10KSB

                    U.S. SECURITIES AND EXCHANGE COMMISSION
                           Washington, D.C.  20549


                                  FORM 10-KSB


(Mark One)

[  X  ]ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE
       SECURITIES EXCHANGE ACT OF 1934

             For the fiscal year ended December 31, 2003

OR

[      ]TRANSITION  REPORT  UNDER SECTION  13  OR  15(d)  OF
        THE SECURITIES EXCHANGE ACT OF 1934

             For the transition period       to

             Commission file number 0-6933

                              CAMBEX CORPORATION
             (Name of small business issuer in its charter)


Massachusetts                                    04 244 2959
(State or other                                  (I.R.S. Employer
jurisdiction of                                  Identification No.)
incorporation or
organization)

115 Flanders Road                                01581
Westborough, Massachusetts                       (Zip Code)
(Address of principal
executive offices)

Issuer's telephone number:  508-983-1200

Securities registered under Section 12(b) of the Exchange Act:  None

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $.10 par value

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) has been subject to such filing requirements for the past 90 days.
Yes  _X   No __

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B contained in this form, and no disclosure will 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.   [ X   ]

State issuer's revenues for its most recent fiscal year. $9,527,643

An Exhibit Index setting forth the exhibits filed herewith or incorporated by
reference herein is included herein at Page A-1.



The aggregate market value of the voting stock held by non-affiliates of
Cambex Corporation as of March 24, 2004 was $3,019,974 based on the closing
price of the common stock on that date.

Check whether the issuer has filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution
of securities under a plan confirmed by a court. Yes X_   No __

The number of shares of Cambex Corporation's preferred stock outstanding as
of March 24, 2004: 245,463.

The number of shares of Cambex Corporation's common stock outstanding as of
March 24, 2004: 18,320,351.


2




                                    PART I

                              Item 1.  Business.

Overview

A Massachusetts corporation formed in 1968, we are a designer and supplier of
data storage products and solutions. Our products include memory for
computing systems and fibre channel connectivity and storage products used to
build storage area networks (SANs).

We design, manufacture, and market memory products that enhance the
performance and reliability of computing systems and networking devices.  We
have been selling memory products to our customers since 1970.  A processor's
memory is used to hold temporary instructions and data needed to execute
tasks.  This enables the computer's CPU to access instructions and data
quickly.  After upgrading a processor's memory, the computer will process
data faster, because it will need to access its slower secondary storage
(i.e., the disk drive) less frequently.  We provide memory upgrade solutions
for most of the major servers, workstations, and personal computers
manufactured by IBM, Sun, Hewlett-Packard, and Dell.  Adding additional
memory is both application transparent and the most cost-effective solution
for eliminating many system performance bottlenecks.

We began developing our current fibre channel SAN product business in 1997.
SANs enhance and simplify the centralized management and sharing of data
storage resources while providing improved availability, scalability,
performance, and disaster recovery. SANs have been enabled by the emergence
of fibre channel, a new generation of server to storage communications
technology. We develop and offer fibre channel host bus adapters and hubs,
high availability software, fibre channel disk storage arrays and management
software for the deployment of SAN solutions.  By reselling fibre channel
hardware and software products from leading manufacturers, together with our
internally developed products, we are able to offer customers a complete
interoperable SAN solution.

Founded in 1968, we have more than 34 years experience in providing
electronic data storage products and solutions.  For more than 30 years we
were a supplier of IBM compatible mainframe computer memory having supplied
memory and related products for seven generations of IBM mainframe computers.
In 1997, in order to diversify our revenue stream as the mainframe memory
market collapsed in the mid-1990s, we entered the fibre channel connectivity
and disk array business.  In March 2002, we acquired Super PC Memory, Inc., a
supplier of memory products for computing systems and networking devices.  As
a result of the acquisition, we have realigned most of our efforts to the
memory business.

We sell our products domestically and internationally directly to end users
and through OEM, systems integrator, and value added reseller (VAR) channels.
We sell our memory products directly to end users and through VARs.  Our SAN
products are sold through OEM, systems integrator and VAR channels and to a
limited extent directly to end users.

Our executive offices are located at 115 Flanders Road, Westborough,
Massachusetts 01581.  We have field offices in Westminster, Colorado and
Irvine, California.  Our telephone number is (508) 983-1200.  Our Web site
is located at http://www.cambex.com.

3


                             Industry Background

In today's information-based economy, a company's information and
databases are central to the value of the enterprise. The volume of business-
critical data generated, processed, and stored has grown dramatically over
the last decade.  As a result, the ability to quickly access and manage large
amounts of stored data is one of the most important challenges for
organizations.

Memory

A computer typically accesses stored data from its own internal memory,
internal hard disk drive, or external storage device such as a disk storage
array or tape library.  Memory provides the best performance, but is also the
most expensive per storage unit (megabyte).  Data retrieval from memory is
more than 1000 times faster than retrieval from a disk drive.  As CPU
processing power is doubling every 18 months, data retrieval from disk
storage is increasingly becoming a performance bottleneck.  As a result,
applications and users spend much of their time waiting for the retrieval of
data resulting in lowered productivity.  Recognizing the performance
limitations of disk-based storage, the major server vendors have
rearchitected their systems and processors to allow more data to be stored
and accessed directly from memory.  High-end servers from the major vendors
(IBM, Sun Microsystems, Hewlett-Packard) now support more than 512 gigabytes
of internal main memory.  The need for fast data access, new servers with
large memory capacities, and the decrease in memory prices is driving demand
for memory upgrades.

Memory upgrades for high volume computing systems and devices are typically
packaged as memory modules which conform to standards defining dimensions,
capacity, performance, interface and pin-out. We offer a broad range of
standard memory upgrades, including single in-line memory modules ("SIMMs"),
dual in-line memory modules ("DIMMs") and small outline DIMMs ("SO DIMMs").
Memory modules are compact circuit board assemblies consisting of dynamic
random access memory ("DRAM") chips, which constitute the main memory of a
computer system.

Unlike memory for high volume computing systems, memory upgrades for high-end
servers and mainframes typically involve proprietary designs.  At the high-
end, vendors focus on maximizing the performance, reliability, and diagnostic
capabilities of the unique processor-to-memory architecture of their flagship
products.  This often results in proprietary memory module designs
incorporating custom logic to support very high-speed memory bus protocols,
error detection and correction, and self-test capabilities.

Memory upgrades for computing systems and networking devices are available
from the original equipment manufacturer as well as from third party memory
vendors. In addition to competing with each other, third party vendors
primarily compete with the original equipment manufacturers by providing
fully compatible memory at a much lower price.

Storage Area Networks

Large quantities of business critical data are typically stored on external
disk storage arrays. These disk arrays are either directly attached to the
computer server or are accessed through a network connection. Due to the
significant volume of data being stored in today's business environment,
traditional direct attached and network attached architectures often do not
adequately support the requirements of data-intensive enterprises. In
response to the demand for high-speed and high-reliability storage-to-server
connectivity, the fibre channel interconnect protocol was developed in the

4


early 1990s.

A storage area network is a network of servers and data storage devices
interconnected via fibre channel at gigabit speeds. SANs provide an open,
extensible platform for storage access in data intensive environments like
those used for web hosting, online transaction processing and data
warehousing. Equally important, SANs can be significantly less expensive to
maintain and expand than traditional storage architectures because they
enable shared, high-speed access to stored data as well as centralized
management.

SANs use several basic components to make up the network, including the
following:

	servers and workstations;
	fibre channel host bus adapters;
	fibre channel hubs and/or switches;
	disk and/or tape storage devices;
	copper or fiber optic cables; and
	management software.

All the components must work together to deliver a functional SAN
environment.

Each server connects to a SAN through host bus adapters, which are printed
circuit cards that fit in standard sockets on computer motherboards and
enable high-speed data transfer. A host bus adapter connects the server to
other devices in a SAN via cables. The cables connect the host bus adapter
either directly to a fibre channel disk array or tape library or to a hub or
a switch. Because fibre channel host bus adapter functions are regulated by
software, each host bus adapter must include software designed to work with
the particular operating system being used by the server/storage solution.
These systems typically include all types of UNIX as well as Linux and
Windows based operating systems.

Hubs and switches are devices that direct the flow of data from one computing
device to another. When connecting multiple servers to one or more storage
devices, a hub or switch is used to create a fibre channel network. Hubs and
switches simplify cabling and allow the non-disruptive addition or removal of
servers or storage devices from the storage area network.

                               Our Products

Memory Products

We offer a wide range of memory for the add-in memory market. Our add-in
memory is used to upgrade personal computers, laptops, workstations, servers,
mainframes, printers, routers, and other high volume computing and networking
products. Our memory is packaged as memory modules which conform to standards
defining dimensions, capacity, performance, interface and pin-out.  We offer
a broad range of standard memory upgrades, including single in-line memory
modules ("SIMMs"), dual in-line memory modules ("DIMMs") and small outline
DIMMs ("SO DIMMs").  Memory modules are compact circuit board assemblies
consisting of dynamic random access memory ("DRAM") chips, which constitute
the main memory of a computer system.

Our SIMMs are modules containing one or more DRAM chips on a small circuit
board with pins connecting to a computer motherboard.  SIMMs typically have
30 or 72 pins on one side of the board, delivering 8 and 32 data bits,
respectively. Four 30-pin SIMMs or one 72-pin SIMM can be used to support a
32-bit CPU such as Intel's 486. Since microprocessor speeds are increasing
rapidly, DIMMs are replacing SIMMs.

5


Our DIMMs are modules with pins on both sides of the memory module.  DIMMs
typically contain DRAM or synchronous DRAM ("SDRAM") chips that support
faster microprocessors such as Intel's Pentium or IBM's PowerPC.  For SDRAM
chips, which have a 64-bit data connection to a computer, a single 168-pin
DIMM supporting 64-bit data transfer can be used instead of two 72-pin SIMMs.

Our SO DIMMs are designed for notebook computers.  Because of their small
size (2 1/4" for 72 pin and 2 3/4" for 144 pin), SO DIMMs can hold very few
DRAM chips.

We provide memory upgrade solutions for most of the major servers,
workstations, and PCs manufactured by IBM, Sun, Hewlett-Packard, and Dell.
We also sell memory upgrades for most white-box PCs, laser printers, and
Cisco routers.  Our memory products are designed to the same exacting
specifications as original system memory and in most cases are identical in
fit, form and function.

Fibre Channel SAN Products

We are a developer, manufacturer and reseller of fibre channel products that
enable users to deploy SANs. We have developed a family of host bus adapters,
hubs and software that provide increased bandwidth and availability when
deploying mission-critical SANs. Our fibre channel disk arrays allow the
storage of large amounts of online data in a high performance, high
availability environment. By offering other SAN products, including disk
arrays, tape drives and libraries, switches, routers, and software, from
other leading manufacturers, we are able to deliver a complete, tested and
interoperable SAN solution to our customers when required.

Technology

We possess multi-disciplinary technological expertise, which we utilize in
designing our memory and SAN products.

Our expertise in designing memories includes (1) high-availability memory
architecture and design including chip and board level sparing; (2) ASIC
design utilizing high-speed semiconductor technologies and high-density
packaging; and (3) comprehensive manufacturing test procedures -
incorporating functional, thermal, voltage, and mechanical stress.

Our expertise in developing fibre channel SAN products includes software
design and development, embedded hardware design, system design, and systems
integration. We believe that our expertise in these technologies provides us
with competitive advantages in time-to-market, price/performance,
interoperability and product capabilities.

At our principal offices in Westborough, Massachusetts, we have established
a systems integration lab to provide comprehensive functional and system
level integration/interoperability testing between our fibre channel host bus
adapters, hubs, disk arrays, and software with various computer platforms and
fibre channel systems. Integration testing at our lab combines our products
with various fibre channel SAN components to simulate the most commonly used
functional configurations defined by our customers.  The overall goal
is to ensure enterprise class performance and interoperability in real world
SAN deployments.

                                  Customers

We sell our products to OEMs, resellers and directly to end-users. In 2002
and 2003, our largest customers included Lockheed Martin, Oracle, Hewlett-
Packard and StorageTek.

6


In the year ended December 31, 2003, our top five customers accounted for
approximately 23% of our total net revenues, and, in the year ended December
31, 2002, our top five customers accounted for approximately 21% of our total
net revenues. During 2003 and 2002, no customer exceeded 10% of total
revenues. There is no assurance that current customers will remain our
customers in the future and the loss of a major customer could have a
material effect on our business.

                           Customer Service and Support

We offer customer service and support programs that include telephone
and on-site support 24 hours a day, seven days a week. In addition, we have
designed our products to allow easy diagnostics and administration. We employ
systems engineers for pre- and post-sales support and technical support
engineers for field support.

                              Sales and Marketing

We sell our memory products principally through our Super PC Memory
subsidiary.  Super PC sells to Fortune 1000 corporations, mid-level
businesses, government institutions and resellers. Our sales strategy is to
employ a business-to-business sales model that provides factory direct orders
to end users and resellers. We will continue to focus significant direct
sales efforts on Fortune 1000 enterprises. This sets us apart from most of
our major competitors in the memory upgrade business who sell through
reseller channels. Our goal is to establish ourselves as the vendor of choice
for filling the majority of the memory upgrade needs within large
corporations. Our marketing strategy consists primarily of telemarketing.

We sell our fibre channel SAN products domestically and internationally to
OEMs, systems integrators, and VARs as well as directly to end users in the
United States. We target OEMs, systems integrators, and VARs who resell
complete SAN solutions to end-users. Our sales and marketing strategy will
continue to focus on the development of these indirect channel relationships.

Our marketing efforts are focused on increasing awareness of our fibre
channel products, promoting SAN-based solutions, and advocating industry-wide
standards and interoperability. We plan to participate in industry
associations to promote and further enhance fibre channel technology and
increase our visibility as industry experts. We also plan to participate in
select trade show events and SAN conferences to promote our products and to
continue our efforts to educate potential customers on the value of SANs.

                       Manufacturing, Test and Assembly

We outsource the majority of our manufacturing, and we conduct quality
assurance, manufacturing, engineering, documentation control and certain
finish assembly and test operations at our headquarter facility in
Westborough, Massachusetts. This approach enables us to reduce fixed costs
and to provide flexibility in meeting market demands.

We select suppliers primarily on the basis of technology, manufacturing
capacity, quality and cost. Our reliance on third-party suppliers and
manufacturers involves risks, including possible limitations on availability
of products due to market abnormalities, unavailability of, or delays in
obtaining access to, certain product technologies and the absence of complete
control over delivery schedules, manufacturing yields, and total production
costs. The inability of our suppliers and third party manufacturers to
deliver products of acceptable quality and in a timely manner or our
inability to procure adequate supplies of our products could have a material
adverse effect on our business, financial condition or operating results.

7

                             Research and Development

Our success will depend to a substantial degree upon our ability to
develop and introduce in a timely fashion new products and enhancements to
our existing products that meet changing customer requirements and emerging
industry standards. We have made, and plan to continue to make, expenditures
for research and development and to participate in the development of
industry standards. However, because our net revenues declined in four of the
five most recently completed fiscal years, our expenditures for research and
development are significantly lower than the amount we expended for research
and development five years ago. Over the last two fiscal years, our
research and development expenses were approximately $660,000 in 2003,
compared to $914,000 in 2002. Research and development expenses primarily
consist of salaries and related costs of employees engaged in ongoing
research, design and development activities and subcontracting costs.

                                   Competition

The markets in which we compete are intensely competitive and are
characterized by frequent new product introductions, changing customer
preferences and evolving technology and industry standards. Our competitors
continue to introduce products with improved price/performance
characteristics, and we will have to do the same to remain competitive.
Increased competition could result in significant price competition, reduced
revenues, lower profit margins or loss of market share, any of which would
have a material adverse effect on our business, operating results and
financial condition.

Our principal competitors in the memory upgrade business are the computer
system original equipment manufacturers (OEMs) and third party memory
vendors.  The major system OEMs we compete against are International Business
Machines Corporation, Sun Microsystems, Hewlett-Packard, and Dell.  The major
third party memory vendors we compete against are Kingston Technology,
Crucial Technology, and Dataram.

Our principal competitors in the fibre channel SAN market include Emulex
Corporation, QLogic Corporation, JNI Corporation, International Business
Machines Corporation, and Sun Microsystems.

Some of our OEM and reseller customers could develop products internally that
would replace our products. The loss of opportunities to sell our products to
any such OEM and reseller customers, in addition to the increased competition
presented by these customers, could have a material adverse effect on our
business, operating results and financial condition.

                               Intellectual Property

The intellectual property rights we have in our technology, which generally
consists of programmable hardware logic, software and know-how associated
with our product portfolio, principally arise from our own internal
development efforts. We attempt to protect our technology through a
combination of unpatented trade secrets, trademarks and contractual
obligations. Our software products are protected by copyright laws. We cannot
assure that our intellectual property protection measures will be sufficient
to prevent misappropriation of our technology or that our competitors will
not independently develop technologies that are substantially equivalent or
superior to our technology. In addition, the laws of many foreign countries
do not protect our intellectual property rights to the same extent as the
laws of the United States. Our failure to protect our proprietary information
could have a material adverse effect on our business, financial condition or

8


operating results.

We may need to initiate litigation in the future to enforce our intellectual
property rights, to protect trade secrets or to determine the validity and
scope of the proprietary rights of others. Litigation could result in
substantial costs and diversion of our resources and could materially harm
our business. In the future, we may receive notice of infringement claims of
other parties' proprietary rights. Infringement or other claims could be
asserted or prosecuted against us in the future, and it is possible that such
assertions or prosecutions could harm our business. Any such claims, with or
without merit, could be time-consuming, result in costly litigation and
diversion of technical and management personnel, cause delays in the
development and release of our products, or require us to develop non-
infringing technology or enter into royalty or licensing arrangements. Such
royalty or licensing arrangements, if required, may not be available on terms
acceptable to us, or at all. For these reasons, infringement claims could
materially harm our business.

                                     Employees

At March 24, 2004, we had 21 full-time employees. None of our employees are
represented by a labor union. We have not experienced any work stoppages and
consider our relations with our employees to be good.



                             Item 2.  Properties

We currently lease approximately 15,000 square feet in an office facility in
Westborough, Massachusetts pursuant to a lease that expires on June 30, 2009.
We currently lease approximately 8,800 square feet in an office facility in
Westminster, Colorado pursuant to a lease that expires on September 30, 2008.
We are in the process of renegotiating the Colorado lease for earlier
termination. There is no assurance that such negotiations will be successful.

We also own 12.4 acres of land in Poughkeepsie, New York.  This land is
vacant and not subject to a mortgage.


                          Item 3.  Legal Proceedings

There are no material legal proceedings pending against us. We are involved
in certain legal proceedings arising in the ordinary course of business. We
believe that the outcome of these proceedings will not have a material
adverse effect on our financial condition.


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

None.

9


                                   PART II


            Item 5.  Market for Common Equity, Related Stockholder Matters
and
                     Small Business Issuer Purchase of Equity Securities.



Our common stock is listed for quotation on the over the counter bulletin
board, under the symbol "CBEX".  The approximate number of shareholders of
record at March 24, 2004 was 513. The following table sets forth the range of
the high and low closing bid prices for our common stock for each quarter
during the years ended December 31, 2003 and December 31, 2002:



                                      2003                     2002

                               High        Low          High        Low

       First Quarter           0.19        0.13         0.80        0.52
       Second Quarter          0.68        0.14         0.80        0.29
       Third Quarter           0.68        0.41         0.45        0.17
       Fourth Quarter          0.43        0.26         0.30        0.12




We have not paid any cash dividends to date, and have no intention of paying
any cash dividends on our common stock in the foreseeable future. The
declaration and payment of dividends is subject to the discretion of the
board of directors and to certain limitations imposed by the Massachusetts
Corporation Laws. The timing, amount and form of dividends, if any, will
depend, among other things, on our results of operations, financial
condition, cash requirements and other factors deemed relevant by our board
of directors.

The series 1 bridge note purchase agreement with Arab Commerce Bank Ltd.
provides that we may not pay cash dividends as long as the series 1 bridge
note remains outstanding.  With the consent of Arab Commerce Bank Ltd. and as
long as we are not in default, we may pay dividends to preferred shareholders
in accordance with our articles of organization and we may repurchase shares
of our common stock issued upon the exercise of options granted under our
stock option plans.

Set forth in chronological order is information regarding securities
convertible into or exercisable for shares of our common stock issued by
Cambex within the past three years:

In November 1998 we entered into a Loan and Security Agreement with B.A.
Associates, Inc. which allows us to borrow up to $650,000. In exchange for
this revolving loan facility, we issued the lender in a transaction exempt
under Section 4(2) of the Securities Act warrants for the purchase of two
shares of common stock for each dollar it committed to loan to us. The
exercise price of these warrants to purchase 1,300,000 shares of common stock
is $0.22 per share. In November 2000, the agreement with B.A. Associates was
amended to increase the amount we can borrow to $1,000,000. In exchange for
this $350,000 increased commitment, we agreed to issue the lender a warrant
to purchase one share of common stock for each additional dollar it committed
to loan to us. The exercise price of this warrant to purchase 350,000 shares
of common stock is $1.25 per share. In December 2000, the agreement with B.A.

