Edgar Filing: Halo Technology Holdings, Inc.

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

FORM 10-QSB/A

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

For the Fiscal Quarter Ended March 31, 2005

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

Commission File No. 000-33197

HALO TECHNOLOGY HOLDINGS, INC.
--------------------------------------------------------------------------------
(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

200 Railroad Avenue, 3rd Floor, Greenwich, CT 06830
--------------------------------------------------------------------------------
(Address of principal executive office)

Issuer's telephone number: (203) 422-2950

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 15, 2005, there were
3,110,800 shares of Common Stock, par value $.00001 per share, outstanding.

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

EXPLANATORY NOTE

This Form 10-QSB/A amends our Quarterly Report on Form 10-QSB for the
fiscal quarter ended March 31, 2005 as filed with the Securities and Exchange
Commission (the "SEC") on May 20, 2005 (the "Original Filing"). We are filing
this amendment to reflect the restatement of our consolidated financial
statements and other financial information contained in the Original Filing. The
reasons for this restatement are presented in Note 1 to our consolidated
financial statements. We have also amended "Note 2. Selected Significant
Accounting Policies," "Note 3. Stockholders' Equity," "Note 4. Gupta
Acquisition," "Note 5. Series C Subscription Agreement," "Note 7. Senior Note
and Warrant Purchase Agreement," and "Note 8. Subordinated Note and Warrant
Purchase Agreement" to our consolidated financial statements in connection with
the restatement.

This Form 10-QSB/A amends and restates "Item 2. Management's Discussion
and Analysis or Plan of Operations" solely as a result of, and to reflect, the
restated financial statements and under "Business" solely for purposes of
disclosing that we changed our name to Halo Technology Holdings, Inc. as of
April 2, 2006. In addition, in accordance with applicable SEC rules, this Form
10-QSB/A includes updated certifications from our Chief Executive Officer and
Principal Financial Officer as Exhibits 31.1, 31.2, 32.1 and 32.2.

Except for the foregoing amended information, this Form 10-QSB/A continues
to describe conditions as of the date of the Original Filing, and we have not
updated the disclosures contained herein to reflect the events that have
occurred subsequent to that date. Other events occurring after the date of the
Original Filing or other information necessary to reflect subsequent events have
been disclosed in reports filed with the SEC subsequent to the Original Filing.

PART I

FINANCIAL INFORMATION

Forward-Looking Information

Certain statements in this Form 10-QSB/A of Halo Technology Holdings, Inc.
(the "Company") may constitute "forward-looking statements" within the meaning
of the Private Securities Litigation Reform Act of 1995 (the "Reform Act").
These forward-looking statements are made only as of the date hereof, and we
undertake no obligation to update or revise the forward-looking statements,
whether as a result of new information, future events or otherwise. The safe
harbors for forward-looking statements provided by the Reform Act are
unavailable to issuers of "penny stock". Our shares may be considered a penny
stock and, as a result, the safe harbors may not be available to us. 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
SEC, as well as the risks and uncertainties discussed in the Company's Annual
Report on Form 10-KSB/A filed with the SEC on October 11, 2006.

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,
2005 2004
---- ----
As Restated (Audited)
(Note 1)
(Unaudited)

Assets
Current assets:
Cash $ 1,080,521 $ 115,491
Accounts receivable 2,486,058 117,847
Prepaid expenses and other 454,206 15,850
Deferred product cost 14,028
------------ ------------
Total current assets 4,020,785 263,216
Property and equipment, net 201,879 36,312
Deferred financing cost 940,898
Intangible assets, net 16,242,791 252,917
Goodwill 11,043,839 3,893,294
------------ ------------
Total assets $ 32,450,192 $ 4,445,739
============ ============
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 999,796 $ 672,105
Accrued expenses 4,138,534 336,496
Deferred revenue 2,962,930 155,826
Deferred compensation payable -- 444,000
Subordinated note 1,500,000
Senior note 2,275,000
Loan from ISIS 1,293,567
------------ ------------
Total current liabilities 13,169,827 1,608,427

Subordinated note 208,334 --
Series C warrants liabilities 26,975,359 --
Senior and Sub warrants liabilities 12,408,000 --
------------ ------------
Total liabilities 52,761,520 1,608,427
Commitments and Contingencies
Stockholders' equity:
Preferred stock (Canadian subsidiary) 2 4
Preferred Stock Series B 10% cumulative convertible; $.00001 par value; 0
and 2,915 shares issued and outstanding at March 31, 2005 and June 30, 2004,
respectively 2,915,100
Common stock to be issued relating to interest and penalties on Series B
and B-2 Cumulative convertible preferred stock 0 and 36,387 shares at
March 31, 2005 and June 30, 2004, respectively 392,939
Preferred Stock Series C 6% cumulative convertible: $.00001 par value;
16,000,000 shares authorized, 11,193,095
issued and outstanding at March 31, 2005 11,193,095
Common stock, $.00001 par value; 150,000,000 shares authorized, 3,110,800
and 971,115 shares issued and outstanding at March 31, 2005 and June 30, 2004 33 10
Additional paid-in capital 55,140,118 40,122,777
Deferred compensation (1,070,860) (891,833)
Accumulated other comprehensive loss (3,823) (4,990)
Accumulated deficit (85,569,893) (39,696,695)
------------ ------------
Total stockholders' equity (20,311,328) 2,837,312
------------ ------------
Total liabilities and stockholders' equity $ 32,450,192 $ 4,445,739
============ ============

See accompanying notes to consolidated financial statements.

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

Three Months Ended Nine months Ended
March 31, March 31,
2005 2004 2005 2004
As Restated As Restated
(Note 1) (Note 1)
---- ---- ---- ----

Revenue
Licenses $ 1,610,615 $ 296,627 $ 1,822,231 $ 587,756
Services 730,427 74,157 783,331 146,939
------------ ------------ ------------ ------------
Total revenue 2,341,042 370,784 2,605,562 734,695
Cost of revenue

Cost of licenses 148,384 360,158 258,809 393,523
Cost of services 154,277 8,000 154,277 17,000
------------ ------------ ------------ ------------
Total cost of revenue 302,661 368,158 413,086 410,523
------------ ------------ ------------ ------------
Gross Margin 2,038,381 2,626 2,192,476 324,172

Product development 616,652 149,597 729,375 474,734
Sales and marketing 1,322,358 469,006 1,798,933 1,731,125
General and administrative 1,888,664 1,923,035 3,050,380 6,579,988
------------ ------------ ------------ ------------
Penalty on financing 1,033,500 1,033,500
------------ ------------ ------------ ------------
Loss before interest income (expense) (2,822,793) (2,539,012) (4,419,712) (8,461,675)
Fair value loss on warrants (18,865,264) -- (18,865,264) --
Interest income (expense) (4,001,754) 1,838 (4,047,433) 62,380
------------ ------------ ------------ ------------
Loss before income taxes $(25,689,811) $ (2,537,174) $(27,332,409) $ (8,399.295)
Income taxes 50,000 50,000
------------ ------------ ------------ ------------
Net loss $(25,739,811) $ (2,537,174) $(27,382,409) $ (8,399,295)
============ ============ ============ ============
Computation of loss applicable to common shareholders
Net loss before beneficial conversion preferred dividends $(25,739,811) $ (2,537,174) $(27,382,409) $ (8,399,295)
Beneficial conversion - preferred dividends (15,680,325) (533,394) (18,490,789) (1,539,989)
------------ ------------ ------------ ------------
Loss attributable to common stockholders $(41,420,136) $ (3,070,568) $(45,873,198) $ (9,939,284)
============ ============ ============ ============
Basic and diluted net loss per share attributable to
common stockholders $ (17.38) $ (4.05) $ (32.04) $ (14.12)
============ ============ ============ ============
Weighted-average number common shares--basic and diluted 2,383,662 757,296 1,431,615 703,735
============ ============ ============ ============

See accompanying notes to consolidated financial statements.

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

Nine months Ended
March 31,
2005
As Restated
(Note 1) 2004
----------- ----

Operating activities
Net loss $(27,382,409) $ (8,399,295)
Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 464,714 187,593
Non cash compensation 1,432,948 4,313,631
Non cash interest expense accreted to debt 3,233,076
Fair value loss on warrants 18,865,264 --
Changes in operating assets and liabilities, net of acquisition of Gupta:
Accounts receivable 149,510 (259,410)
Prepaid expenses 25,865 254,875
Accounts payable, accrued expenses and deferred compensation payable 413,583 (251,861)
Deferred revenue 831,937 160,578
Deferred product cost 14,028 (14,283)
------------ ------------
Net cash used in operating activities (1,951,484) (4,008,172)

Investing activities

Other assets 28,111
Purchase of property and equipment (24,010) (3,175)
Purchase of Gupta, net of cash acquired (15,007,085)
------------ ------------
Net cash (used in) provided by investing activities (15,031,095) 24,936

Financing activities

Subordinated notes and warrants 2,500,000
Senior notes and warrants 6,075,000
Payment of notes payable (120,000)
Proceeds from issuance of preferred and common stock, net of issuance costs 9,371,500 4,682,320
------------ ------------
Net cash provided by financing activities 17,946,500 4,562,320
------------ ------------
Net increase in cash 963,921 579,084

Effects of exchange rates on cash 1,109 69,984
Cash -- beginning of period 115,491 360,064
------------ ------------
Cash -- end of period $ 1,080,521 $ 1,009,132
============ ============

See accompanying notes to consolidated financial statements.

WARP Technology Holdings, Inc.

Notes To Consolidated Financial Statements.

Note 1. Description of Business.

Warp Technology Holdings, Inc. (collectively with its subsidiaries, the
"Company") is a Nevada corporation with its principal executive office in
Greenwich, Connecticut.

The Company is a holding company whose subsidiaries operate enterprise software
and information technology businesses. In addition to holding its existing
subsidiaries, the Company's strategy is to pursue acquisitions of businesses
which either complement the Company's existing businesses or expand the segments
in which the Company operates.

On January 31, 2005, the Company completed the acquisition of Gupta
Technologies, LLC (together with its subsidiaries, "Gupta"). Gupta is now a
wholly owned subsidiary of the Company, and Gupta's wholly owned subsidiaries,
Gupta Technologies GmbH, a German corporation, Gupta Technologies Ltd., a U.K.
company, and Gupta Technologies, S.A. de C.V., a Mexican company, have become
indirect subsidiaries of the Company.

Gupta develops, markets and supports software products that enable software
programmers to create enterprise class applications, operating on either the
Microsoft Windows or Linux operating systems, that are used in large and small
businesses and governmental entities around the world. Gupta's products include
a popular database application and a well-known set of application development
tools. The relational database product allows companies to manage data closer to
the customer, where capturing and organizing information is becoming
increasingly critical. This product is designed for applications being deployed
in situations where there are little or no technical resources to support and
administer databases or applications.

Gupta recently released its Linux product line. Compatible with its existing
Microsoft Windows-based product line, the Linux line of products will enable
developers to write one application to run in both Microsoft Windows and Linux
operating systems.

Gupta has approximately 58 employees worldwide with headquarters in California,
a regional office in Munich and sales offices in London and Paris.

In addition to the Gupta businesses, the Company operates in the United States,
Canada and the U.K. through its subsidiaries, WARP Solutions, Inc., a Delaware
corporation, Warp Solutions, Ltd., a U.K. corporation, 6043577 Canada, Inc., a
Canadian corporation, and Spider Software, Inc. ("Spider"), a Canadian
corporation. These subsidiaries are collectively referred to in this report as
"Warp Solutions."

Warp Solutions produce 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 subsidiaries'
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.

On November 12, 2004, the Company filed a Current Report on Form 8-K which
disclosed the Company's one hundred for one (100:1) reverse stock split. The
reverse split became effective on the opening of business on November 18, 2004
and is reflected in the financial statements for all periods presented.

Basis of Presentation

The accompanying unaudited consolidated financial statements of 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/A 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, 2005 are
not necessarily indicative of the results that may be expected for the fiscal
year

ending June 30, 2005. For further information, refer to the financial statements
and footnotes thereto included in the Company's Annual Report on Form 10-KSB/A
for the year ended June 30, 2004.

The Company has incurred recurring operating losses since its inception. As of
March 31, 2005 the Company had an accumulated deficit of approximately
$53,962,000 and a working capital deficiency of approximately $12,186,000 While
at March 31, 2005, the Company had insufficient capital to fund all of its
obligations, due primarily to approximately $8,325,000 of short-term
indebtedness (before debt discount) with a maturity within the next twelve
months, the Company is seeking to refinance most or all of this short-term debt.
There can be no assurance that the Company will be successful in these efforts.

These conditions raise substantial doubt about the Company's ability to continue
as a going concern. However, due to the acquisition of Gupta, and certain
reductions in liabilities and operating costs of Warp Solutions, the Company's
management has concluded that no further financing is required for the Company
to continue in operation for the next twelve months other than the anticipated
refinance of its short-term indebtedness.

Restatement

The March 31, 2005 financial statements have been restated to correct the
following:

- The warrants related to the Series C Preferred Stock have been accounted for
in accordance with EITF Issue No. 98-5 "Accounting for Convertible Securities
with Beneficial Conversion Features or Contingently Adjustable Conversion
Ratios". The financial statements have been restated to reflect the fair value
of the warrants as a liability and as a beneficial conversion dividend liability
in the amount of $11,193,095.

- In accordance with EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
warrant liability amount from the Series C Preferred Stock was revalued as of
March 31, 2005 resulting in a fair value loss of $15,782,264 in the statement
of operations for the three and nine months ended March 31, 2005 and a
corresponding increase on the balance sheet in the warrant liability.

- In accordance with EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
financial statements have been restated to reflect the warrant relating to
senior and subordinated debt as a liability in the amount of $9,325,000.

- The Senior and Subordinated Debt discount has been amortized by $1,549,750
with a corresponding adjustment interest expense for the three and nine months
ended March 31, 2005.

- In accordance with EITF 00-19, "Accounting for Derivative Financial
Instruments Indexed to, and Potentially Settled in, a Company's Own Stock", the
warrant liability from the senior and subordinated debt was revalued as of March
31, 2005, resulting in a fair value loss of $3,083,000 in the statement of
operations for the three and nine months ended March 31, 2006 and a
corresponding increase on the balance sheet on the warrant liability.

