Edgar Filing: MOBILEPRO CORP

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

FORM 10-QSB

QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period ended December 31, 2002

Commission File Number 002-97869-D

MOBILEPRO CORP.
(Exact name of registrant as specified in charter)

DELAWARE 87-0419571
-------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

30 West Gude Drive, Suite 480, Rockville, MD 20850
-------------------------------------------- -----
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (301) 230-9125
--------------

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 [ ]

State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: As of February 18, 2002, the Company
had outstanding 19,516,788 shares of its common stock, par value $0.001.

TABLE OF CONTENTS

ITEM NUMBER AND CAPTION PAGE
----------------------- --------

PART I

ITEM 1. FINANCIAL STATEMENTS 3
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 7
ITEM 2. MANAGEMENT'S DISCUSSION AND PLAN OF OPERATIONS 22

PART II

ITEM 1. LEGAL PROCEEDINGS 28
ITEM 2. CHANGES IN SECURITIES 28
ITEM 3. DEFAULTS UPON SENIOR SECURITIES 30
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 30
ITEM 5. OTHER INFORMATION 30
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K 31

ITEM 1. FINANCIAL STATEMENTS

ASSETS
DECEMBER 31, MARCH 31,
2002 2002
(UNAUDITED) (AUDITED)
------------ ----------

CURRENT ASSETS
Cash and cash equivalents $ 1,453 $ 154
Prepaid expenses 62,000 -
------------ ----------

TOTAL CURRENT ASSETS 63,453 154
----------

Fixed assets, net of depreciation 42,821 -
------------ ----------

TOTAL ASSETS $ 106,274 $ 154
============ ----------
LIABILITIES AND STOCKHOLDERS' DEFICIT

December 31, March 31,
2002 2002
(Unaudited) (Audited)
------------------- -------------------

LIABILITIES
Current Liabilities:
Due to officer $ 331,111 $ 44,262
Short-term debt 191,000 75,000
Accounts payable and accrued expenses 1,152,790 187,663
------------------- -------------------

Total Current Liabilities 1,674,901 306,925
------------------- -------------------

LONG-TERM DEBT 350,000 -
------------------- -------------------

TOTAL LIABILITIES 2,024,901 306,925
------------------- -------------------

STOCKHOLDERS' DEFICIT
Preferred stock, $.001 par value, authorized
5,000,000 shares, and 35,425 shares
issued and outstanding at December 31, 2002 and March 31,
2002, respectively 35 35
Common stock, $.001 par value, authorized 50,000,000
shares at December 31, 2002 and March 31, 2002, and
19,516,788 and 4,175,492 shares issued and
outstanding, respectively 19,517 4,176
Additional paid-in capital 4,189,605 3,596,613
Deficit accumulated during development stage (6,127,784) (3,907,595)
------------------- -------------------

Total Stockholders' Deficit (1,918,627) (306,771)
------------------- -------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 106,274 $ 154
=================== ===================

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

MOBILEPRO CORP. AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(WITH CUMULATIVE TOTALS SINCE INCEPTION)

NINE MONTHS ENDED THREE MONTHS ENDED Cumulative
December 31, December 31, December 31, December 31, Totals Since
2002 2001 2002 2001 Inception
------------ -------------- -------------- -------------- -------------------

OPERATING REVENUES
Revenue $ - $ 299,994 $ - $ - $ -

COST OF SALES - - - - -
------------ -------------- -------------- -------------- -------------------

GROSS PROFIT - 299,994 - - -
------------ -------------- -------------- -------------- -------------------

OPERATING EXPENSES
Professional fees and compensation expenses 2,027,719 1,245,170 157,547 560,056 2,027,719
Advertising and marketing expenses 2,430 3,173 - 1,827 2,430
Research and development costs 4,996 188,518 - 83,781 4,996
General and administrative expenses 39,656 69,940 2,977 22,299 4,195,968
Office rent and expenses 71,260 109,700 7,245 11,524 71,260
Travel and meals expenses 12,472 63,642 - 13,577 12,472
Depreciation and amortization 12,000 11,439 4,000 5,439 12,000
------------ -------------- -------------- -------------- -------------------
Total Operating Expenses 2,170,533 1,691,582 171,769 698,503 6,326,845
------------ -------------- -------------- -------------- -------------------

NET LOSS BEFORE OTHER INCOME (EXPENSE) (2,170,533) (1,391,588) (171,769) (698,503) (6,326,845)

OTHER INCOME (EXPENSE)
Forgiveness of debt - - - - 276,738
Interest expense - - - - (469)
Other expense (49,656) - (1,222) - (77,264)
Interest income - 4,001 - 2,667 56
------------ -------------- -------------- -------------- -------------------
Total Other Income (Expense) (49,656) 4,001 (1,222) 2,667 199,061
------------ -------------- -------------- -------------- ------------------

NET LOSS BEFORE PROVISION FOR INCOME TAXES (2,220,189) (1,387,587) (172,991) (695,836) (6,127,784)
Provision for Income Taxes - - - - -
------------ -------------- -------------- -------------- -------------------

NET LOSS APPLICABLE TO COMMON SHARES (2,220,189) $ (1,387,587) $ (172,991) $ (695,836) $ (6,127,784)
============ ============== ============== ============== ===================

NET LOSS PER BASIC AND DILUTED SHARES $ (0.13007) $ (0.28744) $ (0.00886) $ (0.14414)
============ ============== ============== ==============

WEIGHTED AVERAGE NUMBER OF COMMON
SHARES OUTSTANDING 17,068,691 4,827,421 19,516,788 4,827,421
============ ============== ============== ==============

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

MOBILEPRO CORP. AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(WITH CUMULATIVE TOTALS SINCE INCEPTION)

Cumulative
Totals Since
2002 2001 Inception
------------ ---------- ------------

CASH FLOW FROM OPERATING ACTIVITIES
Net loss $(2,220,189) $(866,448) $(6,127,784)
------------ ---------- ------------
ADJUSTMENTS TO RECONCILE NET LOSS TO NET CASH
USED IN OPERATING ACTIVITIES:
Forgiveness of debt - - (276,738)
Depreciation 12,000 - 12,000
Common stock issued for services 1,208,253 639,660 4,429,912

CHANGES IN ASSETS AND LIABILITIES
(Increase) in accounts receivable - - -
(Increase) in inventory - - -
(Increase) in prepaid expenses and other assets (62,000) (1,900) (62,000)
Increase in accounts payable and
and accrued expenses 410,386 76,082 934,122
------------ ---------- ------------
Total adjustments 1,568,639 713,842 5,037,296
------------ ---------- ------------

NET CASH (USED IN) OPERATING ACTIVITIES (651,550) (152,606) (1,090,488)
------------ ---------- ------------

CASH FLOWS FROM INVESTING ACTIVITIES
Increase in amounts due to related parties 286,849 - 286,849
Acquisitions of fixed assets - (299) -
------------ ---------- ------------
-
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES 286,849 (299) 286,849
------------ ---------- ------------

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

MOBILEPRO CORP. AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM, INC.)
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FOR THE NINE MONTHS ENDED DECEMBER 31, 2002 AND 2001
(WITH CUMULATIVE TOTALS SINCE INCEPTION)

Cumulative
Totals Since
2002 2001 Inception
---------- -------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from common stock issuances $ - $ - $ 100
Proceeds from borrowings, net - - 394,730
Change in officer loan, net - - 44,262
Net proceeds from issuance of notes payable 366,000 154,055 366,000
---------- -------- ----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 366,000 154,055 805,092
---------- -------- ----------

NET INCREASE IN
CASH AND CASH EQUIVALENTS 1,299 1,150 1,453

CASH AND CASH EQUIVALENTS -
BEGINNING OF PERIOD 154 66 -
---------- -------- ----------

CASH AND CASH EQUIVALENTS - END OF PERIOD $ 1,453 $ 1,216 $ 1,453
========== ======== ==========

SUPPLEMENTAL DISCLOSURE OF NONCASH
ACTIVITIES:
Issuance of common stock for:

Services $1,208,253 $639,660 $4,429,912
========== ======== ==========

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

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2002 AND 2001

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION

The condensed consolidated unaudited interim financial statements included
herein have been prepared, without audit, pursuant to the rules and regulations
of the Securities and Exchange Commission. The condensed consolidated financial
statements and notes are presented as permitted on Form 10-QSB and do not
contain information included in the Company's annual financial statements and
notes. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted pursuant
to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. It is
suggested that these condensed consolidated financial statements be read in
conjunction with the March 31, 2002 audited financial statements and the
accompanying notes thereto. While management believes the procedures followed in
preparing these condensed consolidated financial statements are reasonable, the
accuracy of the amounts are in some respects dependent upon the facts that will
exist, and procedures that will be accomplished by the Company later in the
year.

