UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC 2054
                                   FORM 10-QSB

                                   (Mark One)
             (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                      THE SECURITIES EXCHANGE ACT OF 1934

                FOR THE QUARTERLY PERIOD ENDED: DECEMBER 31, 2004

 ( ) TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
                                     OF 1934
                    For the transition period from --- to ---

                        Commission File Number: 001-31810

                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                 (Name of Small Business Issuer in its Charter)

                                    DELAWARE
         (State or other jurisdiction of incorporation or organization)

                                   22-3720962
                         (I.R.S. Employer Identification No.)

            55 MADISON AVENUE, SUITE 300, MORRISTOWN NEW JERSEY 07960
                    (Address of principal executive offices)

                                 (973-290-0080)
                (ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)



Check  whether  the issuer  (1) has 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. [X] Yes [ ]
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 10, 2004,  9,355,649  shares of Class A Common  Stock,  $.001 par
value,  and  1,005,811  shares of Class B Common  Stock,  $.001 par value,  were
outstanding.

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









                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                                   FORM 10-QSB
                                    CONTENTS

 PART I -- FINANCIAL INFORMATION                                            Page
                                                                            ----
     Item 1. Consolidated Financial Statements

          Consolidated Balance Sheet at December 31, 2004 (unaudited)          2

          Consolidated  Statements  of  Operations  for the three
          months  ended December 31, 2003 and 2004 (unaudited)                 3

          Consolidated  Statements  of  Operations  for the
          nine  months  ended December 31, 2003 and 2004 (unaudited)           4

          Consolidated  Statements  of Cash  Flows  for the  nine
          months  ended December 31, 2003 and 2004 (unaudited)                 5

          Notes to Consolidated Financial Statements (unaudited)               6

     Item 2.  Management's  Discussion  and Analysis of Financial
              Condition and Results of Operations                             16

     Item 3. Controls and Procedures                                          26

PART II -- OTHER INFORMATION

     Item 1. Legal Proceedings                                                26

     Item 5. Other Information                                                26

     Item 6. Exhibits                                                         27

     Signatures                                                               28

     Exhibit Index                                                            29




                                       1


                     ACCESS INTEGRATED TECHNOLOGIES, INC.
                           CONSOLIDATED BALANCE SHEET
                      (In thousands, except for share data)
                                   (unaudited)



                                                                    DECEMBER 31, 2004
                                                                    -----------------
                                   ASSETS
CURRENT ASSETS
                                                                       
Cash and cash equivalents............................................     $1,515
Accounts receivable, net.............................................      1,251
Prepaid and other current assets.....................................        439
Unbilled revenue.....................................................        291
                                                                             ---
Total current assets.................................................      3,496
                                                                           -----

Property and equipment, net..........................................      8,276
Intangible assets, net...............................................      3,695
Capitalized software costs, net......................................      1,558
Goodwill.............................................................      5,478
Deferred costs.......................................................        331
Unbilled revenue, net of current portion.............................         76
Security deposits....................................................        341
                                                                             ---
Total assets.........................................................    $23,251
                                                                         =======


LIABILITIES, REDEEMABLE STOCK AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES

Accounts payable and accrued expenses................................       $921
Current portion of notes payable.....................................      1,009
Current portion of customer security deposits........................        118
Current portion of capital leases....................................        494
Current portion of deferred revenue..................................        688
Current portion of deferred rent expense.............................         42
                                                                              --
Total current liabilities............................................      3,272
                                                                           -----

Notes payable, net of current portion................................      4,937
Customer security deposits, net of current portion...................        156
Deferred revenue, net of current portion.............................        236
Capital leases, net of current portion...............................         21
Deferred rent expense................................................        951
Deferred tax liability...............................................      1,287
                                                                           -----
Total liabilities....................................................     10,860
                                                                          ------

COMMITMENTS AND CONTINGENCIES (See Note 7)

Redeemable Class A common stock, issued and outstanding, 53,534 shares       247

Stockholders' Equity:

Class A common stock, $0.001 par value per share; 40,000,000 shares
   authorized; shares issued, 9,353,328 and shares
   outstanding, 9,344,224  ..........................................         10
Class B common stock, $0.001 par value per share; 15,000,000 shares
   authorized; shares issued and outstanding, 1,005,811 .............          1
Treasury stock, at cost; 9,140 shares................................        (32)
Additional paid-in capital...........................................     30,853
Accumulated deficit..................................................    (18,688)
                                                                         -------
Total stockholders' equity...........................................     12,144
                                                                          ------
Total liabilities, redeemable stock and stockholders' equity.........    $23,251
                                                                         =======


          See accompanying notes to Consolidated Financial Statements.


                                       2




                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except for share and per share data)
                                   (unaudited)



                                                                                     THREE MONTHS ENDED
                                                                                         DECEMBER 31,
                                                                                      2003            2004
                                                                              ------------    ------------
                                                                                        
Revenues:
 Media services ...........................................................   $        637    $      1,300
 Data center services .....................................................          1,406           1,439
                                                                              ------------    ------------

Total revenues ............................................................          2,043           2,739

Costs of revenues (exclusive of depreciation and amortization shown below):
 Media services, including amortization of software development costs
    of $43 and $92 for 2003 and 2004 ......................................             57             570
Data center services ......................................................            837           1,062
                                                                              ------------    ------------
Total costs of revenues ...................................................            894           1,632

Gross profit ..............................................................          1,149           1,107

Operating expenses:
Selling, general and administrative .......................................            872           1,303
Provision for doubtful accounts ...........................................             42              23
Research and development ..................................................              8             122
Depreciation and amortization .............................................            676             895
                                                                              ------------    ------------

Total operating expenses ..................................................          1,598           2,343
                                                                              ------------    ------------

Loss from operations ......................................................           (449)         (1,236)

Interest expense ..........................................................           (143)            (90)
Non-cash interest expense .................................................           (111)            (43)
Other income (expense), net ...............................................              4             (27)
                                                                              ------------    ------------
Net loss before income taxes ..............................................           (699)         (1,396)

Income tax benefit ........................................................            127              77
                                                                              ------------    ------------

Net loss ..................................................................           (572)         (1,319)

Accretion related to redeemable convertible preferred stock ...............         (1,125)           --
Accretion of preferred dividends ..........................................            (40)           --
                                                                              ------------    ------------

Net loss available to common stockholders .................................   $     (1,737)   $     (1,319)
                                                                              ============    ============

Net loss available to common stockholders per common share:
Basic and diluted .........................................................   $      (0.30)   $      (0.13)
                                                                              ============    ============

Weighted average number of common shares outstanding:
Basic and diluted .........................................................      5,725,153      10,041,879
                                                                              ============    ============


           See accompanying notes to Consolidated Financial Statements.



                                       3


                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               (In thousands, except for share and per share data)
                                   (unaudited)



                                                                                    NINE MONTHS ENDED
                                                                                        DECEMBER 31,
                                                                                       
                                                                                     2003           2004
                                                                              -----------    -----------
Revenues:
 Media services ...........................................................   $       637    $     2,496
 Data center services .....................................................         4,235          4,639
                                                                              -----------    -----------

Total revenues ............................................................         4,872          7,135

Costs of revenues (exclusive of depreciation and amortization shown below):
 Media services, including amortization of software development costs
    of $43 and $220 for 2003 and 2004 .....................................            57            912
Data center services ......................................................         2,586          3,102
                                                                              -----------    -----------
Total costs of revenues ...................................................         2,643          4,014

Gross profit ..............................................................         2,229          3,121

Operating expenses:
Selling, general and administrative (excludes non-cash stock-based
compensation of $10 in 2003 and $4 in 2004) ...............................         2,021          3,588
Provision for doubtful accounts ...........................................            55            598
Research and development ..................................................             8            288
Non-cash stock-based compensation .........................................            10              4
Depreciation and amortization .............................................         1,915          2,457
                                                                              -----------    -----------

Total operating expenses ..................................................         4,009          6,935
                                                                              -----------    -----------

Loss from operations ......................................................        (1,780)        (3,814)

Interest expense ..........................................................          (389)          (279)
Non-cash interest expense .................................................          (302)          (155)
Other income, net .........................................................            11             17
                                                                              -----------    -----------
Net loss before income taxes and minority interest in subsidiary ..........        (2,460)        (4,231)

Income tax benefit ........................................................           127            233
                                                                              -----------    -----------
Net loss before minority interest in subsidiary ...........................        (2,333)        (3,998)

Minority interest in subsidiary ...........................................          --               10
                                                                              -----------    -----------

Net loss ..................................................................        (2,333)        (3,988)

Accretion related to redeemable convertible preferred stock ...............        (1,590)          --
Accretion of preferred dividends ..........................................          (220)          --
                                                                              -----------    -----------

Net loss available to common stockholders .................................   $    (4,143)   $    (3,988)
                                                                              ===========    ===========

Net loss available to common stockholders per common share:
Basic and diluted .........................................................   $     (1.05)   $     (0.42)
                                                                              ===========    ===========

Weighted average number of common shares outstanding:
Basic and diluted .........................................................     3,954,827      9,432,380
                                                                              ===========    ===========


          See accompanying notes to Consolidated Financial Statements.


                                       4





                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                           (In thousands - unaudited)



                                                                                NINE MONTHS ENDED
                                                                                    DECEMBER 31,
                                                                                2003          2004
                                                                                ----          ----
                                                                                   
Cash flows from operating activities:
Net loss ..................................................................   $(2,333)   $(3,988)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization .............................................     1,915       2,457
Amortization of software development costs ................................        43        220
Amortization of deferred tax liability ....................................      --         (233)
Provision for doubtful accounts ...........................................        55        598
Non-cash stock-based compensation .........................................        10          4
Non-cash interest expense .................................................       302        155
Minority interest .........................................................        (6)       (10)
Gain on exchange of minority interest shares ..............................      --          (13)
Decrease in fair value of common stock warrants
                                                                                 --          (91)
Changes in operating assets and liabilities:
Accounts receivable .......................................................      (566)      (807)
Prepaid and other current assets ..........................................      (259)      (100)
Other assets ..............................................................      (146)      (355)
Accounts payable and accrued expenses .....................................      (125)      (607)
Deferred revenue ..........................................................       323       (107)
Other liabilities .........................................................       188        118
                                                                              -------    -------

Net cash used in operating activities .....................................      (599)    (2,759)
                                                                              -------    -------

Cash flows from investing activities:
Purchases of property and equipment .......................................      (136)    (1,637)
Purchase of intangible assets .............................................      (110)       (38)
Additions to capitalized software costs ...................................      --         (302)
Acquisition of Hollywood Software, net of cash acquired ...................    (2,354)      --
Acquisition of FiberSat, net of cash acquired..............................      --         (508)
                                                                              -------    -------

Net cash used in investing activities .....................................    (2,600)    (2,485)
                                                                              -------    -------

Cash flows from financing activities:
Net proceeds from issuance of notes payable and warrants ..................     1,230       --
Repayment of notes payable ................................................    (1,000)      (448)
Principal payments on capital leases ......................................      (358)      (158)
Repurchase of common stock ................................................      --          (32)
Proceeds from issuance of common stock ....................................     4,788      5,067
                                                                              -------    -------

Net cash provided by financing activities .................................     4,660      4,429
                                                                              -------    -------

Net increase (decrease)  in cash and cash equivalents .....................     1,461       (815)

Cash and cash equivalents at beginning of period ..........................       956      2,330
                                                                              -------    -------

Cash and cash equivalents at end of period ................................   $ 2,417    $ 1,515
                                                                              =======    =======

          See accompanying notes to Consolidated Financial Statements.


                                       5




                      ACCESS INTEGRATED TECHNOLOGIES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
               (In thousands, except for share and per share data)
                                   (unaudited)

NOTE 1. NATURE OF OPERATIONS

Access Integrated  Technologies,  Inc. ("AccessIT") was incorporated in Delaware
in  March  2000.  Access  Digital  Media,  Inc.  ("AccessDM"),  a  wholly  owned
subsidiary of AccessIT, was incorporated in Delaware in February 2003. Hollywood
Software,  Inc. ("Hollywood SW") was incorporated in California in October 1997,
and was acquired by AccessIT on November 3, 2003. Core Technology Services, Inc.
("Managed  Services")  was  incorporated  in New York in November  1995, and was
acquired  by  AccessIT  on  January  9,  2004.  FiberSat  Global  Services,  LLC
("FiberSat")  was organized in  California  in August 1998,  and was acquired by
FiberSat  Global  Services  Inc., a  wholly-owned  subsidiary  of  AccessIT,  on
November  17,  2004.  ADM Cinema  Corporation  ("ADM  Cinema"),  a wholly  owned
subsidiary  of  AccessIT,  was  incorporated  in Delaware on December  21, 2004.
AccessIT,  AccessDM, Hollywood SW, Managed Services, FiberSat and ADM Cinema are
referred to herein collectively as the ("Company"). AccessIT operates a national
platform  of  carrier-diverse  Internet  Data  Centers  ("IDCs")  in  which  the
Company's  customers  have  access to:  secure,  flexible  space for  installing
network and server  equipment;  multiple  fiber  providers for connecting to the
internet and/or other carrier  networks;  and a broad range of value-added  data
center services including the Company's  AccessStorage-on-Demand managed storage
service solutions. The Company's IDCs, called AccessColocenters, are designed to
serve a variety of customers, including traditional voice/data competitive local
exchange carriers, other integrated  communication  providers,  Internet Service
Providers,   Application  Service  Providers  ("ASPs"),  Streaming  and  Content
Delivery  Service  Providers,  storage  outsourcers,  and small and medium sized
enterprises.  The Company currently  operates nine IDCs located in eight states:
Arkansas,  Kansas,  Maine,  New  Hampshire,  New  Jersey,  New  York,  Texas and
Virginia,  plus a dedicated  digital  delivery site in Los Angeles,  California.
AccessDM is in the business of storing and distributing digital content to movie
theaters and other  remote  venues.  Hollywood  SW is a provider of  proprietary
enterprise  software and consulting  services for distributors and exhibitors of
filmed  entertainment in the United States and Canada.  Its software manages the
planning,  booking,  scheduling,   revenue  sharing,  cash  flow  and  reporting
associated with the  distribution  and exhibition of theatrical  films.  Managed
Services  is a provider  of  information  technology  consulting  services;  its
primary offering is to provide managed network  monitoring  services through its
global network  command  center.  FiberSat  provides  satellite-based  broadband
video,  data and  Internet  transmission  and  encryption  services for multiple
customers in the broadcast and cable television and  communications  industries,
and also operates an outsourced network operations center.

