offset taxable income through the year 2023. Realization of the
benefit of the carryforwards losses depends on gathering sufficient
taxable income before expiration of loss carryforwards. At March 31,
2003 the Company has set up a valuation allowance against the
deferred tax assets.

Loss from Operations

As a result, the net loss was approximately $1,211,000 for the
year ended March 31, 2003, compared with a net income of
approximately $389,000 in the prior year.

Year Ended March 31, 2002 and 2001

The Company had net revenue of approximately $75,450,000 for
Fiscal 2002 as compared with approximately $80,172,000 for Fiscal
2001. Product revenue decreased approximately $2,663,000, or 4.6%,
and service revenue decreased by approximately $2,059,000, or 9.2%, in
Fiscal 2002. The tragic events of September 11, 2001 affected some
of the Company's customers. Many companies reduced their capital
expenditures in 2002 due to the economic downturn. This reduction
adversely impacted both the product and service revenue.

Gross profit in Fiscal 2002 increased to approximately
$11,770,000 from approximately $11,598,000 in Fiscal 2001, an
increase of 1%. Gross profit margins increased to 15.6% in Fiscal
2002 as compared to 14.5% in the prior year. The gross profit margins
from product revenue slightly increased to 8.1% in Fiscal 2002
compared to 7.1% in Fiscal 2001. The increase in gross profit margins
from product revenue is primarily related to the mix of products sold
within the year. The gross profit margins from service revenue
increased to 35.9% in Fiscal 2002 compared to 33.4% in Fiscal 2001.
The increase in gross profit margins from service revenue primarily
is a result of a decrease in the use of outside contractors to
perform certain services and the increased utilization in the use of
the Company's technical and engineering staff. The Company expects
to continue to hire additional professional technicians and engineers
for its consulting and service business in order to meet the expected
demand in the outsourcing and services business for the coming year
and will not be dependent on third party service subcontractors in
the future. To the extent necessary, the Company will continue to use
subcontractors.

The Company continues to face competitive market pressures which
impact the mark-up on product revenue and service related revenue.
The Company currently faces a number of adverse business conditions,
including price and gross profit margin pressures and market
consolidation and slow down in economy. In recent years, all major
hardware vendors have instituted extremely aggressive price
reductions in response to lower component costs and discount pricing
by certain microcomputer manufacturers. The increased price
competition among major hardware vendors has resulted in declining
gross profit margins for many microcomputer distributors, including
the Company, and may result in a reduction in existing vendor
subsidies. Management of the Company believes that these current
conditions, which are forcing certain of the Company's direct
competitors out of business, may present the Company with
opportunities to expand its business. There can be no assurance,
however, that the Company will be able to continue to compete
effectively in this industry, given the intense price reductions and
competition currently existing in the microcomputer industry.

Selling, general and administrative expenses decreased to
approximately $11,077,000 in Fiscal 2002 from approximately
$13,431,000 in Fiscal 2001, or 17%. This decrease is primarily
attributable to a decrease in payroll of approximately $2,400,000 in
Fiscal 2002, from the layoff of employees, and a decrease in all
related employee costs, such as payroll taxes and benefits of
approximately $266,000, offset by an increase of bad debt expense of
approximately $290,000.

Other income decreased to approximately $37,000 in Fiscal 2002
from approximately $69,000 in Fiscal 2000. This decrease is primarily
due to decreased interest income from investing.

Interest expense increased in Fiscal 2002 to approximately
$459,000 from approximately $438,000 in the prior year. The borrowing
interest rate was 4.25% at March 31, 2002 and 6.5% at March 31,2001.
Due to the increased borrowing to finance the investment in the
service sector of the business and its sales force, interest expense
increased approximately $21,000.

A credit of $116,600 for income taxes from continuing operations
has been recorded at an effective rate of 43% for 2002 as compared to
a credit of $601,300, at an effective rate of 21% for 2001. At March
31, 2001, although realization was not assured, management believed
it was more likely than not that part of the deferred tax asset would
be realized, and, accordingly, had provided a reserve against the
deferred tax asset. As a result of the Job Creation and Workers
Assistance Act of 2002 which allowed the Company to carry back losses
to offset taxable income over five years instead of two years, the
Company adjusted its estimates and determined that all of the net
operating losses would be recognized in carry backs and carry
forwards and removed all allowances recorded against all deferred tax
assets.

As the result, net income was approximately $389,000 for the
year ended March 31, 2002, compared with a net loss of approximately
$2,279,000 in the prior year.

LIQUIDITY AND CAPITAL RESOURCES

The Company measures its liquidity in a number of ways, including
the following:

March 31,

2003 2002 2001
--------------------------------------------------
(Dollars in thousands, except current ratio data)

Cash and cash equivalents 118 1,218 1,206

Working capital 6,256 8,409 7,835

Current ratio 1.65:1 1.80:1 1.50:1

Secured notes payable 4,766 5,236 7,620

Working capital line
available 10,201 9,035 3,359

The Company had working capital of approximately $6,256,000 as
of March 31, 2003, a decrease of approximately $2,153,000 from March
31, 2002.

During Fiscal 2003, the Company's net cash provided in operating
activities was approximately $2,020,000 resulting from a decrease in
inventory of approximately $403,000. This reduction of inventory is
due to a decrease in revenue from product sales. A decrease in
deferred taxes asset and liabilities of approximately $433,000. A
decrease in prepaid and other assets of approximately $539,000 caused
by a lower amount of revenue from product sales resulting in a lower
rebate on product purchases from the manufacturer. A decrease in
accounts receivable of $44,000, caused by a decrease in revenue, and
an increase in collection days outstanding. An increase in accounts
payable of approximately $224,000 caused by an increase in days
outstanding on payables. These were offsetting by a decrease of
refundable tax of $838,000 and a loss in operations of approximately
$1,211,000.

The Company used approximately $1,239,000 of cash in investing
activities, which amount is comprised of $162,000 for the purchase of
property, equipment and software and $1,077,000 for capitalized
software labor costs. The Company engaged in several software
development projects during the fiscal year 2002 and 2003. The nature
of the projects was to improve operations within the Company. The
projects were as follows: "Time Keeper", link to billing system of
both Company and service vendors. "1 Director" is a custom Catalog
creator, link to the Company warehouse, vendors and manufactures,
eSales links and patches, "Unix server", custom programming and
enhancement. "Platform Automation Server", job manager, web

publisher. "Reports and Website", performance reports and new website
functionality.

The Company had a decrease in its net cash used by financing
activities of approximately $1,880,000, primarily related to the
repayment of its borrowings of approximately $1,166,000 to its
financing facilities, repurchase of common stock of approximately
$353,000, and payment of a capital lease obligation of approximately
$361,000.

As a result of the foregoing, the Company's cash decreased
approximately $1,099,000.

On January 17, 2002, the Company entered into a $16,000,000
financing facility with a financial institution. Due to the fact that
the Company's borrowing needs do not necessitate the $16,000,000
facility; the facility was revised down to $12,000,000 under the
mutual agreement with the Company and the financial institution for
the new fiscal year. This credit facility is comprised of a floor
plan agreement and a revolving receivable financing facility, and is
secured by the Company's assets (other than inventories and accounts
receivable directly financed by other floor planners who have a lien
thereon). The floor-plan agreements generally allow the Company to
borrow for a period of 30 days interest free. Interest is charged to
the Company only after the due date. In addition, the agreements
provide for minimum amounts of tangible net worth and specified
financial ratios. The borrowing interest rate on the revolving
receivables financing loan is a per annum rate of one half of one
percentage point (0.5%) below the base rate. In the event that the
loan amount is in excess of the eligible collateral, the per annum
rate is four percentage point above the base rate (4.00%), and the
financing company may charge the Company 0.0075% on the over advance
amount. The base rate is the prime rate as listed in The Wall Street
Journal. The Company's loan balance is $4,765,637 at the borrowing
rate of 3.75% and no outstanding balance on the loan at borrowing
rate of 8.25% as of March 31, 2003. The total outstanding due to the
floor plan line is $2,319,460 as of March 31, 2003.

As of March 31, 2003 and 2002, the Company remains in
compliance of the covenants required under the financing facility.

The other financing agreement is a $1,300,000 floor plan
agreement and is secured by the Company's assets (other than
inventories and accounts receivable directly financed by other floor
planners who have the lien thereon). The amount due to this floor
planner was $13,544 as of March 31, 2003.

The Company's total outstanding debt under the revolving
receivable financing facility was $4,765,637 and $5,235,827 at March
31, 2003 and 2002, respectively. The Company is charged a facility
management fee of $40,000 per annum.

Impact of Inflation

The effects of inflation on the Company's operations were not
significant during the periods presented.

Recently Issued Accounting Standards

On July 20, 2001, the Financial Accounting Standards Board
(FASB) issued Statement of Financial Accounting Standards (SFAS)No. 142,
Goodwill and Intangible Assets. SFAS No.142 is effective for fiscal
years beginning after December 15, 2001. SFAS No. 142 includes

requirements to test goodwill and indefinite lived intangible assets
for impairment rather than amortize them; accordingly, the Company no
longer amortizes goodwill and indefinite lived intangible assets,
thereby eliminating an annual amortization charge of approximately $253,000.

We recorded goodwill as a result of the acquisition by the
Company of PTI Corporation and Data.com Results Inc. We determined
the fair value of the PTI Corporation (formerly known as PIVOT
Technologies, Inc.) and DCR operations through a discounted cash
flow method. This analysis was based on a projection of future
sales and earnings for a discrete period of five years plus an
assumed average growth rate for all years beyond the initial
projected period.