WARP TECHNOLOGY HOLDINGS, INC.
RESTATED BALANCE SHEET
MARCH 31, 2005

As Previously
Reported Restatement As Restated
March 31, 2005 Adjustments March 31, 2005
------------------------------------------------------------

Assets
Current assets:
Cash and cash equivalents $ 1,080,521 $ 1,080,521
Accounts receivable, net of allowance 2,486,058 2,486,058
Prepaid expenses and other current assets 454,206 454,206

----------------------------------------------------------
TOTAL CURRENT ASSETS 4,020,785 4,020,785
Property and equipment, net 201,879 201,879
Deferred financing costs, net 940,898 940,898
Intangible assets, net of accumulated amortization 16,242,791 16,242,791
Goodwill 11,043,839 11,043,839

----------------------------------------------------------
TOTAL ASSETS 32,450,192 32,450,192
==========================================================

Liabilities and stockholders equity
Current liabilities:
Accounts payable $ 999,796 $ 999,796
Accrued expenses 4,138,534 4,138,534
Deferred revenue 2,962,930 2,962,930
Due to ISIS 1,293,567 1,293,567
Subordinate note 1,500,000 1,500,000
Senior note 5,312,000 (3,037,000) 2,275,000
----------------------------------------------------------
TOTAL CURRENT LIABILITIES 16,206,827 13,169,827
Subordinated note 552,084 (343,750) 208,334
Series C warrants liabilities 26,975,359 26,975,359
Senior and Sub warrants liabilities 12,408,000 12,408,000

----------------------------------------------------------
TOTAL LIABILITIES 16,758,911 36,002,609 52,761,520

Commitments and contingencies
Stockholders equity:
Preferred stock (Canadian subsidiary) 2 2
Series C Preferred Stock 11,193,095 11,193,095
Common stock 33 33
Additional paid-in capital 59,534,618 (4,394,500) 55,140,118
Deferred compensation (1,070,860) (1,070,860)
Accumulated other comprehensive loss (3,823) (3,823)
Accumulated deficit (53,961,784) (31,608,109) (85,569,893)

----------------------------------------------------------
TOTAL STOCKHOLDERS EQUITY 15,691,281 (36,002,609) (20,311,328)

----------------------------------------------------------
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 32,450,192 $ (43,094,342) $ 32,450,192
==========================================================

WARP TECHNOLOGY HOLDINGS, INC.
RESTATED STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED MARCH 31, 2005

As Previously As Previously
Reported Reported As Restated As Restated
Three Months Nine Months Three Months Nine Months
Ended Ended Restatement Ended Ended
March 31, 2005 March 31, 2005 Adjustment March 31, 2005 March 31, 2005
----------------------------------------------------------------------------------

Revenue

Licenses $ 1,610,615 $ 1,822,231 $ 1,610,615 $ 1,822,231
Services 730,427 783,331 730,427 783,331
----------------------------------------------------------------------------------
Total revenues 2,341,042 2,605,562 2,341,042 2,605,562
Cost of revenue
Cost of license 148,384 258,809 148,384 258,809
Cost of services 154,277 154,277 154,277 154,277
----------------------------------------------------------------------------------
Total cost of revenues 302,661 413,086 302,661 413,086
----------------------------------------------------------------------------------
Gross Profit 2,038,381 2,192,476 2,038,381 2,192,476

Product development 616,652 729,375 616,652 729,375
Sales, marketing and business development 1,322,358 1,798,933 1,322,358 1,798,933
General and administrative 1,888,664 3,050,380 1,888,664 3,050,380
Late Filing Penalty 1,033,500 1,033,500 1,033,500 1,033,500

----------------------------------------------------------------------------------
Loss before interest (2,822,793) (4,419,712) (2,822,793) (4,419,712)
Fair value loss on warrants -- -- (18,865,264) (18,865,264) (18,865,264)
Interest expense (2,452,004) (2,497,683) (1,549,750) (4,001,754) (4,047,433)
----------------------------------------------------------------------------------
Loss before income taxes (5,274,797) (6,917,395) (20,415,014) (25,689,811) (27,332,409)
Income taxes (50,000) (50,000) (50,000) (50,000)
----------------------------------------------------------------------------------
Net Loss $(5,324,797) $ (6,967,395) $(20,415,014) $(25,739,811) $(27,382,409)
==================================================================================

Computation of loss applicable to Common
Shareholders

Net loss before beneficial conversion -
Preferred dividends $(5,324,797) $ (6,967,395) $(20,415,014) $(25,739,811) $(27,382,409)

Beneficial conversion and Preferred dividends (4,487,230) (7,297,694) (11,193,095) (15,680,325) (18,490,789)
----------------------------------------------------------------------------------

Loss attributable to common stockholders $(9,812,027) $(14,265,089) $(31,608,109) $(41,420,136) $(45,873,198)
==================================================================================

Basic and diluted loss per share $ (4.12) $ (9.96) $ (17.38) $ (32.04)
==================================================================================

Weighted average shares outstanding 2,383,662 1,431,615 2,383,662 1,431,615
==================================================================================

WARP TECHNOLOGY HOLDINGS, INC.
RESTATED CASH FLOW STATEMENT
FOR THE NINE MONTHS ENDED MARCH 31, 2005

As Previously Restatement As
Reported Adjustment Restated
-------------------------------------------------

Operating activities

Net loss $ (6,967,395) $ (20,415,014) $ (27,382,409)

Adjustments to reconcile net loss to net cash used in operating activities
Depreciation and amortization 464,714 464,714
Non cash compensation 1,432,948 1,432,948
Non cash interest expense accreted to debt 1,683,326 1,549,750 3,233,076
Loss on fair value of warrants 18,865,264 18,865,264
Changes in operating assets and liabilities, net of acquisition of Gupta:
Accounts receivable 149,510 149,510
Prepaid expenses 25,865 25,865
Accounts payable, accrued expenses and deferred compensation payable 413,583 413,583
Deferred revenue 831,937 831,937
Deferred product cost 14,028 14,028

-------------------------------------------------
Net cash used in operating activities (1,951,484) -- (1,951,484)

Investing activities

Other assets
Purchase of property and equipment (24,010) (24,010)
Purchase of Gupta, net of cash acquired (15,007,085) (15,007,085)

-------------------------------------------------
Net cash (used in) provided by investing activities (15,031,095) -- (15,031,095)

Financing activities

Subordinated notes and warrants 2,500,000 2,500,000
Senior notes and warrants 6,075,000 6,075,000
Proceeds from issuance of preferred and common stock, 9,371,500 9,371,500

-------------------------------------------------
Net cash provided by financing activities 17,946,500 -- 17,946,500

-------------------------------------------------
Net increase in cash 963,921 -- 963,921

Effects of exchange rates on cash 1,109 1,109
Cash at the beginning of the period 115,491 115,491

-------------------------------------------------
Cash at the end of the period $ 1,080,521.00 $ -- $1,080,521.00
=================================================

Note 2. Selected Significant Accounting Policies

The following accounting policies and the related judgments and estimates affect
the preparation of the Company's consolidated financial statements:

Revenue Recognition

The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position ("SOP") 97-2, Software
Revenue Recognition, as amended.

Revenues are derived from the licensing of software, maintenance contracts,
training, and other consulting services.

In arrangements that include rights to multiple software products and/or
services, the Company allocates and defers revenue for the undelivered items,
based on vendor-specific objective evidence of fair value, and recognizes the
difference between the total arrangement fee and the amount deferred for the
undelivered items as revenue. In arrangements in which the Company does not have
vendor-specific objective evidence of fair value of maintenance, and maintenance
is the only undelivered item, the Company recognizes the total arrangement fee
ratably over the contractual maintenance term.

Software license revenues are recognized upon receipt of a purchase order and
delivery of software, provided that the license fee is fixed or determinable; no
significant production, modification, or customization of the software is
required; and collection is considered probable by management. For licensing of
Gupta's software through its indirect sales channel, revenue is recognized when
the distributor sells the software to its end-users, including value-added
resellers. For licensing of software to independent software vendors, revenue is
recognized upon shipment to the independent software vendors.

Service revenue for maintenance contracts is deferred and recognized ratably
over the term of the agreement. Revenue from training and other consulting
services is recognized as the related services are performed.

Intangible Assets and Goodwill

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

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, 32,597,965 and 480,670 common shares as of March 31, 2005 and
March 31, 2004, respectively, are not included, as the inclusion of such would
be anti-dilutive for all periods presented.

Options and Warrants

Options and warrants issued to non-employees were valued utilizing the
Black-Scholes pricing model.

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. In December 2002, the FASB issued SFAS No. 148, Accounting for
Stock-Based Compensation-Transition and Disclosure. SFAS No. 148 amends SFAS No.
123, Accounting for Stock-Based Compensation, to provide alternative methods of
transition for a voluntary change to the fair value method of accounting for
stock-based employee compensation. In addition, SFAS No. 148 amends the
disclosure requirements of SFAS No. 123 to require prominent disclosure in both
annual and interim financial statements about the method of accounting for
stock-based employee compensation and the effect of the method used on reported
results. The Company has adopted the disclosure provisions of SFAS No. 148. SFAS
No. 148 did not require the Company to change to the fair value method of
accounting for stock-based compensation. Accordingly, the Company only records
compensation expense for any stock options granted with an exercise price that
is less than the fair market value of the underlying stock at the date of grant.

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,
2005 2004 2005 2004
---- ---- ---- ----

Net loss, as reported $(25,739,811) $ (2,537,174) $(27,382,409) $ (8,399,295)
Add: Total stock-based employee
compensation expense included in
reported net loss 47,500 496,167 461,342 2,855,333
Deduct: Total stock-based employee
compensation expense determined
under fair value method for all awards (49,400) (510,577) (419,610) (2,932,248)
------------ ------------ ------------ ------------
Net loss, pro forma $(25,741,711) $ (2,551,584) (27,424,141) $ (8,476,210)
Beneficial conversion-Preferred dividend (15,680,325) (533,394) (18,490,789) (1,539,989)
Net Loss attributable to common stockholders-
------------ ------------ ------------ ------------
Pro forma $(41,422,036) $ (3,084,978) $(45,914,930) $(10,016,199)
------------ ------------ ------------ ------------
Basic and diluted net loss per share, as reported $ (17.38) $ (4.05) $ (32.04) $ (14.12)
Basic and diluted net loss per share, pro forma $ (17.38) $ (4.07) $ (32.07) $ (14.23)

Product Development Costs

Product development costs incurred in the process of developing product
improvements and enhancements or new products are charged to expense as
incurred. Statement of Financial Accounting Standards ("SFAS") No. 86,
Accounting for the Costs of Computer Software to be Sold, Leased or Otherwise
Marketed, requires capitalization of certain software development costs
subsequent to the establishment of technological feasibility. Based on the
Company's product development process, technological feasibility is established
upon the completion of a working model. Costs incurred by the Company between
the completion of the working model and the point at which the product is ready
for general release has been insignificant.

Foreign Currency

The functional currency of the Company's international subsidiaries is the local
currency. The financial statements of these subsidiaries are translated to
United States dollars using period-end rates of exchanges for assets and
liabilities, and average rates of exchanges for the period for revenues and
expenses. Translation gains (losses) are recorded in accumulated other
comprehensive

income (losses) as a component of stockholders' equity. Net gain and losses
resulting from foreign exchange transactions are included in operations and were
not significant during the periods presented.

Reclassification.

Certain reclassifications have been made to the 2004 financial statements to
conform to the 2005 presentation.

Segment Information

The Company operates in one segment.

Recent Accounting Pronouncement

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
establishes standards for transactions in which an entity exchanges its equity
instruments for goods or services. This standard requires an entity to measure
the cost of employee services received in exchange for an award of equity
instruments based on the grant date fair value of the award. This eliminates the
exception to account for such awards using the intrinsic method previously
allowable under APB Opinion No. 25. SFAS No. 123 (R) will be effective for the
interim period beginning January 1, 2006. We believe the adoption will have a
material effect on our income statement.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 20, Accounting for Nonmonetary
transactions." The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. Further, the amendments eliminate the narrow exception
for nonmonetary exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary assets that do not have
commercial substance. A nonmonetary exchange has commercial substance if the
future cash flows of the entity are expected to change significantly as a result
of the exchange. This statement shall be applied prospectively and is effective
for nonmonetary asset exchanges occurring in fiscal periods beginning after June
15, 2005. Earlier application is permitted for nonmonetary asset exchanges
occurring in fiscal periods beginning after the date of issuance. The Company
does not anticipate that the adoption of SFAS No. 153 will have a significant
impact on the Company's overall results of operations or financial position.

Note 3. Stockholders' Equity

Common and Preferred Stock

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. The B Shares had a
cumulative dividend of 10% per year, which is payable in cash or stock at the
time of conversion. 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 was $33.00 per share of common stock. The Company was
required to pay a penalty equivalent to 6% of the common shares underlying the B
Shares sold in this offering because it was not able to get its registration
statement effective by the date in the purchase agreement. Under certain
anti-dilution protection rights of the Series B Preferred Stock, the conversion
price will adjust from time to time if the Company issues any shares of Common
Stock, or options, warrants, or other securities convertible or exchangeable
into Common Stock, at a purchase price below the conversion price then in
effect. In August 2004, the Company completed its first closing of the Series
B-2 offering at an effective price of $5.00 per common share. As a result of the
Series B-2 financing, the conversion price of the Series B Stock was reduced
from $18.00 to $5.00, and the Company recorded a stock dividend to the Series B
shareholders for approximately 290,770 of common stock valued at approximately
$1,499,000.

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 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. 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 $33.00 per share of common stock and the
exercise price is only payable with cash. Under certain anti-dilution protection
rights of the Series B Preferred Stock, the conversion price will adjust from
time to time if the Company issues any shares of Common Stock, or options,
warrants, or other securities convertible or exchangeable into Common Stock, at
a purchase price below the conversion price then in effect. In August 2004, the
Company completed its first closing of the Series B-2 offering at an effective
price of $5.00 per common share. As a result of the Series B-2 financing, the
conversion price of the Series B Stock was

reduced from $18.00 to $5.00, and the Company recorded a stock dividend to the
Series B shareholders for approximately 121,290 of common stock valued at
approximately $606,000.

In January 2005 in connection with the Series C financing, the conversion price
of all Series B stock was reduced from $5 to $3, and the Company recorded a
dividend to the Series B holders of approximately $2,207,000. In addition, on
January 31, 2005 all of the Series B holders converted all of their Series B
stock, accrued dividend and penalties to common stock.

