SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. Certain statements contained in this Form 10-KSB constitute "forward looking statements" within the meaning of the Private Securities Reform Act of 1995. Such forward-looking statements involve a number of known and unknown risks, uncertainties, and other factors which may cause actual results, performance or achievements of the Company to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, but are not limited to, changes in the markets for the Company's products and services, regulatory and economic factors, economic times, competition, litigation, client or customer arrangements that may expand or contract, adverse weather conditions, possible technological advances or obsolescence in existing or future products or services, the variability in the value of the Company's securities inventory products, customer

concentration, and other risks detailed in the Company's other periodic reports filed with the United States Securities and Exchange Commission (SEC or Commission). The words "believe," "expect," "anticipate," "may," "plan," and similar expressions identify forward- looking statements. Readers are cautioned not to place undue reliance on these forward- looking statements, which speak only as of the date the statement was made.

A. Summary of Corporate History -- Regulation S-B, Item 101(a). Form and year of organization, bankruptcy, material reclassification, merger, etc.

Dupont Direct Financial Holdings, Inc. (Over-The-Counter Electronic Bulletin Board (OTCEBB): DIRX or the Company) is a Georgia corporation, organized in 1980, formerly known as Marci International Imports, Inc.(and for approximately ten months in1999 and early 2000 as FAB Global, Inc.). Marci conducted an initial public offering in February 1987, on a Form S-18 Registration Statement under the Securities Act of 1933 (the"Securities Act"). In connection with an application to list its Common Stock on the National Association of Securities Dealers Automated Quotation (NASDAQ) system, Marci also registered its Common Stock pursuant to Section 12(g) of the Securities Exchange Act of 1934 (the "Exchange Act"). As a result of a 1989 bankruptcy proceeding, Marci became an inactive shell that had no material assets, liabilities or business activities. Marci remained inactive until June 1998 when its stockholders approved a plan of reorganization proposed by Capston Network Company of Clearwater, Florida ("Capston"). This plan of reorganization authorized Capston to seek a suitable business combination opportunity for the Company, authorized a series of changes in the Company's corporate structure, and provided for stock-based compensation to Capston and others for services rendered and to be rendered in connection with the implementation of the plan of reorganization. Capston began actively seeking a business opportunity for the Company in the summer of 1998.

B. The Acquisition of Operating Businesses.

After investigating a number of potential opportunities, Capston negotiated a business combination with Wavecount, Inc.(Wavecount or WCI) for its operating businesses and other capital assets in exchange for stock. One or more other or different business combinations were considered and pursued by the Company, but the only such business combination that was consummated is the Transaction reported upon in the Annual Report on Form 10-KSB for the period ended March 31, 2001 and filed on June 29, 2001. DIRX successfully completed the reverse merger transaction(the Transaction) authorized by the shareholders pursuant to the resolutions adopted on or about July 17, 1998. The Company thus became a holding company for financial services operating subsidiaries. From 1989 until May 17, 2000, the Company had no material assets, liabilities or business operations. In substance, the Company was a publicly-held shell corporation whose sole business

activity was the search for a suitable operating business to become a merger partner. The Transaction had been agreed upon in the first calendar quarter of 2000, but because of requisite regulatory notices and approvals, it was not possible to bring the Transaction to conclusion before mid May. Moreover, prior to the Transaction, the Company followed or had adopted a 52/53 week fiscal year/period that produced a different period-end each year, and that also differed from the fiscal periods of the operating businesses that were acquired in the Transaction. For that reason the Company's fiscal year was changed to end at March 31 and the operating companies were changed to match.