BASIS OF PRESENTATION

The accompanying  unaudited  consolidated interim financial information has been
prepared by AccessIT.  The unaudited Consolidated Financial Statements have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United  States  for  interim  financial   information  and  in  accordance  with
Regulation  S-B.  Accordingly,   they  do  not  include  all  of  the  financial
information and footnotes required by generally accepted  accounting  principles
for complete financial statements. In the opinion of management, all adjustments
(consisting of normal  recurring  adjustments)  considered  necessary for a fair
presentation have been included.

For the nine months ended December 31, 2003 and 2004,  the Company  incurred net
losses of $2,333 and $3,988 respectively, and negative cash flows from operating
activities  of $599 and $2,759,  respectively.  In addition,  the Company has an
accumulated deficit of $18,688 as of December 31, 2004. Furthermore, the Company
has debt  service  requirements  (including  interest)  of $1,550 for the twelve
months  beginning  in January  2005.  Management  expects  that the Company will
continue  to  generate  operating  losses  for  the  foreseeable  future  due to
depreciation and amortization,  research and development,  the continued efforts
related to the identification of acquisition targets,  marketing and promotional
activities and the development of relationships  with other businesses.  Certain
of these  costs  could be  reduced if working  capital  decreased.  Based on the
Company's cash position at December 31, 2004, a financing  transaction completed
in  February  2005,  (see Note 12),  and  expected  cash flows from  operations;
management believes that the Company has the ability to meet its obligations for
the foreseeable future. The Company may attempt to raise additional capital from
various  sources for future  acquisitions  or for working  capital as necessary.
There is no assurance that such financing will be completed as contemplated or


                                       6


under terms acceptable to the Company or its existing  shareholders.  Failure to
generate additional  revenues,  raise additional capital or manage discretionary
spending  could  have a  material  adverse  effect on the  Company's  ability to
continue as a going concern and to achieve its intended business objectives. The
accompanying  unaudited  Consolidated  Financial  Statements  do not reflect any
adjustments which may result from the outcome of such uncertainties.

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 amounts  reported in the  financial
statements  and  accompanying  notes.  Actual  results  could  differ from those
estimates.

The results of operations for the respective interim periods are not necessarily
indicative  of the results to be expected  for the full year.  The  accompanying
unaudited  Consolidated  Financial Statements should be read in conjunction with
the audited Consolidated  Financial Statements and the notes thereto included in
AccessIT's  Form  10-KSB for the fiscal year ended March 31, 2004 filed with the
Securities and Exchange Commission ("SEC").  Certain  reclassifications of prior
period data have been made to conform to the current presentation.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION

The  unaudited   Consolidated  Financial  Statements  include  the  accounts  of
AccessIT, AccessDM, Hollywood SW, Managed Services, FiberSat and ADM Cinema. All
intercompany transactions and balances have been eliminated.

REVENUE RECOGNITION

Revenues in the Media Services segment primarily consist of software and related
revenues,  generated by Hollywood  SW.  Software  revenues are  accounted for in
accordance with Statement of Position 97-2, "Software Revenue Recognition" ("SOP
97-2"), and Staff Accounting Bulletin No. 104 "Revenue  Recognition in Financial
Statements" ("SAB No. 104"). The Company's  software revenues are generated from
the  following  primary  sources:  (1) software  licensing,  including  customer
licenses  and  ASP  agreements,  (2)  software  maintenance  contracts,  and (3)
professional   consulting  services,   which  includes  systems  implementation,
training, custom software development services and other professional services.

Software  licensing  revenue is recognized when the following  criteria are met:
(a) persuasive  evidence of an arrangement exists, (b) delivery has occurred and
no significant  obligations remain, (c) the fee is fixed or determinable and (d)
collection is determined to be probable.  Significant  upfront fees are received
in addition to periodic  amounts  upon  achievement  of  contractual  events for
licensing of the Company's products. Such amounts are deferred until the revenue
recognition  criteria have been met, which  typically  occurs after delivery and
acceptance.

For  arrangements  with  multiple  elements  (e.g.,  delivered  and  undelivered
products,  maintenance and other services),  the Company  separately  negotiates
each element of the  arrangement  based on the fair value of the  elements.  The
fair  values for ongoing  maintenance  and  support  obligations  are based upon
separate sales of renewals to customers or upon substantive renewal rates quoted
in the agreements. The fair values for services, such as training or consulting,
are based upon hourly  billing rates of these  services when sold  separately to
other  customers.  In instances  where the Company is not able to determine fair
value of each element and the services are essential to the functionality of the
software, percentage-of-completion accounting is followed to recognize revenue.

Customers not wishing to license and operate the software themselves may use the
software through an ASP arrangement,  in which the Company hosts the application
and provides  customer access via the internet.  Annual minimum ASP service fees
are  recognized  ratably over the contract term.  Overage  revenues for usage in
excess of stated minimums are recognized monthly.

Maintenance  services and website  subscription fees are recognized ratably over
the  contract  term.  Professional  consulting  services,  sales of third  party
products and resale  hardware  revenues are recognized as services are provided.
Software  development  revenues are recognized when delivery has occurred and no
significant obligations remain.

Deferred  revenue is recorded  in cases of (1) a portion or the entire  contract
amount  cannot be  recognized  as revenue due to  non-delivery  or acceptance of


                                       7


licensed software or custom  programming,  (2) incomplete  implementation of ASP
service arrangements, or (3) unexpired pro-rata periods of maintenance,  minimum
ASP service fees or website  subscription  fees.  As license  fees,  maintenance
fees,  minimum ASP service fees and website  subscription fees are often paid in
advance,  a portion of this revenue is deferred  until the contract  ends.  Such
amounts are classified as deferred revenue in the unaudited Consolidated Balance
Sheet and are  recognized  as revenue in accordance  with the Company's  revenue
recognition policies described above.

Revenues in the Media  Services  segment also include  digital  cinema - related
revenues generated by AccessDM. These revenues consist of (1) satellite delivery
revenues,  (2) data encryption and preparation fee revenues and (3) landing fees
for  delivery  to  each  movie  theatre.  These  revenues  are  recognized  upon
completion of the related services.

In addition,  revenues in the Media Services  segment  include  FiberSat,  which
consist of satellite  transmission and network  monitoring and maintenance fees.
These fees consist of monthly recurring  billings  pursuant to contracts,  which
are  recognized as revenues in the month earned,  and other  billings  which are
recognized  on a time and  materials  basis in the period in which the  services
were provided, in accordance with SAB No. 104.

Revenues in the Data Center Services  segment consist  primarily of license fees
for  colocation,  riser access  charges,  electric and cross connect  fees,  and
non-recurring installation and consulting fees. Revenues from colocation,  riser
access  charges,  electric  and cross  connect  fees are billed  monthly and, in
accordance  with  SAB No.  104,  are  recognized  ratably  over  the term of the
contract,  generally  one to nine  years.  Certain  customer  contracts  contain
periodic  increases in the amount of license fees to be paid,  and those amounts
are recognized as license fee revenues on a straight-line basis over the term of
the contracts. Installation fees are recognized on a time and materials basis in
the period in which the services were provided and represent the  culmination of
the earnings process as no significant  obligations  remain.  Amounts  collected
prior to satisfying  the above revenue  recognition  criteria are  classified as
deferred  revenue.  Amounts  satisfying  revenue  recognition  criteria prior to
billing are classified as unbilled revenue.

In addition,  within our Data Center Services segment, Managed Services revenues
consist  of network  monitoring  and  maintenance  fees.  These fees  consist of
monthly  recurring  billings  pursuant to  contracts,  which are  recognized  as
revenues in the month earned,  and other billings which are recognized on a time
and materials basis in the period in which the services were provided.

CAPITALIZED SOFTWARE COSTS

The Company accounts for software development costs under Statement of Financial
Accounting  Standards  ("SFAS")  No. 86,  "Accounting  for the Costs of Computer
Software to Be Sold, Leased, or Otherwise Marketed".  Software development costs
that are incurred  subsequent  to  establishing  technological  feasibility  are
capitalized  until  the  product  is  available  for  general  release.  Amounts
capitalized as software  development costs are amortized  periodically using the
greater of the units sold  during  the period or on a  straight-line  basis over
five years. The Company reviews capitalized  software costs for impairment on an
annual basis.  To the extent that the carrying  amount exceeds the estimated net
realizable  value of the  capitalized  software  cost, an  impairment  charge is
recorded.  No  impairment  was recorded  for the nine months ended  December 31,
2004.  Amortization of capitalized software development costs, included in costs
of revenues,  for the three months ended  December 31, 2003 and 2004 amounted to
$43 and $92,  respectively.  Amortization  of capitalized  software  development
costs,  included in costs of revenues,  for the nine months  ended  December 31,
2003 and 2004 amounted to $43 and $220, respectively.

NET LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS

Computations  of basic and  diluted  net loss per share of Class A Common  Stock
("Class A Shares") and Class B Common Stock (collectively,  "Common Stock") have
been made in accordance with SFAS No. 128, "Earnings Per Share".  Basic net loss
per share is computed by dividing net loss available to common stockholders (the
numerator) by the weighted average number of shares of Common Stock  outstanding
(the  denominator)  during  the  period.  Shares  issued  during  the period are
weighted  for  the  portion  of  the  period  that  they  are  outstanding.  The
computation of diluted net loss per share is similar to the computation of basic
net loss per share  except  that the  denominator  is  increased  to include the
number of additional  shares of Common Stock that would have been outstanding if
the  dilutive  potential  shares  of  Common  Stock  had  been  issued  and were
outstanding.  The Company has  incurred net losses for the three and nine months
ending December 31, 2003 and 2004;  therefore,  the impact of dilutive potential
shares of Common Stock has been  excluded  from the  computation  as it would be
anti-dilutive.



                                       8


The following  outstanding stock options,  warrants (prior to the application of
the  treasury  stock  method),  convertible  notes  and  redeemable  convertible
preferred stock (on an as-converted basis) were excluded from the computation of
diluted net loss per share:



                                                                               DECEMBER 31,
                                                                            2003         2004
                                                                            ----         ----

                                                                                  
Stock options....................................................          498,897      598,897
Underwriter warrants.............................................          120,000      120,000
Shares issuable related to convertible notes.....................               --      307,871
Private Placement Warrants.......................................               --      304,375


STOCK-BASED COMPENSATION

The Company has stock based  employee  compensation  plans,  which are described
more  fully  in Note 5.  The  Company  accounts  for its  stock  based  employee
compensation  plans in accordance  with the provisions of Accounting  Principles
Board ("APB") Opinion No. 25,  "Accounting  for Stock Issued to Employees",  and
related interpretations.  As such, compensation is recorded on the date of grant
only if the current  fair value of the  underlying  stock  exceeds the  exercise
price.  The  Company  has  adopted  the  disclosure  standards  of SFAS No.  148
"Accounting for Stock-Based  Compensation - Transaction and Disclosures",  which
amends SFAS No. 123, "Accounting for Stock-Based  Compensation",  which requires
the Company to provide pro forma net loss and earnings per share disclosures for
stock  option  grants made in 1995 and future  years as if the  fair-value-based
method of  accounting  for stock  options  as  defined  in SFAS No. 123 had been
applied.  The following table  illustrates the effect on net loss if the Company
had applied the fair value recognition provisions to stock based compensation:



                                                                        THREE MONTHS ENDED     NINE MONTHS ENDED
                                                                        ------------------     -----------------
                                                                           DECEMBER 31,           DECEMBER 31,
                                                                          ------------            ------------
                                                                         2003       2004       2003         2004
                                                                         ----       ----       ----         ----

                                                                                              
Net loss as reported .................................................   $  (572)   $(1,319)   $(2,333)   $(3,988)
Stock-based compensation expense included in net loss ................      --         --           10          4
Stock-based compensation expense determined under fair value
based method, net of related income tax benefits .....................      (108)      (158)      (341)      (464)
                                                                         -------    -------    -------    -------
Pro forma net loss ...................................................   $  (680)   $(1,477)   $(2,664)   $(4,448)
                                                                         =======    =======    =======    =======

Basic and diluted net loss available to common stockholders per share:
As reported ..........................................................   $ (0.30)   $ (0.13)   $ (1.05)   $ (0.42)
Pro forma ............................................................   $ (0.32)   $ (0.15)   $ (1.13)   $ (0.47)


USE OF ESTIMATES

The  preparation  of  Consolidated   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  at the date of the  Consolidated  Financial
Statements  and the  reported  amounts  of  revenues  and  expenses  during  the
reporting period.  The Company's most significant  estimates related to software
revenue recognition,  capitalization of software development costs, amortization
of intangible  assets and  depreciation  of fixed assets.  Actual  results could
differ from those estimates.

