Edgar Filing: WARP TECHNOLOGY HOLDINGS INC

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-QSB

[X] Quarterly report under Section 13 or 15(d) of the Securities
Exchange Act of 1934

For the Fiscal Quarter Ended March 31, 2004

[ ] Transition report under Section 13 or 15(d) of the Exchange Act

Commission File No. 000-33197

WARP TECHNOLOGY HOLDINGS, INC.
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(Name of Small Business Issuer in its Charter)

Nevada 88-0467845
----------------------------- ---------------------
State or other jurisdiction of I.R.S. Employer
incorporation or organization Identification Number

708 3rd Avenue, 6th Floor, New York, N.Y. 10017
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(Address of principal executive office)

Issuer's telephone number: (212) 962-9277
--------------

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

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of May 10, 2004, there were
93,490,701 shares of Common Stock, par value $.00001 per share, outstanding.

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

PART I

FINANCIAL INFORMATION

Forward-Looking Information

Certain statements in this Form 10-QSB of WARP Technology Holdings,
Inc. (the "Company") may constitute "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements include those relating to future opportunities, the
outlook of customers, the reception of new products and technologies, and the
success of new initiatives. In addition, such forward-looking statements involve
known and unknown risks, uncertainties, and other factors which may cause the
actual results, performance or achievements of the Company to be materially
different from any future results expressed or implied by such forward-looking
statements. Such factors include: (i) demand for the Company's products; (ii)
the actions of current and potential new competitors; (iii) changes in
technology; (iv) the nature and amount of the Company's revenues and expenses;
and (v) overall economic conditions and other risks detailed from time to time
in the Company's periodic earnings releases and reports filed with the
Securities and Exchange Commission (the "Commission"), as well as the risks and
uncertainties discussed in the Company's Annual Report on Form 10-KSB filed with
the Commission on October 14, 2003 (the "Form 10-KSB").

ITEM 1. Financial Statements.

Table of Contents Page

Consolidated Balance Sheets 3

Consolidated Statements of Operations 4

Consolidated Statements of Cash Flows 5

Notes to Consolidated Financial Statements 6

WARP Technology Holdings, Inc.
Consolidated Balance Sheets

March 31, June 30,
2004 2003
----------------------------
(Unaudited) (Audited)

Assets
Current assets:
Cash and cash equivalents $ 1,009,132 $ 360,064
Accounts receivable 273,947 7,692
Inventory -- 207,000
Prepaid expenses and other 15,850 63,723
Deferred product cost 28,839 14,556
----------------------------
Total current assets 1,327,768 653,035

Property and equipment, net 43,836 83,936
Intangible assets, net 300,417 442,917
Goodwill 3,893,294 3,893,294
Other assets -- 28,111
----------------------------
Total assets $ 5,565,315 $ 5,101,293
============================

Liabilities and stockholders' equity Current liabilities:
Accounts payable $ 549,148 $ 358,024
Accrued expenses 179,846 580,462
Prepaid subscription -- 490,000
Note payable -- 120,000
Deferred revenue 264,929 94,712
Accrued compensation payable 662,000 694,000
----------------------------
Total current liabilities 1,655,923 2,337,198

Stockholders' equity:

Cumulative convertible preferred stock,
Series A; $.00001 par value; 0 shares
issued and outstanding at March 31, 2004 -- --
Cumulative convertible preferred stock,
Series B; $.00001 par value; 3,213 shares
issued and outstanding at March 31, 2004 3,212,780 --
Preferred stock 8 15
Common stock, $.00001 par value; 500,000,000
shares authorized, and 93,490,701 and 67,262,586
shares issued and outstanding at March 31,
2004 and June 30, 2003, respectively 935 673
Additional paid-in capital 43,430,464 37,658,978
Deferred compensation (5,786,334) (7,911,000)
Foreign currency translation (5,833) 18,773
Accumulated deficit (36,942,628) (27,003,344)
----------------------------
Total stockholders' equity 3,909,392 2,764,095
----------------------------
Total liabilities and stockholders' equity $ 5,565,315 $ 5,101,293
============================

See accompanying notes

WARP Technology Holdings, Inc.
Consolidated Statements of Operations
(Unaudited)

Three Months Ended Nine Months Ended
March 31, March 31,
2004 2003 2004 2003
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Revenue $ 370,784 $ 86,632 $ 734,695 $ 233,030
Cost of Sales 368,158 9,533 410,523 42,484
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Gross Profit 2,626 77,099 324,172 190,546

Expenses
Product development 149,597 101,000 474,734 353,326
Sales and marketing 469,006 623,197 1,731,125 959,453
General and administrative 1,007,150 669,894 2,266,357 1,853,195
Non-cash compensation,
consulting and other fees 915,885 2,846,555 4,313,631 7,979,888
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Loss before interest income (2,539,012) (4,163,547) (8,461,675) (10,955,316)
------------------------------------------------------------

Interest and other income 1,838 4,660 62,380 13,528
------------------------------------------------------------
Net loss $ (2,537,174) $ (4,158,887) $ (8,399,295) $(10,941,788)
============================================================

Computation of loss Applicable
to Common Shareholders

Net loss before
Beneficial conversion and
Preferred dividend $ (2,537,174) $ (4,158,887) $ (8,399,295) $(10,941,788)

Beneficial conversion and
Preferred dividend (533,394) -- (1,539,989) --
------------------------------------------------------------
Loss attributable
to common stockholders $ (3,070,568) $ (4,158,887) $ (9,939,284) $(10,941,788)
============================================================
Basic and diluted
net loss per share attributable
to common stockholders $ (0.04) $ (0.06) $ (0.14) $ (0.18)
============================================================

Weighted-average number common
shares--basic and diluted 75,729,589 64,278,937 70,373,485 62,214,186
============================================================

See accompanying notes.

WARP Technology Holdings, Inc.
Consolidated Statements of Cash Flows
(Unaudited)

Nine Months Ended
March 31,
2004 2003
-----------------------------

Operating activities
Net loss $ (8,399,295) $(10,941,788)
Adjustments to reconcile net loss to net cash used
in operating activities:
Depreciation and amortization 187,593 99,438
Non cash compensation, consulting and other fees 4,313,631 7,979,888
Changes in operating assets and
liabilities:
Accounts receivable (259,410) (42,417)
Inventory and prepaid expenses 254,875 (213,447)
Accounts payable and accrued expenses (251,861) (88,275)
Deferred revenue 160,578 132,061
Deferred product cost (14,283) (27,228)
-----------------------------
Net cash used in operating activities (4,008,172) $ (3,101,768)
-----------------------------

Investing activities
Other assets 28,111 (4,050)
Purchase of property and equipment (3,175) (15,496)
Cash acquired in Acquisition 36,109
Advances and acquisition consideration (262,775)
-----------------------------
Net cash provided by (used in) investing
activities 24,936 (246,212)
-----------------------------

Financing activities
Collection of stockholder loan 19,000
Payments on loan payable (120,000) (31,116)
Proceeds from issuance of stock, net of
issuance costs 4,682,320 3,063,215
-----------------------------
Net cash provided by financing activities 4,562,320 3,051,099
-----------------------------

Net increase (decrease) in cash 579,083 (296,881)
Effects of exchange rates on cash 69,985 (1,180)
Cash--beginning of period 360,064 1,184,652
-----------------------------
Cash--end of period $ 1,009,132 $ 886,591
=============================

See accompanying notes.