These condensed consolidated unaudited financial statements reflect all
adjustments, including normal recurring adjustments which, in the opinion of
management, are necessary to present fairly the consolidated operations and cash
flows for the periods presented.

Mobilepro Corp formerly Craftclick.com, Inc. was incorporated under the laws of
the State of California in January 1999, as BuyIt.com, Inc. ("BuyIt"). From
inception through March 31, 1999, the Company engaged in preliminary activities
related to the set up of an Internet auction business. On April 16, 1999, the
Company entered into an Agreement and Plan of Reorganization ("Plan") with
Tecon, Inc. ("Tecon"), a Utah Corporation, wherein all of the outstanding shares
and subscriptions of BuyIt were exchanged for 8,500,000 shares (for the
outstanding shares of common stock of Tecon, and 245,997 shares (for the
outstanding subscriptions) of common stock of Tecon. At the conclusion of all
the transactions contemplated in the Plan, BuyIt shareholders and subscribers
owned 8,745,997 shares of total outstanding shares of 12,179,249, or 71.9%. The
survivor in the aforementioned combination was Tecon. However, the name of the
surviving company was changed to BuyIt.com, Inc., simultaneously with the Plan.
The combination of these two entities had been accounted for as a purchase. The
Company changed its name to Craftclick.com, Inc., on January 4, 2000, as a
result of changing its business strategy and focus-which was to become the
premier destination for buyers and sellers of arts and crafts products and
supplies through the use of Internet websites. However, the Company disposed of
substantially all assets in February of 2001 when secured creditors foreclosed
on loans to the Company.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

In April 2001, Craftclick.com, Inc. reorganized pursuant to a Plan of Merger
wherein its domicile was changed from Utah to Delaware, and the common stock was
reverse split on the basis of 1 new share for every 100 shares outstanding.

On June 6, 2001, Craftclick.com, Inc. merged with Mobilepro Corp a Delaware
corporation as of June 1, 2001. Under the merger agreement, Mobilepro Corp
merged into Craftclick.com, Inc. with Craftclick being the surviving corporation
and the Certificate of Incorporation and By Laws of Craftclick being the
constituent documents of the surviving corporation.

In July 2001, the Company changed its name to Mobilepro Corp.

On March 21, 2002, Mobilepro entered into an Agreement and Plan of Merger with
NeoReach, Inc., a private Delaware company, pursuant to which a newly-formed
wholly-owned subsidiary of Mobilepro merged into NeoReach in a tax-free
transaction. NeoReach is a development stage company designing state of the art
modem solutions to support third generation (3G) wireless communications
systems. The merger was consummated on April 23, 2002. As a result of the
merger, NeoReach is now a wholly-owned subsidiary of Mobilepro. On April 23,
2002, the company issued 12,352,129 shares of its common stock in a one-for-one
tax-free stock exchange to the holders of NeoReach's common stock pursuant to
the Agreement. This was a cash-less transaction and there were no payments or
finder's fees involved. The Board of Directors determined the consideration to
be a fair compensation to the NeoReach shareholders. The issuance of the shares
were valued at a fair value of $6,546,628, based on the last trading price of
$0.53 and assuming there was actual active trading of the stock at that time.
The valuation of NeoReach in the merger agreement was based on several factors,
as described in the table below excluding intangible assets and goodwill,
including that over thirty-three man years of development efforts had been
accumulated for achieving the prototype third generation modem boards for the
base station applications, that a management team and engineering team were in
place, that office and laboratory facilities were in place, that six patents had
been filed or were already approved, and that contracts and relationships had
already been established with potential customers both in the United States and
Korea. The value of intangible assets and goodwill, such as contacts,
relationships and potential customers, has not been included in the table below
since it is difficult to estimate a real value, although it could be very
significant, on these items. The transaction was concluded following arms-length
negotiations.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)

The Company believes the issuance of the stock to be exempt from registration
under Section 4(2) of the Securities Act. The related parties from both the
Company and NeoReach were Messrs. Daniel Lozinsky, Arne Dunhem, Scott Smith and
Ken Min. Mr. Daniel Lozinsky who was a controlling stockholder of Mobilepro also
owned approximately 32.5% of NeoReach.

Approximate valuation of NeoReach, Inc. (Excluding Intangible Assets and
Goodwill):

Personnel, engineering man effort, 33 man-years $4.5M
Patents, awarded, allowed, pending, 6 each $1.8M
Tangible assets $0.2M

Total Valuation $6.5M
=====

Consistent with the accounting imposed on other purchase business combinations,
the cost of reverse acquisitions should be measured at the fair value of the net
assets acquired, or the value of the consideration paid, if more apparent. A
special rule is that, if fair market value cannot be determined for the issuer's
stock, and the transaction is valued at the fair market value of the issuer's
net assets, no goodwill should be recognized in the transaction. Therefore, the
transaction was valued at par value of $.001.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the
Company and its wholly owned subsidiary. All significant intercompany accounts
and transactions have been eliminated in consolidation.

Development Stage Company

Mobilepro Corp is a development stage company. The Company since April 23, 2002
has devoted substantially all of its efforts to researching and developing
technology for the third generation wireless waves. Before the acquisition of
NeoReach, Inc., Mobilepro Corp focused on the integration and marketing of
complete mobile information solutions to the business market through strategic
partnership with established firms already delivering information technology
consulting, wireless service and vertical market application products and
services.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Use of Estimates

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

Revenue Recognition

The Company was a development stage company and had no revenues during the
period reported. For the period going forward, the Management intends to adopt a
new revenue policy as defined below.

The Company will recognize revenue both from sales of products and from service
contracts. Revenue from product sales that contain embedded software will be
recognized in accordance with the provisions of the American Institute of
Certified Public Accountants Statement of Position 97-2, "Software Revenue
Recognition."

Revenue from product sales will be recognized based on the type of sales
transactions as follows:

Shipments to Credit-Worthy Customers with No Portion of the Collection Dependent
on Any Future Event: Revenues will be recorded at the time of shipment.

Shipments to a Customer without Established Credit: These transactions are
primarily shipments to customers who are in the process of obtaining financing
and to whom the Company has granted extended payment terms. Revenues will be
deferred (not recognized) and no receivable will be recorded until a significant
portion of the sales price is received in cash.

Shipments where a Portion of the Revenue is Dependent Upon Some Future Event:
These consist primarily of transactions involving value-added resellers ("VAR")
to an end user. Under these agreements, revenues will be deferred and no
receivable will be recorded until a significant portion of the sales price is
received in cash. On certain transactions, a portion of the payment is
contingent upon installation or customer acceptance.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Revenue Recognition (Continued)

Upon non-acceptance, the Customer may have a right to return the product. The
Company will not recognize revenue on these transactions until these
contingencies have lapsed.

