10KSB

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-KSB

(Mark One)

[ X ]

Annual Report to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the Fiscal Year ended August 31, 2003

[    ]

Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from _____________ to ________________

Commission File No.  000-27773

BANKENGINE TECHNOLOGIES, INC.

____________________________________________________________________

(Exact name of registrant as specified in its charter)

Delaware	59-313-4518
(State or other jurisdiction of Incorporation)	(I.R.S. Employer Identification No.)

157 Adelaide Street, Suite 426

Toronto, ON Canada M5H 4E7

______________________________________________________________________

(Address of principal executive offices)

Registrant’s telephone number, including area code: (416) 860-9378

Securities registered pursuant to Section 12(b) of the Act:

Title of each Class	Name of each Exchange on which Registered
Not Applicable	None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.001 Par Value

(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter prior that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

[ X ]

No

[    ]

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.

Yes

[    ]

No

[ X ]

The issuer's net sales for the most recent fiscal year were $-0-.

The aggregate market value of the voting stock held by non-affiliates based upon the last sale price on December 12, 2003 was approximately $235,522.32.

As of December 12, 2003 there were 19,535,893 shares of Common Stock, par value $0.001 per share, outstanding.

PART I

Item 1.  Business

BankEngine Technologies, Inc. (“BankEngine,” or the “Company”) was previously an international solutions provider and developer of Internet-based software and various electronic commerce solutions, as well as telephony solutions.

Callmate Telecom International, Inc. ("Callmate") acquired WebEngine Technologies International, Inc. ("WebEngine") pursuant to a Share Purchase Agreement effective as of January 5, 2001. Callmate acquired all 12,000,000 shares of common stock of WebEngine in a share exchange, which exchange was effected on a one-for-one basis. The transaction was reported on a Form 8-K filed with the Securities and Exchange Commission (the "SEC") on January 16, 2001. Subsequent thereto, Callmate changed its name to BankEngine Technologies, Inc. (the "Company") as reported on Schedule 14C.

The Company determined to move away from the telecom business in the UK due to the increased competitiveness in this sector internationally and growing indebtedness. The trend internationally, and especially in the UK, in the telecom sector is for consolidation and competition from transnational corporations continues to be fierce. Many competitors have since ceased operations.  

On April 2, 2002, Cyberstation Computers and Support Inc., an Ontario corporation ("Cyberstation") and wholly owned subsidiary of the Company, entered into a Common Stock Purchase Agreement (the "Agreement") by and among Platinum Telecommunications, Inc. ("Platinum") and Mr. Zeeshan Saeed (the "Seller"). Pursuant to the Agreement, Cyberstation acquired seventy percent (70%) of the issued and outstanding shares of common stock of Platinum (the "Platinum Shares") in consideration for 1,800,000 shares of common stock of the Company, par value $0.001 per share. The Platinum Shares were acquired from the Seller, by whom Platinum was immediately before closing of the Agreement wholly owned.  

The Company has been considering whether, and if so how, to reorganize its telecommunications and software development  businesses, while remaining open to entering into a business combination.  In December 2003, the Company sold all of its interest in Platinum Telecommunications, which was its only source of revenue, as well as all of its shares of CyberStation.  In connection with the sale of such shares, the purchaser assumed approximately $384,000 in liabilities and received a minimal amount of assets from the Company.  Included in the liabilities assumed by the purchaser was a loan of $120,000 made by such purchaser to the Company.  This will result in a gain on the divestitures. The impact of the divestiture has been reflected in the financial statements for the year ending August 31, 2003.  The sale of the Platinum shares and the Cy berstation shares was made to Joseph J. Alves, our Chief Executive Officer.   Mr. Alves agreed to sell all of his shares of common stock of the Company on December 9, 2003 to an unaffiliated third party, Michael J. Xirinachs.

Effective December 9, 2003, Michael J. Xirinachs acquired an aggregate of 10,115,000 shares of the Company’s common stock, representing approximately 51.8% of the Company’s issued and outstanding common stock, from Joseph J. Alves (9,615,000 shares), the Company’s Chief Executive Officer and from Atlantica Marine (500,000 shares).  Mr. Xirinachs paid an aggregate of $100,000 from his personal funds to acquire such shares.  

Mr. Alves has agreed to remain as the Company’s Chief Executive Officer and acting Chief Financial Officer.  As a result of the sale of Platinum and CyberStation, we have no revenue and intend to aggressively seek a prospective business acquisition.

Item 2.   Properties

The Company currently occupies approximately 100 square feet of office space within the personal offices of Joseph J. Alves located at 157 Adelaide Street, Suite 426, Toronto, ON M5H 4E7.  The Company does not have a lease for this space and is not required to pay any rent for occupying such space.

The Company believes that its facilities are adequate for its current operations.

Item 3.   Legal Proceedings

The Company is not subject to any material legal proceedings.

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

The Company did not submit any matters to a vote of its security-holders during the fourth quarter of fiscal year 2003.

PART II

Item 5.  Market for BankEngine's Common Stock

The Company’s Common Stock is quoted on the NASD’s OTC Bulletin Board under the symbol “BKET”, which began trading on the OTC Bulleting Board on December 24, 1998.  Listed below are the high and low sale prices for the Company’s Common Stock during the fiscal years ended August 31, 2003 and 2002, and through December 13, 2003.

	Common Stock
Fiscal 2002
First Quarter	$             0.07	$            0.02
Second Quarter	0.05	0.01
Third Quarter	0.17	0.01
Fourth Quarter	0.41	0.03
Fiscal 2003
First Quarter	$              0.39	$           0.05
Second Quarter	0.19	0.025
Third Quarter	0.075	0.02
Fourth Quarter	0.04	0.015

On December 12, 2003, there were approximately 333 holders of record of the Company’s 19,535,893 outstanding shares of Common Stock.

On December 12, 2003, the last sale price of the Common Stock as reported on the OTC Bulletin Board was $0.025.

Dividend Policy

BankEngine has never paid or declared dividends on its common stock. The payment of cash dividends, if any, in the future is within the discretion of the Board of Directors and will depend upon BankEngine’s earnings, its capital requirements, financial condition and other relevant factors. BankEngine intends, for the foreseeable future, to retain future earnings for use in its business.

Securities authorized for Issuance Under Equity Plans

	Number of securities to be issued upon exercise of outstanding options, warrants and rights	Weighted-average exercise price of outstanding options, warrants and rights	Number of securities remaining available for future issuance under equity compensation plans
Equity compensation plans approved by security holders	None	---	2,000,000
Equity compensation plans not approved by security holders	None	---	None
Total	None	---	None

Item 6. Management's Discussion and Analysis of Financial Condition and Results of Operations

Forward-looking Statements

The following discussion should be read in conjunction with the Company's consolidated financial statements and related notes included elsewhere in this Form 10-KSB.

This filing contains forward-looking statements. The words "anticipated," "believe," "expect, "plan," "intend," "seek," "estimate," "project," "will," "could," "may," and similar expressions are intended to identify forward-looking statements. These statements include, among others, information regarding future operations, future capital expenditures, and future net cash flow. Such statements reflect the Company's current views with respect to future events and financial performance and involve risks and uncertainties, including, without limitation, general economic and business conditions, changes in foreign, political, social, and economic conditions, regulatory initiatives and compliance with governmental regulations, the ability to achieve further market penetra tion and additional customers, and various other matters, many of which are beyond the Company's control. Should one or more of these risks or uncertainties occur, or should underlying assumptions prove to be incorrect, actual results may vary materially and adversely from those anticipated, believed, estimated, or otherwise indicated. Consequently, all of the forward-looking statements made in this filing are qualified by these cautionary statements and there can be no assurance of the actual results or developments.