On August 4, 2004, the Company entered into a Series B-2 Preferred Stock
Purchase Agreement (the "Purchase Agreement"). The Purchase Agreement related to
the sale of 1,600 shares (the "Series B-2 Preferred Shares") of the Company's
authorized but unissued shares of Preferred Stock, $0.00001 par value per share,
designated Series B-2 Preferred Stock (the "Series B-2 Preferred Stock") at a
purchase price of $1,000 per share, and warrants, exercisable over five (5)
years, to purchase an aggregate of 1,600 shares of Series B-2 Preferred Stock
(the "Warrants" and together with the shares of Series B-2 Preferred Stock,
collectively, the "Securities") to investors. The aggregate purchase price for
the Securities was $1,600,000, of which $1,474,500 was received by December 31,
2004 and the remainder of $125,500 was received by the Company in January 2005.
The Company incurred approximately $20,000 in dividends for the nine months
ended March 31, 2005 to the Series B-2 shareholders. The number of shares of
Common Stock receivable upon conversion shall be equal to the Series B-2 Face
Amount, which is initially equal to the per share purchase price of $1,000, plus
any accrued but unpaid dividends, divided by the conversion price, which was
initially set at $5.00. Under certain anti-dilution protection rights of the
Series B-2 Preferred Stock, the conversion price will adjust from time to time
if the Company issues any shares of Common Stock, or options, warrants, or other
securities convertible or exchangeable into Common Stock, at a purchase price
below $5.00 per share, and will also be adjusted for any stock splits or similar
corporate actions. Under the initial conversion price, each share of Series B-2
Preferred Stock is convertible into 200 shares of Common Stock. Accordingly, the
Company recorded approximately $539,000 as beneficial conversion relating to
this transaction because the fair market value of the common stock was greater
than the conversion price. In January, 2005, in connecting with the Series C
financing, the conversion price of the Series B-2 stock was reduced from $5 to
$2, and the Company recorded a stock dividend to the Series B-2 holders valued
at approximately $2,280,000. In addition on January 31, 2005 all of the Series
B-2 shareholders converted all of their outstanding shares into common stock.

In January, 2005, the Company issued 889 shares of common stock to Mr. Malcolm
Coster pursuant to the terms and conditions of his separation agreement as
compensation for services rendered by Mr. Coster to the Company. The Company
recorded $3,556 of non-cash compensation related to this stock issuance.

In January, 2005, the Company issued 3,636 shares of common stock to CIV, a firm
which had consulted to the Company, for services rendered. The Company recorded
$15,817 of non-cash compensation related to this stock issuance.

In January, 2005, the Company issued 20,000 shares of common stock and warrants
to acquire 1,500 shares of Common Stock to Darien Corporation to settled all
outstanding claims under a prior Fee Agreement. Warrants have $1.00 per share
exercise price, cashless exercise feature and are exercisable over 5 years. The
Company recorded an expense of $86,000 related to this settlement.

Stock Options

In November 2002 the Company's Board of Directors approved and adopted the Warp
Technology Holdings, Inc. 2002 Stock Incentive plan (the "2002 Plan") as a means
through which the Company and its subsidiaries may attract, retain and
compensate employees and consultants. In fiscal 2003, the Board of Directors
issued 70,980 options to certain employees of the Company under the 2002 Plan.
Of those options, 18,333 vested on the date of grant and the remainder vest over
a two-year period. Such options have a term of ten years and have an exercise
price of $25.00 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 $25.00 on the date of grant. The amount
recognized as expense for the nine months ended March 31, 2005 and 2004 was
$420,000 and $2,855,000 respectively.

In fiscal 2003, the Company granted 4,200 options to an employee, Mr. Beller, at
an exercise price of $25.00 per share. The Company had agreed to compensate this
employee in an amount equal to the difference between $100 and the market price
of the stock received upon exercise of each option. The total amount was capped
at $400,000 and expired in December 2003. In January 2005 the Company

issued 240 shares of Series B Preferred stock and 5,973 warrants to purchase
common stock at $33 per share to settle all outstanding liability owed to this
former employee.

In fiscal 2003 the Company's Board of Directors granted 15,000 options to a
consultant, Dr. Milch, at an exercise price of $25.00 per share. As of September
30, 2004 all 15,000 of these options have been vested. The Company had agreed to
compensate this consultant in an amount equal to the difference between $100 and
the market price of the stock received upon exercise of each option for up to
14,500 of these options. In January 2005 the Company issued 330 shares of Series
B Preferred stock and 7,612 warrants to purchase common stock at $33 per share
to settle all outstanding liability owed to this former consultant.

On August 4, 2004,the Company amended its 2002 Employee Stock Plan to increase
the total number of shares authorized for issuance under the plan to a total of
776,611 shares of Common Stock, and to reserve such shares for issuance under
the plan.

On August 4, 2004 the Company granted its executive officers, Rodney A.
Bienvenu, Jr., Gus Bottazzi, Ernest C. Mysogland and Michael D. Liss, certain
options to acquire shares of Common Stock. The total number of shares subject to
these options is 468,799. In addition, the Company granted ISIS certain
non-qualified options to acquire 200,914 shares of Common Stock. All such
options have an exercise price of $6.75 per share. The exercise of such options
is subject to the achievement of certain vesting and milestone terms (subject in
each case to the terms of the optionee's stock option agreement). Any of the
above-described options not previously exercisable shall be vested and
exercisable on the fifth anniversary of the initial closing of the B-2
Financing. In connection, with the options granted to ISIS the Company recorded
deferred compensation of approximately $1,053,000 that will be amortized over
five years from the date of grant. The Company recognized approximately $141,000
of expense for the nine months ended March 31, 2005 relating to the ISIS
options.

Warrants

In August 2004, the Company issued 20,000 warrants to purchase common stock to
Malcolm Coster at an exercise price of $18.00 per share for services performed.
In connection with this issuance the Company recorded an expense of
approximately $96,000.

In September 2004, the Company agreed to issue 35,200 warrants to purchase
Common Stock at an exercise price of $5.00 per share to Griffin Securities, Inc.
for advisory services to be provided to the Company. In connection with these
warrants the Company recorded an expense of $25,696 as of March 31, 2005.

Note 4. Gupta Acquisition.

The Company's Board of Directors determined that acquiring Gupta would be in the
best interests of the Company and its stockholders. Part of the Company's
business strategy is to acquire well-managed, profitable, enterprise software
companies. Gupta has these characteristics, and was available to be acquired at
a price that the board determined to be fair and reasonable.

On January 31, 2005, the Company completed the acquisition of Gupta. The
acquisition of Gupta (the "Acquisition") was made pursuant to a Membership
Interest Purchase Agreement (as amended, the "Purchase Agreement") between the
Company and Gupta Holdings, LLC (the "Seller"). The Consolidated Statement of
Operations for the three and nine months ended March 31, 2005 includes the
results of operations of Gupta for two months beginning as of February 1, 2005.

Under the Purchase Agreement, the total purchase price was $21,000,000, of which
the Company delivered $15,750,000 in cash on or before the closing. The
remainder of the purchase price was paid in equity and debt securities issued or
provided by the Company with the terms described below.

In order to raise funds to pay the cash portion of the purchase price for Gupta,
and in order to provide the non-cash portion of the purchase price, the Company
entered into certain financing agreements described herein. An Amendment to the
Company's Articles of Incorporation was necessary to allow the Company to
reserve for issuance sufficient shares of Common Stock to be issued upon
conversion or exercise of the securities sold by the Company pursuant to the
financing agreements.

The financing agreements include the Subscription Agreement, the Bridge Notes,
the Senior Note Agreement, the Subordinated Note Agreement, the Broker Warrants
and the Assignment, as such terms are defined below.

The purchase price for Gupta was $21 million, plus transaction costs of
$1,525,000, the preliminary allocation of which is as follows:

Cash $ 742,915
Accounts Receivables 2,517,721
Other current assets 393,126
Fixed assets 161,345
Intangibles 16,434,800
Goodwill 7,150,545
Other assets 71,093
Accounts Payable and accrued expenses (2,971,378)
Deferred Revenues (1,975,167)
------------
$ 22,525,000

The Company's management and the Board of directors believes that the purchase
of Gupta that resulted in approximately $7,151,000 of goodwill is justified
because of Gupta's position in the marketplace and expected increased cashflows
to the Company.

Unaudited Pro Forma Financial Information.

The following unaudited pro forma financial information presents the
consolidated operations of the Company as if the fiscal year 2005 acquisition of
Gupta had occurred as of the beginning of fiscal year 2004.

The following unaudited pro forma financial information is provided for
informational purposes only and should not be construed to be indicative of the
Company's consolidated results of operations had the acquisitions been
consummated on the dates assumed and does not project the Company's results of
operations for any future period:

Three Months ended March 31, Nine Months ended March 31,
---------------------------- ---------------------------
2005 2004 2005 2004
---- ---- ---- ----

Revenues $ 4,142,186 $ 4,767,675 $ 12,044,363 $ 12,754,871
Net loss $(24,501,401) $ (1,548,787) $(25,618,105) $ (7,862,567)
Basic and diluted net loss per share $ (10.28) $ (2.05) $ (17.89) $ (11.17)

Note 5. Series C Subscription Agreement.

On January 31, 2005, the Company entered into certain Series C
Subscription Agreements (collectively, the "Subscription Agreement"), with the
Investors (as identified therein). The Subscription Agreement has the following
material terms:

- An aggregate of $8,475,000 of Series C Notes were sold to
Investors under the Subscription Agreement.

- Most of the proceeds of the sale of the Series C Notes were
used to fund a portion of the purchase price in the Gupta
acquisition and the remainder of the proceeds were used for
working capital purposes.

- The Series C Notes were unsecured and bore interest at the
rate of 6% per annum.

- The Series C Notes were converted into a new series of
Preferred Stock, the "Series C Stock" with a par value of
$.00001 per share, and Warrants to acquire Common Stock.

- On March 31, 2005, all amounts due under the Series C Notes
(principal and interest) automatically converted into (i)
8,559,750 shares of Series C Stock, and (ii) Warrants (the
"Warrants") to acquire 8,559,750 shares of Common Stock. The
Company reserved for issuance 17,119,500 shares of Common
stock to cover those shares of Common Stock issuable upon
conversion of the Series C Stock and exercise of the Warrants.

- Since the Series C Notes were not converted by March 17, 2005,
due to a delay in receiving approval required before effecting
the Amendment to the Company's Articles of Incorporation, the
Company may be required to pay to the Investors a penalty in
cash equal to ten percent (10%) of the principal amount of the
Series C Notes. Accordingly, the Company anticipates that it
will need to obtain a waiver or an acknowledgment that the
penalties do not apply. The Company intends to work with the
Investors to obtain waiver of this penalty or an
acknowledgement that no penalty is due, and has received such
waiver and acknowledgement from certain Investors. However,
there is no assurance that the Company will receive sufficient
waivers or acknowledgements from other Investors. As such the
Company has accrued $647,500 for this penalty.

The Series C Stock which the Investors received upon conversion of
their Series C Notes, has the following material terms:

- The Series C Stock is convertible into Common Stock, at the
option of the holder, at a conversion price (the "Applicable
Conversion Price") that is initially equal to $1.00.
Accordingly, the Series C Stock is convertible into Common
Stock at a one to one (1:1) ratio. However, the ratio is
subject to adjustment pursuant to the anti-dilution
protections extended to the holders of Series C Stock. Under
the anti-dilution provisions, in the event the Company issues,
at any time while shares of Series C Stock are still
outstanding, shares of Common Stock or any type of securities
convertible or exchangeable for, or otherwise giving a right
to acquire, shares of Common Stock, at a price below the
Applicable Conversion Price, then the Applicable Conversion
Price will be adjusted to the price per share equal to the
price per share paid for such Common Stock in such subsequent
financing. This full-ratchet anti-dilution protection on the
Series C Stock will also be extended to any warrants received
in connection with the Subscription Agreement that are
outstanding at such time. In addition to the full-ratchet
protection, the Applicable Conversion Price will be equitably
adjusted in the event of any stock split, stock dividend or
similar change in the Company's capital structure.

- If the Company's market capitalization based on the shares of
Common Stock outstanding (including all shares of Common Stock
underlying the Shares of Series C Stock on an as converted
basis) exceeds $50,000,000, the shares of Common Stock
underlying the Series C Stock are registered, and the Company
has an average daily trading volume for 20 consecutive trading
days of 100,000 shares per day, then the Company may require
the holders of Series C Stock to convert the Series C Stock
into Common Stock at the then Applicable Conversion Price.

- The holders of shares of Series C Stock will be entitled to
receive dividends, at a 6% annual rate, payable quarterly in
arrears, either in cash, or at the election of the Company, in
shares of Common Stock. The dividends are preferred dividends,
payable in preference to any dividends which may be declared
on the Common Stock. Common Stock delivered in payment of
dividends will be valued at 90% of the average of the volume
weighted average price for the 20 trading day period ending on
the trading day immediately prior to the date set for payment
of the dividend.

- Any unconverted and non-redeemed Shares of Series C Stock
outstanding on the third anniversary of the initial issuance
of the Series C Stock, will be automatically redeemed on that
date, in cash, at $1.00 per share, plus all accrued but unpaid
dividends thereon (subject to equitable adjustment for all
stock splits, stock dividends, or similar events involving a
change in the capital structure of the Company).

The Warrants issued to the Investors upon conversion of their Series C
Notes, allow the Investors to purchase an aggregate of 8,559,750 shares
of Common Stock. The Warrants have an exercise price of $1.25 per
share. The Warrants are exercisable over a five-year term.

As of March 31, 2005 all of the warrants issued with the Series C
Preferred Stock have the right to require the Company to settle the
warrants on a net-cash basis and the Company was required to register
the common stock underlying the warrants by a certain date As the
contracts must be settled by the delivery of registered shares and the
delivery of the registered shares are not controlled by the Company and
the rights of the warrant holders to settle in cash potentially in
preference to other shareholders receiving other forms of
consideration, pursuant to EITF 00-19, "Accounting for Derivative
Financial Instruments Indexed to, and Potentially Settled in, a
Company's Own Stock", the fair value of the warrants was calculated
using Black-Scholes pricing model. The Warrant liability amount from
the Series C Preferred Stock was revalued as of March 31, 2005
resulting in a fair value loss of $ 18,865,264 based on 11,193,095
warrants issued in the statement of operations and a corresponding
increase on the balance sheet in warrant liability.

Note 6. Bridge Notes.

In October, 2004, December, 2004 and January 2005, the Company raised
funds from investors in order to make certain payments, totaling $2,250,000 to
the Seller, toward the purchase price of Gupta. In exchange for such investment
the Company issued certain promissory notes (the "Bridge Notes") in the
aggregate principal amount of $2,250,000.

The Bridge Notes had the following material terms:

- Interest accrues at the annual rate of 12%.

- Contemporaneously with the closing of the Gupta Purchase
Agreement, the Bridge Notes were automatically converted into
Series C Notes.

- An aggregate of $2,409,253 of Series C Notes were issued upon
conversion of the principal and accrued interest on the Bridge
Notes.