NOTE 3. RECENT ACCOUNTING STANDARDS

In December 2002, the Financial  Accounting  Standards Board (the "FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 148,  "Accounting for
Stock-Based  Compensation  - Transition  and  Disclosure  -an  amendment of FASB
Statement No. 123." This statement  provides  alternative  methods of transition
for a  voluntary  change  to the fair  value  based  method  of  accounting  for
stock-based  employee  compensation.  In  addition,  this  statement  amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee compensation and the effects of the method used on reported
results.



                                       9


In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment." This statement revises the original guidance contained in SFAS No. 123
and supersedes  Accounting  Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees,  and its related implementation  guidance.  Under
SFAS No. 123 (revised 2004), a publicly entity such as AccessIT will be required
to measure the cost of employee  services  received in exchange  for an award of
equity instruments based on the grant-date fair value of the award (with limited
exceptions)  and recognize such cost over the period during which an employee is
required to provide  service in  exchange  for the reward  (usually  the vesting
period). For stock options and similar  instruments,  grant-date fair value will
be estimated using option-pricing models adjusted for unique  characteristics of
instruments (unless observable market prices for the same or similar instruments
are  available).  For  small  business  issuers,  including  AccessIT,  this  is
effective as of the  beginning of the first interim or annual  reporting  period
that begins after December 15, 2005.

Upon  adoption of this  standard,  the actual costs of our  stock-based  payment
plans will be based on  grant-date  fair value,  which can not be  determined at
this time

NOTE 4. NOTES PAYABLE

In February  2002, the Company  commenced an offering of 5-year 8%  subordinated
promissory notes (the "5-Year Notes") with detachable warrants to purchase Class
A Shares (the "5-Year Notes  Warrants").  During the nine months ended  December
31, 2003,  the Company raised an aggregate of $1,230 from the issuance of 5-Year
Notes to several  investors.  Through  March 31,  2004 the  Company had raised a
total of $4,405 from the issuance of 5-Year Notes and no additional 5-Year Notes
were issued  during the nine months ended  December  31,  2004.  As of March 31,
2004,  5-Year Notes Warrants to purchase 440,500 Class A Shares were issued,  of
which 5-Year Warrants to purchase  123,000 Class A Shares were issued during the
nine months ended December 31, 2003 (see Note 6).

In November 2003, the Company issued two 8% notes payable totaling $3,000 to the
founders of Hollywood SW as part of the purchase price for Hollywood SW (the "HS
Notes").  During the nine months ended  December 31,  2004,  the Company  repaid
principal of $378 on the HS Notes.

In February  2004,  the Company sent a notice to the holders of the 5-Year Notes
and the HS Notes offering to exchange (the  "Exchange  Offer") the principal and
accrued  interest of the outstanding  5-Year Notes and the HS Notes for, at each
note holder's  election,  either (1) unregistered  Class A Shares at an exchange
rate of $3.57 per share (the  "Share  Option") or (2)  Subordinated  Convertible
Promissory  Notes  ("Convertible  Notes"),  which are  convertible  into Class A
Shares at a conversion rate of $5.64 per share (the  "Convertible Note Option").
On March 24,  2004,  the  Exchange  Offer was  completed.  Pursuant to the Share
Option, the Company exchanged 5-Year Notes in the aggregate  principal amount of
$2,480 plus accrued and unpaid interest of $46 for 707,477  unregistered Class A
Shares. Pursuant to the Convertible Note Option, in exchange for 5-Year Notes in
the  aggregate  principal  amount of $1,705 plus accrued and unpaid  interest of
$31, the Company  issued  Convertible  Notes which are, as of December 31, 2004,
convertible  into a maximum of  307,871  shares of its Class A Shares (1) at any
time up to the maturity date at each holder's option or (2) automatically on the
date when the average  closing price on the American Stock Exchange of the Class
A Shares for 30  consecutive  trading  days has been  equal to or  greater  than
$12.00.  The  holders of all the HS Notes and holders of 5-Year  Notes  totaling
$220 of principal elected not to participate in the Exchange Offer.

In March 2004, in connection  with its  acquisition  of assets of Boeing Digital
from the Boeing Company  ("Boeing"),  the Company issued a non-interest  bearing
note payable with a face amount of $1,800. The estimated fair value of this note
was  determined  to be $1,367 on the closing date and interest is being  imputed
over the 4 year term of the note, to non-cash  interest expense in the unaudited
Consolidated  Statement of  Operations.  On December 31, 2004,  the value of the
note, (including imputed interest) is $1,489 and is included in notes payable in
the unaudited  Consolidated  Balance Sheet.  For the three and nine months ended
December 31, 2004,  non-cash  interest expense  resulting from this note was $41
and $123, respectively.

In July 2004,  the Company  made early  repayments  totaling $58 for two 5 -Year
Notes,  and the remaining  value of the  underlying 5 - Year Notes  Warrants was
amortized to non-cash interest expense, totaling $17.

During the nine months  ended  December 31,  2004,  the Company  made  scheduled
principal payments of $12 on the 5-Year Notes.



                                       10


NOTE 5. MANDATORILY REDEEMABLE CONVERTIBLE PREFERRED STOCK

PREFERRED STOCK

In  October  2001,  the  Company  issued  3,226,538  shares  of the  Series A 8%
Mandatorily  Redeemable  Convertible  Preferred  Stock (the  "Series A Preferred
Stock") at approximately $0.62 per share,  resulting in gross proceeds of $2,000
before considering expenses of $203. Concurrent with this issuance,  the Company
issued  warrants to purchase up to 430,205 Class A Shares (the "2001  Warrant").
In November 2002, the Company issued  4,976,391 shares of Series B 8% Cumulative
Convertible  Preferred Stock, par value $0.001 (the "Series B Preferred  Stock")
the Series A Preferred Stock holder at approximately $0.50 per share,  resulting
in gross proceeds of $2,500 before considering expenses of $125. Concurrent with
this issuance,  the Company issued three warrants to purchase  381,909,  144,663
and 100,401 Class A Shares  ("Contingent  Warrant A", "Contingent Warrant B" and
"Contingent  Warrant C",  respectively).  The issuance of the Series A Preferred
Stock  resulted  in a  beneficial  conversion  feature of $1,078  calculated  in
accordance   with  Emerging   Issues  Task  Force   ("EITF")  Issue  No.  00-27,
"Application  of  Issue  No.  98-5  to  Certain  Convertible  Instruments".  The
beneficial  conversion  feature was  reflected as an issuance cost and therefore
was reflected as a charge  against the Series A Preferred  Stock and an increase
to additional paid-in capital.  As described below, in November 2003 the Company
exchanged all of its Series A Preferred Stock, Series B Preferred Stock, related
warrants and accumulated dividends for 2,207,976 Class A Shares.

Total  accretion for the Series A Preferred  Stock to its  estimated  redemption
value was $657 and $1,125, respectively,  during the three and nine months ended
December 31, 2003,  respectively of which $633 and $990 related to the accretion
to the estimated  redemption amount and $24 and $131,  respectively,  related to
the accretion of the beneficial  conversion feature.  Accretion for the Series B
Preferred  Stock to its redemption  value was $465 for the three and nine months
ended December 31, 2003.

In  September  2003,  the  Company  entered  into an  agreement  (the  "Exchange
Agreement") with the holder of the Series A and Series B Preferred Stock to: (1)
convert all 8,202,929 shares of Series A and Series B Preferred Stock held by it
into 1,640,585 Class A Shares; (2) exchange the 2001 Warrant, Contingent Warrant
A and Contingent Warrant C for 320,000 Class A Shares;  (3) exercise  Contingent
Warrant B to purchase 143,216 Class A Shares on a  cashless-exercise  basis; and
(4)  accept  Class A  Shares  at a price  per  share of  $5.00  pursuant  to the
Company's  November 2003 initial public offering (the "IPO"),  as  consideration
for the  conversion  of all  accumulated  dividends on the Series A and Series B
Preferred Stock through the effective date of the IPO. On November 14, 2003, the
Exchange Agreement was finalized, concurrent with the completion of the IPO. The
Company issued 104,175 Class A Shares as consideration for the conversion of all
accumulated  dividends on the Series A and B Preferred Stock. As of December 31,
2004, there is no Series A Preferred Stock or Series B Preferred Stock issued or
outstanding.

NOTE 6. STOCKHOLDERS' EQUITY

CAPITAL STOCK

In August 2004, the Company's Board of Directors authorized the repurchase of up
to 100,000  Class A Shares.  The shares will be purchased at  prevailing  prices
from  time-to-time in the open market  depending on market  conditions and other
factors.  During the nine months ended December 31, 2004, the Company  purchased
9,140 Class A Shares for a total purchase price of $32,  including  fees,  which
has been recorded as Treasury stock in the unaudited Consolidated Balance Sheet.
In  January  2005, the  Company  purchased  42,300  Class A  Shares  for a total
purchase price of $140 including fees, at an average purchase price of $3.31 per
share.  As of January  31,  2005,  an  additional  48,560  Class A Shares may be
repurchased.

In November  2004, the Company  issued  540,000  unregistered  shares of Class A
Shares in connection with the acquisition of FiberSat (see Note 11).

In October 2004,  the Company  entered into a stock  purchase  agreement with an
investor  to issue  and sell  282,776  unregistered  Class A Shares at $3.89 per
share to the investors  for gross  proceeds of $1,100 (the "October 2004 Private
Placement"). These shares carry piggyback and demand registration rights, at the
sole expense of the investors.  The net proceeds to the Company of approximately
$1,023 were used for the FiberSat acquisition and for working capital.



                                       11


In  June  2004,  the  Company  issued  in  a  private  placement  (the  "Private
Placement")  1,217,500  unregistered Class A Shares at a sale price of $4.00 per
share.  The total net  proceeds to the Company,  including  fees and expenses to
subsequently  register the securities were approximately  $4,000. The Company is
using the net  proceeds for capital  investments  and for working  capital.  The
Company  also  issued  to  investors  and the  investment  firm  in the  Private
Placement, warrants to purchase a total of 304,375 Class A Shares at an exercise
price of $4.80 per share,  exercisable  upon  receipt  (the  "Private  Placement
Warrants").  The Company  agreed to register the Class A Shares issued and to be
issued upon exercising of the Private Placement  Warrants with the SEC by filing
a Form SB-2 on or before July 5, 2004.  The Company  filed the Form SB-2 on July
2, 2004, and the Form SB-2 was declared effective on July 20, 2004.

In May 2004,  the Company  entered into an agreement  with the holder of 750,000
shares of AccessDM's  common  stock,  to exchange all of those shares for 31,300
unregistered Class A Shares. This transaction was consummated in May 2004 and as
a result, AccessIT holds 100% of AccessDM's common stock. In connection with the
transaction,  the Company  recorded a gain of $13,  representing  the difference
between the fair value of the Class A Shares given and the AccessDM common stock
received.   The  gain  is  included  in  other  income,  net  in  the  unaudited
Consolidated Statements of Operations.

STOCK OPTION PLAN

At the annual stockholders' meeting held in October 2004, the stockholders voted
to approve an increase in the number of AccessIT  stock  options  available  for
grant from 600,000 Class A Shares to 850,000 Class A Shares.

Under AccessIT's stock option plan,  AccessIT granted options to purchase 66,000
Class A Shares to its employees, and options to purchase 1,667 Class A Shares to
a vendor in exchange for  services,  during the nine months  ended  December 31,
2004,  all at an exercise price of $5.00 per share.  In addition,  in July 2004,
AccessIT  granted  options to purchase 5,000 Class A Shares at an exercise price
of $5.00 per share to each of two non-employee members of its Board of Directors
for their Board member service.  Amortization of deferred stock compensation for
the  three  months  ended  December  31,  2003 and 2004 was less than $1 in each
period.  Amortization of deferred stock  compensation  for the nine months ended
December 31, 2003 and 2004  amounted to $10 and $4,  respectively,  and has been
recorded  as  non-cash   stock-based   compensation  expense  in  the  unaudited
Consolidated  Statements of Operations.  Also, in May 2004,  options to purchase
3,334 Class A Shares, previously issued to a vendor were forfeited following the
termination of the underlying services agreement,  and in December 2004, options
to purchase 6,000 Class A Shares were forfeited  following the termination of an
employee.