Callmate Telecom International, Inc. ("Callmate") acquired WebEngine Technologies International, Inc. ("WebEngine") pursuant to a Share Purchase Agreement effective as of January 5, 2001. Callmate acquired all 12,000,000 shares of common stock of WebEngine in a share exchange, which exchange was effected on a one-for-one basis. The transaction was reported on a Form 8-K filed with the Securities and Exchange Commission (the "SEC") on January 16, 2001. Subsequent thereto, Callmate changed its name to BankEngine Technologies, Inc. (the "Company") as reported on Schedule 14C. The Company filed the Definitive 14C on March 5, 2001.

The Company determined to move away from the telecom business in the UK due to the increased competitiveness in this sector internationally and growing indebtedness. The trend internationally, and especially in the UK, in the telecom sector is for consolidation and competition from transnational corporations continues to be fierce. Many competitors have since ceased operations.  

On April 2, 2002, Cyberstation Computers and Support Inc., an Ontario corporation ("Cyberstation") and wholly owned subsidiary of the Company, entered into a Common Stock Purchase Agreement (the "Agreement") by and among Platinum Telecommunications, Inc. ("Platinum") and Mr. Zeeshan Saeed (the "Seller"). Pursuant to the Agreement, Cyberstation acquired seventy percent (70%) of the issued and outstanding shares of common stock of Platinum (the "Platinum Shares") in consideration for 1,800,000 shares of common stock of the Company, par value $0.001 per share. The Platinum Shares were acquired from the Seller, by whom Platinum was immediately before closing of the Agreement wholly owned. The Agreement was effective as of April 5, 2002. The transaction was negotiated on an arms-length basis. Neither the Company nor Cybersta tion had any affiliation with Platinum or any of its officers or directors.

The Company has been considering whether, and if so how, to reorganize its telecommunications and software development  businesses, while remaining open to entering into a business combination.  In December 2003, the Company sold all of its interest in Platinum Telecommunications, which was its only source of revenue, as well as all of its shares of CyberStation.  In connection with the sale of such shares, the purchaser assumed approximately $384,000 in liabilities and received a minimal amount of assets from the Company.  Included in the liabilities assumed by the purchaser was a loan of $120,000 made by such purchaser to the Company.  This will result in a gain on the divestitures. The impact of the divestiture has been reflected in the financial statements for the year ending August 31, 2003.  The sale of the Platinum shares and the Cy berstation shares was made to Joseph J. Alves, our Chief Executive Officer.   Mr. Alves agreed to sell all of his shares of common stock of the Company on December 9, 2003 to an unaffiliated third party.

CRITICAL ACCOUNTING POLICIES

The Company’s significant accounting policies are outlined within Item 8 as Note 1 to the consolidated financial statements. Some of those accounting policies require the Company to make estimates and assumptions that affect the amounts it reports. The following items require the most significant judgment and often involve complex estimation:

Revenue recognition: The Company generally recognizes a sale when the service has been provided and risk of loss has passed to the customer, collection of the resulting receivable is reasonably assured, persuasive evidence of an arrangement exists, and the fee is fixed or determinable. The assessment of whether the fee is fixed or determinable considers whether a significant portion of the fee is due after its normal payment terms. If the Company determines that the fee is not fixed or determinable, the Company recognizes revenue at the time the fee becomes due, provided that all other revenue recognition criteria have been met.

The Company assesses collectibility based on a number of factors, including general economic and market conditions, past transaction history with the customer, and the credit-worthiness of the customer. If the Company determines that collection of the fee is not probable, then we will defer the fee and recognize revenue upon receipt of payment.

Allowance for doubtful accounts:  The Company continuously monitors payments from its customers and maintains allowances for doubtful accounts, if required,  for estimated losses resulting from the inability of its customers to make required payments. When the Company evaluates the adequacy of its allowances for doubtful accounts, it takes into account various factors including its accounts receivable aging, customer credit-worthiness, historical bad debts, and geographic and political risk. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required. As of August 31, 2003, the Company’s net accounts receivable balance was nil.

Results of Operations

Year ended August 31, 2003 compared to August 31, 2002

Continuing Operations

As a result of the Company’s divestiture of Platinum and CyberStation, the Company did not report any revenues from continued operations for the year ended August 31, 2003.

Discontinued Operations

As a result of the Company’s divestiture of Platinum and CyberStation, the Company reported a net income of $201,458 for the year ended August 31, 2003, which consists of an operating loss of $237,447, an income tax benefit of $54,122 and a gain on the settlement of debt in the amount of $384,783, as compared to a net loss of $299,247 for the year ended August 31, 2002.

Liquidity and Capital Resources

Operating Activities

At August 31, 2003, the Company had a working capital deficit of $54,150 and an accumulated deficit of $489,544.  For the year ended August 31, 2003, net cash used in operating activities amounted to $38,402, a decrease from the net cash used in operating activities for the comparable period in 2002.  The decrease in cash requirements for operating activities is primarily the result of the reduction in funds held in escrow.

Financing Activities

At August 31, 2003, the Company does not have any material commitments for capital expenditures other than for those expenditures incurred in the ordinary course of business.  In December 2003, the Company’s principal shareholder sold his entire stake in the Company consisting of 9,615,000 shares of common stock to an unaffiliated third-party.  Additional capital could be required in excess of the Company's liquidity, requiring it to raise additional capital through an equity offering or secured or unsecured debt financing. The availability of additional capital resources will depend on prevailing market conditions, interest rates, and the existing financial position and results of operations of the Company.

Item 7.  Financial Statements

See pages F-1 to F-19.

Item 8. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.

Not applicable.

Item 8A. Controls and Procedures.

Based on an evaluation as of the date of the end of the period covered by this Form 10-KSB, our Chief Executive Office/Acting Chief Financial Officer, conducted an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures, as required by Exchange Act Rule 13a-15.  Based on that evaluation, our Chief Executive Officer/Acting Chief Financial Officer concluded that our disclosure controls and procedures were effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by the SEC’s rules and forms.

Changes in Internal Controls

There were no significant changes in our internal controls over financial reporting that occurred during the quarter and year ended August 31, 2003 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

We believe that a control system, no matter how well designed and operated, cannot provide absolute assurance that the objectives of the control system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

PART III

Item 9.

Directors and Executive Officers, Promoters and Control Person Compliance with Section 16(a) of the Exchange Act

The officers and directors of the Company, and further information concerning them, are as follows:

Name	Elected	Age	Position
Joseph J. Alves	2001	37	Chairman, Chief Executive Officer, Acting Chief Financial Officer and President
Sandra Hrab	2002	26	Director and Secretary
Paul R. Ankcorn	2002	48	Director
Wm. Andrew Campbell	2002	50	Director

Each of the above officers and directors shall hold office until the next annual meeting of the Company's shareholders or until a successor is elected and qualified.

Joseph J. Alves has since 1996 assisted with the development of numerous software applications including sophisticated online databases, robust security systems, online banking applications, ultra-secure encryption systems, and was co-founder and joint developer of the BankEngine Suite of ultra secure transaction systems. Between 1993 and 1996 he worked as a network engineer for IBM, SHL SystemsHouse and Computer Systems Centre. Mr. Alves has founded and co-founded various technology related enterprises since 1996. Mr. Alves has extensive international banking knowledge and has developed business relationships that span five continents.  He has since served as a consultant to many technology based start-ups and public companies including Millennium Communications, DreamPlay Research Inc., and Noble House Communications Ltd. Mr. Alves has a BA (1990) from York University, and an MA (1993) from Wilfrid Laurier University in Waterloo, in Ontario, Canada.

