UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported): December 29, 2005

                                    Digicorp
             (Exact name of registrant as specified in its charter)

            Utah                      000-33067             87-0398271
(State or Other Jurisdiction       (Commission File      (I.R.S. Employer
  of Incorporation)                    Number)        Identification Number)

                  4143 Glencoe Avenue, Marina Del Rey, CA 90292
                  (Address of principal executive offices) (zip code)

                                 (310) 728-1450
              (Registrant's telephone number, including area code)

              100 Wilshire Blvd., Ste. 1750, Santa Monica, CA 90401
          (Former name or former address, if changed since last report)

                                   Copies to:
                               Marc J. Ross, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                              Phone: (212) 930-9700
                               Fax: (212) 930-9725

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written  communications  pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)
|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
|_|   Pre-commencement  communications  pursuant  to  Rule  14d-2(b)  under  the
      Exchange Act (17 CFR 240.14d-2(b))
|_|   Pre-commencement  communications  pursuant  to  Rule  13e-4(c)  under  the
      Exchange Act (17 CFR 240.13e-4(c))

<PAGE>

This Current Report responds to the following items on Form 8-K:

Item 1.01  Entry into a Material Definitive Agreement.
Item 2.01  Completion of Acquisition or Disposition of Assets.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant. Item 3.02 Unregistered Sales of
Equity Securities.
Item 5.01  Changes in Control of Registrant.
Item 5.02 Departure of Directors or Principal  Officers;  Election of Directors;
Appointment of Principal Officers.
Item 5.03 Amendments to Articles of  Incorporation  or Bylaws;  Change in Fiscal
Year.
Item 5.06  Change in Shell Company Status.
Item 9.01  Financial Statements and Exhibits.

ENTRY IN A MATERIAL DEFINITIVE  AGREEMENT;  COMPLETION OF ACQUISITION OF ASSETS;
CREATION  OF  A  DIRECT  FINANCIAL  OBLIGATION;  UNREGISTERED  SALES  OF  EQUITY
SECURITIES;  CHANGE IN CONTROL OF REGISTRANT;  CHANGE IN FISCAL YEAR;  CHANGE IN
SHELL COMPANY STATUS

      In a Form 8-K of Digicorp (the  "Company")  dated  December 20, 2005,  the
Company reported that it entered into a Stock Purchase Agreement to acquire (the
"Acquisition")  all of the issued and  outstanding  capital  stock of Rebel Crew
Films, Inc. a California corporation ("Rebel Crew Films"). On December 29, 2005,
the transaction  closed and the Company  completed the acquisition of Rebel Crew
Films. In connection with the  Acquisition,  the Company changed its fiscal year
from June 30 to December 31.

      The  Company  issued  21,207,080  shares of common  stock  (the  "Purchase
Price") to the  shareholders of Rebel Crew Films as compensation  for the issued
and  outstanding  capital  stock of Rebel Crew Films.  From the Purchase  Price,
4,000,000 shares are held in escrow pending  satisfaction of certain performance
milestones.  In addition, from the Purchase Price, 16,666,667 shares are subject
to lock up  agreements as follows:  (a)  3,333,333  shares are subject to lockup
agreements for one year; (b) 6,666,667  shares are subject to lockup  agreements
for two years; and (c) 6,666,667 shares, of which the 4,000,000  escrowed shares
are a component,  are subject to lockup agreements for three years. The issuance
of  the  foregoing   shares  of  common  stock  was  exempt  from   registration
requirements  pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), and Rule 506 promulgated thereunder.

      In addition,  on December  29, 2005 the Company  entered into a Securities
Purchase  Agreement  with one of the  shareholders  of Rebel Crew  Films,  Rebel
Holdings,  LLC, pursuant to which the Company purchased a $556,306.53  principal
amount  loan  receivable  owed by Rebel  Crew  Films to Rebel  Holdings,  LLC in
exchange for the issuance of a $556,306.53  principal amount secured convertible
note to Rebel  Holdings,  LLC.  The  secured  convertible  note  accrues  simple
interest at the rate of 4.5%, matures on December 29, 2010 and is secured by all
of the Company's assets now owned or hereafter acquired. The secured convertible
note is  convertible  into 500,000  shares of common stock of the Company at the
rate of $1.112614 per share. Jay Rifkin,  the Company's  present Chief Executive
Officer and a Director  Nominee of the Company,  is the sole managing  member of
Rebel Holdings,  LLC. The issuance of the foregoing secured convertible note was
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act and Rule 506 promulgated thereunder.

      The Company agreed to prepare and file a  registration  statement with the
Securities  and  Exchange  Commission  registering  the  resale  of  the  shares
comprising  the Purchase  Price and the shares  issuable upon  conversion of the
secured convertible note no later than March 29, 2006.

