SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934

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[ ] Soliciting Material Pursuant to ss.240.14a-12

[ ] Confidential, For Use of the Commission Only
(as Permitted by Rule 14a.6(e)(2))

SNAP2 CORPORATION
(Name of Registrant as Specified in Its Charter)

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[LOGO]
SNAP2

February 5, 2002

Dear Shareholder:

You are cordially invited to attend the Annual Shareholder Meeting of SNAP2
Corporation which will be held at the main office of the Company at 10641 Justin
Drive, Urbandale, Iowa, on March 5, 2002, at 2:00 p.m. Shareholders of record as
of the close of business on January 25, 2002, will be entitled to vote at the
Annual Meeting.

In addition to the matters scheduled for consideration, your Board of Directors
and management are looking forward to meeting with you and reviewing the major
developments of 2001.

Whether you plan to attend or not, please mark, sign, date, and return the proxy
card in the accompanying envelope. Your vote is important no matter how many
shares you own. If you attend the Annual Meeting and desire to vote in person,
you may do so even though you have previously sent in a proxy.

Sincerely,

/S/ Dean R. "Rick" Grewell, III

Dean R. "Rick" Grewell, III
President & CEO

SNAP2 CORPORATION

10641 Justin Drive
Urbandale, Iowa 50322

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
March 5, 2002

Notice is hereby given that the Annual Meeting of Shareholders of SNAP2
CORPORATION will be held at its main office located at 10641 Justin Drive,
Urbandale, Iowa, on Tuesday, March 5, 2002 at 2:00 p.m., Central Standard Time,
for the following purposes:

1. To elect six directors.

2. To ratify the appointment of auditors for the fiscal year ended
September 30, 2002

3. To transact such other business as may properly come before the
meeting or any adjournment thereof.

Only shareholders of record at the close of business on January 25, 2002, will
be entitled to notice of and to vote at the meeting or any adjournment thereof.

Shareholders are cordially invited to attend the meeting in person. WHETHER OR
NOT YOU WILL BE ABLE TO ATTEND THE MEETING IN PERSON, PLEASE DATE YOUR PROXY,
INDICATE YOUR CHOICE ON THE MATTERS TO BE VOTED UPON, AND RETURN IT PROMPTLY IN
THE ENCLOSED ENVELOPE. IF YOU DO ATTEND THE MEETING AND DESIRE TO WITHDRAW YOUR
PROXY, YOU MAY DO SO.

THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF SNAP2 CORPORATION.

The accompanying Proxy Statement describes in more detail the matters to be
acted upon at the meeting.

A copy of the Annual Report to Shareholders for 2001, including audited
financial statements, is also enclosed.

By Order of the Board of Directors

Kathy Hoffman
Secretary

Urbandale, Iowa
February 5, 2002

SNAP2 CORPORATION

PROXY STATEMENT

Annual Meeting of Shareholders, March 5, 2002

GENERAL INFORMATION

This Proxy Statement and the enclosed Proxy are being provided by SNAP2
Corporation (the "Company"), 10641 Justin Drive, Urbandale, Iowa 50322, for use
at the Annual Meeting of Shareholders to be held March 5, 2002 at 2:00 p.m. at
the Company's main office located at 10641 Justin Drive, Urbandale, Iowa, and
any adjournment thereof (the "Meeting"). When the Proxy is properly executed and
returned, the shares it represents will be voted at the Meeting in accordance
with the instructions contained therein. This Proxy Statement and the
accompanying Proxy will be first mailed to Shareholders of the Company on or
about February 5, 2002. The cost of the distribution and handling of the proxies
will be borne by the Company. The Proxy is solicited on behalf of the Board of
the Directors of the Company.

VOTING SECURITIES

Only Shareholders of record as of the close of business on January 25, 2002 will
be entitled to notice of and to vote at the Annual Meeting.

The Company has a single class of voting common stock, $.001 par value ("Common
Stock"), of which 17,856,000 shares were outstanding on January 25, 2002. The
shares of Common Stock were held by approximately 996 different Shareholders.
The presence, in person or by Proxy, of the holders of a majority of such
outstanding shares entitled to vote at the Annual Meeting shall constitute a
quorum. Each Shareholder of record of Common Stock of the Company as of the
record date will be entitled to one vote for each share of stock held of record
in such Shareholder's name. Shareholders do not have cumulative voting rights.
There are no appraisal or similar rights of dissenters applicable to any matter
to be voted upon at the Annual Meeting.

All Proxies delivered pursuant to this solicitation are revocable at the option
of the person executing the Proxy at any time before the voting thereof. Proxies
in the form enclosed, unless previously revoked, will be voted at the meeting.
Where a choice is specified in the Proxy, the Shareholder will mark the ballot
and the Proxy will be voted in accordance with such specification. If no
direction is given as provided in the Proxy, the Proxy will be voted FOR the
matters presented in this Proxy Statement. Abstentions will be treated as
un-voted for purposes of determining the approval of any matter submitted to the
Shareholders for a vote. If shares are held by a broker, which has indicated
that it does not have discretionary authority to vote on a particular matter,
those shares will not be considered as present and entitled to vote with respect
to that matter.

Dean R. "Rick" Grewell, III, President and Director of the Company currently
owns of record 10,000,000 shares (56.0%) of Common Stock and has indicated his
intention to vote such shares "FOR" the matters to be presented at the Annual
Meeting including the election of each nominee to the Board of Directors. Since
each matter to be presented to the shareholders at the Annual Meeting requires
only a majority vote for approval, the matters will be approved.

ELECTION OF DIRECTORS

The Company's Bylaws provide that the number of directors shall not be less than
one (1) nor more than fifteen (15), the exact number to be determined from time
to time by the Board of Directors, or by resolution of the shareholders at any
meeting thereof. The Board of Directors has set the number of Directors at six
(6). Each of the directors is elected to a one (1) year term and until his or
her successor is elected. Directors need not be shareholders of the Company or
residents of any particular jurisdiction.

Nominees for Director

The terms of each of the existing directors of the Company will expire at the
Annual Meeting. Accordingly, six (6) directors need to be elected. The following
information is provided regarding those nominees:

Name Age Positions with Company
---- --- ----------------------

Dean R.("Rick") Grewell III 43 President, CEO and Director

Antony Hoffman 40 Vice President of Research &
Development and Director

Mark Malinak 41 Vice President of Sales &
Director

Mike Hennel 42 Director

Stephen Dukes 47 Director

Sheldon Ohringer 45 Director

The terms of each director of the Company will expire in January 2002, but the
term of each director will continue until such time as their successors shall
have been elected and qualified.

Rick Grewell has been the President, CEO and a Director of the Company since the
merger with ISES Corporation. Prior to merger Mr. Grewell was President and CEO
of ISES Corporation since September 7, 1996. Microware Systems Corporation
previously employed Mr. Grewell for twelve years.

Antony Hoffman has been a Vice President and Director of the Company since its
merger with ISES Corporation. Prior to the merger, Mr. Hoffman was Vice
President of Research and Development of ISES Corporation since February 1,
1999. Mr. Hoffman was previously employed at Microware for approximately 13
years.

Mark Malinak has been a Vice President of Sales and a Director of the Company
since its merger with ISES Corporation. Prior to the merger Mr. Malinak was Vice
President of Sales of ISES Corporation since February 1, 1999. Prior to joining
the Company, Mr. Malinak had been employed at Microware for approximately 4
years and at Sun Microsystems, Palo Alto, California for 2 years.

Mike Hennel has been a Director of the Company since June 14, 2000. Mr. Hennel
is President and CEO of Silvon Software, a position he has held since 1987.

Stephen Dukes has been a Director of the Company since February 15, 2001. Mr.
Dukes is a former Vice-President of Technology at TCI Technology Ventures and
Media One.

Sheldon Ohringer has been a Director of the Company since June 6, 2001. Mr.
Ohringer was President and Chief Executive Officer of First World
Communications, Inc. in Englewood, Colorado from 1998 to 2000. He was previously
with the ICG Telecom Group, Inc. in various capacities since 1994 where he
served as President of a telecom subsidiary from 1997 to 1998. Mr. Ohringer has
been retired since 2000.

Audit Committee

The Audit Committee, consisting of Mr. Grewell, Mr. Hennel and Mr. Johnson,
monitors the Company's financial records, represents the Company in dealings
with the auditing firm and recommends to the Board the selection of an auditor.
The Audit Committee met once during the fiscal year ended September 30, 2001.

The Audit Committee reviewed and discussed the audited financial statements with
management and the independent auditors, KPMG LLP (KPMG). The discussion with
KPMG included matters required to be discussed by SAS 61 and the committee has
received the disclosures and letter from KPMG as required by ISB Standard #1.
The Audit Committee has also discussed with KPMG the independent auditor's
independence. Based on the review and discussions referred to above, the Audit
Committee recommended to the Board that the audited financial statements be
included in the Company's Annual Reports on Form 10-KSB for the last fiscal year
for filing with the Commission.

Audit fees, including quarterly reviews, to KPMG for the fiscal year ended
September 30, 2001 were $38,900. KPMG provided no other services to the Company
during the fiscal year ended September 30, 2001.

Mr. Grewell is an officer of the Company, while Mr. Hennel and Mr. Johnson are
not. The members are not considered independent, as that term is defined by NASD
Rule 4200(a) (14). The Audit Committee is not currently governed by a charter,
however, the Board is continuing to review the subject to determine if such a
charter should be adopted.

Compensation Committee

The Compensation Committee, consisting of Mr. Grewell, Mr. Hoffman and Mr.
Dukes, determines executive compensation. The Compensation Committee did not
meet during the fiscal year ended September 30, 2001.

Meetings of the Board of Directors

The Board of Directors held 4 meetings during 2001. All directors attended all
of those meetings either in person or telephonically.

Compensation of the Board of Directors

The Company at this time only reimburses travel and communication expenses for
board meetings. The Company believes in the future outside directors will be
compensated with money and stock options. There is no plan currently in place.

Executive Officers of the Company

The executive officers of the Company are elected annually by the Board of
Directors at its Annual Meeting and hold office until the next annual meeting of
the Board of Directors and until their successors are chosen. The Board of
Directors may remove any officer at any time, with or without cause. Officers
need not be a director or shareholder of the Company. The executive officers of
the Company as of the date of the mailing are identified above in "Nominees for
Director".