We develop our budgets based on recent sales data for existing
products, planned timing of new product launches, and customer
commitments related to existing and newly developed products. In
estimating future sales and growth rates, we used our internal
budgets and made comparisons to other competitors. We developed
income statement, balance sheet and cash flow projections of its
PTI and DCR subsidiaries for the next three years. The cash flows
were then discounted to a present value using a weighted average
cost of capital for each unit. We determined a terminal value,
which went beyond the projection period. This terminal value is
based on an average growth rate of 5% assumed by the Company for
cash flows beyond the projection period. We then added the present
value of cash flows to the terminal value and compared it with the
net assets plus reported goodwill and determined that the fair
value was greater then the carrying amount. Therefore goodwill was
not impaired.

We believe that the accounting estimate related to goodwill
impairment is a "critical accounting estimate" because: (1) it is
highly susceptible to change from period to period because it
requires Company management to make assumptions about future sales,
cost of sales, growth rates over the next five years of the
subsidiary; and (2) the impact that recognizing an impairment would
have on the assets reported on our balance sheet as well as our net
income would be material. Management's assumptions about future
sales prices, future sales volumes, and growth rates require
significant judgment because actual sales prices and volumes have
fluctuated in the past and are expected to continue to do so. If
Management's assumptions change then the Company could be required
to recognize an impairment loss, equal to the difference between
the fair value of the goodwill and the reported amount of the
goodwill. Management has discussed the development and selection of
this critical accounting estimate with the audit committee of our
board of directors relating to it in Management's Discussion, and
Analysis appearing in this Form 10-K.

In December 2002, the FASB issued SFAS No. 148, "Accounting for
Stock-Based Compensation - Transition and Disclosure". SFAS No. 148
amends SFAS No. 123 "Accounting for Stock-Based Compensation," to provide
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee
compensation. In addition, SFAS No. 148 amends the disclosure
requirements of SFAS No. 123 to require prominent disclosures in both
annual and interim financial statements about the method of
accounting for stock-based employee compensation and the effect of
the method used on reported results. SFAS No.148 is effective for fiscal
years beginning after December 15, 2002. The expanded annual
disclosure requirements and the transition provisions are effective
for fiscal years ending after December 15, 2002. The interim
disclosure provisions are effective for financial reports containing
financial statements for interim periods beginning after December 15,
2002. Management does not expect the adoption of SFAS 148 No. to have a
material effect on the Company's financial position, results of
operations, or cash flows.

Merger with Pivot

On May 18, 1998, the Company acquired 19.9% of Pivot, an
automated remote network service provider, and an option to cause the
merger of Pivot into a wholly-owned subsidiary of the Company. In
consideration for the option and the Pivot shares, the Company paid
Pivot (exclusive of the merger consideration payable upon any
exercise of the Option) $475,000 and agreed to make further payments
if Pivot was in material compliance with its Business Plan, as
defined in the Purchase and Option Agreement, up to an aggregate of
$346,000 over a five month period commencing one month after closing.
The Company further agreed to lend Pivot up to an additional $125,000
in six (6) equal monthly installments. Such loan was payable, without
interest, twelve months after its issuance, or upon redemption of the
Company's interest in the event the option was not exercised. The
option had a term of six (6) months (the "Initial Option Period") and
could be extended for up to three additional one-month terms upon the
payment of an additional $80,000 prior to the expiration of the
Initial Option Period and the commencement of each additional
extension period, respectively. On February 22, 1999, the Company
exercised its rights to increase ownership to 33.4% from 19.9%.

On June 2, 1999, the Company entered into an Agreement and Plan
of Merger (the "Merger Agreement") consummating a merger (the
"Merger") with Pivot and the principal shareholders of Pivot ("Pivot
Shareholders"). Pursuant to the Merger Agreement, the non-Company
Pivot shareholders received 377,129 shares of Common Stock, five (5)
year warrants to acquire 100,000 shares of Common Stock at an
exercise price of $2.916767 per share and $261,300 in cash. The
Company also paid $100,000 to the Pivot shareholders in consideration
for the shareholders' consent not to compete.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As of March 31, 2003, the Company's investments only consisted
of cash in money market funds. The Company does not use interest rate
derivative instruments to manage its exposure to interest rate
changes. The Company does not expect any material loss with such
investment.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

This information appears in Part IV, immediately following Item 14
of this Report.

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

None.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The directors and executive officers of the Company are as follows:

Name Age Position(s)

- ----------------------------------------------------------------------
Howard Pavony 52 President and Chief Executive
Officer and a Director

Steven H. Rothman 54 Chairman of the Board of
Directors and Chief Financial
Officer

Frank T. Wong 56 Vice President-Finance and
Secretary

William Lerner* 69 Director

Arnold J. Wasserman* 65 Director

Alvin E. Nashman* 76 Director

James W. Davis* 55 Director
______________

* Member of the Audit Committee and Compensation Committee.

Howard Pavony has served as President and Chief Executive
Officer since September 1, 2002; He served as the Chairman of the
Board of Directors of the Company from September 1996 to August 30,
2002. He served as Co-Chief Executive Officer and President of the
Company from May 1986 to August 1996. He has been a director of the
Company since 1986. From 1977 until 1986, Mr. Pavony was employed by
Data Research Associates ("DRA"), a computer hardware and accessories
company, rising to the positions of Vice President of Sales and a
member of the Executive Board of DRA.

Steven H. Rothman has served as Chairman of the Board of
Directors and Chief Financial Officer since September 1, 2002. He
served as Chief Executive Officer and President of the Company from
September 1996 till August 31, 2002. He served as Co-Chief Executive
Officer and Vice President of the Company from May 1986 to August
1996. He has been a director of the Company since 1986. From 1976
until 1986, Mr. Rothman was employed by DRA, rising to the positions
of Director of Marketing and member of the Executive Board.

Frank T. Wong has served as the Company's Vice President-Finance
since February 1992, as a director from June 1993 to March 1998 and
as Secretary since September 1995. From 1975 to 1991, he served as
Chief Accountant of the Carvel Corporation, a franchise ice cream
distributor.

William Lerner has served as a director of the Company since
September 1995. Mr. Lerner has been engaged in the private practice
of corporate and securities law in New York and Pennsylvania since
1991. His career has included service with the U.S. Securities and
Exchange Commission, the American Stock Exchange, and as counsel to a
major investment banking/securities brokerage firm. Mr. Lerner is a
director of Seitel, Inc. (an OTC Bulletin Board oil and gas producing
company that owns one of the largest seismic data libraries in North
America), Rent-way, Inc. (a NYSE listed company that is the second
largest company in the rental-purchase industry), and Cortland Funds,
Inc., a money market fund registered under the Investment Company Act
of 1940, managed by Reich & Tang, Inc., and offered primarily to
customers of banks and brokerage firms.

Arnold J. Wasserman has served as a director of the Company
since March 1998 and is the Chairman of the Company's Audit
Committee. He also is the Company's lead independent director. Mr.
Wasserman has, for the past 35 years, been a principal of P & A
Associates, a leasing/consulting firm. Prior to that, he held
positions with IBM and Litton Industries. Mr. Wasserman has
consulted with major corporations in the areas of marketing,
advertising and sales. He is a director of Stratasys, Inc., a
publicly traded company.

Alvin E. Nashman has served as a director of the Company since
August 1998 and is the Chairman of the Company's Compensation
Committee. He has been an independent consultant for major
corporations in the field of computer services for the past nine
years. Prior to that time, Dr. Nashman was a Director of Computer
Sciences Corporation and the President of its System Group.

James W. Davis became a director of the Company in June 2000.
Since January 1999, he has been Senior Partner at Key West
Technologies, LLC., a business consulting partnership advising a
number of firms with regard to technology, e-commerce, the Internet
and business management. From January 1997 through January 1999, he
served as the President and Chief Executive Officer of MRT micro,
ASA/Inc., a communications software company. From September 1996 to
January 1997, Mr. Davis was a Visiting Research Scholar at the
Communications Technology Center at Florida Atlantic University. In
March 1995, Mr. Davis founded Key West Technologies, Inc., a computer
hardware and software company. In February 1996, Key West
Technologies, Inc. was acquired by Interaxx Television Network, Inc.
Mr. Davis served as Chief Executive Officer of Interaxx Television
Network, Inc. from February 1996 until January 1997. Mr. Davis has
also served as Director for Intel Corp.'s Home Computing Laboratory,
which was responsible for developing a consumer-focused Pentium
platform strategy, and as Senior Technical Staff Member at
International Business Machines Corp., where he worked for
twenty-five years. While at IBM, he also was a member of IBM's
Academy of Science and Technology and Chief Technical Officer of the
IBM PC Company Premium Brand. He is currently a director of American
Vantage Companies, a NASDAQ SmallCap Market listed company operating
in the Internet and gaming industries.

All directors hold office until the next annual meeting of
shareholders or until their successors are elected and qualify.
Officers are elected annually by, and serve at the discretion of, the
Board of Directors.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires
the Company's officers, directors and persons who own more than ten
percent of a registered class of the Company's equity securities, to
file reports of ownership and changes in ownership with the
Securities and Exchange Commission. Officers, directors and ten
percent shareholders are required by regulation to furnish the
Company with copies of all Section 16(a) forms they file. Based
solely on the Company's copies of such forms received or written
representations from those persons subject to the reporting
requirements of Section 16(a) that no Form 5's were required for
those persons, the Company believes that, during the time period from
April 1, 2000 to March 31, 2001, all filing requirements applicable
to its officers, directors and greater than ten percent beneficial
owners were complied with.

ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table sets forth certain compensation information
for the chief executive officer of the Company during fiscal 2003 and
other executive officer who, based on his salary and bonus
compensation from the Company and its subsidiaries, was the most
highly compensated officers for the Fiscal 2003, who received over
$100,000 in total compensation.