      In  connection  with  the  Acquisition,   Jay  Rifkin  and  certain  other
shareholders  of the Company  entered into a voting  agreement  authorizing  Mr.
Rifkin to vote the shares of the Company's common stock owned by such parties to
designate or elect a simple majority of the Company's Board of Directors, one of
whom will be Mr.  Rifkin,  and to  designate  or elect the  remaining  directors
chosen by Milton "Todd" Ault, III,  former Chairman and Chief Executive  Officer
of the Company.

                                       1
<PAGE>

      DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
                        APPOINTMENT OF PRINCIPAL OFFICERS

      Effective  December 29, 2005,  the  following  persons  resigned  from the
indicated  positions as executive officers and/or directors of the Company:  (1)
William B. Horne, Chief Executive Officer; (2) Kathryn Macenzie Queen, President
of  Operations;  (3) Lynne  Silverstein,  Secretary  and  Director;  (4) Melanie
Glazer,  Director and Vice Chairman of the Board of  Directors;  and (5) Darrell
Grimsley,  Jr.,  Director.  Ms.  Glazer  was a  member  of the  Company's  Audit
Committee  at the time of her  resignation.  No other  resigning  director was a
member of any  committee of the  Company's  Board of Directors at the time he or
she resigned.

      The  Company's  Board of Directors  appointed  Jay Rifkin Chief  Executive
Officer of the Company effective as of September 30, 2005, which is the date Mr.
Rifkin began acting as interim President of the Company.

      The Board of Directors  also  nominated  the  following  directors to fill
vacancies  created by the  resignations of Ms.  Silverstein,  Ms. Glazer and Mr.
Grimsley:  Jay  Rifkin,  Alan  Morelli and David M. Kaye.  The Company  plans to
appoint Messrs. Rifkin, Morelli and Kaye to its Board of Directors approximately
ten days after the date the  Company  transmits  to all holders of record of the
Company's  common  stock  information  required by Rule 14f-1 under the Exchange
Act, at which time Mr. Rifkin will serve as Chairman of the  Company's  Board of
Directors.

      Except as described under "Certain Relationships and Related Transactions"
beginning on page 13 of this report,  there has been no  transaction  during the
last two years, or any proposed  transaction,  to which the Company was or is to
be a party,  and in which any of  Messrs.  Rifkin,  Morelli or Kaye had or is to
have a direct or indirect material interest.

      Below  are the names  and  certain  information  regarding  the  Company's
executive officers, directors and director nominees following the Acquisition.

----------------------- ------- ------------------------------------------------
Name                    Age     Position
----------------------- ------- ------------------------------------------------
Jay Rifkin              50      Chief Executive Officer, Director Nominee
----------------------- ------- ------------------------------------------------
William B. Horne        37      Chief Financial Officer and Director
----------------------- ------- ------------------------------------------------
Philip Gatch            41      Chief Technology Officer
----------------------- ------- ------------------------------------------------
Alice M. Campbell       55      Director
----------------------- ------- ------------------------------------------------
Alan Morelli            44      Director Nominee
----------------------- ------- ------------------------------------------------
David M. Kaye           51      Director Nominee
----------------------- ------- ------------------------------------------------

      Officers are elected  annually by the Board of  Directors  (subject to the
terms of any  employment  agreement),  to hold such  office  until an  officer's
successor has been duly appointed and qualified,  unless an officer sooner dies,
resigns or is removed by the Board.  Some of the Company's  directors,  director
nominees  and  executive  officers  also  serve in various  capacities  with the
Company's  subsidiaries.  There  are no  family  relationships  among any of the
Company's directors, director nominees and executive officers.

Background of Executive Officers and Directors

      Jay Rifkin,  Chief  Executive  Officer  and  Director  Nominee.  Effective
September 30, 2005,  the Board of Directors of the Company  appointed Mr. Rifkin
interim President of the Company pending closing of the Acquisition. On December
29,  2005,  Mr.  Rifkin's  title was changed to Chief  Executive  Officer of the
Company effective as of September 30, 2005. From 2004 to Present, Mr. Rifkin has
been the sole Managing Member of Rebel Holdings,  LLC,  through which he is also
the majority  shareholder of Rebel Crew Films,  Inc. In 1995, Mr. Rifkin founded
Mojo Music, Inc., a music publishing company,  and he has been President of Mojo
Music, Inc. since it was founded.  Mr. Rifkin is Chairman and a founder of Media
Revolution,  a  marketing  agency  founded in 1977 that has  executed  marketing
campaigns  for major  Hollywood  studios.  Mr. Rifkin has served as Producer and
Executive  Producer on various motion  pictures with his most recent  production
"Waiting"  (Lion's Gate) released on October 7, 2005. Mr. Rifkin is also a music
producer,  engineer and songwriter.  Mr. Rifkin received a Grammy Award for Best
Children's Album and an American Music Award for Favorite Pop/Rock Album for his
work on Disney's "The Lion King," and received a Tony  nomination  for "The Lion
King" on Broadway.  From 1988 to 2004,  Mr.  Rifkin,  through Mojo Music,  Inc.,
served as a Managing Member of Media Ventures, LLC, an entertainment cooperative
founded by Mr. Rifkin and composer Hans Zimmer. In 1995, Mr. Rifkin founded Mojo
Records,  LLC, which in 1996 became a joint venture with Universal Records,  and
was  subsequently  sold to Zomba/BMG  Records in 2001. Mr. Rifkin also serves as
President  of  Cyberia  Holdings,  Inc.  which  is the  majority  owner of Media
Revolution. In 2004, Cyberia Holdings, Inc. filed for bankruptcy under Chapter 7
which cased was dismissed in May 2005.