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth the beneficial security ownership, as of January
25, 2002, of the Company's Common Stock by the directors, director nominees,
executive officers individually and as a group:

Name and Address of Number of Percentage
Beneficial Owner Shares(1) Ownership(1)
---------------- --------- ------------

Dean R. Grewell, III 5,217,563(2)(3) 18.27%(2)(3)
1032 54th, West Des Moines, Iowa 50266

Steven L. Johnson 1,834,450(3)(4) 6.42%(3)
1620 NW 120th Street, Clive, Iowa 50325

Antony F. Hoffman 1,834,450(3)(4) 6.42%(3)
10113 NW 80th Lane, Grimes, Iowa 50111

Mark Malinak 1,834,450(3)(4) 6.42%(3)
8006 Monona Avenue, Austin, Texas 78717

Mike Hennel 100,000(5) 0.35%(5)
900 Oakmont, Westmont, Illinois 60559

Sheldon S. Ohringer 100,000(5) 0.35%(5)
304 Castle Pines Dr. S.
Castle Rock, CO 80104

All executive officers, directors and nominees for 11,020,913(3)(5) 38.59%(3)(5)
directors as a Group (6 persons)

(1) Ownership totals and percentages are computed based on the actual number of
shares of Company common stock issued and outstanding (17,856,000) plus (a)
10,000,000 additional shares to be issued on February 28, 2002 in exchange
for 10,000 shares of the Company's $.001 par value preferred stock
currently held of record by Mr. Grewell and (b) the exercise by the
executive officers and directors of options for 700,000 shares of common
stock pursuant to the Company's Incentive Stock Option Plan. The totals and
percentages do not include options for 1,147,500 shares of common stock
granted to non-executive employees of the Company under the Company's
Incentive Stock Option Plan, 79,000 of which were exercisable at September
30, 2001. The totals and percentages also include options granted by Mr.
Grewell.

(2) Includes 10,000,000 shares of common stock to be issued on February 28,
2002 in exchange for 10,000 shares of preferred stock held of record by Mr.
Grewell and 100,000 shares of common stock to be issued upon exercise of
options.

(3) Assumes exercise of all options granted by Mr. Grewell, 14,882,437 shares
total, all of which, subject to vesting requirements are exercisable
immediately.

(4) Subject to vesting, call option exercisable February 2, 2000 and expires
March 4, 2008.

(5) Assumes exercise of outstanding options.

Other than Alex Resh, an employee of the Company who has options from Mr.
Grewell with respect to 1,734,450 shares of common stock (6.07%) of the Company,
if exercised and Alex Legaspi, and Ken So (former employees of ISES Canada) who
each have options from Mr. Grewell for 1,547,950 shares of common stock (5.42%)
of the Company, if exercised, management of the Company is not aware of any
person or entity beneficially owning in excess of five percent (5%) of the
Company's common stock.

EXECUTIVE COMPENSATION AND BENEFITS

The following summary compensation table shows the compensation paid or accrued
by the Company to its chief executive officer and each of its executive officers
whose salary and bonus for the year ended September 30, 2001 exceeded one
hundred thousand dollars ($100,000).

Summary Compensation Table
--------------------------

Name and Fiscal Year
Position Ended 9/30 Salary Bonus
- -------- ---- ------ -----
Dean R. Grewell, III 2001 $124,500 $ 0
President and CEO 2000 $138,866 $ 0
1999 $120,090 $ 0
1998 $ 0 $ 0

Mark Malinak 2001 $125,000 $159,391(1)
Vice President Sales 2000 $125,000 $122,887(1)
1999 $115,385 $ 0
1998 $ 0 $ 0

(1) Sales Commission income.

No other executive officer's or significant employee's total annual salary,
bonus and other annual compensation exceeded $100,000 during any of the periods
indicated.

RATIFICATION OF APPOINTMENT OF AUDITORS

The Board of Directors has appointed the accounting firm of KPMG LLP to act as
independent auditors for the Company for its fiscal year ended September 30,
2002 and is requesting ratification by the Shareholders. The Company knows of no
direct or material indirect financial interests of KPMG LLP in the Company.
Representatives of KPMG LLP are expected to be present at the Meeting and may
make a statement, if they desire to do so, and will be available to respond to
appropriate questions.

SHAREHOLDER PROPOSALS

To be included in the Proxy Statement and Proxy for the 2003 Annual Meeting of
shareholders, shareholder proposals intended to be presented at that meeting
must be received by the Company at its principal office no later than October 8,
2002, and must otherwise be in compliance with applicable securities laws.
Shareholder proposals should be sent to: President, SNAP2 Corporation, 10641
Justin Drive, Urbandale, Iowa, 50322.

OTHER MATTERS

The Board of Directors does not know of any other matters which may come before
the Annual Meeting. However, if any other business properly comes before the
Annual Meeting, or any adjournments thereof, proxies will be voted upon any such
matter in accordance with the discretion of the persons named thereon.

By Order of the Board of Directors,

Kathy Hoffman, Secretary

Urbandale, Iowa
February 5, 2002

SNAP2 CORPORATION

2001 ANNUAL REPORT

SHAREHOLDERS

[LOGO]
SNAP2

February 5, 2002

Dear Shareholder:

Thank you for your investment and support of SNAP2 Corporation. It is our
continued intent to grow SNAP2 technology and revenues with industry leaders in
their respective markets. This is not a short-term opportunity, but a long-term
investment and growth path for both SNAP2 and our shareholders.

I would like to highlight the core component to our opportunity for success and
industry credibility, the SNAP2 team. SNAP2 is built around experienced
executives, engineers and graphic designers who have developed a track record of
innovation and success in the embedded systems industry over the past 15 years.
The SNAP2 management and engineering team played a large part in creating and
marketing the industry's first OEM software package for digital television
set-top box manufacturers while at Microware Systems Corporation.

SNAP2 is leveraging this experience and skill to specialize in specific layers
of set-top box software, as well as in the tools that simplify application
development for consumer devices. These skills are not widely available in the
industry and it is not a simple matter to retrain software developers from
desktop or IT environments to be proficient at embedded systems development.
Very few software firms have SNAP2's expertise in each of the layers of the
embedded software stack, from the operating system to the applications. Fewer
still have talented graphics artists working with those engineers to develop
consumer user interfaces, graphics and artwork that both display well on a
television and make applications visually appealing and easy to use for the
television viewer.

We have taken steps in the past year that exhibit our commitment to developing
product and consulting services solutions for the consumer electronics
companies, technology and service providers in the interactive television
market.

Let me provide a brief review of SNAP2 efforts in the Inflight Entertainment
space. SNAP2 applications have set a high standard of reliability and graphics
innovation in the Inflight Entertainment market for several years. SNAP2
continued to gain market share in 2001 with our Inflight Entertainment partner,
Rockwell Collins Passenger Services. SNAP2 added Qantas, British Airways and TAM
airlines as SNAP2 Game customers and secured approximately 281 of the 322
available Rockwell installations across 8 airlines. This market share produced
the opportunity for SNAP2 to enter an Asset Purchase Agreement of these Inflight
Entertainment contracts with Inflight Digital Ltd. representing both an upfront
purchase and ongoing revenue share model for both SNAP2 products and services.
SNAP2 product development will be directed to the interactive television product
roadmap and consulting services.

SNAP2's efforts in the interactive television market focused on strategic
engagements with consumer electronics manufacturers, technology providers and
professional services organizations in 2001 and targets tactical deployments
with these companies in 2002. SNAP2 has both proprietary and standards based
solutions of consulting services, middleware, development tools and
applications. OEM, distribution and 3rd party relationships are being developed
as additional sales channels for this market. SNAP2 middleware, development
tools and application technology were demonstrated with partners at the
following 2001 industry events:

o The Western Show with Sun Microsystems, Philips, 24/7 Broadband and
ICTV

o Consumer Electronics Show with Sun, Philips, WindRiver Systems and
Motorola

o CeBit Show in Hanover Germany with Sun, Philips

o Embedded Systems Conference with WindRiver Systems

o National Association of Broadcasters with Sun, Philips, Panasonic,
WindRiver Systems, the DVB Consortium and multiple Motorola partners

o National Cable & Telecommunications Association Show with Interlink
Electronics

o JavaOne with Sun, Philips, WindRiver Systems and a SNAP2 booth

o Internationale Funkausstellung (IFA) Berlin with Panasonic and
Alticast

We see significant industry events and product opportunities in 2002. The
DVB-MHP standard, an API (Application Program Interface) for interactive
television, has emerged as the predominant standard in Europe, over 35 countries
supporting it. DVB-MHP has been selected by CableLabs(R) in the USA for all of
its OpenCable(TM) digital set top boxes that are to be deployed throughout
America. CableLabs is the technology consortium for cable system operators in
North and South America, with its members serving more than 85 percent of cable
subscribers in the United States and Canada, and a further 12 percent in Mexico.
Cable operators in North America have agreed that MHP is to become the core of
the OCAP (OpenCable Application Platform). SNAP2 products and technology support
DVB-MHP and OCAP platforms. SNAP2 released an application development tool for
the interactive television market, GEAR for DVB-MHP, as an extension to the Sun
Microsystems Forte for Java development environment. We announced the upcoming
release of MHP Express, an end-to-end development and testing solution for
application developers, integrating the development tools with a Philips or
Panasonic set-top box. SNAP2 applications are being proposed for interactive
television deployments globally. SNAP2 Services continue to generate revenue for
the Company while building relationships with partners and creating software
product opportunities.

SNAP2 released our application development tool for the interactive television
market, GEAR for DVB-MHP, as an extension to the Sun Microsystems Forte for Java
development environment in November, 2001. We announced the upcoming release of
MHP Express, an end-to-end development and testing solution for application
developers, integrating the development tools with a Philips or Panasonic
set-top box. SNAP2 LivingRoom Applications are being proposed for interactive
television deployments globally. And finally, SNAP2 Services continue to
generate revenue for the Company while building relationships with partners and
creating new product opportunities.

SNAP2's efforts and changes in 2001 enable the Company to focus on the
opportunities of 2002. It is an exciting time in the market and exciting time
for SNAP2. We welcome your comments and participation in our Annual Shareholder
Meeting. Thank you again for your continued support.