Long-Term
Annual Compensation Compensation
-------------------- ------------

Other (1) Securities
Name of Principal Annual Underlying
Position Year Salary($) Bonus ($)Compensation Options (#)
- -----------------------------------------------------------------------

Howard Pavony 2003 $265,000 $ 8,200
President & CEO 2002 $258,750
2001 $247,500 $ 20,000

Steven H.Rothman 2003 $265,000 $ 8,200
Chairman & CFO 2002 $258,750
2001 $247,500 $ 20,000

(1) Other compensation primarily represents amounts paid by the
Company for life insurance premiums and leased automobiles that are
used in business by the executives. In each of the reporting years,
these amounts were below the reportable threshold.

OPTION GRANTS IN LAST FISCAL YEAR

The table below sets forth the number of shares underlying stock
options granted to the executive officers named in the Summary
Compensation Table during the Fiscal 2003 and exercise information
and potential realizable value with respect to each of the option
grants.

Individual Grants
------------------------------------------------ Potential Realizable
Number of Percent of Value at Assumed
Securities Total Options Annual Rates of
Underlying Granted to Exercise of Price Appreciation
Options Employees in Base Price Expiration for Option Term
Name Granted Fiscal Year ($/Sh) Date 5% 10%
- ------------- --------- ------------ ----------- --------- ------- -------

Howard Pavony - - - - - -
Steven H. Rothman - - - - -
__________________

AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY END OPTION VALUES

The table below sets forth certain information regarding the
value realized on option exercises and the market value of
unexercised options held by the executive officer named in the
Summary Compensation Table during the Fiscal 2003.

Number of
Securities Value of
Underlying Unexercised
Unexercised In-The-Money
Shares Options Options
Acquired at FY-End (#) at FY-End(2)
on Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($)(1) Unexercisable Unexercisable
- ----------------- ---------- -------------- ------------- -------------

Howard Pavony 0 0 134,000/0 $77,720/0

Steven H. Rothman 0 0 134,000/0 $77,720/0

- ------------------------------

(1) Calculated by determining the difference between the last sale
price of the Company's Common Stock on the date of exercise as
reported by the Nasdaq Stock Market and the exercise price.

(2) Calculated by determining the difference between $0.58 (the last
sale price of the Company's Common Stock on March 31, 2003 as
reported by the Nasdaq Stock Market) and the exercise price of the
shares of the Company's Common Stock underlying the options.

DIRECTOR FEES

The Company's independent directors receive an annual fee of
$9,000, payable quarterly in advance. In addition, each independent
director receives $1,500 for attendance in person at each Board
meeting and $250 for telephonic participation at each board meeting.
Members of the Audit Committee and Compensation Committee are
appointed annually and serve at the discretion of the Board of
Directors. In recognition of the increased responsibilities of
members of the Audit Committee, the Chairman of the Audit Committee
receives $3,500 per year and each other member of the Audit Committee
receives $2,500 per year. For serving as a director, the Company's
independent directors who served over three years each received in
September 2001 options to purchase 30,000 shares of Common Stock,
vesting over a three years term through September 2003. One director
who served less than three years, received options in September 2001
to purchase 20,000 shares of Common Stock, vesting in September 2002
and 2003. See "Stock Option Plans" below. The lead independent
director receives an additional $1,000 per month for his services in
such capacity.

Directors who are also officers of the Company currently receive
no cash compensation for serving on the Board of Directors or any
committees of the Board, other than reimbursement of reasonable
expenses incurred in connection with attending meetings.

EMPLOYMENT AGREEMENTS

On September 1, 2002, Steven H. Rothman and Howard Pavony,
respectively the Chairman of the Board of Directors and the Chief
Executive Officer of the Company, entered into amendments to their
employment agreements dated as September 1, 1996. Such amendments
extended their term of the agreements to September 1, 2003. The
salary for each extended term was $265,000 per annum. Pursuant to
their agreements, each executive receives incentive compensation in
each fiscal year if pre-tax income for such fiscal year equals or
excesses $400,000, incentive compensation is required to be paid in
an amount equal to the sum of (i) $5,000, plus (ii) 5% of pre-tax
income in excess of $400,000, but not more than $500,000, plus (iii)
6% of pre-tax income on excess of $500,000. In no event shall the
amount of cash bonus exceed 60% of the executive's fixed
compensation. The agreement also provided each executive with an
allowance for automobiles expenses. Further, under their agreements,
the Company maintains a $1,000,000 life insurance policy on each
executive's life, payable to the beneficiaries named by him, and
maintains disability insurance for the benefit of each executive
which will pay $150,000 per annum to him in the event of his
permanent disability. In the event that there is a change in control
of the Company, the executive will be entitled, upon such change of
control, to terminate his employment and receive 2.9 times his annual
salary as then in effect.

STOCK OPTION PLANS

The Company has adopted the following stock plans: the 1993
Stock Option Plan, which provides for the grant of options to
purchase 250,000 shares of Common Stock; the 1996 Stock Option Plan,
which provides for the grant of options to purchase 350,000 shares of
Common Stock; the 1998 Stock Option Plan, which provides for the
grant of options to purchase 250,000 shares of Common Stock, the
2000 Long Term Performance Plan, which provides for stock awards of
up to 350,000 shares of Common Stock. The 2002 Long-Term Performance
Plan was approved by the shareholders of the Company on November 8,
2002 Employees (including officers), directors and others who provide
services to the Company and its subsidiaries are eligible to
participate in the plans. The plans are administered by the
Compensation Committee.

Options granted under the plans may be incentive stock options
or ISOs (as defined in Section 422 of the Internal Revenue Code of
1986, as amended), or non-qualified stock options. Non-qualified
stock options may be granted in tandem with stock appreciation
rights. The exercise price of options may not be less than 100% of
the fair market value of the Common Stock as of the date of grant,
except that this limitation does not apply to options granted under
the 1998 Stock Option Plan and the exercise price of ISOs granted to
an employee who owns more than ten percent of the outstanding Common
Stock may not be less than 110% of the fair market value as of the
date of grant. Options may not be exercised more than 10 years after

the date of grant, or five years in the case of ISOs granted to an
employee who owns more than 10% of the outstanding Common Stock. An
option may be exercised by tendering payment of the purchase price to
the Company or, at the discretion of the Board of Directors or
Compensation Committee, by delivery of shares of Common Stock having
a fair market value equal to the exercise price. The number of shares
that may be acquired upon exercise of an option and the exercise
price of an option are subject to adjustment in the event of a
merger, recapitalization, stock split or stock dividend.

The 2000 and the 2002 Long Term Performance Plan permits the
grant of any form of award, including stock options, stock
appreciation rights, and stock or cash awards. Awards under the 2000
and the 2002 Long Term Performance Plan may be in stock or
denominated in units of stock, which may be subject to restrictions
on transfer and include forfeiture provisions.

As of March 31, 2003, options to purchase 887,234 shares were
outstanding under the Company's plans, and options to purchase
406,600 shares were available for future grants.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

There are no compensation committee (or Board of Directors)
interlock relationships with respect to the Company.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

The following table sets forth, as of June 20, 2003, certain
information concerning those persons known to the Company, based on
information obtained from such persons, with respect to the
beneficial ownership (as such term is defined in Rule 13d-3 under the
Securities Exchange Act of 1934) of Common Stock by (i) each person
known by the Company to be the owner of more than 5% of the
outstanding Common Stock, (ii) each director, (iii) each executive
officer named in the Summary Compensation Table and (iv) all
directors and executive officers as a group. As of June 20, 2003, the
Company had outstanding of 4,723,052 shares of Common Stock.

Name and Address Amount and Nature
of Beneficial Owner of Beneficial Ownership(1) Percent (1)
- ------------------------- ----------------------------- -----------

Steven H. Rothman(2) 920,486 (3)(4) 18.5%

Howard Pavony(2) 914,456(3) 18.4%

William Lerner
423 East Beau Street
Washington, PA 15301 60,500(5) 1.0%

Arnold Wasserman
1 Brookwood Drive
West Caldwell, NJ 07006 65,500(5) 1.1%

Alvin E. Nashman
3609 Ridgeway Terrace
Falls Church, VA 22044 55,500(5) *

James W. Davis
17300 Boca Club Blvd.
Boca Raton, Fl 33487 45,000(5) *

All directors and
executive officers
as a group (7 persons) 2,035,697
38.3%
__________________________
* Represents less than 1%.

(1) Unless otherwise indicated, each person has sole investment and
voting power with respect to the shares indicated, subject to
community property laws, where applicable. For purposes of this
table, a person or group of persons is deemed to have "beneficial
ownership" of any shares which such person has the right to
acquire within 60 days after June 20, 2003. For purposes of
computing the percentage of outstanding shares held by each person
or group of persons named above on June 20, 2003, any security which
such person or group of persons has the right to acquire within 60 days
after such date is deemed to be outstanding for the purpose of computing
the percentage ownership of such person or persons, but is not
deemed to be outstanding for the purpose of computing the percentage
ownership of any other person.

(2) The address of this person is c/o Micros-to-Mainframes, Inc.,
614 Corporate Way, Valley Cottage, New York 10989.

(3) Includes 134,000 shares that he may acquire upon exercise of
currently exercisable options.

(4) Includes 1,125 shares held by his spouse.

(5) Represents shares that he may acquire upon exercise of
currently exercisable options.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

None.

Item 14. Controls Procedures.

(a) Evaluations of Disclosures Controls Procedures

Based on their evaluation as of date within 90 days of the filing
date of this Annual Report, the Company's Chief Executive Officer and
Chief Financial Officer have concluded that the Company's disclosure
controls and procedures (as defined in Rule 13a-14( c) and 15d-14( c)
under the Securities Exchange Act of 1934) are effective to ensure
that information of the Company is required to disclose in reports
that the Company files or submits under the Exchange Commission is
recorded processed summarized and reported within the time periods
specified in the Securities and Exchange Commission's rules and
forms.