Notes To Consolidated Financial Statements

Note 1. Organization Merger and Description of Business

On May 24, 2002 ("the Closing Date") Abbott Mines, Ltd. ("the Company"), a
Nevada corporation, acquired the outstanding common stock of WARP Solutions, Inc
("WARP") in a share exchange transaction (the "Share Exchange"). For financial
reporting purposes, the transaction was accounted for as a reverse acquisition,
and WARP was treated as the acquiring entity for accounting purposes.

Although the Company was the surviving legal entity in the Share Exchange, the
transaction was accounted for as an issuance of equity by WARP, and a
recapitalization of WARP under the capital structure of the Company in exchange
for $690 in net assets. Under the purchase method of accounting, the historical
results of WARP have been carried forward and the Company's operations have been
included in the financial statements commencing on the Closing Date.
Accordingly, all the historical results included are those of WARP only.

On August 12, 2002, the Company's Board of Directors authorized and approved the
establishment of a subsidiary in the state of Nevada with the name WARP
Technology Holdings, Inc.

On August 15, 2002, the Company's Board of Directors authorized and approved the
upstream merger of WARP Technology Holdings, Inc., the Company's wholly-owned
subsidiary, with and into the Company ("the Upstream Merger"). The Upstream
Merger became effective on August 21, 2002, and the Company changed its name
from Abbott Mines, Ltd. to WARP Technology Holdings, Inc.

6043577 Canada, Inc., a wholly-owned subsidiary of the Company, was established
in January 2003 to acquire SpiderSoftware, Inc. ("Spider"), a Canadian
corporation. On January 13, 2003, the Company completed its acquisition of
Spider.

The Company is an information technology company that produces a series of
application acceleration products that improve the speed and efficiency of
transactions and information requests that are processed over the internet and
intranet network systems. The Company's GTEN suite of software products and
technologies are designed to accelerate network applications, reduce network
congestion, and reduce the cost of expensive server deployments for enterprises
engaged in high volume network activities.

Note 1. Organization Merger and Description of Business (continued)

Basis of Presentation

The accompanying unaudited consolidated financial statements of Warp Technology
Holdings, Inc. and its subsidiaries (collectively the "Company") have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB and Article 10 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by accounting
principles generally accepted in the United States of America for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the nine months ended March 31, 2004 are
not necessarily indicative of the results that may be expected for the fiscal
year ended June 30, 2004. For further information, refer to the financial
statements and footnotes thereto included in the Company's Annual Report on Form
10-KSB for the year ended June 30, 2003.

The Company has incurred recurring operating losses since its inception. As of
March 31, 2004 the Company had an accumulated deficit of approximately
$36,943,000 and at March 31, 2004 had insufficient capital to fund all of its
obligations. These conditions raise substantial doubt about the Company's
ability to continue as a going concern. The financial statements do not include
any adjustments to reflect the possible future effect of the recoverability and
classification of assets or the amounts and classifications of liabilities that
may result from the outcome of this uncertainty.

The Company's continuation as a going concern is dependant upon receiving
additional financing. The Company has raised approximately $4,682,000 (net of
issuance cost) from the exercise of warrants and sale of Preferred and Common
stock for the nine months ended March 2004. The Company anticipates it will need
to raise at least an additional $3,000,000 to support its working capital needs
and to continue to execute through March 2005 the requirements of its business
plan. There can be no assurance that the Company will have sufficient capital to
support its working capital needs through its 2004 fiscal year.

Note 2. Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of WARP
and its wholly-owned subsidiaries (collectively the "Company"). All
inter-company transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the amounts of assets and liabilities and
disclosure of contingent assets and liabilities as of the date of financial
statements and the reported amount of revenue and expenses during the period.
Actual results could differ from those estimates.

Revenue Recognition

Pursuant to AICPA Statement of Position ("SOP") 97-2, Software Revenue
Recognition, the Company recognizes revenues from the sale of the WARP 2063e
product when persuasive evidence of a contractual arrangement exists, delivery
has occurred, the fee is fixed or determinable and collection is probable. The
Company's software licenses generally are marketed with certain post-contract
customer support ("PCS") and other obligations, which may include maintenance,
delivery of unspecified upgrades, and warranties regarding service response
times. Revenue under PCS agreements are recognized ratably over the term of the
agreement. Under SOP 97-2, the Company must allocate revenue to each element
based on vendor specific objective evidence ("VSOE") of each element's fair
value. Accordingly, revenue from license agreements is being recognized ratably
over the term of the PCS agreement. In January 2004 the Company has discontinued
marketing the 2063e product. Licensing revenues from Spider are recognized upon
product delivery, provided persuasive evidence of an arrangement exists, fees
are fixed or determinable and the resulting receivable is deemed collectible by
management.

Inventory

Inventory consists of finished goods and is valued at the lower of cost or
market using the specific identification method. As of March 31, 2004 the
Company changed its business model from selling hardware and software to selling
only software. As a result the Company wrote off all of its remaining hardware
inventory of approximately $328,000.

Note 2. Summary of Significant Accounting Policies (continued)

Intangible Assets and Goodwill

Intangible assets are primarily comprised of trademark, software, non-compete
agreements and workforce assembly. Goodwill represents acquisition costs in
excess of the net assets of businesses acquired. In accordance with SFAS 142,
"Goodwill and Other Intangible Assets" no amortization of goodwill is necessary
and goodwill is tested for impairment on an annual basis. All other intangibles
are being amortized over their estimated useful life of two to three years.

Comprehensive Loss

Comprehensive loss for the twelve months ended June 30, 2003 was approximately
$13,034,000.

Loss Per Share

Basic and diluted net loss per share information for all periods is presented
under the requirements of SFAS No. 128, Earnings Per Share. Basic loss per share
is calculated by dividing the net loss attributable to common stockholders by
the weighted-average common shares outstanding during the period. Diluted loss
per share is calculated by dividing net loss attributable to common stockholders
by the weighted-average common shares outstanding. The dilutive effect of
preferred stock, warrants and options convertible into an aggregate of
approximately 48,067,000 common shares as of March 31, 2004 are not included, as
the inclusion of such would be anti-dilutive for all periods presented.

Stock-Based Compensation

Stock-based compensation is accounted for by using the intrinsic value-based
method in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, Accounting for Stock Issued to Employees, and related
interpretations.