10


Associates was amended to increase the amount we can borrow to $1,050,000. In
exchange for this $50,000 increased commitment, we agreed to issue the lender
a warrant to purchase one share of common stock for each additional dollar it
committed to loan to us. The exercise price of this warrant to purchase
50,000 shares of common stock is $1.25 per share.

In November 1999, we borrowed $125,000 from Joseph F. Kruy and $125,000 from
Philip C. Hankins, a member of our board of directors, and $100,000 from each
of Messrs. Snowday and Calvert.  We also entered into separate Loan and
Security Agreements with each of Messrs. Kruy, Hankins, Calvert and Snowday.
At that time, we entered into one other Loan and Security Agreement with a
person unrelated to the company (the "Other 1999 Lender") pursuant to which
we borrowed an additional $100,000.  Our payment obligations under these Loan
and Security Agreements (the "1999 Loan Agreements") are evidenced by 12%
Notes due in November 2001.  Under the 1999 Loan Agreements, we granted each
of Messrs. Kruy, Hankins, Snowday and Calvert and the Other 1999 Lender a
first priority security interest in all of our accounts, instruments,
documents, general intangibles, equipment, inventory, and proceeds of any of
the foregoing.  Originally, under the terms of the 1999 Loan Agreements,
Messrs. Kruy, Hankins, Calvert and Snowday and the Other 1999 Lender received
a warrant to purchase up two shares of common stock for each dollar loaned to
us, at an exercise price of $2.00 per share.  When we extended the term of
the loans in November 2000, the Company agreed to issue additional warrants
to Messrs. Kruy, Hankins, Snowday and Calvert and the Other 1999 Lender to
purchase one share of our common stock for each dollar loaned to us at an
exercise price of $1.25 per share.  We believe that the borrowing
arrangements we made with Mr. Kruy and others were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.  In
March through May 2001, we borrowed $50,000 from Joseph F. Kruy and $300,000
from Richard E. Calvert.  We also entered into separate Loan and Security
Agreements with Messrs. Kruy and Calvert. Our payment obligations under these
Loan and Security Agreements (the "2001 Loan Agreements") are evidenced by
12% Notes due in March through May 2002.  Under the 2001 Loan Agreements, we
granted each of Messrs. Kruy and Calvert a first priority security interest
in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing.  Under the terms
of the 2001 Loan Agreements, Messrs. Kruy and Calvert received a warrant to
purchase up to two shares of common stock for each dollar loaned to us, at an
exercise price of $0.50 per share. We believe that the borrowing arrangements
we made with Mr. Kruy and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us. In July through
September 2001, we borrowed $100,000 from Joseph F. Kruy and $100,000 from
Richard E. Calvert.  We also entered into separate Loan and Security
Agreements with Messrs. Kruy and Calvert. Our payment obligations under these
Loan and Security Agreements (the "July through September 2001 Loan
Agreements") are evidenced by 12% Notes due in January 2002.  Under the July
through September 2001 Loan Agreements, we granted each of Messrs. Kruy and
Calvert a first priority security interest in all of our accounts,
instruments, documents, general intangibles, equipment, inventory, and
proceeds of any of the foregoing.  Under the terms of the July through
September 2001 Loan Agreements, Messrs. Kruy and Calvert received a warrant
to purchase up one share of common stock for each dollar loaned to us, at an
exercise price of $0.25 per share. We believe that the borrowing arrangements
we made with Mr. Kruy and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us. In April through July
2002, we borrowed $125,000 from Joseph F. Kruy and $50,000 from Richard E.
Calvert.  We also entered into separate Loan and Security Agreements with
Messrs. Kruy and Calvert. Our payment obligations under these Loan and
Security Agreements (the "2002 Loan Agreements") are evidenced by 12% Notes
due in April through July 2003.  Under the 2002 Loan Agreements, we granted
each of Messrs. Kruy and Calvert a first priority security interest in all of
our accounts, instruments, documents, general intangibles, equipment,

11


inventory, and proceeds of any of the foregoing.  Under the terms of the 2002
Loan Agreements, Messrs. Kruy and Calvert received a warrant to purchase up
one share of common stock for each dollar loaned to us, at an exercise price
of $0.25 per share. We believe that the borrowing arrangements we made with
Mr. Kruy and others were on terms at least as favorable to us as we would
have expected from lenders unrelated to us. On June 28, 2002, in transactions
exempt under Section 4(2) of the Securities Act, Joseph F. Kruy, Richard E.
Calvert, H. Terry Snowday, Jr., and Philip Hankins converted Loan and
Security Agreements with an aggregate principal amount of $1,000,000 plus
accrued interest into Series A Convertible Preferred stock. They were issued
98,223 shares of Series A Convertible Preferred stock. The Series A
Convertible Preferred shares have a dividend rate of 12%. The purchase price
per share of the Series A Convertible Preferred stock was $12.50. The Series
A Preferred stock is convertible into shares of common stock, at any time at
the holder's option. The holders of the 98,223 shares of Series A Preferred
stock could convert their preferred shares into 982,230 shares of common
stock. In June through August 2003, we borrowed $200,000 from Joseph F. Kruy.
We also entered into Loan and Security Agreements with Mr. Kruy. Our payment
obligations under these Loan and Security Agreements (the "2003 Loan
Agreements") are evidenced by 12% Notes due in June through August 2004.
Under the 2003 Loan Agreements, we granted Mr. Kruy a first priority security
interest in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing. We believe that
the borrowing arrangements we made with Mr. Kruy were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.  As
of March 24, 2004, the balance outstanding under Loan and Security Agreements
is $475,000 of which $325,000 is owed to Joseph F. Kruy and $50,000 is owed
to Richard E. Calvert.

B.A. Associates, Inc., Joseph F. Kruy, Philip C. Hankins, Richard E. Calvert
and H. Terry Snowday, Jr. are all accredited investors and have provided us
written representations to that effect.

We had no repurchases of equity securities in the fourth quarter of 2003.

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


The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with our consolidated
financial statements and related notes appearing elsewhere in this
Form 10-KSB.  Please refer to "Special Note Regarding Forward-Looking
Statements" for additional information.


Comparison of fiscal years 2003 and 2002

Our revenues were $9,528,000 and $14,345,000 for 2003 and 2002, respectively.
Revenues for 2003 decreased 34% compared to revenues for the prior year due
to decreased sales of our memory products partially offset by increased sales
of our fibre channel connectivity products. The decrease in memory sales was
the result of weaker demand for memory products and our decision not to
accept orders with undesirable gross margins.

Gross profit rate was 40% of revenues in 2003, compared to 26% of revenues in
2002. The increase was due to the write-off of accrued liabilities relating
to inventory purchases, which were incurred in prior periods, in the amount
of $653,000 in 2003 and the product mix as there are higher gross margins on
our fibre channel connectivity products than our memory products.

12


Operating expenses in 2003 decreased by 25% in comparison to operating
expenses in the prior year.  Research and development expenses in 2003
decreased by 28% compared to the amount of these expenses in 2002 due to
decreases in contractor services. Selling and General and Administrative
expenses for 2003 decreased by 21% and 36% respectively compared to the
amount of these expenses in 2002 due to streamlining personnel and related
expenses in consolidating the acquisition of Super PC Memory, Inc.

Other income (expense) in 2003 includes other income of $98,000 relating to
the reversal of accrued expenses and $252,000 of interest expense. Other
income (expense) in 2002 consists of $508,000 of interest expense. Interest
expense decreased by 50% in 2003 compared to 2002. This decrease in interest
expense was primarily due to the conversion of notes payable into common and
preferred stock in the first and second quarters of 2002 and decreased
interest paid to The CIT Group/Commercial Services, Inc., the lender
providing a line of credit to our subsidiary, due to lower amounts
outstanding under this line of credit.

Total comprehensive income for 2003 was $119,000 or $0.01 per share, as
compared with a total comprehensive loss of $1,478,000, or $0.09 per share,
for 2002.


Critical Accounting Policies

Revenue Recognition

We manufacture equipment for sale or lease.  We follow the guidance in Staff
Accounting Bulletin ("SAB") 104 in applying generally accepted accounting
principles to revenue recognition in consolidated financial statements. We
include items in revenue when the following criteria are met: persuasive
evidence of an arrangement exists, delivery has occurred or services have
been rendered, our price to the buyer is fixed or determinable and
collectibility is reasonably assured. The "obligations for trade-in memory"
were determined in each contract when we took mainframe memory in trade when
we installed our mainframe memory in our customers' computers. The amount
remaining in this account is an obligation for product credit which was
established when mainframe memory was traded-in for the purchase of memory.

Stock-Based Compensation

SFAS No. 123, "Accounting for Stock-Based Compensation", encourages but does
not require companies to record compensation cost for stock-based employee
compensation plans at fair value.  We have chosen to continue to account for
such plans using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25.  Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of our
stock at the date of grant over the exercise price of the stock (See Note
10).

Recent Accounting Pronouncements

During November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others,"
which is an interpretation of FASB Statements No. 5, 57 and 107 and
rescission of FASB Interpretation No. 34. The initial recognition and
measurement provisions of this Interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002, and the
disclosure requirements are effective for financial statements of periods
ending after December 15, 2002. This Interpretation addresses the
disclosures to be made by a guarantor in its interim and annual financial
statements about its obligations under guarantees,

13


and also clarifies the requirements related to the recognition of a liability
by a guarantor at the inception of a guarantee for the obligations the
guarantor has undertaken in issuing that guarantee.  Management does not
believe the adoption of FASB Interpretation No. 45 will have a material
impact on the Company's financial position or results of operations as the
Company does not currently provide any third party guarantees.

In January 2003, the FASB issued FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities" ("FIN 46"). In December 2003,
FIN 46 was replaced by FASB interpretation No. 46(R) "Consolidation of
Variable Interest Entities." FIN 46(R) clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of
a controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated
financial support from other parties. FIN 46(R) requires an enterprise to
consolidate a variable interest entity if that enterprise will absorb a
majority of the entity's expected losses, is entitled to receive a majority
of the entity's expected residual returns, or both. FIN 46(R) is effective
for entities being evaluated under FIN 46(R) for consolidation no later than
the end of the first reporting period that ends after March 15, 2004.
Management does not believe the adoption of FIN 46(R) will have a material
impact on the Company's financial position or results of operations, as the
Company does not have any entities that would be covered under FIN 46.

On April 30, 2003, the Financial Accounting Standards Board issued SFAS No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities." SFAS No. 149 amends and clarifies accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The new guidance
amends SFAS No. 133 for decisions made as part of the Derivatives
Implementation Group ("DIG") process that effectively required amendments to
SFAS No. 133, and decisions made in connection with other FASB projects
dealing with financial instruments and in connection with implementation
issues raised in relation to the application of the definition of a
derivative and characteristics of a derivative that contains financing
components. In addition, it clarifies when a derivative contains a financing
component that warrants special reporting in the statement of cash flows.
SFAS No. 149 is effective for contracts entered into or modified after June
30, 2003 and for hedging relationships designated after June 30, 2003.
Adoption of this standard did not have an impact on the Company's financial
statements, as the Company does not currently have such instruments or
activities.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150
"Accounting for Financial Instruments with the Characteristics of both
Liabilities and Equities." SFAS No. 150 establishes standards regarding the
manner in which an issuer classifies and measures certain types of financial
instruments having characteristics of both liabilities and equity. Pursuant
to SFAS No. 150, such freestanding financial instruments (i.e., those entered
into separately from an entity's other financial instruments or equity
transactions or that are legally detachable and separately exercisable) must
be classified as liabilities or, in some cases, assets. In addition, SFAS No.
150 requires that financial instruments containing obligations to repurchase
the issuing entity's equity shares and, under certain circumstances,
obligations that are settled by delivery of the issuer's shares be classified
as liabilities. Certain provisions of SFAS No. 150 have been indefinitely
deferred; however, the Statement is generally effective for financial
instruments entered into or modified after May 31, 2003 and for other
instruments at the beginning of the first interim period beginning after June
15, 2003. The Company does not currently have any financial instruments that
will be impacted by SFAS No. 150. The adoption of SFAS No. 150 did not have a

14


material impact on the Company's financial position or results of operations.

In December 2003, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 104, Revenue Recognition (SAB 104), which provides
guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 104 revises or rescinds portions
of the interpretive guidance that was previously issued in Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101) that
was issued in December 1999 in order to make this interpretive guidance
consistent with current authoritative accounting and auditing guidance and
SEC rules and regulations. The adoption of SAB 104 did not have a significant
impact on the Company's financial position or results of operations.

Recent Developments

On January 30, 2004, Super PC Memory, Inc., a wholly-owned subsidiary of
Cambex Corporation, entered into an agreement with Silicon Mountain Memory
Incorporated, a privately-held company, pursuant to which Silicon Mountain
Memory Incorporated purchased a portion of Super PC Memory's customer
information and rights to do business with said customers with respect to
Wintel products. Sales to said customers with respect to Wintel products was
a substantial portion of our revenues in 2003 and 2002. These sales were
sales with lower gross margins. The total purchase price is $1,050,000
subject to allocation as to cash or note payments, the exact amount and terms
of payment is dependent upon the revenues generated by Silicon Mountain
Memory from Super PC Memory customers. The first payment of $35,000 was
received at closing. According to terms of the agreement, beginning on May
15, 2004, and on or before the 15th of each month, Silicon Mountain Memory
will make a payment to Super PC Memory based upon gross profit for the
preceding month according to the following formula: if the gross profit is
less than $100,000, the payment will be 25% of gross profit; if the gross
profit is between $100,000 and $140,000, the payment will be $35,000; and if
the gross profit is in excess of $140,000, the payment will be 35% of gross
profit.

Inflation

We did not experience any material adverse effects in 2002 or 2003 due to
general inflation.

Liquidity and Capital Resources

As discussed more fully in Note 1 to our audited consolidated financial
statements, we have suffered substantial recurring losses from operations for
the prior seven consecutive years. Consequently, our ability to continue as a
going concern, is dependent upon several factors including, but not limited
to, our ability to generate revenues and gross profit in significantly
greater amounts and our ability to raise additional capital. Our working
capital deficit is a significant threat to our ability to continue as a going
concern.

Management continues to work to establish new strategic alliances that it
believes will result in increases in revenues and gross profit in the future
through the sale of a greater volume of products. Management has also been
trying to secure additional capital. We cannot give any assurances that the
actions taken to date will increase revenues and gross profit or raise
additional capital.

Requirements

We need additional capital and additional financing may not be available. We
believe that the combination of current existing cash, available borrowing
capacity and our ability to obtain additional long-term indebtedness may not

15


be adequate to finance our operations for our current activities and
foreseeable future activities. Currently, our cash burn rate from operations
is approximately $40,000 per month or $480,000 per year at current sales
levels. For each $100,000 reduction in sales per month, our cash burn rate
would increase by approximately $28,000 per month. Conversely, for each
$100,000 increase in sales per month, our cash burn rate would decrease by
approximately $28,000 per month. These estimates may change based on product
mix. The burn rate is an estimate. The actual burn rate may differ materially
as a result of a number of factors, risks and uncertainties that are
described herein. We are trying to raise additional capital and if we are
unable to raise additional capital, we may not be able to meet our
anticipated working capital requirements.

We have a loan and security agreement with B.A. Associates, Inc. which is a
corporation owned by Bruce D. Rozelle, a son-in-law of Joseph F. Kruy, our
Chairman, President and Chief Executive Officer. The outstanding balance due
to B.A. Associates, Inc. was $1,033,016 at December 31, 2003.  We also have
notes payable of $784,669 at December 31, 2003 which include $475,000 of
advances payable which are due on demand. The $475,000 of advances payable
includes $375,000 of borrowings from related parties. $150,000 of the notes
payable balance represents the series 1 bridge financing note issued to Arab
Commerce Bank in 2000.

Resources

Our cash and marketable securities were $269,000 and $545,000 at December 31,
2003 and December 31, 2002, respectively. Working capital was a deficit of
$5,772,000 and $5,907,000 at December 31, 2003 and at December 31, 2002,
respectively. During 2003, we did not expend any funds for capital equipment.
During fiscal 2004, we expect to acquire less than $100,000 of capital
equipment.

Our Super PC Memory subsidiary has a line of credit of up to $2,000,000 with
The CIT Group/Commercial Services, Inc., which is limited to 75% of the
eligible receivables of Super PC Memory. At December 31, 2003 we had a
balance of $526,000 under this line of credit. At the present time, our Super
PC Memory subsidiary is not in compliance with certain financial covenants of
this line of credit with The CIT Group/Commercial Services, Inc.

We also have a revolving credit facility with B.A. Associates, Inc. which is
a corporation owned by Bruce D. Rozelle, a son-in-law of Joseph F. Kruy, our
Chairman, President and Chief Executive Officer under which we may borrow up
to $1,100,000.  At December 31, 2003 we had a balance of $1,033,000
outstanding under this revolving credit facility.

We need additional capital and additional financing may not be available. We
believe that the combination of current existing cash, available borrowing
capacity and our ability to obtain additional long-term indebtedness may not
be adequate to finance our operations for our current activities and
foreseeable future activities. We are actively pursuing raising additional
capital and if we are unable to raise additional capital, we may not be able
to meet our anticipated working capital requirements.

We are attempting to raise additional capital to cover the burn rate not
covered by incremental gross profit. This amount is dependent upon sales and
gross profit. If sales and gross profit do not increase or capital cannot be
raised to cover the current burn rate, we intend to reduce operating expenses
as much as practicable to continue operations until balance is established.

If we are not successful in raising additional capital or increasing our
sales to adequate levels, we will not be able to continue our current

16


operations and there is substantial doubt as to our ability to continue as a
going concern. There can be no assurance that we will be successful in
raising such additional capital at all or on terms commercially acceptable to
us or our shareholders.


Forward-Looking Statements

The statements contained in "Management Discussion and Analysis of Financial
Condition and Results of Operations" and elsewhere throughout this Annual
Report on Form 10-KSB that are not historical facts are "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933
and Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements are subject to certain risks and uncertainties which could cause
actual results to differ materially from those reflected in the forward-
looking statements. These forward-looking statements reflect management's
analysis, judgment, belief or expectation only as of the date hereof. We
undertake no obligation to publicly revise these forward-looking statements
to reflect events or circumstances that arise after the date hereof or to
publicly release the results of any revisions to such forward-looking
statements that may be made to reflect events or circumstances after the date
hereof. In addition to the disclosure contained herein, readers should
carefully review any disclosure of risks and uncertainties contained in other
documents we file or have filed from time to time with the Securities and
Exchange Commission pursuant to the Securities Exchange Act of 1934.


            Item 7.  Financial Statements.

See financial statements, beginning at page F-2, incorporated herein by
reference.


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

None.


            Item 8A. Controls and Procedures

Our principal executive officer and principal financial officer, Joseph F.
Kruy, has evaluated the effectiveness of our disclosure controls and
procedures and concluded that there are no significant deficiencies in the
design or operation of internal controls which could adversely affect our
ability to record, process, summarize and report financial data and has
determined that there are no material weaknesses in internal controls. There
were no significant changes in internal controls or in other factors that
could significantly affect internal controls subsequent to the date of our
most recent evaluation.

17


                                   PART III


       Item 9. Directors, Executive Officers, Promoters and Control Persons;
               Compliance with Section 16(a) of the Exchange Act.

The following table shows the name, age and position of each of our
executive officers and directors.

Name                             Age    Position

Joseph F. Kruy (1)               72     President, Chief Executive Officer,
                                        Treasurer and Chairman of the Board
                                        and a Director
Philip C. Hankins (1)(2)         72     Director
C.V. Ramamoorthy, Ph.D. (1)(2)   77     Director
Robert J. Spain, Ph.D. (1)(2)    66     Director
Lois P. Lehberger                47     Clerk, Vice President and Controller
___________________
(1)	Member of the Compensation Committee.
(2)	Member of the Audit Committee.



Joseph F. Kruy has served as our President, Chief Executive Officer and a
member of our board of directors since our inception in 1968.  Mr. Kruy has
served as our Chairman of the Board since October 1975.  Mr. Kruy holds a
B.S. and a Diploma Engineering degree in electrical engineering from the
Technical University of Budapest.

Philip C. Hankins has been a member of our board of directors since 1975.
Since 1975 Mr. Hankins has been the President of Charter Information
Corporation, an information processing company.  Mr. Hankins holds a B.S. in
mechanical engineering from Cornell University and a M.S. from Harvard
University.

C.V. Ramamoorthy, Ph.D. has been a member of our board of directors since our
inception in 1968.  Since prior to 1995, Dr. Ramamoorthy has been a Professor
of Electrical Engineering and Computer Sciences at the University of
California Berkeley.  Dr. Ramamoorthy holds a B.S. in physics from the
University of Madras, India, a M.S. in mechanical engineering from the
University of California Berkeley and a M.S. and a Ph.D. from Harvard
University.