(b) Changes in Internal Controls

There have been no significant changes in the Company's internal
controls or in other factors that could significantly affect the
disclosure controls subsequent to the most recent evaluation by this
Company's Chief Executive Officer and Chief Financial Officer, and
there have been no corrective actions with regard to significant
deficiencies and material weakness in such controls.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1) Financial Statements.

Independent Auditors' Reports F-1

Consolidated Balance Sheets at March 31, 2003 and 2002 F-2

Consolidated Statements of Income for the years ended March 31,
2003, 2002 and 2001 F-3

Consolidated Statements of Changes in Shareholders' Equity for
the years ended March 31, 2003, 2002 and 2001 F-4

Consolidated Statements of Cash Flows for the years
ended March 31, 2003, 2002 and 2001 F-5

Notes to Consolidated Financial Statements F-6 - F19

(2) Financial Statement Schedules

Financial Statement Schedules have been omitted because of
the absence of the conditions under which they are required or
because the required information, where material, is shown in the
Consolidated Financial Statements or the notes thereto.

(3) Exhibits

2. 1 Asset Purchase Agreement dated as of May 1, 1996 by
and among DATA.COM RESULTS, INC. ("DATA.COM"), the sole
shareholder of DATA.COM, the Company and the Company's
wholly-owned subsidiary, DATA.COM DIRECT, INC. (4)

2.2 Stock Purchase and Option Agreement dated May 15,
1998 by and among the Company, Pivot Technologies, Inc.
and certain Pivot Shareholders. (7)

2.3 Agreement and Plan of Merger dated June 2, 1999 by
and among the Company, Pivot Acquisition
Corporation, Pivot Technologies, Inc. and certain
shareholders of Pivot. (11)

3.1 Certificate of Incorporation of the Company, as amended. (1)

3.2 Certificate of Amendment filed September 10, 1996. (6)

3.3 By-Laws of the Company. (1)

4.1 Form of Warrant issued by the Company to Pivot Shareholders. (9)

4.2 Form of Placement Agent Warrant (10)

4.3 Form of Investor Warrant (Included as Exhibit A to Exhibit
(4.2)(10)

10.1 Lease Agreement between the Company and Associates of
Rockland County dated July 30, 1989. (1)

10.2 Amendment to Lease between the Company and Associates
of Rockland County dated July 23, 1992. (1)

10.3 Lease Extension between the Company and Associates of
Rockland County dated February 29, 1996. (5)

10.4 Revised 1993 Employee Stock Option Plan. (1)

10.9 Remarketer/Integrator Agreement between Dell
Marketing L.P. and Company, as amended. (1)

10.10 Dealer Addendum, as amended, to IBM Agreement for
Authorized Dealers and Industry Remarketers. (1)

10.11 Master Purchase Agreement between PaineWebber
Incorporated and the Company. (1)

10.12 September 13, 1993 amendment to PaineWebber
Incorporated Agreement

10.13 Agreement for Wholesale Financing between Deutsche
Financial Service (f/k/a/ ITT Commercial Finance Corp.)
and the Company. (1)

10.15 Pledge and Escrow Agreement among the Company, Data.Com
and Mr. Fries, dated May 6, 1996. (4)

10.18 Employment Agreement between the Company and Steven H.
Rothman, date September 1, 1996. (6)

10.19 Amendment No 1 to Employment Agreement with Steve H.
Rothman dated as of September 1, 2001

10.20 Employment Agreement between the Company and Howard
Pavony, dated September 1, 1996. (6)

10.21 Amendment No.1 to Employment Agreement with Howard Pavony
dated as of September 1, 2001

10.23 Business Financing Agreement between Deutsche
Financial Services Corporation and the Company, dated
January 19, 1999 (8)

10.24 Addendum to Business Financing Agreement (set forth in
10.22) and Agreement for Wholesale Financing (set forth in
10.13). (8)

10.23 Addendum to Agreement for Wholesale Financing (set forth
in 10.13). (8)

10.24 Employment Agreement dated June 2, 1999 by and among the
Company, Pivot and Anthony Travaglini. (9)

10.26 Lease Agreement between 270 Madison Limited Partnership
as landlord and the Company as tenant for space located at
270 Madison Avenue. (12)

10.27 Master Services Agreement dated April 15, 1999, between
the Company and Dell Marketing L.P. (13)

10.28 1996 Stock Option Plan and 1998 Stock Option Plan (17)

10.29 Long Term Performance Plan 2000. (15)

10.30 Business Financing Agreement between Textron Financial
Corporation and the Company, dated January 17, 2002 (16)

21.1 Subsidiaries of the Company (14)

23.1 Consent from Goldstein Golub Kessler LLP, independent accountants.

99.1 Certification of Howard Pavony..
99.2 Certification of Steven H. Rothman.

___________
1. Incorporated by reference from the Company's Registration
Statement on Form SB-2 for October 26, 1993 (No. 33-62932-NY).

2. Incorporated by reference from the Company's Annual Report
on Form 10- KSB for the fiscal year ended March 31, 1994.

3. Incorporated by reference from the Company's Current
Report on Form 8-K dated March 28, 1995.

4. Incorporated by reference from the Company's Current
Report on Form 8-K dated May 6, 1996.

5. Incorporated by reference from the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1996.

6. Incorporated by reference from the Company's Annual Report
on Form 10-K for the fiscal year ended March 31, 1997.

7. Incorporated by reference from the Company's Current
Report on Form 8-K dated June 1, 1998.

8 Incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended December 31, 1998.

9. Incorporated by reference from the Company's Current
Report on Form 8-K dated June 8, 1999.

10. Incorporated by reference from the Company's Registration
Statement on Form S-3 dated November 13, 2000.

11. Incorporated by reference from the Company's Current
Report on Form 8-K/A dated December 21, 1999.

12. Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1998.

13. Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 1999.

14. Incorporated by reference from the Company's Annual Report on
Form 10-K for the fiscal year ended March 31, 2000.

15. Incorporated by reference from the Company's Annual Proxy
Statement for its Fiscal 2000 Annual Meeting of Shareholders, as
filed on September 25, 2000.

16. Incorporated by reference from the Company's Quarterly
Report on Form 10-Q for the fiscal quarter ended
December 31, 2001.

17. Incorporated by reference from the Company's Registration
Statement Form S-8 filed on February 19, 1999.

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.

Dated: June 26, 2003 MICROS-TO-MAINFRAMES, INC.

By: /s/ Steven H. Rothman

Steven H. Rothman
Chairman and Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of
1934, this Report has been signed below by the following persons on
behalf of the Registrant and in the capacities and on the dates
indicated.

/s/ Howard Pavony President and Chief June 26, 2003
Howard Pavony Executive Officer and
Director
(Principal Executive Officer)

/s/ Steven H. Rothman Chairman and Chief June 26, 2003
Steven H. Rothman Financial Officer and
Director
(Principal Accounting Officer)

/s/ William Lerner Director June 26, 2003
William Lerner

/s/ Arnold J. Wasserman Director June 26, 2003
Arnold J. Wasserman

/s/ Alvin E. Nashman Director June 26, 2003
Alvin E. Nashman

/s/ James W. Davis Director June 26, 2003
James W. Davis

CERTIFICATION

I, Howard A. Pavony, certify that:

1. I have reviewed this Annual Report on Form 10-K of Micros to
Mainframes, Inc.(the "registrant");

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

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

4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

(a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this Annual Report is being prepared;

(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this Annual Report (the "Evaluation
Date"); and

(c) presented in this Annual Report our conclusions about
the effectiveness of the is closure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons fulfilling the equivalent function):

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

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

6. The registrant's other certifying officers and I have indicated in
this Annual Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.

Date: June 26, 2003
/s/ Howard A. Pavony
----------------------
Howard A. Pavony
President and
Chief Executive
Officer

CERTIFICATION

I, Steven H. Rothman, certify that:

1. I have reviewed this Annual Report on Form 10-K of Micros to
Mainframes, Inc.(the "registrant");

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

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

4. The registrant's other certifying officers and I are responsible
for establishing and maintaining disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14 and 15d-14) for the
registrant and have:

(a) designed such disclosure controls and procedures to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this Annual Report is being prepared;

(b) evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date within 90 days
prior to the filing date of this Annual Report (the "Evaluation
Date"); and

(c) presented in this Annual Report our conclusions about
the effectiveness of the is closure controls and procedures based
on our evaluation as of the Evaluation Date;

5. The registrant's other certifying officers and I have disclosed,
based on our most recent evaluation, to the registrant's auditors and
the audit committee of the registrant's board of directors (or
persons fulfilling the equivalent function):

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

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

6. The registrant's other certifying officers and I have indicated in
this Annual Report whether or not there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses

Date: June 26, 2003
/s/ Steven H. Rothman
-----------------------
Steven H. Rothman
Chairman and Chief
Financial Officer

INDEPENDENT AUDITOR'S REPORT

To the Board of Directors and Shareholders
Micros-to-Mainframes, Inc.

We have audited the accompanying consolidated balance sheets of Micros-
to-Mainframes, Inc. and Subsidiaries as of March 31, 2003 and 2002 and
the related consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended
March 31, 2003. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion
on these financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of
Micros-to-Mainframes, Inc. and Subsidiaries as of March 31, 2003 and
2002 and the results of their operations and their cash flows for each
of the three years in the period ended March 31, 2003 in conformity
with accounting principles generally accepted in the United States of
America.