As of December 31, 2004,  there were options to purchase  251,103 Class A Shares
available for grant under AccessIT's stock option plan.

Under  AccessDM's  stock option plan,  AccessDM issued options to purchase 5,000
shares of its common  stock to an  employee  at an  exercise  price of $0.25 per
share,  during the nine months ended December 31, 2004. As of December 31, 2004,
AccessDM has issued  options to purchase  1,005,000 of its shares to  employees,
and there were  options to  purchase  995,000  shares of AccessDM  common  stock
available for grant.

WARRANTS

In  connection  with the  issuance of the 5-Year Notes (see Note 4), the Company
issued 5-Year Notes Warrants to the holders of the 5-Year Notes. During the nine
months ended  December 31, 2003,  the Company  issued  5-Year Notes  Warrants to
purchase  123,000 Class A Shares to the holders of the 5-Year Notes in the ratio
of one-half of a 5-Year Note Warrant for every dollar principal amount of 5-Year
Notes issued. In total, 5-Year Notes Warrants to purchase 440,500 Class A Shares
were  issued and were  ascribed  an  estimated  fair value of $2,202,  which was
recognized as issuance cost and therefore was charged against the carrying value
of the related notes payable.  In March 2004, the Company completed the Exchange
Offer covering the majority of the outstanding 5-Year Notes and related warrants
(see Note 4), and the remaining  $1,421  aggregate  amount of underlying  5-Year
Notes  Warrants was  amortized to Non-Cash  Interest  Expense.  During the three
months ended December 31, 2003,  and 2004 a total of $111 and $2,  respectively,
was amortized to non-cash  interest expense to accrete the value of the notes to
their face value over the expected  term of the related  notes.  During the nine
months ended December 31, 2003 and 2004, a total of $302 and $13,  respectively,
was amortized to non-cash  interest expense to accrete the value of the notes to
their face value over the expected term of the related  notes.  In addition,  in
July 2004, the Company made early repayments totaling $58 for two 5 -Year Notes,
and the remaining $19 of the  underlying  5-Year Notes Warrants was amortized to
non-cash interest expense.



                                       12


In connection  with the Private  Placement,  the Company issued to the investors
and to the  investment  firm in the  Private  Placement,  Warrants  to  purchase
304,375  Class A Shares at an  exercise  price of $4.80 per share.  The  Private
Placement Warrants are exercisable from the date of issuance and for a period of
five years thereafter.  However,  the Private Placement Warrants may be redeemed
by the  Company at any time after the date that is one year from the issue date,
upon thirty days  advance  written  notice to the holder,  for $0.05 per Private
Placement  Warrant  to  purchase  one  Class  A  Share,  provided,  that  (i)  a
registration  statement with the SEC is then in effect as to such Class A Shares
and will be in effect  as of a date  thirty  days  from the date of  giving  the
redemption notice and (ii) for a period of twenty (20) trading days prior to the
giving of the  redemption  notice the Class A Shares  have  closed at a price of
$9.20 per share or higher.  The Company  agreed to  register  the Class A Shares
issued and to be issued upon exercising of the Private  Placement  Warrants with
the SEC by filing a Form SB-2 on or before July 5, 2004.  The Company  filed the
Form SB-2 on July 2, 2004,  and the Form SB-2 was  declared  effective  July 20,
2004.

In accordance with EITF 00-19,  "Accounting for Derivative Financial Instruments
Indexed To, and Potentially Settled In, a Company's Own Stock," and the terms of
the Private Placement Warrants, the fair value of the Private Placement Warrants
were initially accounted for as a liability, with an offsetting reduction to the
carrying value of the common stock.  The warrant  liability was  reclassified to
equity as of the July 20, 2004 effective date of the registration statement.

The fair value of the Private Placement Warrants was estimated to be $797 on the
closing date of the transaction,  using the Black-Scholes  option-pricing  model
with the following assumptions: no dividends: risk-free interest rate 3.94%, the
contractual  life of 5 years  and  volatility  of 72%.  The  fair  value  of the
warrants was re-measured at June 30, 2004 and estimated to be $776. The decrease
in the fair value of $21 from the transaction date to June 30, 2004 was recorded
as a credit to other  income,  net in the  unaudited  Consolidated  Statement of
Operations.  The fair value of the warrants  decreased by $70 from June 30, 2004
to July 20, 2004 and such decrease was recorded as a credit to other income, net
in the unaudited Consolidated Statement of Operations.

NOTE 7. COMMITMENTS AND CONTINGENCIES

On July 2, 2004, the Company  received  notice that certain  creditors of one of
its data center customers filed an involuntary  bankruptcy  petition against the
customer.  On July  14,  2004,  the  customer  agreed  to the  entry of an order
granting  relief under Chapter 11 of the United States  Bankruptcy Code and then
converted the Chapter 11 reorganization to Chapter 7 liquidation. As of December
31,  2004,   the  Company  had  accounts   receivable   of  $121,   representing
approximately  two  months  of  service  charges,   recorded  on  the  unaudited
Consolidated  Balance  Sheet  related to this  customer.  In  addition,  through
December  31,  2004 the Company  had $499 of  unbilled  revenue  related to this
customer.  The Company has provided an  allowance  for $499 against the unbilled
revenue,  which is shown in the provision for doubtful accounts in the unaudited
Consolidated Statements of Operations. The Company has a first security interest
in the customer's  accounts  receivable and the bankruptcy trustee is conducting
an investigation as to the nature and amount of the accounts  receivable.  Based
on  information  received to date,  the  Company  believes  that the  customer's
accounts  receivable  which are deemed to be collectible  are  substantially  in
excess  of the  amounts  owed to the  Company,  and  recorded  on the  unaudited
Consolidated  Balance Sheet.  Therefore,  the Company  believes that the amounts
owed to the Company,  and recorded on the unaudited  Consolidated  Balance Sheet
will be collected.

In March 2004, the Company acquired certain digital cinema - related assets from
the  Boeing  Company.   The  purchase  price  for  the  assets  included  53,534
unregistered  Class A Shares.  At any time  during the 90 day  period  beginning
March 29, 2005,  Boeing can sell its 53,534  unregistered  Class A Shares to the
Company in exchange for $250 in cash.

NOTE 8. SUPPLEMENTAL CASH FLOW DISCLOSURE



                                                                              THREE MONTHS ENDED  NINE MONTHS ENDED
                                                                                DECEMBER 31,        DECEMBER 31,

                                                                               2003      2004      2003      2004
                                                                              ------    ------    ------    ------

                                                                                               
Interest paid .............................................................   $  122    $  91     $  306   $  292
Accretion on mandatorily redeemable convertible preferred stock ...........   $1,125    $  --     $1,590   $   --
Common stock issued to vendor in lieu of cash .............................   $   --    $  --     $  174   $   --
Exchange of preferred stock and warrants for common stock .................   $4,172    $  --     $4,172   $   --
Issuance of common stock and notes to acquire
Hollywood Software, Inc. ..................................................   $4,380    $  --     $4,380   $   --
Issuance of warrants to purchase common stock .............................   $   --    $  --     $   --   $  706
Issuance of common stock to acquire FiberSat Global Services, LLC .........   $   --    $1,625    $   --   $1,625


                                       13



NOTE 9. SEGMENT INFORMATION

Segment  information  has  been  prepared  in  accordance  with  SFAS  No.  131,
"Disclosures  about  Segments of an  Enterprise  and Related  Information".  The
Company has two reportable  segments:  Data Center  Services and Media Services.
The segments were determined based on the products and services provided by each
segment.  Accounting policies of the segments are the same as those described in
Note 2.  Performance  of the segments is evaluated  on operating  income  before
interest, taxes, depreciation and amortization. The Data Center Services segment
provides  services  through its nine IDC's  including the license of data center
space,  provision  of  power,  data  connections  to other  businesses,  and the
installation  of equipment,  and the operations of Managed  Services.  The Media
Services segment  consists of Hollywood SW, AccessDM and FiberSat.  Hollywood SW
develops and licenses  software to the  theatrical  distribution  and exhibition
industries,  provides services as an ASP, and provides software enhancements and
consulting  services.  AccessDM is in the  business of storing and  distributing
digital content to movie theaters and other venues.  FiberSat is in the business
of providing satellite-based broadband video, data and Internet transmission and
encryption services for multiple customers in the broadcast and cable television
and  communications   industries,  and  also  operates  an  outsourced  networks
operations  center.  Prior to November 3, 2003, the Company operated only in the
Data Center  Services  segment.  All of the Company's  revenues  were  generated
inside the United States.

Information  related to the  segments  of the Company  and its  subsidiaries  is
detailed below:




                                                            MEDIA        DATA CENTER                    TOTAL
                                                           SERVICES       SERVICES    CORPORATE     CONSOLIDATED
                                                           --------       --------    ---------     ------------
                                                                                        
FOR THE THREE MONTHS ENDED DECEMBER 31, 2003:
     Total income (loss) from operations ............     $    322      $    (13)     $   (758)     $   (449)
     Depreciation and Amortization ..................           73           581            22           676
     Operating income (loss) before interest, taxes,
     depreciation and amortization ..................          395           568          (736)          227

FOR THE THREE MONTHS ENDED DECEMBER 31, 2004:

     Total loss from operations .....................     $   (244)     $   (132)     $   (860)     $ (1,236)
     Depreciation and Amortization ..................          426           443            26           895

     Operating income (loss) before interest, taxes,
     depreciation and amortization ..................          182           311          (834)         (341)


FOR THE NINE MONTHS ENDED DECEMBER 31, 2003:
     Total income (loss) from operations ............     $    322      $   (126)     $ (1,976)     $ (1,780)
     Depreciation and Amortization ..................           73         1,774            68         1,915

     Operating income (loss) before interest, taxes,
     depreciation and amortization ..................          395         1,648        (1,908)          135

FOR THE NINE MONTHS ENDED DECEMBER 31, 2004:

     Total loss from operations .....................     $   (649)     $   (256)     $ (2,909)     $ (3,814)
     Depreciation and Amortization ..................        1,025         1,355            77         2,457

     Operating income (loss) before interest, taxes,
     depreciation and amortization ..................          376         1,099        (2,832)       (1,357)


AS OF DECEMBER 31,2004:

     Total Assets ...................................     $ 16,089      $  5,752      $  1,410      $ 23,251



                                       14



NOTE 10. RELATED PARTY TRANSACTIONS

As of December 31, 2003 and 2004,  the Company had  principal  amounts of $1,400
and  $4,000,  respectively,  in notes  payable  to  related  parties,  including
officers of the Company.  During the three  months  ended  December 31, 2003 and
2004, there were $0 and $131, respectively, principal repayments for these notes
payable.  During the nine months ended December 31, 2003 and 2004, there were $0
and $509, respectively, of principal repayments for these notes payable.

NOTE 11. ACQUISITIONS

On October  19,  2004,  the Company and its  wholly-owned  subsidiary,  FiberSat
Global Services,  Inc., entered into an agreement to purchase  substantially all
of the assets and certain  specified  liabilities of FiberSat  Global  Services,
LLC. On November 17, 2004, the FiberSat  acquisition  was  completed.  FiberSat,
headquartered in Chatsworth,  California,  provides services utilizing satellite
ground  facilities and  fiber-optic  connectivity  to receive,  process,  store,
encrypt and transmit television and data signals globally. FiberSat's Chatsworth
facility currently houses the infrastructure operations of the Company's digital
cinema satellite delivery services.


The initial purchase price for FiberSat consisted of 500,000  unregistered Class
A Shares, and the Company agreed to repay certain  liabilities of FiberSat on or
before  the  closing  of the  acquisition,  with up to $500 in cash and  100,000
unregistered Class A Shares. The Company had the option to exchange up to 50,000
of such 100,000  Class A Shares to increase the cash,  and thereby  decrease the
Class A Share portion of such repayment  based on the ratio of one Class A Share
for each $5.00 of  additional  cash.  The Company  repaid these  liabilities  by
paying  approximately  $381 and  issuing  40,000  shares of Class A  Shares.  In
addition, the Company may be required to pay a contingent purchase price for any
of the three years following the acquisition in which certain  earnings  targets
are achieved.  The Company has also agreed to a one-time  issuance of additional
unregistered  shares to the sellers in accordance  with a formula if, during the
90 days  following  the  applicable  lock-up  period,  the average  value of the
Company's  Class A Shares during such 90 days declines below an average of $3.17
per share.