                                        2
<PAGE>

      William B. Horne, Chief Financial Officer and Director. Mr. Horne has been
the Company's Chief  Financial  Officer and a director since July 20, 2005. From
September  30,  2005 until  December  29,  2005,  Mr.  Horne also  served as the
Company's  Chief  Executive  Officer  and  Chairman  of the  Company's  Board of
Directors.  Since July 5, 2005, Mr. Horne has been the Chief  Financial  Officer
and a director of Ault Glazer  Bodnar & Company,  Inc.  Since July 5, 2005,  Mr.
Horne has also been Chief Financial Officer of Patient Safety Technologies, Inc.
and its  subsidiaries.  From May 2002 to April 2005, Mr. Horne held the position
of Chief Financial Officer of Alaska Wireless  Communications,  a privately held
advanced cellular communications company. Since January 2002, Mr. Horne has also
provided  strategic  financial  consulting  services to both  private and public
companies.  From November 1996 to December  2001, Mr. Horne held the position of
Chief  Financial  Officer of The Phoenix  Partners,  a venture  capital  limited
partnership located in Seattle, Washington.

      Philip Gatch, Chief Technology  Officer.  Mr. Gatch has been the Company's
Chief  Technology  Officer since June 30, 2005. From June 30, 2005 until October
14,  2005,  Mr.  Gatch was also  Chief  Technology  Officer  of  Patient  Safety
Technologies, Inc. Since May 12, 2005, Mr. Gatch has been President and owner of
Cinapse   Digital  Media,   LLC,  a  company  that  operates  a  production  and
post-production  media content  facility.  From September 2003 to June 2005, Mr.
Gatch was Director of Technical  Services of The DR Group. From February 2002 to
April 2003,  Mr. Gatch was Director of Research and  Development  for Media.net.
From 1999 to 2002,  Mr.  Gatch was  Director of  Research  and  Development  for
Digital Entertainment Solutions.

      Alice M.  Campbell,  Director.  Ms.  Campbell  has  been a  member  of the
Company's  Board of  Directors  since July 16, 2005.  Since June 23,  2005,  Ms.
Campbell has been a director of IPEX,  Inc., a public  company quoted on the OTC
Bulletin  Board.  Since  October 22, 2004,  Ms.  Campbell has been a director of
Patient Safety Technologies, Inc., a public company listed on the American Stock
Exchange.  Since 2001, Ms. Campbell has been, and is currently,  an investigator
and  consultant,  specializing  in research and litigation  services,  financial
investigations  and  computer  forensics,  for  major  companies  and law  firms
throughout the United States.  Ms. Campbell is a certified fraud specialist,  as
well as a certified  instructor for the Regional  Training  Center of the United
States Internal Revenue Service and for the National  Business  Institute.  From
1979 to 2001,  Ms.  Campbell  served as a special  agent for the  United  States
Treasury  Department  where she  conducted  criminal  investigations  and worked
closely  with the  United  States  Attorney's  Office and with  several  federal
agencies,   including  the  Internal   Revenue   Service,   Federal   Bureau  of
Investigation,   Secret  Service,   Customs  Service,  State  Department,   Drug
Enforcement  Agency,  Bureau of Alcohol,  Tobacco and Firearms  and U.S.  Postal
Service.

      Alan Morelli, Director Nominee. Mr. Morelli is a consultant who has served
as Managing  Director of Analog  Ventures,  LLC, a  consulting  firm  located in
Pacific Palisades, California, since 1997. Mr. Morelli is also currently serving
as a director of PT Holdings,  Inc.,  RADD Holdings,  Inc. and Precise  Exercise
Equipment.  PT  Holdings,  Inc. is a  development-stage  company in the physical
therapy  industry.  RADD  Holdings  licenses  intellectual  property  to  retail
distributors.  Precise develops innovative  commercial fitness or rehabilitation
technology  currently used in most health clubs today.  Mr.  Morelli  received a
B.S. from Rutgers  University  (1983) and a J.D. from Georgetown  University Law
Center (1986).

