Edgar Filing: ONSPAN NETWORKING INC

United States
Securities and Exchange Commission
Washington, D.C. 20549

FORM 10-KSB/A
AMENDMENT NO. 1
(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended September 30, 2003
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______ to _________

Commission file number 000-22991
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Onspan Networking, Inc.
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(Name of small business issuer in its charter)

Nevada
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(State of other jurisdiction of incorporation or organization)

87-0460247
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(I.R.S. Employer Identification No.)

6413 Congress Avenue, Suite 230, Boca Raton, Florida 33487
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(Address of principal executive offices) (Zip Code)

Issuer's telephone number 561-988-2334
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Securities registered under Section 12(b) of the Exchange Act:

Title of each class Name of each exchange on which registered

None Not applicable
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Securities registered under Section 12(g) of the Exchange Act:

Common Stock
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(Title of each class)

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

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this form, and no disclosure will be
contained to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB [ ]

State issuer's revenues for its most recent fiscal year. None
----

As of December 31, 2003, the registrant had outstanding 968,677 shares of its
Common Stock, par value $.012 its only class of voting securities. The aggregate
market value of the shares of Common Stock of the registrant held by
non-affiliates on December 31, 2003, was approximately $255,090 based on its
closing price on the OTC: Bulletin Board on that date. (See Item 5).

DOCUMENTS INCORPORATED BY REFERENCE

No documents are incorporated by reference into this Report except those
Exhibits so incorporated as set forth in the Exhibit index.

Transitional Small Business Disclosure Format (Check one): Yes [ ]; No [X]

TABLE OF CONTENTS

INTRODUCTION

PART I

Item 1. Business..............................................................4

Item 2. Properties...........................................................10

Item 3. Legal Proceedings....................................................10

Item 4. Submission of Matters to a vote of security holders..................11

PART II

Item 1. Market for common equity and related stockholder matters.............11

Item 2. Management's discussion and analysis or plan or operation............13

Item 3. Other Information....................................................16

Item 4. Consolidated Financial Statements....................................16

PART III

Item 1. Directors, Executive officers, Promoters and Control persons
Compliance with Section 16(a) of the Exchange Act..................35

Item 2. Executive Compensation...............................................36

Item 3. Security Ownership of certain beneficial owners and
Management.........................................................39

Item 4. Certain relationships and related transactions.......................41

Item 5. Exhibits and Reports on Form 8-K.....................................41

PART I

ITEM 1. HISTORY OF BUSINESS

Originally incorporated in 1985, as Network Information Services, Inc.,
Network Systems International, Inc. ("NESI"), a Nevada corporation, was the
surviving corporation of a reverse merger completed in April 1996. The Company
became a publicly traded entity in connection with the re-organization. On July
10, 1998, the Company's stock was officially approved for listing on the NASDAQ
Small Cap market and the Company's common stock began trading on NASDAQ Small
Cap under the symbol NESI. As of April 2, 2002, the securities were de-listed
from the NASDAQ Small Cap market and now trade on the Over-The-Counter Bulletin
Board under the symbol ONSP. Effective February 10, 2001, the Company changed
its name from Network Systems International, Inc., to Onspan Networking, Inc.
(the "Company" or "Onspan"). On October 9, 2001, the Company effected a 1 for 12
reverse stock split of its issued and outstanding common stock. Prior to August
5, 2002, the Company, a Nevada corporation, was a holding company, that through
its wholly owned subsidiary, InterLAN Communications, Inc. ("InterLAN"),
developed data communications and networking infrastructure solutions for
business, government and education. On August 5, 2002, the Company completed the
sale of its operating division InterLAN and announced a change in its strategy
of business as discussed under Discontinued Operations below. April 22, 2003 the
Company created a new subsidiary, Coventry 1 Inc. that is a Nevada Corporation.
The Company's other subsidiary Onspan SmartHouse, Inc., is a Florida
Corporation.

DISCONTINUED OPERATIONS

On August 5, 2002, the Company sold and transferred the stock of its
wholly-owned subsidiary, InterLAN Communications, Inc. to G. Anthony Munno,
Martin Sainsbury Carter and Brian Ianniello, who were executives and employees
of InterLAN. In exchange for the assignment of the InterLAN stock, Messrs.
Munno, Carter and Ianniello transferred 21,168 shares of Onspan common shares,
and Onspan was relieved of substantially all obligations and guarantees provided
to third parties. Onspan also retained the right to a certain tax refund in
amount of $45,147 owing to InterLAN. These individuals also resigned in all
capacities as directors, officers and/or employees of Onspan. Onspan retained
the following assets of the corporation $1,078,883 in cash, the marketable
securities, the prepaid expenses, the entire income tax receivable, and $2,611
in property. The liabilities Onspan retained include a $30,946 dividend payable,
$25,929 due to purchasers of discontinued operations, and $19,410 note payable.

PLAN OF OPERATION

Prior to August 5, 2002, the Company, a Nevada corporation, was a
holding Company, that through its wholly owned subsidiary, InterLAN
Communications, Inc. ("InterLAN"), developed data communications and networking
infrastructure solutions for business, government and education. Following
August 5, 2002, the Company, announced a change in its strategy and subsequently
sold its operating division InterLAN. The Company's recently changed its
business focus to residential real estate development and building construction
services. From 1985 until 2002, the Company's business primarily concentrated on
sales of computer hardware and software. In April of 2003, the Company changed
its focus to investing in and revitalizing single family homes in established
residential neighborhoods in suburban areas. The Company closed on this property
on June 19, 2003. The Company has entered into a contract with Garcia Brenner &
Stromberg architects to design the project. The Company intends to renovate and
expand the existing single-family home project on this site. This project, known
as Coventry 1 Inc., has entered into the permitting stage.

RISK FACTORS

REAL ESTATE DEVELOPMENT INDUSTRY

Ownership of properties in the categories of which the Company invests
is highly fragmented among individuals, partnerships, public and private
corporations, and REITs. No single entity or person dominates the market for
such properties. At any given time, a significant number of home properties as
well as individual lots and tracts suitable for single-family homes are
available for purchase in the various markets where the Company may seek
additional acquisitions. Industry risks include environmental hazards; changes
in general or local economic conditions; changes in interest rates and the
availability of permanent mortgage financing which may render the acquisition,
sale, or refinancing of a property difficult or unattractive and which may make
debt service burdensome; changes in real estate and zoning laws; changes in
income taxes, real estate taxes, or federal or local economic or rent controls;
floods, earthquakes, and other acts of nature; and other factors beyond the
control of any firm involved in the real estate development industry. Further,
the Company, as other companies it size, will in all probability continue to
encounter problems in obtaining contractors who, in turn, are able to obtain
performance bonds for building contracts; obtaining bank financing for
construction; and obtaining financing without personal guarantees of its
officers and directors, all of which materially adversely affect its ability to
carry on its business. The illiquidity of real estate investments generally may
impair an industry participant's ability to respond promptly to changing
circumstances. See "Risk Factors," below.

CERTAIN RISK FACTORS CERTAIN FACTORS ASSOCIATED WITH REAL ESTATE AND RELATED
INVESTMENTS.

The Company is subject to the risks associated with ownership,
operation, and financing of real estate. These risks include, but are not
limited to, liability for environmental hazards; changes in general or local
economic conditions; changes in interest rates and

the availability of construction and permanent mortgage financing which may
render the acquisition, sale, or refinancing of a property difficult or
unattractive and which may make debt service burdensome; changes in real estate
and zoning laws; bonding requirements; permitting requirements, changes in
income taxes, real estate taxes, or federal or local economic or rent controls;
floods, earthquakes, and other acts of nature; and other factors beyond the
company's control. The illiquidity of real estate investments generally may
impair the Company's ability to respond promptly to changing circumstances.
Under federal, state, and local environmental laws, ordinances, and regulations,
the Company may be liable for removal or remediation costs, as well as other
costs (such as fines or injuries to persons and property) where our employees
may have arranged for removal, disposal, or treatment of hazardous or toxic
substances. In addition, environmental laws impose liability for release of
asbestos-containing materials into the air, and third parties can seek recovery
from the Company for personal injury associated with those materials.

LIMITED REVENUES; LIMITED RELEVANT OPERATING HISTORY; SIGNIFICANT AND CONTINUING
OPERATING LOSSES; NEGATIVE CASH FLOW; ACCUMULATED DEFICIT.

Since its change in focus the Company has not had any revenues from
sales of its properties. Accordingly, the Company has a limited relevant
operating history upon which an evaluation of its prospects can be made. Such
prospects must be considered in light of the risks, expenses and difficulties
frequently encountered in the establishment of a relatively new business in the
real estate development industry, which is a continually evolving industry
characterized by an increasing number of market entrants and intense
competition, as well as the risks, expenses and difficulties encountered in the
real estate development and building construction business. The Company prior to
its change has incurred operating losses and has an accumulated deficit of
approximately $7,074,815. There can be no assurance that the Company will be
successful in generating revenues at a sufficient quantity or margin or that the
Company will ever achieve profitable operations.