Sincerely,

Mark Malinak
Vice President, Sales

SNAP2 is a trademark of SNAP2 Corporation. Sun, Sun Microsystems, Java, and Java
TV are trademarks or registered trademarks of Sun Microsystems, Inc. in the
United States and other countries. Wind River Systems, the Wind River Systems
logo, and Tornado are registered trademarks, and StormPad is a trademark of Wind
River Systems, Inc. Microsoft and WebTV are either registered trademarks or
trademarks of Microsoft Corp. in the United States and/or other countries. All
other names mentioned are trademarks, registered trademarks, or service marks of
their respective companies or organizations.

This Annual Report is being provided to all of the shareholders of SNAP2
Corporation (the "Company) in connection with the 2002 Annual Meeting of the
Shareholders which will be held at SNAP2 Corporation located at 10641 Justin
Drive, Des Moines, Iowa on March 5, 2002, at 2:00 p.m. This Annual Report is not
incorporated into the Proxy Statement of the Company and is not proxy soliciting
material.

Cautionary Statement on Forward-Looking Statements.

The discussions in this Report on Form 10-KSB, contain forward-looking
statements that have been made pursuant to the provisions of the Private
Securities Litigation Reform Act of 1995. Such forward-looking statements are
based on current expectations, estimates and projections about the Company's
business, based on management's current beliefs and assumptions made by
management. Words such as "expects", "anticipates", "intends", "believes",
"plans", "seeks", "estimates" and similar expressions or variations of these
words are intended to identify such forward-looking statements. Additionally,
statements that refer to the Company's estimated or anticipated future results,
sales or marketing strategies, new product development or performance or other
non-historical facts are forward-looking and reflect the Company's current
perspective based on existing information. These statements are not guarantees
of future performance and are subject to certain risks, uncertainties and
assumptions that are difficult to predict. Therefore, actual results and
outcomes may differ materially from what is expressed or forecasted in any such
forward-looking statements. Such risks and uncertainties include those set forth
below in Item 1 under "Risk Factors That May Affect Future Results of
Operations" as well as previous public filings with the Securities and Exchange
Commission. The discussion of the Company's financial condition and results of
operations included in "Management's Discussion and Analysis or Plan of
Operation" should also be read in conjunction with the financial statements and
related notes included in the "Financial Statements" of this annual report. The
Company undertakes no obligation to update publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.

DESCRIPTION OF BUSINESS

General. SNAP2 Corporation (f/k/a White Rock Enterprises, Ltd.) (the "Company")
is a software product developer and software service provider for in-flight
entertainment systems (IFE) for passenger aircraft and interactive set-top boxes
(STB) for interactive television. The Company was incorporated on October 8,
1998 under the laws of the State of Nevada originally for the purpose of
developing and marketing its only product, a boot dryer that dries both boots
and shoes for commercial and consumer use. Effective February 28, 2000 the
Company merged with ISES Corporation (an Iowa corporation originally
incorporated on May 14, 1997) ("ISES") with the Company being the survivor. In
connection with the merger, the Company disposed of its boot dryer product to
the original owner. The Company's name was subsequently changed to SNAP2
Corporation pursuant to Articles of Amendment filed July 12, 2000.

The resulting Company's activities to date have consisted of:

o Developing the Airsoft Travel Kit software product which includes
destination information, language training, games and airline
information for IFE systems.

o Licensing and installing the Airsoft Travel Kit Games on international
and domestic airlines with IFE equipped aircraft.

o Providing interactive television set-top box manufacturers with
professional software design, programming and graphic design services.

o Research and development strategies to productize the intellectual
property assets of ISES (now the Company) for interactive television.

o Contracting with interactive television suppliers to support
promotional efforts of their related products.

o Expanding its engineering, sales and marketing staff to address the
STB and IFE markets.

o The Company is registered with the SEC as SNAP2 Corporation and is
traded on the over-the-counter bulletin board: OTCBB:SSNP.

On November 26, 2001 the Company entered into an Amended and Substituted Asset
Purchase Agreement ("Agreement") with Inflight Digital Limited, a company
incorporated under the laws of England and Wales ("Buyer") which superceded an
earlier Asset Purchase Agreement between the parties dated September 6, 2001.
Pursuant to the Agreement, the Company agreed to sell to the Buyer all of
Company's IFE assets. The IFE assets include all of the Company's rights and
obligations under its contracts with airline operators for the provision of IFE
products and services, the Company's rights and obligations under license and
distribution agreements relating to its IFE business, Company's files, books and
records relating to its IFE assets and other tangible property and physical
assets used by the Company solely in connection with IFE business. The Company
also granted Buyer a perpetual, royalty free, exclusive worldwide license to
use, for IFE business, only, the Company's intangible properties and rights
relating to its IFE business. Terms of the IFE sale include a total purchase
price for the sale and license of the IFE assets of $300,000 plus (i) fifty
percent (50%) of all revenue received by Buyer from certain existing customers
for a period of three (3) years after the closing; (ii) twenty-five percent
(25%) of all revenues received by Buyer under certain new business generated by
Buyer; (iii) an amount not to exceed $100,000 of the existing contract with
British Airways as assigned to Buyer plus fifty percent (50%) of all revenue
received by Buyer from British Airways during the three (3) years after closing;
and (iv) $75,000 upon receipt of the consent from Air France that it will expand
the number of aircraft using the software and fifty percent (50%) of the
revenues received from Air France during the three (3) years after closing. The
transaction is described in the Company's Current Report on Amendment No. 1 to
Form 8-K which was filed with the Securities and Exchange Commission on December
10, 2001. In November 2001, the Company received $300,000 as a result of this
transaction, which was recorded as a gain on sale. Additional amounts to be
received will be recorded as license fees. The Company's fees related to this
Agreement for the years ended September 30, 2001 and 2000 were $496,260 and
$294,751, respectively. Had the transaction occurred at the beginning of the
years ended September 30, 2001 and 2000, license fee revenues would have
approximated $345,000 and $122,000, respectively. The Company's operating
expenses will not be reduced as a result of this transaction.

The Company continues to develop software and service the STB industry and to
explore emerging markets for embedded software technologies. The Company has
engaged with companies creating embedded devices technologies such as Internet
appliances, personal digital assistants and wireless devices. The Company
believes that it can target these markets successfully with the technologies and
experience from the STB and IFE markets as well as the skill sets it has
acquired from its growth of

embedded software programmers. The Company will pursue additional product and
service opportunities in these markets.

Operations. The Company operates from its headquarters located at 10641 Justin
Drive, Des Moines, Iowa 50322. The Company was previously located at 2600 72nd
Street and moved to its expanded facilities on May 23, 2000 to accommodate its
growth and development. In addition to its offices in Des Moines, the Company
also has a sales office in Austin, Texas. The combined offices develop and
market software products and services for IFE systems and STB for interactive
television created by the Company.

Products. Prior to the sale of the IFE assets, the Company marketed software
applications for the IFE and interactive television markets. Its Airsoft Travel
Kit software targeted IFE systems manufactured by Rockwell Collins, Matsushita
Avionics and Sony Trans Com. The Travel Kit is comprised of digital information
and entertainment software that airline passengers can access from video
displays at their passenger seats while traveling. The complete Travel Kit
consists of destination information, language training and games and customized
airline information. The package can be sold as a complete package or as
individual components. The Company has sold packages of Travel Kit Games to Air
France, Delta Air Lines, LanChile, Airtours, Aer Lingus and AOM French airlines.
The Company has licensed destination information and language training from
Lonely Planet Publishing based in Australia. Airsoft Travel Kit Games are
created, copyrighted, owned and licensed by the Company. The Company has also
licensed Tetris(R) game content from Blue Planet Software, San Francisco,
California for use in its In-Flight Tetris(TM) game for in-flight entertainment.
The game suite consists of 18 assorted board, card, arcade, children's games and
games of chance. The Company's products are sold on a royalty-based model that
generates revenue at the time of customer contract execution and provides annual
revenues for continued use of the software. IFE products have been sold to
airlines and to IFE equipment manufacturers. The Company is porting these games
to interactive television STBs targeting interactive cable and telephone
networks.

Management believes the sale of the IFE assets will enhance the Company's plans
to focus its software product offering for the interactive television market and
the Internet appliance market. The Company intends to sell interactive
television and Internet appliance software products to original equipment
manufacturers, technology providers and network operators in these markets.

Consulting Services. The Company is staffed with software engineers experienced
in software design and programming for emerging embedded computer systems and
digital graphic artists experienced in graphical user interfaces and display for
consumer electronic applications. The Company has provided embedded software
services to Motorola, Microsoft, Rockwell Collins and Canal+ for interactive
television and Internet appliances.

The Company emphasizes embedded software consulting services for revenue
generation and strategic positioning of developing intellectual property for the
interactive television, Internet appliance and embedded systems markets.

Revenues. Through September 30, 2001, the Company's revenues were derived from
software and engineering consulting services provided to interactive television
equipment manufacturers and technology providers, and license fees and renewals
of its SNAP2 Travel Kit Games for the IFE market. Consulting services are
recognized using the invoice amount for labor hours as services are performed.
Consulting services are typically performed under contracts of up to six months
in duration and are

renewable. The Company's IFE revenues were comprised of two types: (i) license
fees from airlines for Airsoft Travel Kit Game products previously sold; and
(ii) OEM initial product sales to IFE equipment manufacturers for SNAP2 Travel
Kit Game products. License fees are recognized as revenue upon contract signing
and shipment of the software master copy or download of software by the
customers since the Company does not incur significant additional support costs.
Maintenance fees from the Company's software products are recognized ratably
over the term of the maintenance contract, which is typically one year in
duration.

The Company intends to derive the primary portion of its revenue growth through
Company software and engineering consulting services. The Company intends to
continue engaging in consulting services with original equipment manufacturers
(OEMs), network operators and technology providers. The service engagements are
strategic to the Company as it provides licensing opportunities for software
product and product development.

On November 26, 2001 the Company sold its IFE assets; however, during the three
years after the sale, the Company will receive a certain percentage of certain
revenues collected by the Buyer. The initial $300,000 received was recorded as
gain on the sale and additional amounts will be recorded as license fees.