Robert J. Spain, Ph.D. has been a member of our board of directors since
1995.  Dr. Spain was also our Vice President of Research from 1969 to 1977.
Since prior to 1995, Dr. Spain has been the President of CFC, Inc., an
electronic component manufacturing company.  Dr. Spain holds a B.S.E.E. and a
M.S.E.E. from the Massachusetts Institute of Technology and a Doctor of
Science from Paris, Sorbonne.

Lois P. Lehberger joined Cambex in June 1978 and has served as our controller
since August 1998, and our Vice President since November 1999.  Mrs.
Lehberger was appointed clerk in May 2001. Mrs. Lehberger is responsible for
our accounting and financial control functions.  Mrs. Lehberger holds a B.A.
in economics and accounting from the College of the Holy Cross.


18


Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten
percent of a registered class of the Company's equity securities, to file
reports of ownership and changes in ownership of common stock (Forms 3, 4 and
5) with the Securities and Exchange Commission. Officers, directors and
greater-than-ten-percent holders are required to furnish the Company with
copies of all such forms, which they have filed.

	Based solely upon a review of Forms 3 and Forms 4 furnished to the
Company during the most recent fiscal year, and Forms 5 with respect to its
most recent fiscal year, we believe that all such forms required to be filed
pursuant to Section 16(a) of the Exchange Act were timely filed, as
necessary, by the officers, directors and security holders required to file
the same during the fiscal year ended December 31, 2003.



                      Item 10.  Executive Compensation.

The following table provides certain summary information concerning
compensation awarded to, earned by, or paid to our Chief Executive Officer
and each of our other executive officers for services rendered to Cambex in
all capacities during the fiscal years ended December 31, 2003 and December
31, 2002.

Summary Compensation Table
                                            Annual           Long Term
                                         Compensation(1) Compensation Awards
Name and Position              Year          Salary            Options(#)

Joseph F. Kruy                 2003          $200,000(2)           -
Chairman, President and CEO    2002          $200,000(2)           -

Lois P. Lehberger              2003          $ 80,000              -
Vice President,                2002          $ 80,000              -
Controller and Clerk

(1)The columns for "Bonus", "Other Annual Compensation" and "All Other
   Compensation" have been omitted because there is no such compensation
   required to be reported.

(2)Includes $100,000 and $100,000 for which payment has been deferred
   in 2003 and 2002, respectively.


Stock Options

The following table contains information concerning the grant of stock
options under our Year 2000 Equity Incentive Plan to the executive officers
named in the Summary Compensation Table. Each of the option grants listed
below vests in five equal installments on the first through the fifth
anniversaries of the date of grant.

19


Option Grants in Last Fiscal Year

Individual Grants


                  Number of     % of Total
                  Securities      Options
                  Underlying    Granted to     Exercise
                   Options     Employees in      Price    Expiration
Name                 (#)        Fiscal Year    ($/Share)     Date

Joseph F. Kruy         -             -             -           -

Lois P. Lehberger      -             -             -           -


Aggregate Option Exercises in Last Fiscal Year and Fiscal Year End Option
Value
                                                                 Value of
                                                                Unexercised
                                            Number of           In-the-money
                                            Options at           Options at
                                         December 31,2003 December 31,2003(1)
               Shares Acquired    Value     Exercisable/         Exercisable/
Name           on Exercise(#)    Realized  Unexercisable       Unexercisable

Joseph F. Kruy         -            -          -/-                  -/-

Lois P. Lehberger      -            -     94,500/60,000          1030/-

(1) The closing price of our Common Stock on December 31, 2003 was
    $0.26 per share.  The numbers shown reflect the value of options
    accumulated over all years of employment.


Employment Contracts and Termination Agreements

We entered into an employment agreement with Joseph F. Kruy on November
18, 1994.  An extension of the term of this employment agreement to December
31, 2006 was approved by our board of directors in April 2003. Under his
employment agreement, Mr. Kruy is engaged to serve as our Chairman of the
Board, President and Chief Executive Officer.  Except for illness, reasonable
vacations and other customary exceptions, during the term of the agreement,
Mr. Kruy is to devote all of his working time and attention to the
performance of his duties and responsibilities at Cambex.  Mr. Kruy is to be
paid a minimum annual base salary of $200,000 per year.  Mr. Kruy is also
entitled to participate in our Incentive Bonus Plan and is eligible to
receive an annual bonus equal to 4% of our pre-tax profit, as that term is
defined in the Incentive Bonus Plan.  If Mr. Kruy voluntarily terminates his
employment with us, he is entitled to receive his base annual compensation
through the date of termination and any amount that he may be entitled to
receive under the Incentive Bonus Plan in accordance with the terms of that
Plan.  If, after Mr. Kruy voluntarily terminates his employment with us, he
accepts employment during the remaining then current term of his agreement
with an entity that directly competes with us, then we may cease paying Mr.
Kruy any further amounts.  If we terminate Mr. Kruy's employment for reasons
other than for cause or if we give another person either the title or the
powers of the Chief Executive Officer, then Mr. Kruy is entitled to continue
to receive his annual base salary through the end of the then current term of
the agreement, and is entitled to receive any incentive bonus that would have
been earned under the Incentive Bonus Plan during the fiscal year in which

20


his employment was terminated.  If, following termination of Mr. Kruy's
employment with us, he accepts employment elsewhere before December 31, 2006,
then we do not have to continue to pay Mr. Kruy for the year ending December
31, 2006.  Moreover, if on the date of termination of Mr. Kruy's employment
with us, our assets are in the hands of a receiver, an assignee for the
benefit of creditors, trustee in bankruptcy, debtor-in-possession or other
entity for the benefit of creditors or if our consolidated net worth is less
than our consolidated net worth at December 31, 1999, then we have no
obligation to pay Mr. Kruy any amount after termination of his employment.

Our Super PC Memory, Inc. subsidiary entered into an employment agreement
with Richard Schaefer as of March 12, 2002. Such agreement was terminated as
of December 31, 2003. Under his employment agreement, Mr. Schaefer was
engaged to serve as Super PC Memory's Vice President.  During the term of the
agreement, Mr. Schaefer was to devote all of his working time and attention
to the performance of his duties and responsibilities at Super PC Memory. His
employment, under the terms of his employment agreement, commenced on March
12, 2002 ("Commencement Date") and continued until December 31, 2003.  Mr.
Schaefer was to be paid an annual base salary of $180,000 per year.  Mr.
Schaefer was also entitled to participate in Cambex's Incentive Bonus Plan
and was eligible to receive an annual bonus equal to 1% of Cambex's pre-tax
profit, determined pursuant to Cambex's profit sharing plan, during the
remainder of its 2002 fiscal year and its 2003 and 2004 fiscal years, subject
to his continued employment at the conclusion of the year in question. Mr.
Schaefer was also granted stock options to purchase up to 200,000 shares of
the common stock of Cambex, such options to vest, subject to his continued
employment, over four years in equal annual increments commencing on the
first anniversary of his Commencement Date. In addition, Mr. Schaefer was
granted stock options to purchase up to a maximum of 250,000 additional
shares of the common stock of Cambex ("Performance Options"), such
Performance Options to vest, subject to his continued employment, as follows:
Performance Options earned based on profits and earnings during fiscal year
2002 shall vest over four years in equal annual increments commencing on the
first anniversary of his Commencement Date; Performance Options earned based
on profits and earnings during fiscal year 2003 shall vest over three years
in equal annual increments commencing on the second anniversary of his
Commencement Date; Performance Options earned based on profits and earnings
during fiscal year 2004 shall vest over two years in equal annual increments
commencing on the third anniversary of his Commencement Date; provided that
the Performance Options shall be earned, and the vested portion shall be
exercisable when earned, then the Performance Options shall become
exercisable according to the following formula: two thousand shares shall
vest for each $1,000,000 of gross profits and five thousand shares for each
$1,000,000 of EBITDA generated by Super PC Memory in the three fiscal years
ending December 31, 2004. If the application of this formula to the gross
profits and EBIDTA over the three fiscal years would result in Mr. Schaefer's
vesting in more than 250,000 Performance Options, then additional Performance
Options shall be granted to him and will vest in four equal annual
installments over the four year period ending on the eighth anniversary of
the Commencement Date. During the term of his employment and for a period of
one (1) year following the expiration or termination of his employment,
whether such termination is voluntary or involuntary, Mr. Schaefer shall not
compete with, or own any interest in a business competitive with the business
of, Super PC Memory, or solicit customers or employees of Super PC Memory.

Our Super PC Memory, Inc. subsidiary entered into an employment agreement
with Simon Le as of March 12, 2002. Such agreement was terminated as of
December 31, 2003. Under his employment agreement, Mr. Le was engaged to
serve as Super PC Memory's Vice President. During the term of the agreement,
Mr. Le was to devote all of his working time and attention to the performance
of his duties and responsibilities at Super PC Memory. Mr. Le's employment,

21


under the terms of his employment agreement, commenced on March 12, 2002
("Commencement Date") and continued until December 31, 2003. Mr. Le was to be
paid an annual base salary of $240,000 per year, less all amounts paid by
Super PC Memory for Mr. Le's automobile expenses. Mr. Le was also eligible to
receive an annual bonus equal to 0.5% of Super PC Memory's gross profit
during its 2003 and 2004 fiscal years, subject to his continued employment.
Mr. Le was also granted stock options to purchase up to 150,000 shares of the
common stock of Cambex, such options to vest, subject to his continued
employment, over four years in equal annual increments commencing on the
first anniversary of his Commencement Date. During the term of his employment
and for a period of one (1) year following the expiration or termination of
his employment, whether such termination is voluntary or involuntary, Mr. Le
shall not compete with, or own any interest in a business competitive with
the business of, Super PC Memory, or solicit customers or employees of Super
PC Memory.

We compensate our non-employee directors with an annual fee of $10,000 and a
fee of $1,000 for each meeting of the board of directors attended. In August
1998, the board of directors authorized the non-employee director
compensation to be converted from cash to shares of our common stock at a
price of $0.25 per share, or 50% of the fair market value, whichever is
greater. To date, no shares have been issued to the non-employee directors as
compensation for services as a member of the board of directors.



  Item 11.  Security Ownership of Certain Beneficial Owners and Management
            and Related Stockholder Matters.

The following table presents information regarding the beneficial ownership
of Cambex's common stock as of March 24, 2004, by:

      each person, or group of persons, known to us to be the beneficial
owner
      of more than five percent of our outstanding shares of common stock;
      each of our directors;
      each of our executive officers; and
      all current directors and officers of Cambex as a group.

Unless otherwise noted in the table, the address for each person listed in
the table is c/o Cambex Corporation, 115 Flanders Road, Westborough, MA
01581.

Name and Address         (#)Shares of Common
of Beneficial Owner    Stock Beneficially Owned(1)    Percent of Class(2)

Joseph F. Kruy (3)              6,116,176          		 31.4%

Estate of Richard E. Calvert(4) 3,480,086           		 17.6
 c/o Huntington National Bank
 1227 East Front Street
 Traverse City, MI 49685

H. Terry Snowday, Jr.(5)        2,107,496           		 11.2
 7784 East Shore Road
 Traverse City, MI 49686

SovCap Equity Partners, Ltd.(6) 1,765,939            		  8.8
 Cumberland House
 #27 Cumberland St.
 P.O. Box CB-13016
 Nassau, New Providence
 The Bahamas

22



Bruce D. Rozelle(7)             1,700,000            		  8.5
 9 Webster Circle
 Sudbury, MA 01776

Peter J. Kruy (8)               1,347,164            		  7.2

Philip C. Hankins (9)             630,220            		  3.3

C.V. Ramamoorthy                   99,156            		   *

Robert J. Spain                     -0-              		   *

Lois P. Lehberger (10)             94,500            		   *

All directors and executive
officers as a group
(5 persons) (11)                6,940,052           		 34.6


_______________
*		Represents beneficial ownership of less than 1%.

(1) Beneficial ownership for purposes of the table is determined in
accordance with the rules of the Securities and Exchange Commission and is
not necessarily indicative of beneficial ownership for any other purpose.  In
computing the number of shares beneficially owned by a person and the
percentage ownership of that person, shares of common stock issuable upon the
exercise of options and warrants held by that person that are currently
exercisable or exercisable within 60 days following March 24, 2004 (May 23,
2004) are deemed to be outstanding. These shares, however, are not considered
outstanding for purposes of computing the percentage ownership of any other
person.  Except as indicated in the footnotes, we believe that the persons
and entities named in the table have sole voting and sole investment power
with respect to all shares beneficially owned by them, subject to community
property laws where applicable.

(2) Percentage of ownership is based on 18,320,351 shares of common stock
outstanding as of March 24, 2004.

(3) Includes   860,103 shares of common stock issuable upon exercise of stock
purchase warrants issued in 1998, 1999, 2000 and 2001 exercisable within 60
days following March 24, 2004 (or by May 23, 2004).  Includes 270,200 shares
of common stock issuable upon conversion of Series A Preferred stock issued
in 2002. This number also includes 56,250 shares held by the Kruy Family
Trust, for which Mr. Kruy's wife and children are the beneficial owners.  Mr.
Kruy disclaims beneficial ownership of these shares.  Of these shares of
common stock, 979,239 are subject to the terms of a stock pledge agreement
dated as of January 18, 2000 (the "Kruy Pledge Agreement"), among Joseph F.
Kruy, Cambex and SovCap Equity Partners, Ltd., Arab Commerce Bank Ltd., and
Correllus International Ltd.  Provided that Cambex is not in default under
the series 1 bridge note purchase agreement dated as of January 18, 2000 (the
"Bridge Note Purchase Agreement"), among Cambex and SovCap Equity Partners,
Ltd., Arab Commerce Bank Ltd., and Correllus International Ltd., the series 1
bridge financing notes issued pursuant to the Bridge Note Purchase Agreement,
or the Kruy Pledge Agreement, Mr. Kruy has the right to vote the pledged
shares.

(4) Includes 1,012,000 shares issuable upon exercise of stock purchase
warrants exercisable within 60 days following March 24, 2004 (or by May 23,
2004). Also, includes 469,200 shares of common stock issuable upon conversion
of Series A Preferred stock issued in 2002.

23


(5) Includes 312,000 shares issuable upon exercise of stock purchase warrants
exercisable within 60 days following March 24, 2004 (or by May 23, 2004).
Some of these warrants are held by family members and Mr. Snowday disclaims
beneficial ownership of those shares. Includes 107,610 shares of common stock
issuable upon conversion of Series A Preferred stock issued in 2002.

(6) Consists of 1,525,939 shares issuable upon the conversion of Series B
Preferred stock and a total of 240,000 shares issuable upon exercise of two
common stock purchase warrants. Mr. Barry Herman, the President of SovCap
Equity Partners, Ltd. has both voting and investment control over these
shares. Mr. Herman disclaims beneficial ownership of these shares.

(7) Consists of 1,700,000 shares issuable upon exercise of stock purchase
warrants exercisable within 60 days following March 24, 2004 (or by May 23,
2004) held by B.A. Associates. Bruce Rozelle, a son-in-law of Joseph F. Kruy,
has both voting and investment control over B.A. Associates. Mr. Rozelle
disclaims beneficial ownership of these shares.

(8) Includes 960,164 shares owned by CyberFin Corporation, a corporation
wholly owned by Peter J. Kruy, 135,000 shares subject to currently
exercisable options, and 250,000 shares issuable upon exercise of stock
purchase warrants exercisable within 60 days following March 24, 2004 (or by
May 23, 2004). Of these shares of common stock, 730,228 are subject to
the terms of a stock pledge agreement dated as of January 18, 2000 (the
"CyberFin Pledge Agreement"), among CyberFin, Cambex, and SovCap Equity
Partners, Ltd., Arab Commerce Bank Ltd., and Correllus International Ltd.
Provided that Cambex is not in default under the Bridge Note Purchase
Agreement, the series 1 bridge financing notes, or the CyberFin
Pledge Agreement, CyberFin has the right to vote the pledged shares.

(9) Includes 390,000 shares of common stock issuable upon exercise of
stock purchase warrants issued in November 1999 and 2000 exercisable within
60 days following March 24, 2004 (or by May 23, 2004). Includes 135,220
shares of common stock issuable upon conversion of Series A Preferred stock
issued in 2002.

(10) Consists of 94,500 shares subject to options exercisable within 60 days
following March 24, 2004 (or by May 23, 2004).

(11) Includes 1,750,023 shares subject to options and warrants exercisable
within 60 days following March 24, 2004 (or by May 23, 2004) and stock
issuable upon conversion of Series A Preferred stock. See footnotes
(3)through (10) above.

Solely for the purpose of calculating the aggregate market value of voting
stock held by non-affiliates of the Company as set forth on the Cover Page,
it was assumed that only directors and executive officers on the calculation
date together with spouses and dependent children of such persons constituted
affiliates.




          Item 12.  Certain Relationships and Related Transactions.

On June 1, 1998, we borrowed approximately $1,060,000, including
approximately $460,000 from Joseph F. Kruy, our Chairman of the Board,
President and Chief Executive Officer, and $250,000 from each of H. Terry
Snowday, Jr. and Richard E. Calvert, each greater than 5% shareholders of
Cambex, in exchange for the issuance of 10% Subordinated Convertible

24


Promissory Notes (the "10% Notes").  Under the terms of the 10% Notes, which
are due on April 30, 2003, the holders may convert the 10% Notes into shares
of common stock at a conversion price of $0.22 per share.  In addition to the
10% Notes, each holder, including Messrs. Kruy, Snowday and Calvert, were
issued a Stock Purchase Warrant, the exercise of which will allow the warrant
holder to purchase one share of common stock, at $0.50 per share, for each
dollar loaned to us.  Additional Stock Purchase Warrants to purchase 96,373
shares of common stock, at an exercise price of $0.50 per share, were issued
to the holders of 10% Notes on June 1, 1999 in relation to interest due on
the June 1, 1998 notes.  We believe that the borrowing arrangements we made
with Messrs. Kruy, Snowday and Calvert and others were on terms at least as
favorable to us as we would have expected from lenders unrelated to us and
Messrs. Kruy, Snowday and Calvert. From June 1, 1999 through August 18, 1999,
we raised $210,000 in exchange for the issuance of 10% Subordinated
Convertible Promissory Notes. During this time period Joseph F. Kruy loaned
us $100,000, and Messrs. Snowday and Calvert each loaned us $55,000 of the
total amount that we borrowed.  In exchange for these loans, we issued 10%
Subordinated Convertible Promissory Notes, including 10% Subordinated
Convertible Promissory Notes to Messrs. Kruy, Snowday and Calvert.  We
believe that the borrowing arrangements we made with Messrs. Kruy, Snowday
and Calvert were on terms at least as favorable to us as we would have
expected from lenders unrelated to us and Messrs. Kruy, Snowday and Calvert.
On March 29, 2002, Joseph F. Kruy, Richard E. Calvert, H. Terry Snowday, Jr.
and a person unrelated to the company converted their 10% Subordinated
Convertible Promissory Notes and accrued interest into common stock. They
were issued 7,540,871 shares of common stock at $0.22 per share. As of
December 31, 2002 none of the 10% Notes remained outstanding.

On November 9, 1998, we entered into a Loan and Security Agreement with
B.A. Associates, Inc. (BAA), which is a corporation owned by Bruce Rozelle, a
son-in-law of Joseph F. Kruy, our Chairman, President and Chief Executive
Officer.  This Loan and Security Agreement, as amended by a First Amendment
to Loan and Security Agreement dated March 15, 1999, and further amended
through December 27, 2001 (as so amended, the "BAA Loan Agreement"), allows
us to borrow up to $1,100,000, which is the maximum that may be outstanding
at any one time. Under the BAA Loan Agreement, we granted BAA a first
priority security interest in all of our accounts, instruments, documents,
general intangibles, equipment, inventory, and proceeds of any of the
foregoing.  We are obligated to pay all amounts that we receive from
collections of our accounts receivable to BAA not less frequently than each
week until the outstanding loan amount plus interest, which accrues at a 12%
annual rate, is fully paid.  Under the terms of the BAA Loan Agreement,
originally BAA received a warrant for the purchase of 1.3 million shares of
common stock, at an exercise price of $0.22 per share.  In consideration for
increasing the amount of available funds, the Company agreed to issue an
additional warrant to BAA for the purchase of 400,000 shares of our common
stock, at an exercise price of $1.25 per share.  We believe that the
borrowing arrangements we made with BAA were on terms at least as favorable
to us as we would have expected from lenders unrelated to us and relatives of
Mr. Kruy. If we were to default under the terms of the Loan and Security
Agreement and as a result BAA demanded immediate repayment of the amounts
owed to it under the Loan and Security Agreement, we would be unable to
satisfy the obligation.