Note 2. Summary of Significant Accounting Policies (continued)

The following table details the effect on net loss and loss per share had
stock-based compensation expense been recorded based on the fair value method
under SFAS No. 123, as amended.

Three Months Ended Nine Months Ended
March 31, March 31,
2004 2003 2004 2003
---------------------------- ----------------------------

Net loss, as reported $ (2,537,174) $ (4,158,887) $ (8,399,295) $(10,941,788)
Add: Total stock-based employee
compensation expense included in
reported net loss 496,167 1,242,000 2,855,333 6,375,333
Deduct: Total stock-based employee
compensation expense determined
under fair value method for all awards (510,577) (1,273,565) (2,932,248) (6,535,232)
------------ ------------ ------------ ------------

Net loss, pro forma $ (2,551,584) $ (4,190,452) $ (8,476,210) (11,101,687)
Beneficial conversion-Preferred dividend (533,394) -- (1,539,989) --
Net Loss attributable to common stockholders-
Pro forma $ (3,084,978) $ (4,190,452) $(10,016,199) $(11,101,687)

Basic and diluted net loss per share, as reported $ (.04) $ (.06) $ (.14) $ (.18)
Basic and diluted net loss per share, pro forma $ (.04) $ (.07) $ (.14) $ (.18)

Recent Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 on
Derivative Instruments and Hedging Activities." This statement amends and
clarifies accounting for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities under SFAS
No. 133. This statement is effective for contracts entered into or modified
after June 30, 2003, except as for provisions that relate to SFAS No. 133
implementation issues that have been effective for fiscal quarters that began
prior to June 30, 2003, which should continue to be applied in accordance with
their respective dates. The adoption of SFAS No. 149 has not and is not expected
to have a material impact on the Company's financial condition, results of
operations, and cash flows.

In May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity". This statement
requires that certain financial instruments that, under previous guidance,
issuers could account for as equity be classified as liabilities in statements
of financial position. Most of the guidance in SFAS No. 150 is effective for
financial instruments entered into or modified after May 31, 2003, and otherwise
is effective at the beginning of the first interim period beginning after June
15, 2003. The adoption of SFAS No. 150 has not and is not expected to have a
material impact on the Company's financial condition, results of operations, and
cash flows.

Note 2. Summary of Significant Accounting Policies (continued)

In December 2003, the FASB issued FASB interpretation No. 46, "Consolidation of
Variable Interest Entities" ("FIN46"). FIN46 requires that a variable interest
entity be consolidated by a company if that company is subject to a majority of
the risk of loss from the variable interest entity's activities or entitled to
receive a majority of the entity's residual return or both. The consolidation
requirements apply to the first fiscal or interim period ending after December
15, 2004. The adoption of FIN46 is not expected to have a material impact on the
Company's financial condition, results of operations, and cash flows.

Segment Information

The Company operates in one segment.

Note 3. Stockholders Equity

On March 29, 2004, the Company issued 5,000,000 shares of common stock to Noah
Clark as consideration for four months of financial consulting services begining
April 1, 2004, to be provided by Mr. Clark pursuant to the Consulting Agreement
dated March 26, 2004 between the Company and Mr. Clark (the "Consulting
Agreement"). The Company recognized approximately $950,000 as deferred
compensation relating to this agreement. The shares issued to Mr. Clark were
restricted shares on the date of issuance. On April 26, 2004, the Company filed
an Amendment Number 1 to a Registration Statement on Form S-2 originally filed
on April 4, 2004 (hereinafter referred to as the "April Form S-2"), which
covered the shares of common stock issued to Mr. Clark under his consulting
agreement. On April 29, 2004, the April Form S-2 was declared effective by the
Securities and Exchange Commission (File No. 333-114296). A copy of the
Consulting Agreement is attached hereto as Exhibit 10.15 and the reader is
referred to that exhibit for the full text of that agreement.

On March 12, 2004, the Company approved the issuance 555,554 shares of common
stock to Mr. Malcolm Coster pursuant to the terms and conditions of his
Employment Contract as compensation for services rendered by Mr. Coster to the
Company in the amount of approximately $111,000 as its interim Chief Executive
Officer.

Note 3. Stockholders Equity (continued)

In March 2004, holders of 1,468.94 shares of the Company's Series B 10%
Cumulative Convertible Preferred Stock ("B Shares") converted their B Shares
into shares of the Company's common stock. Such conversions resulted in the
issuance of 8,857,643 shares of common stock. The 8,857,643 common shares issued
on the conversions consisted of 8,160,783 shares derived from the B Shares' $.18
conversion price, 267,872 shares issued as payment of the B Shares 10%
cumulative dividend, and 428,988 shares issued as payment of a 6% penalty for
the failure by the Company to cause its March Form S-2 (as defined below) to be
declared effective in a timely manner.

In March 2004, 135,000 warrants were exercised at $.10 per share; the Company
received approximately $13,500.

On February 10, 2004, the Company completed an offering of 1,058 shares of
Series B 10% Cumulative Convertible Preferred Stock (the "B Shares") with gross
proceeds to the Company from the sales equaling $1,058,000. The B Shares had a
purchase price of $1,000.00 per share. The purchase price of the B Shares was
paid in cash. The B Shares have a cumulative dividend of 10% per year, which is
payable in cash or stock at the time of conversion at the election of the
Company. Each B Share is convertible into approximately 5,556 shares of the
common stock of the Company. The conversion to common stock of all the B Shares
sold in the offering will result in the Company issuing approximately 5,877,800
shares of common stock to the B Share subscribers. The B Share subscribers also
received warrants to purchase a number of common shares equal to 50% of the
common shares such subscriber would receive upon the conversion of their B
Shares to common shares. The exercise price of the warrants is $.33 per share of
common stock and the exercise price is only payable with cash. Exercise of all
the warrants held by the B Share subscribers would result in the issuance of
approximately 2,938,900 shares of common stock. The Company recorded
approximately $235,000 as beneficial conversion relating to this transaction
because the fair market value of the common stock was greater than the
conversion price. On March 22, 2004, the Company filed an Amendment Number 2 to
a Registration Statement on Form S-2 originally filed on February 12, 2004
(hereinafter referred to as the "March Form S-2"), which covered the common
shares issuable upon the conversion of the all B Shares and warrants sold in
this offering. On March 31, 2004, the March Form S-2 was declared effective by
the Securities and Exchange Commission File No. 333-112771. The Company paid
approximately $106,000 in placement agent fees relating to this private
placement.

Note 3. Stockholders Equity (continued)

On February 10, 2004, the Company closed an offering of 1,600,000 restricted
shares of its common stock and 800,000 warrants to purchase common stock in a
private transaction for gross proceeds of $288,000 in cash. The exercise price
of the warrants is $.33 per share of common stock and the exercise price is only
payable with cash. The March Form S-2, declared effective on March 31, 2004,
registered the shares sold in this offering and the common stock issuable upon
the exercise of the warrants sold in this offering. The Company paid
approximately $28,000 in placement agent fees relating to this private
placement.