- In accordance with their terms, these Series C Notes converted
into 2,433,345 shares of Series C Preferred Stock and Warrants
to acquire 2,433,345 shares of Common Stock. These warrants
(the "Bridge Warrants") have an exercise price of $1.25 per
share and are exercisable for a period of five years from the
date of issuance. The Company reserved sufficient common stock
to issue upon conversion of these Series C shares and exercise
of the Bridge Warrants.

Note 7. Senior Note and Warrant Purchase Agreement.

On January 31, 2005, the Company entered into that certain Senior Note
and Warrant Purchase Agreement (the "Senior Note Agreement"), by and among the
Company and the Purchasers (the "Senior Noteholders") identified therein.

The Senior Note Agreement has the following material terms:

- Senior Notes with an aggregate principal amount of $6,825,000
were sold.

- The Senior Notes bear interest at an annual rate of 10%, with
interest payments due quarterly in arrears.

- Most of the proceeds of the sale of the Senior Notes was used
to fund a portion of the purchase price in the Gupta
acquisition and the remainder of the proceeds was used for
working capital purposes.

- The Senior Notes are due on July 31, 2005. The Senior Notes
are not convertible.

- The Senior Notes are secured by a first priority security
interest in the assets of the Company, including the equity
interests of the Company in Gupta and the Company's other
subsidiaries.

Under the Senior Note Agreement the Senior Noteholders received
warrants to purchase an aggregate of 2,670,000 shares of the Company's
Common Stock (the "Senior Lender Warrants"). These warrants have an
exercise price of $1.25, and are exercisable for a period of five years
from the date of issuance. The proceeds received were allocated to the
fair value of the warrants since the fair value of the warrants was
greater than the proceeds. The discount to the note will be amortized
over 6 months. For the period ended March 31, 2005, $2,275,000 was
amortized and charged to interest expense. In addition, the warrants
have a cashless exercise feature and as such are treated as a
derivative in accordance with EITF 00-19 and accordingly recorded a
warrant liability of $6,408,000 at March 31, 2005. The Company
recognized a loss on the fair value of this warrant of $417,000 for the
period ended March 31, 2005.

Note 8. Subordinated Note and Warrant Purchase Agreement.

On January 31, 2005, the Company entered into that certain Subordinated
Note and Warrant Purchase Agreement (the "Subordinated Note Agreement") by and
among the Company and the Purchasers (the "Subordinated Noteholders") identified
therein.

The Subordinated Note Agreement has the following material terms:

- Subordinated Notes with an aggregate principal amount of
$4,000,000 were sold, including the $1,500,000 subordinated
note issued to the Seller under the Purchase Agreement (the
"Gupta Note").

- The Subordinated Notes bear interest at an annual rate of 10%,
with interest payments due quarterly in arrears. Interest is
payable in registered shares of Common Stock of the Company,
provided that until such shares are registered, interest shall
be payable in cash.

- Most of the proceeds of the sale of the Subordinated Notes was
used to fund a portion of the purchase price in the Gupta
acquisition and the remainder of the proceeds was used for
working capital purposes.

- The Subordinated Notes are due on January 31, 2007, other than
the Gupta Note, which is due on January 31, 2006.

- The Subordinated Notes are secured by a security interest in
the assets of the Company, including the equity interests of
the Company in Gupta and the Company's other subsidiaries,
subordinated only to the security interest granted to secure
the Senior Notes.

- The Subordinated Noteholders have the right to convert all
principal amounts due under the Subordinated Notes - other
than the Gupta Note which is not convertible - into such
number of Shares of Common Stock equal to the principal amount
due under the Subordinated Notes divided by $1.00.
Accordingly, an aggregate of 2,500,000 shares of Common Stock
is issuable upon conversion of the Subordinated Notes.

- Under the Subordinated Note Agreement, the Subordinated
Noteholders - other than the holder of the Gupta Note-also
received warrants to purchase 2,500,000 shares of the
Company's Common Stock (the "Subordinated Lender Warrants").
The Warrants will have an exercise price of $1.25, and will be
exercisable for a period of five years from the date of
issuance. The proceeds received were allocated to the warrants
since the fair value of the warrants was greater than the
proceeds. The discount to the note will be amortized over 24
months. For the period ended March 31, 2005 $208,833 was
accreted an charged to interest expense. In addition, the
warrants have a cashless exercise feature and as such are
treated as a derivative in accordance with EITF 00-19 and
accordingly recorded a warrant liability of $6,000,000 at
March 31, 2005. The Company recognized a loss on the fair
value of this warrant of $3,500,000 for the period ended March
31, 2005.

Note 9. Warrants Issued in Connection with Brokers or Finders Fees.

In connection with the various sales of the Bridge Notes, the Series C
Notes, the Senior Notes and the Subordinated Notes under the financing
agreements, the Company has incurred brokers or finders fees and commissions of
a total of $1,058,900. In addition, subject to the effectiveness of the
Amendment, the Company has committed to issue to such brokers and finders
warrants (the "Broker Warrants") to acquire up to an aggregate of 1,236,601
shares of Common Stock. These warrants are exercisable for a period of five
years and 280,000 have an exercise price of $4.75 and 956,601 have an exercise
price of $1.25 per share. These warrants were valued at $998,211 using the
black-scholes model . The value of the warrants is being amortized over the
length of the various debt financing as interest expense. The Company's
amortization expense for the three and nine months ended March 31, 2005 was
approximately $528,000.

Note 10. Registration Rights.

Investors in the Series C Notes, as well as the Bridge Note holders,
the Senior Noteholders and the Subordinated Noteholders, will have those
registration rights set forth in that certain Investors' Agreement (the
"Investors' Agreement") entered into on January 31, 2005 by and among the
Company, and the persons listed on Exhibit A thereto. The Investors' Agreement
provides that the Company will file a registration statement to register the
shares of Common Stock issuable upon conversion of the Series C Stock, issuable
upon exercise of the Warrants issued pursuant to the Subscription Agreement,
upon exercise of the Bridge Warrants, upon exercise of the Senior Lender
Warrants and upon exercise of the Subordinated Lender Warrants (collectively,
the "Conversion Shares").

The Company agreed, within forty-five (45) days after the closing of
the financing transactions, to complete all required audits and make all related
filings concerning the acquisition of Gupta. Within fifteen (15) days after the
end of such 45-day period, the Company agreed to file a registration statement
for the purpose of registering all of the Conversion Shares for resale, and to
use its best efforts to cause such registration statement to be declared
effective by the Securities and Exchange Commission (the "Commission") at the
earliest practicable date thereafter.

If (i) the registration statement has not been filed with the
Commission by the filing deadline or (ii) the registration statement has not
been declared effective by the Commission before the date that is ninety (90)
days after the filing deadline or, in the event of a review of the Registration
Statement by the Commission, one hundred and twenty (120) days after the filing
deadline, or (iii) after the registration statement is declared effective, the
registration statement or related prospectus ceases for any reason to be
available to the investors and noteholders as to all Conversion Shares the offer
and sale of which it is required to cover at any time prior to the expiration of
the effectiveness period (as defined in the Investors' Agreement) for an
aggregate of more than twenty (20) consecutive trading days or an aggregate of
forty (40) trading days (which need not be consecutive) in any twelve (12) month
period, the Company will pay to the Investors an amount in cash equal to 2% of
the face value of the Series C Stock issued under the Subscription Agreement or
upon conversion of the Bridge Notes, and 2% in cash of the principal amount of
the Senior Notes and Subordinated Notes, and will continue to pay such 2%
monthly penalties every thirty days until such registration statement if filed,
declared effective and available to the investors at the earliest practicable
date thereafter. The registration statement was filed after the date due.
Accordingly, the Company may have incurred a penalty. The Company is seeking an
acknowledgement from the affected investors that no penalty has yet incurred and
that no such penalty will be incurred so long as the registration statement is
declared effective within the applicable time period. If such acknowledgement is
not forthcoming, the Company will seek a waiver of the penalty. As there can be
no assurance it will receive an acknowledgement or waiver, the Company has
accrued $386,000.

Note 11. Separation Agreement.

On March 3, 2005, the Company entered into an agreement (the
"Separation Agreement") with Gus Bottazzi related to Mr. Bottazzi's resignation
as an officer and director of the Company. Under the Separation Agreement, the
Company committed to issue to Mr. Bottazzi 200,000 shares of the Company's
Series C Preferred Stock. In connection with this separation agreement the
Company recorded a non-cash charge of $500,000.

Note 12. Amendment to Articles of Incorporation.

The Company filed with the Nevada Secretary of State the Certificate of
Amendment to Articles of Incorporation described in its Definitive Information
Statement filed on March 11, 2005, increasing the Company's authorized Common
Stock from 5,000,000 to 150,000,000.

Note 13. Series C Certificate of Designations.

Effective March 31, 2005, the Company filed with the Secretary of State of the
State of Nevada a Certificate of Designation establishing the series of
preferred stock to be referred to as the Series C Preferred Stock.

Note 14. Related Party Transactions.

The Company has certain contractual relationships with ISIS which were entered
into in connection with the Company's Series B-2 Preferred Stock financing (as
previously described in, and included as exhibits to, the Company's Form 8-K
dated August 4, 2004). In addition, certain individuals are members of ISIS and
directors or officers of the Company.

ISIS is a limited liability company whose managing members are Rodney A.
Bienvenu, Jr. ("Bienvenu"), the Company's Chief Executive Officer and Chairman
of the Company's Board of Directors, and Ernest C. Mysogland ("Mysogland"), the
Executive Vice President and Chief Legal Officer of the Company. ISIS is the
managing member of ISIS Acquisition Partners II LLC ("IAP II"). IAP II is a
stockholder of the Company having purchased shares of the Company's Series B-2
Preferred Stock (the "Series B-2 Preferred Stock"), pursuant to that certain
Series B-2 Preferred Stock Purchase Agreement (the "Series B-2 Purchase
Agreement"), as of August 4, 2004, between and among the Company and the
investors. In addition, pursuant to that certain Stockholders Agreement, dated
as of August 4, 2004, between and among the Company, the holders of the Series
B-2 Preferred Stock and such other Stockholders as named therein (the
"Stockholders Agreement"), IAP II and other Series B-2 Stockholders have certain
rights to designate directors of the Company. Further, ISIS and the Company
entered into a Consulting Agreement, dated as of August 4, 2004, pursuant to
which the Company will pay ISIS for services requested of ISIS from time to
time, including, without limitation, research services, at ISIS's regular rates
or at the cost incurred by ISIS to provide such services, and will reimburse
ISIS for any costs incurred by ISIS on behalf of the Company.

Furthermore, in October, 2004, Company and ISIS entered into that certain
Purchase Agreement Assignment and Assumption (the "Assignment"), pursuant to
which the Company acquired all of the rights and assumed all of the liabilities
of the Purchaser under that certain Membership Interest Purchase Agreement to
acquire Gupta Technologies, LLC.

Under the Assignment, the Company agreed to repay ISIS (or its assignees), for
the $1,000,000 ISIS paid to the Seller in October, 2004. Furthermore, upon the
acquisition of Gupta, in consideration of the assignment, and services in
connection with due diligence, financing contacts and structure, for its efforts
in negotiating the terms of the acquisition (including the specific right to
assign the Purchase Agreement to the Company), and undertaking the initial
obligation regarding the purchase of Gupta, the Company shall pay ISIS and its
investors, as allocated by ISIS, a transaction fee equal to $1,250,000, payable
either in cash or, at the election of ISIS, in Series B-2 securities, or senior
debt or senior equity issued in connection with the Gupta financing. As of March
31, 2005 this transaction fee was not paid to ISIS and is shown on the balance
sheet as a due to ISIS. ISIS will also be reimbursed by the Company for any
amounts it has incurred in connection with the negotiation and consummation of
the transaction.

Note 15. Legal Proceedings.

Two former consultants to the Company who provided services to the Company's
U.K. subsidiary, Warp Solutions, Ltd., have made claims against the Company
under U.K. law, contending that they were employees under such laws, were
unfairly dismissed, and, therefore, entitled to certain benefits and rights. The
Company contested the claims and the case was dismissed in February 2005.

On April 1, 2002, Herman von Drateln ("HD"), a former employee of Gupta, filed a
wrongful termination action in Mexico against Gupta, Gupta's Mexican subsidiary
Gupta Technologies, S.A. de C.V. ("Gupta Mexico"), as well as five other US
defendants and another Mexican defendant (the "Labor Action"). The Labor Action
seeks approximately US $350,000 in damages, plus back pay from the date of the
alleged wrongful termination (February 4, 2002). Because the plaintiff failed to
appear at the last scheduled hearing, the court is required to make adverse
inferences against him. The final hearing was held in April, 2005 and the
court's decision is expected within approximately two months. Gupta has and
intends to continue to defend itself vigorously. There is no indication at
present whether the lawsuit will have a material effect on Gupta's or the
Company's financial condition, results of operations or liquidity.

In August 2002, Gupta US filed a lawsuit against HD in Santa Clara County,
California, alleging fraud, libel, and breach of his employment contract. In May
2003, HD's attorney withdrew from the case; subsequently, the case was stayed
due to HD's Chapter 13 bankruptcy filing. The case status is still "confirmed"
with no future hearing date set. It is unclear, whether, if Gupta were to
prevail in this matter, any award of damages would offset damages, if any,
awarded to HD in the matter referenced above, or whether other creditors of HD
would have superior claims on any such damage award.

On May 6, 2005, the Company received notice of a demand for arbitration before
the American Arbitration Association from attorneys representing Michael Liss, a
former employee of the Company who had the title Chief Operating Officer. Mr.
Liss disputes the circumstances surrounding the termination of his employment
and claims that he is entitled to severance benefits, other compensation and
damages totaling approximately $187,000 in addition to attorneys fees and
statutory damages. The Company believes that Mr. Liss's claim is without merit
and intends to vigorously defend itself.

Note 16. Subsequent Events

On April 4, 2005, the Company issued 3,000,000 shares of Series C Stock, and
Warrants to acquire 3,000,000 shares of Common Stock, at the same terms as the
Subscription Agreement, in exchange for a purchase price of $3,000,000.

ITEM 2. Management's Discussion And Analysis of Financial Condition and Results
of Operations.

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 is
based on, and should be read together with, the Company's accompanying unaudited
consolidated financial statements, and the notes to such financial statements,
which are included in this report, and with the Company's Form 10-KSB for the
year ended June 30, 2004.

The accompanying financial statements 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. The preparation of these financial statements
requires management to make estimates and judgments that affect the reported
amounts of assets, liabilities, revenue and expenses and disclosure of
contingent liabilities.

On an on-going basis, we evaluate our estimates, including those related to
revenue recognition and accounting for intangible assets. We base our estimates
on historical experience and on various other assumptions that we believe to be
reasonable under the circumstances. Actual results may differ from these
estimates under different assumptions or conditions.