Following  the FiberSat  acquisition,  the  following  is the initial  estimated
purchase price allocation:

Current assets ................................................           $  214
Property and equipment, net ...................................            2,164
Intangible assets .............................................              560
Goodwill ......................................................               24
Other noncurrent assets .......................................               16

Total tangible and intangible assets acquired .................            2,978
Less: liabilities assumed:

Current liabilities ...........................................              711

Long-term liabilities .........................................               80
                                                                          ------
Total Liabilities .............................................              791
                                                                          ------
Total Purchase Price ..........................................           $2,187
                                                                          ======


                                       15



NOTE 12. SUBSEQUENT EVENTS

On December  23,  2004,  ADM Cinema  Corporation,  the  Company's  wholly  owned
subsidiary,  entered into an asset  purchase  agreement  with  Pritchard  Square
Cinema,  LLC, a New York limited  liability  company (the "Seller"),  and Norman
Adie, the Seller's managing member, to purchase  substantially all of the assets
and certain  liabilities of the Seller's  Pavilion  Movie  Theatre/Entertainment
Complex (the "Pavilion") located in Brooklyn, New York. On February 11, 2005 the
acquisition  of  the  Pavilion  was  completed.  The  total  purchase  price  is
approximately  $5.4 million,  including  transaction  fees.  The purchase  price
included  a cash  payment  of  $3,300  (less  $500 held in  escrow  pending  the
completion  of certain  construction)  and a five-year  8%  promissory  note for
$1,700,  among other things.  The Pavilion is an eight-screen  movie theatre and
cafe and will be a  component  of the  Media  Services  segment.  Continuing  to
operate  as a fully  functional  multiplex,  the  Pavilion  will  also  become a
showplace for the Company to demonstrate its integrated digital cinema solutions
to the  movie  entertainment  industry.  The  Company  will  file the  financial
statements  of the  Seller and the  Company's  pro forma  financial  information
pursuant to the Exchange Act and the rules promulgated thereunder.

On  February  10,  2005,  the  Company  issued 7%  convertible  debentures  (the
"Convertible  Debentures") and warrants (the "Convertible  Debentures Warrants")
to a group of  institutional  investors for aggregate  proceeds of $7.6 million.
The  Convertible  Debentures  have a four  year  term,  with  one  third  of the
unconverted  principal  balance  repayable  in  12  equal  monthly  installments
beginning  three years after the closing.  The remaining  unconverted  principal
balance is repayable  at maturity.  The Company may pay the interest in cash or,
if certain  conditions are met, by issuing shares of its Class A Shares.  If the
Company is  eligible to issue  Class A Shares to repay  interest,  the number of
shares issuable is based on 93% of the 5-day average closing price preceding the
interest due date. The  Convertible  Debentures are initially  convertible  into
1,867,322  shares of Class A Shares,  based upon a conversion price of $4.07 per
share  subject to  adjustments  from time to time.  Upon the  redemption  of the
Convertible  Debentures,  the Company may issue additional warrants  exercisable
for  Class  A  Shares.  Additionally,   the  Company  issued  to  the  investors
Convertible  Debentures  Warrants to  purchase  up to 560,197  shares of Class A
Shares, at an initial exercise price of $4.44 per share,  subject to adjustments
from time to time. The Convertible Debentures Warrants are exercisable beginning
on September 9, 2005 until 5 years  thereafter.  The offering of the Convertible
Debentures  and  the  Convertible   Debentures  Warrants  was  exempt  from  the
registration  requirements  of the  Securities  Act of  1933,  as  amended  (the
"Securities  Act"),  under  Section  4(2) of the  Securities  Act and  Rule  506
promulgated thereunder.

The  Company has agreed to  register,  among  other  things,  the Class A Shares
underlying the  Convertible  Debentures and Convertible  Debentures  Warrants on
Form  S-3  within  30 days  from  the  closing.  If,  among  other  things,  the
registration  statement is not filed within 30 days or is not declared effective
within  90 days  (120  days in the  event of an SEC  review),  then  cash  delay
payments equal to 1% of the offering proceeds per month will apply.

On January 26, 2005, the bankruptcy court in the matter of Norvergence  approved
a motion  for the  trustee to pay the  Company  $121,000  for past due  accounts
receivable.  Additionally,  the  Company  has been  granted  the right to pursue
collection of Norvergence's customer accounts receivable.  Any amounts collected
will be retained by the Company in settlement of its claim against Norvergence.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS

THIS REPORT ON FORM 10-QSB CONTAINS FORWARD-LOOKING STATEMENTS.  FORWARD-LOOKING
STATEMENTS  IN THIS  REPORT  ARE  INDICATED  BY  WORDS  SUCH  AS  "ANTICIPATES,"
"EXPECTS," "BELIEVES,"  "INTENDS," "PLANS," "ESTIMATES,"  "PROJECTS" AND SIMILAR
EXPRESSIONS.  THESE  STATEMENTS  REPRESENT  OUR  EXPECTATIONS  BASED ON  CURRENT
INFORMATION AND ASSUMPTIONS.  FORWARD-LOOKING  STATEMENTS ARE INHERENTLY SUBJECT
TO RISKS AND  UNCERTAINTIES.  OUR ACTUAL  RESULTS COULD DIFFER  MATERIALLY  FROM
THOSE  WHICH ARE  ANTICIPATED  OR  PROJECTED  AS A RESULT OF  CERTAIN  RISKS AND
UNCERTAINTIES,  INCLUDING,  BUT NOT LIMITED TO A NUMBER OF FACTORS,  SUCH AS OUR
INCURRENCE OF LOSSES TO DATE;  ACHIEVING  SUFFICIENT VOLUME OF BUSINESS FROM OUR
CUSTOMERS; OUR SUBSIDIARIES CONDUCTING BUSINESS IN AREAS IN WHICH WE HAVE LITTLE
EXPERIENCE;  ECONOMIC AND MARKET CONDITIONS;  THE PERFORMANCE OF THE DATA CENTER
SERVICES AND SOFTWARE RELATED BUSINESSES; CHANGES IN BUSINESS RELATIONSHIPS WITH
OUR MAJOR CUSTOMERS AND IN THE TIMING,  SIZE AND  CONTINUATION OF OUR CUSTOMERS'
PROGRAMS;  COMPETITIVE  PRODUCT AND PRICING  PRESSURES;  INCREASES IN COSTS THAT
CANNOT BE  RECOUPED  IN PRODUCT  PRICING;  SUCCESSFUL  INTEGRATION  OF  ACQUIRED
BUSINESSES;  AS WELL AS OTHER RISKS AND  UNCERTAINTIES,  SUCH AS THOSE DESCRIBED
UNDER  QUANTITATIVE  AND  QUALITATIVE  DISCLOSURES  ABOUT  MARKET RISK AND THOSE
DETAILED  HEREIN  AND FROM  TIME TO TIME IN OUR  FILINGS  WITH  THE  SEC.  THOSE
FORWARD-LOOKING STATEMENTS ARE MADE ONLY AS OF THE DATE HEREOF, AND WE UNDERTAKE
NO OBLIGATION TO UPDATE OR REVISE THE FORWARD-LOOKING  STATEMENTS,  WHETHER AS A
RESULT OF NEW INFORMATION,  FUTURE EVENTS OR OTHERWISE. THE FOLLOWING DISCUSSION
SHOULD  BE  READ  IN  CONJUNCTION  WITH  THE  UNAUDITED  CONSOLIDATED  FINANCIAL
STATEMENTS, INCLUDING THE NOTES THERETO, INCLUDED ELSEWHERE IN THIS FORM 10-QSB.

                                       16


OVERVIEW

AccessIT was organized on March 31, 2000 and we are in the business of providing
software services and technology  solutions to the motion picture industry,  and
operating IDC's.  Recently,  we have actively expanded into new and interrelated
business areas relating to the delivery and management of digital cinema content
to entertainment venues worldwide.  These businesses,  supported by our internet
data center business, have become our primary strategic focus.


We have two  reportable  segments:  Data Center  Services,  which  comprise  the
operations of our nine IDCs and the  operations of Managed  Services;  and Media
Services,  which represents the operations of Hollywood SW, AccessDM  (including
Boeing Digital),  ADM Cinema, and FiberSat.  For the three months ended December
31, 2004, we received 47% and 53%,  respectively,  of our revenue from the Media
Services and Data Center Services  segments.  For the nine months ended December
31, 2004, we received 35% and 65%,  respectively,  of our revenue from the Media
Services and Data Center Services segments.

From our  inception  through  November 3, 2003,  all of our  revenues  have been
derived  from  monthly  license  fees and fees  from  other  ancillary  services
provided  by us at our IDCs.  Hollywood  SW  generates  revenues  from  software
license fees, ASP fees,  enhancements,  consulting and maintenance fees. Managed
Services generates  revenues  primarily from managed network services.  AccessDM
generates  revenues  from the  delivery of movies and other  content  into movie
theaters.  We incurred net losses of $2.33  million and $4.0 million in the nine
months  ended  December  31,  2003  and  2004,  respectively,  and  we  have  an
accumulated  deficit of $18.7  million as of December  31, 2004.  We  anticipate
that, with the  acquisitions  of Hollywood SW,  FiberSat,  Managed  Services and
substantially  all of the assets of Boeing Digital,  as well as the operation of
AccessDM,  our results of  operations  will  improve.  As we grow, we expect our
operating costs and general and  administrative  expenses will also increase for
the  foreseeable  future,  but as a lower  percentage  of  revenue.  In order to
achieve  and  sustain  profitable  operations,  we will  need to  generate  more
revenues  than we have in  prior  years  and we may  need to  obtain  additional
financing.

CRITICAL ACCOUNTING POLICIES AND USE OF ESTIMATES

Our discussion and analysis of our financial condition and results of operations
are based upon our unaudited Consolidated Financial Statements,  which have been
prepared in accordance  with  accounting  principles  generally  accepted in the
United States of America.  The preparation of Consolidated  Financial Statements
in conformity with accounting principles generally accepted in the United States
of America requires our management to make estimates and assumptions that affect
the reported  amounts of assets and liabilities and the disclosure of contingent
assets and liabilities at the date of the Consolidated  Financial Statements and
the reported amounts of revenues and expenses during the reporting  period.  Our
most significant  estimates relate to software revenue recognition,  capitalized
software  costs,  depreciation  of fixed assets and  amortization  of intangible
assets. Actual results could differ from these estimates.  On an on-going basis,
we evaluate our estimates, including those related to the carrying values of our
fixed  assets  and  intangible  assets.  We base  our  estimates  on  historical
experience  and on various  other  assumptions  that we believe to be reasonable
under the  circumstances  made,  the  results of which form the basis for making
judgments  about the  carrying  values of assets  and  liabilities  that are not
readily  apparent  from other  sources.  Actual  results could differ from these
estimates under different assumptions or conditions.

We believe that the following critical  accounting policies and estimates affect
our more  significant  estimates and judgments  used in the  preparation  of our
unaudited Consolidated Financial Statements.

REVENUE RECOGNITION

Through December 31, 2004, most of our Media Services segment revenues have been
generated by Hollywood SW and are accounted for in accordance  with Statement of
Position 97-2 ("SOP 97-2") and SAB 104. Our software revenues are generated from
the following primary sources:

o    software licensing, including customer licenses and ASP agreements;

o    software maintenance contracts; and

o    professional  consulting services,  which includes systems  implementation,
     training,  custom  software  development  services  and other  professional
     services.

Software licensing revenue is recognized when the following criteria are met:

o    persuasive evidence of an arrangement exists;

o    delivery has occurred and no significant obligations remain;

o    the fee is fixed or determinable; and

o    collection is determined to be probable.

                                      17


Significant  upfront  fees are  received in addition  to periodic  amounts  upon
achievement  of contractual  events for licensing of our products.  Such amounts
are  deferred  until the  revenue  recognition  criteria  have  been met,  which
typically occurs after delivery and acceptance.

For  arrangements  with  multiple  elements  (e.g.,  delivered  and  undelivered
products,  maintenance and other services), we separately negotiate each element
of the arrangement based on the fair value of the elements.  The fair values for
ongoing  maintenance  and support  obligations  are based upon separate sales of
renewals  to  customers  or  upon  substantive   renewal  rates  quoted  in  the
agreements.  The fair values for services,  such as training or consulting,  are
based upon hourly billing rates of these services when sold  separately to other
customers.  In instances  where we are not able to determine  fair value of each
element and the services are essential to the functionality of the software,  we
follow percentage-of-completion accounting to recognize revenue.

Customers not wishing to license and operate our software themselves may use the
software  through  an ASP  arrangement,  in which we host  the  application  and
provide  customer  access via the internet.  Annual minimum ASP service fees are
recognized  ratably over the contract term. Overage revenues for usage in excess
of stated minimums are recognized monthly.

Maintenance  services and website  subscription fees are recognized ratably over
the  contract  term.  Professional  consulting  services,  sales of third  party
products and resale  hardware  revenues are recognized as services are provided.
Software  development  revenues are recognized when delivery has occurred and no
significant obligations remain.

Deferred revenue is recorded in cases of:

o    a portion or the entire contract amount cannot be recognized as revenue due
     to non-delivery or acceptance of licensed software or custom programming;

o    incomplete implementation of ASP service arrangements; or

o    unexpired  pro-rata  periods of  maintenance,  minimum ASP service  fees or
     website subscription fees.

As  license  fees,  maintenance  fees,  minimum  ASP  service  fees and  website
subscription  fees are often  paid in  advance,  a portion  of this  revenue  is
deferred  until the  contract  ends.  Such  amounts are  classified  as deferred
revenue  in the  unaudited  Consolidated  Balance  Sheet and are  recognized  as
revenue in accordance with our revenue recognition policies described above.

In addition,  revenues in the Media Services  segment  include  digital cinema -
related revenues generated by AccessDM.  These revenues consist of (1) satellite
delivery revenues, (2) encryption and preparation fee revenues, (3) landing fees
for  delivery  to  each  movie  theatre.  These  revenues  are  recognized  upon
completion of the related services.