Certain of the Company's product sales are sold with maintenance/service
contracts. The Company will allocate revenues to such maintenance/service
contracts based on vendor-specific objective evidence of fair value as
determined by the Company's renewal rates. Revenue from maintenance/service
contracts will be deferred and recognized ratably over the period covered by the
contract.

Cash and Cash Equivalents

The Company considers all highly liquid debt instruments and other short-term
investments with an initial maturity of three months or less to be cash
equivalents.

The Company maintains cash and cash equivalent balances at several financial
institutions which are insured by the Federal Deposit Insurance Corporation up
to $100,000.

Income Taxes

Effective July 14, 2000, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 109 (the Statement), Accounting for Income
Taxes. The Statement requires an asset and liability approach for financial
accounting and reporting for income taxes, and the recognition of deferred tax
assets and liabilities for the temporary differences between the financial
reporting bases and tax bases of the Company's assets and liabilities at enacted
tax rates expected to be in effect when such amounts are realized or settled.
The cumulative effect of this change in accounting for income taxes as of
December 31, 2002 is $0 due to the valuation allowance.

Fair Value of Financial Instruments

The carrying amounts reported in the balance sheets for cash and cash
equivalents, and accounts payable approximate fair value because of the
immediate or short-term maturity of these financial instruments.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Advertising Costs

The Company expenses the costs associated with advertising as incurred.
Advertising and promotional expenses were approximately $2,430 and $3,173 for
the nine months ended December 31, 2002 and 2001, respectively.

Furniture and Equipment

Furniture and equipment are stated at cost. Depreciation is computed using the
straight-line method over the estimated useful lives of the assets.

When assets are retired or otherwise disposed of, the costs and related
accumulated depreciation are removed from the accounts, and any resulting gain
or loss is recognized in income for the period. The cost of maintenance and
repairs is charged to income as incurred; significant renewals and betterments
are capitalized. Deduction is made for retirements resulting from renewals or
betterments. Furniture and equipment consist of the following at December 31,
2002:

Office Furniture and Computer Equipment 3 to 5 Years

There was $12,000 and $ -0- charged to operations for depreciation expense for
the nine months ended December 31, 2002 and 2001, respectively.

Earnings (Loss) Per Share of Common Stock

Historical net income (loss) per common share is computed using the weighted
average number of common shares outstanding. Diluted earnings per share (EPS)
includes additional dilution from common stock equivalents, such as stock
issuable pursuant to the exercise of stock options and warrants. Common stock
equivalents were not included in the computation of diluted earnings per share
when the Company reported a loss because to do so would be antidilutive for
periods presented.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Earnings (Loss) Per Share of Common Stock (Continued)

The following is a reconciliation of the computation for basic and diluted EPS:

DECEMBER 31, DECEMBER 31,
2002 2001
------------ -----------
Net loss $(2,220,189) $ (787,587)

Weighted-average common shares outstanding
Basic 17,068,691 4,827,421

Weighted-average common stock equivalents:
Stock options - -
Warrants - -

Weighted-average common shares outstanding
(Diluted) 17,068,691 4,827,421
============ ===========

Options and warrants outstanding to purchase stock were not included in the
computation of diluted EPS because inclusion would have been antidilutive.

Reclassifications

Certain amounts for the nine months ended December 31, 2001 have been
reclassified to conform with the presentation of the December 31, 2002 amounts.
The reclassifications have no effect on net income for the nine months ended
December 31, 2001.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Recent Accounting Pronouncements

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
requires companies to recognize all derivative contracts as either assets or
liabilities in the balance sheet and to measure them at fair value. If certain
conditions are met, a derivative may be specifically designated as a hedge, the
objective of which is to match the timing of the gain or loss recognition on the
hedging derivative with the recognition of (i) the changes in the fair value of
the hedged asset or liability that are attributable to the hedged risk or (ii)
the earnings effect of the hedged forecasted transaction. For a derivative not
designated as a hedging instrument, the gain or loss is recognized in income in
the period of change. On June 30, 1999, the FASB issued SFAS No. 137,
"Accounting for Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133". SFAS No. 133 as amended by SFAS No.
137 is effective for all fiscal quarters of fiscal years beginning after June
15, 2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities". SFAS No. 133 as amended
by SFAS No. 137 and 138 is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000.

Historically, the Company has not entered into derivatives contracts to hedge
existing risks or for speculative purposes. Accordingly, the Company does not
expect adoption of the new standard to have a material effect on its
consolidated financial statements.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin ("SAB") No. 101, "Revenue Recognition in Financial Statements." SAB 101
provides guidance for revenue recognition under certain circumstances, and is
effective during the first quarter of fiscal year 2001. SAB 101 is not expected
to have a material effect on the consolidated results of operations, financial
position and cash flows.

On March 16, 2000, the Emerging Issues Task Force issued EITF 99-19 "Recording
Revenue as a Principal versus Net as an Agent" which addresses the issue of how
and when revenues should be recognized on a Gross or Net method as the title
implies. The emerging Issues Task Force has not reached a consensus but sites
SEC Staff Accounting Bulletin 101. EITF 99-19 does not affect the consolidated
financial statements.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

On July 20, 2000, the Emerging Issues Task Force issued EITF 00-14 "Accounting
For Certain Sales Incentives" which establishes accounting and reporting
requirements for sales incentives such as discounts, coupons, rebates and free
products or services. Generally, reductions in or refunds of a selling price
should be classified as a reduction in revenue. For SEC registrants, the
implementation date is the beginning of the fourth quarter after the
registrant's fiscal year end December 15, 1999. EITF 00-14 does not affect the
consolidated financial statements.

In June 2001, the FASB issued Statement No. 142 "Goodwill and Other Intangible
Assets". This Statement addresses financial accounting and reporting for
acquired goodwill and other intangible assets and supersedes APB Opinion No. 17,
Intangible Assets. It addresses how intangible assets that are acquired
individually or with a group of other assets (but not those acquired in a
business combination) should be accounted for in financial statements upon their
acquisition. This Statement also addresses how goodwill and other intangible
assets should be accounted for after they have been initially recognized in the
financial statements. This statement does not affect the consolidated financial
statements.

NOTE 3- GOING CONCERN

As shown in the accompanying condensed consolidated financial statements the
Company has sustained substantial net operating losses for the year ended March
31, 2002 and the period December 31, 2002 and periods prior. There is no
guarantee that the Company will be able to raise enough capital or generate
revenues to sustain its operations.

Management has received a commitment from Cornell Capital Partners, L.P. to
provide the Company with up to $10 million in financing under certain
conditions.

Additionally, assuming that the Company receives the full $10 million from
Cornell Capital, the Company believes that the amount will be sufficient enough
to implement NeoReach, Inc. its subsidiary's Plan over the next two years.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 4- STOCKHOLDERS DEFICIT

The following details the stock transactions for the period April 1, 2002
through December 31, 2002.

Common Stock

On April 23, 2002, we issued 12,352,129 shares of our common stock to the
holders of NeoReach's common stock pursuant to an Agreement and Plan of Merger,
dated March 21, 2002. A newly formed, wholly-owned subsidiary of Mobilepro
merged into NeoReach, in a tax-free one-for-one share exchange transaction. The
merger was consummated on April 23, 2002. As a result of the merger, NeoReach is
now a wholly-owned subsidiary of Mobilepro. The issuance of the shares were
valued at a fair value of $6,546,628, based on the last trading price of $0.53
and assuming there was actual active trading of our stock at that time. The
Company believes the issuance of the stock to be exempt from registration under
Section 4(2) of the Securities Act.