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, 2005 are not necessarily
indicative of the results that may be expected for the fiscal year ending June
30, 2005.

DESCRIPTION OF BUSINESS.

Warp Technology Holdings, Inc. (collectively with its subsidiaries, the
"Company") is a Nevada corporation with its principal executive office in
Greenwich, Connecticut.

In addition to the Gupta businesses, which is described further below, the
Company operates in the United States, Canada and the U.K. through its
subsidiaries, WARP Solutions, Inc., a Delaware corporation, Warp Solutions,
Ltd., a U.K. corporation, 6043577 Canada, Inc., a Canadian corporation, and
Spider Software, Inc. ("Spider"), a Canadian corporation. These subsidiaries are
collectively referred to in this report as "Warp Solutions."

Effective April 2, 2006, the Company changed its name from Warp Technology
Holdings, Inc. to Halo Technology Holdings, Inc. Because this Filing covers a
period prior to such name change, we shall refer to the Company throughout this
Form 10-QSB/A as Warp Technology Holdings, Inc.

GUPTA TECHNOLOGIES, LLC.

OVERVIEW

Gupta develops, markets and supports software products that enable
software programmers to create enterprise class applications, operating on
either the Microsoft Windows or Linux operating systems, that are used in large
and small businesses and governmental entities around the world. Applications
developed using Gupta products are used in mission-critical processes in
thousands of businesses worldwide. Everyday, people rely on Gupta products when
filling a prescription at their local pharmacy, banking online, shipping a
package, riding a train, or shopping at a convenience store. Businesses rely on
Gupta products to run their manufacturing operations, track their finances and
organize their data.

Gupta's flagship products, Team Developer and SQLBase, are specifically
designed to meet the demands for enterprise performance and functionality
combined with low total cost of ownership. SQLBase is a low/zero-administration
relational database that features a high level of security with more than one
million copies in use worldwide. It is ideal for rich client applications and
environments where it is impractical to have a database administrator. Team
Developer is used by over 10,000 developers worldwide and offers an
object-oriented, 4GL toolset with built-in version control, customizable coding
environment, and native connectivity to most popular databases. It can be used
by a single developer or by large teams to develop robust applications in a
managed environment. Gupta's primary customers are independent software vendors
(ISVs), value-added resellers (VARs), systems integrators and corporate IT
departments.

While Gupta products can be used independently with other tools and
databases, the majority of Gupta's customers use them in conjunction with each
other to develop business applications. A typical customer uses Team Developer
to create a software

application for a business solution, with SQLBase as the embedded database, and
deploys that application within their organization (a corporate user), or sells
the application as a proprietary product (ISVs and VARs).

Gupta sells its products using a traditional software licensing model.
Developers buy Team Developer licenses by the seat. SQLBase licenses are sold as
either a single workstation version or a multi-user server version on a per seat
basis. Gupta additionally offers maintenance and support contracts that allow
customers to receive product upgrades and telephone support on an annual basis.

Gupta in its present form originated in February 2001 when Platinum, a
private equity firm in Los Angeles, California, acquired certain assets and
liabilities from Centura Software Corporation ("Centura"). These assets and
liabilities related principally to the SQLBase and Team Developer product lines
and included all rights to the intellectual property, the working capital, fixed
assets, contracts, and operating subsidiaries that supported these products.
Gupta also hired certain employees from Centura to support the development,
sales, technical support, and administration of the acquired assets. Originally
founded in 1983 as Plum Computers, Inc., the entity became Gupta Technologies,
Inc. in 1984, then Gupta Corporation in 1992, then Centura Software Corporation
in 1996. Gupta is a limited liability company formed under the laws of the State
of Delaware. In January 2005, Gupta was acquired from Gupta Holdings, LLC, a
wholly owned subsidiary of Platinum, by the Company.

Gupta is based in Redwood Shores, California with offices in Munich,
London, and Paris. It has over 1,000 customers in over 50 countries.

STRATEGY

Gupta is focused on providing software developers with the most
efficient and cost effective tools and database products to create rich software
applications that help businesses run more effectively. Whether used by ISVs and
VARs to create commercial or custom software applications, or used by IT
departments as a corporate development environment, Gupta's intent is to provide
products that:

- are easy to learn, use and deploy,

- create rich, enterprise class applications,

- allow development faster than other products,

- require little to no maintenance once deployed,

- provide a high and rapid ROI,

- allow users to deploy on either Microsoft Windows or Linux
operating systems,

- "shield" users from underlying operating system changes, and

- allow users to operate their business more profitably.

One of the reasons Gupta's customers buy its products is that when
creating complex applications using Team Developer with SQLBase as the embedded
database, they find that not only is the cost of development lower than using
competing products, but the cost of maintaining the application over the
following years is lower as well. By staying current with Gupta's product
upgrades and enhancements, they have little to no coding changes they have to
make to their application when the underlying operating system is upgraded or
enhanced.

Through December 2004, use of Gupta's products was limited to the
Microsoft Windows operating system. In January 2005, Gupta began supporting
selected Linux operating systems. We believe that the commercial use of Linux
will increase over the coming years and that it will create the need for more
Linux-based business software applications. We also believe that software
developers will increasingly have to develop applications that will support both
the Microsoft Windows and Linux operating systems. Our intent through Gupta is
to provide the market with the premier "cross platform" RAD tool and database
products that allow developers to create, maintain and deploy applications using
one code line that will operate on both the Microsoft Windows and Linux
platforms. With Team Developer for Linux, Gupta's customers can not only develop
applications that run on Linux, they can also recompile their Microsoft Windows
based applications written using Team Developer and have them running on Linux
in as little as fifteen minutes.

SQLBASE

SQLBase is a true relational database that is transparent to the
end-user because of its low/zero administrative requirements and solid
reliability. It offers a high level of security by providing encryption on the
local machine and in communications over the internet.

Developers use SQLBase because it seamlessly integrates into their
applications. SQLBase provides flexibility by offering a wide variety of
connectivity options including OLE DB, ODBC, JDBC, and one of the first .NET
data providers. On LinuxSQLBase offers a native C-API, Linux ODBC (iODBC,
unixODBC) and JDBC driver to enable C++, Java, PHP and Perl development.

SQLBase is ideal for desktop, workgroup and Internet applications for
multi-user environments where it is impractical to have a database
administrator. With SQLBase, companies can manage data far from the corporate
data center with administration-free operation and low resource requirements.

BENEFITS

- Reduces operational and support costs through self
administration and proven reliability

- Guarantees data integrity and reduces downtime

- Protects data on the hard drive and over the wire with
triple-DES encryption

- Provides interoperability via support for latest SQL standards

- Excellent deployment support

- Available on Microsoft Windows and Linux

- Very easy upgrading to new versions

- Scalable from laptop to workgroup and internet server

TEAM DEVELOPER

Team Developer provides a complete, integrated visual development
environment that includes a database explorer, integrated reporting tool,
team-oriented source code management facility, and a powerful component
developer facility that enables users to automate and customize their
development environments.

Cross Platform development and deployment offers the choice whether to
use Microsoft Windows, Linux or both platforms for application development and
deployment. Customers that already have Team Developer for Microsoft Windows
applications can easily port them to Linux by using Team Developer for Linux.

ISVs, VARs and corporate IT departments use Team Developer to quickly
develop mission-critical business applications. Using GUPTA's Team Developer,
applications can be developed significantly faster than those built with Java,
Delphi and Visual Studio. This allows for smaller development budgets, faster
"time to market" and a quicker return on investment.

Team Developer fully supports COM+ and provides the ability to rapidly
develop n-tier applications that may be exposed to multiple front ends, such as
Web browsers or Microsoft Windows style applications. Because of its high-level
language, Team Developer provides greater productivity by allowing developers to
focus on solving business problems -- instead of writing volumes of complex
code.

Team Developer has always provided substantial business value in
preserving customers' intellectual property by ensuring applications can be
easily migrated forward to the next- generation development platform. Many
customers who initially created 16-bit applications were able to quickly and
easily re-compile them in Team Developer/32 and re-deploy. Backward
compatibility allows customers to use all their resources for new development
instead of spending money over and over again to recode existing functionality
on new technology.

BENEFITS

- Cross Platform Microsoft Windows and Linux development and
deployment

- Allows users to react quickly to new customer requirements

- Embraces latest technologies, such as XML and Web Services

- Protects code investments through backward compatibility

- Rapid prototyping and rapid coding keep development cost low

- Open technology that allows users access to multiple data
sources

MAINTENANCE AND SUPPORT

Gupta provides its subscribing customers with around-the-clock
telephone support, comprehensive product and technical expertise, and the rights
to future software upgrades and enhancements and technical fixes. Customers
licensing Gupta's software have the right

to buy annual "Gupta License Services" (GLS) contracts that give them the right
to receive product upgrades and enhancements and technical fixes for a year
period with the option to renew annually. Gupta also offer customers telephone
technical support contracts that give them access to Gupta's technical support
staff to assist them with technical issues. Support contracts are offered
providing a range of service levels based on price. Customers can sign up for
programs that allow them from three calls to Gupta's support center during
normal business hours up to unlimited 24/7 technical support.

SALES AND MARKETING

Gupta currently uses both indirect and direct sales models, based on
geography. In Europe, which accounted for 57% of Gupta's revenue in 2004, Gupta
uses an indirect sales channel relying on VARs and distributors to sell its
products to end users. Gupta's sales and marketing team in Europe works directly
with its VAR partners to help them market and sell Gupta's products by engaging
in joint efforts to meet with their customers, attend their roadshows, provide
technical support and training and attending major technology trade events. In
North America, which accounted for 32% of Gupta's revenue for 2004, Gupta relies
on direct sales force to sell its products. Gupta is currently working on
developing an indirect channel in North America. Gupta is targeting VARs and
ISVs, similar to ones Gupta is successfully working with in Europe, to partner
with in selling Gupta's products. Throughout Latin America and AsiaPacific,
which accounted for 11% of Gupta's revenue in 2004, Gupta uses an indirect sales
model similar to Europe. It is Gupta's intent to increase its marketing
activities worldwide in 2005 to increase Gupta brand awareness, attract new
partners and customers and generate increased revenues.

SOFTWARE PRODUCT DEVELOPMENT

Gupta's software development effort is based in its Redwood Shores,
California office and currently consists of 15 employees of Gupta and another 30
full-time contractors based in India. It is Gupta's intent to continue
developing enhanced functionality in Gupta's existing products. Gupta is
currently working on the next generation Team Developer product which will
include a new graphical user interface that supports UNICODE and adds a number
of new objects for creating rich-client applications. This new version will also
allow developers to consume web services from J2EE or .Net as well as create web
services providing a rapid approach to Enterprise Data Integration and
Enterprise Application Integration. Database connectivity will also be expanded
to include connectivity to MySQL, SYBASE, ORACLE, IBM's DB2, SQLServer and
others. SQLBase development is moving forward with UNICODE support, auto
increment columns, better security and performance.

INTELLECTUAL PROPERTY AND PROPRIETARY RIGHTS

We regard certain aspects of Gupta's operations, products and
documentation as proprietary. We do not own any patents on Gupta's intellectual
properties. We rely on a combination of copyright, trademark and trade secret
laws and other measures to protect our proprietary rights. We also rely on
contractual restrictions in Gupta's agreements with customers, employees and
others to protect our intellectual property rights. However, in certain foreign
countries, effective copyright and trade secret protection may be unavailable or
the laws of these other jurisdictions may not protect our proprietary technology
rights to the same extent as the laws of the United States. Failure to obtain
and/or maintain appropriate patent, copyright or trade secret protection either
in the United States or in certain foreign countries, for any reason, may have a
material adverse effect on Gupta's business, operating results and financial
condition.

Gupta licenses software and technology from third parties, including
some competitors, and incorporates them into its own software products, some of
which are critical to the operation of Gupta's software.

The source code for Gupta's software products is protected both as a
trade secret and as a copyrighted work. Some of Gupta's customers are
beneficiaries of a source code escrow account arrangement which enables the
customer to obtain a contingent future limited right to use Gupta's source code
solely for the customer's internal use. If Gupta's source code is accessed, the
likelihood of misappropriation or other misuse of Gupta's intellectual property
may increase.

We believe that Gupta's copyrights, trademarks and other proprietary
rights do not infringe upon the proprietary rights of third parties. However,
there can be no assurance that third parties will not assert infringement claims
against Gupta in the future with respect to current or future products or that
any such assertion will not require Gupta to enter into royalty arrangements or
result in litigation.

COMPETITION

The market for application development tools and databases is extremely
competitive and contains a number of companies that are larger, more established
and better financed than Gupta. Development tools for the Microsoft Windows
marketplace include Microsoft's Visual Studio, Borland's DelphiO, Raining Data's
Omnis and SYBASE PowerBuilder. Visual Studio comprises over 90% of the Microsoft
Windows-based application development market. The remaining 10% is divided among
Gupta, Borland, Raining Data, SYBASE and other smaller players like Revelation
and TrollTech.

Embeddable databases in the Microsoft Windows marketplace include
Microsoft's SQLServer, Microsoft SQLServer Express (formerly MSDE), Microsoft
Access, Oracle's Personal Oracle, Sybase's SQL Anywhere and MySQL. There are
additionally a number of smaller companies that compete in this market as well.

Due to Linux' recent emergence, there are fewer established competitors
in its development environment. Borland's Kylix and Raining Data's Omnis are the
only other fully integrated development tools for Linux of which we are aware.
There are a number of open source tools available for Linux application
developers over the internet that offer certain components that can become part
of an integrated development environment; however, we are not aware of any other
fully integrated development tools that are being developed and supported on a
commercial basis.

Competitors in the Linux embeddable database market include MySQL,
ORACLE10g, PostgreSQL, FireFox, SleepyCat and about 30 other non-commercial
single-user database engines.

We believe that Gupta currently has a competitive advantage in
providing the only fully integrated development environment that supports both
Microsoft Windows and Linux based software application development using the
same code line. Due to the early nature of the market for Linux based business
software applications and due to the fact that there are larger, better
capitalized companies in the development tool and database marketplace, there is
no assurance that Gupta can maintain a competitive position.

CHANGES IN DIRECTORS AND OFFICERS

The Company has also had several recent changes in its management and
board of directors. As a result of the Company's continued growth and pursuit of
new growth opportunities, the Company has sought to enhance the quality and
number of directors and management personnel and to more closely align the
experience and expertise of its executive officers and directors with its needs.