SIGNIFICANT CAPITAL REQUIREMENTS; NEED FOR ADDITIONAL CAPITAL.

The Company's capital requirements have been and will continue to be
significant. The Company has been dependent primarily on existing capital and a
credit line. Future capital needs may be satisfied by either the private
placement of equity securities and/or debt financings. The Company based on its
cash requirements and exposure to liability from shareholder lawsuits is unsure
if existing capital will be sufficient for the next twelve months. In the event
that the Company's plans (due to unanticipated expenses, delays, problems, or
otherwise), the Company would be required to seek additional funding. Any such
additional funding could be in the form of additional equity capital. The
Company is currently, contemplating, pursuing potential funding opportunities.
However, there can be no assurance that any of such opportunities will result in
actual funding or that additional financing will be available to the Company
when needed, on commercially reasonable terms, or at all. If the Company is
unable to obtain additional financing if needed, it will likely be required to
curtail its real estate development plans and may possibly cease its operations.
Any additional equity financings may involve substantial dilution to the
Company's then-existing shareholders.

MANAGEMENT OF GROWTH AND ATTRACTION AND RETENTION OF KEY PERSONNEL.

Management of the Company's growth may place a considerable strain on
the Company's management, operations and systems. The Company's ability to
execute any future business strategy will depend in part upon its ability to
manage the demands of a growing business. Any failure of the Company's
management team to effectively manage growth could have a material adverse
affect on the Company's business, financial condition or results of operations.
The Company's future success depends in large part on the continued service of
its key management personnel. The Company believes that its future success also
depends on its ability to attract and retain skilled technical, managerial and
marketing personnel. Competition for qualified personnel is intense. The Company
has from time to time experienced difficulties in recruiting qualified
personnel. Failure by the Company to attract and retain the personnel it
requires could have a material adverse affect on the financial condition and
results of operations of the Company.

VOLATILITY OF MARKET PRICE; ISSUANCE OF SUBSTANTIAL NUMBER OF SHARES; AUTHORIZED
SHARES; PROXY RULES.

The Company's Common Stock has been traded since 1994. The Company
believes that factors such as (but not limited to) the sale of common stock
issued on conversion of the Company's debentures, announcements of developments
related to the Company's business, fluctuations in the Company's quarterly or
annual operating results, failure to meet expectations, general economic
conditions, interest rate changes or money supply fluctuations and developments
in the Company's relationships with clients and suppliers will cause the price
of the Company's Common Stock to fluctuate substantially. In recent years the
stock market has experienced extreme price fluctuations, which have often been
unrelated to the operating performance of affected companies. Such fluctuations
could adversely affect the market price of the Company's Common Stock.

PENNY STOCK REGULATIONS AND REQUIREMENTS FOR LOW PRICED STOCK.

The Commission adopted regulations which generally define a "penny
stock" to be any non-Nasdaq equity security that has a market price of less than
$5.00 per share, subject to certain exceptions. Based upon the price of the
Company's Common Stock as currently traded on the OTC Bulletin Board, the
Company's stock is subject to Rule 15g-9 under the Exchange Act which imposes
additional sales practice requirements on broker-dealers which sell securities
to persons other than established customers and "accredited investors." For
transactions covered by this Rule, a broker-dealer must make a special
suitability determination for the purchaser and have received a purchasers'
written consent to the transaction prior to sale. Consequently, the Rule may
have a negative effect on the ability of shareholders to sell common shares of
the Company in the secondary market.

MANAGEMENT CONTROLS THE COMPANY'S FUNDS.

Management has broad discretion over how to spend the funds held by the
Company. Although management will endeavor to act in the best interests of the
shareholders, there can be no assurance that the decision to utilize proceeds
will prove profitable to the Company.

THE COMPANY MAY NOT BE SUCCESSFUL.

The Company is to compete in the competitive market of real estate
development and housing construction. The Company's prospects for success will
depend on management's ability to successfully market its lots or houses to
buyers and its apartment projects to renters. As a result, demand and market
acceptance for our projects is subject to a high level of uncertainty. The
Company currently has limited resources to undertake the activities that will be
necessary to acquire property and build real estate projects. If the Company is
unable to expand its efforts, it will not generate substantial additional
revenues. Investors should be aware that if the Company is not successful in the
operation of its current business, or any future acquisition endeavors, each
investor's entire investment in the Common Stock of the Company could become
worthless. Even if the Company is successful in our operations and potential
acquisitions, it is not certain that investors will derive a profit from
investment in the Company.

THE COMPANY RELIES ON ITS MANAGEMENT.

The Company is dependent upon the members of management set forth
herein. If the current management is no longer able to provide services to the
Company, its business will be negatively affected.

ADDITIONAL DEBT, OR EQUITY FINANCING MAY AFFECT INVESTOR'S ABILITY TO SELL
COMMON STOCK.

The Company's common stock currently trades on the OTC Bulletin Board
under the symbol ONSP. Stocks trading on the OTC Bulletin Board generally
attract a smaller number of market makers and a less active public market and
may be subject to significant volatility. If the Company raises additional money
from the sale of its Common Stock, the market price could drop and investor's
ability to sell stock could be diminished. Further, even if the Company is able
to increase its authorized shares, there can be no assurance that it will be
able to obtain sufficient shareholder votes in the future for any such increase,
which votes are required by Nevada law.

THE COMPANYS STRATEGY INCLUDES PURSUING STRATEGIC ACQUISITIONS THAT MAY NOT BE
SUCCESSFUL

The Company will consider acquiring businesses that are intended to add
products and or services. Acquisitions involve a number of operational risks
that the acquired business may not be successfully integrated, may distract
management attention, may involve unforeseen costs and liabilities, and possible
regulatory costs, some or all of which could have a materially adverse effect on
the Company's financial condition or results of operations. Additionally, the
Company may make acquisitions with cash or with stock, or a combination thereof.
If the Company does make any such acquisitions, various associated risks may be
encountered, including potential dilution to the Company's then current
shareholders, as a result of additional shares of common stock being issued in
connection with the acquisitions.

THE COMPANY'S STOCK PRICE WILL FLUCTUATE AND MAY FALL BELOW EXPECTATIONS OF
SECURITIES ANALYSTS AND INVESTORS, WHICH COULD SUBJECT THE COMPANY TO LITIGATION

The market price of the Company's common stock may fluctuate
significantly in response to a number of factors, some of which are beyond its
control. These factors include:

- quarterly variations in operating results;

- changes in accounting treatments or principles;

- existing litigation;

- announcements by the Company or its competitors of new products and
services offerings, significant contracts, acquisitions or strategic
relationships;

- additions or departures of key personnel;

- any future sales of the Company's common stock or other securities;

- stock market price and volume fluctuations of publicly-traded companies
in general and Internet-related companies in particular; and

- general political, economic and market conditions.

It is likely that in some future quarter the Company's operating
results may fall below the expectations of securities analysts and investors,
which could result in a decrease in the trading price of the Company's common
stock. In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. The Company may be the target of similar litigation in the future.
Securities litigation could result in substantial costs and divert management's
attention and resources, which could seriously harm the Company's business and
operating results.

THERE IS A LIMITED PUBLIC MARKET FOR THE COMPANY'S COMMON STOCK AND THERE ARE NO
ASSURANCES OF A CONTINUED TRADING MARKET FOR THE COMPANY'S COMMON STOCK

The Company's common stock is currently quoted on the OTC Bulletin
Board (R) Market (OTCBB) under the symbol "ONSP". The Company's common stock is
thinly traded. There are no assurances the Company will maintain its OTC
Bulletin Board (R) listing. If the Company's common stock should be delisted
from the OTC Bulletin Board(R) Market, it is likely that the stock would then be
quoted on the Pink Sheets Market, which could materially and / or adversely
effect any future liquidity in the Company's common stock.

INABILITY TO SECURE AN INDEPENDENT AUDIT COMMITTEE MEMBER

Due to the potential exposure to litigation and small compensation, it
may be difficult to secure and Independent Audit Committee Member. If the
Company is unable to secure an Independent Audit Committee Member, it may be in
violation of current audit standards and may be subject to possible de-listing
of which could have a materially adverse affect on the Company's financial
condition or results of operations.

ITEM 2. DESCRIPTION OF PROPERTY

The Company's principal executive offices are located in approximately
2,108 square feet of commercial office space sub-leased from Millennium Holdings
Group, Inc., under a three-year lease signed on July 1, 2003 at a rate of
$34,907 per annum plus 5% per annum. The Company believes its current facilities
are adequate for its current needs.

ITEM 3. LEGAL PROCEEDINGS

1. Network Systems International of North Carolina, Inc. v Network
Systems International, Inc. and OnSpan Networking, Inc. (02-CvS-10154)
(Complaint filed September 13, 2002). This action asserts a claim for breach of
contract against the Company, seeking certain tax refunds obtained by the
Company. The plaintiff, a former subsidiary of the Company, claims that these
tax refunds belong to the plaintiff. The Company has filed an answer disputing
the amounts claimed and seeking reimbursement for certain expenses incurred by
the Company on behalf of the plaintiff. The parties have engaged in settlement
discussions, which have been unsuccessful to date.

