To The Board of Directors

        Quantum Bit Induction Technology, Inc.

        Houston, Texas

       

        We  have  audited the accompanying balance sheet of  Quantum  Bit

        Induction  Technology, Inc. (a development stage company)  as  of

        September  30, 2003 and the related statements of operations  and

        comprehensive loss, shareholders' deficit, and cash flows for the

        period April 1, 2003 through September 30, 2003.  These financial

        statements  are the responsibility of the  Company's  Management. 

        Our  responsibility is to express an opinion on  these  financial

        statements based on our audit.

       

        We  conducted  our audit in accordance with  standards  generally

        accepted  in the United States of America.  Those  standards  re-

        quire  that  we plan and perform the audit to  obtain  reasonable

        assurance  about  whether the financial statements  are  free  of

        material  misstatement.  An audit includes examining, on  a  test

        basis,  evidence  supporting the amounts and disclosures  in  the

        financial  statements.   An  audit also  includes  assessing  the

        accounting  principles  used and significant  estimates  made  by

        management, as well as evaluating the overall financial statement

        presentation.   We believe that our audit provides  a  reasonable

        basis for our opinion.

       

        In  our  opinion,  the financial  statements  referred  to  above

        present fairly, in all material respects, the financial  position

        of  Quantum  Bit Induction Technology, Inc. as of  September  30,

        2003 and the results of its operations and its cash flows for the

        period  April  1, 2003 through September 30, 2003  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  1 to the financial statements, the Company  is  in  the

        development stage and has had a retained deficit since its incep-

        tion  and  is  dependent upon its ability to  continue  to  raise

        capital.   These  conditions  raised doubt  about  the  Company's

        ability  to  continue as a going concern. Management's  plans  in

        regard to those matters also are described in Note 1.  The finan-

        cial statements do not include any adjustments that might  result

        from the outcome of this uncertainty.

       

       

                                      George Baugh III & Company

                                      Certified Public Accountants

       

                                      October 17, 2003



 

 



 



 


                     QUANTUM BIT INDUCTION TECHNOLOGY, INC.

                        NOTES TO THE FINANCIAL STATEMENTS

               FOR THE PERIOD FROM APRIL 1, 2003 TO SEPTEMBER 30, 2003

       

       

       

        1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

       

       

        Nature of Operations and Organization

       

        Quantum Bit Induction Technology, Inc. (the Company) is a provid-

        er of an email forwarding service that increases customer's email

        frequency.  The Company refers to the increase in email frequency

        as "bias".  The Company is working to increase bias by as much as

        possible  through continual upgrade.  The service can be used  by

        internet  web  merchants, that receive sale  notices  via  email,

        investors  that  receive email trade confirmations,  email  alert

        users, or any other email traffic that one may wish to  increase. 

        The company and its systems store only statistical email  traffic

        data and not user or email content.

       

        A large and controllable bias applied at the bit level of  infor-

        mation  really describes transdimensional propulsion.   "Transdi-

        mensional"   in the "configuration of existence to  configuration

        of existence" sense.  Installing trandimensional drive on a vehi-

        cle  is  a long-term goal of the Company.  The  craft  should  be

        effortlessly  space capable in order to meet the spirit  of  this

        goal.   Space capability requires progress in power  and  propul-

        sion.   Biology  requires overcoming any health issues  that  may

        distract  from the work.  Programmed Trading  involves  providing

        adequate  resources  with  which  to  accomplish  the   Company's

        Projects.   The  Company's projects are more fully  described  on

        their website, www.quantumbit.com.

       

        The Company was incorporate in Nevada on January 28, 1999.

       

        Cash and Cash Equivalents

       

        For  the  purposes of the statement of cash  flows,  the  Company

        considers  all short-term securities purchased with  maturity  of

        three months of less to be cash equivalents.

       

        Short-term Investments and Other Assets

       

        The  Company's short-term investments and other assets have  been

        classified as available-for-sale and stated at their fair  market

        value.   All  short-term investments are  available  for  current

        operations  and are classified as current assets in  the  balance

        sheet.   Unrealized  holding gains and losses are included  as  a

        component of other comprehensive income until realized.  Realized

        gains  and losses are determined by the  specific  identification

        method and are reflected in income.

       

       

 

       

                     QUANTUM BIT INDUCTION TECHNOLOGY, INC.

                        NOTES TO THE FINANCIAL STATEMENTS

               FOR THE PERIOD FROM APRIL 1, 2003 TO SEPTEMBER 30, 2003

       

       

       

        Property and Equipment

       

        Property  and  equipment consist of computer  equipment  and  are

        stated  at  cost.  For property and equipment  over  $2,500,  the

        company  will use the straight-line depreciation method over  the

        estimated  useful lives of three years.  Currently, there  is  no

        property equipment being depreciated.