Sandra Hrab has extensive corporate administrative experience that will serve the Company well as it increases its activities and diversifies its business. She served as Treasurer and Secretary of WebEngine Corporation, a Canadian public company, between 1999 and 2001. Ms. Hrab has acquired extensive personal experience in the management of the day-to-day affairs of the Company over the last two years. Ms. Hrab is currently a director of Critical Commerce Inc., a wholly owned subsidiary of the public company, as well as an officer of Cyberstation Computers and Support, Inc. and serves those companies in a variety of capacities. Ms. Hrab graduated from Sheridan College in Toronto, Ontario in 1999.

Paul R. Ankcorn, C.M.A. Mr. Ankcorn holds an Honours Bachelor of Business Administration degree from Wilfrid Laurier University and became a Certified Management Accountant in 1983.Mr. Ankcorn has over 17 years of corporate experience in both the public and private sector.  He has been on the board of several public companies in the resource sector and is currently the president of Zenda Capital Corp where his duties include management of day-to-day operations, financing, and financial statement preparation.  He is currently a director of the E21 Group Inc. (YEP-CDNX) and formerly with Southern Star Resources Ltd. (YSO-CDNX). From 1989 to 1996 Mr. Ankcorn was the Secretary-Treasurer, then Vice President and then President of Northfield Minerals Inc. Prior to this Mr. Ankcorn spent seven years in various accounting positions with Gulf Canada.

Wm. Andrew Campbell, C.A. Mr. Campbell holds a Bachelor of Business Administration Degree from Bishop's University (1976) and obtained his Chartered Accountants qualification in 1985. Mr. Campbell was a senior manager at Deloitte Touche from 1985 to 1992 primarily in the real estate and small business practice group. Subsequent to this date he has been a sole practitioner specializing in junior mining and industrial public company audits. He currently has approximately 32 junior public companies, which he reports on to various regulatory bodies including the Ontario Alberta and British Columbia Securities Commissions. In addition Mr. Campbell has provided management and advisory services to private companies and individuals related to Canadian and non-resident tax issues as well as preparation of corporate and trust returns for approximately 15 years.

 Except as set forth herein, no officer or director of the Company has, during the last five years: (i) been convicted in or is currently subject to a pending a criminal proceeding; (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any Federal or state securities or banking laws including, without limitation, in any way limiting involvement in any business activity,  or finding any violation with respect to such law, nor (iii) has any bankruptcy petition been filed by or against the business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy of for the two years prior thereto.

Under the securities laws of the United States, the Company's directors, its executive (and certain other) officers, and any persons holding ten percent or more of the Company's Common Stock must report on their ownership of the Company's Common Stock and any changes in that ownership to the Securities and Exchange Commission. Specific due dates for these reports have been established. During the fiscal year ended August 31, 2003, the Company does not believe that all reports required to be filed by Section 16(a) were filed on a timely basis.

The Company does not have separate audit or compensation committees, as a result thereof the Company’s entire board of directors acts as the compensation and audit committee.

Item 10.  Executive Compensation

The following table sets forth all cash compensation for services rendered in all capacities to the Company, for the fiscal years ended August 31, 2003, 2002 and 2001 paid to the Company's Chief Executive Officer.

Summary Compensation Table

	Annual Compensation ($)				Long Term Compensation
Name and Principal Position	Year	Salary	Bonus	Other Annual Compensation	Awards Securities Underlying Options/ SARs (#)	Payouts LTIP Payouts	All Other Compensation
Joseph J. Alves
Chairman, CEO and President	2003 2002	--- ---	--- ---	--- ---	--- ---	--- ---	--- ---
	2001	---	---	---	---	---	---

Employment Agreements

No employment agreements currently exist between BankEngine and any of its executive officers.

Item 11.   Security Ownership of Certain Beneficial Owners and Management

As of December 12, 2003, the Company's authorized capitalization consisted of 50,000,000 shares of Common Stock, par value $.001 per share.  As of December 12, 2003, there were 19,535,893 shares of Common Stock outstanding, all of which were fully paid, non-assessable and entitled to vote.  Each share of Common Stock entitles its holder to one vote on each matter submitted to the shareholder.

The following table sets forth, as of December 12, 2003, the number of shares of Common Stock of the Company owned by (i) each person who is known by the Company to own of record or beneficially five percent (5%) or more of the Company’s outstanding shares, (ii) each director of the Company, (iii) each of the executive officers, and (iv) all directors and executive officers of the Company as a group.  Unless otherwise indicated, each of the persons listed below has sole voting and investment power with respect to the shares beneficially owned.

Name and Address of Beneficial Owner (1) Number of Common Shares Beneficially Owned (2) Percentage of Common Shares Beneficially Owned

Michael J. Xirinachs(3)	10,115,000	51.8%
Joseph Alves	-0-	-0-
Mahmoud Hashmi(4)	1,900,000	9.7%
Zeeshan Saeed	1,800,000	9.2%
Sandra Hrab	-0-	-0-
Paul R. Ankcorn	-0-	-0-
Wm. Andrew Campbell	-0-	-0-
All Directors and Officers as a group
(2 persons)	-0-	-0-

(1)Unless otherwise indicated, the address of each person listed below is c/o BankEngine Technologies, Inc., at 157 Adelaide Street, Suite 426, Toronto, Ontario, M5H 4E7.

(2)Pursuant to the rules and regulations of the Securities and Exchange Commission, shares of common stock that an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purposes of computing the percentage ownership of such individual or group, but are not deemed to be outstanding for the purposes of computing the percentage ownership of any other person shown in the table.

(3) The address for Michael Xirinachs is 425 Broad Hollow Road, Melville, New York 11747.

(4)  Mr. Mahmoud Hashmi controls the following two entities that each own 950,000 shares of the Company’s common stock, Conrati Resources Ltd. and Cablerise Limited.

Item 12.   Certain Relationships and Related Transactions

In December 2003, in connection with the divestiture of the Company’s subsidiaries Platinum and CyberStation, the Company sold all of its interests in each company to its Chief Executive Officer and Acting Chief Financial Officer, Mr. Joseph Alves, in exchange for nominal consideration and the assumption of all of the outstanding liabilities of each of Platinum and CyberStation.

Other than the above there have been no transactions between the Company and any of its officers, directors, 10% shareholders or any other affiliates required to be reported hereunder.

Item 13.         Exhibits, Lists and Reports on Form 8- K

(a)  Exhibits

Exhibit 31. Rule 13a-14(a)/15d-14(a) Certification.

Exhibit 32.1 Certification by the Chief Executive Officer/Acting Chief Financial Officer Relating to a Periodic Report Containing Financial Statements.*

(b)  Reports on Form 8-K.

There were no reports filed on Form 8-K during the period covered by this report.

* The Exhibit attached to this Form 10-Q shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934 (the "Exchange Act") or otherwise subject to liability under that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Annual Report on Form 10-KSB to be signed on its behalf by the undersigned, thereunto duly authorized.

BANKENGINE TECHNOLOGIES, INC.

By:

/s/ Joseph J. Alves

President, CEO, Acting Chief Financial Officer

and Chairman of the Board

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

Signature

Title

Date

/s/ Joseph J. Alves

President, CEO, Acting CFO

December 16, 2003

Joseph J. Alves

 and Chairman of the Board

 /s/ Sandra Hrab               

Director

December 16, 2003

Sandra Hrab

 /s/ Paul R. Ankcorn            

Director

December 16, 2003

Paul R. Ankcorn

INDEX TO EXHIBITS

Exhibit No.

Description of Exhibits

21.1

Subsidiaries of Registrant. (1)

31

Rule 13a-14(a)/15d-14(a) Certifications

32

Certification by the Chief Executive Officer/Acting Chief Financial Officer Relating to a Periodic Report Containing Financial Statements

(1)

Filed herewith.