Expenses. Expenses consist primarily of payroll and related costs, third-party
consulting, other professional services, and travel. The majority of the
Company's products have been created and copyrighted by ISES (Company's
predecessor in interest pursuant to the merger which was effective February 28,
2000). The Company has licensed In-Flight TetrisTM from Blue Planet Software and
incurs licensing costs for each copy inventoried for or distributed to the IFE
market. The Company has also licensed travel information from Lonely Planet
Publishing and incurs licensing costs for copies distributed to the IFE market.

Research and Development. The Company's research and development expenses
include personnel costs, allocated facilities-related expenses and payments to
third-party consultants. The Company expects research and development expenses
will increase in the future as additional personnel are hired to support
anticipated product development efforts. During the years ended September 30,
2001 and 2000 the Company expended approximately $921,000 and $515,000,
respectively, on research and development expense.

Employees. At September 30, 2001, the Company had 18 full time employees and no
part time employees. During the year ended September 30, 2001 the Company
reduced its work force by 3 employees.

Risk Factors That May Affect Future Results of Operations. In addition to the
other risk factors contained herein and within other filings with the Securities
and Exchange Commission, the Company believes the following additional risk
factors should be taken into consideration in evaluating its business:

Additional Funding Needed. The Company needs additional funding to pay its
obligations as they come due, further develop or enhance its products, and take
advantage of future opportunities or respond to competitive pressures or
unanticipated requirements. The Company was unable to meet payroll for several
pay periods and was unable to pay vendors until it sold its IFE assets.

The Company's original financing plans were to obtain funding of approximately
$2,000,000 as a result of the merger with ISES Corporation on February 28, 2000.
Only $615,650 of funding was received. As a result of the unfunded commitment,
the Company entered into a $200,000 line of credit with a bank, which is
guaranteed by a stockholder, and entered in other debt arrangements of
approximately $100,000. Also, the Company delayed paying vendors and employees.

Recently, the Company sold its IFE assets for $300,000, with additional amounts
due to the Company upon collection of certain revenues by the Buyer of the IFE
assets. The Company is also investigating several other financing activities,
but there is no assurance that any funding will be obtained, or if obtained, the
terms thereof may not be favorable. Also, the Company has focused its efforts on
increasing revenues, primarily consulting revenues, but has been unable to
consistently generate profitable operations. As a result of the continued
losses, the Company is analyzing its costs and expenses and continues to seek
and investigate transactions that would generate cash; however, there is no
assurance that any such transaction will be identified or successfully closed.
If additional capital cannot be obtained on acceptable terms, if and when
needed, the Company may not be able to further develop or enhance its products,
take advantage of future opportunities or respond to competitive pressures or
unanticipated requirements, any of which could have a material adverse effect on
the Company's business.

The Company Expects to Incur Operating and Net Losses. The Company has a limited
operating history, has incurred significant losses in the past year and, at
September 30, 2001, had an accumulated deficit of $2,192,581 and a stockholders'
deficit of $803,587. To date, the Company has recognized growing revenue,
however; its ability to generate revenue is subject to substantial uncertainty
and it has been unable to generate profitable operations. The Company expects to
incur significant sales and marketing, research and development and general and
administrative expenses. The Company will need to generate significant revenues
to achieve profitability and positive operating cash flows and there are no
assurances this revenue level can be obtained. Even if profitability and
positive operating cash flow are achieved, the Company may not be able to
achieve, sustain or increase profitability or positive operating cash flow on a
quarterly or annual basis.

Dependence on Key Customer. The Company's revenue is dependent on consulting
services performed for 1 key customer. For the year ended September 30, 2001 62
% of the Company's revenue was generated for this single customer. Due to the
sale of the IFE assets, the Company will become more dependent on these
customers.

The Company's Limited Operating History and the Emerging Market for Interactive
Television Make Its Future Financial Results Unpredictable. The Company's
business and prospects depend on the development and market acceptance of
interactive television. The Company's future revenue prospects are subject to a
high degree of uncertainty. For the year ended September 30, 2001, the Company
derived approximately 31% of its revenues from in-flight entertainment software
license fees and 69% from interactive television consulting services. On
November 26, 2001 the Company sold its IFE assets. In the future, however, the
Company intends to generate revenue initially from consulting services and then
from software license fees particularly in the emerging market of interactive
television. The market for interactive television software is new, unproven and
subject to rapid technology change. This market may never develop or may develop
at a slower rate than anticipated. In addition, the Company's success in
marketing the Company as a supplier of interactive television application
software is dependent upon developing and maintaining relationships with
industry-leading computer and consumer electronics manufacturers, network
operators and Internet content providers.

There is already competition in the market to provide interactive television
software. Companies such as Liberate, Intellocity, Microsoft, and AOL have
established a market presence and have significantly greater financial,
marketing and technical resources than the Company. These companies who offer
interactive television application software may capture a larger portion of the
market than the Company. Any failure to establish relationships with interactive
television equipment manufacturers and network operators will have a material
adverse effect on the Company's business and prospects.

The Company's Business is Dependent Upon the Successful Deployment of Digital
Set Top Boxes for Interactive Television Targeted by the Company. The Company's
software products target specific interactive television systems and the
opportunity to generate revenue can be directly related to the number and the
timing of systems deployed. It is the Company's intent to pursue and support the
most popular system platforms for these markets. If the targeted platforms fail
to establish significant and timely deployment in the market it will have a
material adverse effect on the Company's business and prospects.

The Company Faces Competition from Companies with Significantly Greater
Financial, Marketing, and Technical Resources. The markets for interactive
television and in-flight entertainment systems are competitive. Companies that
offer competing software applications and services for interactive television
include Liberate, Intellocity, Microsoft, AOL and others. These entities each
have a larger customer base, a greater number of applications, and greater brand
recognition, market presence and financial, marketing and distribution resources
than the Company. Other companies that offer competing software applications and
services for in-flight entertainment include Nintendo, Infogrames, Tenzing, and
Intergame some of which have a larger customer base, a greater number of
applications, and greater brand recognition, market presence and financial,
marketing and distribution resources than the Company. As a result, the Company
will have difficulty increasing the number of design "wins" for its products and
services.

The Company May Not Be Able to Respond to the Rapid Technological Change in the
Markets in Which It Competes. The Company currently participates in markets
which are subject to:

o rapid technology change;

o frequent product upgrades and enhancements;

o changing customer requirements for new products and
features; and

o multiple, competing and evolving industry standards.

The introduction of the software applications targeting interactive television
and in-flight entertainment containing new technologies and the emergence of new
industry standards could render the Company's products less desirable or
obsolete. In particular, the Company expects that changes in the operating
system environment including client and server middleware will require it to
rapidly evolve and adapt its products to be competitive. As a result, the life
cycle of each release of the Company's products is difficult to estimate. To be
competitive, the Company will need to develop and release new products and
upgrades that respond to technological changes or evolving industry standards on
a timely and cost-effective basis. There can be no assurance that the Company
will successfully develop and market these types of products and upgrades or
that the Company's products will achieve market acceptance. If the Company fails
to produce technologically competitive products in a timely and cost-effective
manner, its business and results of operations could suffer materially.

Volatility of Stock Price. The market price of the Company's common stock is
likely to fluctuate in the future. The Company believes that various factors,
including quarterly fluctuations in results of operations, announcements of new
products or partners by the Company or by its competitors, changes in
interactive television markets in general, or general economic, political and
market conditions may significantly affect the market price of its common stock.

MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

This should be read in conjunction with the discussion included in "Description
of Business" and the "Financial Statements" included below.

Revenues. The Company's revenues are derived from software and engineering
consulting services provided to interactive television equipment manufacturers
and technology providers, and license fees and renewals of its SNAP2 Travel Kit
Games for the IFE market. Consulting services are recognized using the invoice
amount for labor hours as services are performed. Consulting services are
typically performed under contracts of up to six months in duration and are
renewable. The Company's IFE revenues were comprised of two types: (i) license
fees from airlines for Airsoft Travel Kit Game products previously sold; and
(ii) OEM initial product sales to IFE equipment manufacturers for SNAP2 Travel
Kit Game products. License fees are recognized as revenue upon contract signing
and shipment of the software master copy or download of software by the
customers since the company does not incur significant additional support costs.
Maintenance fees from the Company's software products are recognized ratably
over the term of the maintenance contract, which is typically one year in
duration.

The Company intends to derive the primary portion of its future revenue growth
through Company software and engineering consulting services. The Company
intends to continue engaging in consulting services with original equipment
manufacturers (OEMs), network operators and technology providers. The service
engagements are strategic to the Company as it provides licensing opportunities
for software product and product development.

Cost of Revenue. Primarily consists of payroll and related costs (salaries,
payroll taxes, employee health insurance and employer 401(k) contributions), and
consulting expenses incurred in performing software and engineering consulting
services. The Company allocates certain research and development costs to cost
of revenue, based on utilization of its employees and consultants.

Research and Development. Primarily consists of payroll and related costs
(salaries, payroll taxes, employee health insurance and employer 401(k)
contributions) of engineering and software development staff, as well as,
amounts paid to independent development consultants, to develop software and
graphic arts owned and utilized by the Company. During the year ended September
30, 2001, the Company increased the amount of time its product development staff
was utilized on consulting engagements. The Company expects to continue using a
significant amount of its development staff on consulting projects during the
next year as it strives to achieve more revenues and IFE development
requirements will be reduced due to the sale of the IFE assets.

Sales and Marketing. Primarily consists of payroll and related costs (salaries,
payroll taxes, employee health insurance and employer 401(k) contributions),
travel, various marketing efforts, promotional materials and public relations
activities. The Company expects sales and marketing costs will increase as it
continues to sell consulting projects and analyzes various product development
opportunities.

General and Administrative. Primarily consists of payroll and related costs
(salaries, payroll taxes, employee health insurance and employer 401(k)
contributions), legal fees, travel costs, facilities-related expenses, bad debt
expense, depreciation and other administrative costs. The Company expects that
general and administrative expense will increase in the future as a result of
the anticipated growth in business.