On May 31, 2002, the Company issued a total of 690,000 shares of its common
stock to the following parties: 450,000 shares to INFe, Inc., 150,000 shares to
Thomas Richfield, 60,000 shares to Francine Goodman, and 30,000 shares to Triple
Crown Consulting. These shares were issued for consulting services regarding the
Mobilepro-NeoReach merger. The issuance of the shares were valued at
$317,400,the fair value of our stock at that time. The Company believes the
value of the services provided were commensurate with the value of the stock
issued. The Company believes the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

On June 10, 2002, the Company issued a total of 784,314 shares of its common
stock to the following parties: 764,706 to Cornell Capital Partners, LP and
19,708 to Westrock Advisors, Inc. These shares were issued pursuant to an equity
line of credit arrangement with Cornell Capital Partners, dated May 31, 2002.
The issuance of the shares were valued at $517,647, the fair value of our stock
at that time. The Company believes the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 4- STOCKHOLDERS DEFICIT (CONTINUED)

On July 18, 2002, the Company issued a total of 305,000 shares of our common
stock to various parties. 160,000 shares of the restricted common stock was
issued to Daniel Lozinsky, a director of the corporation, in a private sale for
an aggregate cash consideration of $39,000 based on a Board Resolution as of
July 17, 2002. In addition, the Company also issued 20,000 shares of common
stock under the 2001 Equity Performance Plan and 100,000 restricted common stock
as compensation to Mark Johnson for various merger and acquisition related
services and associated back office services in accordance with a Consulting
Agreement dated July 17, 2002. The Company also issued 25,000 shares of
restricted common stock as compensation to M. Johnson & Associates, Inc. for
certain services in accordance with an Investor Relations Agreement dated July
17, 2002. The issuance of the shares was valued at $65,250, the fair value of
the stock at that time. The Company believes the value of the services provided
were commensurate with the value of the stock issued. The Company believes the
issuance of the stock to be exempt from registration under Section 4(2) of the
Securities Act.

On July 26, 2002, the Company issued a total of 500,000 shares of its restricted
common stock to Capital Research Group, Inc. for certain investor relations
consulting services in accordance with a Consulting Group Agreement dated July
25, 2002. The issuance of the shares was valued at $220,000, the fair value of
the stock at that time. The Company believes the issuance of the stock to be
exempt from registration under Section 4(2) of the Securities Act.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 4- STOCKHOLDERS DEFICIT (CONTINUED)

On September 4, 2002, the Company issued a total of 709,853 shares of its common
stock to various parties. 100,000 shares were issued to Hee Han Bang, a
non-affiliated and accredited/sophisticated investor in a private sale for an
aggregate cash consideration of $25,000. These shares were issued at $0.25 per
share based on a Board Resolution fixing the value of the securities on and as
of August 9, 2002. 150,000 shares of the common stock was issued to Daniel
Lozinsky, a director of the Corporation, in a private sale for an aggregate cash
consideration of $15,000. These shares were issued based on a Board Resolution
as of August 20, 2002. The Company issued a total of 209,853 shares of its
common stock to shares of INFe, Inc. based on a Board Resolution as of August
19, 2002. These shares were issued for consulting services in connection with
the Mobilepro-NeoReach merger and a Reverse Merger Engagement Agreement dated
January 11, 2002 between Neo-Reach, Inc. and INFe, Inc. The issuance of the
shares was valued at $62,956, the fair value of the stock at that time. The
Company also granted a total of 250,000 shares of our restricted common stock to
Parag Sheth, an executive of the Corporation. Parag Sheth was granted 150,000
shares of the Company's restricted common stock for forgiving a total of $15,000
in salary corresponding to a price of $0.10 per share and he was also granted
100,000 shares of the Company's restricted common stock as an inducement for
providing services for the Corporation. These shares were issued based on a
Board Resolution as of August 20, 2002 and the issuance of the shares was valued
at $25,000. The Company believes the value of the services provided were
commensurate with the value of the stock issued. The Company beleives the
issuance of the stock to be exempt from registration under Section 4(2) of the
Securities Act.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 5- PATENTS

As of January 23, 2003, the Company has filed a total of six patent applications
which were pending with the U.S. Patent and Trademark Office (PTO) in the area
of "Smart Antenna" technology. As of January 23, 2003, the Company has been
granted approval of five patents and one patent application is still pending
approval. The five approved patents are as follows:

"Smart Antenna with Adaptive Convergence Parameter" with PTO Patent Number
6,369,757, issued April 9, 2002; "A Smart Antenna With No Phase Calibration For
CDMA Reverse Link" with PTO Patent Number 6,434,375 issued August 13, 2002; "PN
Code Acquisition With Adaptive Antenna Array and Adaptive Threshold for DS-CDMA
Wireless Communication" with PTO Patent Number 6,404,803, issued June 11, 2002;
"New Cellular Architecture ofr Code Division Multiple Access SMOA Antenna Array
Systems" with PTO Patent Number 6,459,895, issued October 1, 2002; and
"Direction of Arrival Angel Tracking Algorithm For Smart Antennas" with PTO
Patent Number 6,483,459, issue date November 19, 2002.

"Improvement of PN Code Chip Time Tracking with Smart Antenna", a patent
application filed on February 6, 2002 with Docket #3228-007-64 and serial number
10/066,762 is pending - awaiting first Office Action from Patent Office.

In addition, the Company also has two other patent applications pending which
are referred to as "Wireless Communication System and Method of Providing
Wireless Communication Service" with specific descriptions to include "Device
and Method for Changing the Orientation and Configuration of a Display of an
Electronic Device" and "Electronic Device Having Multiple Service
Functionality". Both of these pending patent applications relate to the business
of the Company before the merger with NeoReach. The Company does not intend to
pursue business related to these patents and intends to assign the patents to
the inventor and former president of Mobilepro.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

NOTE 6- COMMITTMENTS

In April 2002, NeoReach, Inc. established a technology alliance with Prime
Circuits, Inc. Prime Circuits is a privately-held semiconductor developer based
in Greenbelt, MD that specializes in ultra small, ultra low power analog,
digital and hybrid chipsets. Prime Circuits' technology is currently in use in a
number of NASA applications at Goddard Space Flight Center.

As part of the alliance, NeoReach will gain access to technical knowledge,
personnel and low power semiconductor technology that NeoReach believes will
greatly expand its digital modem suite. This solution targets the consumer
handsets and network transmission base stations to support 3G communications.

On May 10, 2002 the Company announced that Arne Dunhem was appointed the
Chairman, President and CEO of Mobilepro Corp. Mr. Dunhem has over 28 years of
experience in the growth of high technology companies, especially in the
telecommunications field.

On May 31, 2002, the Company entered into an equity line of credit arrangement
with Cornell Capital Partners, L.P. that was terminated on October 16, 2002 and
re-entered on the same day October 16, 2002. This agreement was in turn
terminated on February 6, 2003 and re-entered the same day February 6, 2003. The
equity line provides generally, that Cornell will purchase up to $10 million of
common stock over a two-year period, with the time and amount of such purchases,
if any, at the Company's discretion.

There are certain conditions applicable to the Company's ability to draw down on
the equity line including the filing and effectiveness of a registration
statement registering the resale of all shares of common stock that may be
issued to Cornell under the equity line and the Company's adherence with certain
covenants.

The Company on May 31, 2002, entered into a Securities Purchase Agreement with
certain investors pursuant to which the Company issued and sold $250,000 of
convertible debentures. The debentures accrue interest at the rate of four
percent (4%) per year. Holders of the debentures have certain registration
rights with respect to the resale of shares of common stock received upon any
conversion of the debentures.