C. Regulation S-B, Item 101(b) -- Services and Markets.

1. Current Organization.

In the Transaction, the Company acquired three (3) operating businesses and stock and options on stock in publicly traded issuers from Wavecount, Inc. (Wavecount or WVCI), in exchange for 5.8 million shares of DIRX' common stock. At that time, these businesses and securities had a fair market value of approximately $1,700,000. Also in the Transaction, the previous sole Director of the Board of Directors (Board) and sole officer, Sally Fonner, pursuant to the mandate rendered by the shareholders, resigned. Upon her resignation, pursuant to the By-Laws and in accordance with all other applicable laws, she appointed a new Board of Directors consisting of five individuals who were Wavecount's designees or nominees. The new Directors were Elroy Drake, Marc Greenspan, Steven A. Muchnikoff, David W. Parsons, and Randy M. Strausberg. Mr. Muchnikoff resigned in June 2001, and Mr. Strausberg died in June 2003. Mr. Greenspan resigned in January 2004. The Board therefore now consists of Messrs. Drake and Parsons. Mr. Parsons became the Company's Chairman and Chief Executive Officer after Mr. Strausberg's death.

Following the end of the fiscal year ended March 31, 2004, a culmination of events resulted in the Company's cessation of the conduct of any active business. All employees departed, except for Mr. Parsons, who has remained for limited purposes. The Company's offices on lower Broadway in Manhattan were closed. This event is described more fully herein in Section ___.

2. Operating Businesses of the Company.

During the fiscal year ended March 31, 2004, and until April 22, 2004, when active business operations ceased, the operating businesses and an affiliate investment of the Company were as follows.

Dupont Securities Group, Inc. ("DSGI"), a registered United States securities broker-dealer

operating under the NASD's $100,000 net capital requirements.

A 47.5% equity interest in Native American Financial Services Company ("NAFSCO"). NAFSCO is a financial services company located in Window Rock, Arizona, the capital of the Navajo Nation. During the year ended March 31, 2002, NAFSCO formed as its wholly- owned subsidiary Native American Securities Company (NASCo.), an SEC registered and NASD member broker-dealer.

Wavecount Advisory Services, Inc. (WASI), is a firm that renders capital structuring advice for issuers or prospective issuers prior to the time that an actual issuance of securities is actively pursued by that particular business client.

3. Business of the Company after the Transaction.

From May 2000, until on or about April 22, 2004, the Company operated as a holding company conducting business activities through three subsidiaries, an investment in an LLC, and NAFSCO., an investment affiliate. The main business lines centered around Fixed Income Securities including brokered deposit or certificates of deposit and a unique trading strategy applicable to zero-coupon bonds. The principal operating business of the Company was a New York formed and domiciled company, Dupont Securities Group, Inc. (DSGI), registered with the United States Securities and Exchange Commission (SEC) and a member of the National Association of Securities Dealers, Inc. (NASD), a securities broker-dealer (B-D).

Wavecount Advisory Services, Inc.(WASI) is a wholly-owned subsidiary of DIRX. WASI is an investment-banking subsidiary that is organizationally utilized for capital financing and management advisory services when a prospective sale of securities is not contemplated in the near-term. WASI was the venture capital/merchant/investment banking arm of DIRX.

The Company owns, controls or otherwise participates in the ownership and/or management of several other businesses that, for various reasons, have never commenced any significant operations.

D. Competition and Regulation -- Regulation S-B Item 101(b)(4),(8) & (9).

Since the Company ceased active operations shortly after the end of the fiscal year reported upon in this Report, it would not be helpful or meaningful to users of this Report to address the information contemplated by this section at this time.

E. Research, Environmental Compliance and Headcount --Regulation S-B Item 101(b)(10), (11) & (12).

The Company's research and development costs have historically been, and are expected to continue to be, negligible. The Company's costs for compliance with environmental laws and regulations are insignificant. As of the date of this filing, the Company employs one person, part-time.

F. Subsequent Events.

On or about April 22, 2004, the Company ceased conducting any active business. On that date, the landlord of the Company's leased premises at 42 Broadway in lower Manhattan caused the Company to be evicted from those premises. This was in breach and violation of the landlord's agreement with the Company to permit the Company's orderly move from the premises on April 30, 2004.

As a result of the wrongful eviction, the Company's business was for all practical purposes destroyed. The Company's employees dispersed to other employment. The Company's records were made largely inaccessible to the Company without the payment of monetary sums that were both beyond the Company's means and in the nature of "ransom."

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