Results of Operations

Since inception, the Company has been engaged primarily in the business of
developing and licensing software products and providing engineering and
software and software consulting services. In an effort to increase revenues as
the Company attempts to reduce its operating losses, the Company has increased
the amount of consulting services it performs and has utilized more of its
product development personnel to perform these services. During the year ended
September 30, 2001 the Company was not able to meet its obligations to make
payroll on several occasions and has delayed paying vendors. In an effort to
improve its liquidity, the Company has increased its consulting activities and
sold its IFE assets on November 26, 2001. The Company used the initial proceeds
from this transaction to become current on its payroll obligations and become
more current on its vendor obligations. See additional comments in "Liquidity
and Capital Resources". Accordingly, historical results of operations are not
indicative of and should not be relied upon as an indicator of future
performance.

Year Ended September 30, 2001 and 2000

Revenues

Total revenues increased 141% to $1,778,000 for the year ended September 30,
2001, compared to $737,000 for the year ended September 30, 2000. The increase
was related primarily to an increase in software and engineering consulting
services. Consulting services represented 69% and 53% of revenues for the years
ended September 30, 2001 and 2000, respectively. During the year ended September
30, 2001, transactions with Microsoft and Air France accounted for 62% and 11%,
respectively, of the Company's total revenues.

Cost of Revenue

Cost of revenue increased 123% to $570,000 for the year ended September 30,
2001, compared to $256,000 for the year ended September 30, 2000. The increase
was related to more work performed on consulting projects.

Research and Development

Research and development expense increased 80% to $921,000 for the year ended
September 30, 2001, compared to $513,000 for the year ended September 30, 2000.
The increase was related to an increased number of employees working on product
development, prior to the Company focusing its efforts more to consulting
services.

Sales and Marketing

Sales and marketing expense increased 25% to $636,000 for the year ended
September 30, 2001, compared to $508,000 for the year ended September 30, 2000.
The increase was related to increased sales efforts related to consulting
services and analyzing product development opportunities.

General and Administrative

General and administrative expense increased 27% to $518,000 for the year ended
September 30, 2001, compared to $407,000 for the year ended September 30, 2000.
The increase was due to costs and expenses needed to support the Company's
ongoing operations.

Interest Expense

Interest expense increased 70% to $34,000 for the year ended September 30, 2001,
compared to $20,000 for the year ended September 30, 2000. The increase was due
to debt being outstanding for an entire year during the year ended September 30,
2001 and borrowing under the line of credit.

Net Loss

Net loss decreased 7% to $901,000 for the year ended September 30, 2001,
compared to $967,000 for the year ended September 30, 2000. The increase in
revenues were primarily offset by increased costs.

Liquidity and Capital Resources

Since its inception, the Company has experienced losses from operations and
negative cash flows. At September 30, 2001, the Company had an accumulated
deficit of $2,193,000 and a stockholders' deficit of $804,000. The Company has
not been able to pay its obligations as they became due. During the year ended
September 30, 2001, the Company was not able to meet its obligations to make
payroll on several occasions and has delayed paying vendors.

At its inception on February 28, 2000, (the date of filing of a Certificate of
Merger with the Nevada Secretary of State), the Company merged with ISES
Corporation with the Company as the surviving corporation. The merger was
arranged for the Company by Investment Capital Corporation and Pursuit Capital
LLC, venture capital firms located in Scottsdale, Arizona in accordance with
understandings these entities reached with ISES Corporation to raise capital in
private transactions. According to their agreement, these entities were to raise
$2,000,000 to fund the Company's post-merger research and development, marketing
and overall expansion. Pursuant to and in consideration of this arrangement and
the identification of the potential merger as an investment opportunity, the
Company issued 2,200,000 shares of its $.001 par value per share common stock to
these entities and/or their designees. During the fiscal quarter ended March 31,
2000 these entities conducted a private placement on behalf of the Company and
raised $760,000, the proceeds of which have been given to the Company. For these
funds, the Company issued an additional 760,000 shares of its $.001 per share
common stock. These entities are obligated to provide the Company with an
additional $2,000,000 in equity (without further issuance of equity securities
by the Company) of which $615,650 was received through September 30, 2001,
leaving a balance of $1,384,350 to be provided by these entities. None of such
shares of common stock was or will be registered under the Securities Act of
1933, as amended. Management believes that it is unlikely that these entities
will provide any additional capital to the Company and is in the process of
attempting to recover as many of such shares as possible. As of December 31,
2001, 1,097,000 shares have been surrendered by those entities in lieu of
additional capital contributions. The Company has not taken action to either
establish these shares as treasury stock or to cancel them and return them to
authorized but unissued shares. Accordingly, the shares are outstanding in the
names of the original

owners on the Company's stock records. The Company plans to cancel these shares
and return them to authorized but unissued shares.

As a result of the unfunded commitment, the Company entered into a $200,000 line
of credit with a bank on November 10, 2000, which is guaranteed by a
stockholder. The line of credit matured in November 2001, but the Company has
not renewed the line. The Company intends to renew this line of credit and there
is no indication that the bank will not renew this line.

Due to continued losses during the year ended September 30, 2001, the Company
was not able to meet it obligations to make payroll on several occasions and has
delayed paying vendors. In an effort to improve its liquidity, the Company has
increased is consulting activities, reduced its work force by three employees
and sold its IFE assets.

On November 26, 2001 the Company entered into an Amended and Substituted Asset
Purchase Agreement with Inflight Digital Limited, a company incorporated under
the laws of England and Wales ("Buyer") which superceded a previous agreement
between the parties dated September 6, 2001. The Company used the initial
proceeds from this transaction to become current on its payroll obligations and
become more current on its vendor obligations. Terms of the IFE sale include at
total purchase price for the sale and license of the IFE assets of $300,000 plus
(i) fifty percent (50%) of all revenue received by Buyer from certain existing
customers for a period of three (3) years after the closing; (ii) twenty-five
percent (25%) of all revenues received by Buyer under certain new business
generated by Buyer; (iii) an amount not to exceed $100,000 of the existing
contract with British Airways as assigned to Buyer plus fifty percent (50%) of
all revenue received by Buyer from British Airways during the three (3) years
after closing; and (iv) $75,000 upon receipt of the consent of Air France that
it will expand the number of aircraft using the software and fifty percent (50%)
of the revenues received from Air France during the three (3) years after
closing.

The Company is investigating several other financing activities, but there is no
assurance any funding will be obtained, or if obtained, the terms may not be
favorable. Also, the Company has focused its efforts on increasing revenues,
primarily consulting revenues, in an effort to generate positive cash flow. The
Company has been able to increase revenues, but has not been able to generate
profitable operations. Due to the continued losses and the inability to pay its
debts as they come due, the Company is currently analyzing its costs and
expenses in an effort to achieve profitability. Also, the Company continues to
seek and investigate potential transactions that may generate cash; however,
there are no assurances that any such transactions will be identified or
successfully closed.

Since incorporation, ISES (the Company's predecessor in interest pursuant to the
merger) and the Company after the merger, have experienced various levels of
losses and negative cash flow from operations and notwithstanding the merger,
expects to experience negative cash flows in the foreseeable future, without a
significant reduction in costs and expenses or increase in revenues. In
addition, the Company needs to raise additional capital to begin product
development efforts and there can be no assurance the merged Company will be
able to obtain additional financing on favorable terms, if at all. If additional
capital cannot be obtained on acceptable terms, if and when needed, the Company
may not be able to further develop or enhance its products, take advantage of
future opportunities or respond to competitive pressures or unanticipated
requirements, any of which could have a material adverse effect on the Company's
business.

DIRECTORS AND EXECUTIVE OFFICERS

The Company's directors and executive officers are as follows:

Name Age Positions
---- --- ---------
Dean R.("Rick") Grewell III 43 President, CEO and Director

Antony Hoffman 40 Vice President of Research
and Development and Director

Mark Malinak 40 Vice President of Sales and
Director

Steven L. Johnson 41 Director

Mike Hennel 42 Director

Stephen Dukes 47 Director

Sheldon Ohringer 45 Director

The terms of each director of the Company expired January 2002, but the term of
each director will continue until such time as their successors shall have been
elected and qualified.

Rick Grewell has been the President, CEO and a Director of the Company since the
merger with ISES Corporation. Prior to merger Mr. Grewell was President and CEO
of ISES Corporation since September 7, 1996. Prior to that time Mr. Grewell was
employed by Microware Systems Corporation, in Clive, Iowa ("Microware") for
approximately 12 years.

Steven Johnson has been a Vice President (until October 15, 2001) and Director
of the Company since its merger with ISES Corporation. Prior to the merger Mr.
Johnson was Vice President of Marketing of ISES Corporation since February 1,
1999. Mr. Johnson was previously employed by Microware for approximately 11
years. Mr. Johnson was part of the Company's reduction in force and his
employment was terminated on October 15, 2001.

Antony Hoffman has been a Vice President and Director of the Company since its
merger with ISES Corporation. Prior to the merger Mr. Hoffman was Vice president
of Marketing of ISES Corporation since February 1, 1999. Mr. Hoffman was
previously employed at Microware for approximately 13 years.

Mark Malinak has been a Vice President and Director of the Company since its
merger with ISES Corporation. Prior to the merger Mr. Malinak was Vice President
of Sales of ISES Corporation since February 1, 1999. Prior to joining the
Company, Mr. Malinak had been employed at Microware for approximately 4 years
and at Sun Microsystems, Palo Alto, California for 2 years.

Mike Hennel has been a Director of the Company since June 14, 2000. Mr. Hennel
is President and CEO of Silvon Software, a position he has held since 1987.

Stephen Dukes has been a Director of the Company since February 15, 2001. Mr.
Dukes is a former Vice-President of Technology at TCI Technology Ventures and
Media One.

The number of directors for the Company is currently set at seven. The Bylaws
permit the Board of Directors to establish the number of directors at not less
than one (1) nor more than fifteen (15). Each of Company's directors is elected
to a one year term and until his or her successor is elected. Directors need not
be shareholders of the Company or residents of any particular jurisdiction.

The officers of the Company are to be elected annually by the board of directors
at its annual meeting, and hold office until the next annual meeting of the
board of directors and until their successors are chosen. Officers may also be
removed by the board of directors at any time, with or without cause. Officers
need not be a director or a shareholder of the Company.