NOTE 7 - LEGAL PROCEEDINGS

Mr. Tatcha Chulajata, a former employee of NeoReach, Inc. filed a formal
complaint against the company on October 29, 2002 with the State of Maryland,
Department of Labor, Licensing and Regulation for a claim for unpaid wages. The
employee claims a total of $49,866.67 for unpaid wages from August 2001 through
October 2002. Mr. Chulajata was employed by NeoReach, Inc. on July 15, 2000 as
Senior Engineer and he resigned in October 2002. Due to financial difficulties
encountered by the Company in 2001 and 2002, Mr. Chulajata received a reduced
salary. The Company is negotiating a settlement with the employee with respect
to the claim.

Mobilepro and Neoreach, Inc. were on December 31, 2002 served with three
complaints in the United States District Court for the District of Maryland in
three separate actions seeking relief for failure to pay wages and breach of
contract. The three plaintiffs are in the three separate actions seeking relief
of approximately $59,334.67, $65,383.34 and $60,750.00 respectively. The three
plaintiffs are former employees of NeoReach, Inc., Mr. Mann Hyuk Park, Mr. Sang
Humn Lee and Mr. Yang Hoon Jung, were employed as Senior or Principal Engineers
since September 2001, June 2000 and August 2001, respectively. Due to financial
difficulties encountered by the Company in 2001 and 2002, the three individuals
received reduced salaries. The Company is currently negotiating settlements with
the employees with respect to the claims.

Mr. Scott R. Smith, a former executive of NeoReach, Inc. filed a formal
complaint against the company on January 10, 2003 with the State of Illinois,
Department of Labor for a claim for unpaid wages. The former executive claims a
total of $97,335 for unpaid wages from February 2002 through August 2002. Mr.
Smith was employed by NeoReach, Inc. on February 19, 2002 as Executive Vice
President and his employment agreement expired on August 18, 2002. Due to
financial difficulties encountered by the Company in 2002, Mr. Smith's salary
was deferred as part of an agreement between Mr. Smith and the Company. A
settlement agreement was mutually signed and executed on August 30, 2002. The
Company intends to vigorously defend its position and intends to adher to the
settlement agreement.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Forward Looking Statements

When used in this Form 10QSB and in future filings by Mobilepro Corp. with the
Securities and Exchange Commission, the words or phrases "will likely result,"
"management expects," or we expect," "will continue," "is anticipated,"
"estimated," or similar expression or use of the future tense, are intended to
identify forward looking statements. Readers are cautioned not to place undue
reliance on any such forward-looking statements, each of which speak only as of
the date made. These statements are subject to risks and uncertainties, some of
which are described below and others are described in other parts of this Form
10QSB. Actual results may differ materially from historical earnings and those
presently anticipated or projected. We have no obligation to publicly release
the result of any revisions that may be made to any forward-looking statements
to reflect anticipated events or circumstances occurring after the date of such
statements.

Business History

Mobilepro is a development stage company and currently trades on the Bulletin
Board under the stock symbol "MOBL". The following is a brief history of the
Company.

Mobilepro was incorporated on July 14, 2000 and was focused on the integration
and marketing of complete mobile information solutions that satisfy the needs of
mobile professionals.

The company with which Mobilepro merged in June of 2001 was first organized in
June 1988 as Bud Corp. Bud Corp. changed its name to Tecon, Inc. in July 1992,
then to Buyit.com, Inc. in May 1999 and finally to CraftClick.com, Inc. on
January 4, 2000. CraftClick's business strategy and focus was to become the
premier destination for buyers and sellers of arts and crafts products and
supplies through the use of Internet websites. Due to the lack of adequate
funding and the lack of generating enough Internet traffic to achieve
profitability, CraftClick began to cease business operations in October 2000.
CraftClick subsequently disposed of substantially all of its assets in February
2001 when secured creditors foreclosed on outstanding loans made to CraftClick.

In April 2001, CraftClick reorganized pursuant to a Plan of Merger wherein its
domicile was changed from Utah to Delaware, and the common stock was subject to
a reverse split on the basis of 1 new share for every 100 shares outstanding. On
June 6, 2001, CraftClick and Mobilepro entered into an Agreement and Plan of
Merger dated June 1, 2001 ("CraftClick Merger Agreement"). Under the CraftClick
Merger Agreement, Mobilepro merged with and into CraftClick, with CraftClick
being the surviving corporation. On July 9, 2001, the name of the surviving
corporation was changed to Mobilepro Corp.

On November 19, 2001, Mobilepro implemented a 200 for 1 reverse stock split of
its Common Stock. There were no fractional shares issued. Concurrent with the
reverse stock split, Mobilepro issued 3,000,000 new shares of Common Stock to
Dungavel, Inc., pursuant to an Investor Rights Agreement, which the Company
entered into with Dungavel on June 1, 2001 as part of the merger with
CraftClick.

On February 19, 2002, the Company entered into a Stock Purchase Agreement with
Mr. Daniel Lozinsky and Dungavel, Inc., and another Stock Purchase Agreement
with Mr. Daniel Lozinsky, Ms. Joann Smith and Mr. Scott Smith. Dungavel, Inc.,
Ms. Joann Smith and Mr. Scott Smith were all significant stockholders of the
Company at the time. Pursuant to these two stock purchase agreements, Mr.
Lozinsky acquired an aggregate of 2,057,733 shares of Mobilepro Common Stock,
representing approximately 64.7% of the Company's voting securities at that
time. On February 28, 2002, Mr. Scott Smith resigned as the President, CEO and
Chairman of the Company, and Mr. Lozinsky became the President and CEO of the
Company. On May 10, 2002, Mr. Arne Dunhem became the Company's President, CEO
and Chairman and Mr. Lozinsky became our Senior Vice President.

On March 21, 2002, Mobilepro entered into an Agreement and Plan of Merger with
NeoReach, Inc., a private Delaware company, pursuant to which a newly-formed,
wholly-owned subsidiary of Mobilepro merged into NeoReach in a tax-free
transaction. NeoReach is a development stage company designing state of the art
modem solutions to support third generation (third generation) wireless
communications systems. The merger was consummated on April 23, 2002. As a
result of the merger, NeoReach is now a wholly-owned subsidiary of Mobilepro. On
April 23, 2002, the Company issued 12,352,129 shares of its common stock in a
one-for-one tax-free stock exchange to the holders of NeoReach's common stock
pursuant to the Agreement. This was a cash-less transaction and there were no
payments or finder's fees involved. The Board of Directors determined the
consideration to be a fair compensation to the NeoReach shareholders. The
issuance of the shares were valued at a fair value of $ 6,546,628, based on the
last trading price of $0.53 and assuming there was actual active trading of our
stock at that time. The valuation of NeoReach in the merger agreement was based
on several factors, as described in the table below excluding intangible assets
and goodwill, including that over thirty-three man-years of development efforts
had been accumulated for achieving the prototype third generation modem boards
for the base station applications, that a management team and engineering team
were in place, that office and laboratory facilities were in place, that six
patents had been filed or were already approved, and that contacts and
relationships had already been established with potential customers both in the
United States and Korea. The value of intangible assets and goodwill, such as
contacts, relationships and potential customers, has not been included in the
table below since it is difficult to estimate a real value, although it could be
very significant, on these items. The transaction was concluded following
arms-length negotiations. The Company believes the issuance of the stock to be
exempt from registration under Section 4(2) of the Securities Act. The related
parties from both the Company and NeoReach were Messrs. Daniel Lozinsky, Arne
Dunhem, Scott Smith and Ken Min. Mr. Daniel Lozinsky who was a controlling
stockholder of Mobilepro also owned approximately 32.5% of NeoReach.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

Approximate valuation of Neoreach, Inc. (Excluding Intangible Assets and
Goodwill)

Item Approx. Value
Personnel, engineering man effort, 33 man-years $4.5 M
Patents, Awarded, Allowed, Pending, 6 each $1.8 M
Tangible Assets $0.2 M
------
Total Valuation (Excluding Intangible Assets and Goodwill) $6.5 M

Business Strategy

We are a development stage company and therefore, the following business
strategy contains forward-looking information and we can give no assurances that
we will be able to accomplish these goals, generate sufficient revenues to be
profitable, obtain adequate capital funding or continue as a going concern. Our
independent auditors have issued a going-concern opinion for the year ended
March 31, 2002 and March 31, 2001 (See "Financial Statements and Supplementary
Data").