Exhibit 21.1

Subsidiaries of the Registrant

1.

Critical Commerce Inc., incorporated under the laws of the State of Delaware, formerly known as WebEngine Technologies International, Inc.

EX-1

BANKENGINE TECHNOLOGIES, INC.

INDEX

Financial Statements

INDEPENDENT AUDITORS’ REPORT

To the Board of Directors and Stockholders of

BankEngine Technologies, Inc.

Toronto, Canada

We have audited the accompanying balance sheets of BankEngine Technologies, Inc. and Subsidiaries (the “Company”) as of August 31, 2003 and 2002, and the related statements of operations, stockholders’ deficiency and cash flows for each of the years in the period ended August 31, 2003 and 2002.  These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.  

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

In our opinion, such financial statements referred to above present fairly, in all material respects, the financial position of BankEngine Technologies, Inc. and Subsidiaries at August 31, 2003 and 2002, and the results of its operations and their cash flows for the years ended August 31, 2003 and 2002, in conformity with generally accepted accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming the Company will continue as a going concern. The Company has ceased its telecommunications operations and has been actively seeking a merger to diversify its operations.  As more fully explained in Note 1 to the financial statements, the Company needs to obtain additional financing to pursue investment opportunities and/or achieve a level of sales adequate to support its cost structure.

These uncertainties raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans are also described in Note 1.  The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties should the Company be unable to continue as a going concern.

WIENER, GOODMAN & COMPANY, P.C.

Certified Public Accountants

Eatontown, New Jersey

December 10, 2003

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

August 31,

2003 2002

ASSETS

Current Assets:
Cash and cash equivalents	850	59,065
Funds held in escrow	-	219,026
Accounts receivable	-	55,031
Prepaid expenses and sundry	-	11,556

Total Current Assets	850	344,678
Property, plant and equipment – net	-	63,926
Other intangible assets – net	-	19,748

TOTAL ASSETS $                        850 $               428,352

LIABILITIES AND STOCKHOLDERS’ DEFICIENCY

Current Liabilities:
Accounts payable and accrued expenses	55,000	441,932
Income taxes payable	-	48,123
Current portion of loan payable	-	14,783

Total Current Liabilities 55,000 504,838

Loans from stockholders	-	125,122
Loan payable – long term portion	-	33,134

Total Liabilities 55,000 663,094

Commitments and Contingencies
Stockholders’ Deficiency:
Common stock $0.001 par value – authorized 50,000,000 shares; 19,115,893 and 19,015,893 shares issued and outstanding, respectively	19,116	19,016
Additional paid-in-capital	484,556	454,790
Accumulated deficit	(489,544)	(691,002)
Accumulated other comprehensive loss	(65,778)	(15,046)
Treasury stock, 100,000 shares at cost	(2,500)	(2,500)

Total Stockholders’ Deficiency (54,150) (234,742)

TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIENCY $                        850 $                428,352

See Notes to Consolidated Financial Statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Years Ended August 31,

2003 2002

Income from continuing operations - -

Discontinued operations (Note 12)
Loss from telecommunications and software development segments	(237,447)	(300,761)
Gain on divesture of telecommunications segment	204,529	-
Gain on divesture of software segment	180,254	-
Income tax benefit	54,122	-

Income (loss) from discontinued operations 201,458 (300,761)

Income (loss) before minority interest	201,458	(300,761
Minority interest in loss of consolidated subsidiary	-	1,514

Net income (loss) 201,458 (299,247)

Net loss per common share – basic and diluted $                        0.01 $                   (0.02)

Weighted average number f common shares outstanding – basic and diluted 19,090,140 17,872,879

See Notes to Consolidated Financial Statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

Compre-hensive Income (loss)


Common
Shares


Stock
Amount


Treasury
Shares


Stock
Amount


Additional Paid-In Capital


Retained Earnings (Deficit) Cumulative Other Compre-hensive Income (loss)




Total

Balance, September 1, 2001		17,115,893	$   17,116	-	$               -	$    431,190	$  (391,775)	$     (12,326)	$     44,225
Shares issued in exchange for shares of Platinum Technologies		1,800,000	1,800			16,200			18,000
Shares issued in exchange for services		100,000	100			2,400			2,500
Issuance of shares for services cancelled and shares reacquired by the Company and held as treasury stock				(100,000)	(2,500)				(2,500)
Options issued in exchange for services						5,000			5,000
Net loss	$   (299,247)						(299,247)		(299,247)
Foreign currency translation	(2,720)							(2,720)	(2,720)

Comprehensive loss $   (301,967)

Balance, August 31, 2002		19,015,893	19,016	(100,000)	(2,500)	454,790	(691,002)	(15,046)	(234,742)
Shares issued for reduction in accounts payable		100,000	100			22,400			22,500
Reduction in shareholder loan as a contribution of capital						7,366			7,366
Net income for the period	$     201,458						201,458		201,458
Foreign currency translation	(50,732)							$    (50,7 32)	$   (50,732)

Comprehensive income $      150,726

Balance, August 31, 2003 19,115,893 19,116 (100,000) (2,500) 484,556 (489,544) (65,778) (54,150)

See Notes to Consolidated Financial Statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

Years Ended August 31,

2003 2002

Cash flows from operating activities:
Net cash provided by operating activities of continuing operations	$                            -	$                           -

Net income (loss)	201,458	(299,247)
Adjustments to reconcile net loss to cash provided by operating activities:
Depreciation and amortization	20,323	20,245
Impairment of longterm assets	66,470	23,886
Settlement of accounts payable	-	73,456
Loss of disposition of fixed assets	13,520	-
Minority interest	-	(1,514)
Options issued for services rendered	-	5,000
Gains on divestures	(384,783)	-
Changes in operating assets and liabilities
Decrease (increase) in accounts receivable	62,204	(48,158)
Decrease in funds held in escrow	234,387	67,841
Decrease (increase) in prepaid expenses and other assets	11,673	(5,945)
Decrease in income taxes payable	(54,446)	-
Decrease in deferred revenue	-	(14,704)
Decrease in accounts payable	(209,189)	(2,646)

Net cash used in operating activities of discontinued operations (38,403) (181,786)

Net Cash Used in Operating Activities (38,403) (181,786)

Cash flows from investing activities:
Proceeds on disposition of property, plant and equipment	44,641	-
Acquisition of property, plant and equipment	(59,349)	(17,502)

Net Cash Used in Investing Activities (14,708) (17,502)

Cash flows from financing activities:
Loan advances from stockholders	(328)	4,230
Repayment of loan payable	(6,124)	(4,920)

Net Cash Used in Provided by Financing Activities (6,452) (690)

Effect of change in foreign currency rate 1,348 2,673

Net decrease in cash	(58,215)	(197,305)
Cash – beginning of year	59,065	256,370

Cash – end of year $                         850 $                  59,065

Supplementary Information:
Cash paid during the year for:
Income taxes	Nil	Nil

Interest $                    10,548 $                    1,273

Non-cash transactions
Accounts payable settled through common share	22,500	-
Shareholder loan settled through capital contribution	7,776	-

Changes to capital stock and additional paid in capital 30,276 -

Shareholder loan settled through disposition of plant and equipment	(1,951)	-
Proceeds on disposition of property, plant and equipment	1,951	-

- -

Bank reduced through divesture	(460)	-
Accounts payable settled through divestiture	207,865	-
Shareholder loan settled through divestiture	130,116	-
Loan payable settled through divestiture	47,262	-

Gain on divestitures 384,783 -

Details of acquisitions:
Fair value of assets acquired other than cash	-	105,874
Liabilities assumed	-	87,874

Common stock issued - 18,000

Shares issued in exchange for services	-	2,500
Common shares issued	-	(2,500)

Issuance cancelled and shares reacquired by the company as treasury stock - -

See Notes to Consolidated Financial Statements

BANKENGINE TECHNOLOGIES, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Bankengine Technologies, Inc. (the "Company" or "BankEngine") was a long distance telecommunications service provider through its 70% owned subsidiary, Platinum Telecommunications, Inc. The Company also was in the business of software development for its new software product, Critical Commerce Suite, to provide video streaming analysis tools and computer consulting, through its wholly owned subsidiaries, Critical Commerce Inc., a Delaware corporation, and Cyberstation Computers and Support, Inc. ("Cyberstation"), a company operating in Canada.  The operations of the Company are predominately in Canada, however, the financial statements are expressed in U.S. dollars.