On March 3, 2005, Mr. Gus Bottazzi resigned from his positions as the
Company's President and Principal Financial Officer, as a member of the
Company's Board of Directors, and from his positions as officer and director of
the Company's Warp Solutions subsidiaries. Mr. Bottazzi's resignation was a
mutual planned decision for him to pursue new opportunities and the Company to
pursue a strategy of growth-by-acquisition under new leadership. It was not the
result of a disagreement or a condition of the Gupta acquisition. In connection
with such resignation, the Company and Mr. Bottazzi entered into a Separation
Agreement, pursuant to which:

- The Company committed to issue to Mr. Bottazzi 200,000 shares
of Series C Stock.

- In addition, the Company agreed to vest the options to acquire
2,000 shares of Common Stock pursuant to a Stock Option
Agreement dated as of February 10, 2003, between the Company
and Mr. Bottazzi, to the extent that such options had not
vested. Such options are exercisable for $25.00 per share.

- Furthermore, with respect to the options to acquire 187,520
shares of Common Stock at an exercise price of $6.75 per share
pursuant to a Stock Option Agreement dated as of August 4,
2004 between the Company and Mr. Bottazzi, the Company agreed
that these options have vested.

- All such options will be exercisable by Mr. Bottazzi for a
period one year after the date of the Separation Agreement.
Failure to exercise the options by such date, will result in
their termination.

- Mr. Bottazzi agreed to cooperate and consult with the Company
concerning the transitioning of his former responsibilities to
other officers of the Company.

On March 30, 2005, the Company reported the appointment of certain
officers.

Brian Sisko has been appointed Chief Operating Officer of the Company.
Mr. Sisko has 20 years of experience in the areas of corporate finance, mergers
and acquisitions and strategic development. During the past several years, from
Feb 2002 to March 2005, Mr. Sisko ran B/T Business and Technology, which served
as an advisor and strategic management consultant to a variety of public and
private companies, including the Company. He was previously, from April 2000 to
January 2002, a Managing Director of Katalyst, LLC, a venture capital and
operational advisory firm where he was responsible for business development and
client/portfolio company engagement management in that firm's Philadelphia and
Boston offices. Mr. Sisko also previously served as Senior Vice President --
Corporate Development and General Counsel of National Media Corporation, a large
public company with international operations. In addition, Mr. Sisko was a
partner in the Corporate Finance/Mergers and Acquisitions practice group of the
Philadelphia-based law firm, Klehr Harrison, Harvey Branzburg & Ellers. Mr.
Sisko also teaches as an adjunct professor in the MBA program of the Fox School
of Business at Temple University. He earned his Juris Doctorate form The Law
School of the University of Pennsylvania and his B.S. from Bucknell University.

Mr. Jeff Bailey, Chief Executive Officer of Gupta has been appointed
interim Chief Financial Officer and Principal Financial Officer for the Company.
Since January, 2000 Mr. Bailey has served led Gupta as its Chief Executive
Officer, responsible for guiding Gupta's strategic direction as well as
day-to-day operations. Mr. Bailey joined Gupta in October, 2001 as its CFO. From
August 2001 through October 2001 Mr. Bailey was the CEO of David Corporation.
Mr. Bailey served as vice president of finance and CFO at Vivant Corporation
until August 2001. He has also held positions as vice president of finance and
CFO at Uniteq Application Systems Inc. and Phoenix Network Inc. He earned his
B.S. in Business Administration from the University of California, Berkeley, and
is a certified public accountant.

Mr. Takeshi Taniguchi, Corporate Controller of Gupta, has been
appointed interim Principal Accounting Officer for the Company. Since July 2004,
Mr. Taniguchi has served as Corporate Controller of Gupta, responsible for the
overall financial management of Gupta. Mr. Taniguchi has worked at Gupta or its
predecessors since 2000, serving as a senior financial analyst prior to his
current position. He earned his Master of Business Administration from the
University of Nevada, Reno, and is a Certified Management Accountant.

On March 30, 2005, the Company's Board of Directors ("Board") announced
that it has elected the following three individuals to fill vacancies on the
Board.

Mr. John Boehmer is an executive recruitment and human resources
professional with more than 20 years experience. Mr. Boehmer is a Managing
Director with Korn/Ferry International a position he has held since September
2003. Prior to joining Korn/Ferry, from January 2002, Mr. Boehmer was the
Founder and Managing Director of Matlin Partners LLC. Previously, from July 1999
through December 2001, Mr. Boehmer served as Vice President of Executive
Recruiting at Internet Capital Group. Mr. Boehmer holds a B.A. from Denison
University.

Mr. David Howitt is the President and CEO of the Meriwether Group,
Inc., a boutique brand consulting and marketing firm which he founded in May,
2004. From May, 2001 until April, 2004, Mr. Howitt served as director of
licensing and business development at adidas America, Inc. Mr. Howitt also
worked for several years as corporate counsel with adidas. Mr. Howitt holds a
B.A. from Denison University, and a J.D. from the Lewis & Clark Northwestern
School of Law. Mr. Howitt has a fifty percent interest in ISIS Acquisition
Partners II, LLC, ("IAP") an entity which has entered into transactions with the
Company as described below under the heading "Related Party Transactions". ISIS
Capital Management, LLC ("ISIS") is the managing member of IAP. The managing
members of ISIS are Mr. Rodney A. Bienvenu, Jr., Chairman and Chief Executive
Officer of the Company, and Mr. Ernest C. Mysogland, the Company's Chief Legal
Officer.

Mr. Mark Lotke is a General Partner with FT Ventures which he joined in
2005. From January 2003 through December 2004 he was a General Partner with
Pequot Ventures, and from January 2001 through December 2002, Mr. Lotke was a
General Partner with Covalent Partners. Prior to that, Mr. Lotke was a Managing
Director with Internet Capital Group. Mr. Lotke also worked for several years as
a principal with General Atlantic Partners. Mr. Lotke holds a Masters in
Business Administration from the Stanford University Graduate School of
Business, and a B.S. from the Wharton School of the University of Pennsylvania.

None of the Company's directors hold directorships in any public
reporting company other than the Company.

There are no family relationships among any of the Company's directors
or executive officers.

RESULTS OF OPERATIONS.

The results of operations of the Company includes the results of Gupta for two
months from February 1 to March 31, 2005.

During the three and nine months ended March 31, 2005 the Company recognized
approximately $2,341,000 and $2,606,000 of revenues compared to approximately
$371,000 and $735,000 for the three and nine months ended March 31, 2004. The
increase in revenue was due primarily to the acquisition of Gupta on January 31,
2005 which accounted for approximately $2,324,000 of the revenues for the three
and nine months ended March 31, 2005. The decline in Warp Solutions revenues is
a direct result of decrease spending on sales and marketing, the move from
hardware to software, and less business resulting from its reseller relationship
with iMimic.

Cost of revenues for three and nine months ended March 31, 2005 was
approximately $302,000 and $413,000 as compared to $368,000 and $411,000 for the
three months and nine months ended March 31, 2004. The decrease in product cost
was due to the write-off of inventory in 2004 of approximately $328,000 due to
Warp Solutions changing its business model from a hardware to a pure software
company. Gupta's cost of revenues as a percentage of revenue is 8.4% for the
three and nine months ended March 31, 2005.

Product development costs were approximately $617,000 and $729,000 for the three
and nine months ended March 31, 2005 as compared to approximately $150,000 and
$475,000 for the three and nine months ended March 31, 2004. The increase was
due primarily the acquisition of Gupta which accounted for approximately
$580,000 of the three months and nine months product development costs. The
decline of $113,000 and $326,000 for the three and nine months ended March 31,
2005 in product development costs related to Warp Solutions resulted primarily
because of reduced headcount.

Sales and marketing costs were approximately $1,322,000 and $1,799,000 for the
three and nine months ended March 31, 2005 as compared to approximately $469,000
and $1,731,000 for the three and nine months ended March 31, 2004. The increase
is due primarily to the acquisition of Gupta that accounted for approximately
$885,000 of the increase for the three and nine months ended March 31, 2005. The
decline of $32,000 and $817,000 for the three and nine months ended March 31,
2005 in sales and marketing costs related to Warp Solutions resulted primarily
because of reduced headcount.

General and administrative expense was approximately $1,888,000 and $3,050,000
for the three and nine months ended March 31, 2005 as compared to approximately
$1,923,000 and $6,579,000 for the three and nine months ended March 31, 2004.
The increase was due primarily to the acquisition of Gupta which accounted for
$811,000 of the three and nine months ended March 31, 2005 expenses. The decline
of $717,000 and $1,321,000 in general and administrative expense in Warp
Solutions general and administrative expenses was due to reduced headcount in
2005.

General and administrative expense also includes non-cash compensation,
consulting fees and amortization of stock options. For the three months ended
March 31, 2005, it was approximately $890,000 as compared to approximately
$916,000 for the three months ended March 31, 2004. In 2005 approximately
$790,000 related to shares issued to former employees and consultants as part of
their employment and separation agreement. The remainder was primarily related
to amortization of stock options granted to employees. In 2004 the Company
non-cash compensation was primarily made up of amortization of stock options
granted to employees and shares issued to consultants.

Non-cash compensation, consulting fees and amortization of stock options for the
nine months ended March 31, 2005 was approximately $1,433,000 as compared to
approximately $4,314,000 for the nine months ended March 31, 2004. In 2005
approximately $790,000 related to shares issued to former employees and
consultants as part of their employment and separation agreements. The remainder
was primarily related to amortization of stock options granted to employees. In
2004 the Company recognized non-cash compensation of approximately $1,091,000
relating to shares of common stock issued to consultants and amortization of
employees stock options 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 in 2004. The remainder was primarily related to amortization of stock
options granted to employees.

For the three and nine months ended March 31, 2005 the Company incurred
approximately $1,033,500 in penalties for failing to timely file a registration
statement and amend articles of incorporation of the Company as required by the
financing in January 2005.

Fair value loss on warrants was approximately $18,865,264 for the three and nine
months ended March 31, 2005. The loss relates to the change in the fair value of
the warrants relating to the Series C preferred stock, Senior Note, and
Subordinated debt, based on the Black-Scholes pricing model.

Interest expense for the three and nine months ended March 31, 2005 increased by
approximately $4,004,000 and $4,110,000, respectively. The increase represents
the cost associated with the debt to acquire Gupta .

Net Operating Loss Carry forwards.

At March 31, 2005, the Company has net operating loss carry forwards of
approximately $23,858,000 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 carry
forward 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, 2005, the Company had approximately
$1,081,000 in cash. In addition, the Company raised an additional $3 million
from the sale of Series C preferred stock in April 2005. During the nine months
ended March 31, 2005 the Company used approximately $1,951,000 cash to fund its
net loss and working capital. The Company's consolidated financial statements
for June 30, 2004 had been prepared on the assumption that the Company will
continue as a going concern. The Company's independent auditors issued their
audit report for the June 30, 2004 financial statements dated September 28, 2004
that includes an explanatory paragraph stating that the Company's recurring
losses and accumulated deficit, among other things, raised 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.

In January 2005 the Company acquired Gupta for $21 million. The purchase price
paid to the Seller was comprised of $15.75 million of cash (which included $1
million of cash paid to the Seller prior to March 31, 2005 by the Company, and
$1 million paid to the Seller by ISIS prior to March 31, 2005). The balance of
the purchase price of $5.25 million consisted of a $.75 million Senior note from
the Company to the Seller, a $1.5 million subordinated note from the Company to
the Seller, a $2 million Series C note from the Company to the Seller, and a $1
million Secured Promissory Note issued by ISIS to the Seller.

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 acquisition of Gupta, and certain reductions in expenses of Warp Solutions,
Inc. and other subsidiaries, lead management of the Company to conclude that no
further financing is required for the Company to continue in operation for the
next twelve months (other than an anticipated refinancing of the Company's
senior debt). The Company incurred $10,825,000 of senior and subordinated debt
in connection with the Gupta acquisition. The senior debt, the outstanding
principal amount of which is $6,825,000 is due July 31, 2005 (although the
Company may extend the maturity until August 30, 2005 in exchange for increased
interest payments and additional warrants to acquired common stock). In the
event the Company is not able to refinance this debt, the Company does not
anticipate that it would then have cash sufficient to pay the principal and any
interest due at maturity. In such case, the Company would default on the debt.
In the event of a default, the senior secured creditors would have the rights
pursuant to their security interests in all of the Company's assets, to
foreclose on such assets. In addition, any default under the senior debt would
result in an event of default under the terms of the Company's outstanding
subordinated debt. In such an event, the subordinated note holders would be
entitled to exercise their security interests and, pursuant to the terms of the
Company's collateral and security agreements, as well as the intercreditor
agreement among the senior and subordinated lenders, the subordinated debt
holders would receive the proceeds from the Company's assets after the payment
of the claims of the senior creditors. The subordinated debt, totals $4,000,000.
Of this amount, $1,500,000 matures on January 31, 2006, and the remainder
matures on January 31, 2007. Even if the Company were able to refinance or
otherwise pay its outstanding senior debt at maturity, there can be no assurance
that the Company will have sufficient cash to repay the subordinated debt
maturing in 2006 or 2007.

The Company is seeking to refinance its senior debt prior to July 31, 2005.
There can be no assurance that the Company will be successful in its efforts to
refinance this debt, or if it is successful, whether the terms will be favorable
and/or will result in the issuance of additional equity which would be dilutive
to shareholders.

Related Party Transactions.

Recent Accounting Pronouncement.

In December 2004, the FASB issued SFAS No. 123(R), Share-Based Payment, which
establishes standards for transactions in which an entity exchanges its equity
instruments for goods or services. This standard requires entity to measure the
cost of employee services received in exchange for an award of equity
instruments based on the grant date fair value of the award. This eliminates the
exception to account for such awards using the intrinsic method previously
allowable under APB Opinion No. 25. SFAS No. 123 (R) will be effective for the
interim period beginning January 1, 2006. The Company is the process of
evaluating the impact to its financial statements. We believe the adoption will
have a material effect on our income statement.

In December 2004, the FASB issued SFAS No. 153, "Exchanges of Nonmonetary
Assets, an amendment of APB Opinion No. 20, Accounting for Nonmonetary
Transactions." The amendments made by SFAS No. 153 are based on the principle
that exchanges of nonmonetary assets should be measured based on the fair value
of the assets exchanged. Further, the amendments eliminate the narrow exception
for nonmonetary exchanges of similar productive assets and replace it with a
broader exception for exchanges of nonmonetary asset that do not have commercial
substance. A nonmonetary exchange has commercial substance if the future cash
flows of the entity are expected to change significantly as a result of the
exchange. This statement shall be applied prospectively and is effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005. Earlier application is permitted for nonmonetary asset exchanges occurring
in fiscal periods beginning after the date of issuance. The Company does not
anticipate that the adoption of SFAS No. 153 will have a significant impact on
the Company's overall results of operations or financial position.