2. Securities Actions:

a. Richard T. Clark and Joel C. Holt v. OnSpan Networking,
Inc. and Herbert Tabin, Case No. 03-CV-298K (N.D. Okla.) (Removed from
state court May 1, 2003); This action asserts claims for violation of
Oklahoma securities law, fraud, breach of contract, and breach of
fiduciary duties. The action seeks damages in the amount of $300,000,
for each plaintiff, the plaintiffs' attorneys' fees and costs, and
certain other relief. The case was filed in Oklahoma State court on
March 28, 2003, and it was removed to federal court on May 1, 2003. The
Company has filed a Motion to Dismiss the matter.

b. D. Mark White v Onspan Networking, Inc. and Herbert Tabin,
Case No. 352198686 03 (District Court, Tarrant County Texas) (Complaint
filed May 2, 2003) This action asserts claims for violation of Texas
securities law, fraud, and breach of fiduciary duties. The action seeks
unspecified damages, restitution in the amount of $300,000, punitive
damages, pre-judgment interest, the plaintiffs' attorney's fees and
costs, and certain other relief. The case was filed in Texas state
court on May 2, 2002. The Company has filed a Motion to Dismiss
Plaintiff's Amended Complaint.

No discovery has taken place in either of these two actions. The Company will
vigorously defend both of these actions.

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

None.

PART II

ITEM 1. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

From July 1998, until February 9, 2001, the Company's common stock was
traded under the symbol NESI, on the NASDAQ Small Cap market. Beginning February
10, 2001, it began trading under the symbol ONSP. As of April 2, 2002, the
securities were de-listed from the NASDAQ Small Cap market. The Company's common
stock is now traded on the Over-The-Counter Bulletin Board under the symbol
ONSP. On October 9, 2001, the Company effected a 1 for 12 reverse stock split of
its issued and outstanding common stock. The total number of authorized Shares
of its common stock before the stock split was 100,000,000; the total number of
authorized shared of common stock after the stock split was 8,333,333. The total
number of issued and outstanding shares of its common stock on the record date
were 11,574,619; giving effect to the stock split, there were 964,552 shares of
common stock issued and outstanding after the split. All information contained
in this annual report gives proforma effect to this stock split.

The following table sets forth, for the periods from October 1, 2001,
through September 30, 2003, the quarterly high and low closing bid sale prices
for the Company's Common Stock as reported on the NASDAQ Small Cap Market until
April 2, 2002, and the OTC Bulletin Board subsequently, as adjusted to reflect
the stock split. The prices represent quotations by dealers without adjustment
for retail mark ups, mark-downs or commissions and may not represent actual
transactions.

HIGH LOW
FISCAL YEAR 2003 ---- ---

First Quarter $ .85 $ .10
Second Quarter $1.07 $ .51
Third Quarter $ .55 $ .30
Fourth Quarter $2.75 $ .30

HIGH LOW
FISCAL YEAR 2002 ---- ---

First Quarter $4.20 $ .10
Second Quarter $1.90 $ .67
Third Quarter $ .92 $ .20
Fourth Quarter $1.01 $ .30

As of September 30, 2003, there were approximately 320 holders of
record of the Company's common stock, an undetermined number of which represent
more than one individual participant in securities positions with the Company.

RECENT ISSUANCES OF SECURITIES

On September 28, 2001, the Company agreed to issue 29,168 shares of its
common stock, as of September 30, 2002, all of these shares have been issued,
and granted a three-year option to purchase 25,000 shares of its common stock at
an exercise price of $ 7.20 per share, in settlement of certain litigation.
These issuances will be made in a private transaction exempt from registration
under the Securities Act of 1933 in reliance on Section 4(2) of that act.

The Company has reserved 500,000 shares of common stock for the grant
of qualified incentive options or non-qualified options to employees and
directors of the Company or its parents or subsidiaries, and to non-employee
directors, consultants and advisors and other persons who may perform
significant services for or on behalf of the Company under the Plan. Prices for
incentive stock options must provide for an exercise price of not less than 100%
of the fair market value of the common stock on the date the options are granted
unless the eligible employee owns more than 10% of the Company's common stock
for which the exercise price must be at least 110% of such fair market value.
Non-statutory options must provide for an exercise price of not less than 85% of
the fair market value.

DIVIDENDS

The Company has never paid cash dividends on its common stock, and intends to
utilize current resources to expand its operations. Therefore, it is not
anticipated that cash dividends will be paid on the Company's common stock in
the foreseeable future.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

FORWARD LOOKING INFORMATION

The following discussion and analysis of the Company's financial
condition and results of operations should be read with the condensed
consolidated financial statements and related notes contained in this annual
report on Form 10-KSB ("Form 10-KSB"). All statements other than statements of
historical fact included in this Form 10-KSB are, or may be deemed to be,
forward-looking statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These
statements involve known and unknown risks, uncertainties and other factors that
may cause the Company's actual results, levels of activity, performance or
achievements to be materially different than any expressed or implied by these
forward-looking statements. In some cases, you can identify forward-looking
statements by terminology such as "may," "will," "should," "expects," "plans,"
"anticipates," "believes," "estimates," "predicts," "potential," "continue," or
the negative of these terms or other comparable terminology. Important factors
that could cause actual results to differ materially from those discussed in
such forward-looking statements include: 1. General economic factors including,
but not limited to, changes in interest rates and trends in disposable income;
2. Information and technological advances; 3. Cost of products sold; 4.
Competition; and 5. Success of marketing, advertising and promotional campaigns.
The Company is subject to specific risks and uncertainties related to its
business model, strategies, markets and legal and regulatory environment You
should carefully review the risks described in this Form 10-KSB and in other
documents the Company files from time to time with the SEC. You are cautioned
not to place undue reliance on the forward-looking statements, which speak only
as of the date of this Form 10-KSB. The Company undertakes no obligation to
publicly release any revisions to the forward-looking statements to reflect
events or circumstances after the date of this document.

Effective August 5, 2002 the Company completed the sale of its
operating line of business as discussed under Discontinued Operations in Item 1,
accordingly, the following discussion will deal with the Company's Plan of
Operation. The operations of InterLAN, for the year ended September 30, 2002
have been reclassified as loss from discontinued operations.

CRITICAL ACCOUNTING POLICIES

The Company has identified the policies outlined below as critical to
its business operations and an understanding of its results of operations. The
listing is not intended to be a comprehensive list of all of the Company's
accounting policies. In many cases, the accounting treatment of a particular
transaction is specifically dictated by accounting principles generally accepted
in the United States, with no need for management's judgment in their
application. The impact and any associated risks related to these policies on
the Company's business operations is discussed throughout Management's
Discussion and Analysis or plan of operations where such policies affect the
Company's reported and expected financial results. For a detailed discussion on
the application of these and other accounting policies, see the Notes to
Consolidated Financial Statements. The Company's preparation of the financial
statements requires it to make estimates and assumptions that affect the
reported amount of assets and liabilities, disclosure of contingent assets and
liabilities at the date of the Company's financial statements, and the reported
amounts of revenue and expenses during the reporting period. There can be no
assurance that actual results will not differ from those estimates.

PLAN OF OPERATION

PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment is recorded at cost and is depreciated on
a straight-line basis over the estimated useful lives of such assets. Changes in
circumstances such as technological advances, changes to the Company's business
model or changes in the Company's capital strategy could result in the actual
useful lives differing from the Company's estimates. In those cases where the
Company determines that the useful life of property, plant and equipment should
be shortened, the Company will depreciate the net book value in excess of the
estimated salvage value over its revised remaining useful life.

DEFERRED TAX ASSETS

The Company records a valuation allowance to reduce the carrying value
of its deferred tax assets to an amount that is more likely than not to be
realized. While the Company has considered future taxable income and prudent and
feasible tax planning strategies in assessing the need for the valuation
allowance, should the Company determine that it would not be able to realize all
or part of its net deferred tax assets in the future, an adjustment to the
carrying value of the deferred tax assets would be charged to income in the
period in which such determination was made.

RESULTS OF OPERATIONS

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE

The Company's selling, general and administrative expenses, including
salaries and wages amounted to $396,305 during the twelve months ended September
30, 2003, as compared to $417,422 for the twelve months ended September 30,
2002.The majority of the decrease is a result of higher compensation costs of
$88,000, increased legal fees due to lawsuits of $69,000, increased rent of
$7,200 offset by a decrease of $17,000 in accounting fees, decreased filing fees
of $20,000, decreased D & O Insurance due to cancellation of the policy of
$49,000 and $80,000 due to bad debt expense .

INCOME TAXES

The North Carolina Department of Revenue has contacted the Company with
regard to state income taxes for the tax year ended September 30, 1999. Upon
investigation, the Company has determined that former management did not file a
state income tax return in North Carolina for that year although a return was
filed in Florida for that year. The Company is in the process of investigating
the situation and of evaluating what action should be taken as a result of the
inquiry by the North Carolina Department of Revenue. The Company has been unable
to estimate with any reasonable certainty what liability it may have to the
State of North Carolina.