GOLDSTEIN GOLUB KESSLER LLP
New York, New York

May 20, 2003

F-1

Micros-to-Mainframes, Inc. and Subsidiaries

Consolidated Balance Sheet

March 31, 2003 March 31, 2002

ASSETS

Current Assets:
Cash and cash equivalents $ 118,452 $ 1,217,790
Accounts receivable - trade, net of
allowance of $873,000 and $335,000, respectively 13,459,765 13,504,056
Inventories 1,460,428 1,863,370
Prepaid expenses and other current assets 774,589 1,314,006
Refundable income taxes - 862,000
Deferred income taxes, net of allowance of
$332,000 in 2003 23,000 155,000
---------------------------

Total current assets 15,836,234 18,916,222

Property and Equipment 9,097,464 7,858,342
Less accumulated deprecation and amortization 5,401,805 3,797,562
---------------------------
3,695,659 4,060,780

Goodwill, 3,228,729 3,228,729
Other Assets 193,789 180,495
---------------------------
Total Assets $22,954,410 $26,386,226
===========================

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:
Secured notes payable $ 4,765,637 $ 5,235,837
Inventory financing agreements 2,333,004 3,028,828
Accounts payable and accrued expenses 2,114,980 1,890,514
Current portion of capital lease obligations 366,344 352,379
--------------------------

Total current liabilities 9,579,965 10,507,558

Capital Lease Obligations, net
of current portion 109,797 484,943
Deferred Income Taxes 23,000 588,000
--------------------------
Total liabilities 9,712,762 11,580,501

Commitments and Contingencies

Shareholders' Equity:
Common stock - $.001 par value; authorized
10,000,000 shares issued and outstanding
4,723,152 shares and 4,957,569 shares,
respectively 4,723 4,958
Additional paid-in capital 15,332,728 15,685,456
Accumulated deficit (2,095,803) (884,689)
----------------------------
Total shareholders' equity 13,241,648 14,805,725
____________________________

Total Liabilities and Shareholders' Equity $ 22,954,410 $ 26,386,226
==============================

See Notes to Consolidated Financial Statements

F-2

MICROS-TO-MAINFRAMES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF OPERATIONS

Year ended March 31, 2003 2002 2001

Net revenue:
Products $ 34,470,683 $ 55,141,478 $ 57,804,277
Services 20,984,951 20,308,509 22,367,274
----------------------------------------
55,455,634 75,449,987 80,171,551
----------------------------------------

Costs and expenses:
Cost of products sold 32,138,765 50,662,203 53,674,101
Cost of services provided 13,272,246 13,017,319 14,899,902
Selling, general and
administrative expenses 11,483,984 11,076,877 13,431,019
Severance and other costs of
terminated employees - - 677,000
---------------------------------------
56,894,995 74,756,399 82,682,022
---------------------------------------

Other income 97,983 37,298 68,708
Interest expense 285,736 458,811 438,517
--------------------------------------
Income (loss) from operations before
benefit for income taxes (1,627,114) 272,075 (2,880,280)

Benefit for income taxes (416,000) (116,600) (601,300)
----------------------------------------
Net income (loss) $(1,211,114) $ 388,675 $(2,278,980)
========================================

Net income (loss) per common shares:
Basic and diluted $ (0.26) $ 0.08 $ (0.45)

Weighted-average number of common
share outstanding:
Basic 4,734,093 5,033,726 5,012,718
Diluted 4,734,093 5,042,908 5,012,718

See Notes to Consolidated Financial Statements

F-3

MICROS-TO-MAINFRAMES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY

Retained
Common Stock Additional Earnings
Number Paid-in (Accumulated
of shares Amount Capital Deficit) Total

- --------------------------------------------------------------------------------------

Balance at April 1, 2000 $ 4,878,069 $4,878 $14,974,888 $ 1,005,616 $ 15,985,382

Exercise of stock options 3,500 4 10,496 - 10,500

Exercise of stock options
in connection with purchase
of Pivot 14,000 14 105,000 - 105,014

Issuance of common stock
in connection with private
placement offering 240,000 240 819,772 - 820,012

Tax benefit related to
employee stock options - - 22,100 - 22,100

Net loss - - - (2,278,980) (2,278,980)

- ----------------------------------------------------------------------------------------

Balance at March 31, 2001 5,135,569 5,136 15,932,256 (1,273,364) 14,664,028

Repurchase of common stock (178,000) (178) (246,800) - (246,978)

Net income - - - 388,675 388,675
- ----------------------------------------------------------------------------------------
Balance at March 31, 2002 4,957,569 4,958 15,685,456 (884,689) 14,805,725

Repurchase of common stock (234,417) (234) (352,729) (352,963)

Net loss - - - (1,211,114) (1,211,114)
- ----------------------------------------------------------------------------------------
Balance at March 31, 2003 $4,723,152 $4,724 $15,332,727 $(2,095,803) $ 13,241,648
========================================================================================

See Notes to Consolidated Financial Statements

F-4

MICROS-TO-MAINFRAMES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended March 31, 2003 2002 2001
Cash flows from operating activities:
Net income (loss) $(1,211,114) $ 388,675 $ (2,278,980)
Adjustments to reconcile net income
(loss) to net cash provided by
(used in)operating activities:
Depreciation and amortization 1,604,243 1,305,460 815,005
Amortization of goodwill 252,706
Deferred income taxes (433,000) 745,400 (449,200)
Changes in operating assets and
liabilities:
Decrease (increase) in accounts
receivable 44,291 5,087,313 (3,987,408)
(Increase) decrease in inventories 402,942 (35,679) 80,391
Decrease (increase) in prepaid
expenses and other current assets 539,417 210,789 (250,006)
Increase (decrease) in refundable
income taxes 862,000 (687,800) (174,200)
(Increase) decrease in other assets (13,293) 94,206 171,480
Increase (decrease)accounts payable
and accrued expenses 224,466 (3,012,087) 2,300,862
-------------------------------------
Net cash provided by (used in)
operating activities 2,019,952 4,096,277 (3,519,350)
-------------------------------------

Cash flows from investing activities:
Acquisition of property and equipment (1,239,122) (2,258,314) (1,699,937)
-------------------------------------
Net cash used in investing activities (1,239,122) (2,258,314) (1,699,937)
-------------------------------------

Cash flows from financing activities:
(Repayment) borrowing of secured
notes payable (470,200) (2,384,163) 4,580,000
Payment on Inventory financing (695,824)
Proceeds from issuance of common
stock from private placement offering - - 820,012
Proceeds from exercise of stock options - - 10,500
Purchases and retirement of common stock(352,963) (246,978) -
Proceeds from capital lease obligations - 1,074,428 -
Payments on capital lease obligations (361,181) (269,334) (40,783)
-------------------------------------
Net cash provided by (used in)
financing activities (1,880,168) (1,826,047) 5,369,729
-------------------------------------

Net increase (decrease) in cash and
cash equivalents (1,099,338) 11,916 150,442

Cash and cash equivalents at
beginning of year 1,217,790 1,205,874 1,055,432
--------------------------------------
Cash and cash equivalents at end of year $ 118,452 $1,217,790 $1,205,874
--------------------------------------

Supplemental disclosures of cash flow information:
Cash paid during the quarter for:
Interest $ 291,374 $ 482,910 $416,448
Income taxes $ 30,223 $ 12,370 $ 7,800

Supplemental schedule of noncash investing
and financing activities:

Exercise of stock options in
connection with purchase of Pivot - - $105,014
Tax benefit related to stock options - - $ 22,100

See Notes to Consolidated Financial Statements

F-5

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation and Nature of Operations:

The accompanying consolidated financial statements include the accounts
of Micros-to-Mainframes, Inc. and its wholly owned subsidiaries,
Data.Com RESULTS, Inc. ("Data.Com"), MTM Advanced Technology, Inc.
("MTM") and PTI Corporation, formerly known as Pivot Technologies, Inc.
("Pivot"), hereinafter collectively referred to as the "Company." All
significant intercompany accounts and transactions have been
eliminated. The Company is a premier provider of network analysis and
diagnostics, management, remote network management, architecture,
design, implementation and support services serving the New York Tri-
State Area. The Company practices in Network Protocol Analysis,
Network OS Consulting, Internet and Network Security, integrated
Communications and Life Cycle Managed Services, which create a
comprehensive computer and communication services suite.

The Company purchases microcomputers and related products directly from
suppliers as either an authorized dealer or a value-added reseller.
The Company has entered into authorization agreements with major
suppliers, which can be terminated by the supplier, with or without
cause, upon 30 to 90 days' notice, or immediately upon the occurrence
of certain events. The cost of sales of products purchased from the
Company's three largest suppliers accounted for 45%, 26% and 24% for
the year ended March 31, 2003. The cost of sales of products purchased
from the Company's three largest suppliers were 42%, 37% and 15% for
the year ended March 31, 2002. The cost of sales of products purchased
from the Company's three largest suppliers were 33%, 32% and 29% for
the year ended March 31, 2001. The Company believes that it has
excellent relationships with its major suppliers; however, there can be
no assurance that the aforementioned agreements will be renewed. If
these agreements are not renewed, the Company may have difficulty-
obtaining inventory at a cost which would allow for resale at a
competitive market price.

Certain prior years' amounts have been reclassified to conform to
current-year presentation.

Estimates:

The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying
notes. Actual results could differ from those estimates.

Cash and Cash Equivalents:

Cash and cash equivalents generally consist of cash and money market
funds. The Company considers all highly liquid investments purchased
with a maturity of three months or less to be cash equivalents. Such
investments are stated at cost, which approximates fair value, and are
considered cash equivalents for purposes of reporting cash flows.

F-6

Accounts Receivable:

Accounts receivable are reported at their outstanding unpaid principal
balances reduced by an allowance for doubtful accounts. The Company
estimates doubtful accounts based on historical bad debts, factors
related to specific customers' ability to pay, and current economic
trends. The Company also records allowances based on certain
percentages and aged receivables. The Company writes off accounts
receivable against the allowance when a balance is determined to be
uncollectible.

Inventories:

Inventories, comprised principally of computer hardware and software,
are stated at the lower of cost or market using the first-in, first-out
("FIFO") method.