Legal Proceedings.

On April 1, 2002, Herman von Drateln ("HD"), a former employee of Gupta, filed a
wrongful termination action in Mexico against Gupta, Gupta's Mexican subsidiary
Gupta Technologies, S.A. de C.V. ("Gupta Mexico"), as well as five other US
defendants and another Mexican defendant (the "Labor Action"). The Labor Action
seeks approximately US $350,000 in damages, plus back pay from the date of the
alleged wrongful termination (February 4, 2002). Because the plaintiff failed to
appear at the last scheduled hearing, the court is required to make adverse
inferences against him. The final hearing was held in April, and the court's
decision is expected within approximately two months. Gupta has and intends to
continue to defend itself vigorously. There is no indication at present whether
the lawsuit will have a material effect on Gupta's or the Company's financial
condition, results of operations or liquidity.

Subsequent Events.

On April 4, 2005, the Company issued 3,000,000 shares of Series C Stock, and
Warrants to acquire 3,000,000 shares of Common Stock, upon the same terms as the
Subscription Agreement, in exchange for a purchase price of $3,000,000.

Critical Accounting Policies

We have identified the accounting policies below as the policies critical to the
Company's business operations and the understanding of the Company's results of
operations. We believe the following critical accounting policies and the
related judgments and estimates affect the preparation of the Company's
consolidated financial statements:

Revenue Recognition

The Company recognizes revenue in accordance with the American Institute of
Certified Public Accountants Statement of Position ("SOP") 97-2, Software
Revenue Recognition, as amended.

Revenues are derived from the licensing of software, maintenance contracts,
training, and other consulting services.

considered probable by management. For licensing of Gupta's software through its
indirect sales channel, revenue is recognized when the distributor sells the
software to its end-users, including value-added resellers. For licensing of
software to independent software vendors, revenue is recognized upon shipment to
the independent software vendors.

Intangible Assets and Goodwill

ITEM 3. Controls And Procedures

As of March 31, 2005, the Company carried out an evaluation, under the
supervision and with the participation of the Company's management, including
Rodney A. Bienvenu, Jr., the Company's principal executive officer, and Jeff
Bailey, the Company's principal financial officer, of the effectiveness of the
Company's disclosure controls and procedures (as such term is defined in Rule
13a-15(e) and Rule 15(d)-15(e) of the Securities Exchange Act of 1934 (the
"Exchange Act") pursuant to Rule 13a-15(d) and 15(e) of the Exchange Act. Based
upon that evaluation, Messrs. Bienvenu and Bailey have each 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,
furnishes or submits under the Exchange Act is recorded, processed, summarized
and reported on a timely basis.

There were no changes in our internal control over financial reporting
identified in management's evaluation during the fiscal quarter to which this
report relates that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.

PART II
OTHER INFORMATION

ITEM 1. Legal Proceedings

On April 1, 2002, Herman von Drateln ("HD"), a former employee of Gupta, filed a
wrongful termination action in Mexico against Gupta, Gupta's Mexican subsidiary
Gupta Technologies, S.A. de C.V. ("Gupta Mexico"), as well as five other US
defendants and another Mexican defendant (the "Labor Action"). The Labor Action
seeks approximately US $350,000 in damages, plus back pay from the date of the
alleged wrongful termination (February 4, 2002). Because the plaintiff failed to
appear at the last scheduled hearing, the court is required to make adverse
inferences against him. The final hearing was held in April, and the court's
decision is expected within approximately two months. Gupta has and intends to
continue to defend itself vigorously. There is no indication at present whether
the lawsuit will have a material effect on Gupta's or the Company's financial
condition, results of operations or liquidity.

compensation and damages totaling approximately $187,000 in addition to
attorneys fees and statutory damages. The Company believes that Mr. Liss's claim
is without merit and intends to vigorously defend itself.

ITEM 2. Unregistered Sales of Equity Securities and use of Proceeds.

The following information relates to sales of unregistered securities by the
Company during the third quarter of fiscal year 2005 ended March 31, 2005. 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.

As disclosed further above in the notes to the Company's financial statements,
the Company entered into various financing agreements pursuant to which it sold
Series C Notes, which converted into Series C Stock, and Warrants to acquire
Common Stock.

Under the Series C Subscription Agreement, the Company issued total aggregate
principal amount of Series C Notes equal to $8,475,000. In addition, certain
Bridge Notes in the aggregate principal amount of $2,250,000 issued previously
by the Company in order to fund the Non-Refundable Fees paid to the Seller in
the Gupta acquisition (which were credited against the purchase price at the
closing of the acquisition of Gupta), were converted with accrued interest into
an aggregate of $2,409,253 of Series C Notes.

On March 31, 2005, all amounts of principal and interest due under the Series C
Notes converted into shares of Series C Stock, plus Warrants to acquire common
stock. The Series C Notes issued to the Investors under the Subscription
Agreement (principal and interest) converted into (i) 8,558,589 shares of Series
C Stock, and (ii) Warrants to acquire 8,558,589 shares of Common Stock. In
accordance with their terms, these Series C Notes issued upon conversion of the
Bridge Notes converted into 2,433,015 shares of Series C Preferred Stock and
Warrants to acquire 2,433,015 shares of Common Stock. These Warrants have an
exercise price of $1.25 per share and are exercisable for a period of five years
from the date of issuance. The Company reserved sufficient common stock to issue
upon conversion of these Series C shares and exercise of the Bridge Warrants.

Pursuant to a Senior Note and Warrant Purchase Agreement entered into by the
Company on January 31, 2005 the Company entered into a Senior Note Agreement,
pursuant to which it sold Senior Notes and Senior Lender Warrants. The Senior
Lender Warrants allow the Senior Noteholders to acquire, in the aggregate,
2,660,256 shares of Common Stock, at an exercise price of $1.25 per share.

On January 31, 2005 the Company also entered into a Subordinated Note Agreement,
pursuant to which it sold Subordinated Notes and Subordinated Lender Warrants.
The Subordinated Lender Warrants allow the Subordinated Noteholders to acquire,
in the aggregate, 2,500,000 shares of Common Stock at an exercise price of $1.25
per share. In addition, the Subordinated Noteholders have the right to convert
all principal amounts due under the Subordinated Notes (other than the note
issued to Gupta Holdings, LLC, the Seller of Gupta Technologies, LLC) into such
number of Shares of Common Stock equal to the principal amount due under the
Subordinated Note divided by $1.00. Accordingly, the Subordinated Noteholders
have the right to convert their Subordinated Notes into 2,500,000 shares of
Common Stock.

The proceeds from the Series C Subscription Agreement, the Bridge Notes, the
Senior Notes and the Subordinated Notes were used primarily to pay the purchase
price to the Seller in the Gupta acquisition with the remainder used for general
working capital purposes.

Also, the Company received the remaining $125,500 for the Company's Series B-2
stock in exchange 125.5 shares of Series B-2 Preferred Stock were to be issued
together with Warrants to acquire an additional 125.5 shares of Series B-2
Preferred Stock.

ITEM 3. Defaults Upon Senior Securities.

None.

ITEM 4. Submission of Matters to a Vote of Security Holders.

On January 31, 2005, the holders of a majority of the outstanding shares of our
Common Stock approved an Amendment to the Company's Articles of Incorporation by
written consent. The Amendment, which became effective March 31, 2005, increased
the authorized Common Stock of the Company. The Company references the
Definitive Information Statement on Schedule 14C filed on March 11, 2005, which
describes the consent, the Amendment and other information.

ITEM 5. Other Information.

None.

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.

2.2* Form of Share Exchange Agreement dated as of December 13, 2002 by
and among WARP Technology Holdings, Inc., 6043577 Canada Inc.,
Spider Software Inc., the Spider Insiders and the Persons
Identifiedon Schedule A thereto. Incorporated by reference to
Exhibit 2.2 to the Current Report on Form 8-K filed by the Company
on January 25, 2003.

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 3.5
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
referenceto Exhibit 3.4 of 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 of
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.

3.8* Certificate of Designations, Preferences, and Rights of Series B-2
Preferred Stock, as filed with the Secretary of State of the State
of Nevada on August 4, 2004. Incorporated by reference to Exhibit
10.02 to the Current Report on Form 8-K filed by the Company on
August 20, 2004.

3.9* Certificate of Change Pursuant to Nevada Revised Statutes Sec.
78.209, effecting 100 for 1 reverse split effective November 18,
2004, as filed with the Secretary of State of the State of Nevada on
November 8, 2004. Incorporated by reference to Exhibit 3.9 to the
Current Report on Form 8-K filed by the Company on November 12,
2004. 3.10* Certificate of Amendment to Articles of Incorporation of
Warp Technology Holdings, Inc. Incorporated by reference to Exhibit
3.10 to the Current Report on Form 8-K filed by the Company on April
1, 2005.

3.11* Certificate of Designations of Series C Stock of Warp Technology
Holdings, Inc. incorporated by reference to Exhibit 3.11 to the
Current Report on Form 8-K filed by the Company on April 4, 2005.

4.01* Form of Warrant to Purchase Shares of Series B-2 Preferred Stock.
Incorporated by reference to Exhibit 4.01 to the Current Report on
Form 8-K filed by the Company on August 20, 2004.

4.02* Form of Bridge Note issued October 13, 2004, by the Company.
Incorporated by reference to Exhibit 4.02 to the Quarterly Report on
Form 10-QSB filed by the Company on November 15, 2004.

4.03* Form of Amended and Restated $1,500,000 Subordinated Secured
Promissory Note issued by the Company to Gupta Holdings, LLC, on
January 31, 2005. Incorporated by reference to Exhibit 4.03 to the
Current Report on Form 8-K filed

by the Company on February 4, 2005.

4.04* Form of Senior Secured Promissory Note issued January 31, 2005 by
the Company under the Senior Note and Warrant Purchase Agreement, by
and between the Company and the Purchasers identified therein.
Incorporated by reference to Exhibit 4.04 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

4.05* Form of Initial Warrant and Additional Warrant to be issued under
the Senior Note and Warrant Purchase Agreement, by and between the
Company and the Purchasers identified therein. Incorporated by
reference to Exhibit 4.05 to the Current Report on Form 8-K filed by
the Company on February 4, 2005.

4.06* Form of Subordinated Secured Promissory Note issued January 31, 2005
by the Company under the Subordinated Note and Warrant Purchase
Agreement, by and between the Company and the Purchasers identified
therein. Incorporated by reference to Exhibit 4.06 to the Current
Report on Form 8-K filed by the Company on February 4, 2005.

4.07* Form of Warrant to be issued under the Subordinated Note and Warrant
Purchase Agreement, by and between the Company and the Purchasers
identified therein. Incorporated by reference to Exhibit 4.07 to the
Current Report on Form 8-K filed by the Company on February 4, 2005.

4.08* Form of Convertible Promissory Note issued January 31, 2005 by the
Company pursuant to the Subscription Agreement by and between the
Company and the Investors identified therein. Incorporated by
reference to Exhibit 4.08 to the Current Report on Form 8-K filed by
the Company on February 4, 2005.

10.3* The form of the Financial Consulting Agreement dated March 5, 2002
between WARP Solutions, Inc. and Lighthouse Capital, Inc.
Incorporated by reference to Exhibit 10.3 to the Annual Report on
Form 10-KSB filed by the Company on October 7, 2002.

10.4* The form of the Financial Consulting Agreement dated May 16, 2002
between the Company and Lighthouse Capital, Inc. Incorporated by
reference to Exhibit 10.4 to the Annual Report on Form 10-KSB filed
by the Company on October 7, 2002.

10.5* Form of Master Distributor Agreement between Maniac Networks Company
and WARP Solutions, Inc. dated as of August 1, 2002. Incorporated by
reference to Exhibit 10.5 to the Annual Report on Form 10-KSB filed
by the Company on October 7, 2002.

10.6* Form of Master Distributor Agreement between CDI Technologies, Inc.
and WARP Solutions, Inc. dated as of September 1, 2002. Incorporated
by reference to Exhibit 10.6 to the Annual Report on Form 10-KSB
filed by the Company on October 7, 2002.

10.8* The WARP Technology Holdings, Inc. 2002 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.8 to the Quarterly Report on
Form 10-QSB filed by the Company on February 14, 2003.

10.9* Form of Stock Option Grant agreement for options granted pursuant to
The WARP Technology Holdings, Inc. 2002 Stock Incentive Plan.
Incorporated by reference to Exhibit 10.9 to the Quarterly Report on
Form 10-QSB filed by the Company on February 14, 2003.

10.10* Form of Strategic Alliance Agreement dated as of April 7, 2003
between Mirror Image Internet, Inc. and WARP Solutions, Inc.
Incorporated by reference to Exhibit 10.10 to the Quarterly Report
on Form 10-QSB filed by the Company on May 16, 2003.

10.11* Form of iMimic/OEM Software License Agreement dated April 2003
between iMimic Networking, Inc. and WARP Technology Holdings, Inc.
Incorporated by reference to Exhibit 10.11 to the Quarterly Report
on Form 10-QSB filed by the Company on May 16, 2003.

10.12* Form of Consulting Agreement between WARP Technology Holdings, Inc.
and Dr. David Milch dated as of August 1, 2003. Incorporated by
reference to Exhibit 3.4 of the Annual Report on Form 10-KSB filed
by the Company on October 14, 2003.

10.13* Form of Consulting Agreement between WARP Technology Holdings, Inc.
and Mr. Steven Antebi which was executed by the parties thereto on
December 23, 2003. Incorporated by reference to Exhibit 10.13 to the
Quarterly Report on Form 10-QSB filed by the Company on February 12,
2004.

10.14* Form of Employment Agreement between WARP Technology Holdings, Inc.
and Mr. Malcolm Coster which was executed by the parties thereto on
November 17, 2003. Incorporated by reference to Exhibit 10.14 to the
Quarterly Report on Form 10-QSB filed by the Company on February 12,
2004.

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. Incorporated by reference to Exhibit 10.13 to the
Quarterly Report on Form 10-QSB filed by the Company on May 17,
2004.

10.16* Series B-2 Preferred Stock Purchase Agreement entered into as of
August 4, 2004 between and among the Company and the Persons listed
on Schedule 1.01 thereto. Incorporated by reference to Exhibit 10.01
to the Current Report on Form 8-K filed by the Company on August 20,
2004.

10.17* Stockholders Agreement, dated as of August 4, 2004, between and
among Warp, the holders of the Series B-2 Preferred Stock and such
other Stockholders as named therein. Incorporated by reference to
Exhibit 10.03 to the Current Report on Form 8-K filed by the Company
on August 20, 2004.