LIQUIDITY AND CAPITAL RESOURCES

During the twelve months ended September 30, 2003, working capital
decreased $424,112 to $681,065 from $1,105,177. The primary reasons for the
decrease is the $(80,000) decrease in market value of marketable securities due
to the sale of RCG stock, a decrease of ($990,537) in cash off set by an
increase in inventory - home of $1,464,344, and increase in loan payable of
$675,000. During this same period, stockholders' equity decreased $425,024 to
$682,432 from $1,107,456. The decrease in stockholders' equity is primarily due
to the net loss for the year of ($525,599), and increases in paid in capital of
$100,575 primary due to the issuance of options for the loan payable to Evolve
One, Inc (EONE). The Company has budgeted significant capital expenditures for
the current fiscal year to make improvements on the house. The Company is
currently reliant on construction/mortgage financing provided by one lender -
Evolve One Inc. As of September 30, 2003, Evolve One, Inc did not have
sufficient cash reserves to fully fund the available credit under the line of
credit. Any financial or legal impairment of this lender may have an impact on
our current project. An impairment of our lender may force the Company to cancel
outstanding project, may cause project delays or may ultimately force the
Company to sell its project.

The Company is currently a party to several legal proceedings and
although the Company will vigorously defend all of these actions, the Company is
unable to estimate with any reasonable certainty what liability it may have to
these litigants. There are no assurances that the Company will be successful in
defending these legal proceedings, or if successful the cost of defending these
legal proceedings may significantly deplete the capital of the Company impairing
the Company's ability to continue as a going concern. Accordingly, there are no
assurances that the Company will be successful in achieving the above plans, or
that such plans, if consummated, will enable the Company to obtain profitable
operations or continue as a going concern.

ITEM 3. OTHER INFORMATION

None.

ITEM 4. CONSOLIDATED FINANCIAL STATEMENTS

INDEX

Page #

Independent auditors' reports.................................................17

Consolidated Balance Sheet
- September 30, 2003.........................................................18

Consolidated Statements of Operations
- Years Ended September 30, 2003 and 2002....................................19

Consolidated Statement of Stockholders' Equity
- Years Ended September 30, 2003and 2002.....................................20

Consolidated Statements of Cash Flows
- Years Ended September 30, 2003 and 2002....................................21

Notes to Consolidated Financial Statements....................................23

INDEPENDENT AUDITORS' REPORT

The Board of Directors
Onspan Networking, Inc. and Subsidiaries
(f/k/a Network Systems International, Inc.)

We have audited the accompanying consolidated balance sheet of Onspan
Networking, Inc. and Subsidiaries as of September 30, 2003 and the related
consolidated statements of operations, changes in stockholders' equity and cash
flows for the years ended September 30, 2003, and 2002. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audit.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Onspan Networking,
Inc. and Subsidiaries as of September 30, 2003, and the results of its
operations and its cash flows for the years ended September 30, 2003 and 2002 in
conformity with accounting principles generally accepted in the United States of
America.

The accompanying consolidated financial statements have been prepared assuming
the Company will continue as a going concern. However, the Company has suffered
recurring losses from operations and had negative cash flows from operations
that raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans regarding those matters are also described in Note
14. The consolidated financial statements do not include any adjustments that
might result from the outcome of this uncertainty.

/s/ Daszkal Bolton LLP
Boca Raton, Florida
December 2, 2003

Onspan Networking, Inc. and Subsidiary

Consolidated Balance Sheet
September 30, 2003

ASSETS

CURRENT ASSETS
Cash and cash equivalents ................................... $ 40,074
Deposits .................................................... 3,584
Prepaid Insurance ........................................... 10,405
Inventory - Home ............................................ 1,464,344
-----------
Total current assets .......................................... 1,518,407
Property and equipment, net ................................... 1,367
-----------
$ 1,519,774
===========

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES
Accounts payable ............................................ $ 66,034
Accrued dividend ............................................ 30,946
Accrued interest ............................................ 9,433
Loan Payable ................................................ 675,000
Amounts due to purchasers of discontinued operations ........ 55,929
-----------
Total current liabilities ..................................... 837,342

COMMITMENT AND CONTINGENCIES

STOCKHOLDERS' EQUITY
Preferred stock; $.001 par value; authorized 12,500
shares; issued and outstanding 2,713 shares;
liquidation preference $271,300 ........................... 2
Common stock, $.012 par value. Authorized 8,333,333
shares; issued and outstanding 968,677 shares .............. 11,624
Paid-in capital ............................................. 7,873,709
Accumulated deficit ......................................... (7,202,903)
-----------
Total stockholders' equity .................................... 682,432
-----------
$ 1,519,774
===========

See accompanying notes to consolidated financial statements.

Onspan Networking, Inc. and Subsidiary

Consolidated Statements of Operations
Years Ended September 30, 2003 and 2002
2003 2002
---- ----
Costs and expenses:
Other selling, general and
administrative expenses ........................ 396,305 417,422
--------- -----------
396,305 417,422
--------- -----------
(Loss) from operations ............................. (396,305) (417,422)

Other income (expense):
Interest income .................................. 9,580 23,313
Loss on sale of marketable
equity securities .............................. (28,866) -
Unrealized gain (loss) on
marketable equity securities ................... - (382,000)

Interest expense ................................. (110,008) (2,277)
--------- -----------
Total other income (expense) ................... (129,294) (360,964)
--------- -----------
(Loss) before income taxes and
discontinued operations .......................... (525,599) (778,386)
Income tax (expense) ............................... - (11,975)
--------- -----------
(Loss) from continuing operations .................. (525,599) (790,361)
Loss from earnings of a discontinued division ...... - (555,833)
Gain on disposal of division, (less applicable
income tax expense of $3,660) .................... - 6,075
--------- -----------
- (549,758)
--------- -----------
Net (loss) ......................................... $(525,599) $(1,340,119)
Dividends on preferred shares ...................... - -
--------- -----------
Net (loss) applicable to common shares ............. $(525,599) $(1,340,119)
========= ===========

Basic and diluted net (loss) per share
Continuing operations ............................ $ (0.54) $ (0.82)
========= ===========
Discontinued operations .......................... $ - $ (0.57)
========= ===========
Total ........................................... $ (0.54) $ (1.38)
========= ===========

Weighted average shares outstanding
Basic ............................................ 968,677 967,735
========= ===========
Diluted .......................................... 968,677 967,735
========= ===========

See accompanying notes to consolidated financial statements.

Onspan Networking, Inc. and Subsidiary

Consolidated Statement of Stockholders' Equity
Years Ended September 30, 2003 and 2002

Preferred Stock Common Stock Paid-in Retained
Shares Par Value Shares Par Value Capital Earnings Total
------------------------------------------------------------------------------

Balance, September 30, 2001 .......... 2,763 $ 2 964,552 11,575 7,755,319 (5,337,185) 2,429,711
Conversion of preferred stock ........ (50) - 209 2 - - 2
Sale of interLAN .................... - - (21,168) (254) 254 - -
Retirement of shares ................. - - (4,084) (48) 46 - (2)
Issuance of stock for legal settlement - - 29,168 349 17,515 - 17,864
Net income (loss) .................... - - - - - (1,340,119) (1,340,119)
------ -------- -------- -------- ---------- ----------- -----------
Balance, September 30, 2002 .......... 2,713 $ 2 968,677 $ 11,624 $7,773,134 $(6,677,304) $ 1,107,456
====== ======== ======== ======== ========== =========== ===========
Issuance of options for loan payable . - - - - 100,575 - 100,575
Net income (loss) .................... - - - - - (525,599) (525,599)
------ -------- -------- -------- ---------- ----------- -----------

Balance, September 30, 2003 .......... 2,713 $ 2 968,677 $ 11,624 $7,873,709 (7,202,903) $ 682,432
====== ======== ======== ======== ========== =========== ===========

See accompanying notes to consolidated financial statements.