In January 2004, the Company issued 1,500,000 warrants to Mr. Ray Musson and
Killick & Co. as a settlement for not registering previously sold shares. The
warrants have a (5) five-year term, an exercise price of $.36 per share and no
cashless exercise provision. The Company recorded as expense $180,000 relating
to this warrants issuance. The March Form S-2, declared effective on March 31,
2004, registered the shares of common stock issuable upon the exercise of the
warrants issued to Mr. Musson and Killick & Co.

In December 2003, the Company issued 5,000,000 shares of common stock to Blue &
Gold Enterprises LLC ("Blue & Gold") as consideration for financial consulting
services provided by Mr. Steven Antebi pursuant to the Consulting Agreement
dated December 2003 between the Company and Mr. Antebi. The shares issued to Mr.
Antebi were restricted shares on the date of issuance. The April Form S-2,
declared effective on April 29, 2004, registered the shares of common stock
issued to Mr. Antebi under his consulting agreement.

On November 4, 2003, the Company completed an offering of 2,647.78 shares of
Series B 10% Cumulative Convertible Preferred Stock (the "B Shares") with gross
proceeds to the Company from the sale equaling $2,647,780. All of the B Shares
sold in this offering were offered and sold to accredited investors in a
transaction exempt from the registration requirements of the Securities Act,
pursuant to Section 4(2) of that Act. No general solicitation was made in
connection with the sale of the B Shares. The B Shares have a cumulative
dividend of 10% per year, which is payable in cash or stock at the time of
conversion. Each B Share is convertible into approximately 5,556 shares of the
common stock of the Company. The conversion to common stock of all the B Shares
sold in the offering will result in the Company issuing approximately 14,710,000
shares of common stock to the B Share subscribers. The B Share subscribers also
received warrants to purchase a number of common shares equal to 50% of the
common shares such subscriber would receive upon the conversion of their B
Shares to common shares. The exercise price of the warrants is $.33 per share of
common stock. Exercise of all the warrants held by the B Share subscribers would
result in the issuance of approximately 7,355,000 shares of common stock. The
Company recorded approximately $736,000 as beneficial conversion relating to
this transaction because the fair market value of the common stock was greater
than the conversion price. The March Form S-2, declared effective on March 31,
2004, covered the common shares issuable upon the conversion of the B Shares and
warrants sold in

Note 3. Stockholders Equity (continued)

this offering. However, the Company was not able to get the March Form S-2
declared effective before the passing of certain deadlines and as such the
Company is required to pay a penalty equivalent to 6% of the common shares
underlying the B Shares sold in this offering. The Company has recorded a charge
of approximately $217,423 relating to this penalty (including the penalty
relating to the Series A subscribers described below) for the nine months ended
March 31, 2004. In addition, the Company incurred approximately $167,000 of
dividends to the Series B shareholders. The Company paid approximately $322,000
in finders' fees relating to this private placement.

On September 30, 2003, the Company completed an offering of 975,940 shares of
its Series A 8% Cumulative Convertible Preferred Stock (the "A Shares") with
gross proceeds to the Company from the sale equaling $975,940. All of the A
Shares sold in this offering were offered and sold to accredited investors in a
transaction exempt from the registration requirements of the Securities Act,
pursuant to Section 4(2) of that Act. No general solicitation was made in
connection with the sale of the A Shares. Pursuant to a "most favored nation"
provision of the A Shares offering, the holders of the A Shares were entitled to
receive the better terms of any offering that was completed subsequent to the
closing of the A Shares offering. As a result, the Company has cancelled all
975,940 A Shares which were to be issued and has instead issued 975.94 B Shares
to the A Share subscribers. The A Share subscribers also received warrants with
the same terms as the B Share subscribers. The conversion to common stock of all
the B Shares issued to the A Share subscribers will result in the Company
issuing approximately 5,422,000 shares of common stock to the A Share
subscribers. Pursuant to a registration rights agreement between the Company and
the B Share subscribers, the Company was obligated to register the shares of
common stock issuable upon conversion of the B Shares within 45 days of issuance
of the B Shares. This registration rights agreement contained a penalty
provision that required the Company to issue the number of shares of common
stock equal to 2% of the shares of common stock issuable upon conversion of the
B Shares for each 30 day period until such shares were registered. When the
March Form S-2 was declared effective, the Company was obligated to issue an
aggregate of 1,242,698 shares of common stock pursuant to this penalty
provision. Exercise of all the warrants held by the A Share subscribers will
result in the issuance of approximately 2,711,000 shares of common stock to the
A Share subscribers. The Company recorded approximately $271,000 as beneficial
conversion relating to this transaction because the fair market value of the
common stock was greater than the conversion price. The March Form S-2, declared
effective on March 31, 2004, covered the common shares issuable upon the
conversion of the B Shares and warrants held by the A Share subscribers. The
Company recorded approximately $60,000 for fees relating to this private
placement.

In fiscal 2003, the Board of Directors issued 7,098,000 options to certain
employees of the Company under its 2002 Stock Incentive Plan. Of those options,
1,833,333 vested on the date of grant and the remainder vest over a two to three
year period. Such options have a term of ten years and have an exercise price of
$.25 per share. For financial statement purposes the Company recorded deferred
compensation of $18,996,000, representing the difference between the market
price of the Company's stock and $.25 on the date of grant. Deferred
compensation is being amortized for financial reporting purposes over the
vesting period of the options. The amount recognized as expense for the nine
months ending March 31, 2004 was $2,855,000.

Note 3. Stockholders Equity (continued)

In fiscal 2003, the Company granted 420,000 options to employees at an exercise
price of $.25 per share. Under the terms of employment the Company has agreed to
compensate employees holding these options upon exercise, the difference between
one dollar and cash realized from the exercise price of $.25 of each option up
to one dollar in cash or stock. As of March 31, 2004, 400,000 options remain
outstanding and accordingly, the Company has recorded a $400,000 liability. All
400,000 options were fully vested and exercisable as of March 31, 2004. All
400,000 options expire in December 2004.

In fiscal 2003 the Company's Board of Directors granted 1,500,000 options to
consultants at an exercise price of $.25 per share. Under the terms of
engagement the Company agreed to compensate certain consultants upon exercise
the difference between one dollar and cash realized from the exercise of each
option up to one dollar in cash or stock up to a maximum of $262,000, and
accordingly, the Company has recorded a $262,000 liability at March 31, 2004. At
March 31, 2004, 1,438,000 options were outstanding, fully vested and exercisable
and expire in December 2004.