In November 1999, we borrowed $125,000 from Joseph F. Kruy and $125,000 from
Philip C. Hankins, a member of our board of directors, and $100,000 from each
of Messrs. Snowday and Calvert.  We also entered into separate Loan and
Security Agreements with each of Messrs. Kruy, Hankins, Calvert and Snowday.
At that time, we entered into one other Loan and Security Agreement with a
person unrelated to the company (the "Other 1999 Lender") pursuant to which
we borrowed an additional $100,000.  Our payment obligations under these Loan
and Security Agreements (the "1999 Loan Agreements") are evidenced by 12%

25


Notes due in November 2001.  Under the 1999 Loan Agreements, we granted each
of Messrs. Kruy, Hankins, Snowday and Calvert and the Other 1999 Lender a
first priority security interest in all of our accounts, instruments,
documents, general intangibles, equipment, inventory, and proceeds of any of
the foregoing.  Originally, under the terms of the 1999 Loan Agreements,
Messrs. Kruy, Hankins, Calvert and Snowday and the Other 1999 Lender received
a warrant to purchase up two shares of common stock for each dollar loaned to
us, at an exercise price of $2.00 per share.  When we extended the term of
the loans in November 2000, the Company agreed to issue additional warrants
to Messrs. Kruy, Hankins, Snowday and Calvert and the Other 1999 Lender to
purchase one share of our common stock for each dollar loaned to us at an
exercise price of $1.25 per share.  We believe that the borrowing
arrangements we made with Mr. Kruy and others were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.  In
March through May 2001, we borrowed $50,000 from Joseph F. Kruy and $300,000
from Richard E. Calvert.  We also entered into separate Loan and Security
Agreements with Messrs. Kruy and Calvert. Our payment obligations under these
Loan and Security Agreements (the "2001 Loan Agreements") are evidenced by
12% Notes due in March through May 2002.  Under the 2001 Loan Agreements, we
granted each of Messrs. Kruy and Calvert a first priority security interest
in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing.  Under the terms
of the 2001 Loan Agreements, Messrs. Kruy and Calvert received a warrant to
purchase up to two shares of common stock for each dollar loaned to us, at an
exercise price of $0.50 per share. We believe that the borrowing arrangements
we made with Mr. Kruy and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us. In July through
September 2001, we borrowed $100,000 from Joseph F. Kruy and $100,000 from
Richard E. Calvert.  We also entered into separate Loan and Security
Agreements with Messrs. Kruy and Calvert. Our payment obligations under these
Loan and Security Agreements (the "July through September 2001 Loan
Agreements") are evidenced by 12% Notes due in January 2002.  Under the July
through September 2001 Loan Agreements, we granted each of Messrs. Kruy and
Calvert a first priority security interest in all of our accounts,
instruments, documents, general intangibles, equipment, inventory, and
proceeds of any of the foregoing.  Under the terms of the July through
September 2001 Loan Agreements, Messrs. Kruy and Calvert received a warrant
to purchase up one share of common stock for each dollar loaned to us, at an
exercise price of $0.25 per share. We believe that the borrowing arrangements
we made with Mr. Kruy and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us. In April through July
2002, we borrowed $125,000 from Joseph F. Kruy and $50,000 from Richard E.
Calvert.  We also entered into separate Loan and Security Agreements with
Messrs. Kruy and Calvert. Our payment obligations under these Loan and
Security Agreements (the "2002 Loan Agreements") are evidenced by 12% Notes
due in April through July 2003.  Under the 2002 Loan Agreements, we granted
each of Messrs. Kruy and Calvert a first priority security interest in all of
our accounts, instruments, documents, general intangibles, equipment,
inventory, and proceeds of any of the foregoing.  Under the terms of the 2002
Loan Agreements, Messrs. Kruy and Calvert received a warrant to purchase up
one share of common stock for each dollar loaned to us, at an exercise price
of $0.25 per share. We believe that the borrowing arrangements we made with
Mr. Kruy and others were on terms at least as favorable to us as we would
have expected from lenders unrelated to us. On June 28, 2002, in transactions
exempt under Section 4(2) of the Securities Act, Joseph F. Kruy, Richard E.
Calvert, H. Terry Snowday, Jr., and Philip Hankins converted Loan and
Security Agreements with an aggregate principal amount of $1,000,000 plus
accrued interest into Series A Convertible Preferred stock. They were issued
98,223 shares of Series A Convertible Preferred stock. The Series A
Convertible Preferred shares have a dividend rate of 12%. The purchase price
per share of the Series A Convertible Preferred stock was $12.50. The Series

26


A Preferred stock is convertible into shares of common stock, at any time at
the holder's option. The holders of the 98,223 shares of Series A Preferred
stock could convert their preferred shares into 982,230 shares of common
stock. In June through August 2003, we borrowed $200,000 from Joseph F. Kruy.
We also entered into Loan and Security Agreements with Mr. Kruy. Our payment
obligations under these Loan and Security Agreements (the "2003 Loan
Agreements") are evidenced by 12% Notes due in June through August 2004.
Under the 2003 Loan Agreements, we granted Mr. Kruy a first priority security
interest in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing. We believe that
the borrowing arrangements we made with Mr. Kruy were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.  As
of December 31, 2003, the balance outstanding under Loan and Security
Agreements is $475,000 of which $325,000 is owed to Joseph F. Kruy and
$50,000 is owed to Richard E. Calvert.


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

       (a)   The following documents are filed as part of this report:

             (1)   The financial statements listed in the index to
                   financial statements appearing at page F-1 of this
                   report, which index is incorporated in this item by
                   reference.

             (2)   See the exhibit index following on page A-1.


        (b)  On February 5, 2004, we filed a report on Form 8-K regarding
Super PC Memory, Inc., a wholly-owned subsidiary of Cambex Corporation,
entering into an agreement with Silicon Mountain Memory Incorporated, a
privately-held company, pursuant to which Silicon Mountain Memory
Incorporated purchased a portion of Super PC Memory's customer information
and rights to do business with said customers with respect to Wintel
products.


                Item 14. Principal Accountant Fees and Services.

Audit Fees

The aggregate fees we agreed to pay Sullivan Bille, P.C. for professional
services rendered for the audit of the Company's annual financial statements
on Form 10-KSB and the review of financial statements included in Form 10-QSB
for the year ended December 31, 2003 is up to $58,400 and for the year ended
December 31, 2002 was $60,000.

Audit Related Fees

There were no fees billed in 2003 and 2002 for assurance and related services
provided by the Company's principal accountants.

Tax Fees

During 2003, $1500 was billed for tax compliance and during 2002, there were
no fees billed for tax compliance, tax advice, and tax planning professional
services rendered by the Company's principal accountants.

All Other Fees

There were no fees billed in 2003 and 2002 for products and other services
provided by the Company's principal accountants.

27


The Audit Committee approved 100% of the fees paid to the principal
accountants for audit-related, tax and other fees. The Audit Committee pre-
approves all non-audit services to be provided by the auditor in accordance
with the Audit Committee Charter.

There were no hours expended on the principal accountant's engagement to
audit the Company's financial statements for 2003 that were attributed to
work performed by persons other than the principal accountant's full time,
permanent employees.

28


                                EXHIBIT INDEX

The following exhibits are filed herewith or incorporated by reference
herein.

Exhibit

3.1	Restated Articles of Organization of Cambex Corporation (included as
Exhibit 3.1 to the Company's Registration Statement on Form SB-2,
declared effective with the Commission on November 7, 2000, Reg. No.
333-43294, and incorporated herein by reference).

3.2	Restated By-laws of Cambex Corporation (included as Exhibit 3.2 to the
Company's Registration Statement on Form SB-2, declared effective with
the Commission on November 7, 2000, Reg. No. 333-43294, and
incorporated herein by reference).

3.3 Series A Preferred Stock Certificate of Designations (included as Exhibit
10.37 to the Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 2002 and incorporated herein by reference).

3.4 Series B Preferred Stock Certificate of Designations (included as Exhibit
10.39 to the Company's Quarterly Report on Form 10-QSB for the quarter ended
June 30, 2002 and incorporated herein by reference).

4.1	Specimen Stock Certificate (included as Exhibit 4.1 to the Company's
Registration Statement on Form SB-2, declared effective with the
Commission on November 7, 2000, Reg. No. 333-43294, and incorporated
herein by reference).

4.2	Registration Rights Agreement among the Company and the Purchasers
identified therein (the "Sovereign Purchasers") dated as of January 18,
2000 (included as Exhibit 4.1 to the Company's Amendment to Quarterly
Report on Form 10-Q/A for the quarter ended April 1, 2000, and
incorporated herein by reference).

4.3	Registration Rights Agreement between the Company and SovCap Equity
Partners, Ltd. dated as of June 28, 2002 (included as Exhibit 4.3 to the
Company's Registration Statement on Form SB-2, filed with the Commission on
November 25, 2002 and incorporated herein by reference).

10.1	Employment Agreement between Joseph F. Kruy and the Company,
dated as of November 18, 1994 (included as Exhibit 10.1 to the
Company's Amendment to Quarterly Report on Form 10-Q/A for the quarter
ended April 1, 2000, and incorporated herein by reference).

10.2	Incentive Bonus Plan (included as Exhibit 10.2 to the Company's
Registration Statement on Form SB-2, declared effective with the
Commission on November 7, 2000, Reg. No. 333-43294, and incorporated
herein by reference).

10.3	1987 Combination Stock Option Plan (included as Exhibit 10.8 to
the Company's Annual Report on Form 10-K for the fiscal year ended
August 31, 1987, and incorporated herein by reference).

                                       A-1
29


                           EXHIBIT INDEX(CONTINUED)

10.4	2000 Equity Incentive Plan (included as Exhibit 10.12 to the
Company's Annual Report on Form 10-K for the fiscal year ended December
31, 1999, and incorporated herein by reference).

10.5	Series 1 Bridge Note Purchase Agreement among the Company and the
Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit
10.7 to the Company's Amendment to Quarterly Report on Form 10-Q/A for
the quarter ended April 1, 2000, and incorporated herein by reference).

10.6	Escrow Agreement among the Company, the Sovereign Purchasers and
Suntrust Bank, Atlanta dated as of January 6, 2000 (included as Exhibit
10.8 to the Company's Amendment to Quarterly Report on Form 10-Q/A for
the quarter ended April 1, 2000, and incorporated herein by reference).

10.7	Placement Agent Agreement between the Company and Sovereign
Capital Advisors, LLC ("Sovereign Advisors") dated as of January 18, 2000
(included as Exhibit 10.9 to the Company's Amendment to Quarterly
Report on Form 10-Q/A for the quarter ended April 1, 2000, and
incorporated herein by reference).

10.8	Guaranty Agreement among Joseph F. Kruy, the Company and the
Sovereign Purchasers dated as of January 18, 2000. (included as Exhibit 10.10
to the Company's Amendment to Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).

10.9	Guaranty Agreement among CyberFin Corporation, the Company and
the Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit
10.11 to the Company's Amendment to Quarterly Report on Form 10-Q/A for
the quarter ended April 1, 2000, and incorporated herein by reference).

10.10	Stock Pledge Agreement by Joseph F. Kruy in favor of the
Sovereign Purchasers dated as of January 18, 2000  (included as Exhibit
10.12 to the Company's Amendment to the Quarterly Report on Form 10-Q/A
for the quarter ended April 1, 2000, and incorporated herein by
reference).

10.11	Stock Pledge Agreement by CyberFin Corporation in favor of the
Sovereign Purchasers dated as of January 18, 2000 (included as Exhibit
10.13 to the Company's Amendment to the Quarterly Report on Form 10-Q/A
for the quarter ended April 1, 2000, and incorporated herein by
reference).

10.12	Series 1 Bridge Financing Note in favor of SovCap Equity
Partners, Ltd. dated as of January 18, 2000 (included as Exhibit 10.14
to the Company's Amendment to the Quarterly Report on Form 10-Q/A for
the quarter ended April 1, 2000, and incorporated herein by reference).

10.13	Series 1 Bridge Financing Note in favor of Correllus
International, Ltd. dated as of January 18, 2000 (included as Exhibit
10.16 to the Company's Amendment to the Quarterly Report on Form 10-Q/A
for the quarter ended April 1, 2000, and incorporated herein by
reference).

10.14	Common Stock Purchase Warrant in favor of SovCap Equity Partners,
Ltd. dated as of January 18, 2000 (included as Exhibit 10.18 to the
Company's Amendment to the Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).
                                    A-2

30

                          EXHIBIT INDEX(CONTINUED)

10.15	Common Stock Purchase Warrant in favor of Correllus
International, Ltd. dated as of January 18, 2000 (included as Exhibit
10.19 to the Company's Amendment to the Quarterly Report on Form 10-Q/A
for the quarter ended April 1, 2000, and incorporated herein by
reference).

10.16	Sovereign Warrant Agreement between the Company and Sovereign
Advisors dated as of January 18, 2000 (included as Exhibit 10.20 to the
Company's Amendment to the Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).

10.17	Warrant Certificate registered in the name of Sovereign Advisors
dated January 18, 2000 (included as Exhibit 10.21 to the Company's
Amendment to the Quarterly Report on Form 10-Q/A for the quarter ended
April 1, 2000, and incorporated herein by reference).

10.18	Series 1 Bridge Financing Note in favor of Arab Commerce Bank
Ltd. dated as of February 9, 2000 (included as Exhibit 10.22 to the
Company's Amendment to the Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).

10.19	Common Stock Purchase Warrant in favor of Arab Commerce Bank Ltd.
dated as of February 9, 2000 (included as Exhibit 10.24 to the
Company's Amendment to the Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).

10.20	Series 1 Bridge Financing Note in favor of SovCap Equity
Partners, Ltd. dated as of February 9, 2000 (included as Exhibit 10.25
to the Company's Amendment to the Quarterly Report on Form 10-Q/A for
the quarter ended April 1, 2000, and incorporated herein by reference).

10.21	Common Stock Purchase Warrant in favor of SovCap Equity Partners,
Ltd. dated as of February 9, 2000 (included as Exhibit 10.27 to the
Company's Amendment to the Quarterly Report on Form 10-Q/A for the
quarter ended April 1, 2000, and incorporated herein by reference).

10.22	Loan and Security Agreement, as amended, by and between the
Company and BA Associates, Inc. (included as Exhibit 10.27 to the Company's
Registration Statement on Form SB-2 filed with the Commission on November 29,
2000, Reg. No. 333-50936, and incorporated herein by reference.)

10.23 Fifth Amendment to Loan and Security Agreement, as amended, by and
between the Company and B.A. Associates, Inc., dated as of December 27, 2000
(included as Exhibit 10.28 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 2000, and incorporated herein by
reference).

10.24 Form of Warrant Certificate between the Company and B.A. Associates,
Inc. (included as Exhibit 10.29 to the Company's Annual Report on Form 10-K
for the fiscal year ended December 31, 2000, and incorporated herein by
reference).

10.25 Sixth Amendment to Loan and Security Agreement, as amended, by and
between the Company and B.A. Associates, Inc., dated as of December 27, 2001
(included as Exhibit 10.30 to the Company's Annual Report on Form 10-KSB
for the fiscal year ended December 31, 2001 and incorporated herein by
reference).

                                 A-3
31


                              EXHIBIT INDEX(CONTINUED)
10.26 Stock Purchase and Sale Agreement dated as of January 31, 2002 by
and among Cambex Corporation, Super PC Memory, Inc., Son T. Pham,
Simon Le and Richard G. Schaefer (included as Exhibit 2.1 to the Company's
Current Report on Form 8-K dated March 27, 2002, and incorporated herein by
reference).

10.27 Amendment to the Stock Purchase and Sale Agreement dated as of July 29,
2002 by and among Cambex Corporation, Super PC Memory, Inc., Son T. Pham,
Simon Le and Richard G. Schaefer (included as Exhibit 10.32 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and
incorporated herein by reference).

10.28 Securities Exchange Agreement dated as of June 28, 2002 by and between
the Company and Richard Calvert (included as Exhibit 10.33 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and
incorporated herein by reference).

10.29 Securities Exchange Agreement dated as of June 28, 2002 by and between
the Company and H. Terry Snowday (included as Exhibit 10.34 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and
incorporated herein by reference).

10.30 Securities Exchange Agreement dated as of June 28, 2002 by and between
the Company and The Hankins Family Trust (included as Exhibit 10.35 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002
and incorporated herein by reference).

10.31 Securities Exchange Agreement dated as of June 28, 2002 by and between
the Company and Joseph Kruy (included as Exhibit 10.36 to the Company's
Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002 and
incorporated herein by reference).

10.32 Securities Exchange Agreement dated as of June 28, 2002 by and between
the Company and SovCap Equity Partners, Ltd (included as Exhibit 10.38 to the
Company's Quarterly Report on Form 10-QSB for the quarter ended June 30, 2002
and incorporated herein by reference).

10.33 Lease by and between the Company and Bertech Flanders, LLC dated as of
April 24, 2003 (included as Exhibit 10.33 to the Company's Quarterly Report
on 10QSB for the quarter ended March 31, 2003, and incorporated herein by
reference).

10.34 Purchase Agreement dated January 30, 2004 by and between Silicon
Mountain Memory Incorporated and Super PC Memory, Inc. (included as Exhibit
99.2 to the Company's Current Report on Form 8-K filed on February 5, 2004
and incorporated herein by reference).

21.1	List of subsidiaries of the Company.

31.1 Certification as required by section 302 of the Sarbanes-Oxley Act of
2002

32.1 Certification as required by section 906 of the Sarbanes-Oxley Act of
2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code).

99.1 Consent of Sullivan Bille, P.C.

99.2 Risk Factors.                                    A-4

32



                     CAMBEX CORPORATION AND SUBSIDIARIES


                 (Information required by Part II, Item 7 and
                        Part III, Item 13 of Form 10-KSB)


                             FINANCIAL STATEMENTS

                                                                Page

Report of Independent Public Accountants                        F - 2

Consolidated Balance Sheets - December 31, 2003 and 2002        F - 3

Consolidated Statements of Operations for the Years
       Ended December 31, 2003 and December 31, 2002            F - 5

Consolidated Statements of Stockholders' Investment
       for the Years Ended December 31, 2003 and
       December 31, 2002                                        F - 6

Consolidated Statements of Cash Flows for the
       Years Ended December 31, 2003 and December 31, 2002      F - 7

Notes to Consolidated Financial Statements                      F - 8







                                                               F-1

33


                 REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Stockholders of Cambex Corporation

We have audited the accompanying consolidated balance sheet of Cambex
Corporation (a Massachusetts corporation) and subsidiaries as of December 31,
2003 and 2002, and the related consolidated statements of operations,
stockholders' investment and cash flows for the years then ended.  These
consolidated financial statements are the responsibility of the Company's
management.  Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

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

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Cambex
Corporation and subsidiaries as of December 31, 2003 and 2002 and the results
of their operations and their cash flows for the years then ended in
conformity with accounting principles generally accepted in the United States
of America.

The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern.  As discussed in
Note 1 to the consolidated financial statements, the Company has suffered
recurring losses from operations that raises substantial doubt about its
ability to continue as a going concern.  Management's plans in regard to
these matters are also described in Note 1.  The consolidated financial
statements do not include any adjustments relating to the recoverability and
classification of asset carrying amounts or the amount and classification of
liabilities that might result should the Company be unable to continue as a
going concern.




                                 SULLIVAN BILLE, P.C.
                                 CERTIFIED PUBLIC ACCOUNTANTS

Tewksbury, Massachusetts
March 12, 2004





                                                    F-2

34


                       CAMBEX CORPORATION AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS
                       DECEMBER 31, 2003 AND DECEMBER 31, 2002

                                      ASSETS

                                                DECEMBER 31,   DECEMBER 31,
                                                     2003          2002


CURRENT ASSETS:

   CASH AND CASH EQUIVALENTS                    $   268,807   $   544,911

   ACCOUNTS RECEIVABLE,
   Less Reserves of $120,000
   in 2003 and 2002                                 765,931     1,334,374


   INVENTORIES                                      316,514       364,851

   PREPAID EXPENSES                                 111,322        68,953

      TOTAL CURRENT ASSETS                      $ 1,462,574   $ 2,313,089

PROPERTY AND EQUIPMENT, at cost:
   MACHINERY AND EQUIPMENT                      $   436,148   $ 3,072,567
   FURNITURE AND FIXTURES                            14,186       162,625
   LEASEHOLD IMPROVEMENTS                              -          602,092
                                                $   450,334   $ 3,837,284

 LESS - ACCUMULATED DEPRECIATION
             AND AMORTIZATION                       441,635     3,812,872

 NET PROPERTY AND EQUIPMENT                     $     8,699   $    24,412

OTHER ASSETS
      GOODWILL                                  $   257,372   $   257,372
      OTHER                                          37,830        37,830

        TOTAL OTHER ASSETS                      $   295,202   $   295,202

  TOTAL ASSETS                                  $ 1,766,475   $ 2,632,703

The accompanying notes are an integral part of these consolidated financial
statements.