Onspan Networking, Inc. and Subsidiary

Consolidated Statements of Cash Flows
Years Ended September 30, 2003 and 2002
2003 2002
---- ----
Cash flows from operating activities
Net loss .............................................$ (525,599) $(1,340,119)
Less: (Loss) from discontinued operations,net ........$ - $ (549,758)
----------- -----------
(Loss) from continuing opertions .....................$ (525,599) $ (790,361)
Adjustments to reconcile net loss to net
cash provided by operating activities:
Depreciation ....................................... 912 990
Stock options granted in loan agreement ............ 100,575 -
Deferred income taxes .............................. - 46,303
Stock issued in legal settlement ................... - (17,865)
Unrealized loss from marketable securities ......... - 382,000
Gain on sale of marketable securities .............. 28,866 -
Change in assets and liabilities (excluding
effects of acquisitions):
Income tax receivable ............................ 45,147 60,696
Inventory - Home ................................. (1,464,344) -
Prepaid expenses ................................. (2,156) 29,980
Accounts payable ................................. 60,495 (4,121)
Accrued interest ................................. 9,433 -
Amounts due to purchasers of discontinued
operations ...................................... 30,000 -
----------- -----------
Net cash provided by operating activities ............ (1,716,671) (292,378)
----------- -----------

Cash flows from investing activities
Proceeds from sale of marketable securities ........ 51,134 -
Capital expenditures ............................... - (1,589)
----------- -----------
Net cash provided by investing activities ............ 51,134 (1,589)
----------- -----------

Cash flows from financing activities
Loan from EONE ..................................... 675,000 -
Proceeds from notes payable ........................ - 71,000
Payment of notes payable ........................... - (77,781)
Payment to purchasers of discontinued operations ... - (44,531)
----------- -----------
Net cash used in financing activities ................ 675,000 (51,312)
----------- -----------
Net (decrease) increase in cash and cash equivalents
from continuing operations ......................... (990,537) (345,279)
Net cash used in (provided by) discontinued operations - 92,217
Net (decrease) increase in cash and cash equivalents (990,537) (253,062)
Cash and cash equivalents, beginning of period
from continuing operations ......................... 1,030,611 1,283,673
----------- -----------
Cash and cash equivalents, end of period .............$ 40,074 $ 1,030,611
=========== ===========
Continued

See accompanying notes to consolidated financial statements.

Onspan Networking, Inc. and Subsidiary

Consolidated Statements of Cash Flows
Years Ended September 30, 2003 and 2002

(Continued)
2003 2002
---- ----
Supplemental Cash Flow Information

Cash paid for interest and income taxes
are as follows:
Interest ...........................................$ - $ 2,377
Income taxes .......................................$ - $ -

Financed insurance premiums ..........................$ - $ 57,000

See accompanying notes to consolidated financial statements.

ONSPAN NETWORKING , INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2003 AND 2002

1. BACKGROUND INFORMATION

Onspan Networking, Inc. (the "Company" or "Onspan"), a Nevada corporation, is a
holding company. The financial statements include the accounts of the Company
and the discontinued operations of InterLAN Communications, Inc. ("InterLAN").
Onspan changed its name from Network Systems International, Inc. effective
February 10, 2001.

On April 22, 2003 the Company created a new subsidiary, Coventry 1 Inc. which is
a Nevada Corporation. The Company's other subsidiary Onspan SmartHouse, Inc., is
a Florida Corporation

concentrated on sales of computer hardware and software. In April of 2003, the
Company changed its focus to investing in and revitalizing single family homes
in established residential neighborhoods in suburban areas. The Company closed
on this property on June 19, 2003. The Company has entered into a contract with
Garcia Brenner & Stromberg architects to design the project. The Company intends
to renovate and expand the existing single-family home project on this site.
This project, known as Coventry 1 Inc., has entered into the permitting stage.

2. SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The financial statements at September 30, 2003 and 2002, include the accounts of
the Company and the discontinued operations of InterLAN Communications, Inc.

PRINCIPLES OF CONSOLIDATION

The accompanying consolidated financial statements for the period ended
September 30, 2003 include the accounts of Onspan Networking, Inc. and its
subsidiary, Coventry 1, Inc. and Onspan Smarthouse Inc. All significant
intercompany accounts and transactions have been eliminated.

CASH AND CASH EQUIVALENTS

The Company considers all highly liquid debt instruments purchased with maturity
of three months or less to be cash equivalents.

FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values of cash and cash equivalents, accounts receivable,
marketable equity securities, notes receivable, income taxes receivable,
accounts payable, amounts due to purchasers of discontinued operations and note
payable approximate fair value as of September 30, 2003, because of the short
maturity of these instruments.

REVENUE RECOGNITION

The Company recognizes revenue from all homebuilding activities at the closing
of the sale using the deposit method. During construction, all direct material
and labor costs and those indirect costs related to acquisition and construction
are capitalized, and all customer deposits are treated as liabilities.
Capitalized costs are charged to earnings upon closing. Costs incurred in
connection with completed homes and selling, general, and administrative costs
are charged to expense as incurred. Provision for estimated losses on
uncompleted contracts and on speculative projects is made in the period in which
such losses are determined.

INVESTMENT SECURITIES

Investments are classified into three categories as follows:

1. Trading securities reported at fair value with unrealized gains and
losses included in earnings;

2. Securities available-for-sale reported at fair value with unrealized
gains and losses reported in other comprehensive income; and

3. Held-to-maturity securities reported at amortized cost.

PREFERRED STOCK

At September 30, 2003, the Company had 2,713 shares outstanding of its Series A
Convertible Preferred Stock ("Series A"). This issue has a stated liquidation
preference value of $100 per share redeemable at the Company's option, has no
voting rights, and each preferred share is convertible to 4 shares of the
Company's common stock as adjusted for the 1 for 12 reverse stock split.
Dividends on the Series A were to be paid monthly in cash at a rate of 12% of
the original issue. The Company's Board of Directors, elected for the payment of
cash dividends on its Series A to be suspended. This decision was made in light
of the general economic conditions. In particular, the Board took such actions
as necessary to preserve the Company's working capital in order to ensure the
continued viability of the Company. The Board of Directors is unable at this
time to predict if the Company will resume the payment of cash dividends on its
Series A 12% Cumulative Convertible Preferred Stock. However, the Company has
accrued dividends on these shares in the amount of $30,946 at September 30,
2003.

INCOME TAXES

The Company accounts for income taxes under the provisions of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes" ("SFAS
109"). Under SFAS 109, the liability method is used in accounting for income
taxes and deferred tax assets and liabilities are determined based on
differences between the financial reporting and tax bases of assets and
liabilities. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.

STOCK OPTION PLAN

The Company applies the intrinsic value-based method of accounting prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees," and related interpretations, in accounting for its stock option
plan. As such, compensation expense would be recorded on the date of grant only
if the current market price of the underlying stock exceeded the exercise price.

EARNINGS PER SHARE

The financial statements are presented in accordance with Statement of Financial
Accounting Standards No. 128 ("SFAS 128"), "Earnings Per Share". Basic earnings
per share is computed using the weighted average number of common shares
outstanding during the period. Diluted earnings per share reflect the potential
dilution from the exercise or conversion of securities into common stock.

USE OF ESTIMATES

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

PROPERTY AND EQUIPMENT

Property and equipment are stated at cost. Expenditures for significant renewals
and improvements are capitalized. Repairs and maintenance are charged to expense
as incurred. Depreciation is computed using an accelerated method for both
financial and tax purposes based upon the useful lives of the assets.

RECLASSIFICATION

Certain prior year amounts have been reclassified to conform with current year
presentation.

RECENT ACCOUNTING PRONOUNCEMENTS

In January 2003, the FASB issued FIN No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51." FIN No. 46 requires certain variable
interest entities to be consolidated by the primary beneficiary of the entity if
the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the
entity to finance its activities without additional subordinated financial
support from other parties. FIN No. 46 is effective immediately for all new
variable interest entities created or acquired after January 31, 2003. For
variable interest entities created or acquired prior to February 1, 2003, the
provisions of FIN No. 46 must be applied for the first interim or annual period
beginning after June 15, 2003. We believe that the adoption of this standard
will have no material impact on our financial position or results of operations.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities." SFAS No. 149 amends and
clarifies financial accounting and reporting of derivative instruments and
hedging activities under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities." SFAS No. 149 amends SFAS No. 133 for decisions made:

(i) as part of the Derivatives Implementation Group process that require
amendment to SFAS No. 133; (ii) in connection with other FASB projects dealing
with financial instruments; and (iii) in connection with the implementation
issues raised related to the application of the definition of a derivative. SFAS
No. 149 is effective for contracts entered into or modified after June 30, 2003
and for designated hedging relationships after June 30, 2003. The Company does
not believe that the adoption of this standard will have a material impact on
its financial position or results of operations.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity." The Statement
establishes standards for how an issuer classifies and measures certain
financial instruments with characteristics of both liabilities and equity and
further requires that an issuer classify as a liability (or an asset in some
circumstances) financial instruments that fall within its scope because that
financial instrument embodies an obligation of the issuer. Many of such
instruments were previously classified as equity. The statement is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. We believe that the adoption of this standard will not have a material
impact on our financial position or results of operations.

3. INVENTORY HOME

Inventory - home which is reflected at cost consists of the following at
September 30, 2003 :

Home Basis ................ $1,440,865
Improvements .............. 23,479
----------
Total Basis ............... $1,464,344
==========

4. PROPERTY AND EQUIPMENT

Property and equipment, which are reflected at cost, consist of the following at
September 30, 2003:

Computer equipment ........... $ 3,689
-------
Total property and equipment . $ 3,689
Less: accumulated depreciation (2,322)
-------
Property and equipment, net .. $ 1,367
=======

Depreciation expense for the year ended September 30, 2003 and 2002 is $912 and
$990, respectively.