Within our Data Center Services  segment,  IDC revenues  consist of license fees
for colocation space, riser access charges, electric and cross-connect fees, and
non-recurring  equipment installation fees. Revenues from our IDCs, riser access
charges,  electric and cross-connect  fees are billed monthly and, in accordance
with SAB 104, are recognized  ratably over the terms of the contracts,  which is
generally  one to  nine  years.  Certain  customer  contracts  contain  periodic
increases  in the  amount of  license  fees to be paid,  and those  amounts  are
recognized as license fee revenues on a straight-line basis over the term of the
contracts. Installation fees are recognized on a time and materials basis in the
period in which the services were provided and represent the  culmination of the
earnings process as no significant  obligations remain.  Amounts such as prepaid
license fees and other  amounts,  which are collected  prior to  satisfying  the
above revenue recognition criteria, are classified as deferred revenues. Amounts
satisfying  revenue  recognition  criteria  prior to billing are  classified  as
unbilled revenues. In addition, within our Data Center Services segment, Managed
Services revenues consist of network monitoring and maintenance fees. These fees
consist  of  monthly  recurring  billings  pursuant  to  contracts,   which  are
recognized  as  revenues  in the  month  earned,  and other  billings  which are
recognized  on a time and  materials  basis in the period in which the  services
were provided.

CAPITALIZED SOFTWARE COSTS

We account for software  costs under SFAS No. 86,  "Accounting  for the Costs of
Computer  Software  to  Be  Sold,  Leased,  or  Otherwise  Marketed".   Software
development  costs that are incurred  subsequent to  establishing  technological
feasibility are capitalized  until the product is available for general release.
Amounts  capitalized as software  development  costs are amortized  periodically
using the  greater  of the units sold  during  the period or on a  straight-line


                                       18


basis over five years. We review capitalized software costs for impairment on an
annual basis.  To the extent that the carrying  amount exceeds the estimated net
realizable  value of the  capitalized  software  cost, an  impairment  charge is
recorded.  No  impairment  was recorded  for the nine months ended  December 31,
2004.  Amortization of capitalized software development costs, included in costs
of revenues,  for the three and nine months ended  December 31, 2004 amounted to
$92,000 and $220,000, respectively.

BUSINESS COMBINATIONS AND INTANGIBLE ASSETS

We have  adopted  SFAS No.  141,  "Business  Combinations"  and  SFAS  No.  142,
"Goodwill  and other  Intangible  Assets".  SFAS No. 141  requires  all business
combinations  to be accounted for using the purchase  method of  accounting  and
that  certain  intangible  assets  acquired  in a business  combination  must be
recognized  as  assets  separate  from  goodwill.  SFAS No.  142  addresses  the
recognition and measurement of goodwill and other intangible  assets  subsequent
to their  acquisition.  SFAS No. 142 also addresses the initial  recognition and
measurement of intangible  assets  acquired  outside of a business  combination,
whether  acquired  individually or with a group of other assets.  This statement
provides that intangible  assets with indefinite  lives and goodwill will not be
amortized but will be tested at least annually for impairment.  If an impairment
is indicated,  then the asset will be written down to its fair value,  typically
based upon its future  expected  discounted cash flows. As of December 31, 2004,
our finite-lived  intangible assets consisted of customer agreements,  covenants
not  to  compete,  Federal  Communications  Commission  licenses  for  satellite
transmission services,  trade names and trademarks,  which are estimated to have
useful  lives of  ranging  from 2 to 10 years.  In  addition,  we have  recorded
goodwill in connection with the  acquisitions of Hollywood SW, Managed  Services
and FiberSat.

PROPERTY AND EQUIPMENT

Property  and  equipment  are  stated at cost,  less  accumulated  depreciation.
Depreciation  is recorded  using the  straight-line  method  over the  estimated
useful  lives  of  the  respective  assets.  Leasehold  improvements  are  being
amortized over the shorter of the lease term or the estimated useful life of the
improvement.  Maintenance  and repair  costs are charged to expense as incurred.
Major renewals, improvements and additions are capitalized.

IMPAIRMENT OF LONG-LIVED ASSETS

We review the  recoverability  of our  long-lived  assets on a periodic basis in
order to identify business conditions, which may indicate a possible impairment.
The  assessment  for potential  impairment is based  primarily on our ability to
recover  the  carrying  value of our  long-lived  assets  from  expected  future
undiscounted cash flows. If the total of expected future undiscounted cash flows
is less than the total  carrying  value of the assets,  a loss is recognized for
the difference  between the fair value  (computed based upon the expected future
discounted cash flows) and the carrying value of the assets.

DESCRIPTION OF LINE ITEMS

The  following is a  description  of certain line items from our  statements  of
operations:

o    Media  Services  revenues  include  charges for software  license fees, ASP
     service fees,  consulting,  development and maintenance fees, digital movie
     delivery fees and satellite delivery  services.  Media Services revenue are
     those  generated by Hollywood SW,  AccessDM and  FiberSat.  Our Data Center
     Services  revenues  include charges for monthly license fees for IDC space,
     electric  fees,  riser access  charges and  installation  fees, and managed
     network monitoring fees.

o    Cost of  revenues  consists  of  facility  operating  costs  such as  rent,
     utilities, real estate taxes, repairs and maintenance,  insurance and other
     related  expenses,  direct  personnel costs and amortization of capitalized
     software development costs.

o    Selling,  general and administrative expenses consist primarily of salaries
     and related  personnel costs for management and other  headquarters  office
     employees,  professional  fees,  advertising  and  marketing  costs and our
     corporate and divisional headquarters facility costs.

o    Provision for doubtful accounts  represents  amounts deemed not probable of
     collection from customers.



                                       19


o    Non-cash,  stock-based  compensation  represents  the value of employee and
     non-employee stock options and restricted stock grants,  amortized over the
     vesting periods (if any).

o    Non-cash interest expense represents the accretion of the value of warrants
     attached to our five-year promissory notes, and the imputing of interest on
     a non-interest bearing note payable.

PRIVATE PLACEMENTS

On June 4, 2004,  we concluded  the Private  Placement  with  several  investors
whereby we issued 1,217,500 unregistered Class A Shares at a sale price of $4.00
per share.  The total net proceeds,  including fees and expenses to register the
securities  were  approximately  $4.0  million,  which is being used for capital
investments  and  working  capital.  We  also  issued  to  investors  and to the
investment firm Private Placement  Warrants to purchase a total of 304,375 Class
A Shares at an exercise price of $4.80 per share,  which became exercisable upon
receipt.  We agreed to file a  registration  statement  for the  resale of these
shares and the shares underlying the warrants with the SEC by filing a Form SB-2
on or before July 5, 2004. We filed the Form SB-2 on July 2, 2004,  and the Form
SB-2 was declared effective on July 20, 2004.

On October 26, 2004, we entered into the October 2004 Private Placement, whereby
we issued and sold  282,776  unregistered  shares of Class A Shares at $3.89 per
share to certain investors for gross proceeds of $1.1million. These shares carry
piggyback and demand registration  rights, at the sole expense of the investors.
The net proceeds to the Company of  approximately  $1.023  million were used for
the  FiberSat  acquisition  and  for  working  capital.   (See  Note  6  to  the
Consolidated Financial Statements).

RECENT ACCOUNTING ISSUES

In December 2002, the Financial  Accounting  Standards Board (the "FASB") issued
Statement of Financial  Accounting  Standards ("SFAS") No. 148,  "Accounting for
Stock-Based  Compensation  - Transition  and  Disclosure  -an  amendment of FASB
Statement No. 123." This statement  provides  alternative  methods of transition
for a  voluntary  change  to the fair  value  based  method  of  accounting  for
stock-based  employee  compensation.  In  addition,  this  statement  amends the
disclosure requirements of SFAS No. 123 to require prominent disclosures in both
annual and  interim  financial  statements  about the method of  accounting  for
stock-based employee compensation and the effects of the method used on reported
results.

In December  2004,  the FASB issued SFAS No. 123  (revised  2004),  "Share-Based
Payment." This statement revises the original guidance contained in SFAS No. 123
and supersedes  Accounting  Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees,  and its related implementation  guidance.  Under
SFAS No. 123 (revised 2004), a publicly entity such as AccessIT will be required
to measure the cost of employee  services  received in exchange  for an award of
equity instruments based on the grant-date fair value of the award (with limited
exceptions)  and recognize such cost over the period during which an employee is
required to provide  service in  exchange  for the reward  (usually  the vesting
period). For stock options and similar  instruments,  grant-date fair value will
be estimated using option-pricing models adjusted for unique  characteristics of
instruments (unless observable market prices for the same or similar instruments
are  available).  For  small  business  issuers,  including  AccessIT,  this  is
effective as of the  beginning of the first interim or annual  reporting  period
that begins after December 15, 2005.

Upon  adoption of this  standard,  the actual costs of our  stock-based  payment
plans will be based on  grant-date  fair value,  which can not be  determined at
this time

RESULTS OF OPERATIONS

FOR THE NINE MONTHS ENDED  DECEMBER 31, 2003 AND THE NINE MONTHS ENDED  DECEMBER
31, 2004


REVENUES.  Our total  revenues were $4.87 million and $7.13 million for the nine
months ended December 31, 2003 and 2004,  respectively,  an increase of 46%. The
increase  was  primarily  attributable  to  Hollywood  SW, which was acquired in
November 2003, and contributed  $1.35 mil1ion of increased  revenues and Managed
Services, which was acquired in January 2004, generated $570,000 of revenues. In
addition,  FiberSat,  which we acquired in November 2004,  generated $348,000 of
revenues  and our AccessDM  division  contributed  $173,000 of  revenues.  These
increases were  partially  offset by our Internet data center  operations  which
experienced  a revenue  decrease  of $177,000  primarily  due to the loss of one
customer.

COST OF REVENUES.  Our cost of revenues was $2.64  million and $4.01 million for
the nine months ended December 31, 2003 and 2004,  respectively,  an increase of
52%. This increase was primarily  attributable  to the  acquisition of Hollywood


                                       20


SW, Managed Services and FiberSat.  Hollywood SW expenses increased by $574,000,
primarily due to personnel costs and amortization of capitalized software costs.
Managed  Service's  operating  expenses were  $417,000,  primarily  representing
personnel  and  utility   costs.   In  addition,   AccessDM   incurred   digital
cinema-related delivery costs of $150,000. Additionally,  FiberSat expenses were
$145,000,  primarily  representing  personnel  costs.  Also,  cost  of  revenues
increased at our IDC's by $85,000, primarily due to utility cost increases.

GROSS  PROFIT.  Gross  profit was $2.23  million and $3.12  million for the nine
months  ended  December,  31,  2003 and 2004,  respectively.  The  increase  was
primarily due to $772,000 of increased  gross profit  generated by Hollywood SW,
and FiberSat,  which we acquired in November 2004,  generated  $203,000 in gross
profit.  In  addition,  Managed  Services,  which we acquired  in January  2004,
generated $153,000 in gross profit.  Additionally, a gross profit of $23,000 was
attributable  to AccessDM's  operations  and we  experienced a decrease in gross
profit at our IDC's of $259,000, which was primarily attributable to the loss of
a customer and higher utility expenses.

SELLING,   GENERAL  AND  ADMINISTRATIVE   EXPENSES.  Our  selling,  general  and
administrative expenses were $2.02 million and $3.59 million for the nine months
ended December 31, 2003 and 2004, respectively,  an increase of 78%. Incremental
costs associated with Hollywood SW, Managed Services, AccessDM, and FiberSat for
the nine months ended December 31, 2004, were $623,000,  $274,000, $148,000, and
$108,000  respectively,  due  primarily to personnel  and office  expenses.  The
remainder of the increase is primarily  due to increases in corporate  personnel
costs,  advertising expenses and, professional fees. As of December 31, 2003 and
2004 we had 23 and 58  employees,  respectively,  and one and five of whom,  are
part-time employees, respectively.

PROVISION FOR DOUBTFUL ACCOUNTS. Our provision for doubtful accounts was $55,000
and $598,000 for the nine months ended December 31, 2003 and 2004, respectively.
The  increase is  primarily  due to the  recording of a provision of $499,000 in
September 2004 related to the bankruptcy of a data center customer in July 2004.
The  remainder  of the  increase  is due to the  increase  in  overall  business
activity.

RESEARCH AND  DEVELOPMENT.  We recorded  expenses of $8,000 and $288,000 for the
nine months  ended  December  31, 2003 and 2004,  respectively.  The increase is
attributable to research and development efforts at Hollywood SW.

NON-CASH,   STOCK-BASED   COMPENSATION.   We  recorded   non-cash,   stock-based
compensation  of $10,000 and $4,000 for the nine months ended  December 31, 2003
and 2004, respectively.  These amounts represent the fair value of stock options
granted to non-employees in exchange for goods and services,  amortized over the
vesting period, which ranges from immediate vesting to three years. The types of
services  performed  by  non-employees  in exchange for stock  options  included
advisory  services on real estate matters,  and  advertising and marketing.  The
fair value of these stock options was determined using the Black-Scholes  option
pricing  model.  The  decrease  was  due  to  lower  amortization  expense  from
non-employee options, due to the vesting of certain grants made in prior years.