Note 4. SpiderSoftware, Inc. Acquisition

On August 13, 2002 the Company entered into a memorandum of understanding (the
"MOU") to enter into a business combination transaction with SpiderSoftware,
Inc. ("Spider"), a Canadian corporation. On January 10, 2003 the Company
completed the acquisition by issuing one million five hundred thousand shares of
its common stock, stock options valued at $178,328 and assumed debt of $335,766
(including advances made by WARP) for all of the outstanding capital shares of
Spider. The acquisition was valued at $4,514,621 based upon an independent
valuation.

The acquisition has been accounted for using the purchase method of accounting,
and accordingly the purchase price has been allocated to the assets acquired and
the liabilities assumed based on their fair values at the date of acquisition.
The excess of the purchase price over the estimated fair values of net assets
acquired has been recorded as goodwill.

ITEM 2. Management's Discussion And Analysis Or Plan Of Operation.

The following discussion and analysis provides information that the
Company's management believes is relevant to an assessment and understanding of
the Company's results of operations and financial condition. This discussion
should be read together with the Company's financial statements and the notes to
financial statements, which are included in this report, and with the Company's
Form 10-KSB.

Plan of Operations

In January 2004 the Company changed its business model from a hardware
and software company to a pure software company. Management made the change to
allow the Company to better leverage its channel partners and manage its product
portfolio.

The Company's plan of operation is to develop, manage and market the
products of its subsidiaries, which have developed unique and proprietary
technologies which accelerate the processing speed of dynamic content requests
and improve the efficiency of an internet or intranet network's infrastructure.
The Company refers to this activity as Application Acceleration. The Company's
product offerings are marketed as components of its GTEN (Global Transaction
Enabled Network) application acceleration framework. This includes the WARP
2063e, SpiderSoftware's Enterprise and Spider Professional and iMimic's
DataReactor and StreamReactor software products. The Company's technology moves
the processing of dynamic and static content requests away from the core of an
enterprises' network infrastructure to the edge of that infrastructure. By doing
so, the Company's technology and products enable an enterprise to improve the
efficiency of its network infrastructure resulting in:

o The elimination of complex transaction-processing
bottlenecks,
o Improved response times,
o Lower hardware costs, and
o Lower wide area network costs.

Strategic Initiatives to Strengthen the Company's Operational Effectiveness

Having completed an initial six months of "validation sales" from June
30, 2002 through December 31, 2002, the Company elected to undertake a strategy
to improve the effectiveness of its sales and marketing strategy. As part of its
strategy the Company acquired Spider in January 2003 and in April 2003 the
Company entered into an OEM Software License Agreement with iMimic Networking,
Inc.

Increase Product Range:

The Company has initiated a strategy to broaden the scope of the technologies
that it delivers to its customers and channel partners through a series of
acquisitions and licensing strategies. A significant portion of that plan is
underway, as the combination of Spider, WARP technologies and third party OEM
software has significantly increased the overall product offerings of the
Company. Management expects the further broadened product coverage to promote
enhanced customer traction. Dynamic caching is a relatively new technology with
an undefined

market size. By incorporating third party OEM software into its technology, the
Company is seeking to increase the target market for its products to cover the
static caching market, which analysts estimate ranges from $250 million to $450
million per year.

Increase Sales Effectiveness:

The nature of new technology launches requires a consultative selling
approach, since customers are typically unfamiliar with new techniques such as
dynamic caching. In order to promote a consultative approach, the Company has
formed what it believes to be a capable sales engineering team. Essentially, the
Company's strategy is to have the salesperson focus on moving the customer
through the sales process from "prospect" status to "closure", while the sales
engineering team handles any technical details required by the customer. This
approach is intended to shorten the sales cycle and promote the image of the
Company.

Direct Sales:

The Company uses its direct sales team to create base level traction
with potential customers. Direct sales are used as the foundation to promote
channel sales. Essentially, the strategy is to show the channel, i.e. VARs and
resellers, the benefits of selling the Company's technology. In order to promote
increased visibility into the sales process, the Company instituted Company wide
use of an integrated sales management system. As a result, new account
opportunities are closely monitored and tracked across five development stages:
Prospect, Proposal, Pilot, Negotiation, and Won/Lost. Additionally, the Company
has instituted an incentive based compensation plan for all sales staff.

Channel Sales:

Channel Sales are active in Japan and Europe. In Japan, Macnica
Networks is the Company's master reseller. The Company's United Kingdom office
(the "UK Office") has been effective in developing VAR relationships. To date
the UK Office has developed three VAR relationships with Morse, Estafet and
European Management Group. There have been no channel sales in North America to
date. The Company has engaged an experienced channel sales consultant to develop
the channel in South America. The focus of the Company's initial channel effort
in South America will be on small integrators and resellers that focus on web
performance.

Results of Operations

During the three months ending March 31, 2004 the Company recognized
approximately $371,000 of revenues compared to approximately $87,000 for the
three months ended March 31, 2003. The increase in revenue was due to the
Company focus on developing its sales and marketing team, in addition Management
has changed its business model from a hardware company to a pure software
company. Revenue on software is recognized upon delivery versus hardware where
it was amortized over twelve months.

During the nine months ending March 31, 2004 the Company recognized
approximately $735,000 of revenues compared to approximately $233,000 for the
nine months ended March 31, 2003. The increase in revenue was due to the Company
focus on developing its sales and marketing team, in addition

Management has changed its business model from a hardware company to a pure
software company. Revenue on software is recognized upon delivery versus
hardware where it was amortized over twelve months.

Cost of sales for three months ended March 31, 2004 was approximately $368,000
as compared to $10,000 for the three months ended March 31, 2003. The increase
in cost of sales was due to the Company's increased sales and write off of
approximately $328,000 of inventory relating to the change in its business model
from a hardware to a software company. The Company gross margin was
approximately 89% exclusive of the inventory writeoff.

Cost of sales for nine months ended March 31, 2004 was $411,000 as compared to
$42,000 for the nine months ended March 31, 2003. The increase in cost of sales
was due to the Company's increased sales and write off of approximately $328,000
of inventory relating to the change in its business model from a hardware to a
software company. The Company gross margin was approximately 89% exclusive of
the inventory writeoff.

Product development costs were approximately $150,000 for the three months ended
March 31, 2004 as compared to approximately $101,000 for the three months ended
March 31, 2003. The increase was due primarily to salary increases and payment
of severance to terminated employees.

Product development costs were approximately $475,000 for the nine months ended
March 31, 2004 as compared to approximately $353,000 for the nine months ended
March 31, 2003. The increase was due primarily to salary increases and payment
of severance to terminated employees.

Sales and marketing costs were approximately $469,000 for the three months ended
March 31, 2004 as compared to approximately $623,000 for the three months ended
March 31, 2003. In 2003 the Company paid approximately $154,000 to consultants
and public relations company to establish its sales and marketing focus.

Sales and marketing costs were approximately $1,731,000 for the nine months
ended March 31, 2004 as compared to approximately $959,000 for the nine months
ended March 31, 2003. The increase represents the Company's focus on selling its
products by increasing its sales force and marketing efforts.