                                       F-3
35



                          CONSOLIDATED BALANCE SHEETS

                     DECEMBER 31, 2003 AND DECEMBER 31, 2002

                    LIABILITIES AND STOCKHOLDERS' INVESTMENT

                                                DECEMBER 31,     DECEMBER 31,
                                                    2003             2002

CURRENT LIABILITIES:
LINE OF CREDIT                                $     525,520  $     802,097
LOAN AGREEMENT                                    1,033,016      1,032,869
NOTES PAYABLE                                       784,669        425,000
ACCOUNTS PAYABLE                                    843,775      1,560,147
OBLIGATIONS FOR TRADE-IN MEMORY                     240,000        240,000
OTHER LIABILITIES                                 1,815,805      2,543,181
ACCRUED EXPENSES                                  1,992,173      1,616,864

 TOTAL CURRENT LIABILITIES                    $   7,234,958  $   8,220,158


STOCKHOLDERS' INVESTMENT:
PREFERRED STOCK, $ 1.00 PAR VALUE PER SHARE
AUTHORIZED - 3,000,000 SHARES
 SERIES A - ISSUED -  98,223 shares           $      98,223  $      98,223
 SERIES B - ISSUED - 147,240 shares                 147,240        147,240

COMMON STOCK, $ .10 PAR VALUE PER SHARE
AUTHORIZED - 25,000,000 SHARES
 ISSUED - 19,865,609 shares                       1,986,561      1,986,561
CAPITAL IN EXCESS OF PAR VALUE                   20,498,545     20,498,545
ACCUMULATED OTHER
   COMPREHENSIVE INCOME                             100,528        101,774
RETAINED EARNINGS (DEFICIT)                     (27,410,609)   (27,530,827)
LESS - COST OF SHARES OF COMMON STOCK
       HELD IN TREASURY - 1,545,258 shares         (888,971)      (888,971)

TOTAL STOCKHOLDERS' INVESTMENT                $  (5,468,483) $  (5,587,455)
TOTAL LIABILITIES AND
 STOCKHOLDERS' INVESTMENT                     $   1,766,475  $   2,632,703

The accompanying notes are an integral part of these consolidated financial
statements.

                                   F-4

36


                      CAMBEX CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF OPERATIONS
            FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002


                                                Year Ended    Year Ended
                                               December 31,  December 31,
                                                    2003         2002


REVENUES                                         $ 9,527,643 $14,345,060
COST OF SALES                                      5,672,534  10,555,258

Gross profit                                     $ 3,855,109 $ 3,789,802

OPERATING EXPENSES:
   Research and development                      $   660,075 $   914,188
   Selling                                         2,365,326   2,978,152
   General and administrative                        555,980     866,970
   Total operating expenses                      $ 3,581,381 $ 4,759,310

OPERATING INCOME (LOSS)                          $   273,728 $(  969,508)

OTHER INCOME (EXPENSE)                              (153,510) (  507,629)

INCOME (LOSS) BEFORE INCOME TAXES                $   120,218 $(1,477,137)
   Provision for income taxes                           -           -

NET INCOME (LOSS)                                $   120,218 $(1,477,137)
OTHER COMPREHENSIVE INCOME, NET OF TAX:
   Foreign currency translation adjustments       (    1,246) (      903)

TOTAL COMPREHENSIVE INCOME (LOSS)                $   118,972 $(1,478,040)

BASIC AND DILUTED INCOME(LOSS) PER COMMON SHARE  $      0.01 $     (0.09)

Weighted Average Common Shares Outstanding        18,320,000  16,320,000
Weighted Average Common and Common
Equivalent Shares Outstanding                     18,320,000  16,320,000

The accompanying notes are an integral part of these consolidated financial
statements.

                                    F-5
37


                         CAMBEX CORPORATION AND SUBSIDIARIES
               CONSOLIDATED STATEMENTS OF STOCKHOLDERS' INVESTMENT
               FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

                  Common Stock  Capital in  Accumulated  Retained   Cost of
                     $.10       Excess of     Other      Earnings Shares of
                   Par Value    Par Value  Comprehensive (Deficit)Common
Stock
                                               Income                Held in
                                                                    Treasury

BALANCE AT
 DECEMBER 31, 2001    $1,148,474 $16,268,677 $102,677 $(26,053,690)$(888,971)

ADD:
Net loss                    -           -        -     ( 1,477,137)     -
Conversion of long
 term debt               754,087     904,905     -            -         -
Acquisition of business   84,000     302,800     -            -         -
Translation adjustment      -           -        (903)        -         -
Conversion of notes
 Payable                    -      3,022,163     -            -         -

BALANCE AT
 DECEMBER 31, 2002    $1,986,561 $20,498,545 $101,774 $(27,530,827)$(888,971)

ADD:
Net income                  -           -        -         120,218      -
Translation adjustment      -           -      (1,246)        -         -

BALANCE AT
 DECEMBER 31, 2003    $1,986,561 $20,498,545 $100,528 $(27,410,609)$(888,971)



                        Series A             Series B
                      Preferred Stock    Preferred Stock
                      $1.00 Par Value    $1.00 Par Value

BALANCE AT
 DECEMBER 31, 2001      $   -              $    -

Conversion of notes
 Payable                  98,223             147,240

BALANCE AT
 DECEMBER 31, 2002
 AND DECEMBER 31, 2003  $ 98,223           $ 147,240



The accompanying notes are an integral part of these consolidated financial
statements.

                                         F-6

38

                       CAMBEX CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOW
               FOR THE YEARS ENDED DECEMBER 31, 2003 AND DECEMBER 31, 2002

	                                           Year Ended    Year Ended
                                                 December 31,  December 31,
                                                    2003         2002
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)                                  $   120,218 $(1,477,137)
Adjustments to reconcile net income(loss) to net
cash provided by(used in)operating activities:
 Depreciation                                      $    15,713 $    40,686
 Amortization of prepaid expenses                        9,550       4,048
Change in assets and liabilities:
  Accounts receivable                                  568,443   1,590,204
  Inventory                                             48,337   1,077,854
  Prepaid expenses                                  (   51,919)      1,900
  Accounts payable                                  (  496,703) (  754,479)
  Accrued expenses                                     375,309     678,897
  Other liabilities                                 (  727,376) (  171,226)
     Total adjustments                             $(  258,646)$ 2,467,884
Net cash provided by(used in) operating activities $(  138,428)$   990,747

CASH FLOWS FROM INVESTING ACTIVITIES:
 Purchases of equipment, net                       $      -    $      -
 Net cash provided by(used in)investing activities $      -    $      -

CASH FLOWS FROM FINANCING ACTIVITIES:
 Increase(decrease) in notes payable               $   140,000 $   175,000
 Net borrowings(repayments) under line of credit    (  276,577) (  804,384)
 Net borrowings(repayments) under loan agreement           147  (   25,122)
 Net cash provided by
 (used in) financing activities                    $(  136,430)$(  654,506)
 Effect of exchange rate changes on cash            (    1,246) (      903)
 Net increase (decrease) in
  cash and cash equivalents                        $(  276,104)$   335,338
 Cash and cash equivalents at beginning of year        544,911     209,573
 Cash and cash equivalents at end of year          $   268,807 $   544,911

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
  Interest                                         $    73,010 $   117,371
  Income Taxes                                            -           -
Non-cash financing activity:
 Accounts payable converted into notes payable     $   216,669 $      -
 Conversion of long term debt and accrued interest
 into common stock                                        -      1,658,992
 Net assets of business acquired and increase
 in goodwill financed via issuance of common stock        -        511,800
 Conversion of notes payable and accrued interest
  into preferred stock, net of deferred
  offering costs                                   $      -    $ 3,267,626

The accompanying notes are an integral part of these consolidated financial
statements.
                                                                F-7

39



                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         December 31, 2003 and 2002

(1)   Liquidity


As further described in Note 12, from June 1, 1998 through August 18, 1999,
we raised $1,270,000 in cash from the issuance of 10% Subordinated
Convertible Promissory Notes. We also have a loan and security agreement
under which we may borrow up to $1,100,000 outstanding at any one time of
which $1,033,016 was outstanding as of December 31, 2003. During 1999, we
raised $550,000 in cash from the issuance of notes payable with interest at
12% per annum and maturities of November, 2001. During 2000, we raised
$2,000,000 in cash from the issuance of series 1 bridge financing notes that
matured in the third quarter of 2000. During 2001, we raised $550,000 in cash
from the issuance of notes payable with interest at 12% per annum. During
2002, we raised $175,000 in cash from the issuance of notes payable with
interest at 12% per annum. During 2003, we raised $200,000 in cash from the
issuance of notes payable with interest at 12% per annum.

We have suffered recurring losses from operations that raise substantial
doubt about our ability to continue as a going concern. Our working capital
deficit is a significant threat to our ability to continue as a going
concern. Our ability to continue as a going concern is dependent upon several
factors including, but not limited to, our ability to generate revenues and
gross profits in significantly greater amounts and our ability to raise
additional capital. The additional financing, if obtained, will be used to
fund our continuing operations, particularly in development, sales and
marketing. Our management continues to work to establish new strategic
alliances that it believes will result in increased revenues through the sale
of a greater volume of products. These consolidated financial statements do
not include any adjustments relating to the recoverability and classification
of asset carrying amounts or the amount and classification of liabilities
that might result should we be unable to continue as a going concern.

We need additional capital and additional financing may not be available. We
believe that the combination of current existing cash, available borrowing
capacity and our ability to obtain additional long-term indebtedness may not
be adequate to finance our operations for our current activities and
foreseeable future activities. Currently, our cash burn rate from operations
is approximately $40,000 per month or $480,000 per year at current sales
levels. For each $100,000 reduction in sales per month, our cash burn rate
would increase by approximately $28,000 per month. Conversely, for each
$100,000 increase in sales per month, our cash burn rate would decrease by
approximately $28,000 per month. These estimates may change based on product
mix. The burn rate is an estimate. The actual burn rate may differ materially
as a result of a number of factors, risks and uncertainties that are
described herein. We are trying to raise additional capital and if we are
unable to raise additional capital, we may not be able to meet our
anticipated working capital requirements.



                                                  F-8
40


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         December 31, 2003 and 2002

                                 (Continued)
(1)Liquidity(continued)

We are attempting to raise additional capital to cover the burn rate not
covered by incremental gross profit. If sales and gross profit do not
increase or capital cannot be raised to cover the current burn rate, we
intend to reduce operating expenses as much as practicable to continue
operations until balance is established.

If we are not successful in raising additional capital or increasing our
sales to adequate levels, we will not be able to continue our current level
of operations and there is substantial doubt as to our ability to continue as
a going concern. There can be no assurance that we will be successful in
raising such additional capital at all or on terms commercially acceptable to
us or our shareholders.

In addition, the sale of equity securities could result in the dilution of
the percentage ownership of existing shareholders and could also adversely
affect the market price of our common stock.

(2)   Summary of Significant Accounting Policies

Principles of Consolidation

The accompanying consolidated financial statements include the accounts of
Cambex Corporation and its wholly-owned subsidiaries.  All material
intercompany transactions and balances have been eliminated in consolidation.

Revenue Recognition

We manufacture equipment for sale or lease.  We follow the guidance in Staff
Accounting Bulletin ("SAB") 104 in applying generally accepted accounting
principles to revenue recognition in consolidated financial statements. We
include items in revenue when the following criteria are met: persuasive
evidence of an arrangement exists, delivery has occurred or services have
been rendered, our price to the buyer is fixed or determinable and
collectibility is reasonably assured. The "obligations for trade-in memory"
were determined in each contract when we took mainframe memory in trade when
we installed our mainframe memory in our customers' computers. The amount
remaining in this account is an obligation for product credit which was
established when mainframe memory was traded-in for the purchase of memory.

Inventories

Inventories, which include materials, labor and manufacturing overhead, are
stated at the lower of cost (first-in, first-out) or market and consist of
the following:
                                         December 31,       December 31,
                                             2003               2002

     Raw materials                     $   238,092        $   215,693
     Work-in-process                        42,866             69,412
     Finished goods                         35,556             79,746
            Total                      $   316,514        $   364,851
                                                   F-9

41


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    December 31, 2003 and 2002

                                 (Continued)


(2)   Summary of Significant Accounting Policies - Continued


Property and Equipment

We provide for depreciation and amortization on a straight- line basis to
amortize the cost of property and equipment over their estimated useful lives
as follows:

             Leasehold improvements          2-10 Years
             Machinery and equipment         3- 8 Years
             Furniture and fixtures          3- 8 Years

Maintenance and repair items are charged to expense when incurred; renewals
or betterments are capitalized.

If property is sold or otherwise disposed of, our policy is to remove the
related cost and accumulated depreciation from the accounts and to include
any resulting gain or loss in income.

Depreciation expense of $15,713 and $40,686, was recorded for the periods
ended December 31, 2003 and December 31, 2002, respectively.

Net Income (Loss) Per Common Share

Basic income (loss) per share amounts are based on the weighted average
number of common shares outstanding during each year. Diluted income (loss)
per share amounts are based on the weighted average number of common shares
and common share equivalents outstanding during each year to the extent such
equivalents have a dilutive effect on the income (loss) per share.

For the years ended December 31, 2003 and 2002, common share equivalents
(options, warrants and convertible preferred stock) were not included in
diluted income (loss) per share because the inclusion of the common stock
equivalents would have had an antidilutive effect on the computation of
diluted income (loss) per share.

Cash and Cash Equivalents

Cash and cash equivalents are recorded at cost which approximates market
value.  Cash equivalents include certificates of deposit, government
securities and money market instruments purchased with maturities of less
than three months.

Stock Options

Proceeds from the sale of newly issued stock to employees under our stock
option plans are credited to common stock to the extent of par value and the
excess to capital in excess of par value.

                                     F-10
42

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    December 31, 2003 and 2002

                                 (Continued)

(2)   Summary of Significant Accounting Policies - Continued

Disclosures about the Fair Value of Financial Instruments

Our financial instruments consist mainly of cash, cash equivalents, accounts
receivable, accounts payable, notes payable, a line of credit and a revolving
credit agreement.  The carrying amounts of these financial instruments
approximate their fair value due to the short-term nature of these
instruments.

Use of Estimates

The preparation of consolidated financial statements in conformity with
generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosures of contingent assets and liabilities as of the
date of the consolidated financial statements, and the reported amounts of
income and expenses during the reporting periods.  Actual results could
differ from those estimates.

Goodwill and Other Intangible Assets

In accordance with Financial Accounting Standards (SFAS) No. 142, goodwill
cannot be amortized. However, a test for impairment must be performed
annually, or immediately, if events or changes in circumstances indicate that
such an impairment could exist. The goodwill impairment test has two steps.
We identify potential impairments by comparing the fair value of the
reporting unit with its book value, including goodwill. If the fair value
exceeds the book value, goodwill is considered not impaired and the second
step of the impairment test is not necessary. If the book value exceeds its
fair value, the second step calculates the possible impairment loss by
comparing the implied fair value of goodwill with the carrying amount. If the
implied goodwill is less than the carrying amount, a write-down is recorded.

Foreign Currency Translation

The financial statements of the Company's foreign subsidiaries are generally
measured using the local currency as the functional currency. Net exchange
gains or losses resulting from the translation of the financial statements of
foreign operations are recorded as a separate component of stockholders'
investment as other comprehensive income in accordance with SFAS No. 130,
"Reporting Comprehensive Income".

Segment Reporting

SFAS No. 131, "Disclosure about Segments of an Enterprise and Related
Information," became effective for periods beginning after December 31, 1997.
This statement requires the presentment of information about the identifiable
components comprising an enterprise's business activities.

We have determined that there are no separately reportable operating segments
and, therefore, do not present separate reporting segments in the
consolidated financial statements.
                                               F-11
43


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    December 31, 2003 and 2002

                                 (Continued)

(2)   Summary of Significant Accounting Policies - Continued

Stock-Based Compensation

SFAS No. 123, "Accounting for Stock-Based Compensation", encourages but does
not require companies to record compensation cost for stock-based employee
compensation plans at fair value.  We have chosen to continue to account for
such plans using the intrinsic value method prescribed in Accounting
Principles Board Opinion No. 25.  Accordingly, compensation cost for stock
options is measured as the excess, if any, of the quoted market price of our
stock at the date of grant over the exercise price of the stock (See Note
10).

Recently Issued Accounting Pronouncements

During November 2002, the Financial Accounting Standards Board issued FASB
Interpretation No. 45, "Guarantor's Accounting and Disclosure Requirements
for Guarantees, Including Indirect Guarantees of Indebtedness of Others,"
which is an interpretation of FASB Statements No. 5, 57 and 107 and
rescission of FASB Interpretation No. 34. The initial recognition and
measurement provisions of this Interpretation are applicable on a prospective
basis to guarantees issued or modified after December 31, 2002, and the
disclosure requirements are effective for financial statements of periods
ending after December 15, 2002. This Interpretation addresses the disclosures
to be made by a guarantor in its interim and annual financial statements
about its obligations under guarantees, and also clarifies the requirements
related to the recognition of a liability by a guarantor at the inception of
a guarantee for the obligations the guarantor has undertaken in issuing that
guarantee.  Management does not believe the adoption of FASB Interpretation
No. 45 will have a material impact on the Company's financial position or
results of operations as the Company does not currently provide any third
party guarantees.

In January 2003, the FASB issued FASB Interpretation No. ("FIN") 46,
"Consolidation of Variable Interest Entities" ("FIN 46"). In December 2003,
FIN 46 was replaced by FASB interpretation No. 46(R) "Consolidation of
Variable Interest Entities." FIN 46(R) clarifies the application of
Accounting Research Bulletin No. 51, "Consolidated Financial Statements," to
certain entities in which equity investors do not have the characteristics of
a controlling financial interest or do not have sufficient equity at risk for
the entity to finance its activities without additional subordinated
financial support from other parties. FIN 46(R) requires an enterprise to
consolidate a variable interest entity if that enterprise will absorb a
majority of the entity's expected losses, is entitled to receive a majority
of the entity's expected residual returns, or both. FIN 46(R) is effective
for entities being evaluated under FIN 46(R) for consolidation no later than
the end of the first reporting period that ends after March 15, 2004.
Management does not believe the adoption of FIN 46(R) will have a material
impact on the Company's financial position or results of operations, as the
Company does not have any entities that would be covered under FIN 46.

On April 30, 2003, the Financial Accounting Standards Board issued SFAS No.
149, "Amendment of Statement 133 on Derivative Instruments and Hedging
Activities." SFAS No. 149 amends and clarifies accounting for derivative

                                   F-12
44

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    December 31, 2003 and 2002

                                 (Continued)

(2)   Summary of Significant Accounting Policies - Continued

instruments, including certain derivative instruments embedded in other
contracts, and for hedging activities under SFAS No. 133. The new guidance
amends SFAS No. 133 for decisions made as part of the Derivatives
Implementation Group ("DIG") process that effectively required amendments to
SFAS No. 133, and decisions made in connection with other FASB projects
dealing with financial instruments and in connection with implementation
issues raised in relation to the application of the definition of a
derivative and characteristics of a derivative that contains financing
components. In addition, it clarifies when a derivative contains a financing
component that warrants special reporting in the statement of cash flows.
SFAS No. 149 is effective for contracts entered into or modified after June
30, 2003 and for hedging relationships designated after June 30, 2003.
Adoption of this standard did not have an impact on the Company's financial
statements, as the Company does not currently have such instruments or
activities.

In May 2003, the Financial Accounting Standards Board issued SFAS No. 150
"Accounting for Financial Instruments with the Characteristics of both
Liabilities and Equities." SFAS No. 150 establishes standards regarding the
manner in which an issuer classifies and measures certain types of financial
instruments having characteristics of both liabilities and equity. Pursuant
to SFAS No. 150, such freestanding financial instruments (i.e., those entered
into separately from an entity's other financial instruments or equity
transactions or that are legally detachable and separately exercisable) must
be classified as liabilities or, in some cases, assets. In addition, SFAS No.
150 requires that financial instruments containing obligations to repurchase
the issuing entity's equity shares and, under certain circumstances,
obligations that are settled by delivery of the issuer's shares be classified
as liabilities. Certain provisions of SFAS No. 150 have been indefinitely
deferred; however, the Statement is generally effective for financial
instruments entered into or modified after May 31, 2003 and for other
instruments at the beginning of the first interim period beginning after June
15, 2003. The Company does not currently have any financial instruments that
will be impacted by SFAS No. 150. The adoption of SFAS No. 150 did not have a
material impact on the Company's financial position or results of operations.

In December 2003, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin No. 104, Revenue Recognition (SAB 104), which provides
guidance on the recognition, presentation and disclosure of revenue in
financial statements filed with the SEC. SAB 104 revises or rescinds portions
of the interpretive guidance that was previously issued in Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101) that
was issued in December 1999 in order to make this interpretive guidance
consistent with current authoritative accounting and auditing guidance and
SEC rules and regulations. The adoption of SAB 104 did not have a significant
impact on the Company's financial position or results of operations.