10.18* Form of Employment Agreement between WARP Technology Holdings, Inc.
and Mr. Ron Bienvenu which was executed by the parties thereto on
August 4, 2004. Incorporated by reference to Exhibit 10.18 of the
Annual Report on Form 10-KSB filed by the Company on October 13,
2004.

10.19* Form of Employment Agreement between WARP Technology Holdings, Inc.
and Mr. Gus Baptize which was executed by the parties thereto on
August 4, 2004. Incorporated by reference to Exhibit 10.19 of the
Annual Report on Form 10-KSB filed by the Company on October 13,
2004.

10.20* Form of Employment Agreement between WARP Technology Holdings, Inc.
and Mr. Ernest Mysogland which was executed by the parties thereto
on August 4, 2004. Incorporated by reference to Exhibit 10.20 of the
Annual Report on Form 10-KSB filed by the Company on October 13,
2004.

10.21* Form of Employment Agreement between WARP Technology Holdings, Inc.
and Mr. Michael David Less which was executed by the parties thereto
on August 4, 2004. Incorporated by reference to Exhibit 10.21 of the
Annual Report on Form 10-KSB filed by the Company on October 13,
2004.

10.22* Form of Incentive Stock Option Agreement between WARP Technology
Holdings, Inc. and Mr. Ron Bienvenu which was executed by the
parties thereto on August 4, 2004. Incorporated by reference to
Exhibit 10.22 of the Annual Report on Form 10-KSB filed by the
Company on October 13, 2004.

10.23* Form of Incentive Stock Option Agreement between WARP Technology
Holdings, Inc. and Mr. Gus Baptize which was executed by the parties
thereto on August 4, 2004. Incorporated by reference to Exhibit
10.23 of the Annual Report on Form 10-KSB filed by the Company on
October 13, 2004.

10.24* Form of Incentive Stock Option Agreement between WARP Technology
Holdings, Inc. and Mr. Ernest Mysogland which was executed by the
parties thereto on August 4, 2004. Incorporated by reference to
Exhibit 10.24 of the Annual Report on Form 10-KSB filed by the
Company on October 13, 2004.

10.25* Form of Incentive Stock Option Agreement between WARP Technology
Holdings, Inc. and Mr. Michael David Liss which was executed by the
parties thereto on August 4, 2004. Incorporated by reference to
Exhibit 10.25 of the Annual Report on Form 10-KSB filed by the
Company on October 13, 2004.

10.26* Form of Consulting Agreement between WARP Technology Holdings, Inc.
and ISIS Capital Management, LLC which was executed by the parties
thereto on August 4, 2004. Incorporated by reference to Exhibit
10.26 of the Annual Report on Form 10-KSB filed by the Company on
October 13, 2004.

10.27* Form of Stock Option Agreement between WARP Technology Holdings,
Inc. and ISIS Capital Management, LLC which was executed by the
parties thereto on August 4, 2004. Incorporated by reference to
Exhibit 10.27 of the Annual Report on Form 10-KSB filed by the
Company on October 13, 2004.

10.28* Amendment to Employment Agreement, dated as of July 27, 2004 between
Warp Technology Holdings, Inc. and Malcolm Coster. Incorporated by
reference to Exhibit 10.28 to the Quarterly Report on Form 10-QSB
filed by the Company on

November 15, 2004.

10.29* Registration Rights Agreement, dated as of July 27, 2004 between
Warp Technology Holdings, Inc. and Malcolm Coster. Incorporated by
reference to Exhibit 10.29 to the Quarterly Report on Form 10-QSB
filed by the Company on November 15, 2004.

10.30* Agreement between WARP Technology Holdings, Inc. and Griffin
Securities, Inc. dated September 13, 2004. Incorporated by
referenceto Exhibit 10.30 to the Quarterly Report on Form 10-QSB
filed by the Company on November 15, 2004.

10.31* Purchase Agreement Assignment and Assumption (the "Assignment"), as
of October 13, 2004, by and between ISIS Capital Management, LLC and
Warp Technology Holdings, Inc. Incorporated by reference to Exhibit
10.31 to the Quarterly Report on Form 10-QSB filed by the Company on
November 15, 2004.

10.32* Agreement between Warp Technology Holdings, Inc. and Duncan Capital
LLC dated September 20, 2004. Incorporated by reference to Exhibit
10.32 to the Quarterly Report on Form 10-QSB filed by the Company on
November 15, 2004.

10.33* Amendment No. 2 to Extension Agreement, by and between the Company
and Gupta Holdings, LLC. Incorporated by reference to Exhibit 10.33
to the Current Report on Form 8-K filed by the Company on February
4, 2005.

10.34* Amendment No. 3 to Extension Agreement, by and between the Company
and Gupta Holdings, LLC. Incorporated by reference to Exhibit 10.34
to the Current Report on Form 8-K filed by the Company on February
4, 2005.

10.35* Amendment to Membership Interest Purchase Agreement, made and
entered into as of January 31, 2005, by and between the Company and
Gupta Holdings, LLC. Incorporated by reference to Exhibit 10.35 to
the Current Report on Form 8-K filed by the Company on February 4,
2005.

10.36* Form of Series C Subscription Agreement entered into January 31,
2005 by and between the Company and the Investors as identified
therein. Incorporated by reference to Exhibit 10.36 to the Current
Report on Form 8-K filed by the Company on February 4, 2005.

10.37* Investors' Agreement entered into the 31st day of January, 2005 by
and among the Company, and the persons listed on Exhibit A thereto.
Incorporated by reference to Exhibit 10.37 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.38* Senior Note and Warrant Purchase Agreement, as of January 31, 2005,
by and among the Company and the Purchasers identified therein.
Incorporated by reference to Exhibit 10.38 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.39* Subordinated Note and Warrant Purchase Agreement, as of January 31,
2005, by and among the Company and the Purchasers identified
therein. Incorporated by reference to Exhibit 10.39 to the Current
Report on Form 8-K filed by the Company on February 4, 2005.

10.40* Senior Security Agreement, dated as of January 31, 2005, between the
Company and Collateral Agent (as defined therein). Incorporated by
reference to Exhibit 10.40 to the Current Report on Form 8-K filed
by the Company on February 4, 2005.

10.41* Senior Security Agreement, dated as of January 31, 2005, between
Warp Solutions, Inc. and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.41 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.42* Senior Security Agreement, dated as of January 31, 2005, between
Gupta Technologies, LLC and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.42 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.43* Senior Guaranty, dated as of January 31, 2005, between Warp
Solutions, Inc. and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.43 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.44* Senior Guaranty, dated as of January 31, 2005, between Gupta
Technologies, LLC and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.44 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.45* Subordinated Security Agreement, dated as of January 31, 2005,
between the Company and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.45 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.46* Subordinated Subsidiary Security Agreement, dated as of January 31,
2005, between Warp Solutions, Inc. and Collateral Agent (as defined
therein). Incorporated by reference to Exhibit 10.46 to the Current
Report on Form 8-K filed by the Company on February 4, 2005.

10.47* Subordinated Subsidiary Security Agreement, dated as of January 31,
2005, between Gupta Technologies, LLC and Collateral Agent (as
defined therein). Incorporated by reference to Exhibit 10.47 to the
Current Report on Form 8-K filed by the Company on February 4, 2005.

10.48* Subordinated Guaranty, dated as of January 31, 2005, between Warp
Solutions, Inc. and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.48 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.49* Subordinated Guaranty, dated as of January 31, 2005, between Gupta
Technologies, LLC and Collateral Agent (as defined therein).
Incorporated by reference to Exhibit 10.49 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.50* Intercredit or and Subordination Agreement dated as of January 31,
2005, by and among: the Subordinated Noteholders, the Senior
Noteholders, the Company, Warp Solutions, Inc., Gupta Technologies,
LLC, and the Collateral Agent (as such terms are defined therein).
Incorporated by reference to Exhibit 10.50 to the Current Report on
Form 8-K filed by the Company on February 4, 2005.

10.51* Collateral Agency Agreement made as of January 31, 2005 by and among
the Collateral Agent (as defined therein) and the Noteholders (as
defined therein). Incorporated by reference to Exhibit 10.51 to the
Current Report on Form 8-K filed by the Company on February 4, 2005.

10.52* Post Closing Agreement, dated as of January 31, 2005, by and among
the Credit Parties and the Collateral Agent (as such terms are
defined therein). Incorporated by reference to Exhibit 10.52 to the
Current Report on Form 8-K filed by the Company on February 4, 2005.

10.53* Separation Agreement, dated as of March 3, 2005, by and between the
Company and Gus Bottazzi. Incorporated by reference to Exhibit 10.53
to the Current Report on Form 8-K filed by the Company on March 9,
2005.

10.54* Letter Agreement dated October 31, 2003 by and between Gupta
Technologies, LLC and Jeffrey L. Bailey. Incorporated by reference
to Exhibit 10.54 to the Company's Registration Statement on Form
S-2, file no. 333-123864.

10.55* Letter Agreement dated August 4, 2004 by and between Gupta
Technologies, LLC and Jeffrey Bailey, as amended January 1, 2005.
Incorporated by reference to Exhibit 10.55 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

10.56* Premium International Distribution Agreement dated January 1, 2004
by and between ADN Distribution, GmbH and Gupta Technologies, LLC.
Incorporated by reference to Exhibit 10.56 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

10.57* Premium International Distribution Agreement dated March 1, 2005 by
and between Scientific Computers and Gupta Technologies, LLC.
Incorporated by reference to Exhibit 10.57 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

10.58* Premium International Distribution Agreement dated January 1, 2004
by and between NOCOM AB and Gupta Technologies, LLC, as amended
January 1, 2005. Incorporated by reference to Exhibit 10.58 to the
Company's Registration Statement on Form S-2, file no. 333-123864.

10.59* Premium International Distribution Agreement dated October 1, 2003
by and between Sphinx CST and Gupta Technologies, LLC, as amended
October 1, 2004. Incorporated by reference to Exhibit 10.59 to the
Company's Registration Statement on Form S-2, file no. 333-123864.

10.60* Premium International Distribution Agreement dated March 24, 2004 by
and between Xtura B.V. and Gupta Technologies, LLC. Incorporated by
reference to Exhibit 10.60 to the Company's Registration Statement
on Form S-2, file no. 333-123864.

10.61* OEM Software License Agreement dated September 29, 1994 by and
between United Parcel Service General Services Co. and Gupta
Technologies, LLC, as amended September 8, 1995, September 30, 1999,
December 21, 1999, March 23, 2001, and December 31, 2004.
Incorporated by reference to Exhibit 10.61 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

10.62* Service Agreement dated March 27, 2002 by and between Offshore
Digital Services Inc., DBA Sonata and Gupta Technologies, LLC, as
amended March 28, 2003, July 21, 2003, and March 28, 2004.
Incorporated by reference to Exhibit 10.62 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

10.63* Services Agreement dated September 20, 2004 by and between
CodeWeavers, Inc. and Gupta Technologies, LLC. Incorporated by
reference to Exhibit 10.63 to the Company's Registration Statement
on Form S-2, file no. 333-123864.

10.64* OEM Product Agreement dated September 20, 2004 by and between
CodeWeavers, Inc. and Gupta Technologies, LLC. Incorporated by
reference to Exhibit 10.64 to the Company's Registration Statement
on Form S-2, file no. 333-123864.

10.65* Qt Commercial License Agreement for Enterprise Edition dated as of
December 15, 2004 by and between Trolltech Inc. and Gupta
Technologies, LLC. Incorporated by reference to Exhibit 10.65 to the
Company's Registration Statement on Form S-2, file no. 333-123864.

10.66* OEM License Agreement dated January 1, 2004 by and between Graphics
Server Technologies, L.P. and Gupta. Incorporated by reference to
Exhibit 10.66 to the Company's Registration Statement on Form S-2,
file no. 333-123864.

10.67* Technologies, LLC. Shrinkwrap software license agreement with Data
Techniques, Inc. for the ImageMan software product. Incorporated by
reference to Exhibit 10.67 to the Company's Registration Statement
on Form S-2, file no. 333-123864.

10.68* Shrinkwrap software license agreement with Rogue Wave Software Inc.
for the Rogue Wave Stingray software product. Incorporated by
reference to Exhibit 10.68 to the Company's Registration Statement
on Form S-2, file no. 333-123864.

10.69* Lease Agreement dated July 19, 2001 by and between Westport Joint
Venture and Gupta Technologies, LLC, together with amendments
thereto. Incorporated by reference to Exhibit 10.69 to the Company's
Registration Statement on Form S-2, file no. 333-123864.

22.1* Subsidiaries of the Company. Incorporated by reference to Exhibit
22.1 of the Annual Report on Form 10-KSB filed by the Company on
October 13, 2004.

31.1# Certification of Periodic Report pursuant to Section 302 of the
Sarbanes Oxley Act of 2002.

31.2# Certification of Periodic Report pursuant to Section 302 of the
Sarbanes Oxley Act of 2002.

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

32.2# Certification pursuant to 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:

Current Report on Form 8-K filed January 7, 2005, disclosing that the Company
entered into a material agreement with Gupta Holdings, LLC extending the date
for the closing of the acquisition of Gupta Technologies, LLC until January 20,
2005, and disclosing the sale of $250,000 of convertible promissory notes.

Current Report on Form 8-K filed February 1, 2005, disclosing a press release
concerning the closing of the Gupta acquisition.

Current Report on Form 8-K filed February 4, 2005, as amended on February 4,
2005, March 17, 2005 and April 5, 2005, disclosing the completion of the Gupta
acquisition, the material agreements entered into in connection with the
acquisition, the financing agreements entered into in connection with the
issuance of equity and debt incurred to finance the acquisition, and the
financial statements and information required concerning the Company and the
acquired business.

Current Report on Form 8-K filed March 9, 2005, disclosing the resignation of
Mr. Gus Bottazzi from his positions as an executive officer and a director of
the Company, the terms of the separation agreement entered into with Mr.
Bottazzi and the issuance of the securities in connection therewith.

Current Report on Form 8-K filed March 30, 2005, disclosing the appointment of
principal executive officers and directors of the Company.

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.

October 11, 2006

HALO TECHNOLOGY HOLDINGS, INC.

By: /s/ Rodney A. Bienvenu, Jr.
------------------------------------
Rodney A. Bienvenu, Jr., CEO, Chairman
as Registrant's duly authorized officer

EXHIBIT INDEX

The following Exhibits are filed herewith:

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

31.1# Certification of Periodic Report pursuant to Section 302 of the
Sarbanes Oxley Act of 2002.

31.2# Certification of Periodic Report pursuant to Section 302 of the
Sarbanes Oxley Act of 2002.

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

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