BASIS OF PRESENTATION

On January 5, 2001, Callmate Telecom International, Inc. ("Callmate") acquired all of the issued and outstanding shares of common stock of WebEngine Technologies, Inc.(WebEngine) in exchange for 12,000,000 common shares of Callmate in a reverse acquisition. 9,200,000 common shares of Callmate held by previous shareholders of Callmate were cancelled in exchange for all of the shares of its subsidiaries which carry on the UK operations of Callmate. The acquisition by the shareholders of WebEngine of a majority of the shares of Callmate has been accounted for as a reverse acquisition. As Callmate became substantially a shell after the removal of the UK operations, no goodwill has been reflected on this acquisition. Although Callmate is the legal acquirer, WebEngine is treated as having acquired Callmate for accounting purposes. Callmate has been accounted for as the successor to WebEngine. Callmate changed its name to BankEngine Technologies Inc. on March 5, 2001.

WebEngine was incorporated in November 2000 in order to hold the shares of Cyberstation.  The shareholders of Cyberstation became the shareholders of WebEngine and therefore WebEngine has been considered to be a successor to Cyberstation. WebEngine has changed its name to Critical Commerce Inc.

The historical financial statements of BankEngine are those of Cyberstation as the company has been accounted for as the successor to Cyberstation.

The estimated income tax costs of the divestiture of the UK operations, in the amount of $50,000, has been treated as a reduction of the assets acquired on the acquisition of the shell company.

The acquisition of Callmate, as a reverse acquisition, was reflected as follows;

Cash – escrow	$          601,457
Accounts payable	(316,000)
Income taxes payable	(50,000)

Capital stock issued $          235,457

The accounts payable assumed on the acquisition of Callmate included $146,000 for short falls which could have arisen on settlement with a credit card company.  Callmate operated a retail and wholesale telecommunications operations and permitted payment by its retail customers through credit card facility.  The credit card company held funds on deposit to be applied against refused credit card charges and agreed that the limit of the Company's liability is the amount of the security held on hand.  As detailed in Note 11, final settlement of the liability for chargebacks and the receipt of the balance of the funds on deposit occurred during 2003.

As discussed in Note 2, on April 5, 2002, the Company through its wholly-owned subsidiary, Cyberstation, acquired 70% of the issued and outstanding common stock of Platinum Telecommunications Inc. for the issuance of 1,800,000 common shares of BankEngine Technologies, Inc.

The Company presently does not have sufficient liquid assets to finance its anticipated funding needs and obligations.  The Company's continued existence is dependent upon its ability to obtain needed working capital through additional equity and/or debt financing and achieve a level of sales adequate to support its cost structure.  Management is actively seeking additional capital to ensure the continuation of its activities and is also actively pursuing other investment opportunities.  However, there is no assurance that additional capital will be obtained or that other investment opportunities will be achieved.  These uncertainties raise substantial doubt about the ability of the Company to continue as a going concern.

The accompanying financial statements do not include any adjustments that might result from the outcome of these uncertainties should the Company be unable to continue as a going concern.

MANAGEMENT INTENTIONS

The Company has sustained recurring operating losses and negative cash flows from operations. The Company also has a working capital deficit of approximately $55,000 and a stockholders' deficiency of approximately $54,000 at August 31, 2003.  Management plans to mitigate these adverse conditions through the following activities:

The Company has been attempting to restructure its telecommunication and software development activities. The Company has decided that the best course of action is to  cease its telecommunications and software development  operations and has been actively seeking a merger to diversify its operations. As discussed in note 12, the principal shareholder has sold his common shares to an arms’ length third party in November 2003 and has agreed to acquire the shares of the telecommunication and software development subsidiaries for $2. In addition, the principal shareholder has agreed to fund any liability balances in excess of $55,000. A gain has been recorded to reflect the settlement of the debts  in the amount of $384,783.

PRINCIPLES OF CONSOLIDATION

The consolidated financial statements include the accounts of the Company and its majority-owned subsidiaries. The earnings of the subsidiaries are included from the date of acquisition for acquisitions accounted for using the purchase method. All intercompany balances and transactions have been eliminated.

USE OF ESTIMATES

The preparation of consolidated financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. These estimates are reviewed periodically and as adjustments become necessary, they are reported in earnings in the period in which they become known.

REVENUE RECOGNITION

The Company’s revenues from its telecommunications business is recognized when the earnings process is complete. This occurs when the services have been utilized, collection is probable and pricing is fixed or determinable.

The Company provides computer consulting services in a number of areas including database management, on-line transaction processing and e-mail capabilities. Revenue is recognized as pre-determined milestones are accomplished and consulting services delivered.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents include cash on hand, amounts to banks, and any other highly liquid investments purchased with a maturity of three months or less from the date of purchase. The carrying amount approximates fair value because of the short maturity of those instruments.

CONCENTRATION OF CREDIT RISK

Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of accounts receivable and temporary cash investments.  The Company grants credit based on an evaluation of the customer's financial condition, without requiring collateral.  Exposure to losses on receivables is principally dependent on each customer's financial condition.  The Company controls its exposure to credit risk through credit approvals, credit limits and monitoring procedures and establishes allowances for anticipated losses.

The Company places its temporary cash investments with quality financial institutions and, by policy, limits the amount of credit exposure with any one financial instrument.

FAIR VALUE OF FINANCIAL INSTRUMENTS

For financial instruments, including cash, accounts receivable, accounts payable and loans payable, it was assumed that the carrying amounts approximated fair value because of the short maturities of such instruments.

FOREIGN CURRENCY

The Company's functional currency is primarily the Canadian dollar.  All assets and liabilities recorded in foreign currencies are translated at the current exchange rate. Translation adjustments resulting from this process are charged or credited to other comprehensive income. Revenue and expenses are translated at average rates of exchange prevailing during the year. Gains and losses on foreign currency transactions are included in financial expenses.

COMPUTER SOFTWARE DEVELOPMENT

The Company accounts for the cost of developing computer software for sale as research and development expenses until the technological feasibility of the product has been established. To date all costs have been expensed. In the future,  After the technological feasibility of the product has been established at the end of each year the Company will compare any unamortized capital costs to the net realizable value of the product to determine if a reduction in carrying value will be warranted.

DEPRECIATION

Property, plant and equipment are recorded at historical cost less accumulated depreciation.  Depreciation is provided using the following annual rates:

Telecommunication switch

- 25%  per year on a straight line basis

Furniture and Fixture

- 20%  declining balance method

Computer Equipment

- 30%  declining balance method

INCOME TAXES

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

LONG-LIVED ASSETS

The Company reviews property and equipment for impairment whenever events or changes in circumstances indicate the carrying value may not be recoverable in accordance with SFAS No. 144 "Accounting for the Impairment or Disposal of Long Lived Assets."  If the carrying value exceeds the present value of the estimated future cash flows, the asset would be adjusted to its fair value and an impairment loss would be charged to operations in the period identified.  For the year ended August 31, 2003 and 2002 the Company recorded an impairment charge of approximately $66,000 and $24,000, respectively.