General and administrative expense was approximately $1,007,000 for the three
months ended March 31, 2004 as compared to approximately $670,000 for the three
months ended March 31, 2003. The increase was due primarily to increase in
professional fees and severance costs.

General and administrative expense was approximately $2,266,000 for the nine
months ended March 31, 2004 as compared to approximately $1,853,000 for the nine
months ended June 30, 2003. The increase was due primarily to increase in
professional fees and severance costs.

Non-cash compensation, consulting and other fees for the three months ended
March 31, 2004 was approximately $916,000 as compared to approximately
$2,847,000 for the three months ended March 31, 2003. The decrease of
approximately $1,931,000 in non-cash compensation primarily relates to the
decrease of approximately $825,000 in amortization expenses from the issuance of
options granted in 2002. In addition, the Company's non-cash compensation to
consultants decreased by approximately $1,474,000 which was partially offset by
penalties paid to investors for failure to timely file the registration of
securities.

Non-cash compensation for the nine months ended March 31, 2004 was approximately
$4,314,000 as compared to approximately $7,980,000 for the nine months ended
March 31, 2003. The decrease in non-cash compensation primarily relates to a
portion of prior year employee stock options of $6,253,000 vesting immediately
as compared to approximately $2,855,000 expensed for the nine months ended March
31, 2004. In addition, the Company recognized non-cash compensation of
approximately $1,091,000 relating to shares of common stock issued to
consultants and approximately $217,000 relating to penalty provision of the B
Shares and $180,000 relating to penalty warrants for failure to timely file the
registration of securities.

Net interest and other income for the three months ended March 31, 2004 was
approximately $2,000 as compared to $5,000 for the three months ended March 31,
2003. The decrease in income was primarily due to lower cash balances.

Net interest and other income for the nine months ended March 31, 2004 was
approximately $62,000 as compared to $14,000 for the nine months ended March 31,
2003. The increase in income was due primarily to a research and development
refund relating to Spider Software from the Canadian government.

Net Operating Loss Carryforwards

At March 31, 2004, the Company has net operating loss carryforwards of
approximately $21,807,000, which may be used to reduce taxable income in future
years through the year 2024. Due to uncertainty surrounding the realization of
the favorable tax attributes in future returns, WARP has placed a full valuation
allowance against its net deferred tax asset. At such time as it is determined
that it is more likely than not that the deferred tax asset is realizable, the
valuation allowance will be reduced. Furthermore, the net operating loss
carryforward may be subject to further limitation pursuant to Section 382 of the
Internal Revenue Code.

Liquidity and Capital Resources

To date, the Company has financed its operations primarily through the sale of
equity securities and debt. As of March 31, 2004, the Company had approximately
$1,009,000 in cash. The Company has never been profitable and expects to
continue to incur operating losses in the future. The Company will need to
generate significant revenues to achieve profitability and to be able to
continue to operate. The Company's consolidated financial statements for June
30, 2003 had been prepared on the assumption that the Company will continue as a
going concern. The Company's previous independent auditors issued their audit
report for the June 30, 2003 financial statements dated October 9, 2003 that
includes an explanatory paragraph stating that the Company's recurring losses
and accumulated deficit, among other things, raise substantial doubt about the
Company's ability to continue as a going concern. The Company's historical sales
have never been sufficient to cover its expenses and it has been necessary to
rely upon financing from the sale of equity securities and debt to sustain
operations.

The Company's ultimate future capital requirements will depend on many factors,
including cash flow from operations, customer acquisition, continued progress in
research and development programs, competing technological and market
developments, and the Company's ability to successfully market its products. The
Company has no firm commitments from any sources to provide additional equity or
debt financing. As such, there can be no assurance that sufficient funds will be
raised to finance the operations of the Company through fiscal 2004. Moreover,
any equity financing could result in dilution to the existing shareholders and
any debt financing would result in higher interest expense.

The Company has raised approximately $4,682,000 (net of issuance cost) from the
exercise of warrants and sale of Preferred and Common stock for the nine months
ended March 2004. The Company anticipates that it will need to raise at least an
additional $3,000,000 to support its working capital needs and to continue to
execute through March 2005 the requirements of its business plan. The Company is
actively pursuing a number of alternatives to increase cash available to fund
operations. There can be no assurance that the Company will succeed in raising
sufficient capital to continue operations or that any such capital will be
available on favorable terms.

Subsequent Events

On April 19, 2004, Mr. John Gnip resigned from his position on the Board of
Directors of the Company.

Critical Accounting Policies

Revenue Recognition

Pursuant to AICPA Statement of Position ("SOP") 97-2, Software Revenue
Recognition, the Company recognizes revenues from software licenses when
persuasive evidence indicates a contractual arrangement exists, delivery has
occurred, the fee is fixed or determinable and collection is probable. The
Company's software licenses generally are marketed with certain post contract
customer support ("PCS") and other obligations, which may include maintenance,
delivery of unspecified upgrades, and warranties regarding service response
times. Revenue under PCS agreements is recognized ratably over the term of the
agreement. Under SOP 97-2, the Company must allocate revenue to each element
based on vendor specific objective evidence ("VSOE") of each element's fair
value. Since the Company has just begun to market its products, VSOE of the fair
value of each element has not been clearly established. Accordingly, revenue
from license agreements is being recognized ratably over the term of the PCS
agreement.

Licensing revenue from Spider Software and Data Reactor is recognized upon
product delivery provided persuasive evidence of an arrangement exists, fees are
fixed or determinable and the resulting receivable is deemed collectible by
management.

Goodwill and Impairment

The Company reviews goodwill when events or changes in circumstances indicate
that the carrying amount of goodwill may not be recoverable. We also review
goodwill as required by SFAS No. 142, "Goodwill and Other Intangible Assets",
which requires that goodwill be tested annually using a two-step process. The
first is to identify any potential impairment by comparing the carrying value of
the company to the fair market value. If a potential impairment is identified,
the second step is to compare the implied fair value of goodwill with its
carrying amount to measure the impairment loss. The Company's fair value is
determined by the price in the public market. A significant decrease in the
market price could result in an unexpected impairment charge to goodwill, which
could have a negative impact on our operating results. We will complete our
annual testing in the quarter ending June 30, 2004. The annual impairment test
completed during the fourth quarter of fiscal year ended June 30, 2003 indicated
that our goodwill is not impaired.