Upon successful completion of the NeoReach/Mobilepro merger, the business
strategy, direction and focus of the former NeoReach became the dominant
operating focus of the new Mobilepro. The former business model and marketplace
offering of Mobilepro ceased entirely. After the merger, Mobilepro has been
notified by the Patent and Trademark Office that five of the six patent
applications that had been filed by NeoReach had been approved and that the
review process was still underway for the remaining one patent application.

In addition to being granted the approval on these two out of five patents, the
Company continued to make progress on design of the various technical features
for the base station modem. In April of 2002, the Company began working with
leading scientists at the RF Microelectronics Lab (RFIC) at Korea's Information
and Communications University in South Korea, to test some modem and radio
frequency integrated circuit development advancements. The first phase of the
simulation testing focused principally on the Company's proprietary 3G radio
frequency technology.

As result of the design effort to date, we believe that a preliminary version of
the base station modem will be ready for field evaluation during the first
quarter of 2003 with a multi-channel modem semi-conductor integrated circuit
chip to be commercially available by the end of 2003. The chip is anticipated to
be designed and developed by the Company, but we will expect the chip to be
manufactured by a third party offshore it. Once this development milestone is
reached, the Company believes that it can have the completed design for the
handset modem chip commercially available by the end of 2004.

The long-term product vision is founded on product line extensions that leverage
the current technology and expertise in 3G. We intend to add new products to the
development schedule if market success with the modem solutions is demonstrated
and based on the market timing and future competitive landscape.

Mobilepro believes it can be successful in the 3G wireless modem market for two
key reasons: 1) capitalizing on an early-to-market advantage with advanced
capabilities; and, 2) maintaining narrowly focused product and market strategy
on its two core solutions. We believe that all the other vendors must
rationalize 3G development, sales and marketing resources among a larger product
line and among an installed base of customers utilizing other products for which
upgrades are expected and required.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

We also anticipate to review opportunities arising for strategic partnerships or
possible acquisitions to increase our product and service offerings. Given the
increased demand for wireless remote monitoring of industrial machinery,
corporate computer networks, and various facilities at widely dispersed global
locations in combination with the data processing of all gathered information,
the Company intends to explore possible opportunities in this arena. We intend
to consider licensing or teaming arrangements for the Company's technology
working with other industry players in addition to potential acquisition
opportunities. No funds have been allocated for these new initiatives.

NeoReach has signed a memorandum of understanding with RF Microelectronics
Laboratory of the Information and Communications University of the Republic of
Korea to cooperate in research, particularly in radio frequency integrated
circuit development for the 3G W-CDMA standard. This specific integrated
circuit, chipset, which is expected to support the W-CDMA standard, is also a
required component in the consumer handsets and base stations managed by the
mobile operators to support 3G wireless services. This co-development initiative
has the potential to expand the NeoReach product suite beyond the Company's
modem solutions currently in development and testing. This memorandum of
understanding is non-binding on either party and additional agreements are
necessary before the parties may collaborate together.

We have also announced a strategic technology alliance with Prime Circuits, Inc.
of Maryland, a semiconductor development company. As part of the alliance, we
expect to gain access to technical knowledge, personnel and low power
semiconductor technology. This solution may target the consumer handsets and
network transmission base stations to support 3G communications. As of December
9, 2002, no material terms of an agreement have yet been developed. There is no
affiliation between Prime Circuits and our Company, its officers, directors
and/or affiliates. The completion of an agreement is pending a joint review of
mutual additional business opportunities and the current nature of the
relationship is still under discussion.

Financial Condition and Changes in Financial Condition

Overall Operating Results:

We had no revenues for the quarter ended December 31, 2002.

Our operating expenses for the quarter ended December 31, 2002 were
approximately $171,769. Our primary expense was incurred for Professional fees
and compensation expenses of $157,547 compared with $560,056 for the three
months ended December 31, 2001. Of this amount, no common stock in lieu of cash
was issued in connection with consulting fees and expenses for services
rendered. Approximately $150,000 in expenses was for on-going compensation
expenses.

Operating Losses

Our net operating loss for the quarter ended December 31, 2002 was approximately
$172,991. These losses were incurred primarily as a result of the aforementioned
incurred expenses.

We have accumulated approximately $6,127,784 of net operating loss carryforwards
as of December 31, 2002, that may be offset against future taxable income. There
will be limitations on the amount of net operating loss carryforwards that can
be used due to the change in the control of the management of the Company. No
tax benefit has been reported in the financial statements, because we believe
there is a 50% or greater chance the carryforwards will expire unused.
Accordingly, the potential tax benefits of the loss carryforwards is offset by a
valuation allowance of the same amount.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

Liquidity and Capital Resources:

As of December 31, 2002, we had a total Stockholders' Deficit of approximately
$1,918,627 and do not currently have any revenues, liquidity or capital
resources as we move forward with our business plan and our independent auditors
have issued an audit opinion as of March 31, 2002 that raises substantial doubt
as to our ability to continue as a going concern. We will need additional
financing in order to implement our business plan and continue business. The
traditional markets for raising capital have become extremely more difficult in
the last year due to a depressed economy, large well-known business failures and
the events of September 11, 2001.

The Company will need additional financing and may use a private placement
offering or debt financing to raise such additional funds, to be used for the
following:

o Investment in laboratory facilities including test and simulation
equipment;
o Acquisition or licensing of certain intellectual property related to the
development of modems and communications semiconductor and component
technology;
o Pay-down certain debt, such as a convertible debenture from Cornell
Capital. We intend to pay-off debt owed to Mr. Daniel Lozinsky, a Director,
and Mr. Arne Dunhem, an officer and Director, during 2003; and
o General working capital purposes.

We are in the process of establishing a source for additional financing and we
cannot give any assurances that we will be able to secure any financing.

On October 16, 2002, the Company entered into an equity line of credit
arrangement (the "Equity Line") with Cornell Capital Partners, LP ("Cornell").
This agreement was in turn terminated on February 6, 2003 and re-entered the
same day February 6, 2003. The Equity Line provides, generally, that Cornell
will purchase up to $10 million of Common Stock over a two-year period, with the
timing and amount of such purchases, if any, at the Company's discretion. Any
shares of Common Stock sold under the Equity Line will be priced at a 9%
discount to the lowest closing bid price of the Common Stock during the five-day
period following the Company's notification to Cornell that it is drawing down
on the Equity Line. The Company is not permitted to draw down more than $450,000
in any 30-day calendar period. In addition, there are certain other conditions
applicable to the Company's ability to draw down on the Equity Line including
the filing and effectiveness of a registration statement registering the resale
of all shares of Common Stock that may be issued to Cornell under the Equity
Line and the Company's adherence with certain covenants. At the time of each
draw down, the Company is obligated to pay Cornell a fee equal to three percent
of amount of each draw down.