5. REVOLVING CREDIT NOTE

The Company has a demand line of credit with a related party (Evolve One Inc),
totaling $1,000,000, under which the Company may borrow on an unsecured basis at
5% annually. There was $675,000 outstanding under this line of credit at
September 30, 2003. Evolve One has deferred receiving the first payment of
interest due under the Note at December 19, 2003. As of September 30, 2003,
Evolve One, Inc did not have sufficient cash reserves to fully fund the
available credit under the line of credit. The terms of the demand line of
credit state that the Company must issue options to purchase common stock equal
to 10% of the dollar amount of the loan advance at an exercise price of $0.10
per share, and options to purchase common stock equal to 90% of the dollar
amount of the loan advance at the ten trading day average at the time of the
draw ($0.30 at June 30, 2003). Under these terms, the Company issued 675,000
stock options resulting in a charge to interest expense of $110,008.

6. STOCKHOLDERS EQUITY

On June 19, 2003, the Company granted 67,500 stock options to Evolve One Inc in
a revolving note agreement see footnote 5. The options have an exercise price of
$.10 per share. The Company also granted on June 19, 2003, 607,500, stock
options to Evolve One Inc., in the same note agreement. These options have an
exercise price of $.30 per share. The Company recognized a non-cash interest
expense of $100,575, during the twelve month period ended September 30, 2003.

7. EMPLOYEE INCENTIVE STOCK OPTION AGREEMENTS

During 1999, the Company adopted the Onspan Networking, Inc. f/k/a Network
Systems International, Inc. "1999 Long Term Stock Incentive Plan." The maximum
number of shares authorized and available under the plan was amended to be
increased from 41,667 to 500,000 shares, this amendment was approved at the
annual shareholder meeting held December 31, 2001, Under the terms of the plan,
the options expire after 10 years, as long as the employees remain employed with
the Company. The Company has reserved 500,000 shares of common stock for the
grant of qualified incentive options or non-qualified options to employees and
directors of the Company or its parents or subsidiaries, and to non-employee
directors, consultants and advisors and other persons who may perform
significant services for or on behalf of the Company under the Plan. Prices for
incentive stock options must provide for an exercise price of not less than 100%
of the fair market value of the common stock on the date the options are granted
unless the eligible employee owns more than 10% of the Company's common stock
for which the exercise price must be at least 110% of such fair market value.
Non-statutory options must provide for an exercise price of not less than 85% of
the fair market value.

Pursuant to the Plan on September 2, 2003, the Company granted 122,000
non-qualified stock options and 366,000 incentive stock options to certain
directors and employees. The stock options are immediately exercisable. .The
following is a summary of option activity for the years ended September 30, 2003
and 2002.

OPTIONS
OPTIONS OUTSTANDING
AVAILABLE WEIGHTED AVERAGE
FOR GRANT OPTIONS EXERCISE PRICE
--------- ------- --------------
Balance; September 30, 2001 8,598 14,334 $13.08
-------- ------- ------
Granted ................... - - -
Exercised ................. - - -
Cancelled ................. - - -
Plan amendment ............ 477,068 - -
-------- ------- ------
Balance; September 30, 2002 485,666 14,334 13.08
-------- ------- ------
Granted ................... (488,000) 488,000 .30
Exercised ................. - - -
Cancelled ................. 2,667 (2,667) -
-------- ------- ------
Balance; September 30, 2003 333 499,667 .67
-------- ------- ------

SFAS No. 123 "Accounting for Stock Based Compensation" ("SFAS 123"), requires
the Company to disclose pro forma information regarding option grants made to
its employees. SFAS 123 specifies certain valuation techniques that produce
estimated compensation charges that are included in the pro forma results below.
These amounts have not been reflected in the Company's Statement of Operations,
because Accounting Principles Board Opinion 25, "Accounting for Stock Issued to
Employees," specifies that no compensation charge arises when the price of the
employees' stock options equal the market value of the underlying stock at the
grant date, as in the case of options granted to the Company's employees.

SFAS No. 123 pro forma numbers are as follows for the years ended September 30,
2003 and 2002:

2003 2002
---- ----

Actual net income (loss) ..................... $(525,599) $(1,340,119)
========= ===========
Pro forma net income (loss) .................. $(667,119) $(1,340,119)
========= ===========
Pro forma basic and diluted net
Income (loss) per share .................... $ (.69) $ (1.38)
========= ===========

8. INCOME TAXES

The provision for income taxes for the years ended September 30, consists of the
following components:

2003 2002
---- ----
Continuing operations
Federal
Deffered ..................................... $ - $11,975
----- -------
$ - $11,975
===== =======
Discontinued Operations
Federal
Deffered ..................................... - 3,660
===== =======

Total income tax expense (benefit) ................. $ - $15,635
===== =======

Reconciliation of the Federal Statutory Income Tax rate to the Company's
effective income tax rate is as follows:
2003 2002
---- ----

Computed at the Statuary rates(34%) ................ $(178,704) $(455,640)
Non deductible expenses ............................ 625 126,973
State income taxes net of federal tax benefit ...... (19,704) (35,090)
Unrealized loss on marketable securities ........... 143,747 -
Discontinued operations ............................ - 3,660
--------- ---------
Reinstatement/Change in valuation Allowance ........ 54,036 375,733
--------- ---------
Tax provision (benefit) ............................ $ - $ 15,635
========= =========

The significant temporary differences that give rise to a deferred tax asset as
of September 30, 2003 and 2002 are as follows:

2003 2002
---- ----
Deferred tax asset:

Unrealized loss on marketable securities ......... $ - $ 143,747
Capital loss Carryforward ........................ 41,798 41,798
NOL Carryforward ................................. 417,796 220,013
--------- ---------
Total deferred tax asset .................... 459,594 405,558
Less valuation allowance .................... (459,594) (405,558)
--------- ---------
Net deferred tax asset ...................... $ - $ -
========= =========

The net change in the total valuation allowance for the year ended September 30,
2003 was an increase of$54,036.

In assessing the reliability of deferred tax assets, management considers
whether it is more likely than not that some portion or all of the deferred tax
assets will not be realized. The ultimate realization of deferred tax assets is
dependent upon the generation of future taxable income during the periods in
which those temporary differences become deductible. Management considers
projected future taxable income and tax planning strategies in making this
assessment.

The net operating loss carry forward originated September 30, 2002; the amount
is $1,110,275 and expires in 2023.

During the year ended September 30, 2003 a refund of $45,147 was received from
the Internal Revenue Service for $45,147 for prior year overpaid income taxes
for former subsidiary InterLAN Communications as per the sale agreement.

9. LEASE COMMITMENT

OPERATING LEASES

The Company has entered into a sub-lease agreement with Millennium Holdings
Group, Inc for a three-year term commencing July 1, 2003, for office space in
Boca Raton, Florida. The lease provides for base monthly rentals of $2,908 plus
the Company's proportionate share of certain expenses with 5% annual increases
through June 30, 2006.

Minimum future obligations over the term of the lease are as follows:

Year ended September 30,
------------------------
2004 $ 35,343
2005 37,106
2006 30,303
--------
$102,752
========

Rent expense for the years ended September 30, 2003 and 2002 aggregated $13,226
and $6,000 respectively.

10. LEGAL PROCEEDINGS

the amounts claimed and seeking reimbursement or certain expenses incurred by
the Company on behalf of the plaintiff. The parties have engaged in settlement
discussions, which have been unsuccessful to date.

2. Securities Actions:

b. D. Mark White v OnSpan Networking, Inc. and Herbert Tabin,
Case No. 352198686 03 (District Court, Tarrant County Texas) (Complaint
filed May 2, 2003) This action asserts claims for violation of Texas
securities law, fraud, and breach of fiduciary duties. The action seeks
unspecified damages, restitution in the amount of $300,000, punitive
damages, pre-judgment interest, the plaintiffs' attorneys' fees and
costs, and certain other relief. The case was filed in Texas state
court on May 2, 2002. The Company has filed a Motion to Dismiss
Plaintiff's Amended Complaint.

No discovery has taken place in either of these two actions. The Company will
vigorously defend both of these actions.