INCOME (LOSS) PER COMMON SHARE

Basic income (loss) per common share are computed by dividing net income (loss) by the weighted average number of common shares outstanding during the year.  Diluted earnings per common share are computed by dividing net earnings by the weighted average number of common shares and potential common shares outstanding during the year. Potential common shares used in computing diluted earnings per share relate to stock options and warrants which, if exercised, would have a dilutive effect on earnings per share.  Options previously outstanding have been cancelled and therefore the possible shares to be issued are –0- and 600,000 for the years ended August 31, 2003 and 2002, respectively.  During the year ended August 31, 2002 potential common shares outstanding were omitted from the calculation of loss per share as the effect would be antidilutive.

GOODWILL AND OTHER INTANGIBLES

In June 2001, the Financial Accounting Standards Board ("FASB") issued SFAS No. 141, "Business Combinations" ("SFAS 141"), and No. 142, "Goodwill and Other Intangible Assets" ("SFAS 142").  SFAS 141 changes the accounting for business combinations, requiring that all business combinations be accounted for using the purchase method and that intangible assets be recognized as assets apart from goodwill if they arise from contractual or other legal rights, or if they are separate or capable of being separated from the acquired entity and sold, transferred, licensed, rented or exchanged.  SFAS 141 was effective for all business combinations initiated after June 30, 2001.  SFAS 142 specifies the financial accounting and reporting for acquired goodwill and other intangible assets.  Goodwill and intangible assets that have indefinite useful lives are not amortized but rather they are tested at least annually for impairment unless certain impairment indicators are identified.  This standard was effective for fiscal years beginning after December 15, 2001.

SFAS 142 requires that the useful lives of intangible assets acquired on or before June 30, 2001 be reassessed and the remaining amortization periods adjusted accordingly.  Previously recognized intangible assets deemed to have indefinite lives are tested for impairment.  Goodwill recognized on or before June 30, 2001, has been tested for impairment as of the beginning of the fiscal year in which SFAS 142 was initially applied and, after considering the results of an independent valuation and appraisal, management concluded that no impairment was indicated.

Upon adoption of this standard, the Company allocated its goodwill and other intangibles to its telecommunications unit.

Other intangibles primarily include customer lists in connection with the Company's telecommunications activity.  Amounts assigned to these intangibles are based on independent appraisals.  Other intangibles are being amortized over 24 months.  The intangible asset was written down to $-0- during the second quarter of fiscal 2003.

2003 2002

Reported net income (loss)	$             201,458	$         (299,247)
Addback: Goodwill amortization (net of income tax)	-	-

Adjusted net income (loss) 201,458 (299,247)

Basic and diluted loss per share:
Reported net income (loss)	$                   0.01	$              (0.02)
Addback: Goodwill amortization	-	-

Adjusted net income (loss) $                   0.01 $              (0.02)

The components of other intangible assets are as follows:

August 31, 2003		August 31, 2002
Gross Carrying Amount	Accumulated Amortization	Gross Carrying Amount	Accumulated Amorization

Customer lists $             - $              - $          25,262 $            5,514

STOCK BASED COMPENSATION

The Company accounts for equity-based compensation issued to employees in accordance with Accounting Principles Board ("ABP") Opinion No. 25 "Accounting for Stock Issued to Employees".  ABP No. 25 requires the use of the intrinsic value method, which measures compensation cost as the excess, if any, of the quoted market price of the stock at the measurement date over the amount an employee must pay to acquire the stock.  The Company makes disclosures of pro forma net earnings and earnings per share as if the fair-value-based method of accounting had been applied as required by SFAS No. 123 "Accounting for Stock-Based Compensation-Transition and Disclosure" and SFAS 148  Accounting for Stock Based Compensation – Transition and disclosures. To date no options have been granted.

The Company accounts for equity-based compensation to non-employees based on the fair value of the consideration received or the fair value of the equity instruments issued, whichever is more reliably measurable.  For the years ended August 31, 2003 and 2002, the Company recorded compensation expense of $-0- and $5,000, respectively.

SEGMENT REPORTING

The Company applies Financial Accounting Standards Boards ("FASB") statement No. 131, "Disclosure about Segments of an Enterprise and Related Information". The Company has considered its operations and has determined that it operated in two operating segments, software development and telecom, for purposes of presenting financial information and evaluating performance. As such, the accompanying financial statements present information in a format that is consistent with the financial information used by management for internal use.

RECENT ACCOUNTING PRONOUNCEMENTS

In August 2001, the FASB issued SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, effective for fiscal years beginning after December 15, 2001.  Under SFAS  No. 144 assets held for sale will be included in discontinued operations if the operations and cash flows will be or have been eliminated from the ongoing operations of the entity and the entity will not have any significant continuing involvement in the operations of the component.  The Company adopted SFAS No. 144  on September 1, 2002.  The Company has reflected the impairment of fixed assets in both the August 2002 and August 2003 financial statements.

In April 2002, the FASB issued SFAS No. 145 "Rescission of FASB Statements No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections". This statement eliminates the automatic classification of gain or loss on extinguishment of debt as an extraordinary item of income and requires that such gain or loss be evaluated for extraordinary classification under the criteria of Accounting Principles Board No. 30 "Reporting Results of Operations". This statement also requires sales-leaseback accounting for certain lease modifications that have economic effects that are similar to sales-leaseback transactions, and makes various other technical corrections to existing pronouncements. The Company adopted SFAS No. 145 on September 1, 2002.  The adoption of this statement did not have a material effect on the Company's results of operati ons or financial position.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities."  This Statement requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred.  Under previous guidance, certain exit costs were accrued upon management's commitment to an exit plan.   The Company adopted SFAS No. 146 on September 1, 2002.  The adoption of this statement did not have a material effect on the Company's results of operations or financial position.

In April 2003, the FASB issued SFAS No. 149, "Amendment of Statement No. 133 on Derivative Instruments and Hedging Activities."  This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under FASB Statement No. 133, "Accounting for Derivative Instruments and Hedging Activities."  This Statement is effective for contracts entered into or modified after June 30, 2003, and for hedging relationships designated after June 30, 2003.  Management believes that adopting this statement will not have a material effect on the Company's results of operations or financial position.

In November 2002, the FASB issued FASB Interpretation No. 45 (FIN 45), Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness of Others, and interpretation of FASB Statements No. 5, 57,and 107 and Rescission of FASB Interpretation No. 34.  FIN 45 clarifies the requirements of FASB Statement No. 5, Accounting for Contingencies, relating to the guarantor’s accounting for, and disclosure of, the issuance of certain types of guarantees.  This interpretation clarifies that a guarantor is required to recognize, at the inception of certain types of guarantees, a liability for the fair value of the obligation undertaken in issuing the guarantee.  The initial recognition and initial measurement provisions of this Interpretation are applicable on a prospective basis to guarantees issued or modified after Decemb er 31, 2002, irrespective of the guarantor’s fiscal year-end.  The disclosure requirements in this interpretation are effective for financial statements of interim or annual periods ending after December 15, 2002.  The Company adopted FIN 45 on November 1, 2003.  The adoption of FIN 45 did not have a material impact on the Company's results of operations or financial position.