No executive officer or director of the Company has been the subject of any
order, judgment, or decree of any court of competent jurisdiction, or of any
regulatory agency enjoining him from acting as an investment advisor,
underwriter, broker or dealer in the securities industry, or as an affiliated
person, director or employee of an investment company, bank, savings and loan
association, or insurance company or from engaging in or continuing any conduct
or practice in connection with any such activity or in connection with the
purchase or sale of any securities nor has any such person been the subject of
any order of a state authority barring or suspending for more than sixty (60)
days, the right of such a person to be engaged in such activities or to be
associated with such activities.

No executive officer or director of the Company has been convicted in any
criminal proceeding (excluding traffic violations) or is the subject of a
criminal proceeding which is currently pending.

No executive officer or director of the Company is the subject of any pending
legal proceedings.

MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company is authorized to issue 50,000,000 shares of its $0.001 par value
common stock and 20,000,000 shares of its $0.001 par value preferred stock. As
of September 30, 2001, the Company had 17,856,000 issued and outstanding shares
of common stock and 10,000 issued and outstanding shares of preferred stock
which are automatically convertible into 10,000,000 shares of common stock on
February 28, 2002.

The Company's common stock is traded on the OTC Electronic Bulletin Board
sponsored by the National Association of Securities Dealers under the trading
symbol "SSNP." The Electronic Bulletin Board is a network of security dealers
who buy and sell stock. The dealers are connected by a computer network which
provides information on current "bids" and "asks" as well as volume information.

As of September 30, 2001 the Company had approximately 998 common stock
shareholders and one shareholder of its preferred stock and there has been only
a limited public market for the Company's

common stock. The following table shows, for the periods indicated, the high and
low per share prices of common stock, as reported on the OTC Electronic Bulletin
Board. Such prices represent prices between dealers, do not include retail
mark-ups, mark downs or conversions and may not represent actual transactions.
No information is provided for periods prior to the effective date of the merger
of ISES with and into the Company, which merger was effective February 28, 2000.

Period Ended High Low
------------ ---- ---
March 31, 2000 (one month) $5.625 $3.937
June 30, 2000 $4.50 $1.875
September 30, 2000 $3.875 $0.937
December 31, 2000 $1.875 $0.375
March 31, 2001 $1.5625 $0.4688
June 30, 2001 $1.07 $0.35
September 30, 2001 $0.90 $0.40

On December 31, 2001, the closing bid and ask prices of the common stock as
reported on the OTC Electronic Bulletin Board were $0.20 and $0.21,
respectively.

The Company has never declared or paid cash dividends on its capital stock. It
is anticipated that the Company would retain its future earnings, if any, to
fund the operation and expansion of its business and management does not
anticipate paying any cash dividends in the foreseeable future.

Effective February 28, 2000, SNAP2 Corporation (f/k/a White Rock Enterprises,
Ltd.) (the Company) merged with ISES Corporation (ISES), with the Company as the
surviving corporation. At the date of the merger, the Company was a "shell
company" as the Company had no assets or liabilities, had generated no revenues
since inception and had incurred total expenses of $6,100 since its inception on
October 8, 1998. The merger transaction has been accounted for as a reverse
acquisition. In such a transaction, the operating enterprise (ISES) is
determined to be the acquiring enterprise for financial reporting purposes. The
historical financial statements of ISES are presented as the historical
financial statements of the combined enterprise. The equity of ISES is presented
as the equity of the combined enterprise, however, the capital stock account of
ISES is adjusted to reflect the par value of the outstanding stock of the
Company after giving effect to the number of shares issued in merger. For
periods prior to the merger, the equity of the combined enterprise is the
historical equity of ISES prior to the merger retroactively restated to reflect
the number of shares received in the merger.

In connection with the merger of ISES with and into the Company, the Acquisition
Agreement and Plan of Merger (previously filed as Exhibit 1.1 to the Company's
Current Report on Form 8-K filed March 1, 2000) provided for the issuance of
10,000,000 shares of common stock and 10,000 shares of convertible preferred
stock for 100% of the outstanding shares of ISES. The convertible preferred
stock automatically converts to 10,000,000 shares of common stock on February
28, 2002. Also in connection with the merger, an additional 2,200,000 shares of
common stock were issued to others in exchange for locating investors and a
commitment to raise $2,000,000 to fund the Company's working capital needs and
general corporate purposes. As of September 30, 2001, $615,650 of the $2,000,000
had been received and recorded as additional paid-in capital. Management
believes that it is unlikely that any additional capital will be provided by
those entities, and is in the process of attempting to recover as many of those
shares as possible. As of September 30, 2001, approximately 1,097,000 shares
have been surrendered by these entities in lieu of additional capital
contributions. The Company has not taken

action to either establish these shares as treasury stock or to cancel them and
return them to authorized but unissued shares. Accordingly, the shares are
outstanding in the names of the original owners on the Company's stock records.
The Company plans to cancel these shares and return them to authorized but
unissued shares.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Company is the resulting corporation of a merger between White Rock
Enterprises, Ltd. (the Company, n/k/a SNAP2 Corporation) and ISES Corporation,
an Iowa corporation which was effective on February 28, 2000. Prior to that time
the Company was a "shell" corporation and ISES Corporation was an operating
company. The Company was the surviving corporation of the merger. ISES
Corporation (as a predecessor to the Company) has not had any change in its
accountants during the last three years or any disagreement with its accountants
during that period which are the type required to be disclosed under this Item.
However, on December 15, 2000, the Board of Directors of SNAP2 Corporation (the
"Company") approved the hiring of KPMG LLP (KPMG) as the Company's independent
accountants for the audit of the financial statements of the Company for the
year ended September 30, 2000. The Company's previous accountant (prior to the
merger) was Barry L. Friedman, P.C., Las Vegas, Nevada, ("Friedman").

The audit report of Friedman on the financial statements of the Company for the
period ended September 30, 1999 did not contain an adverse opinion or disclaimer
of opinion, nor was the report qualified or modified as to uncertainty, audit
scope, or accounting principles, except as to an uncertainty regarding the
Company's ability to continue as a going concern due to recurring losses and the
absence of sources of revenue.

To the knowledge of management, during the audit of the period ended September
30, 1999 , there were no disagreements with Friedman on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure.

The change in the Company's accountants was previously reported on the Company's
Current Report on Form 8-K filed with the SEC on December 20, 2000.

AVAILABILITY OF OTHER INFORMATION

The Company will provide to each Shareholder, upon written request of the
Shareholder, a copy of the Company's Annual Report on Form 10-KSB for the fiscal
year ended September 30, 2001. The report on Form 10-KSB will be provided
without charge. Shareholders should direct any written request to the company at
the following address: SNAP2 Corporation, 10641 Justin Drive, Urbandale, Iowa,
50322.

FINANCIAL STATEMENTS

The following pages set forth certain financial statements of the Company with
respect to the years ended September 30, 2001 and 2000.

SNAP2 CORPORATION

Financial Statements

September 30, 2001 and 2000

(With Independent Auditors' Report Thereon)

Independent Auditors' Report

The Board of Directors
SNAP2 Corporation:

We have audited the accompanying balance sheets of SNAP2 Corporation (a Nevada
Corporation) as of September 30, 2001 and 2000, and the related statements of
operations, stockholders' deficit, and cash flows for the years then ended.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States 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 financial statements referred to above present fairly, in
all material respects, the financial position of SNAP2 Corporation as of
September 30, 2001 and 2000, and the results of its operations and its cash
flows for the years then ended, in conformity with accounting principles
generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in note 2 to the
financial statements, the Company has suffered significant losses, has a
stockholder's deficit, and as a result has insufficient liquidity to pay its
obligations as they come due. These matters raise substantial doubt about the
Company's ability to continue as a going concern. Management's plans in regard
to these matters are also described in note 2. The financial statements do not
include any adjustments that might result from the outcome of this uncertainty.

/s/ KPMG LLP

Des Moines, Iowa
December 14, 2001

SNAP2 CORPORATION

Balance Sheets

September 30, 2001 and 2000

Assets 2001 2000
----------- ----------

Current assets:
Cash $ 10,792 18,956
Accounts receivable (notes 3 and 7) 143,794 127,279
----------- ----------
Total current assets 154,586 146,235
Equipment, net of accumulated depreciation (note 3) 55,580 76,833
Other assets 300 4,760
----------- ----------
Total assets $ 210,466 227,828
=========== ==========
Liabilities and Stockholders' Deficit
Current liabilities:
Accounts payable $ 205,312 56,390
Accrued payroll and related liabilities 310,358 36,339
Accrued royalty 12,750 3,750
Accrued interest payable 14,209 --
Deferred income 46,809 9,343
Line of credit (note 3) 200,000 --
Current portion of long-term debt (note 3) 66,000 21,445
----------- ----------
Total current liabilities 855,438 127,267
Long-term debt, excluding current installments (note 3) 158,615 203,170
----------- ----------
Total liabilities 1,014,053 330,437
Stockholders' deficit (note 4):
Common stock - $0.001 par value; 50,000,000 shares authorized; 17,856,000
shares issued and outstanding
at September 30, 2001 and 2000 17,856 17,856
Convertible preferred stock - $0.001 par value; 20,000,000
shares authorized; 10,000 shares issued and outstanding
at September 30, 2001 and 2000. Shares convert to
common stock at a ratio of 1,000 shares of common for
each share of convertible preferred stock
on February 28, 2002 10 10
Additional paid-in capital 1,417,528 1,188,858
Accumulated deficit (2,192,581) (1,291,683)
Unearned compensation (46,400) (17,650)
----------- ----------
Total stockholders' deficit (803,587) (102,609)
----------- ----------
Total liabilities and stockholders' deficit $ 210,466 227,828
=========== ==========

See accompanying notes to financial statements

SNAP2 CORPORATION

Statements of Operations

Years ended September 30, 2001 and 2000

2001 2000
------------ -----------
Revenue (notes 7 and 10):
License fees $ 496,260 294,751
Consulting 1,229,708 387,723
Maintenance and other income 52,468 54,580
------------ -----------
Total revenue 1,778,436 737,054
Cost of revenue 569,972 255,767
------------ -----------
Gross profit 1,208,464 481,287
Expenses:
Research and development (note 6) 921,127 513,422
Sales and marketing 636,086 508,233
General and administrative 518,430 406,757
------------ -----------
Total operating expenses 2,075,643 1,428,412
------------ -----------
Loss from operations (867,179) (947,125)
Interest expense 33,719 19,914
------------ -----------
Net loss $ (900,898) (967,039)
============ ===========
Net loss per share:
Basic and diluted (0.05) (0.07)
============ ===========
Weighted average shares outstanding:
Basic and diluted 17,856,000 14,536,175
============ ===========
See accompanying notes to financial statements.