                                           F-13
45

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     December 31, 2003 and 2002
                                 (Continued)

 (3)   Business Operations

We are a designer and supplier of data storage products and solutions.  Our
products include memory for computing systems and fibre channel connectivity
and storage products used to build storage area networks (SANs).

We sell our products to OEMs, resellers and directly to end-users. In 2002
and 2003, our largest customers included Lockheed Martin, Oracle, Hewlett-
Packard and StorageTek.

In the year ended December 31, 2002, our top five customers accounted
for approximately 21% of our total net revenues, and, in the year ended
December 31, 2003, our top five customers accounted for approximately 23% of
our total net revenues. During 2003 and 2002, no customer exceeded 10% of
total revenues. There is no assurance that current customers will remain our
customers in the future and the loss of a major customer could have a
material effect on our business.


(4)   Income Taxes

In accordance with SFAS No. 109, "Accounting For Income Taxes", deferred tax
assets and liabilities are determined based on the difference between the
financial statement and tax basis of assets and liabilities using enacted tax
rates in effect for the year in which the differences are expected to
reverse.

The following table presents the components of income (loss) before income
taxes and extraordinary items:


                Year ended        Year ended
                December 31,      December 31,
                   2003             2002


Domestic         $   122,000      $(1,476,000)

Foreign           (    2,000)      (    1,000)

                 $   120,000      $(1,477,000)





                                 F-14

46


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                    December 31, 2003 and 2002

                                 (Continued)

(4)   Income Taxes (continued)

The following table presents a reconciliation between taxes provided at the
statutory federal income tax rate and the actual tax provision recorded for
the following periods:



                              Year ended      Year ended

                               December        December
                                 2003            2002

Provision (credit) at
federal statutory rate        $   40,900      $ (502,200)

State tax provision
(credit), net of federal
tax benefit                        7,700        ( 93,000)

Foreign and other losses
for which no benefits have
been recorded                        700             500

Change in valuation
allowances                       (49,000)        594,500

Other                            (   300)            200
                              $    -0-        $    -0-



We have federal net operating loss carryovers totalling $25,500,000 which
expire through the year ended December 31, 2023.



                                             F-15
47


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                        December 31, 2003 and 2002

                                 (Continued)


(4)   Income Taxes - Continued


The tax effects of the significant items which comprise the deferred tax
liability and tax asset, as of fiscal 2003 and 2002 are as follows:

                                   December       December
                                     2003           2002

Assets
Reserves not currently deductible
 for tax purposes                  $   769,000    $ 1,528,000
State tax net operating loss
 carryforward                        2,485,000      2,319,000
Federal net operating loss
 carryforward                        7,841,000      7,302,000
Employee benefits                       56,000         51,000
Other                                   36,000         36,000

 Total deferred tax assets         $11,187,000    $11,236,000

Liabilities
Fixed asset basis difference       $         0    $         0
Other                                  103,000        103,000

 Total deferred tax liabilities    $   103,000    $   103,000

Net deferred tax asset             $11,290,000    $11,339,000
Valuation allowance                (11,290,000)   (11,339,000)
Tax asset                                   0             0

Tax refunds receivable                      0             0

Total tax asset                             0             0

Due to the uncertainty of the realizability of the deferred tax assets, we
have established a valuation allowance for the net deferred tax assets.




                                                   F-16
48


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                         December 31, 2003 and 2002

                                 (Continued)

(5)   Short Term Borrowings

We have a loan and security agreement with a related party referred to in
Note 12. The outstanding balance due to the related party was $1,033,016 and
$1,032,869 at December 31, 2003 and 2002, respectively.

Notes payable of $784,699 at December 31, 2003 and $425,000 at December 31,
2002 include $475,000 and $275,000, respectively, of advances payable which
are due on demand. The $475,000 of advances payable at December 31, 2003
includes amounts of $375,000 from related parties. The $275,000 of advances
payable at December 31, 2002 includes amounts of $175,000 from related
parties. These notes are further described in Note 12. In the second quarter
of 2002, related party holders of secured notes converted $1,000,000 of
principal plus $227,801 of accrued interest into 98,223 shares of Series A
Convertible Preferred stock. The Series A Convertible Preferred shares have a
dividend rate of 12%. The purchase price per share of the Series A
Convertible Preferred stock was $12.50.  The Series A Preferred stock is
convertible into shares of common stock, at any time at the holder's option.
The holders of the 98,223 shares of Series A Preferred stock could convert
their preferred shares into 982,230 shares of common stock.


The balances of $309,669 and $150,000 as of December 31, 2003 and December
31, 2002 include $150,000 of series 1 bridge financing notes issued in 2000.
During the first quarter of 2000, we borrowed $2,000,000 in cash from SovCap
Equity Partners, Ltd., Arab Commerce Bank Ltd., and Correllus International
Ltd. in exchange for, among other things, our issuance of series 1 bridge
financing notes that matured in the third quarter of 2000. We received net
proceeds equal to $1,737,900 from SovCap Equity Partners, Ltd., Arab Commerce
Bank Ltd., and Correllus International Ltd. as a result of this bridge
financing. The balance of $309,669 as of December 31, 2003 also includes
$159,669 of accounts payable converted to notes payable.

The series 1 bridge financing notes bore interest at the rate of 8% per annum
prior to maturity. Since maturity, interest is accruing on these notes at a
rate of 12% per annum. These bridge notes are convertible into shares of our
common stock at any time at a weighted average per share price of $4.08.
Because the bridge notes matured before we registered, under the Securities
Act of 1933, as amended, the offer and resale of shares of our common stock
issuable upon conversion of the bridge notes and exercise of the repricing
warrants and the common stock purchase warrants described above, SovCap
Equity Partners, Ltd., Arab Commerce Bank Ltd., and Correllus International
Ltd. became entitled to premiums and penalties totaling approximately
$607,000 (in addition to the repayment of principal and interest). Following
conversion of the bridge notes, if SovCap Equity Partners, Ltd., Arab
Commerce Bank Ltd., and Correllus International Ltd. do not realize at least
a 20% gain on shares of common stock that they choose to sell during the 90
days following conversion, then SovCap Equity Partners, Ltd., Arab Commerce
Bank Ltd., and Correllus International Ltd. are entitled to acquire
additional shares of common stock at a price of $0.10 per share through the
exercise of repricing warrants.  In addition to these bridge notes and the
attached repricing

                                               F-17
49

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     December 31, 2003 and 2002

                                 (Continued)

(5)   Short Term Borrowings (continued)

warrants, we issued warrants to purchase 300,000 shares of common stock.
These warrants have a weighted average exercise price of $4.54 per share.
There is no value associated with these warrants recorded on our books. In
the fourth quarter of 2000, one of our lenders, converted a portion of its
Series 1 Bridge Financing Note ($50,000 of unpaid principal plus interest,
premiums and penalties) into 18,232 shares of our common stock at a
conversion price of $3.79.In the first quarter of 2001, the same lender,
converted the balance of its Series 1 Bridge Financing Note ($200,000 of
unpaid principal plus interest, premiums and penalties) into 74,335 shares of
our common stock at a conversion price of $3.79. They also exercised a
repricing warrant and received 112,778 shares of our common stock. In the
second quarter of 2002, one of our lenders converted $1,600,000 of principal,
$487,067 of premium and penalties, $430,733 of interest, and all attached
repricing warrants into 147,240 shares of Series B Convertible Preferred
stock.  The Series B Convertible Preferred shares have a dividend rate of
12%. The purchase price per share of the Series B Convertible Preferred stock
was $17.10. The Series B Preferred stock is convertible into shares of common
stock, at any time at the holder's option. The holders of the 147,240 shares
of Series B Preferred stock could convert their Preferred shares into
1,525,939 shares of common stock. The holders of the Series B Convertible
Preferred stock were granted registration rights for the underlying common
stock into which the Preferred is convertible.

Our Super PC Memory, Inc. subsidiary has a line of credit of $2,000,000
available from The CIT Group/Commercial Services, Inc., limited to 75% of the
eligible receivables of Super PC Memory, Inc. At December 31, 2003 and 2002
we had a balance of $525,520 and $802,097, respectively, under this line of
credit. At the present time, our Super PC Memory, Inc. subsidiary is not in
compliance with certain financial covenants of this line of credit.


(6)   Long-Term Debt and Related Matters

During 2002, under the terms of certain 10% notes, the holders converted the
10% notes and accrued interest into shares of common stock at a conversion
price of $0.22 per share. Of the advances received for the notes,
approximately $1,070,000 was received from related parties and is discussed
in Note 12.




                                F-18

50

                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     December 31, 2003 and 2002

                                 (Continued)


(7)   Earnings Per Share

Earnings per share are computed by dividing net income by the average number
of common shares and common stock equivalents outstanding during the year.
The weighted average number of common shares outstanding during the years
ended December 31, 2003 and 2002 were approximately 18,320,000 and
16,320,000, respectively.

Common stock equivalents include the net additional number of shares that
would be issuable upon the exercise of the outstanding common stock options
and warrants (see Note 10) and conversion of preferred stock, assuming that
we reinvested the proceeds to purchase additional shares at market value.
Common stock equivalents also include shares of common stock that would be
issuable upon conversion of subordinated promissory convertible notes.

Options and warrants to purchase 8,096,029 and 8,396,188 weighted average
shares of common stock during the years ended December 31, 2003 and December
31, 2002, respectively, were not included in the computation of diluted loss
per share because to do so would have had an antidilutive effect on the
computation of loss per share. Weighted average shares issuable from
convertible notes of 24,630 and 1,550,961 were not included in the diluted
earnings per share because to do so would have had an antidilutive effect on
the computation of earnings per share.

As more fully described in Note 10, options and warrants to purchase
7,434,403 and 8,846,765 shares of common stock outstanding at December 31,
2003 and 2002, respectively, and 24,630 shares of common stock issuable upon
conversion of notes outstanding at December 31, 2003 and 2002 could
potentially dilute basic income (loss) per share in the future.


(8) Preferred Stock

We are authorized to issue up to 3,000,000 shares of preferred stock, $1.00
par value per share, of which 245,463 shares are issued and outstanding as of
December 31,2003. Of the 245,463 preferred shares outstanding, 98,223 shares
are Series A Convertible Preferred shares and 147,240 shares are Series B
Convertible Preferred shares. Both the Series A and Series B Convertible
Preferred shares have a dividend rate of 12%, when and if declared by the
Company's Board of Directors. Holders of shares of both Series A and Series B
Preferred stock are not entitled to any voting rights for any shares of
Series A or Series B Preferred stock which they hold.  Both the Series A and
Series B Preferred Stock are convertible into shares of common stock, at any
time at the holder's option. The holder's of the 98,223 shares of Series A
Preferred Stock could convert their preferred shares into 982,230 shares of
common stock. The 147,240 shares of Series B Preferred stock are convertible
into up to a total of 1,525,939 shares of our common stock.



                                                            F-19
51


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(9)   Commitments and Contingencies

At December 31, 2003, we had minimum rental commitments under long-term,
noncancelable operating leases for facilities and other equipment as follows:

            Due during Fiscal Year


                  2004              $  249,848
                  2005                 301,559
                  2006                 313,791
                  2007                 315,014
                  2008                 286,721
                  2009                  91,744

                  Total             $1,558,677

Total rental expense, including the cost of short-term equipment leases, real
estate taxes and insurance paid to the landlord and charged to operations
approximated $562,000 for the year ended December 31, 2003 and $634,000 for
the year ended December 31, 2002. Our Super PC Memory, Inc. subsidiary is
presently in default on certain lease obligations and is in the process of
renegotiating such leases. There is no assurance that we will be able to
renegotiate the leases.

In the ordinary course of business, we are involved in legal proceedings.  We
believe that the outcome of these proceedings will not have a material
adverse effect on our financial condition or results of operations.

(10)   Stock Options and Warrants

On March 24,1987, we established the 1987 Stock Option Plan and 46,300
options to purchase shares of our common stock were outstanding as of
December 31, 2003. On March 7, 1997, we established the 1997 Stock Option
Plan. As of December 31, 2003, there were 465,000 options to purchase shares
of our common stock outstanding under the 1997 Plan. On November 12, 1999,
the 1997 Plan was cancelled. On November 12, 1999, we established and on
December 23, 1999, shareholders approved the Year 2000 Equity Incentive Plan.
The Year 2000 Equity Incentive Plan provides for the issuance of up to
1,500,000 shares of our common stock and 797,000 options to purchase shares
of our common stock were outstanding as of December 31, 2003. The Year 2000
Equity Incentive Plan replaces the 1997 Plan for all future options. At
December 31, 2003, we had three stock option plans for officers and certain
employees under which 2,011,300 shares were reserved and options for 703,000
shares were available for future grants.  Options are granted at not less
than 85%, or in certain cases, not less than 100%, of the fair market value
of the common stock on the date of grant.  Options outstanding have a term of
ten years and become exercisable in installments as determined by the Board
of Directors. The plans' options vest between one through six years and all
expire between December 22, 2005 and August 7, 2012.
                                                        F-20

52


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(10)   Stock Options and Warrants - Continued


Stock option activity for the two years ended December 31, 2003 was as
follows:


Option Shares                        Number of shares      Option Price
                                     of common stock       per share
                                     covered by options


	Outstanding at December 31, 2001  1,102,620           .12  -   5.30

	Granted                             700,000           .22  -    .45
	Exercised, cancelled or
	    Expired                        (208,500)          .12  -   3.00
	Outstanding at December 31, 2002  1,594,120          $.12  -  $5.30

	Granted                             200,000           .47
	Exercised, cancelled or
	    Expired                        (485,820)          .12  -    .47
	Outstanding at December 31, 2003  1,308,300          $.12  -  $5.30



As of December 31, 2003 and 2002, options for 750,500 and 589,920 shares were
exercisable at aggregate option prices of $486,716 and $133,854,
respectively.

Had compensation cost for these plans been determined consistent with SFAS
No. 123, our net income(loss) and income(loss) per share would have been
changed to the following pro forma amounts:

                                      Year ended    Year ended
                                     December 31,  December 31,
                                          2003         2002

Net Income (Loss): As Reported (000's)       120       (1,477)
                   Pro Forma                  60       (1,539)

Basic and Diluted EPS:As Reported           0.01       ( 0.09)
                      Pro Forma             0.00       ( 0.09)



                                                          F-21
53


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(10)   Stock Options and Warrants - Continued

The fair value of each option grant is estimated on the date of the grant
using the Black-Scholes option pricing model with the following assumptions
for grants in the periods presented. No amounts are included for 2003 because
all options granted during the year were cancelled prior to year-end.

                                     Year ended    Year ended
                                     December 31,  December 31,
                                        2003           2002
Assumptions:
      Risk free interest rate            N/A           5.17%
      Expected dividend yield            N/A              0%
      Expected life in years             N/A             10


As of December 31, 2003 and 2002, warrants to purchase 6,126,103 and
7,252,645 shares of common stock at weighted average prices of $1.02 and
$1.12 per share, respectively, were outstanding and an equal number of shares
were reserved for issuance.

(11)   Incentive Bonus Plan and 401(k) Profit Sharing Retirement Plan

We have an incentive bonus plan under which certain key employees as a group
are entitled to receive additional compensation up to a maximum of 15% of our
pre-tax income, as defined.  There was no provision for additional
compensation in 2003 or 2002.

On September 1, 1988, we established the Cambex Corporation 401(k) Profit
Sharing Retirement Plan (the Plan).  Under the Plan, employees are allowed to
make pre-tax retirement contributions.  In addition, we may provide matching
contributions based on pre-established rates. Each year the Board of
Directors determines whether matching contributions will be made and in what
amounts. There was no matching contribution in 2003 or 2002.

We offer no post-retirement benefits other than those provided under the
Plan.


(12)  Related Party Transactions

On June 1, 1998, we borrowed approximately $1,060,000, including
approximately $460,000 from Joseph F. Kruy, our Chairman of the Board,
President and Chief Executive Officer, $250,000 from each of H. Terry
Snowday, Jr. and Richard E. Calvert, each greater than 5% shareholders of
Cambex, in exchange for the issuance of 10% Subordinated Convertible
Promissory Notes (the "10% Notes").  Under the terms of the 10% Notes, which
are due on April 30, 2003, the holders may convert the 10% Notes into shares
of common stock at a conversion price of $0.22 per share.  In addition to the
10% Notes, each holder, including Messrs. Kruy, Snowday and Calvert, were
issued a Stock

                                                                F-22

54


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                     December 31, 2003 and 2002

                                 (Continued)



(12)  Related Party Transactions - Continued

Purchase Warrant, the exercise of which will allow the warrant holder to
purchase one share of common stock, at $0.50 per share, for each dollar
loaned to us.  Additional Stock Purchase Warrants to purchase 96,373 shares
of common
stock, at an exercise price of $0.50 per share, were issued to the holders of
10% Notes on June 1, 1999 in relation to interest due on the June 1, 1998
notes.  We believe that the borrowing arrangements we made with Messrs. Kruy,
Snowday and Calvert, and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us and Messrs. Kruy, Snowday
and Calvert. From June 1, 1999 through August 18, 1999, we raised $210,000 in
exchange for the issuance of 10% Subordinated Convertible Promissory Notes.
During this time period Joseph F. Kruy loaned us $100,000, and Messrs.
Snowday and Calvert each loaned us $55,000 of the total amount that we
borrowed.  In exchange for these loans, we issued 10% Subordinated
Convertible Promissory Notes, including 10% Subordinated Convertible
Promissory Notes to Messrs. Kruy, Snowday and Calvert.  We believe that the
borrowing arrangements we made with Messrs. Kruy, Snowday and Calvert were on
terms at least as favorable to us as we would have expected from lenders
unrelated to us and Messrs. Kruy, Snowday and Calvert.  On March 29, 2002,
Joseph F. Kruy, Richard E. Calvert, H. Terry Snowday, Jr. and a person
unrelated to the company converted their 10% Subordinated Convertible
Promissory Notes and accrued interest into common stock. They were issued
7,540,871 shares of common stock at $0.22 per share. As of December 31, 2002
none of the 10% Notes remained outstanding.

On November 9, 1998, we entered into a Loan and Security Agreement with
B.A. Associates, Inc. (BAA), which is a corporation owned Bruce D. Rozelle, a
son-in-law  of Joseph F. Kruy, our Chairman, President and Chief Executive
Officer.  This Loan and Security Agreement, as amended by a First Amendment
to Loan and Security Agreement dated March 15, 1999, and further amended
through December 27, 2001 (as so amended, the "BAA Loan Agreement"), allows
us to borrow up to  $1,100,000, which is the maximum that may be outstanding
at any one time. Under the BAA Loan Agreement, we granted BAA a first
priority security interest in all of our accounts, instruments, documents,
general
intangibles, equipment, inventory, and proceeds of any of the foregoing.  We
pay all amounts that we receive from collections of our accounts receivable
to BAA not less frequently than each week until the outstanding loan amount
plus interest, which accrues at a 12% annual rate, is fully paid.  Under the
terms of the BAA Loan Agreement, originally BAA received a warrant for the
purchase of 1.3 million shares of common stock, at an exercise price of $0.22
per share.  In consideration for increasing the amount of available funds,
the Company agreed to issue an additional warrant to BAA for the purchase of
400,000 shares of our common stock, at an exercise price of $1.25 per share.
We believe that the borrowing arrangements we made with BAA were on terms at
least as favorable to us as we would have expected from lenders unrelated to
us and relatives of Mr. Kruy.



                                          F-23
55


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(12) Related Party Transactions - Continued


In November 1999, we borrowed $125,000 from Joseph F. Kruy and $125,000
from Philip C. Hankins, a member of our board of directors, and $100,000 from
each of H. Terry Snowday, Jr. and Richard E. Calvert.  We also entered into
separate Loan and Security Agreements with each of Messrs. Kruy, Hankins,
Calvert and Snowday.  At that time, we entered into one other Loan and
Security Agreement with a person unrelated to the company (the "Other 1999
Lender") pursuant to which we borrowed an additional $100,000.  Our payment
obligations under these Loan and Security Agreements (the "1999 Loan
Agreements") are evidenced by 12% Notes due in November 2001.  Under the 1999
Loan Agreements, we granted each of Messrs. Kruy, Hankins, Calvert and
Snowday and the Other 1999 Lender a first priority security interest in all
of our accounts, instruments, documents, general intangibles, equipment,
inventory, and proceeds of any of the foregoing.  Originally, under the terms
of the 1999 Loan Agreements, Messrs. Kruy, Hankins, Calvert and Snowday and
the Other 1999 Lender received a warrant to purchase up two shares of common
stock for each dollar loaned to us, at an exercise price of $2.00 per share.
When we extended the term of the loans in November 2000, the Company agreed
to issue additional warrants to Messrs. Kruy, Hankins, Calvert and Snowday
and the Other 1999 Lender to purchase one share of our common stock for each
dollar loaned to us at an exercise price of $1.25 per share.  We believe that
the borrowing arrangements we made with Mr. Kruy and others were on terms at
least as favorable to us as we would have expected from lenders unrelated to
us.