In January 2003, the Financial Accounting Standards Board issued Interpretation No. 46, "Consolidation of Variable Interest Entities," which addresses consolidation by business enterprises of variable interest entities. In general, a variable interest entity is a corporation, partnership, trust, or any other legal structure used for business purposes that either (a) does not have equity investors with voting rights or (b) has equity investors that do not provide sufficient financial resources for the entity to support its activities. A variable interest entity often holds financial assets, including loans or receivables, real estate or other property. A variable interest entity may be essentially passive or it may engage in research and development or other activities on behalf of another company. The objective of Interpretation No. 46 is not to restrict the use of variable interest entities but to improve financial reporting by companies involved with variable interest entities. Until now, a company generally has included another entity in its consolidated financial statements only if it controlled the entity through voting interests.  Interpretation No. 46 changes that by requiring a variable interest entity to be consolidated by a company if that company is subject to a majority of the risk of loss from the variable interest entity's activities or entitled to receive a majority of the entity's residual returns or both. The consolidation requirements of Interpretation No. 46 apply immediately to variable interest entities created after January 31, 2003. The consolidation requirements apply to older entities in the first fiscal year or interim period beginning after June 15, 2003. Certain of the disclosure requirements apply in all financial statements issued after January 31, 2003, regardless of when the variable interest entity was established.  The Company does not have any variable interest entities, and, accordingly, adoption is not expected to have a material effect on the Company.

In January 2003, the FASB issued SFAS No. 148, Accounting for Stock –Based Compensation  - Transition and Disclosures. This statement provides alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement also amends the disclosure requirements of SFAS No. 123 to require more prominent and frequent disclosures in the financial statements about the effects of stock-based compensation. The transitional guidance and annual disclosure provisions of this Statement is effective  for the August  31, 2003 financial statements. The company has no outstanding stock based compensation.

In May 2003, the FASB issued SFAS 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS 150 establishes standards for how an issuer classifies and measures in its statement of financial position certain financial instruments with characteristics of both liabilities and equity. SFAS 150 requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances) because that financial instrument embodies an obligation of the issuer. SFAS 150 is effective for financial instruments entered into or modified after May 31, 2003 and otherwise is effective at the beginning the Company’s interim period commencing July 1, 2003. SFAS 150 is to be implemented by reporting the cumulative effect of a change in accounting principle for financial instruments cr eated before the issuance date of SFA 150 and still existing at the beginning of the interim period of adoption. The adoption of SFAS 150 did not have a significant effect on the company’s financial statement presentation or disclosures.

2.   INVESTMENT IN PLATINUM TELECOMMUNICATIONS INC.

On April 5, 2002, the Company through its subsidiary Cyberstation, acquired 70% of the issued and outstanding stock of Platinum Telecommunications Inc. ("Platinum") for the issuance of 1,800,000 common shares of BankEngine Technologies Inc. The Company acquired Platinum, a long distance telecommunications service provider, in order to reenter the telecommunications industry. The results of operations of Platinum are included in the operations of the Company from April 5, 2002.

Unaudited pro forma results of operations after giving effect to certain adjustments resulting from this acquisition for the period ended November 30, 2001 as if the business combination had occurred at the beginning of each period presented are not material to the financial statements and, accordingly, are not presented herein.

The investment has been accounted for by the purchase method as follows;

Consideration	$             18,000
Costs of acquisition	10,000

Total investment	28,000
Share of net assets acquired	2,738

Intangible asset acquired $              25,262

The intangible assets acquired representing contracts and client lists are being amortized over a 24 month period from the date of acquisition.  As the re-organization of the telecommunications activities has not been completed to date, the balance of the intangible asset has been written off during the three months ended May 31, 2003.  See Note 1 of Notes to Consolidated Financial Statements.

3.  ACCOUNTS RECEIVABLE

August 31, 2003 August 31, 2002

Accounts receivable	$                         -	$             55,031
Allowance for doubtful accounts	-	-

$                         - $            55,031

4.  PROPERTY, PLANT AND EQUIPMENT

August 31, 2003 August 31, 2002

Telecommunication Switch	$                       -	$               78,323
Furniture, fixtures and equipment	-	11,778
Computer equipment	-	16,411

	-	106,512
Less accumulated depreciation		42,586

$                       - $              63,926

As of August 31, 2003, the property, plant and equipment has been reflected at the estimated realizable value of the assets. During 2003, approximately $67,000 (2002 $23,886) represents estimated impairment of the telecommunication switches. Depreciation expense for the years ended August 31, 2003 and 2002 was $20,323 and $44.131, respectively.

5.  LOANS FROM STOCKHOLDERS

Loans from stockholders bear interest at the rate of 4% and have no specific terms of repayment.  As of August 31, 2003 and 2002 the amount due the shareholders was $ 0 and $125,122 respectively.  Interest expense for the years ended August 31, 2003 and 2002 was $2,643 and $-4,923, respectively.

During the year ended August 31, 2003, a shareholder forgave a loan in the amount of $7,366 and the Company recorded the forgiveness as an addition to paid-in capital.

6.  LOANS PAYABLE

Loans payable were acquired as part of the acquisition of Platinium Telecommunications. The loan bears interest at the rate of 2.5% above the prime rate,  which interest is payable monthly together with a fixed principal amount of $1,232 until the maturity of the loan in November 2005. The loan is secured by a personal guarantee in the amount of  $18,500 provided by the minority shareholder of Platinium Telecommunications. As the Company ceased making payments on the loan, the creditor has demanded payment on the personal guarantee. As this loan forms part of the liabilities of Platinium, the loan has been written off in anticipation of the settlement of this debt through the removal of the shares of Platinium from the Company as detailed in Note 12.

7.

INCOME TAXES

Years Ending August 31,
2003	2002

The provision (benefit) for income taxes consists of the following:
Amount calculated at Federal statutory rates	$              59,000	$        (120,000)
Overaccrual of income taxes	(54,122)	-
Increase (decrease) in Valuation allowance	(59,000)	120,000

Current income taxes $           (54,122) $                    -

The types of temporary differences between the tax basis of assets and liabilities and their financial reporting amounts that give rise to the deferred tax liability and deferred tax asset and their approximate tax effects are as follows:

August 31,
2003		2002
Temporary Difference	Tax Effect	Temporary Difference	Tax Effect

Deferred Liabilities – non current
Impairment of fixed assets	$              66,000	$           26,000	$              24,000	$         10,000
Net operating loss carryforward	392,000	157,000	581,000	232,000
Valuation allowance	(458,000)	(183,000)	(605,000)	(242,000)

$                       - $                    - $                       - $                   -

8.  CAPITAL STOCK

a)  Authorized

50,000,000 common stock with a $.001 par value

b)  Common stock

The Company had issued and outstanding 14,315,893 common stock at the time of the reverse acquisition in January 2001. As detailed in Note 1, the Company issued 12,000,000 common shares to the shareholders of WebEngine. A total of 9,200,000 shares were cancelled in exchange for the removal of the UK operations in January 2001.

As indicated in Note 2, the Company issued on April 5, 2002, 1,800,000 common stock for a 70% interest in Platinium Telecommunications Inc.

Shares outstanding prior to the reverse acquisition	14,315,893
Issued to shareholders of WebEngine	12,000,000
Cancelled for UK operations	(9,200,000)

Shares outstanding, August 31, 2001	17,115,893
Shares issued in consideration of services	100,000
Shares issued in settlement of accounts payable	100,000
Acquisition of 70% interest in Platinium Telecommunications Inc.	1,800,000

Shares outstanding, August 31, 2003 19,115,893

During the second quarter of 2003, the Company issued 100,000 shares in settlement of an accounts payable.

During the second quarter of 2002, the Company agreed to issue 100,000 shares in consideration of services to be provided to the Company.  In the third quarter, the Company reacquired the shares as the services were not rendered and the shares are reflected as treasury stock.