Property and Equipment:

Property and equipment is stated at cost and is depreciated using the
straight-line method. Furniture, fixtures and other equipment and
software development costs have useful lives ranging from 3 to 7 years.
Leasehold improvements are amortized over the shorter of the lease term
or economic life of the related improvement. Expenditures which extend
the useful lives of existing assets are capitalized. Maintenance and
repair costs are charged to operations as incurred.

The Company incurred approximately $1,604,000, $1,305,000, and
$815,000 depreciation and amortization expense, exclusive of
amortization of goodwill, for the years ended March 31,2003, 2002 and
2001,respectively.

The following is the summary of property and equipment held by the
Company:

Fiscal Year Ended March 31, 2003 2002
Property and equipment, at cost
Furniture and Office Equipment $ 2,505,714 $ 2,389,361
Software and software development costs 6,450,550 5,327,781
Leasehold improvement 141,200 141,200
-------------------------
9,097,464 7,858,342
Less accumulated deprecation and amortization 5,401,805 3,797,562
-------------------------
Net property and equipment $ 3,695,659 $ 4,060,780
=========================

Software Development Costs:

The costs of software developed for internal use incurred during the
preliminary project stage are expensed as incurred. Direct costs
incurred during the application development stage are capitalized.
Costs incurred during the post-implementation/operation stage are
expensed as incurred. Capitalized software development costs are
amortized on a straight-line basis over their estimated useful lives.

F-7

Impairment of Long-lived Assets:

The Company identifies and records impairment on long-lived assets,
including capitalized software development costs and goodwill, when
events and circumstances indicate that such assets have been impaired.
The Company periodically evaluates the recoverability of its long-lived
assets based on expected discounted cash flows. At March 31, 2003, no
such impairment existed.

Income Taxes:

Deferred income taxes are provided, using the asset and liability
method, for temporary differences between financial and tax reporting,
which arise principally from the deductions related to the allowances
for doubtful accounts, certain capitalized software costs, the basis of
inventory and differences arising from book versus tax depreciation
methods.

The Company files a consolidated federal income tax return and a
separate state income tax return for each of its subsidiaries.

Revenue Recognition:

The Company recognizes revenue in accordance with SAB 101. For all
revenue billed, the revenue recognition criteria were met. Accordingly,
no deferred revenue has been recorded.

The Company recognizes revenue from sales of hardware when the rights
and risks of ownership have passed to the customer, which is upon
shipment or receipt by the customer, depending on the terms of the
sales contract. Revenue from sales of software not requiring
significant modification or customization is recognized upon delivery
or installation. Revenue from services is recognized upon
performance and acceptance after consideration of all the terms
and conditions of the customer contract. Service contracts generally
do not extend over one year, and are billed periodically as services
are performed. Revenue from both products and services is recognized
provided that persuasive evidence of an arrangement exists, the sales
price is fixed and determinable, and collection of the resulting
receivable is reasonably assured. Revenue arrangements generally do
not include specific customer acceptance criteria. For arrangements
with multiple deliverables, delivered items are accounted for
separately provided that the delivered item has value to the customer
on a stand alone basis and there is objective and reliable evidence of
the fair value of the undelivered items.

The Company periodically receives discretionary cost reimbursements
from suppliers. These reimbursements are accounted for as reductions
to cost of sales.

Shipping and handling costs are included in the cost of sales.

Fair Value of Financial Instruments:

The estimated fair value of amounts reported in the consolidated
financial statements have been determined by using available market
information and appropriate valuation methodologies. All current
assets are carried at their cost and current liabilities at their
contract amount, which approximate fair value, because of their short-
term nature.
F-8

Per Share Data

Basic net income per share is calculated using the weighted-average
number of common shares outstanding during the period. Diluted net
income per share is calculated using the weighted-average number of
common shares plus dilutive potential common shares outstanding during
the period. Dilutive securities have not been included in the weighted
average shares used for the calculation of earnings per share in
periods of net loss because the effect of such securities would be
anti-dilutive. Because of the Company's capital structure, all
reported earnings pertain to common shareholders and no other assumed
adjustments are necessary.

Stock-Based Compensation

In December 2002, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 148,
Accounting for Stock-Based Compensation - Transition and Disclosure,
an amendment of SFAS No. 123. SFAS No. 148 provides alternative
methods of transition for a voluntary change to the fair value based
method of accounting for stock-based employee compensation. In
addition, SFAS No. 148 amends the disclosure requirements of SFAS No.
123 Accounting for Stock-Based Compensation", to require prominent
disclosures in annual and interim financial statements about the method
of accounting for stock-based employee compensation and the effect in
measuring compensation expense. The disclosure requirements of SFAS No.
148 are effective for periods beginning after December 15, 2002.

The Company has elected, in accordance with the provisions of SFAS No.
123, as amended by SFAS No. 148, to apply the current accounting rules
under APB Opinion No. 25 and related interpretations in accounting for
employee stock options and, accordingly, has presented the disclosure-
only information as required by SFAS No. 123. If the Company had
elected to recognize compensation cost based on the fair value of the
options granted at the grant date as prescribed by SFAS No. 123, the
Company's net income (loss) and net income (loss) per common share for
the years ended March 31, 2003, 2002 and 2001 (pro forma effect has
been adjusted for income taxes) would approximate the pro forma amounts
indicated in the table below (dollars in thousands)

March 31,
2003 2002 2001
-------------------------
Net income (loss) - as reported..................... $(1,211) $389 $(2,880)
Net income (loss) - pro forma....................... (1,373) 75 (2,653)
Basic net income (loss) per common share - as reported (.26) 0.08 ( 0.45)
Diluted net income (loss) per common share - as reported (.26) 0.08 ( 0.45)
Basic net income (loss) per common share - pro forma (.29) 0.01 ( 0.53)
Diluted net income (loss) per common share - pro forma (.29) 0.01 ( 0.53)

Pro forma information regarding net income (loss) and earnings per
share is required by SFAS No. 123, and has been determined as if the
Company had accounted for its employee stock options under the fair
value method of the statement. The fair value of these options was
estimated at the date of grant using a Black-Scholes option pricing
model with the following weighted-average assumptions for the years
ended March 31, 2003, 2002 and 2001: risk-free interest rate of 2.8%,
F-9

4.5% and 5.8% respectively; no dividend yield; a volatility factor of
the expected market price of the Company's common stock of 1.24, 1.21
and 1.25, respectively; and an expected life of 4.0, 4.6 and 5.0 years,
respectively.

The Black-Scholes option valuation model was developed for use in
estimating the fair value of traded options which have no vesting
restrictions and are fully transferable. In addition, option valuation
models require the input of highly subjective assumptions including the
expected stock price volatility. Because the Company's employee stock
options have characteristics significantly different from those of
traded options, and because changes in the subjective input assumptions
can materially affect the fair value estimate, in management's opinion
the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

Concentrations of Credit Risk:

Financial instruments that potentially subject the Company to
significant concentrations of credit risk consist principally of cash
and cash equivalents and trade accounts receivable. The Company places
its cash with high credit quality institutions. At times, such amounts
may be in excess of the FDIC insurance limits.

The Company's customers are primarily mid- to large-sized corporations
in diversified industries located in the New York Tri-State Area.

One of the Company's largest customers is a federal government funded
City Board of Education, which represented approximately $2,703,000
and or 19% of the Company trade receivables and represented 5% of total
revenue of the Company in the year ended March 31,2003 ; the Federally
funded program is being reviewed, causing the normal funding process to
be delayed. The collection of the receivables connected to this federal
funding program is contingent upon the continue funding by the Federal
Government.

Receivables from another one of the Company's customers were
approximately 11% of the trade receivables in March 31, 2003,2002, and
2001, respectively. One other customer was approximately 9%, 11%, and
10% of the Company's trade receivables at March 31,2003, 2002, and 2001
respectively. One customer accounted for approximately 2%, 15% and 14%
of the Company's revenue for the years ended March 31, 2003, 2002 and
2001, respectively. Two other customers accounted for approximately 18%
and 12% of the Company's revenue for the year ended March 31, 2003. The
loss of a principal customer would be expected to have a material
adverse effect on the Company's operations during the short term until
the Company is able to generate replacement business, although there
can be no assurance of obtaining such business.

Credit is extended to customers based on an evaluation of their
financial condition, and collateral is generally not required. The
evaluation of financial condition is performed to reduce the risk of
loss. The Company has not historically experienced any material losses
due to uncollectible accounts receivable.
F-10

Recently Issued Accounting Standards

On July 20, 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) 142, Goodwill
and Intangible Assets. SFAS 142 is effective for fiscal years beginning
after December 15, 2001. SFAS No. 142 includes requirements to test
goodwill and indefinite lived intangible assets for impairment rather
than amortize them; accordingly, the Company no longer amortizes
goodwill and indefinite lived intangible assets, thereby eliminating an
annual amortization charge of approximately $253,000.

We recorded goodwill as a result of the acquisition of PTI
Corporation and Data.com Results Inc. (DCR), subsidiaries of Micros
to Mainframes. We determined the fair value of the PTI Corporation
and DCR operations through a discounted cash flow method. This
analysis was based on a projection of future sales and earnings for a
discrete period of five years at the end of March 31, 2002 and three
years at end of March 31, 2003 plus an assumed average growth rate
for all years beyond the initial projected period.

As of April 1, 2001, the Company has adopted Statement Financial
Accounting Standards ("SFAS") No. 142, Goodwill and Other Intangible
Assets. SFAS No. 142 eliminates the amortization of goodwill and
certain other intangible assets. It also requires the Company to
complete a test for impairment of these assets annually, as well as a
transitional goodwill impairment test within six months from the date
of adoption. The Company has completed this impairment test, and has
found no impairment.