In addition, on May 31, 2002, the Company entered into a Securities Purchase
Agreement with certain investors pursuant to which the Company issued and sold
$250,000 of convertible debentures (the "Debentures"). The Securities Purchase
Agreement contemplates the sale of up to an additional $250,000 of Debentures.
The Debentures accrue interest at the rate of four percent per year. The
Debentures must be repaid two years following their issuance or, at the
Company's election, converted into shares of Common Stock. In addition, at any
time, the holders of the Debentures may elect to convert their debt into Common
Stock. If, at the time of conversion, the Common Stock is listed on the Nasdaq
Bulletin Board System, Nasdaq SmallCap Market, or American Stock Exchange, the
conversion price will be 120% of the closing bid price. If, at the time of
conversion, the Common Stock is not listed on any of the foregoing markets, the
conversion price will be 80% of the closing bid price of the Common Stock as
furnished by the National Association of Securities Dealers, Inc. The Debentures
also provide the Company with certain redemption rights which, if exercised,
will require the Company to issue Common Stock warrants to the Debenture
holders. Holders of the Debentures have certain registration rights with respect
to the resale of shares of Common Stock received upon any conversion of the
Debentures.

Employees

We currently employ four people. Mr. Arne Dunhem is our President, Chief
Executive Officer and Chairman. We anticipate that we will need additional
persons to fill administrative, sales and technical positions if we are
successful in raising the capital to implement our business plan.

New Accounting Pronouncements

We have adopted FASB Statement 128. It is not expected that we will be impacted
by other recently issued standards. FASB Statement 128 presents new standards
for computing and presenting earnings per share (EPS). The Statement is
effective for financial statements for both interim and annual periods ending
after December 15, 1997.

FASB Statement 131 presents news standards for disclosures about segment
reporting. We do not believe that this accounting standard applies to us as all
of our operations are integrated for financial reporting and decision-making
purposes.

MOBILEPRO CORP AND SUBSIDIARY
(FORMERLY CRAFTCLICK.COM)
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DECEMBER 31, 2002 AND 2001

Inflation

The Company's results of operations have not been affected by inflation and
management does not expect inflation to have a significant effect on its
operations in the future.

Recent Events

On July 18, 2002, the Company issued a total of 160,000 shares of its common
stock for the forgiveness of $39,000 of advances from an officer of the Company.
The Company believes the issuance of the stock to be exempt from registration
under Section 4(2) of the Securities Act.

On July 18, 2002, the Company issued a total of 645,000 shares of its common
stock for consulting services to be performed. The Company believes the issuance
of the stock to be exempt from registration under Section 4(2) of the Securities
Act.

On August 6, 2002, the Company announced that it has signed a Memorandum of
Understanding (MOU) with the RF Microelectronics Laboratory (RFME Lab) at the
Information and Communications University in South Korea to cooperate in
research, particularly in RF-CMOS ASICs development for RF transceiver of the 3G
W-CDMA standard. Under the MOU, engineering teams from NeoReach and RFME Lab
will devote joint research and design expertise, staffing, facilities resources,
project management, and testing for the development of an RF CMOS -- a radio
frequency ASIC chipset. This specific chipset, which will support the W-CDMA
standard, is also a required component in the consumer handsets and base
stations managed by the mobile operators to support 3G wireless services. This
co-development initiative has the potential to expand the NeoReach product suite
beyond the Company's modem solutions currently in development and testing

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. CHANGES IN SECURITIES

On April 23, 2002, the Company issued 12,352,129 shares of its common stock to
the holders of NeoReach's common stock pursuant to an Agreement and Plan of
Merger, dated March 21, 2002. A newly formed, wholly-owned subsidiary of
Mobilepro merged into NeoReach, in a tax-free one-for-one share exchange
transaction. The merger was consummated on April 23, 2002. As a result of the
merger, NeoReach is now a wholly-owned subsidiary of Mobilepro. The issuance of
the shares were valued at a fair value of $ 6,546,628, based on the last trading
price of $0.53 and assuming there was actual active trading of our stock at that
time. The Company believes the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

On May 31, 2002, the Company issued a total of 690,000 shares of its common
stock to the following parties: 450,000 shares to INFe, Inc., 150,000 shares to
Thomas Richfield, 60,000 shares to Francene Goodman, and 30,000 shares to Triple
Crown Consulting. These shares were issued for consulting services regarding the
Mobilepro-NeoReach merger. The issuance of the shares were valued at $ 317,400,
the fair value of our stock at that time. We believe the value of the services
provided were commensurate with the value of the stock issued. The Company
believes the issuance of the stock to be exempt from registration under Section
4(2) of the Securities Act.

On June 10, 2002, the Company issued a total of 784,314 shares of its common
stock to the following parties: 764,706 to Cornell Capital Partners and 19,708
to West Rock Advisors, Inc. These shares were issued pursuant to an equity line
of credit arrangement with Cornell Capital Partners, dated May 31, 2002. The
issuance of the shares were valued at $517,647, the fair value of our stock at
that time. The Company believes the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

In addition, on May 31, 2002, the Company entered into a Securities Purchase
Agreement with certain investors pursuant to which the Company issued and sold
$250,000 of convertible debentures (the "Debentures"). The Debentures accrue
interest at the rate of four percent per year. The Debentures must be repaid two
years following their issuance or, at the Company's election, converted into
shares of Common Stock. In addition, at any time, the holders of the Debentures
may elect to convert their debt into Common Stock. If, at the time of
conversion, the Common Stock is listed on the Nasdaq Bulletin Board System,
Nasdaq SmallCap Market, or American Stock Exchange, the conversion price will be
120% of the closing bid price or an amount equal to eighty percent of the
average of the four lowest closing bid prices of the common stock for the five
trading days immediately preceding the conversion date. If, at the time of
conversion, the Common Stock is not listed on any of the foregoing markets, the
conversion price will be 80% of the closing bid price of the Common Stock as
furnished by the National Association of Securities Dealers, Inc. The Debentures
also provide the Company with certain redemption rights which, if exercised,
will require the Company to issue Common Stock warrants to the Debenture
holders. Holders of the Debentures have certain registration rights with respect
to the resale of shares of Common Stock received upon any conversion of the
Debentures. As of August 15, 2002, the Debentures can be converted into
1,041,667 shares of the Company's common stock.

On July 18, 2002, we issued a total of 305,000 shares of our common stock to
various parties. 160,000 shares of our restricted common stock were issued to
Daniel Lozinsky, a director of the Corporation, in a private sale for an
aggregate cash consideration of $39,000 based on a Board Resolution as of July
17, 2002. In addition, we also issued 20,000 shares of common stock under the
2001 Equity Performance Plan and 100,000 restricted common stock as compensation
to Mark Johnson for various Merger and Acquisition related services and
associated back office services in accordance with a Consulting Agreement dated
July 17, 2002. We also issued 25,000 shares of restricted common stock as
compensation to M. Johnson & Associates, Inc. for certain services in accordance
with an Investor Relations Agreement dated July 17, 2002. The issuance of the
shares was valued at $65,250, the fair value of our stock at that time. We
believe the value of the services provided were commensurate with the value of
the stock issued. We believe the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

On July 26, 2002, we issued a total of 500,000 shares of our restricted common
stock to Capital Research Group, Inc. for certain investor relations consulting
services in accordance with a Consulting Services Agreement dated July 25, 2002.
The issuance of the shares was valued at $220,000, the fair value of our stock
at that time. We believe the issuance of the stock to be exempt from
registration under Section 4(2) of the Securities Act.