DEPRECIATION AND  AMORTIZATION.  Depreciation and amortization was $1.91 million
and  $2.46  million  for the nine  months  ended  December  31,  2003 and  2004,
respectively,  an increase of 24%. The  acquisition  of Hollywood SW and Managed
Services  and the  addition  of  AccessDM  resulted  in  $268,000  $587,000  and
$117,000,  respectively,  of depreciation  and  amortization for the nine months
ended December 31, 2004.  Partially  offsetting these increases was certain data
center and  corporate  computer  equipment  reaching the end of their  estimated
useful lives, and becoming fully depreciated.

INTEREST EXPENSE. Interest expense was $389,000 and $279,000 for the nine months
ended December 31, 2003 and 2004,  respectively.  The decrease was primarily due
to the March 2004  exchange of $2.5 million for  aggregate  principal  amount of
5-Year Notes for Class A Shares and $1.7 million  aggregate  principal amount of
5-Year Notes for Convertible  Notes. In addition,  in November 2003, we repaid a
1-year 9% note payable for $1.0 million incurred in connection with the November
2002 acquisition of six IDC's.

NON-CASH INTEREST  EXPENSE.  Non-cash interest expense was $302,000 and $155,000
for the nine months  ended  December 31, 2003 and 2004,  respectively.  Non-cash
interest  expense results from the imputing of interest on the $1.8 million note
payable to Boeing,  incurred in the March 2004,  and from the  accretion  of the
value of the 5-Year  Notes  Warrants  attached to the 5-Year  Notes  (which bear
interest at 8% per year). The decrease is primarily due to one-time accretion of
$1.4 million recorded in connection with the March 2004 exchange of 5-Year Notes
described above.



                                       21


INCOME TAX  BENEFIT.  Income tax benefit was  $127,000 and $233,000 for the nine
months ended December 31, 2003 and 2004,  respectively.  The current year amount
is  related  to the  amortization  of a deferred  tax  liability  related to our
acquisition of Hollywood SW and Managed Services.

NET LOSS. As a result of the  foregoing,  we had net losses of $2.33 million and
$4.0 million for the nine months ended December 31, 2003 and 2004, respectively.

FOR THE THREE MONTHS ENDED DECEMBER 31, 2003 AND THE THREE MONTHS ENDED DECEMBER
31, 2004

REVENUES.  Our total revenues were $2.04 million and $2.74 million for the three
months ended December 31, 2003 and 2004,  respectively,  an increase of 34%. The
increase  was  primarily  attributable  to  Hollywood  SW, which was acquired in
November 2003, and contributed $216,000 of increased revenues, Managed Services,
which was acquired in January 2004,  which  generated  $188,000 of revenues.  In
addition,  FiberSat,  which we acquired in November 2004,  generated $348,000 of
revenues  and our AccessDM  division  contributed  $105,000 of  revenues.  These
increases were  partially  offset by our Internet data center  operations  which
experienced  a revenue  decrease  of $162,000  primarily  due to the loss of one
customer.

COST OF  REVENUES.  Our cost of revenues  was  $894,000 and $1.6 million for the
three months ended December 31, 2003 and 2004, respectively, an increase of 83%.
This increase was primarily  attributable  to the  acquisition  of Hollywood SW,
Managed  Services and  FiberSat.  Hollywood  SW expenses  increased by $327,000,
primarily due to personnel costs and amortization of capitalized software costs.
Managed  Service's  operating  expenses were  $154,000,  primarily  representing
personnel  and  utility   costs.   In  addition,   AccessDM   incurred   digital
cinema-related delivery costs of $51,000.  Additionally,  FiberSat expenses were
$145,000,  primarily  representing  personnel  costs.  Also,  cost  of  revenues
increased at our IDC's by $63,000, primarily due to utility cost increases.

GROSS  PROFIT.  Gross  profit was $1.15  million and $1.1  million for the three
months  ended  December,  31,  2003 and 2004,  respectively.  The  increase  was
primarily due to FiberSat,  which we acquired in November 2004,  which generated
$203,000 in gross profit  Managed  Services,  which we acquired in January 2004,
which generated $34,000 in gross profit. In addition,  a gross profit of $51,000
was  attributable  to  AccessDM's  operations.  Additionally,  we  experienced a
decrease in gross  profit at Hollywood SW of $109,000 and our IDC's of $221,000,
which was primarily  attributable  to the loss of a customer and higher  utility
expenses.

SELLING,   GENERAL  AND  ADMINISTRATIVE   EXPENSES.  Our  selling,  general  and
administrative  expenses  were  $872,000  and $1.3  million for the three months
ended December 31, 2003 and 2004, respectively,  an increase of 49%. Incremental
costs associated with FiberSat, Managed Services, AccessDM and Hollywood SW, for
the nine months ended  December 31, 2004,  were $108,000,  $44,000,  $89,000 and
$51,000,  respectively,  due  primarily to personnel  and office  expenses.  The
remainder of the increase is primarily  due to increases in corporate  personnel
costs,  advertising expenses and, professional fees. As of December 31, 2003 and
2004 we had 23 and 58  employees,  respectively,  and one and five of whom,  are
part-time employees, respectively.

PROVISION FOR DOUBTFUL ACCOUNTS. Our provision for doubtful accounts was $42,000
and $23,000 for the three months ended December 31, 2003 and 2004, respectively.
The  increase is  primarily  due to the  recording of a provision of $499,000 in
September 2004 related to the bankruptcy of a data center customer in July 2004.
The  remainder  of the  increase  is due to the  increase  in  overall  business
activity.

RESEARCH AND  DEVELOPMENT.  We recorded  expenses of $8,000 and $122,000 for the
three months ended  December  31, 2003 and 2004,  respectively.  The increase is
attributable to research and development efforts at Hollywood SW.

DEPRECIATION  AND  AMORTIZATION.  Depreciation and amortization was $676,000 and
$895,000 for the three months ended December 31, 2003 and 2004, respectively, an
increase of 18%. The  acquisition  of Hollywood SW and Managed  Services and the
addition of AccessDM resulted in $116,000 $43,000 and $213,000, respectively, of
depreciation  and  amortization  for the nine months  ended  December  31, 2004.
Partially  offsetting  these  increases  was certain  data center and  corporate
computer  equipment  reaching  the end of  their  estimated  useful  lives,  and
becoming fully depreciated.

INTEREST EXPENSE. Interest expense was $143,000 and $90,000 for the three months
ended December 31, 2003 and 2004,  respectively.  The decrease was primarily due
to the March 2004 exchange of $2.5 million aggregate  principal amount of 5-Year
Notes for Class A Shares and $1.7 million  aggregate  principal amount of 5-Year


                                       22


Notes for Convertible  Notes. In addition,  in November 2003, we repaid a 1-year
9% note payable for $1.0 million,  incurred in connection with the November 2002
acquisition of six IDC's.

NON-CASH  INTEREST  EXPENSE.  Non-cash interest expense was $111,000 and $43,000
for the three months ended  December 31, 2003 and 2004,  respectively.  Non-cash
interest  expense results from the imputing of interest on the $1.8 million note
payable to Boeing,  incurred in March 2004,  and from the accretion of the value
of the 5-Year Notes  Warrants  attached to the 5-Year Notes (which bear interest
at 8% per year).  The  decrease is primarily  due to one-time  accretion of $1.4
million  recorded in  connection  with the March 2004  exchange of 5-Year  Notes
described above.

INCOME TAX  BENEFIT.  Income tax benefit was  $127,000 and $77,000 for the three
months ended December 31, 2003 and 2004,  respectively.  The current year amount
is  related  to the  amortization  of a deferred  tax  liability  related to our
acquisition of Hollywood SW and Managed Services.

NET LOSS. As a result of the foregoing,  we had net losses of $572,000 and $1.32
million for the three months ended December 31, 2003 and 2004, respectively.

LIQUIDITY AND CAPITAL RESOURCES

We  have  incurred  operating  losses  in  each  year  since  we  commenced  our
operations.  Since our inception, we have financed our operations  substantially
through the private  placement of shares of our common and preferred  stock, the
issuance  of our one-and  five-year  8%  promissory  notes and our IPO. In March
2004, we refinanced $4.2 million  aggregate  principal  amount (plus accrued and
unpaid interest) of 5-Year Notes pursuant to the Exchange Offer. In exchange for
those  notes,  we issued  707,477  unregistered  Class A Shares and $1.7 million
aggregate  principal amount of Convertible Notes which, as of December 31, 2004,
were  convertible  into a maximum  of  307,871  Class A Shares.  From  inception
through December 31, 2004, we had raised cash of $20.7 million, $4.5 million and
$4.4 million through sales of our Common Stock,  preferred stock, and promissory
notes, respectively.  Additionally,  we have issued common stock in lieu of cash
payments  totaling $5.8 million to the sellers of Hollywood SW, Managed Services
and Boeing Digital, and for construction services at our IDCs. Also, in November
2002,  we issued a $1.0 million 9% secured note to a seller in  connection  with
the acquisition of six IDCs from ColoSolutions. This note was repaid in November
2003. We have no borrowings or line of credit  arrangements  with banks or other
financial  institutions.  We are not  party to any  material  off-balance  sheet
arrangements.

On July 2, 2004,  we received  notice that certain  creditors of one of our data
center customers filed an involuntary  bankruptcy petition against the customer.
On July 14, 2004, the customer  agreed to the entry of an order granting  relief
under Chapter 11 of the United  States  Bankruptcy  Code and then  converted the
Chapter 11 reorganization to Chapter 7 liquidation.  As of December 31, 2004, we
had  accounts  receivable  of $121,000  recorded on the  unaudited  Consolidated
Balance Sheet related to this customer. We have a first security interest in the
customer's  accounts  receivable  and the  bankruptcy  trustee is  attempting to
validate the amount and nature of the accounts receivable.  Based on information
received to date, we believe that the  customers  accounts  receivable  that are
deemed to be collectible are  substantially in excess of the amounts recorded on
our unaudited Consolidated Balance Sheet. Therefore, we believe that the amounts
owed to us, and recorded on the unaudited  Consolidated  Balance Sheet,  will be
collected.  We have been  advised that the  bankruptcy  trustee is in receipt of
certain amounts  resulting from paid receivables of the customer;  however,  the
trustee has not paid any amounts to us in respect of our claim.

On June 4, 2004,  we concluded  the Private  Placement  with  several  investors
whereby we issued 1,217,500 unregistered Class A Shares at a sale price of $4.00
per share.  The total net proceeds,  including fees and expenses to register the
securities  were $4.0 million,  which is being used for capital  investments and
working capital.  We also issued to investors and to the investment firm Private
Placement  Warrants to purchase a total of 304,375 Class A Shares at an exercise
price of $4.80 per share,  which became  exercisable upon receipt.  We agreed to
file a  registration  statement  for the  resale of these  shares  and the share
underlying  the warrants with the SEC by filing a Form SB-2 on or before July 5,
2004.  We filed the Form SB-2 on July 2,  2004,  and the Form SB-2 was  declared
effective on July 20, 2004.

On October 26, 2004,  we entered into the October  2004 Private  Placement  with
investors  whereby we issued  282,776  unregistered  Class A Shares at $3.89 per
share to the investors  for gross  proceeds of  $1.1million.  These shares carry
piggyback and demand registration  rights, at the sole expense of the investors.
We realized net proceeds of  approximately  $1.023 million,  which were used for
the  FiberSat  acquisition  and  for  working  capital.   (See  Note  6  to  the
Consolidated Financial Statements).


                                       23

On  November  14,  2003 our IPO was  finalized,  resulting  in the  issuance  of
1,380,000  Class A Shares.  The net  proceeds of our IPO were $4.8  million,  of
which $1.1 million was used for general  business  purposes.  We agreed upon the
completion of the IPO in November 2003 to pay the lead  underwriter  an advisory
fee of $4,167 per month for the 12-month period beginning upon the completion of
the IPO.  (See Note 5 to the Consolidated Financial Statements)

On  November  3, 2003,  we  acquired  all of the  outstanding  capital  stock of
Hollywood  SW. In  connection  with this  acquisition,  we issued  $3.0  million
aggregate  principal  amount of HS Notes,  which are secured  and  senior,  with
certain  exceptions,  to all  indebtedness  during  their  five year  term.  Our
obligations  to repay the HS Notes and to pay any  additional  purchase price is
secured by a pledge of all of Hollywood SW's capital stock and any distributions
and  proceeds  there  from,  except  that  we  are  permitted  to  receive  cash
distributions  from  Hollywood SW to the extent that such  distributions  do not
exceed Hollywood SW's cash flow from operations. In addition, as of December 31,
2004, the principal balance of the HS Notes is $2.62 million. (See Note 4 to the
Consolidated Financial Statements)

On November 17, 2004,  we acquired  substantially  all of the assets and certain
specified  liabilities  of  FiberSat.  The initial  purchase  price for FiberSat
consisted of 500,000 unregistered Class A Shares, and we agreed to repay certain
liabilities of FiberSat on or before the closing of the acquisition,  with up to
$500,000 in cash and 100,000  unregistered  Class A Shares. We had the option to
exchange up to 50,000 of such 100,000  Class A Shares to increase the cash,  and
thereby  decrease the Class A Share portion of such repayment based on the ratio
of one  Class A Share  for each  $5.00  of  additional  cash.  We  repaid  these
liabilities by paying approximately  $381,000 and issuing 40,000 shares of Class
A Shares. In addition, we may be required to pay a contingent purchase price for
any of the three years  following  the  acquisition  in which  certain  earnings
targets are achieved.  We have also agreed to a one-time  issuance of additional
unregistered  shares to the sellers in accordance  with a formula if, during the
90 days following the applicable  lock-up period, the average value of our Class
A Shares during such 90 days declines below an average of $3.17 per share.  (See
Note 11 to the Consolidated Financial Statements)

On March 29, 2004, we acquired  certain assets from Boeing for use in AccessDM's
digital cinema business.  In connection with this acquisition we issued a 4-year
non-interest bearing note for $1.8 million with equal repayments of $450,000 due
each year  beginning in April  2005.In  addition,  at any time during the 90 day
period beginning March 29, 2005, Boeing can sell its 53,534 unregistered Class A
Shares to us for  $250,000 in cash.  (See Note 4 to the  Consolidated  Financial
Statements)

As of December 31, 2004, we had cash and cash equivalents of $1.52 million.  Our
working capital at December 31, 2004 was $224,000.