We developed our projections based on recent sales data for
existing products, planned timing of new product launches, and
customer commitments related to existing and newly developed
products. In estimating future sales and growth rates, we used our
internal budgets and made comparisons to other competitors. We
developed income statement, balance sheet and cash flow projections
of its PIVOT Technologies and Data.Com RESULTS, Inc. (DCR)
subsidiaries for the next five years March 31 2002 and three years at
March 31, 2003. The cash flows were then discounted to a present
value using a weighted average cost of capital for each unit. We
determined a terminal value, which went beyond the projection period.
This terminal value is based on an average growth rate of 5% assumed
by the Company for cash flows beyond the projection period. We then
added the present value of cash flows to the terminal value and
compared it with the net assets plus reported goodwill and determined
that the fair value was greater than the carrying amount. Therefore
goodwill was not impaired.

We believe that the accounting estimate related to goodwill
impairment is a "critical accounting estimate" because: (1) it is
highly susceptible to change from period to period because it
requires Company management to make assumptions about future sales,
cost of sales and growth rates over the next five years of the
subsidiary; and (2) the impact that recognizing an impairment would
have on the assets reported on our balance sheet as well as our net
income would be material. Management's assumptions about future sales
prices, future sales volumes, and growth rates require significant
judgment because actual sales prices and volumes have fluctuated in
the past and are expected to continue to do so. If Management's
assumptions change then the Company could be required to recognize an
impairment loss, equal to the difference between the fair value of
the goodwill and the reported amount of the goodwill.

F-11

SFAS No. 142 requires disclosure of what net income (loss) would
have been in all periods presented had SFAS No. 142 been in effect.
The following table is provided to disclose what net income would
have been had SFAS No. 142 been adopted in prior periods:

Year ended March 31, 2003 2002 2001
- ----------------------------------------------------------------------
(in thousands, except per share amounts)

Reported net income (loss) $(1,211) $ 389 $(2,279)
Add back: goodwill amortization net of
income tax 154
- ----------------------------------------------------------------------
Adjusted net income (loss) $(1,211) $ 389 $(2,125)
======================================================================
Basic earnings per share as reported $ (0.26) $ .08 $ (.45)
======================================================================
Adjusted basic earnings per share $(0.26) $ .08 $ (.42)
======================================================================

In November 2002, the Emerging Issues Task Force ("EITF") issued EITF
00-21, "Accounting for Revenue Arrangements with Multiple
Deliverables." This consensus provides guidance in determining when a
revenue arrangement with multiple deliverables should be divided into
separate units of accounting, and, if separation is appropriate, how
the arrangement consideration should be allocated to the identified
accounting units. The provisions of EITF 00-21 are effective for
revenue arrangements entered into in fiscal periods beginning after
June 15, 2003. The Company will evaluate multiple element arrangements
in accordance with this EITF conclusion upon its effective date for new
arrangements into which it enters.

The Company does not believe that any other recently issued but not yet
effective accounting standards will have a material effect on the
Company's financial position or results of operations.

2. CREDIT FACILITIES:

On January 17, 2002, the Company entered into a $16,000,000
financing facility with a financial institution. Due to the fact that
the Company's borrowing needs do not necessitate the $16,000,000
facility; the facility was revised down to $12,000,000 under the
mutual agreement with the Company and the financial institution for
the new fiscal year. This credit facility is comprised of a floor plan
agreement and a revolving receivable financing facility, and is
secured by the Company's assets (other than inventories and accounts
receivable directly financed by other floor planners who have a lien
thereon). The floor-plan agreements generally allow the Company to
borrow for a period of 30 days interest free. Interest is charged to
the Company only after the due date. In addition, the agreements
provide for minimum amounts of tangible net worth and specified
financial ratios. The borrowing interest rate on the revolving
receivables financing loan is a per annum rate of one half of one
percentage point (0.5%) below the base rate. In the event that the
loan amount is in excess of the eligible collateral, the per annum
rate is four percentage point above the base rate (4.00%), and the
financing company may charge the Company 0.0075% on the over advance
amount. The base rate is the prime rate as listed in The Wall Street
Journal. The Company's loan balance is $4,765,637 at the borrowing
rate of 3.75% and no outstanding balance on the loan at borrowing rate
of 8.25% as of March 31, 2003. The total outstanding due to the floor
plan line is $2,319,460 as of March 31, 2003.

As of March 31, 2003 and 2002, the Company has been in
compliance of the covenants required under the financing facility.
F-12

The other financing agreement is a $1,300,000 floor plan
agreement and is secured by the Company's assets (other than
inventories and accounts receivable directly financed by other floor
planners who have the lien thereon). Total amount due to this floor
plan was $13,544 as of March 31, 2003.

The Company's total outstanding debt under the revolving receivable
financing facility was $4,765,637 and $5,235,827 at March 31, 2003 and
2002, respectively. The Company is charged a facility management fee
of $40,000 per annum.

3. SHAREHOLDERS' EQUITY:

Preferred Stock:

The Company has authorized 2,000,000 shares of "blank check" preferred
stock, par value $.001 per share. As of March 31, 2003 and 2002, there
were no preferred shares issued.

Stock Options:

The 1993 Employee Stock Option Plan (the "1993 Plan") was adopted by
the Company in May 1993; the 1996 Stock Option Plan (the "1996 Plan")
was approved by the shareholders of the Company on August 20, 1996; and
the 1998 Stock Option Plan (the "1998 Plan") was approved by the
shareholders of the Company on October 16, 1998. The 2000 Employee
Stock Option Plan (the "2000 Plan") was adopted by the Company in
September 2000. The 2002 Long-Term Performance Plan (the 2002 Plan")
was approved by the shareholders of the Company on November 8, 2002.
The plans provide for granting of options, including incentive stock
options, nonqualified stock options and stock appreciation rights to
qualified employees (including officers and directors) of the Company,
independent contractors, consultants and other individuals, to purchase
up to an aggregate of 250,000, 350,000, 250,000 ,350,000 and 250,000
shares of common stock under the 1993 Plan, the 1996 Plan, the 1998
Plan, the 2000 Plan and the 2002 Plan, respectively. The exercise
price of options generally may not be less than 100% of the fair market
value of the Company's common stock at the date of grant. Options may
not be exercised more than 10 years after the date of grant. Options
granted under the plans become exercisable in accordance with different
vesting schedules depending on the duration of the options.

A summary of the status of the Company's options as of March 31, 2003,
2002 and 2001, and changes during the years then ended, is presented
below:

2003 2002 2001
- ------------------------------------------------------------------------------

Weighted- Weighted- Weighted-
Number average Number average Number average
of Exercise of Exercise of Exercise
Shares Price Shares Price Shares Price
- ------------------------------------------------------------------------------
Outstanding at
beginning of year 910,334 $ 2.34 698,434 $ 3.43 647,534 $ 3.23
Expired - - - - (15,000) 2.88
Canceled (98,100) 2.32 (137,000) 3.18 (27,600) 3.18
Granted 75,000 0.75 348,900 1.31 111,000 3.19
Exercised - - - - (17,500) 2.04
- -----------------------------------------------------------------------------

Outstanding at
end of year 887,234 $ 2.21 910,334 $ 2.34 698,434 $ 3.43
- -----------------------------------------------------------------------------

There was no option grant on the 2002 Plan as of March 31, 2003.

The weighted-average exercise price of the total options outstanding at
March 31, 2003 is $2.51 and the weighted-average contractual life is
5.73 years.

The weighted-average fair value of options granted during the years
ended March 31, 2003, 2002 and 2001 is $0.75,$1.18 and $2.25, respectively.

There were 783,634, 659,134 and 440,544 options exercisable at March
31, 2003, 2002 and 2001, respectively. The weighted-average exercise
price of the total options exercisable at March 31, 2003 is $2.21.

Earnings per Share:

The following table presents the computation of basic and diluted
income (loss) per share:

Year ended March 31, 2003 2002 2001
- -------------------------------------------------------------------------
Numerator:
Net income (loss) $(1,211,114) $ 388,675 $(2,278,980)

Denominator:
Denominator for basic earnings per
share - weighted-average shares 4,734,093 5,033,726 5,012,718
Dilutive effect of employee stock
options and warrants - 9,182 -

____________________________________________________________________________

Denominator for diluted earnings
per share 4,734,093 5,042,908 5,012,718
____________________________________________________________________________

Net income (loss) per share - basic $(0.26) $ .08 $ (.45)

____________________________________________________________________________
Net income (loss) per share - diluted $(0.26) $ .08 $ (.45)

____________________________________________________________________________

Options to purchase 887,234, 901,152 and 698,434 shares of common
stock outstanding as of March 31, 2003, 2002 and 2001, respectively,
were not included in the computation of diluted earnings per share
because their inclusion would be antidilutive.
F-13

4. ACCOUNTS PAYABLE AND ACCRUED EXPENSES:

Accounts payable and accrued expenses consist of the following:

March 31, 2003 2002
- ---------------------------------------------------------------------
Trade accounts payable $ 1,549,933 $1,520,737
Sales and other taxes payable 286,600 101,228
Accrued commissions 33,742 30,000
Accrued other 244,705 238,549
- ---------------------------------------------------------------------
$ 2,114,980 $1,890,514

5. INCOME TAXES:

The asset and liability method is used in accounting for income taxes.
Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and the tax bases of
assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when the differences are expected to
reverse.