SNAP2 CORPORATION

Statements of Stockholders' Deficit

Years ended September 30, 2001 and 2000

Additional
Common Convertible Paid Accumulated Unearned
Stock Preferred In Capital Deficit Compensation Total
---------- ---------- ---------- ---------- ---------- ----------

Balance December 31, 1999 $10,000 10 (8,696) (376,900) -- (375,586)

Net loss of companies for three months ended
December 31, 1999 duplicated to adjust to
common fiscal year end -- -- -- 52,256 -- 52,256
Issuance of common stock 7,856 -- 1,179,004 -- -- 1,186,860
Stock options issued to employees below fair value -- -- 18,550 -- (18,550) --
Amortization of unearned compensation -- -- -- -- 900 900
Net loss -- -- -- (967,039) -- (967,039)
---------- ---------- ---------- ---------- ---------- ----------
Balance September 30, 2000 17,856 10 1,188,858 (1,291,683) (17,650) (102,609)

Capital contribution -- -- 188,790 -- -- 188,790
Stock options issued to employees below fair value -- -- 39,880 -- (39,880) --
Amortization of unearned compensation -- -- -- -- 11,130 11,130
Net loss -- -- -- (900,898) -- (900,898)
---------- ---------- ---------- ---------- ---------- ----------
Balance September 30, 2001 $17,856 10 1,417,528 (2,192,581) (46,400) (803,587)
========== ========== ========== ========== ========== ==========

See accompanying notes to financial statements

SNAP2 CORPORATION

Statements of Cash Flows

Years ended September 30, 2001 and 2000

2001 2000
--------- ----------

Cash flows from operating activities:
Net loss $(900,898) (967,039)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation 23,789 14,470
Amortization of unearned compensation 11,130 900
Deferred income 37,466 4,375
Changes in:
Accounts receivable (16,515) (1,003)
Accounts payable and accrued expenses 446,150 (80,401)
--------- ----------
Net cash used in operating activities (398,878) (1,028,698)
--------- ----------
Cash flows from investing activities:
Purchases of equipment (2,536) (71,163)
Other assets 4,460 (4,760)
--------- ----------
Net cash provided by (used in) investing activities 1,924 (75,923)
Cash flows from financing activities:
Proceeds from notes payable -- 100,000
Repayment of notes payable and long-term debt -- (185,385)
Proceeds from line of credit 200,000 --
Proceeds from issuance of common stock -- 1,186,860
Additional paid-in capital from investors 188,790 --
--------- ----------
Net cash provided by financing activities 388,790 1,101,475
--------- ----------
Net decrease in cash (8,164) (3,146)
Cash at beginning of year 18,956 22,102
--------- ----------
Cash at end of year $ 10,792 18,956
========= ==========
Supplemental disclosures:
Cash paid for interest $ -- 20,076
========= ==========

See accompanying notes to financial statements

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

(1) Business and Organization

SNAP2 Corporation (the Company) formerly known as White Rock Enterprises,
Ltd. is a software product developer and software service provider for
in-flight entertainment systems (IFE) for passenger aircraft and
interactive set-top boxes (STB) for interactive television. The Company
markets and licenses its software worldwide.

(a) Reverse Acquisition

Effective February 28, 2000, the Company merged with ISES Corporation
(ISES), with the Company as the surviving corporation. At the date of
the merger, the Company was a "shell company" as the Company had no
assets or liabilities, had generated no revenues since inception, and
had incurred total expenses of $6,100 since its inception on October
8, 1998. The merger transaction has been accounted for as a reverse
acquisition. In such a transaction, the operating enterprise (ISES) is
determined to be the acquiring enterprise for financial reporting
purposes. The historical financial statements of ISES are presented as
the historical financial statements of the combined enterprise. The
equity of ISES is presented as the equity of the combined enterprise,
however, the capital stock account of ISES is adjusted to reflect the
par value of the outstanding stock of the Company after giving effect
to the number of shares issued in merger. For periods prior to the
merger, the equity of the combined enterprise is the historical equity
of ISES prior to the merger retroactively restated to reflect the
number of shares received in the merger.

In connection with the merger, the Company issued 10,000,000 shares of
common stock and 10,000 shares of convertible preferred stock for 100%
of the outstanding shares of ISES. The convertible preferred stock
automatically converts to 10,000,000 shares of common stock on
February 28, 2002. Also in connection with the merger, an additional
2,200,000 shares of common stock were issued to others in exchange for
locating investors and a commitment to raise $2,000,000 to fund the
Company's working capital needs and for general corporate purposes. As
the $2,000,000 is received, additional paid in capital will be
recorded. As of September 30, 2001, $615,650 had been received.
Management believes that it is unlikely that any additional capital
will be provided and is in the process of attempting to recover as
many of those shares as possible. As of September 30, 2001, 1,097,000
shares have been surrendered in lieu of additional capital
contributions. The Company has not taken action to either establish
these shares as treasury stock or to cancel them and return them to
authorized but unissued shares. Accordingly, the shares are
outstanding in the names of the original owners on the Company's stock
records.

(b) Use of Estimates

The preparation of financial statements, in conformity with auditing
standards generally accepted in the United States of America, requires
the Company to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets
and liabilities, at the date of the financial statements, and the
reported amounts of revenues and expenses, during the reporting
period. Actual results could differ from those estimates.

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

Equipment is stated at cost and is depreciated on the straight-line
method with estimated useful lives of 3 to 7 years.

(d) Revenue Recognition

Software license fees are recognized as revenue upon contract signing
and shipment of the software master copy or download of software by
the customer since the Company does not incur significant additional
support costs. Consulting revenues are derived primarily from custom
contract engineering work and training and consulting services.
Revenues from custom contract engineering work are recognized using
the percentage of completion method. Revenues from training and
consulting services are recognized as the services are rendered.
Maintenance revenues are recognized ratably over the term of the
related agreements.

(e) Fair Value of Financial Instruments

Fair value estimates, methods, and assumptions are set forth below:

o Trade accounts receivable, accounts payable, and accrued
expenses--The carrying amount approximates the estimated fair
value due to the short-term nature of those instruments.

o Long-term debt--Due to amounts being borrowed from a related
party of the Company's president and from an economic development
agency of the State of Iowa, the fair value of long-term debt was
not reasonably determinable.

o Limitations--Fair value estimates are made as of a specific point
in time, based upon the relevant market information about the
financial instruments. Because no market exists for a majority of
the Company's financial instruments, fair value estimates are
based on judgments regarding current economic conditions and
other factors. These estimates are subjective in nature and
involve uncertainties and matters of judgment and, therefore,
cannot be determined with precision. Changes in assumptions could
significantly affect the estimates.

(f) Stock-Based Compensation

The Company accounts for stock-based compensation using the intrinsic
value method prescribed in Accounting Principles Board Opinion No. 25,
"Accounting for Stock Issued to Employees," (APB No. 25) and related
interpretations. Under APB No. 25, compensation cost is measured as
the excess, if any, of the quoted market price of the Company's stock
at the date of grant over the exercise price of the option granted.
Compensation cost for stock options, if any, is recognized ratably
over the vesting period for those options granted to employees and
directors. Compensation cost for stock options

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

issued other than to employees and directors, if any, is recognized at
the date of grant. The Company provides additional pro forma
disclosures as required under SFAS No. 123, "Accounting for
Stock-Based Compensation" (see note 4).

(g) Income Taxes

The Company accounts for income taxes under the asset and liability
method. Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and
liabilities and their respective tax bases, and operating loss and tax
credit carryforwards. 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 rate is recognized in income in the
period that includes the enactment date.

(h) Earnings Per Share

Basic earnings per share is computed using the weighted average number
of actual common shares outstanding during the period. Diluted
earnings per share is computed using the weighted average number of
actual common shares plus the potential dilution that would occur from
the conversion of convertible preferred stock and the exercise of
stock options. Due to the net loss incurred for the years ended
September 30, 2001 and 2000, the effect of convertible preferred stock
and stock options is not included in the calculation of diluted
earnings per share because the effect is anti-dilutive.

(i) Reclassification

Certain amounts previously reported in the prior year's financial
statements have been reclassified to conform to the current year
presentation.

(2) Going-concern Matters

The Company's financial statements are prepared using accounting principles
generally accepted in the United States of America applicable to a going
concern, which contemplate the realization of assets and liquidation of
liabilities in the normal course of business. However, the Company does not
have significant cash or other assets, nor does it have an established
source of revenues sufficient to cover its operating costs to allow it to
continue as a going concern. The financial statements do not include any
adjustments that might result if the Company is unable to continue its
operations.

The Company has entered into and is currently negotiating additional
contracts for its products and services. The Company sold part of its
intellectual property (see note 10) and is also exploring the licensing or
additional sale of its intellectual property and is attempting to raise
additional capital. Also, the Company has delayed making certain debt
payments and other obligations (see note 3).

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

(3) Long-term debt

On June 20, 1999, the Company entered into a promissory note with a related
party of the Company's president whereby $135,000 was borrowed by the
Company. The note bears an interest rate of 9% per annum on the unpaid
principal balance. Under the terms of the note, principal payments of
$10,385 along with interest are due in quarterly installments beginning
July 1, 2001. The Company has not paid the $10,385 due under this note, as
well as the accrued interest, since July 1, 2000. The remaining maturities
of this note are $41,538, 2002; $41,538, 2003; and $41,539, 2004. Principal
payments have not been accelerated under this note by the noteholder.

On August 17, 1999 the Company entered an agreement with the Iowa
Department of Economic Development (IDED) whereby the Company would receive
$100,000 of financial assistance under the Community Economic Betterment
Account (CEBA). Under the terms of the agreement, the Company shall pay an
annual royalty equal to 1.5% of the prior year total gross revenues to IDED
in semi-annual payments each June 1 and December 1, until a repayment
amount of $200,000 has been reached. $24,462 was due under this agreement
at September 30, 2001.