On September 9, 2002, we issued a total of 709,853 of our common stock to
various parties. 100,000 shares were issued to Hee Han Bang, a non-affiliated
and accredited/sophisticated investor in a private sale for an aggregate cash
consideration of $25,000. These shares were issued at $0.25 per share based on a
Board Resolution fixing the value of the securities on and as of August 09,

2002. 150,000 shares of our common stock were issued to Daniel Lozinsky, a
director of the Corporation, in a private sale for an aggregate cash
consideration of $15,000. These shares were issued based on a Board Resolution
as of August 20, 2002. We issued a total of 209,853 shares of our common stock
to shares to INFe, Inc. based on a Board Resolution as of August 19, 2002. These
shares were issued for consulting services in connection with the Mobilepro
NeoReach merger and a Reverse Merger Engagement Agreement dated January 11, 2002
between NeoReach, Inc. and INFe, Inc. The issuance of the shares was valued at
$62,956, the fair value of our stock at that time. We also granted a total of
250,000 shares of our restricted common stock to Parag Sheth, an executive of
the Corporation. Parag Sheth was granted 150,000 shares of our restricted common
stock for forgiving a total of $15,000.00 in salary corresponding to a price of
$0.10 per share and he was also granted 100,000 shares of our restricted common
stock as an inducement for providing services for the Corporation. These shares
were issued based on a Board Resolution as of August 20, 2002 and the issuance
of the shares was valued at $25,000. We believe the value of the services
provided were commensurate with the value of the stock issued. We believe the
issuance of the stock to be exempt from registration under Section 4(2) of the
Securities Act.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None

ITEM 5. OTHER INFORMATION
None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

a) Exhibits

2.1 Articles of Merger of CraftClick.com, Inc. (a Utah corporation) and
CraftClick.com, Inc. (a Delaware corporation) (incorporated by reference to
the Company's Form S-8 Registration Statement as filed with the Securities
and Exchange Commission on May 11, 2001 (File No. 333-60726))

2.2 Plan of Merger of CraftClick.com, Inc. (a Utah corporation) with and into
CraftClick.com, Inc. (a Delaware corporation) (incorporated by reference to
the Company's Form S-8 Registration Statement as filed with the Securities
and Exchange Commission on May 11, 2001 (File No. 333-60726))

2.3 Agreement and Plan of Merger dated as of June 1, 2001, between
CraftClick.Com, Inc. a Delaware corporation, and Mobilepro Corp., a
Delaware corporation, (incorporated by reference to the Company's Form 8-K
Current Report as filed with the Securities and Exchange Commission on June
20, 2001 (File No. 002-97869-D))

2.4 Agreement and Plan of Merger dated March 21, 2002, consummated April 23,
2002, between NeoReach, Inc., a Delaware company and Mobilepro.
(incorporated by reference to the Company's Form 8-K Current Report as
filed with the Securities and Exchange Commission on April 5, 2002 (File
No. 002-97869-D)

3.1 Certificate of Incorporation of CraftClick.com, Inc. (a Delaware
corporation) (incorporated by reference to the Company's Form S-8
Registration Statement as filed with the Securities and Exchange Commission
on May 11, 2001 (File No. 333-60726))

3.2 By-Laws of CraftClick.com, Inc. (a Delaware corporation) (incorporated by
reference to the Company's Form S-8 Registration Statement as filed with
the Securities and Exchange Commission on May 11, 2001 (File No.
333-60726))

3.3 Certificate of Amendment of Certificate of Incorporation of Mobilepro Corp.
(a Delaware corporation) (incorporated by reference to the Company's Form
S-8 Registration Statement as filed with the Securities and Exchange
Commission on December 4, 2001 (File No. 333-74492))

4.1 2001 Performance Equity Plan (incorporated by reference to the Company's
Form S-8 Registration Statement as filed with the Securities and Exchange
Commission on May 11, 2001 (File No. 333-60726))

4.2 2001 Equity Performance Plan (incorporated by reference to the Company's
Form S-8 Registration Statement as filed with the Securities and Exchange
Commission on December 4, 2001 (File No. 333-74492))

10.1 Stock Purchase Agreement dated February 19, 2002 with Mr. Daniel Lozinsky
and Dungavel, Inc., and another Stock Purchase Agreement dated February 19,
2002 with Mr. Daniel Lozinsky, Ms. Joann Smith and Mr. Scott Smith.
(incorporated by reference to the Company's Form 8-K Current Report as
filed with the Securities and Exchange Commission on March 6, 2002 (File
No. 002-97869-D))

10.2 Memorandum of Understanding between Neoreach, Inc., and RF Microelectronics
Laboratory dated July 31, 2002 for opportunities to cooperate in research,
particularly in RF-CMOS ASICs development for RF transceiver of 3G W-CDMA
standard. The ASICs will be fabricated in CMOS processes. (incorporated by
reference to the Company's Form 10QSB/A Quarterly Report as filed with the
Securities and Exchange Commission on October 4, 2002 (File No.
002-97869-D))
31

99.1 Certification by Arne Dunhem, Chief Executive Officer and Chief Financial
and Accounting Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (included
herewith)

b) Reports on Form 8-K

The Company filed a Current Report on Form 8-K dated April 5, 2002 with the
Securities and Exchange Commission on March 21, 2002, consummated April 23,
2002. On March 21, 2002, NeoReach, Inc., a Delaware company and Mobilepro
entered into an Agreement and Plan of Merger pursuant to which a newly formed,
wholly-owned subsidiary of Mobilepro would merge into NeoReach, in a tax-free
transaction. The merger was effective on April 23, 2002. As a result of the
merger, NeoReach is now a wholly-owned subsidiary of Mobilepro. Prior to the
merger, Mr. Daniel Lozinsky who was a controlling stockholder of Mobilepro also
owned approximately 32.5% of NeoReach.

The Company filed a Current Report on Form 8-K dated May 10, 2002 with the
Securities and Exchange Commission on June 20, 2002. Effective June 6, 2002, the
Board of Directors of Mobilepro Corp. (the "Company") dismissed its independent
auditors, Mantyla, McReynolds LLC ("Mantyla"), and engaged the services of
Bagell, Josephs & Company, L.L.C. ("Bagell"), as its new independent auditors.
Bagell will audit the Company's financial statements for the fiscal year ended
March 31, 2002.

Also included in the Current Report dated May 10, 2002, on May 13, 2002, the
Company announced in a press release that Mr. Daniel Lozinsky had resigned as
the President, Chief Executive Officer and Chairman of the Board of the Company
and that Mr. Arne Dunhem had been appointed to serve as the President, Chief
Executive Officer and Chairman of the Board of the Company, effective as of May
10, 2002. Mr. Lozinsky was also appointed to serve as a Senior Vice President of
the Company, effective as of May 10, 2002.

The Company filed an amended Current Report on Form 8-K/A dated May 10, 2002
with the Securities and Exchange Commission on June 25, 2002.

Subsequent to the period of this report, the Company filed two amended Current
Reports of Form 8-K, dated June 6, 2001 and March 21, 2002 with the Securities
and Exchange Commission on July 5, 2002.

Signatures

In accordance with the requirements of the Exchange Act, the Company caused this
Quarterly Report to be signed on its behalf by the undersigned, thereunto duly
authorized.

MobilePro Corp.

By /s/ Arne Dunhem
---------------------------------
Arne Dunhem,
President and Chief Executive Officer
(Principal executive and financial officer)

Date February 18, 2003

CERTIFICATION

I, Arne Dunhem, certify that:

1. I have reviewed this quarterly report on Form 10-QSB of Mobilepro Corp.;

2. Based on my knowledge, this 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 report;

3. Based on my knowledge, the financial statements, and other financial
information included in this 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 report;

4. I am 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 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 report
(the "Evaluation Date"); and

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

5. 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
report whether or not 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.

February 18, 2003

/s/ Arne Dunhem
Arne Dunhem
Chief Executive Officer
Principal Financial and Principal Accounting Officer