The provision (benefit) for income taxes consists of the following:

Year ended March 31, 2003 2002 2001

Federal:
Current 17,000 $(862,000) $(152,100)
Deferred (300,000) 708,500 (345,500)
------------------------------------------------------------------------
(283,000) (153,500) (497,600)
State:
Current - - (5,300)
Deferred (133,000) 36,900 103,700
------------------------------------------------------------------------
(416,000) $(116,600) $(601,300)

The reconciliations of income tax benefit computed at the federal
statutory tax rates to actual income tax expense (benefit) are as
follows:

Year ended March 31, 2003 2002 2001
- -------------------------------------------------------------------------
Tax expense at statutory rates applied
to pretax earnings $(553,000) $ 92,500 $(979,000)
State income taxes, net of federal
benefit ( 83,000) 20,500 (69,100)
Changes in valuation allowance 332,000 (397,600) 397,600
Other permanent items (25,000) 41,700 -
Adjustment to prior provisions - 126,300 -
Research and development credit (87,000) - -
Non deductible goodwill amortization - - 65,700
Other, net - - (16,500)
- --------------------------------------------------------------------------
$(416,000) $(116,600) $(601,300)

The tax effects of temporary differences that give rise to the net
short-term deferred income tax asset at March 31, 2003 and 2002 are
presented below:

March 31, 2003 2002

Reserve for bad debts $341,000 $131,000
Inventory 14,000 24,000
Valuation allowance (332,000) -
- --------------------------------------------------------------------
Total short-term deferred income tax asset $ 23,000 $ 155,000
F-14

The tax effects of temporary differences that give rise to the net
long-term deferred income tax liability are presented below:

March 31, 2003 2002
- --------------------------------------------------------------------
Capitalized software, net $(1,271,000) $(1,055,400)
Other 15,000
Net operating loss 1,043,000 436,600
Research and development credit 190,000 30,800
- --------------------------------------------------------------------
Net long-term deferred income liability $ (23,000) $ (588,000)

During 2002 the Company carried back approximately $2,475,000 of net
operating losses, which were available to offset taxable income through
1997. This resulted in income tax refunds aggregating $838,000 received
during 2003. The Company has net operating loss carryforwards of (1)
$2,296,000 to offset federal taxable income and (2) $5,223,000 of
available state carryforwards to offset taxable income through the year
2002. Realization of the benefit of the carryforward losses depends on
gathering sufficient taxable income before expiration of loss
carryforwards. At March 31, 2003 the Company has set up a valuation
allowance against the deferred tax assets.

For the year ended March 31, 2001, the Company recognized for income
tax purposes a tax benefit of $22,100 and for compensation expense
related to its incentive stock option plan for which no corresponding
charge to operations has been recorded. Such amounts have been added
to additional paid-in capital for the year ended March 31, 2001.

6. COMMITMENTS AND CONTINGENCIES:

The Company leases three locations for its administrative and
operational functions under operating leases expiring at various dates
through September 2006. Certain leases are subject to escalation based
on the Company's share of increases in operating expenses. In
addition, the Company leases three cars for the use of certain of its
officers, as well as office equipment.

Approximate future minimum annual lease payments under noncancelable
operating leases are as follows:

Year ending March 31,
2004 $204,000
2005 38,000
2006 11,000
----------------------------------
$253,000
==================================

Rental expense for operating leases including amounts from cancelable
leases approximated $703,000, $836,000 and $735,000 for the years ended
March 31, 2003, 2002 and 2001, respectively.

On or about April 1, 2003, Andrew J. Maxwell, trustee (the
"Trustee") of the Chapter 7 bankruptcy case of Marchfirst, Inc. and its
subsidiaries and affiliates (collectively, the "Debtor"), filed a
complaint (the "Complaint") against MTM in the United States Bankruptcy
Court, Northern District of Illinois, Eastern Division. On or about
April 12, 2001 (the "Petition Date"), the Debtor filed petitions for
F-15

relief under Chapter 11 of Title 11 of the United States Code (the
"Bankruptcy Code"). The Debtor's bankruptcy case was thereafter
converted to a Chapter 7 bankruptcy case on or about April 26, 2001.
During the ninety days preceding the petition date, the Debtor
transferred to MTM an aggregate of approximately $212,000 (the
"Transfer") on account of debts owed by the Debtor to MTM. The
Complaint alleges that the Transfer constituted a preference within the
meaning of Section 547(b) of the Bankruptcy Code, and seeks return of
the Transfer, together with interest and costs incurred by the Trustee
in bringing suit, including attorney's fees, to the extent permitted by
law. MTM has answered the Complaint denying liability, and asserting
affirmative defenses under Sections 547(c)(2) and (4) of the Bankruptcy
Code, commonly known as the "ordinary course of business" and "new
value" defenses. The Company believes that a loss is not probable and
has not accrued this amount in the accompanying financial statements.

Employment Agreements:

The Company has entered into employment agreements, which require the
payment of approximately $467,000 and $175,000 for the next two years.
In addition, certain of the agreements provide for bonus compensation
based on certain performance goals, as defined.

7. EMPLOYEE SAVINGS PLAN:

The Company has an employee savings plan which qualifies under Section
401(k) of the Internal Revenue Code. Under the plan, all employees who
are at least 21 years of age and have completed one year of service are
eligible to defer up to 15% of their pretax compensation, but not more
than the limit prescribed by the Internal Revenue Service. The Company
matches 10% of employee contributions to a maximum of 6% of the
employee's salary. The Company contributed approximately $30,000,
34,000 and $34,000 to the plan for the years ended March 31, 2003, 2002
and 2001, respectively.

8. ALLOWANCE FOR DOUBTFUL ACCOUNTS:

Information relating to the allowance for doubtful accounts is as follows:

Balance at Charged to Balance
Beginning Costs and at End
of Year Expenses Deductions of Year
- ---------------------------------------------------------------------------
(in thousands)

Year ended March 31,
2001 $140 $317 - $457
2002 457 262 $384(a) 335
2003 335 538 873

(a) Write-off of uncollectible accounts receivable

F-16

9. Segment Information:

Micros To Mainframes, Inc. and subsidiaries sells as a single source
provider of advanced technology solutions, including design, consulting
and communication services. The Company also sells, installs and

services microcomputers, microcomputer software products and supplies,
accessories and custom designed microcomputer systems. The Company has
aggregated its business units into three reportable segments, Pivot
Technologies, Data.Com and Micros to Mainframes. The accounting
policies of the segments are the same as those described in the summary
of accounting policies. There are no material intersegment sales.
Each unit will share facilities, sales and administrative support.
Management evaluates performance on gross profits and operating results
of the three business segments. Summarized financial information
concerning the Company's reportable segments is shown on the following
table.

For the Year ended March 31, 2003

Consolidated
PIVOT DCR MTM Total

(In thousands)
_________________________________________________________________

Revenues:
Products 6,124 28,347 34,471
Services 1,780 5,872 13,333 20,985

Cost of Good Sold
Products 5,343 26,796 32,139
Services 525 4,459 8,288 13,272

Gross Profit 1,255 2,194 6,596 10,045

Operating Expenses 1,034 1,620 8,830 11,484

Interest Expense 286 286

Income (loss) from
operations 221 574 (2,520) (1,725)

Income tax Benefit (416) (416)

Segment Assets 6,322 3,397 13,235 22,954

Capital Expenditures 876 25 338 1,239

Depreciation Expense 1,029 62 513 1,604

For the Year ended March 31, 2002

Consolidated
PIVOT DCR MTM Total

(In thousands)
_________________________________________________________________

Revenues:
Products 5,242 49,899 55,141
Services 1,009 4,802 14,498 20,309

Cost of Good Sold
Products 4,786 45,876 50,662
Services 900 3,854 8,263 13,017

Gross Profit 109 1,404 10,258 11,771

Operating Expenses 74 1,375 9,628 11,077

Interest Expense 459 459

Income from
operations 35 29 630 694

Income tax Benefit (117) (117)

Segment Assets 6,131 3,375 16,880 26,386

Capital Expenditures 1,902 61 295 2,258

Depreciation Expense 761 83 461 1,305

F-17

For the Year ended March 31, 2001

Consolidated
PIVOT DCR MTM Total

(In thousands)
_________________________________________________________________

Revenues:
Products $ 8,940 $ 48,864 $ 57,804
Services $648 2,281 19,438 22,367

Cost of Good Sold
Products 8,276 45,398 53,674
Services 428 1,712 12,760 14,900

Gross Profit 220 1,233 10,144 11,597

Operating Expenses 200 1,230 12,679 14,109

Interest Expense 439 439

Income (loss) form
operations 20 3 (2,533) (2,510)

Income tax Benefit (601) (601)

Segment Assets 8,650 2,228 19,370 30,248

Capital Expenditures 904 74 722 1,700

Depreciation Expense 289 103 423 815

F-18

10. Quarterly Results of Operations (unaudited):

The following is a summary of the quarterly results of operations
for the years ended March 31, 2003, 2002 and 2001:

June 30 September 30 December 31 March 31
- ------------------------------------------------------------------------------
(in thousands, except per share data)

2003:
- -----
Net revenue $ 15,430 $ 14,634 $ 14,188 $11,204
Cost of products sold 9,459 8,363 8,558 5,758
Cost of services provided 3,579 3,457 3,175 3,061
Net income (loss) (438) 41 (189) (625)
Net Income (loss)per common share:
Basic $ (0.09) $ 0.01 $ (0.04) $ (0.14)
Diluted $ (0.09) $ 0.01 $ (0.04) $ (0.14)

2002:
- -----
Net revenue $19,867 $17,591 $22,658 $15,334
Cost of products sold 14,452 12,088 15,069 9,053
Cost of services provided 2,469 2,891 4,503 3,154
Net income 91 91 101 106
Net income per common share:
Basic $ .02 $ .02 $ .02 $ .02
Diluted $ .02 $ .02 $ .02 $ .02

2001:

Net revenue $21,628 $20,819 $18,570 $19,155
Cost of products sold 15,229 13,758 12,039 12,648
Cost of services provided 3,560 3,134 4,244 3,962
Net income (loss) (8) 34 (899) (1,406)
Net income (loss) per common
share:
Basic $ - $ .01 $ (.18) $ (.28)
Diluted $ - $ .01 $ (.18) $ (.28)

Earnings per common share calculations for each of the quarters were
based on the weighted-average number of shares outstanding for each
period, and the sum of the quarters may not necessarily be equal to the
full-year earnings per common share amount.

F-19