In March through May 2001, we borrowed $50,000 from Joseph F. Kruy and
$300,000 from Richard E. Calvert.  We also entered into separate Loan and
Security Agreements with Messrs. Kruy and Calvert. Our payment obligations
under these Loan and Security Agreements (the "2001 Loan Agreements") are
evidenced by 12% Notes due in March through May 2002.  Under the 2001 Loan
Agreements, we granted each of Messrs. Kruy and Calvert a first priority
security interest in all of our accounts, instruments, documents, general
intangibles, equipment, inventory, and proceeds of any of the foregoing.
Under the terms of the 2001 Loan Agreements, Messrs. Kruy and Calvert
received
a warrant to purchase up two shares of common stock for each dollar loaned to
us, at an exercise price of $0.50 per share. We believe that the borrowing
arrangements we made with Mr. Kruy and others were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.

In July through September 2001, we borrowed $100,000 from Joseph F. Kruy and
$100,000 from Richard E. Calvert.  We also entered into separate Loan and
Security Agreements with Messrs. Kruy and Calvert. Our payment obligations
under these Loan and Security Agreements (the "2001 Loan Agreements") are
evidenced by 12% Notes due in January 2002.  Under the 2001 Loan Agreements,
we granted each of Messrs. Kruy and Calvert a first priority security
interest in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing.  Under the terms
of the 2001 Loan Agreements, Messrs. Kruy and Calvert received a warrant to

                                                              F-24

56


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(12) Related Party Transactions - Continued

purchase up one share of common stock for each dollar loaned to us, at an
exercise price of $0.25 per share. We believe that the borrowing arrangements
we made with Mr. Kruy and others were on terms at least as favorable to us as
we would have expected from lenders unrelated to us.

In April through July 2002, we borrowed $125,000 from Joseph F. Kruy and
$50,000 from Richard E. Calvert.  We also entered into separate Loan and
Security Agreements with Messrs. Kruy and Calvert. Our payment obligations
under these Loan and Security Agreements (the "2002 Loan Agreements") are
evidenced by 12% Notes due in April through July 2003.  Under the 2002 Loan
Agreements, we granted each of Messrs. Kruy and Calvert a first priority
security interest in all of our accounts, instruments, documents, general
intangibles, equipment, inventory, and proceeds of any of the foregoing.
Under the terms of the 2002 Loan Agreements, Messrs. Kruy and Calvert
received a warrant to purchase up one share of common stock for each dollar
loaned to us, at an exercise price of $0.25 per share. We believe that the
borrowing arrangements we made with Mr. Kruy and others were on terms at
least as favorable to us as we would have expected from lenders unrelated to
us.

On June 28, 2002, in transactions exempt under Section 4(2) of the Securities
Act, Joseph F. Kruy, Richard E. Calvert, H. Terry Snowday, Jr., and Philip
Hankins converted Loan and Security Agreements with an aggregate principal
amount of $1,000,000 plus accrued interest into Series A Convertible
Preferred stock. They were issued 98,223 shares of Series A Convertible
Preferred stock. The Series A Convertible Preferred shares have a dividend
rate of 12%. The purchase price per share of the Series A Convertible
Preferred stock was $12.50. The Series A Preferred stock is convertible into
shares of common stock, at any time at the holder's option. The holders of
the 98,223 shares of Series A Preferred stock could convert their preferred
shares into 982,230 shares of common stock.

In June through August 2003, we borrowed $200,000 from Joseph F. Kruy.  We
also entered into Loan and Security Agreements with Mr. Kruy. Our payment
obligations under these Loan and Security Agreements (the "2003 Loan
Agreements") are evidenced by 12% Notes due in June through August 2004.
Under the 2003 Loan Agreements, we granted Mr. Kruy a first priority security
interest in all of our accounts, instruments, documents, general intangibles,
equipment, inventory, and proceeds of any of the foregoing. We believe that
the borrowing arrangements we made with Mr. Kruy were on terms at least as
favorable to us as we would have expected from lenders unrelated to us.
As of December 31, 2003, the balance outstanding under these Loan Agreements
is $475,000 of which $325,000 is owed to Joseph F. Kruy and $50,000 is owed
to Richard E. Calvert.


                                                           F-25

57


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(13) Acquisition of Super PC Memory, Inc.

On March 12, 2002, Cambex Corporation completed the acquisition of 100% of
the outstanding common stock of Super PC Memory, Inc. and Super PC Memory,
Inc. became a wholly-owned subsidiary of Cambex Corporation. The results of
Super PC Memory, Inc.'s operations have been included in the consolidated
financial statements since that date. Super PC Memory is a leading provider
of memory products for servers, workstations, desktop PCs and laptops.

The purchase price initially included the issuance of 560,000 shares of
Cambex common stock and payments based on the gross profit of the subsidiary
over the next three years. The 560,000 shares are valued at $291,200 based on
the closing price on March 12, 2002 of $0.52 per share of Cambex common
stock. The Sellers, Son T. Pham, Simon Le and Richard G. Schaefer received
560,000 shares of Cambex Corporation common stock and were to receive fifteen
percent (15%) of Super PC Memory, Inc.'s gross profit for the period from
March 12, 2002 through December 31, 2004, payable in quarterly installment
payments pursuant to the terms of the Stock Purchase and Sale Agreement.

On July 29, 2002, we amended the agreement with the Sellers for the purchase
of 100% of the outstanding common stock of Super PC Memory, Inc.  We issued
an additional 280,000 shares of Cambex common stock and in return the Sellers
agreed that they were no longer entitled to receive 15% of Super PC's gross
profit for the period from March 12, 2002 through December 31, 2004 or any
other additional consideration for the sale of 100% of the outstanding common
stock of Super PC Memory, Inc.  The additional 280,000 shares are valued at
$145,600 based on the closing price on the date of the acquisition of $0.52
per share of Cambex common stock.

We have recorded the net assets of Super PC on our books as follows:

   Accounts receivable             $ 2,684,194
   Inventories                         969,795
   Prepaid expenses                     18,172
   Property and equipment               19,680
   Goodwill                            257,372

        Total assets acquired      $ 3,949,213

    Line of credit                 $ 1,606,481
    Accounts payable                 1,487,774
    Accrued expenses                   343,158

        Total liabilities assumed  $ 3,437,413

           Net assets acquired     $   511,800


                                                              F-26

58


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)

(13) Acquisition of Super PC Memory, Inc. - Continued

The primary reasons for our acquisition of Super PC Memory, and the primary
factors that contributed to a purchase price that resulted in recognition of
goodwill, are:

- - Super PC Memory operations would deliver earnings prospects, a significant
customer base, and other potential strategic benefits,
- - Combining the operations of the two companies could provide cost savings,
- - The acquisition would transform Cambex into a stronger, more integrated
storage products company with the benefits of increased size and scale.

Had the results of operations for Super PC Memory, Inc. been included for the
whole year ended December 31, 2002, our revenue, net income(loss) and
income(loss) per share would have been changed to the following pro forma
amounts:

                                   Year ended
                                   December 31,
                                          2002

Revenue: As Reported (000's)            $14,345
         Pro Forma                       19,168

Net Income(Loss): As Reported (000's)    (1,477)
                   Pro Forma             (1,470)

Basic and Diluted EPS:As Reported        ( 0.09)
                      Pro Forma          ( 0.09)


(14)  Credit Risk

We maintain cash balances at financial institutions located in Massachusetts.
Our Super PC Memory, Inc. subsidiary maintains cash balances in financial
institutions located in Massachusetts and California. Accounts at each
institution are insured by the Federal Deposit Insurance Corporation up to
$100,000.  At December 31, 2003, our uninsured cash balances total $95,206.

Our subsidiaries maintain cash balances at several financial institutions
located throughout Europe.  These cash balances are subject to normal
currency exchange fluctuations. At December 31, 2003, our overseas cash
balances total $2,708.





                                       F-27

59


                     CAMBEX CORPORATION AND SUBSIDIARIES
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                   December 31, 2003 and 2002

                                 (Continued)


(15) Subsequent Events

On January 30, 2004, Super PC Memory, Inc., a wholly-owned subsidiary of
Cambex Corporation, entered into an agreement with Silicon Mountain Memory
Incorporated, a privately-held company, pursuant to which Silicon Mountain
Memory Incorporated purchased a portion of Super PC Memory's customer
information and rights to do business with said customers with respect to
Wintel products. Sales to said customers with respect to Wintel products was
a substantial portion of our revenues in 2003 and 2002. These sales were
sales with lower gross margins. The total purchase price is $1,050,000
subject to allocation as to cash or note payments, the exact amount and terms
of payment is dependent upon the revenues generated by Silicon Mountain
Memory from Super PC Memory customers. The first payment of $35,000 was
received at closing. According to terms of the agreement, beginning on May
15, 2004, and on or before the 15th of each month, Silicon Mountain Memory
will make a payment to Super PC Memory based upon gross profit for the
preceding month according to the following formula: if the gross profit is
less than $100,000, the payment will be 25% of gross profit; if the gross
profit is between $100,000 and $140,000, the payment will be $35,000; and if
the gross profit is in excess of $140,000, the payment will be 35% of gross
profit.

                                            F-28

60

                                  SIGNATURES



Pursuant to the requirements of Section 13 of the Securities Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.


CAMBEX CORPORATION


By:   /s/Joseph F. Kruy
         Joseph F. Kruy, President                        March 30, 2004



Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Company and in the capacities indicated as of March 30, 2004.


By:   /s/   Joseph F. Kruy
            Joseph F. Kruy, Chairman of the Board, President
            (Principal Executive Officer)


By:   /s/   Robert J. Spain
            Robert J. Spain, Director


By:   /s/   Philip C. Hankins
            Philip C. Hankins, Director


By:   /s/   C. V. Ramamoorthy
            C. V. Ramamoorthy, Director

EX-21.1

                          List of Subsidiaries

Subsidiary                                       Jurisdiction

Cambex Investment Corporation                    Delaware
Cambex Securities Corporation                    Massachusetts
Cambex Foreign Sales Corporation                 U.S. Virgin Islands
Cambex Europe, B.V.                              The Netherlands
Cambex GmbH                                      Germany
Cambex UK Ltd.                                   England
Cambex Europe S.a.r.l.                           France
Super PC Memory, Inc.                            California

EX-31.1

Certifications:

I, Joseph F. Kruy, certify that:

1. I have reviewed this annual report on Form 10-KSB of Cambex Corporation;

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. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:

a) designed such disclosure controls and procedures to ensure that material
information relating to the registrant, including its consolidated
subsidiaries, is made known to us 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 as of a date within 90 days prior to the filing date of this
annual report (the "Evaluation Date"); and

c) presented in this annual report our conclusions about the effectiveness of
the disclosure controls and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):

a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to record,
process, summarize and report financial data and have identified for the
registrant's auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal controls;
and

6. The registrant's other certifying officers and I have indicated in this
annual report whether there were significant changes in internal controls or
in other factors that could significantly affect internal controls
subsequent to the date of our most recent evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.

Date: March 30, 2004

/s/ Joseph F. Kruy
Joseph F. Kruy
President and Treasurer
(principal executive officer and principal financial officer)

EX-32.1

Exhibit 32.1

       Form of Certification Pursuant to Section 1350 of Chapter 63
                 of Title 18 of the United States Code


I, Joseph F. Kruy, the chief executive officer and chief financial officer of
Cambex Corporation, certify that

(i) This annual report on Form 10KSB for the fiscal year ended December
31, 2003 fully complies with the requirements of Section 13(a) or 15(d) of
the Securities Exchange Act of 1934 and

(ii) The information contained in this annual report on Form 10KSB fairly
presents, in all material respects, the financial condition and results of
operations of Cambex Corporation.


Dated: March 30, 2004        /s/ Joseph F. Kruy
                             Joseph F. Kruy
                             President and Treasurer
                             [principal executive officer and
                              principal financial officer]


This certification accompanies this quarterly report pursuant to section 906
of the Sarbanes-Oxley Act of 2002 and shall not be deemed filed by the
Company for purposes of Section 10 of the Securities Exchange Act of 1934, as
amended.

EX-99.1

                   CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS


As independent public accountants, we hereby consent to the
incorporation of our report included in this Form 10-KSB, into the
Company's previously filed Registration Statements on Form SB-2 (File
Nos. 333-43294 and 333-50936) and Forms S-8 (File Nos. 2-77667 and 33-
18072).


                                         SULLIVAN BILLE, P.C.
                                         CERTIFIED PUBLIC ACCOUNTANTS



Tewksbury, Massachusetts
March 12, 2004

EX-99.2

                                 RISK FACTORS

                         Risks Related to Our Business

We have a history that includes substantial operating losses and we are in an
unfavorable financial position that makes an evaluation of our business
difficult

    We incurred substantial operating losses in each of the seven years
prior to the current fiscal year.  At December 31 2003, we had an
accumulated deficit of approximately $27.4 million.  At December 31, 2003 we
had current assets totaling approximately $1.5 million.  At that same date,
we had current liabilities totaling approximately $7.2 million. If B.A.
Associates, our revolving credit facility lender choses to demand immediate
payment of the amounts currently outstanding to them, we will be unable to
satisfy this obligation. In order to continue as a going concern and compete
effectively, we need to satisfy our short-term obligations, continue to
invest in research and development, and increase our selling, general and
administrative expenses as well as other expenses, which may not be possible
if revenues and gross profits do not increase significantly.


We may need additional capital and additional financing may not be available.
There is substantial doubt about our ability to continue as a going concern
and if we are unable to continue as a going concern, you may lose some or all
of your investment

    We believe that the combination of current existing cash, available
borrowing capacity and our ability to obtain additional long-term
indebtedness may not be adequate to finance our operations for our current
activities and foreseeable future. We have scaled back our operations as a
result of our recurring losses and insufficient cash flow and working capital
and will continue to do so if it is needed. Our inability to generate revenue
and gross profit in significantly greater amounts raises substantial doubt
about our ability to continue as a going concern and our ability to operate
our business on a full-scale basis. Without additional capital, we may be
unable to pay operating expenses, to satisfy current liabilities and other
obligations, to fund expansion, to develop new products and services, to
enhance existing products and services to respond to competitive pressures,
or to acquire complementary businesses or technologies. There can be no
assurance that we will ever generate the revenue or gross profits or be able
to raise the capital necessary for us to continue as a going concern or to
operate our business on a full-scale basis. We may not be able to obtain
additional financing on terms favorable to us, if at all. If adequate funds
are not available or are not available on terms favorable to us, we will not
be able to effectively execute our business plan and we may not be able to
continue as a going concern. Our Financial Statements do not include any
adjustments relating to the recoverability and classification of asset
carrying amounts and classification of liabilities that might result should
we be unable to continue as a going concern.  See Report of Independent
Public Accountants on Page F-2.

1


We have limited recent operating history with respect to our memory
products upon which you can evaluate our business and prospects

    Although we have been selling memory products since our inception, memory
products have accounted for an insignificant percentage of our overall
revenues since 1998.  In the first quarter of 2002, we began to shift our
product development, sales and marketing efforts towards the memory market
with our acquisition of Super PC Memory, Inc.  Because we have a limited
recent operating history with respect to memory products offered by our Super
PC Memory subsidiary, you must consider the risks and difficulties frequently
encountered by companies developing a business such as ours in rapidly
evolving markets.  In addition, because of the intense competition in the
memory market and the evolving nature of this market, achieving profitability
may be extremely challenging.


The application of the "penny stock rules" could adversely affect the market
price of our common stock

    On March 24, 2004, the last sales price of our common stock was $0.23.
Because the trading price of our common stock is less than $5.00 per share
and our common stock no longer trades on the Nasdaq National Market, our
common stock comes within the definition of a "penny stock."  The "penny
stock rules" impose additional sales practice requirements on broker-dealers
who sell our securities to persons other than established customers and
accredited investors (generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, broker-dealers must satisfy certain
additional administrative criteria in order to effectuate sales of our common
stock, including disclosure of the broker-dealer's compensation received for
such transaction, any compensation received by a person associated with the
broker-dealer for this transaction and disclosing certain information to the
investor in writing.  These additional burdens imposed on broker-dealers may
restrict the ability of broker-dealers to sell our securities and may affect
your ability to resell our common stock.  Among the requirements of
transacting in penny stock is that broker-dealers effecting transactions in
penny stock are required to deliver to the investors, a document containing
specific information about penny stock, and to receive a manually signed and
dated acknowledgement of receipt of such document from investors, prior to
effecting such transactions.  Such requirements may have the effect of making
your investment in our common stock less liquid because the rules will
decrease the number of potential investors and thereby reducing demand for
our stock.


We have developed relationships with potential OEM, distribution channel and
end user customers and a decision by any one of these potential customers not
to purchase our products, or any cancellation or delay of orders that may be
placed by any of these potential customers may have a significant and adverse
affect on our net revenues

    Historically, a limited number of OEMs, distribution channel and end user
customers have accounted for a significant majority of our total net revenues
in each fiscal period.  For example, sales to our top five customers

2


accounted for approximately 23% and 21% percent of net revenues for the
fiscal years ended December 31, 2003 and 2002, respectively.  We have
established relationships with a small number of potential OEM, distribution
channel and end user customers.  If any one of these potential customers
decides not to purchase our products or decides to purchase our products in
quantities that are below our expectations, then our net revenues will be
adversely affected.  We have and expect to continue to experience substantial
period-to-period fluctuations in future operating results because, among
other factors, we depend to a significant extent upon revenues from a small
number of customers.

    Our sales cycle typically involves a lengthy qualification cycle during
which there is a need to expend significant resources in addressing customer
specifications.  Because of the length of the sales cycle, we may experience
a delay between increasing expenses for research and development and sales
and marketing efforts and the generation of higher revenues, if any, from
such expenditures.  The purchase of our products or of solutions that
incorporate our products typically involves significant internal procedures
associated with the evaluation, testing, implementation and acceptance of new
technologies.  This evaluation process frequently results in a lengthy sales
process, typically ranging from three months to longer than a year, and
subjects the sales cycle associated with the purchase of our products to a
number of significant risks, including budgetary constraints and internal
acceptance reviews. The length of our sales cycle also varies substantially
from customer to customer.

    Because we anticipate that none of our potential customers will be, and
none of our current customers are, contractually obligated to purchase any
fixed amount of products from us in the future, they may stop placing orders
with us at any time, regardless of any forecast they may have previously
provided.  If any of our significant customers stop or delay purchases, our
revenues and operating results would be adversely affected, which could cause
our stock price to decline.  We cannot be certain that we will retain our
current OEM, distribution channel or end user customers or that we will be
able to recruit additional or replacement customers.  As is common in an
emerging technology industry, agreements with OEMs and distribution channel
customers are typically non-exclusive and often may be terminated by either
party without cause.  Moreover, many OEM and distribution channel customers
carry competing product lines.  If we were to suddenly lose one or more
important OEM, distribution channel or end user customers or potential
customers to a competitor, our business, operating results or financial
condition could be materially adversely affected.  Moreover, OEM customers
could develop products internally that would replace our products.  The
resulting reduction in sales of our products to any OEM customers, in
addition to the increased competition presented by these customers, could
have a material adverse effect on our business, operating results or
financial condition and could affect our ability to continue as a going
concern.


The failure of OEM customers to keep pace with rapid technological change and
to successfully develop and introduce new products could adversely affect our
net revenues

    Our ability to generate increased revenues depends significantly upon the
ability and willingness of OEM customers to develop and promote products on a
timely basis that incorporate our technology.  If OEM customers do not
successfully develop and market the solutions that incorporate our products,
3


then sales of our products to OEM customers will be adversely affected.  The
ability and willingness of OEM customers to develop and promote such products
is based upon a number of factors beyond our control.


Delays in product development could adversely affect our market position or
customer relationships

    We have experienced delays in product development in the past and may
experience similar delays in the future.  Given the short product life cycles
in the markets for our products, any delay or unanticipated difficulty
associated with new product introductions or product enhancements could cause
us to lose customers and damage our competitive position.  Prior delays have
resulted from numerous factors, such as:

      changing product specifications;
      difficulties in hiring and retaining necessary personnel;
      difficulties in reallocating engineering resources and other
      resource limitations;
      lack of adequate capital to fund product development efforts;
      difficulties with independent contractors;
      changing market or competitive product requirements;
      unanticipated engineering complexity;
      undetected errors or failures in software and hardware; and
      delays in the acceptance or shipment of products by customers.


We expect the average selling prices and associated gross margins of our
products to continue to decrease, which may reduce our revenues or gross
profits

    The markets for memory, fibre channel connectivity and disk storage
products have experienced erosion of average selling prices and gross margins
due to a number of factors, including competitive pricing pressures and rapid
technological change. The gross margins for our memory products is lower than
the gross margins for our fibre channel connectivity and disk storage
products. We may experience substantial period-to-period fluctuations in
future operating results due to the erosion of our average selling prices. We
anticipate that the average selling prices of our products will decrease in
the future in response to competitive pricing pressures, increased sales
discounts, new product introductions by us or our competitors or other
factors.  Therefore, to maintain our gross margins, we must develop and
introduce on a timely basis, new products and product enhancements and
continually reduce our product costs.  Our failure to do so would cause our
revenue and gross margins to decline, which could materially adversely affect
our operating results and cause the price of our common stock to decline.