Controls And Procedures

Within 90 days prior to the date of this Quarterly Report on Form 10-QSB for the
fiscal quarter ended March 31, 2004, the Company carried out an evaluation,
under the supervision and with the participation of the Company's management,
including the Company's Chief Executive Officer and President, the principal
executive officer, and the Company's principal financial officer, of the
effectiveness of the design and operation of the Company's disclosure controls
and procedures pursuant to Rule 13a-15(d) and 15(e) of the Securities Exchange
Act of 1934 (the "Exchange Act"). Based upon that evaluation, the principal
executive and principal financial officer concluded that the Company's
disclosure controls and procedures are effective to ensure that information
required to be disclosed by the Company in reports that it files under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Securities and Exchange Commission's rules and forms.
There were no significant changes in internal controls or

in other factors that could significantly affect internal controls subsequent to
the date of our most recent evaluation, including any corrective actions with
regard to significant deficiencies and material weaknesses.

PART II
OTHER INFORMATION

ITEM 2. Changes In Securities And Small Business Issuer Purchases of Equity
Securities

The following information relates to sales of unregistered securities
by the Company during the third quarter of fiscal 2004 ended March 31, 2004. All
of these sales of securities were made in reliance upon the exemption from the
registration provisions of the Securities Act of 1933, as amended (the
"Securities Act"), set forth in Sections 4(2) thereof and the rules and
regulations under the Securities Act, including Regulation D, as transactions by
an issuer not involving any public offering and/or sales to a limited number of
purchasers who were acquiring such securities for their own account for
investment purposes and not with a view to the resale or distribution thereof.

On March 29, 2004, the Company issued 5,000,000 shares of common stock to Mr.
Noah Clark as consideration for four months of financial consulting services
begining April 1, 2004 to be provided by Mr. Clark pursuant to the Consulting
Agreement dated March 26, 2004 between the Company and Mr. Clark (the
"Consulting Agreement"). The Company recognized approximately $950,000 as
deferred compensation relating to this agreement. The shares issued to Mr. Clark
were restricted shares on the date of issuance. On April 26, 2004, the Company
filed an Amendment Number 1 to a Registration Statement on Form S-2 originally
filed on April 4, 2004 (hereinafter referred to as the "April Form S-2"), which
covered the shares of common stock issued to Mr. Clark under his consulting
agreement. On April 29, 2004, the April Form S-2 was declared effective by the
Securities and Exchange Commission (File No. 333-114296). A copy of the
Consulting Agreement is attached hereto as Exhibit 10.15 and the reader is
referred to that exhibit for the full text of that agreement.

On March 12, 2004, the Company approved the issuance 97,608 shares of
common stock to Bradley L. Steere, Esq. as consideration for legal services
rendered to the Company in the amount of approximately $18,500. The shares
issued to Mr. Steere are restricted shares and are subject to Rule 144 under the
Securities Act and therefore generally cannot be resold for a period of twelve
months from the date it was earned.

On March 12, 2004, the Company approved the issuance 32,639 shares of
common stock to Mr. Wesley Ramjeet as consideration for professional accounting
services rendered to the Company in the amount of approximately $5,900. The
shares issued to Mr. Ramjeet are restricted shares and are subject to Rule 144
under the Securities Act and therefore generally cannot be resold for a period
of twelve months from the date it was earned.

On March 12, 2004, the Company approved the issuance 555,554 shares of
common stock to Mr. Malcolm Coster pursuant to the terms and conditions of his
Employment Contract as compensation for services rendered by Mr. Coster to the
Company in the amount of approximately $111,000 as its interim Chief Executive
Officer. The shares issued to Mr. Coster are restricted shares and are

subject to Rule 144 under the Securities Act and therefore generally cannot be
resold for a period of twelve months from the date it was earned.

In March 2004, several holders of the preferred stock of 6043577
Canada, Inc., a wholly-owned subsidiary of the Company established to complete
the acquisition of Spider, converted their preferred stock to shares of the
Company's common stock. Such conversions resulted in the issuance of 767,003
shares of common stock. The shares issued in this conversion are restricted
shares and are subject to Rule 144 under the Securities Act and therefore
generally cannot be resold for a period of twelve months from the date of
conversion.

In March 2004, holders of 1,468.94 shares of the Company's Series B 10%
Cumulative Convertible Preferred Stock ("B Shares") converted their B Shares
into shares of the company's common stock. Such conversions resulted in the
issuance of 8,857,643 shares of common stock. The 8,857,643 common shares issued
on the conversions consisted of 8,160,783 shares derived from the B Shares' $.18
conversion price, 267,872 shares issued as payment of the B Shares 10% dividend,
and 428,988 shares issued as payment of a 6% penalty for the failure by the
Company to cause its March Form S-2 to be declared effective in a timely manner.
The shares issued in this conversion were restricted shares on the date of
issuance. The March Form S-2 (as defined below), declared effective on March 31,
2004, subsequently covered the shares of common stock issued as a result of this
conversion.

On March 5, 2004, the Company initiated a warrant exchange program (the
"Program") applicable to all of the Company's outstanding warrants (collectively
the "Original Warrants"). The Program was an opportunity for the Company's
warrant holders to choose whether they wanted to keep their Original Warrants or
exchange them for new warrants (the "Exchanged Warrants"). The Exchanged
Warrants had an exercise price of $0.15 per share, as compared to the Original
Warrants, which have exercise prices of $0.36, $0.33, $0.25, $0.18 per share,
and were required to be exercised immediately after their issuance. The terms of
the Exchanged Warrants required that they be exercised immediately after
issuance, as compared to the Original Warrants, which are exercisable for a
period of 5 years from the date of issuance. Also, the terms of the Exchanged
Warrants required that the exercise price be paid in cash, as compared to
certain Original Warrants, which had a cashless exercise provision. All other
terms of the Exchanged Warrants were the same as the terms of the Original
Warrants. The purpose of the Program was to provide warrant holders with the
opportunity to immediately obtain the Company's common stock based on a $0.15
per share exercise price and to provide the Company with funds through the
exercise of such warrants. The Program closed on March 18, 2004, and resulted in
the exchange of 4,302,387 Original Warrants for Exchanged Warrants. The
immediate exercise of the Exchanged Warrants caused the issuance by the Company
of 4,302,387 shares of common stock for gross proceeds to the Company of
$645,348. The shares of common stock issued pursuant to the Program were
restricted shares on the date of issuance. The March Form S-2 (as defined
below), declared effective on March 31, 2004, subsequently covered the shares of
common stock issued as a result of the Program. No placement or finder's fees
were paid in connection with the Program.

In March 2004, 135,000 warrants were exercised at $.10 per share; the Company
received approximately $13,500.