The Company has a $200,000 line of credit with a bank bearing interest at
the bank's commercial base rate, 8.9% at September 30, 2001. This line is
guaranteed by a director/officer of the Company. Funds advanced are secured
by the Company's accounts receivable and equipment. At September 30, 2001,
$200,000 was outstanding under the agreement. The line of credit matured
November 10, 2001 and the Company expects to renew this line.

(4) Stock Options

On February 1, 1999 and March 4, 1998 the president of the Company granted
options to purchase 7,805,025 and 7,077,412, respectively, shares of common
stock of the Company owned by him, (adjusted for the February 28, 2000
merger) to employees of the Company and consultants to the Company for
$0.10 and $0.05 per share, respectively. These options were issued at fair
value at the date of grant and were accounted for as if such options were
issued directly by the Company. The options vest three years from the date
of grant.

The Company's Board of Directors adopted the Stock Option Plan (the Plan)
effective March 15, 2000. Under the Plan options may be granted to
employees, officers, consultants, directors and advisors to purchase up to
an aggregate of 5,000,000 shares of the Company's common stock. Options
granted under the Plan may be options that are intended to qualify as
incentive stock options and options that are not intended to so qualify. If
incentive stock options are granted to a person possessing more than ten
percent of the combined voting power or value of all classes of stock of
the Company, the exercise price shall not be less than 110% of the
Company's common stock fair market value on the date of grant. Under the
Plan, the term of options may not exceed ten years unless an incentive
stock option is granted to a stockholder who owns more than ten percent of
the combined voting power of the Company, then the term may not exceed five
years. The Board of Directors determines the exercise price, vesting period
of options at the date of grant and other conditions as specified in the
Plan.

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

The Company applies the provisions of APB No. 25 and related
interpretations in accounting for stock options and related compensation
expense, if any, under the Plan. Compensation expense of $11,130 and $900
was recognized for stock options issued below fair value to employees to
purchase 447,500 and 105,000 shares of the Company's common stock during
the years ended September 30, 2001 and 2000, respectively.

Had the Company determined compensation cost based on the fair value at the
grant date for stock options including options granted by the Company's
president under SFAS 123, the Company's net loss and net loss per share
would have been as indicated below:

2001 2000
------------- ------------
Net loss - as reported $ (900,898) (967,039)
Net loss - pro forma (1,308,519) (1,102,754)
Basic loss per share - as reported (0.05) (0.07)
Basic loss per share - pro forma (0.06) (0.08)
Diluted loss per share - as reported (0.05) (0.07)
Diluted loss per share - pro forma (0.06) (0.08)

The fair value of each option granted is estimated on the date of grant
using the Black-Scholes option valuation model with the following weighted
average assumptions: 2001: risk-free interest rate of 5.0%, dividend yield
of 0.0%, expected volatility of 110% and expected lives of 5 years; 2000:
risk free interest rate of 6.5%, dividend yield of 0.0%, expected
volatility of 110%, and expected lives of 5 years. The fair values of the
option grants in fiscal 2001 and 2000 were $0.41 to $1.24 per share and
$1.64 to $2.02 per share respectively. As the Company was a nonpublic
entity until February 28, 2000, it is permitted under SFAS 123 to use the
"minimum value" method to value stock options granted prior to February 28,
2000. Under the "minimum value" method expected volatility is effectively
zero. The effects of applying SFAS 123 may not be representative of the
effects on reported net earnings (loss) for future years.

The stock option activity under the Plan during the years ended September
30, 2001 and 2000 is summarized as follows:

Weighted- Weighted-
Year ended average Year ended average
September 30, exercise September 30, exercise
2001 price 2000 price
------------ ----------- ------------ ------------

Beginning balance 395,000 2.36 -- --
Granted 1,452,500 0.67 470,000 2.44
Exercise -- -- -- --
Canceled -- -- (75,000) 2.88
------------ ------------
Ending Balance 1,847,500 1.03 395,000 2.36
============ ============ ============ ============
Options excercisable at year end 79,000 --
============ ============

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

At September 30, 2001, 3,152,500 stock options were available for grant.

The options outstanding under the Plan as of September 30, 2001 have the
following attributes:

Option statistics by price ranges: $ .52 to .99 1.00 to 1.99 2.00 and over
------------ ------------ -------------

Options oustanding 1,300,000 152,500 395,000
Weighted-average price $ 0.60 1.30 2.36
Weighted-average remaining life 9.50 9.00 8.80
Number exercisable -- -- 79,000

(5) Income Taxes

The income tax (benefit) expense differs from the "expected" tax (benefit)
expense computed by applying the United States federal income tax rate of
34% to the loss before income taxes, as follows:

2001 2000
---- ----

Computed "expected" tax benefit $ (306,305) (264,114)
Increase (decrease) in "expected" tax
expense resulting from:
Net operating loss carry forward not
recognized 307,000 266,000

Other, net (695) (1,886)

Income tax benefit $ -- --
============ ============

At September 30, 2001 the temporary difference that gave rise to deferred
income tax assets was a net operating loss carryforward. This created a
deferred tax asset of approximately $575,000 and $268,000 as of September
30, 2001 and 2000 respectively. A valuation allowance has been established
of $575,000 and $268,000 for the years ended September 30, 2001 and 2000,
respectively. At September 30, 2001, the Company has a net operating loss
carryforward of approximately $1,688,000. The net operating loss
carryforward will begin to expire in 2020.

(6) Related Party

ISES Canada, a Canadian Company with common ownership through the Company's
president, provided software development and consulting services to the
Company through June 30, 2001. Fees paid to ISES Canada totaled $196,267
and $322,802 for the years ended September 30, 2001 and 2000, respectively.

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

(7) Business and Credit Concentration

For the year ended September 30, 2001, the Company had two customers (three
in 2000) who accounted for approximately 73% of total sales (66% in 2000).
Included in trade accounts receivable at September 30, 2001 was $100,100
due from these customers ($99,163 in 2000).

(8) Leases

The Company leases an office facility under an operating lease. For the
years ended September 30, 2001 and 2000, rent expense was approximately
$54,000 and $42,000, respectively.

At September 30, 2001, the Company's future minimum lease obligation is
approximately:

Year ending September 30
2002 $ 58,500
2003 60,000
2004 61,000
2005 39,000
---------
Total $ 218,500
=========

(9) Retirement Plan

The Company has a 401(k) plan that covers substantially all full-time
employees that meet certain eligibility requirements. The plan became
effective November 1, 2000. Under the terms of the plan, employees can
contribute up to 10% of maximum compensation as prescribed by law to the
plan. Employee contributions are matched by the Company at 50% up to a
maximum of 10% of eligible compensation. For the year ended September 30,
2001, the Company's matching portion of the plan amounted to $48,085.

(10) Subsequent Event

SNAP2 CORPORATION

Notes to Financial Statements

September 30, 2001 and 2000

for IFE business. Terms include a total purchase price for the sale and
license of the IFE assets of $300,000 plus (i) fifty percent (50%) of all
revenue received by Buyer from certain existing customers for a period of
three (3) years after the closing; (ii) twenty-five percent (25%) of all
revenues received by Buyer under certain new business generated by Buyer;
(iii) an amount not to exceed $100,000 of the existing contract with
British Airways as assigned to Buyer plus fifty percent (50%) of all
revenue received by Buyer from British Airways during the three (3) years
after closing; and (iv) $75,000 upon receipt of the consent of Air France
that it will expand the number of aircraft using the software and fifty
percent (50%) of the revenues received from Air France during the three (3)
years after closing. In November 2001, the Company received $300,000 as a
result of this transaction, which was recorded as a gain on sale.
Additional amounts to be received will be recorded as license fees. The
Company's fees related to this Agreement for the years ended September 30,
2001 and 2000 were $496,260 and $294,751, respectively. Had the transaction
occurred at the beginning of the years ended September 30, 2001 and 2000,
license fee revenues would have approximated $345,000 and $122,000,
respectively. The Company's operating expenses will not be reduced as a
result of this transaction.

[Form of Proxy]

This Proxy is Solicited on Behalf of the Board of Directors
SNAP2 CORPORATION
PROXY FOR THE ANNUAL MEETING OF SHAREHOLDERS ON MARCH 5, 2002

The undersigned hereby constitutes and appoints Dean R. Grewell, III and Antony
Hoffman or either of them, the proxies and attorneys for the undersigned, each
with full power of substitution, for and in the name, place, and stead of the
undersigned to attend the Annual Meeting of Shareholders of SNAP2 Corporation to
be held at the main office of SNAP2 Corporation located at 10641 Justin Drive,
Urbandale, Iowa, on March 5, 2002 at 2:00 p.m. and any adjournments thereof, and
to vote as directed below all shares of Common Stock held of record by the
undersigned on January 25, 2002, with all powers the undersigned would possess
if personally present at such meeting.

1. Election of Directors (mark only one box):

To withhold authority to vote for any individual nominee, strike a line
through the nominee's name.

[ ] FOR all nominees listed below [ ] WITHHOLD AUTHORITY on all
(except as marked to the contrary below) nominees listed below

Dean R. Grewell, III
Antony Hoffman
Mike Hennel
Mark Malinak
Sheldon Ohringer
Stephen Dukes

2. Ratification of the appointment of KPMG LLP as the independent auditors of
SNAP2 Corporation for the fiscal year ending September 30, 2002.

[ ] FOR [ ] AGAINST [ ] ABSTAIN

3. In their discretion, upon such other matters as may properly come before
the meeting or any adjournments thereof.

This proxy when properly executed will be voted in the manner directed herein by
the shareholder. If no direction is given, this proxy will be voted FOR the
matters listed above.

Shareholders who are present at the meeting may withdraw their proxies and vote
in person if they so desire.

PLEASE MARK, SIGN, DATE, AND RETURN THIS PROXY PROMPTLY
USING THE ENCLOSED ENVELOPE

(Please sign exactly as your name appears on this proxy. When signing in a
representative capacity such as guardian, attorney, trustee, or executor, please
indicate your full title as such. Proxies by a corporation should be signed in
its name by an authorized officer. Proxies by a partnership should be signed in
its name by an authorized person. If more than one name appears, all persons so
designated should sign.)

The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting
of Shareholders and Proxy Statement dated February 5, 2002.

Dated _______________, 2002 Signature__________________________