       

        Revenue Recognition

       

        Currently,  the Company's sources of revenue come from  sales  of

        subscriptions to its email service and project sponsorships.  

       

        Use of Estimates

       

        The preparation of financial statements in conformity with gener-

        ally  accepted accounting principles requires management to  make

        estimates  and assumptions that affect certain  reported  amounts

        and  disclosures.  Accordingly, actual results could differ  from

        those estimates.

       

        Concentration of Credit Risk

       

        Financial  instruments, which potentially subject the Company  to

        significant  concentrations of credit risk, consist of  cash  and

        investments.

       

        The  Company maintains cash and cash equivalents and  investments

        with various major financial institutions.  Investment securities

        are  exposed to various risks, such as interest rate, market  and

        credit  risk.  Due to the level of risk associated  with  certain

        investment  securities, it is at least reasonably  possible  that

        changes in the values of investment securities will occur in  the

        near  term  and  that each change  could  materially  affect  the

        amounts reported in the financial statement.

       

        Going Concern

       

        Since  inception, the Company has not generated  any  significant

        operating  revenue, although, the Company does not have  signifi-

        cant General and Administrative expense.  To fund its development

        activities  to  date, the Company has relied on  funding  by  the

        Company's  President, Officers and some Directors.  This  funding

        has  been and continues to be sufficient for the Company to  meet

        is operating cash requirements, continue development and to  fund

        marketing  efforts  to sell its email service  and  sponsorships. 

        The Company has not incurred any long-term debt and does not plan

        to incur.

 

 

       

                     QUANTUM BIT INDUCTION TECHNOLOGY, INC.

                        NOTES TO THE FINANCIAL STATEMENTS

               FOR THE PERIOD FROM APRIL 1, 2003 TO SEPTEMBER 30, 2003

       

       

       

       

        2.  Income Taxes

       

        As of September 30, 2003, the company has net operating tax  loss

        carry  forwards  of approximately $869,195.  The  carry  forwards

        begin to expire in the year 2019.

       

        Deferred  income taxes reflect the net tax effects  of  temporary

        differences  between the carrying amounts of assets and  liabili-

        ties  for financial reporting purposes and the amounts  used  for

        income tax purposes.  It is doubtful that the Company will  real-

        ize any net deferred tax assets when applying the rule.

       

       

        3.  Note Payable

       

        On June 28, 2000, the Company entered into an unsecured promisso-

        ry  ,note  agreement  of $30,000 with an  individual.   The  note

        payable bears interest at 6.94% with a due date of June 28, 2001. 

        No principal or interest payments have been made through  Septem-

        ber 30, 2003.  The individual has also been issued 300,000 shares

        of  the Company's common stock at a price of $0.15 per share  for

        up  to one year after retirement of the promissory note  or  June

        28,  2002.   The Company has calculated the fair  market  of  the

        option using the Black-Scoles option-pricing model and determined

        that the fair market value was not material.

       

        4.  Common Stock

       

        The  Board of Directors and the President of the Company  control

        approximately  77.12%  and 30.20% respectively of  the  Company's

        issued  stock at July 31, 2003.  The Company has 98 total  share-

        holders with 45,000,000 issued shares.

       

        5.  Long-Term Debt and Extraordinary Transactions

       

        Long-term  debt  converted of $733,378 at 2003 consist  of  Notes

        from  Related  Parties.  Substantially all of  these  notes  were

        exchanged  for  1,833,445 shares of common  stock  from  treasury

        during 2003 which was recorded in Paid in Capital.  The stock was

        valued at the corresponding value of the Long-Term Debt.

 

 

 

 

 

 

 

 

 

 

CONTENTS

       

       

       

       

       

       

        REPORT OF CERTIFIED PUBLIC ACCOUNTANTS                       

      

       

       

        FINANCIAL STATEMENTS

      

       

       

        Balance Sheet                                                 2

       

        Statement of Operations                                       3

       

        Statement of Shareholders Deficit                             4

       

        Statement of Cash Flows                                       5

       

       

       

       

        NOTES TO FINANCIAL STATEMENTS                                 6-8

 

 

 

 

 

 

       

        

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

       

                     QUANTUM BIT INDUCTION TECHNOLOGY, INC.

       

       

                            ________________________

       

       

       

                              FINANCIAL STATEMENTS

       

           

           

               FOR THE PERIOD FROM APRIL 1, 2003 TO SEPTEMBER 30, 2003