11. DISCONTINUED OPERATIONS
2003 2002
---- ----

Net Sales - Interlan ....................................... $ - $2,146,824

Net loss from discontinued division - Interlan ............. $ - $ (555,833)

Gain on disposal of a division net of income taxes of $3,660 $ - $ 6,075
---- ----------

Net (loss) from discontinued operations .................... $ - $ (549,758)
==== ==========
Net (loss) per common share
Basic .................................................. (.57)
Diluted ................................................ (.57)

12. EARNINGS PER SHARE

Basic earning (loss) per share is computed by dividing earnings available to
common stockholders by the weighted average number of common shares outstanding
during the period. Diluted earnings per share reflect per share amounts that
would have resulted if dilutive potential common stock had been converted to
common stock. The following reconciles amounts reported in the financial
statements:
2003 2002
---- ----

(Loss) from continuing operations ................ $(525,599) $ (790,361)
(Loss) from discontinued operations .............. - (549,748)
--------- -----------

Net (loss) ....................................... $(525,599) $(1,340,119)
========= ===========

Denominator for basic earnings per share -
Weighted average shares .......................... 968,677 967,735
Effect of dilutive securities - stock options .... - -
--------- -----------
Denominator for diluted earnings per share -
Weighted average shares adjusted
for dilutive securities .......................... 968,677 967,735
========= ===========

Basic and diluted (loss) per common share:
(Loss) from continuing operations ................ $ (.54) $ (.82)

(Loss) from discontinued operations .............. - (.57)
--------- -----------

Net (loss) ....................................... $ (.54) $ (1.38)
========= ===========

13. REVERSE SPLIT

On October 4, 2001, the Company announced a 1 for 12 reverse stock split of its
common stock. The total number of authorized shares of its common stock before
the stock split was 100,000,000 the par value was $.001; the total number of
authorized shares of common stock after the stock split is 8,333,333 and the par
value is .012. The total number of issued and outstanding shares of its common
stock on the record date were 11,574,619; giving effect to the stock split,
Onspan Networking now has 967,735 shares of common stock issued and outstanding.
Any fractional shares, which would otherwise be issuable upon such split, were
rounded up to the next whole share. Onspan Networking did not issue new stock
certificates as a result of the stock split. The financial statements have been
adjusted to retroactively to show the 1 for 12 reverse stock split.

14. GOING CONCERN

The accompanying condensed financials were prepared assuming that the Company
will continue as a going concern. The Company is currently a party to several
legal proceedings and although the Company will vigorously defend all of these
actions, the Company is unable to estimate with any reasonable certainty what
liability it may have to these litigants. There are no assurances that the
Company will be successful in defending these legal proceedings, or if
successful the cost of defending these legal proceedings may significantly
deplete the capital of the Company impairing the Company's ability to continue
as a going concern. Accordingly, there are no assurances that the Company will
be successful in achieving the above plans, or that such plans, if consummated,
will enable the Company to obtain profitable operations or continue as a going
concern.

15. CONCENTRATIONS

GEOGRAPHICAL

Currently, all of the Company's material revenues to be derived in 2004 are from
one house located in Palm Beach County within the State of Florida. Accordingly,
the Company could be adversely affected by natural disasters, such as hurricanes
or other tropical storms or events, economic downturns, significant
unemployment, and other economic conditions that may occur from time to time in
Florida, which may not have as much impact on more geographically diversified
competitors.

FINANCIAL

The Company is currently reliant on construction/mortgage financing provided by
one lender - Evolve One Inc. Any financial or legal impairment of this lender
may have an impact on our current projects. An impairment of our lender may
force the Company to cancel outstanding projects, may cause project delays or
may ultimately force the Company to sell its projects.

PART III

ITEM 1. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS,
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT

DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS:

The following table sets forth the names, ages and current positions
with the Company held by the Directors and Executive Officers, together with the
date such positions were assumed. The Company is not aware of any arrangement or
understanding between any Director or Executive Officer and any other person
pursuant to which he was elected to his current position.

Position or Office Date Name Age
------------------ ---- ---- ---
President/CEO/Director Jul/2000 Herbert Tabin 36
Treasurer/CFO/Director Sep/2000 Marissa Dermer 35
Director 2001 Elizabeth Capra 41

HERBERT TABIN is a Director of the Company and is currently the
President and CEO. Mr. Tabin was the Chief Operating Officer and founder of
publicly traded Evolve One, Inc., formerly International Internet, Inc., and had
served as its Vice President until December 2000. Mr. Tabin has been a Director
of Evolve One, Inc and serves as the Company's Director of Marketing since
February 1998,. Mr. Tabin is also currently vice president of Millennium
Holdings Group, Inc. a private Florida based venture capital firm. Mr. Tabin has
been Vice President with Millennium Holdings since 1996. In February 1999, Mr.
Tabin became President of Interactive Golf Marketing a publicly traded company
that became WowStores.com. In August 1999, Mr. Tabin resigned as President of
WowStores.com. Previously, Mr. Tabin was a Vice President of Marketing with LBI
Group, Inc., a merchant banking and venture capital group from April 1995 to
December 1996. From September 1993 to March 1995 Mr. Tabin was a vice president
with HBL Associates a financial relations firm in New York City. From 1989 to
August 1993 Mr. Tabin was employed with the American Stock Exchange and three
Long Island, NY based Stock Brokerage firms. Mr. Tabin received a Bachelor of
Science in Business Economics from the State University of New York At Oneonta
in 1989. In March 2000, the State University of New York At Oneonta named their
campuses largest computer lab, the Tabin Computer Lab.

MARISSA DERMER is a Director of the Company and is currently the Chief
Financial Officer. Ms. Dermer is also currently controller of publicly traded
Evolve One, Inc. symbol EVLO.pk. From September 1997 to April 2000, Ms. Dermer
was an assistant controller with Mitchell Hutchins Asset Management, Inc., the
mutual fund advisory group of Paine Webber Inc. Prior to her employment with
Paine Webber, Ms. Dermer was a manager of David Berdon and Company LLP, a
prominent public accounting firm

headquartered in New York City from 1990 to 1997. Ms. Dermer graduated in 1990
from the State University of New York at Albany with a degree in
Business/Accounting.

ELIZABETH CAPRA is a Director of the Company. Mrs. Capra is also
currently an Executive Assistant with Publicly Traded Evolve One, Inc. From
October 1992 to July 1999, Mrs. Capra was simultaneously a Property Manager for
upscale properties, Reflections of Boca, Inc. and Sanctuary of Boca Raton, Inc.,
both located in Boca Raton, Florida. From 1984 to 1991 Mrs. Capra was the
Assistant to the Vice President of The International Department of Marsh &
McLennan - insurance and reinsurance broking, investment management and
consulting businesses worldwide. Mrs. Capra graduated in 1983 from Roberts Walsh
Business School with a degree in Business Administration.

ITEM 2. EXECUTIVE COMPENSATION

The following table shows the cash compensation of the Company's chief
executive officer and each officer whose total cash compensation exceeded
$100,000, for the three fiscal years ended September 30, 2001, 2002 and 2003.

SUMMARY COMPENSATION TABLE - ANNUAL COMPENSATION

Other
Annual
Name and Principal Position Year Salary Bonus Compensation
--------------------------- ---- ------ ----- ------------

Herbert Tabin 2003 N/A N/A N/A
Chairman of the Board 2002 N/A N/A N/A
And Chief Executive Officer 2001 N/A N/A N/A
Since July 25, 2000

Marissa Dermer 2003 N/A N/A N/A
Chief Financial Officer 2002 N/A N/A N/A
Since September 2000 2001 N/A N/A N/A

SUMMARY COMPENSATION TABLE - LONG-TERM COMPENSATION

Securities
Underlying
Options
Name and principal position Year SAR's
--------------------------- ---- ----------
Herbert Tabin 2003 122,000(2)
Chairman of the Board 2002 N/A
And Chief Executive Officer 2001 8,333(1)
Since July 25, 2000

Marissa Dermer 2003 122,000(2)
Chief Financial Officer 2002 N/A
Since September 2000 2001 2,500
----------
(1) The Company issued Mr. Tabin options to purchase 8,333 shares of its common
stock, exercisable at $13.56 per share, as compensation for his services to
the Company in fiscal 2001 and it issued him options to purchase 14,569
shares of its common stock exercisable at $6.864 per share as compensation
for his services to the Company in fiscal 2001.

(2) The Company issued Mr. Tabin, and Ms Dermer options to purchase 122,000
shares each of its common stock, exercisable at $.33 and .30 per share
respectively, as compensation for his services to the Company in fiscal 2003

Long-Term Stock Incentive Plan

In April 1999, the Board of Directors of the Company adopted, subject
to stockholder approval, the Company's Stock Incentive Plan (the "Stock
Incentive Plan"). The purposes of the Stock Incentive Plan are to closely
associate the interests of the key associates (management and certain other
employees) of the Company and its adopting subsidiaries with the stockholders by
reinforcing the relationship between participants' rewards and stockholder
gains, to provide key associates with an equity ownership in the Company
commensurate with Company performance, as reflected in increased stockholder
value, to maintain competitive compensation levels, and to provide an incentive
to key associates for continuous employment with the Company.

Under the Stock Incentive Plan, the Company may grant (i) incentive
stock options intended to qualify under Section 422 of the Internal Revenue Code
of 1986, as amended (the "Code"), and (ii) options that are not qualified as
incentive stock options ("nonqualified stock options"). Executive officers,
management and other employees of the Company capable of making a substantial
contribution to the success of the Company are eligible to participate in the
Stock Incentive Plan.

The Stock Incentive Plan is administered by a Committee consisting of
three members appointed by the Board of Directors of the Company (the
"Committee"). The Committee is currently comprised of Messr. Tabin and Ms.
Dermer. and Ms Capra The Committee, in its sole discretion, has the authority
to: (i) designate the key associates or classes of key associates eligible to
participate in the Stock Incentive Plan; (ii) to grant awards provided in the
Stock Incentive Plan in the form and amount determined by the Committee; (iii)
to impose such limitations, restrictions and conditions upon any such award as
the Committee shall deem appropriate; and (iv) to interpret the Stock Incentive
Plan.