For the nine months ended  December 31, 2003,  we raised gross  proceeds of $1.2
million through sales of our 5-Year Notes.

Our  operating  activities  resulted in net cash  outflows of $599,000  and $2.8
million for the nine months ended December 31, 2003 and 2004, respectively.  The
increase was primarily due to lower collection of accounts receivable.

Investing activities used net cash of $2.6 million and $2.5 million for the nine
months ended December 31, 2003 and 2004,  respectively.  The increase was due to
various  purchases  of computer  and other  equipment,  primarily to support our
digital cinema and managed data storage businesses,  and, additions to Hollywood
SW's  capitalized  software  costs.  We  anticipate  that we will  experience an
increase in our capital  expenditures  consistent with the anticipated growth in
our operations, infrastructure and personnel.

Net cash  provided by financing  activities of $4.66 million for the nine months
ended  December 31, 2003 was  primarily due to proceeds from issuance of Class A
Shares of $4.79 and the  issuance  of $1.23  million of our 5-Year  Notes,  less
$1.36  repayments  of notes  payable and  capital  lease  obligations.  Net cash
provided by  financing  activities  of $4.43  million for the nine months  ended
December 31, 2004 was due  primarily to the June 2004 Private  Placement and the
October 2004 Private Placement,  less repayments of notes payable, capital lease
obligations and proceeds from capital leases.

We have acquired equipment under long-term capital lease obligations that expire
at various  dates  through  December  2006.  As of December 31, 2004,  we had an
outstanding  balance of $515,000 in capital  lease  obligations.  These  capital
lease  obligations  cover computer and telecom equipment at our data centers and
our corporate office. All our capital lease obligations are secured by equipment
at the  following  locations  and in the  following  principal  amounts:  at our
executive  offices,  telephone  equipment in the remaining  principal  amount of
$17,000,  and computer  equipment  for use in Managed  Service's  operations  of
$14,000.  As of  December  31,  2004,  minimum  future  capital  lease  payments
(including interest) for the fiscal years ended December 31, 2005 and 2006, were
$576,000, and $13,000,  respectively.  During the nine months ended December 31,
2003 and 2004,  we made early  repayments  of  $159,000  and  $70,000 on capital
leases,  respectively,  in order to achieve interest savings and aid future cash
flow.

Following the completion of the Exchange Offer in March 2004, the holders of the
$3.0 million of Hollywood SW acquisition notes, and $220,000 aggregate principal
amount of 5-Year Notes, elected not to participate in the Exchange Offer.

                                 24


Other  significant  commitments  consist  of  obligations  under  non-cancelable
operating  leases that  totaled  $15.9  million as of December  31, 2004 and are
payable in varying monthly  installments  through 2015. As of December 31, 2004,
minimum future  operating lease payments for the fiscal years ended December 31,
2005, 2006,  2007, 2008, 2009 and thereafter (in total) were $2.4 million,  $2.3
million,   $2.3  million,   $2.3   million,   $1.9  million  and  $4.7  million,
respectively.

In May 2004, we entered into an agreement  with the holder of 750,000  shares of
AccessDM's  common stock, to exchange all of its shares for 31,300  unregistered
Class  A  Shares.  As a  result  of the  transaction,  AccessIT  holds  100%  of
AccessDM's common stock.

During the fiscal year ended March 31, 2004 and the nine months  ended  December
31,  2004,  we  have   incurred   losses  of  $4.8  million  and  $4.0  million,
respectively,  and cash inflows (outflows) from operating activities of $321,000
and $(2.8) million, respectively. In addition, we have an accumulated deficit of
$18.7 million as of December 31, 2004.  Furthermore,  we have total debt service
requirements  totaling $1.55 million for the twelve months  beginning in January
2005.

In July 2004, we made early  repayments  totaling $58,000 for two 5 -Year Notes,
and the remaining  value of the underlying 5 - Year Notes Warrants was amortized
to non-cash interest expense, totaling $19,000.

In August 2004, the Company's Board of Directors authorized the repurchase of up
to 100,000  Class A Shares.  The shares will be purchased at  prevailing  prices
from  time-to-time in the open market  depending on market  conditions and other
factors.  During the nine months ended  December 31,  2004,  we purchased  9,140
Class A Shares for a total purchase price of $32, including fees, which has been
recorded as Treasury  stock in the  unaudited  Consolidated  Balance  Sheet.  In
January 2005, we purchased  42,300 Class A Shares for a total  purchase price of
$140  including  fees, at an average  purchase  price of $3.31 per share.  As of
January 31, 2005, an additional  48,560 Class A Shares may be repurchased.  (See
Note 6 to the Consolidated Financial Statements)

Management  expects that we will continue to generate  operating  losses for the
foreseeable   future  due  to  depreciation  and   amortization,   research  and
development,  the continued efforts related to the identification of acquisition
targets,   marketing  and   promotional   activities  and  the   development  of
relationships with other businesses.  Certain of these costs could be reduced if
working  capital  decreased.  We may attempt to raise  additional  capital  from
various sources for future acquisitions or for working capital as necessary, but
there is no assurance that such financing will be completed as  contemplated  or
under terms acceptable to us, or our existing shareholders.  Failure to generate
additional revenues,  raise additional capital or manage discretionary  spending
could have a material  adverse  effect on our  ability  to  continue  as a going
concern and to achieve our intended business objectives.

Our management  believes that.  based on the Company's cash position at December
31, 2004, a financing transaction completed in February 2005, (see Note 12), and
expected  cash flows from  operations,  the  Company has the ability to meet its
obligations for the foreseeable future.

RELATED PARTY TRANSACTIONS

As of December 31, 2003 and 2004,  the Company had  principal  amounts of $1,400
and  $4,000,  respectively,  in notes  payable  to  related  parties,  including
officers of the Company.  During the three  months  ended  December 31, 2003 and
2004, there were $0 and $131,000,  respectively,  principal repayments for these
notes payable.  During the nine months ended  December 31, 2003 and 2004,  there
were $0 and  $509,000,  respectively,  of principal  repayments  for these notes
payable.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our business is currently  principally  in the United States.  As a result,  our
financial  results  are not  affected  by  factors  such as  changes  in foreign
currency  exchange rates or economic  conditions in foreign  markets.  We do not
engage in hedging  transactions  to reduce our  exposure  to changes in currency
exchange rates,  although if the geographical scope of our business broadens, we
may do so in the future.

Our exposure to market risk for changes in interest  rates relates  primarily to
the  increase or  decrease in the amount of interest  income that we may earn on
our invested  cash.  Because we  currently  do not have any variable  rate debt,
there is no risk associated with fluctuating interest expense. We do not plan to
use any derivative financial instruments.  We plan to help ensure the safety and
preservation of invested principal funds by limiting default risks,  market risk
and investment risk. We plan to mitigate our default risk by investing generally
in low-risk securities.

                                       25



ITEM 3. CONTROLS AND PROCEDURES

As of the end of the period covered by this report,  we conducted an evaluation,
under the  supervision  and with the  participation  of our principal  executive
officer and principal  financial officer, of the effectiveness of our disclosure
controls and  procedures  (as defined in Rules 13a-15 and 15d-15 of the Exchange

Act). Based on this evaluation,  our principal  executive  officer and principal
financial  officer  concluded  that our  disclosure  controls and procedures are
effective to ensure that  information  required to be disclosed by us in reports
that we file or submit under the Exchange Act is recorded, processed, summarized
and reported within the time periods specified in the SEC rules and forms.

There was no change in our internal control over financial  reporting during our
most recently  completed  fiscal  quarter that has  materially  affected,  or is
reasonably  likely to materially  affect,  our internal  controls over financial
reporting.


                           PART II. OTHER INFORMATION

ITEM 1.  LEGAL PROCEEDINGS.

         On July 2, 2004,  we received  notice that certain  creditors of one of
our data center customers filed an involuntary  bankruptcy  petition against the
customer.  On July  14,  2004,  the  customer  agreed  to the  entry of an order
granting  relief under Chapter 11 of the United States  Bankruptcy Code and then
converted the Chapter 11 reorganization to Chapter 7 liquidation. As of December
31,  2004,  we had accounts  receivable  of $121,000  recorded on the  unaudited
Consolidated  Balance Sheet related to this  customer.  We have a first security
interest in the customer's  accounts  receivable  and the bankruptcy  trustee is
attempting to validate the amount and nature of the accounts  receivable.  Based
on  information  received  to  date,  we  believe  that the  customers  accounts
receivable that are deemed to be collectible are  substantially in excess of the
amounts  recorded on our unaudited  Consolidated  Balance Sheet.  Therefore,  we
believe that the amounts owed to us, and recorded on the unaudited  Consolidated
Balance  Sheet,  will be  collected.  We have been advised  that the  bankruptcy
trustee is in receipt of certain amounts  resulting from paid receivables of the
customer;  however  the trustee has not paid any amounts to us in respect of our
claim.

On January 26, 2005 the bankruptcy court in the matter of Norvergence approved a
motion  for the  trustee  to pay the  Company  $121,000  for past  due  accounts
receivable.  Additionally,  the  Company  has been  granted  the right to pursue
collection of Norvergence's customer accounts receivable.  Any amounts collected
will be retained by the Company in settlement of its claim against Norvergence."

ITEM 5.  OTHER INFORMATION.

The information required in response to this Item is set forth in Note 12 to the
Consolidated  Financial  Statements contained in this Report on Form 10-QSB, and
such information is hereby  incorporated  herein by reference.  Such description
contains all of the of the information required hereunder.

                                       26


ITEM 6.  EXHIBITS.

            The  exhibits are listed in the Exhibit  Index  beginning on page 29
herein.




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                                   SIGNATURES

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


                                  ACCESS INTEGRATED TECHNOLOGIES, INC.
                                               (Registrant)


Date: February 14, 2005           BY: /S/  A. DALE MAYO
                                  ----------------------------------------------
                                  A. Dale Mayo
                                  President and Chief Executive Officer
                                    and Director
                                  (Principal Executive Officer)


Date:  February 14, 2005          BY: /S/ BRIAN D. PFLUG
                                  ----------------------------------------------
                                  Brian D. Pflug
                                  Senior Vice President - Accounting & Finance
                                  (Principal Financial Officer)



                                       28




EXHIBIT INDEX

Exhibit
Number    Description
-------   -----------
       

2.1       Stock  Purchase  Agreement,  dated  October  24,  2004,  among  Access
          Integrated Technologies, Inc. and the purchases identified therein.

4.1       Registration  Rights  Agreement,  dated as of November 8, 2004,  among
          Access  Integrated  Technologies,  Inc.  and the  purchases  identifed
          therein.

10.1*     Asset Purchase  Agreement,  dated as of October 19, 2004, among Access
          Integrated Technologies,  Inc. FiberSat Global Services Inc., FiberSat
          Global   Services   LLC,   Richard   Wolfe,   Ravi   Patel,   McKibben
          Communications,  Globecomm Systems,  Inc., Timothy Novoselski,  Scott
          Smith and Farina.

10.2      Asset  Purchase  Agreement,  dated as of December 23, 2004,  among ADM
          Cinema Corporation, Pritchard Square Cinema, LLC and Norman Adie

31.1      Certification Pursuant to Rule 13a-14(a) under the Securities Exchange
          Act of 1934.

31.2      Certification Pursuant to Rule 13a-14(a) under the Securities Exchange
          Act of 1934.

32.1      Certification  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2      Certification  Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
          to Section 906 of the Sarbanes-Oxley Act of 2002.



* Incorporated by reference from the  Registrant's  Current Report on Form 8-K/A
dated October 19, 2004,  which was filed on November 8, 2004  (Commission  File
No. 001-31810).

All of the  above-referenced  Exhibits  (other  than  Exhibit  10.1)  are  filed
herewith.




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