If our business improves rapidly, our operations may be negatively impacted
and we may be required to incur substantial costs to upgrade our
infrastructure. We may need additional working capital financing and we may
not be able to obtain such financing
4


    If our business expands rapidly, then a significant strain may be
placed on our resources.  Unless we manage such growth effectively, we may
make mistakes in operating our business such as inaccurate sales forecasting,
incorrect material planning or inaccurate financial reporting, which may
result in unanticipated fluctuations in our operating results.  Our
management team has had limited experience managing rapidly growing companies
on a public or private basis.  We may not be able to install adequate control
systems in an efficient and timely manner, and our current or planned
personnel, systems, procedures and controls may not be adequate to support
our future operations.


The loss of or failure to attract and retain key technical, sales and
marketing and managerial personnel could adversely affect our business

    Our success depends to a significant degree upon the performance and
continued service of engineers involved in the development of our memory and
fibre channel technology and technical support of products and customers.
Our success also depends to a significant degree upon the continued
contributions of our key management, sales and marketing and manufacturing
personnel.  Accordingly, our future success depends upon our ability to
attract, train and retain such technical, sales and marketing and managerial
personnel.  Except for an employment agreement with Joseph F. Kruy, our
Chairman, President and Chief Executive Officer, we do not have employment
agreements with any of these personnel.  We do not maintain key person life
insurance on any of our personnel.  As we further develop our product line we
will need to increase the number of sales and marketing personnel as well as
technical staff members with experience in hardware and software development.
We are currently seeking to hire additional skilled experienced sales
personnel.  Competition for such highly skilled employees in our industry is
intense, and we cannot be certain that we will be successful in recruiting or
retaining such personnel.  Our employees may leave and subsequently compete
against us.  The loss of key employees could have a material adverse effect
on our business, operating results or financial condition. We also believe
that our success depends to a significant extent on the ability of our key
personnel to operate effectively, both individually and as a group.

Insiders have and will continue to have substantial control over us and could
delay or prevent a change in our corporate control, which may negatively
affect your investment

    Our officers and directors control the vote of approximately 28.3% of the
outstanding shares of our common stock prior to the exercise of any
outstanding warrants or options or the issuance of shares issuable upon the
conversion of Series A Preferred stock held by them.  Following the issuance
of all shares of our common stock issuable to SovCap Equity Partners, Ltd.,
Arab Commerce Bank Ltd, and Correllus International, Ltd., our officers and
directors would continue to control the vote of approximately 25.8% of the
then outstanding shares of common stock.  As a result, they may be able to
significantly influence all matters requiring approval by our stockholders,
including the election of directors.

5


Because we rely on a limited number of third party suppliers and
manufacturers, and failures by any of these third parties to provide key
components or to manufacture and assemble products of sufficient quality and
quantity could cause us to delay product shipments, which could result in
delay or lost revenues or customer dissatisfaction

    Advanced Printed Circuit Technology fabricates our printed circuit
boards, and various subcontractors, such as Stracon, Inc. and Circuit
Technology, Inc., perform assembly of our memory and host bus adapters
boards.  We have no long-term contracts with Advanced Printed Circuit
Technology, Stracon,Inc. or Circuit Technology, Inc. Also, key components
that we use in our products may, from time to time, only be available from
single sources with which we do not have long-term contracts.  In particular,
QLogic Corporation is currently the sole supplier of certain components in
certain of our host bus adapters.  The components we use for our products are
based on an emerging technology and may not be available with the performance
characteristics or in the quantities that we require.  Accordingly, our major
suppliers are not obligated to supply products to us for any specific period,
or in any specific quantity, except as may be provided in a particular
purchase order. Moreover, any inability to supply products due to a lack of
components or to redesign products to incorporate alternative components in a
timely manner could materially adversely affect our business, operating
results or financial condition.  If any of our third-party manufacturers
experiences delays, disruptions, capacity constraints or quality control
problems in its manufacturing operations, then product shipments to our
customers could be delayed, which would negatively impact our net revenues,
competitive position and reputation.

    We have no long-term integrated circuit device supply contracts and are
dependent on a small number of suppliers to supply integrated circuit
devices, which represent approximately 90% of our component costs. Our
dependence on a small number of suppliers and our limited number of long-term
supply contracts expose us to several risks, including the inability to
obtain an adequate supply of components, price increases, late deliveries and
poor component quality.  Micron Semiconductor Electronics and Samsung
Semiconductor currently supply a majority of the DRAM integrated circuit
devices used in our DRAM memory products. A disruption in or termination of
our supply relationship with any of these significant suppliers by natural
disaster or otherwise, or our inability to develop relationships with new
suppliers, if required, would cause delays, disruptions or reductions in
product shipments or require product redesigns which could damage
relationships with our customers, and would increase our costs and/or prices.

	Our business would be harmed if we fail to effectively manage the
manufacture of our products.  Because we place orders with our suppliers and
manufacturers based on our forecasts of expected demand for our products, if
we inaccurately forecast demand, we may be unable to obtain adequate
manufacturing capacity or adequate quantities of components to meet our
customers' delivery requirements, or we may accumulate excess inventories.

    We may in the future need to find new suppliers and contract
manufacturers in order to increase our volumes or to reduce our costs.  We
may not be able to find suppliers or contract manufacturers that meet our
needs, and even if we do, qualifying a new contract manufacturer and
commencing volume production is expensive and time consuming.  If we
6

are required or elect to change suppliers or contract manufacturers, we may
lose revenues, and our customer relationships may suffer.


We may be unable to maintain a steady supply of components

	The electronics industry has experienced in the past, and may
experience in the future, shortages in IC devices, including DRAM, and SRAM
memory. We have experienced and may continue to experience delays in
component deliveries and quality problems, which have caused and could in the
future cause delays in product shipments. In addition, we have required and
could in the future require the redesign of some of our products. In
addition, industry capacity has, from time to time, become constrained such
that some vendors, which supply components for our products have placed their
customers, ourselves included, on allocation. This means that while we may
have customer orders, we may not be able to obtain the materials that we need
to fill those orders in a timely manner.


Our products are complex and may contain undetected hardware, firmware or
software errors or may fail to achieve interoperability standards that could
lead to an increase in our costs, reduce our net revenues, or damage our
reputation

    In order to satisfy our customers, the solutions that we design require
several different products to work together in a seamless fashion.  Our
solutions may fail to achieve various interoperability standards necessary to
satisfy our customers.  Moreover, products as complex as ours frequently
contain undetected hardware, firmware or software errors when first
introduced or as new versions are released.  We have from time to time found
errors in existing products, and we may from time to time find errors in our
existing, new or enhanced products.  Failure to achieve interoperability
among products or the occurrence of hardware, firmware or software errors in
various products could adversely affect sales of our products, cause us to
incur significant warranty and repair costs, divert the attention of our
engineering personnel from our product development efforts, cause significant
customer relations problems and could result in product returns and loss of
revenue.


Steps taken to protect our intellectual property may not be adequate to
protect our business, and if so, we may be unable to compete effectively

    We primarily rely on unpatented trade secrets to protect our
proprietary rights.  We seek to protect these secrets, in part, through
confidentiality agreements with employees, consultants, and our customers and
potential customers.  If these agreements are breached, or if our trade
secrets become known to, or are independently developed by competitors, we
may not have adequate remedies for such breach.  We cannot be certain that
the steps we take to protect our intellectual property will adequately
protect our proprietary rights, that others will not independently develop or
otherwise acquire equivalent or superior technology or that we can maintain
such technology as trade secrets.  In addition, the laws of some of the
countries in which our products are or may be developed, manufactured or sold
may not protect our products and intellectual property rights to the same
extent as the laws of the United States, or at all.  Our failure to protect
7


our intellectual property rights could have a material adverse effect on our
business, operating results or financial condition.


We may become involved in costly and lengthy patent infringement or
intellectual property litigation which could divert management attention,
cause us to incur significant costs and prevent us from selling our products

    We may receive communications from third parties alleging infringement of
patents or other intellectual property rights, and there is the chance that
third parties may assert infringement claims against us.  Any such claims,
with or without merit, could result in costly and time-consuming litigation
or cause product shipment delays that would adversely affect our business,
financial condition or operating results.  It is possible that holders of
patents or other intellectual property rights may assert rights that apply
broadly to our industry, and that such patent or other intellectual property
rights, if valid, may apply to our products or technology.  These or other
claims may require us to stop using the challenged intellectual property or
to enter into royalty or licensing agreements.  We cannot be certain that the
necessary licenses will be available or that they can be obtained on
commercially reasonable terms.  Our business, operating results or financial
condition could be materially adversely affected if we were to fail to obtain
such royalty or licensing agreements in a timely manner or on reasonable
terms.


Failure to comply with governmental regulations by our OEM customers or us
could reduce our sales or require design modifications

    Our products are subject to U.S. Department of Commerce and Federal
Communications Commission regulations as well as various standards
established by various state, local and foreign authorities.  Failure to
comply with existing or evolving U.S. or foreign governmental regulation or
to obtain timely domestic foreign regulatory approvals or certificates, could
materially harm our business by reducing our sales or requiring design
modifications to our products or the products of OEM customers.  U.S. export
laws also prohibit the export of our products to a number of countries deemed
by the United States to be hostile.  These restrictions may make foreign
competitors facing less stringent controls on their products more competitive
in the global market than we or our customers are.  The U.S. government may
not approve future export license requests.  In addition, the list of
products and countries for which export approval is required, and the
regulatory policies with respect thereto, could be revised.


Our quarterly operating results are volatile and may cause our stock price to
fluctuate and the price of our common stock could fall if quarterly results
are lower than investor expectations and you may lose all or part of your
investment

    Our revenues and operating results have varied on a quarterly basis in
the past and are likely to vary significantly from quarter to quarter in the
future.  The variations in our revenues and operating results are due to a
number of factors, many of which are outside of our control, including among
others:

      Changes in our operating expenses;
8


      Our ability to develop and market new products;
      The ability of our contract manufacturers and suppliers to
      produce and supply our products in a timely manner;
      The market acceptance of our new memory and fibre channel
      products;
      The timing of the introduction or enhancement of products by us,
      OEM and distribution channel customers, and competitors;
      The level of product and price competition;
      Our ability to expand our relationship with OEMs, distribution
      channel and end user customers;
      Activities of and acquisitions by our competitors;
      Changes in technology, industry standards or consumer preferences;
      Changes in the mix of products sold, as our fibre channel
      connectivity products typically have higher margins than our memory and
	disk array products;
      Personnel changes;
      Changes in customer budgeting cycles and the timing of their purchase
      decisions; and
      General economic conditions.

    Accordingly, you should not rely on quarter-to-quarter comparisons of
our operating results as an indication of future performance.  It is possible
that in some future periods our operating results will be below the
expectations of investors.  In this event, the price of our common stock will
likely decline.

    We generally do not have a significant backlog of unfilled orders.  As
a result, our revenues in a given quarter depend substantially on orders
booked in that quarter.  A decrease in the number of orders we receive is
likely to adversely and disproportionately affect our quarterly operating
results.  Our expense levels are partially based on our expectations of
future sales.  Therefore, our expenses may be disproportionately large as
compared to sales in a quarter with reduced orders.  As a result, we may be
unable to adjust spending in a timely manner to compensate for any unexpected
revenue shortfall.  Any shortfall in sales in relation to our quarterly
expectations or any delay of customer orders would likely have an immediate
and adverse impact on our business, quarterly operating results and financial
condition.


                            Risks Related to Our Industry

Because a significant proportion of our revenues are generated from the sale
of our memory products, our revenues will be limited if new memory
technologies obsolete our products and we cannot develop memories with such
new technologies in time, or we cannot develop memories for new processors

    New memory technologies are currently in development by our competitors
that may obsolete and compete for market share with our current products if
they are successfully developed and commercialized.  Because these competing
new technologies are likely to have support from technology companies with
more significant resources than we have, they may limit our growth.


9


We are subject to the cyclical nature of the semiconductor industry and
continued deterioration of the current cycle could adversely affect our
business

	The semiconductor industry, including the memory markets in which we
compete, is highly cyclical and is characterized by constant and rapid
technological change, rapid product obsolescence and price erosion, evolving
standards, short product life cycles and wide fluctuations in product supply
and demand. The industry has experienced significant downturns in the past
and is currently experiencing a significant downturn that may get worse.
Industry downturns are often connected with, or in anticipation of, maturing
product cycles of both semiconductor companies' and their customers' products
and declines in general economic conditions. These downturns have been
characterized by diminished product demand, production overcapacity, high
inventory levels and accelerated erosion of average selling prices. The
continuation or worsening of the current downturn in the industry and any
future downturns could have a material adverse effect on our business and
operating results. Furthermore, any upturn in the semiconductor industry
could result in increased demand for, and possible shortages of, components
we use to manufacture and assemble our integrated circuits. Such shortages
could have a material adverse effect on our business and operating results.


Our operating results may suffer because of increasing competition in the
memory and fibre channel connectivity markets

    The market in which we compete is intensely competitive.  As a result,
we face a variety of significant challenges, including rapid technological
advances, price erosion, changing customer preferences and evolving industry
standards.  Our competitors continue to introduce products with improved
price/performance characteristics, and we will have to do the same to remain
competitive.  Increased competition could result in significant price
competition, reduced revenues, lower profit margins or loss of market share,
any of which would have a material adverse effect on our business, operating
results and financial condition.  We cannot be certain that we will be able
to compete successfully against either current or potential competitors in
the future.

    Many of our current and potential competitors have substantially
greater financial, technical, marketing and distribution resources than we
have.  We face the threat of potential competition from new entrants into the
memory market, including large technology companies that may develop
or acquire differentiating technology and then apply their resources,
including established distribution channels and brand recognition, to obtain
significant market share.  It is also possible that we will face increased
competition due to mergers or consolidations of existing or potential
competitors.  Emerging companies attempting to obtain a share of the existing
market act as potential competition as well.


We may not be able to maintain or improve our competitive position because of
the intense competition in our industry

    We conduct business in an industry characterized by intense competition,
rapid technological change, evolving industry standards, declining average
sales prices and rapid product obsolescence. Our competitors include many
large domestic and international companies that have substantially greater

10


financial, technical, marketing, distribution and other resources, broader
product lines, lower cost structures, greater brand recognition and longer-
standing relationships with customers and suppliers. As a result, our
competitors are able to respond better to new or emerging technologies or
standards and to changes in customer requirements. Our competitors are able
to devote greater resources to the development, promotion and sale of
products, and may be able to deliver competitive products at a lower price.

    We expect to face competition from existing competitors and new and
emerging companies that may enter our existing or future markets with similar
or alternative products, which may be less costly or provide additional
features. In addition, some of our significant suppliers are also our
competitors, many of whom have the ability to manufacture competitive
products at lower costs as a result of their higher levels of integration. We
also face competition from current and prospective customers that evaluate
our capabilities against the merits of manufacturing products internally.
Competition may arise due to the development of cooperative relationships
among our current and potential competitors or third parties to increase the
ability of their products to address the needs of our prospective customers.
Accordingly, it is possible that new competitors or alliances among
competitors may emerge and rapidly acquire significant market share.

    We expect our competitors will continue to improve the performance of
their current products, reduce their prices and introduce new products that
may offer greater performance and improved pricing, any of which could cause
a decline in sales or loss of market acceptance of our products. In addition,
our competitors may develop enhancements to or future generations of
competitive products that may render our technology or products obsolete or
uncompetitive.


In our industry, technology and other standards change rapidly, and we may be
unable to keep pace with changes and could hinder our ability to compete
effectively

    The market for our products is characterized by rapidly changing
technology, evolving industry standards and the frequent introduction of new
products and enhancements.  If we do not keep pace with these changes, we may
lose market share to our competitors and fail to meet our financial and
operational objectives.  Because many of our products are designed to work
with software produced by third parties, our operating results could be
adversely affected if such third parties delay introduction of new versions
of their software for which we have designed new products or if they make
unanticipated modifications to such software.  Our future success depends in
a large part on our ability to enhance our existing products and to introduce
new products on a timely basis to meet changes in customer preferences and
evolving industry standards.  We cannot be certain that we will be successful
in designing, supplying and marketing new products or product enhancements
that respond to such changes in a timely manner and achieve market
acceptance.  We also cannot be certain that we will be able to develop the
underlying core technologies necessary to create new products and
enhancements, or that we will be able to license the core technologies from
third parties.  Additionally, changes in technology and customer preferences
could potentially render our current products uncompetitive or obsolete.  If
we are unable, for technological or other reasons, to develop new products or
enhance existing products in a timely manner in response to technological and
market changes, our business, operating results and financial condition would
11


be materially adversely affected.



                  Risks Related to the Securities Markets

The issuance of shares to SovCap Equity Partners, Arab Commerce Bank, and
others may cause significant dilution in the value of our common stock

    The issuance of shares of our common stock to SovCap Equity Partners and
Arab Commerce Bank will dilute the equity interest of existing stockholders
and could have an adverse effect on the market price of our common stock.  As
of December 31, 2003, we had 9,884,577 shares of common stock reserved for
possible future issuances upon, among other things, the conversion of the
series 1 bridge financing note held by Arab Commerce Bank and conversion of
the Series B Preferred shares held by SovCap Equity Partners, the conversion
of Series A Preferred shares, and the exercise of outstanding options and
warrants.

    We may seek additional financing, which would result in the issuance of
additional shares of our capital stock and/or rights to acquire additional
shares of our capital stock.  Additional issuances of capital stock would
result in a reduction of current shareholders' percentage interest in Cambex.
If the exercise price of any outstanding options or warrants is lower than
the price per share of common stock at the time of the exercise, then the
price per share of common stock may decrease because the number of shares of
common stock outstanding would increase without a corresponding increase in
the dollar amount assigned to stockholders' equity.

    The addition of a substantial number of shares of common stock into the
market, including those issuable upon conversion of the Series A Preferred
shares, or by the registration of any other of our securities under the
Securities Act may significantly and negatively affect the prevailing market
price for our common stock.  Furthermore, future sales of shares of common
stock issuable upon the exercise of outstanding options and warrants may have
a depressive effect on the market price of the common stock, as these
warrants and options would be more likely to be exercised at a time when the
price of the common stock is in excess of the applicable exercise price.


Sales of our common stock in the public market by the selling securityholders
could cause our stock price to decline

    SovCap Equity Partners, Arab Commerce Bank, and Correllus International
hold securities which may be exercisable for and convertible into
approximately 9.1% of our outstanding capital stock at December 31, 2003.
Sales of a substantial number of shares of our common stock could cause our
stock price to decline.  In addition, the sale of these shares could impair
our ability to raise capital through the sale of additional stock.


Our stock price is volatile and may drop unexpectedly, which could cause you
to lose all or part of your investment

    The stock market in general, and the stock prices of technology-based
companies in particular, have experienced extreme volatility that often has
been unrelated to the operating performance of any specific public company.
12


Changes in general economic conditions or developments in the data storage,
technology, and personal computer and workstation markets that affect
investor confidence could have a dramatic impact on the market price of our
common stock.  Also, changes in estimates of our earnings as well as any of
the factors described in this "Risk Factors" section could have a significant
impact on the market price of our common stock.  In the past, companies that
have experienced volatility in the market price of their stock have been the
subject of securities class action litigation.  We may be a target of such
litigation in the future.  If we become the subject of securities class
action litigation, it could result in substantial costs and a diversion of
management's attention and resources and could seriously harm our business,
financial condition and results of operations.


We may engage in future acquisitions that dilute our stockholders' equity and
cause us to incur debt or assume contingent liabilities

    We may pursue acquisitions that could provide new technologies or
products.  Future acquisitions may involve the use of significant amounts of
cash, potentially dilutive issuances of equity or equity-linked securities,
the incurrence of debt, or amortization expenses related to goodwill and
other intangible assets.

      In addition, acquisitions involve numerous risks, including:

         difficulties in the assimilation of the operations, technologies,
         products and personnel of the acquired company;
         the diversion of management's attention from other business
         concerns;
         risks of entering markets in which we have no or limited prior
         experience; and
         the potential loss of key employees of the acquired company.

    In the event that such an acquisition does occur and we are unable to
successfully integrate businesses, products, technologies or personnel that
we acquire, our business, operating results or financial condition could be
materially adversely affected.


If you invest in our common stock, you should not expect to receive a current
return because we do not pay, and have no foreseeable plans to pay cash
dividends on our common stock

	We have never paid cash dividends on our common stock and do not
anticipate paying any cash dividends in the foreseeable future.  We intend to
retain future earnings, if any, to finance the growth and expansion of our
business and for general corporate purposes.