On February 10, 2004, the Company completed an offering of 1,058 shares
of Series B 10% Cumulative Convertible Preferred Stock (the "B Shares") with
gross proceeds to the Company from the sales equaling $1,058,000. The B Shares
had a purchase price of $1,000.00 per share. The purchase price of the B Shares
was paid in cash. The B Shares have a cumulative dividend of 10% per year, which
is payable in cash or stock at the time of conversion at the election of the
Company. Each B Share is convertible into approximately 5,556 shares of the
common stock of the Company. The conversion to common stock of all the B Shares
sold in the offering will result in the Company issuing approximately 5,877,800
shares of common stock to the B Share subscribers. The B Share subscribers also
received warrants to purchase a number of common shares equal to 50% of the
common shares such subscriber would receive upon the conversion of their B
Shares to common shares. The exercise price of the warrants is $.33 per share of
common stock and the exercise price is only payable with cash. Exercise of all
the warrants held by the B Share subscribers would result in the issuance of
approximately 2,938,900 shares of common stock. The Company recorded
approximately $235,000 as beneficial conversion relating to this transaction
because the fair market value of the common stock was greater than the
conversion price. On March 22, 2004, the Company filed an Amendment Number 2 to
a Registration Statement on Form S-2 originally filed on February 12, 2004
(hereinafter referred to as the "March Form S-2"), which covered, among other
securities, the common shares issuable upon the conversion of the all the B
Shares and certain warrants of the Company then outstanding. On March 31, 2004,
the March Form S-2 was declared effective by the Securities and Exchange
Commisssion File No. 333-112771. The Company paid approximately $106,000 in
placement agent fees relating to this private placement. No general
solicitations were made in connection with the sale of the B Shares.

On February 10, 2004, the Company closed an offering of 1,600,000
restricted shares of its common stock and 800,000 warrants to purchase common
stock in a private transaction for gross proceeds of $288,000 in cash. The
exercise price of the warrants is $.33 per share of common stock and the
exercise price is only payable with cash. No general solicitations were made in
connection with the sale of theses shares and warrants. The March Form S-2,
declared effective on March 31, 2004, subsequently covered the shares of common
stock issued in this offering and the common shares issuable upon the exercise
of the warrants sold in this offering. The Company paid approximately $28,000 in
placement agent fees relating to this private placement.

In January 2004, the Company issued 1,000,000 warrants to Mr. Ray
Musson and 500,000 warrants to Killick & Co as a result of the Company's failure
to timely file a registration statement covering certain restricted shares
previously issued to Mr. Musson and Killick & Co. The warrants have a (5)
five-year term, an exercise price of $.36 per share and no cashless exercise
provision. The March Form S-2, declared effective on March 31, 2004, covered the
shares of common stock issuable upon the exercise of the warrants issued to Mr.
Musson and Killick & Co.

ITEM 5. Other Information.

On April 19, 2004, Mr. John Gnip resigned from his position on the
Board of Directors of the Company.

ITEM 6. Exhibits And Reports On Form 8-K.

(a) Exhibits:

The following documents heretofore filed by the Company with the
Securities and Exchange Commission are hereby incorporated by reference:

Exhibit
Number Description Of Document
---------- -----------------------

2.1* Form of Share Exchange Agreement dated as of May 16, 2002 by
and among Abbott Mines, Ltd., Carlo Civelli, Mike Muzylowski,
WARP Solutions, Inc., Karl Douglas, John Gnip and the Persons
Identified on Schedule A thereto. Incorporated by reference to
Exhibit 2.1 to the Current Report on Form 8-K filed by the
Company on June 10, 2002.

3.1* Articles of Incorporation of WARP Technology Holdings, Inc.
Incorporated by reference to Exhibit 3.1 to the Registration
Statement on Form SB-2 (Registration No. 333-46884) filed by
the Company on August 28, 2000 as amended (the "Registration
Statement").

3.2* By-laws of WARP Technology Holdings, Inc. Incorporated by
reference to Exhibit 3.2 to the Registration Statement.

3.3* The form of the Articles of Merger of Abbott Mines Limited and
WARP Technology Holdings, Inc. Incorporated by reference to
Exhibit 3.3 to the Current Report on Form 8-K filed by the
Company on September 3, 2002.

3.4* Form of Certificate of Amendment to Articles of Incorporation
of WARP Technology Holdings, Inc. filed with the Secretary of
State of the State of Nevada on September 12, 2003.
Incorporated by reference to Exhibit 3.4 to the Annual Report
on Form 10-KSB filed by the Company on October 14, 2003.

3.5* Form of Charter of the Audit Committee of the Board of
Directors of WARP Technology Holdings, Inc. as adopted by the
Unanimous Consent of the Board of Directors of the Company in
May 2003 which governs the make-up, powers and
responsibilities of the Audit Committee of the Board of
Directors. Incorporated by reference to Exhibit 3.5 to the
Annual Report on Form 10-KSB filed by the Company on October
14, 2003.

3.6* Form of Certificate Of Designations, Preferences And Rights Of
Series A 8% Cumulative Convertible Preferred Stock Of Warp
Technology Holdings, Inc. as filed with the Secretary of State
of the State of Nevada on October 1, 2003. Incorporated by
reference to Exhibit 3.6 to the Quarterly Report on Form
10-QSB filed by the Company on November 14, 2003.

3.7* Form of Certificate Of Designations, Preferences And Rights Of
Series B 10% Cumulative Convertible Preferred Stock Of Warp
Technology Holdings, Inc. as filed with the Secretary of State
of the State of Nevada on October 1, 2003. Incorporated by
reference to Exhibit 3.7 to the Quarterly Report on Form
10-QSB filed by the Company on November 14, 2003.

10.15# Form of Consulting Agreement between WARP Technology Holdings,
Inc. and Mr. Noah Clark which was executed by the parties
thereto on March 29, 2004.

31.1# Certification of Chief Executive Officer required by Exchange
Act Rules 13a-14(a) (Section 302)

31.2# Certification of Principal Financial Officer requires by
Exchange Act Rules 13a-14(a) (Section 302)

32.1# Certification required by 18 U.S.C.Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2# Certification required by 18 U.S.C.Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

---------------------
* Incorporated herein by reference.
# Filed herewith.

(b) Reports on Form 8-K:

The following reports on Form 8-K have been filed during the time
period covered by this report:

On February 2, 2004, the Company filed a Current Report on Form 8-K,
which disclosed that Mr. Karl Douglas had resigned from its Board of Directors
on January 28, 2004 and that Mr. Gus Bottazzi had been appointed to the Board to
fill the vacancy created by Mr. Douglas' resignation.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

May 17, 2004
WARP TECHNOLOGY HOLDINGS INC

By: /s/ Gus Bottazzi
-------------------------------
Gus Bottazzi, CEO and President
and Principal Executive Officer

EXHIBIT INDEX

The following Exhibits are filed herewith:

Exhibit
Number Description of Document
------ -----------------------

10.15 Form of Consulting Agreement between WARP Technology Holdings,
Inc. and Mr. Noah Clark which was executed by the parties
thereto on March 29, 2004.

31.1 Certification of Chief Executive Officer required by Exchange
Act Rules 13a-14(a) (Section 302)

31.2 Certification of Pricipal Financial Officer requires by
Exchange Act Rules 13a-14(a) (Section 302)

32.1 Certification required by 18 U.S.C.Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2 Certification required by 18 U.S.C.Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002