The maximum aggregate number of shares of common stock available for
issuance under the Stock Incentive Plan is 500,000 shares. At September 30,
2003, there were options to purchase 499,667 shares of the Company's common
stock outstanding under the Stock Incentive Plan. The shares of common stock
available for issuance under the Stock Incentive Plan are subject to adjustment
for any stock dividend or distribution, recapitalization, merger, consolidation,
split-up, combination, exchange of shares or the like. Shares issued may consist
in whole or in part of authorized but unissued shares or treasury shares. Shares
tendered by a participant as payment for shares issued upon exercise of an
option shall be available for issuance under the Stock Incentive Plan.

Any shares of common stock subject to an option, which for any reason
is terminated unexercised or expires shall again be available for issuance under
the Stock Incentive Plan. Subject to the provisions of the Stock Incentive Plan,
the Committee may award incentive stock options and nonqualified stock options
and determine the number of shares to be covered by each option, the option
price therefore and the conditions and limitations applicable to the exercises
of the option. Each option shall be exercisable at such times and subject to
such terms and conditions as the Committee may specify in the applicable award
or thereafter.

Incentive stock options granted under the Stock Incentive Plan are
intended to qualify as such under section 422 of the Code. No incentive stock
option granted under the Stock Incentive Plan may be exercisable more than 10
years from the date of grant.

The option price per share for nonqualified stock options and incentive
stock options must at least equal the fair market value of the common stock on
the date the option is granted. For a 10% shareholder must equal at least 110%.
Each option shall be evidenced by a written stock option agreement, in such form
as the Committee may from time to time determine, executed by the Company and
the grantee, stating the number of shares of common stock subject to the option.
The Committee may at any time and from time to time terminate or modify or amend
the Stock Incentive Plan in any respect, except that without stockholder
approval the Committee may not (i) increase the maximum number of shares of
common stock which may be issued under the Stock Incentive Plan, (ii) extend the
period during which any award may be granted or exercised, (iii) extend the term
of the Stock Incentive Plan, or (iv) change the associates/employees or group of
associates/employees eligible to receive incentive stock options.

OPTION/SAR GRANTS IN LAST FISCAL YEAR

Percent of total
Number of options/SARs
Securities grated to Exercise or
Underlying Options/ employees in Base Expiration
Name SARs granted (#) fiscal year Price ($/Sh) Date
---- ---------------- ----------- ------------ ----

Herbert Tabin 122,000 25% .33 9/02/2013
Marissa Dermer 122,000 25% .30 9/02/2013
Elizabeth Capra 122,000 25% .30 9/02/2013
Gary Schultheis 122,000 25% .30 9/02/2013

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

Number of
securities VALUE OF
underlying UNEXERCISED
unexercised IN-THE-MONEY
Shares options/SARs at OPTIONS/SARs
Acquired FY-end (#) At FY-end ($)
On Value Exercisable/ Exercisable/
Name Exercise (#) Realized ($) Unexercisable Unexercisable
---- ------------ ------------ ------------- -------------

NONE $0

ITEM 3. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table indicates all persons who, as of September 30,
2003, the most recent practicable date, are known by the Company to own
beneficially more than 5% of any class of the Company's voting securities and
all Directors of the Company and all Officers who are not Directors of the
Company, as a group. The Company's common stock is the only class of its voting
securities. As of September 30, 2003, there were 968,677 shares of the Company's
common stock outstanding. Beneficial ownership is determined in accordance with
the rules of the SEC and generally includes voting or investment power with
respect to securities and includes any securities which the person has the right
to acquire within 60 days through the conversion or exercise of any security or
other right. Unless otherwise noted, the Company believes that all persons named
in the table have sole voting and investment power with respect to all shares of
its common stock beneficially owned by them. The information as to the number of
shares of the Company's common stock owned by each named person or group is
based upon the information contained in a record list of the Company's
shareholders at September 30, 2003.

Title of Amount & Nature of % of
Class Name & Address of Beneficial Owner Beneficial Owner Class
-------- ---------------------------------- ------------------ -----

Common Herbert Tabin
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487 369,902(1) 25.39%

Common Marissa Dermer
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487 124,500(2) 8.5%

Common Elizabeth Capra
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487 122,000(3) 8.4%

Common Gary Schultheis
6413 Congress Avenue, Suite 230
Boca Raton, FL 33487 205,050(4) 13.96%

Common All directors and executive
officers as a group (four persons) 848,452 55.94%
----------
(1) Includes an option granted to Mr. Tabin on October 23, 2000 for 8,333 shares
with an exercise price of $13.56 per share, and an option granted on September
2, 2003 for 122,000 shares with an exercise price of $.33 per share, the closing
price for the stock on that date as reported on the NASDAQ Small Cap Market. The
options were granted by the Board of Directors in lieu of current compensation
agreements.

(2) Includes an option granted to Ms. Dermer on October 23, 2000 for 2,500
shares with an exercise price of $13.56 per share, and an option granted on
September 2, 2003 for 122,000 shares with an exercise price of $.30 per share,
the closing price for the stock on that date as reported on the Nasdaq SmallCap
Market. The options were granted by the Board of Directors in lieu of current
compensation agreements.

(3) Includes an option granted to Ms. Capra on September 2, 2003 for 122,000
shares with an exercise price of $.30 per share, the closing price for the stock
on that date as reported on the Nasdaq SmallCap Market. The options were granted
by the Board of Directors in lieu of current compensation agreements.

(4) Includes an option granted to Mr. Schultheis on September 2, 2003 for
122,000 shares with an exercise price of $.30 per share, the closing price for
the stock on that date as reported on the Nasdaq SmallCap Market. The options

were granted by the Board of Directors in lieu of current compensation
agreements. As of the date of this filing Mr. Schultheis has sold all shares
owned in the company, retaining only the unexercised options granted on
September 2, 2003, therefore he is no longer a 10 % beneficial owner in the
company.

ITEM 4. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

"There is no immediate family relationship between or among any of the
Directors and Executive Officers, except Ms. Dermer who is the sister-in-law of
Mr. Tabin. Related transactions include 1) Mr. Tabin is also Vice President of
Millennium Holdings Group, Inc. who Onspan sub leases its office space from.

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

Within the 90 days prior to the filing date of this report, the Company
carried out an evaluation of the effectiveness of the design and operation of
its disclosure controls and procedures pursuant to Exchange Act Rule 13a-14.
This evaluation was done under the supervision and with the participation of the
Company's Chairman, President and General Counsel and Secretary. Based upon that
evaluation, they concluded that the Company's disclosure controls and procedures
are effective in gathering, analyzing and disclosing information needed to
satisfy the Company's disclosure obligations under the Exchange Act.

CHANGES IN INTERNAL CONTROLS

There were no significant changes in the Company's internal controls or
in other factors that could significantly affect those controls since the most
recent evaluation of such controls.

ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K

1. Form 8-K filed with the Securities and Exchange Commission October
16, 2001 announcing the Onspan Networking, Inc. (the "Company"), filed a
Certificate pursuant to Section 78.207 of the Nevada Statutes whereby the
Company decreasing the number of issued and outstanding shares of common stock,
par value $.012, at a rate of one for twelve (1:12), and proportionately
decreasing the number of authorized shares of common stock at a rate of one for
twelve (1:12). As a result, the Company's authorized common stock has been
reduced from 100,000,000 shares to 8,333,333 shares, and the number of issued
and outstanding shares of common stock were reduced from 11,574,619 to
approximately 964,552 shares.

2. Form 8-K filed with the Securities and Exchange Commission August 8,
2002 announcing on August 5, 2002, the Company sold and transferred the stock of
its wholly-owned subsidiary, InterLAN Communications, Inc. to G. Anthony Munno,
Martin Sainsbury Carter and Brian Ianniello, who were executives and employees
of InterLAN. In exchange for the assignment of the InterLAN stock, Messrs.
Munno, Carter and Ianniello transferred 20,833 shares of Onspan common shares,
and Onspan was relieved of substantially all obligations and guarantees provided
to third parties. Onspan also retained the right to a certain tax refund owing
to InterLAN. These individuals also resigned in all capacities as directors,
officers and/or employees of Onspan. InterLAN provides data communications and
network solutions and consulting services.

4.0 Long Term Incentive Stock Options Plan (1)
_________

(1) Incorporated by reference to the company's report on form S-8 dated July 27,
2001

SIGNATURES

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

ONSPAN NETWORKING, INC.

By: /s/ Herbert Tabin February 23, 2004
-----------------
Herbert Tabin, Principal Executive Officer

In accordance with the Securities Exchange Act of 1934, this report has
been signed below by the following persons on behalf of the registrant and in
the capacities and on the dates indicated.

SIGNATURES

By: /s/ Herbert Tabin February 23, 2004
-----------------
Herbert Tabin, Principal Executive Officer

By: /s/ Marissa Dermer February 23, 2004
------------------
Marissa Dermer, Principal Accounting and Financial Officer