9.  STOCK OPTIONS

(a)

On April 5, 2002, the Company issued 600,000 options exercisable at $0.10 per share, the fair market value at the date of grant. The options have a 5 year term and were issued in consideration of consulting services to be rendered by the principal of Platinum Telecommunications Inc. and are exercisable immediately.  The estimated fair value of the options on the date of grant using the Black-Scholes option pricing model is $5,000, based on a risk free interest rate of 4.65%, an expected volatility of 200%, an expected life of 5 years and no dividend yield and has been expensed in the quarter ended May 31, 2002.  The weighted - average fair value of the options issued during the year was $.008. As of August 31, 2003, these options have been cancelled.

(b)

In May 17, 2002, the shareholders of the Company approved the adoption of the Company's  2002 Stock Option Plan. The plan provides for the issuance of 2,000,000 options with the following terms and conditions.

The plans are administrated by the Board of   Directors, which determine among other things, those individuals who shall receive options, the time period during which the options may be partially or fully exercised, the number of common stock to be issued upon the exercise of the options and the option exercise price.

The maximum term of  the plan is ten years and options may be granted to officers, directors, consultants, employees, and similar parties who provide their skills and expertise to the Company.

Options granted under the plans have a maximum term of ten years  and shall be at an exercise price that may not be less than 85% of the fair market value of the common stock on the date of the grant. Options are non-transferable and if a participant ceases affiliation with the company for a reason other than death or permanent and total disability, the participant will have 90 days to exercise the option subject to certain extensions. In the event of death or permanent and total disability, the option holder or their representative may exercise the option within 1 year.

Any unexercised options that expire or that terminate upon an employee's ceasing to be employed by the company become available again for issuance under the plans, subject to applicable securities regulation. The plans may be terminated or amended at any time by the Board of Directors.

10.

CONTINGENCIES AND COMMITMENTS   

a)

The Company is liable for shortfalls which may arise upon the settlement with a credit card company. The credit card company has agreed that the limit of the Company’s liability is the amount of security held on hand. The settlement will be based on the transactions to December 31, 2001 and have been settled in the current fiscal year.

Funds on deposit
Chargeback liability assumed Included in statement of operations

January 5, 2001 – upon acquisition	$                601,457	$             146,000	$                             -
Refunded during period	(303,006)	-	-
Foreign currency fluctuation	(6,544)	-	-

Balance August 31, 2001 291,907 146,000 $                            -

Refunded during period	(67,841)	-	$                            -
Foreign currency fluctuation	(5,040)	(2,575)	-
Estimate of liability adjusted	-	47,718	47,718

Balance, August 31, 2002 219,026 191,143 $                   47,718

Refunded during period	(28,765)	-	$                            -
Foreign currency fluctuation	5,471	4,589	-
Settled	(193,444)	(193,444)	-

Balance, August 31, 2003 $                          - $                        - $                           -

b)

The Company has signed a lease commitment for office space in Toronto, Canada which expires on April 30, 2004 for its corporate head office.  The Company is responsible for monthly rent of approximately $1,100. The company vacated the premises during 2003 and the landlord has agreed that no rent is payable.

11.  SEGMENT INFORMATION

Information about operating segments is as follows:

2003 2002

Revenues:
Software development	$                        -	$              8,467
Telecom	387,854	381,367

$             387,854 $          389,834

Net income (loss)
Software development	$            180,254	$       (199,978)
Telecom	21,204	(99,269)

$            201,458 $       (299,247)

Identifiable Assets:
Software development	$                       -	$                     -
Telecom	850	428,352

$                  850 $         428,352

12.

DISCONTINUED OPERATIONS

The Company has been attempting to restructure its telecommunication and software development activities. The Company has decided that the best course of action is to  cease its telecommunications and software development  operations and has been actively seeking a merger to diversify its operations. A principal shareholder of the Company agreed in November 2003 to sell 9,615,000 common shares to an arms’ length party and also agreed to acquire the shares of Platinium Telecommunications and Cyberstation,   subsidiaries for the amount of $2. The agreement provides that liabilities are limited to $55,000 and any excess will be funded by the vending shareholder. The impact of the sale of the shares of Platinium and Cyberstation and the settlement of debts in excess of $55,000  will result in an estimated gain on divestitures of $384,783. .

The discontinued operations generated sales of $387,854 and $389,834 in the years ended August 31, 2003 and August 31, 2002 respectively and an operating income of $201,458 for 2003 and an operating loss of $299,247 for 2002. The income from discontinued operations  in 2003 consists of an operating loss of $237,447, an income tax benefit of $54,122 and the favorable settlement of debts in the amount of $384,783.

The liabilities of discontinued operations are reflected at their estimated settlement amount to the company of $nil.  Assets related to discontinued operations are recorded at their estimated net realizable value of $nil.

13.

MINORITY INTERESTS

On April 5, 2002, the Company through its wholly-owned subsidiary, Cyberstation, acquired 70% of the issued and outstanding common stock of Platinum.  At the time of acquisition, the Company recorded the 30% minority interest of $1,514, which existed as of that date.  From the date of acquisition through August 31, 2002 Platinum sustained losses. Minority interests are limited to the extent of their equity capital and losses in excess of minority interest are charged against the majority interests.  Subsequently, when the losses reverse, the majority interests should be credited with the amount of minority losses previously absorbed before credit is made to the majority interests.  The Company recorded losses of $1,514 to the minority in the year ended August 31, 2002 and the balance of minority interest at August  31, 2003 was $-0-.

14.  TRANSACTIONS WITH MAJOR CUSTOMERS AND SUPPLIERS

The Company had sales to four individual customers in excess of 10% of consolidated net sales for the year ended August 31, 2003 as follows:  The amount and percentages of the Company's consolidated sales were $105,800 (27%), $81,900 (21%), $75,000 (19%), and $ 38,800 (10%).  The Company had sales to three individual customers in excess of 10% of consolidated net sales for the year ended August 31, 2002 as follows:  The amount and percentages of the Company's consolidated sales were $164,900  (42%), $105,500 (27%), and $ 46,900 (12%).  

Cost of sales includes purchases from four suppliers in excess of 10% of consolidated cost of sales for the year ended August 31, 2003 as follows:  The amounts and percentages of the Company's consolidated cost of sales were $131,800 (42%), $52,000  (17%), $35,300 (11%), and $31,400 (10%). Cost of sales includes purchases from two suppliers in excess of 10% of consolidated cost of sales for the year ended August 31, 2002 as follows:  The amounts and percentages of the Company's consolidated cost of sales were $252,400 (63%),and $65,400  (16%).  

The loss of any of these customers or suppliers could have a material adverse effect on the Company's results of operations, financial position and cash flows.

EX-31

Exhibit 31

Certification

I, Joseph J. Alves, Chairman of the Board, Chief Executive Officer, Acting Chief Financial Officer and President, of BankEngine Technologies, Inc., certify that:

1.

I have reviewed this annual report on Form 10-KSB of BankEngine Technologies, Inc.;

2.

Based on my knowledge, this annual report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this annual report;

3.

Based on my knowledge, the financial statements, and other financial information included in this annual report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this annual report;

4.

I am responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under my supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to me by others within those entities, particularly during the period in which this annual report is being prepared;

b) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report my conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;

c) Disclosed in this annual report any change in the registrant's internal control over financial reporting that occurred during the registrant's fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.

I have disclosed, based on my most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize, and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  December 16, 2003

      By:

/s/ Joseph J. Alves

Joseph J. Alves

Chairman of the Board, Chief Executive Officer, Acting Chief Financial Officer and President

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of BankEngine Technologies, Inc. (the "Company") on Form 10-KSB for the period ending August 31, 2003 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Ness Lakdawala, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. ' 1350, as adopted pursuant to ' 906 of the Sarbanes-Oxley Act of 2002, that:

1)

The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)

The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

December 16, 2003

By: /s/ Joseph J. Alves

Name: Joseph J. Alves

Title: Chairman, CEO, Acting CFO and President