      David M. Kaye,  Director  Nominee.  Mr. Kaye is an attorney and has been a
partner  in the law firm of Danzig  Kaye  Cooper  Fiore & Kay,  LLP  located  in
Florham Park, New Jersey,  since the firm's  inception in February  1996.  Since
1980, Mr. Kaye has been a practicing  attorney in the New York City metropolitan
area  specializing  in  corporate  and  securities  matters.  He is  currently a
director of Dionics,  Inc.,  a company  which  designs,  manufactures  and sells
semiconductor  electronic  products.  Mr.  Kaye  received  his B.A.  from George
Washington University (1976) and his J.D. from the Benjamin N. Cardozo School of
Law, Yeshiva University (1979).


                                        3
<PAGE>

Audit Committee

      The Audit  Committee is appointed by the Board of Directors in  fulfilling
its  responsibilities  to oversee:  (1) the integrity of the Company's financial
statements and disclosure  controls;  (2) the qualifications and independence of
our independent accountants; (3) the performance of our independent accountants;
and (4) compliance with legal and regulatory requirements.  Alice M. Campbell is
presently the only member of the Company's  Audit  Committee and she is Chairman
of the Audit Committee.  The Board has determined that Ms. Campbell is an "audit
committee  financial  expert"  as  defined  under  Item  401 of  Regulation  S-B
promulgated pursuant to the Exchange Act.

Compensation Committee

      The  Compensation  Committee  is  appointed  by the Board of  Directors to
discharge the  responsibilities  of the Board  relating to  compensation  of the
Company's executive officers.  Alice M. Campbell is currently the only member of
the Compensation Committee and she is Chairman of the Compensation Committee.

Employment Agreements

      On September 20, 2005,  the Company  entered into an employment  agreement
with Philip Gatch documenting the terms of his employment as the Company's Chief
Technology  Officer.  The term of the  employment  continues  for 36 months from
September 20, 2005 and automatically renews for successive one-year terms unless
either party  delivers to the other party written notice of termination at least
30 days before the end of the then current term. Mr.  Gatch's base  compensation
under the  agreement  is  $95,000 in cash per year and  $45,000 in a  restricted
stock grants each year. Prior to signing the employment  agreement,  the Company
granted Mr. Gatch  options  entitling him to purchase  250,000  shares of common
stock vesting  annually over three years with a strike price of $0.25 per share,
which stock options are reflected in the employment agreement. Mr. Gatch is also
eligible to receive an annual  performance  bonus  determined  by the  Company's
chief  executive  officer.  In addition,  Mr. Gatch was granted rights for three
years to (a) veto a chief executive officer candidate as a replacement to Milton
"Todd"  Ault,  III,  and (b) veto a decision  to sell the  Company or any of the
Company's core assets or  technologies  related to the iCodemedia  Assets in the
event the Company is sold for less than $50,000,000.  If Mr. Gatch's  employment
is terminated for any reason,  the veto rights will be forfeited.  The agreement
also contains  customary  provisions  for  disability,  death,  confidentiality,
indemnification  and  non-competition.  If Mr. Gatch voluntarily  terminates the
agreement or if the Company  terminates the agreement for cause,  Mr. Gatch will
not be  entitled  to any  compensation  for the  period  between  the  effective
termination date and the end of the employment term and all unvested  restricted
stock and stock options will be forfeited. If the Company voluntarily terminates
the agreement  without cause, the Company must pay Mr. Gatch a cash sum equal to
(a) all accrued  base salary  through the date of  termination  plus all accrued
vacation  pay and cash  bonuses,  if any,  plus (b) as  severance  compensation,
500,000 unrestricted shares of common stock and $250,000 cash. In the event of a
merger,  consolidation,  sale, or change of control,  the surviving or resulting
company is required to honor the terms of the agreement with Mr. Gatch.

      In  connection  with the  Acquisition,  on December 29, 2005,  the Company
entered into an  employment  agreement  with Jay Rifkin as the  Company's  Chief
Executive Officer effective as of September 30, 2005. The term of the employment
continues for three years from September 30, 2005 and  automatically  renews for
successive  one-year  terms  unless  either  party  delivers  to the other party
written  notice  of  termination  at  least 30 days  before  the end of the then
current term. Mr.  Rifkin's base  compensation  in the first year of the term is
$150,000, will increase at least 10% in the second year of the term and at least
10% more in the third  year of the  employment  term.  Mr.  Rifkin  was  granted
options to  purchase  4,400,000  shares of the  Company's  common  stock with an
exercise  price equal to the FMV of the Company's  common stock on September 30,
2005 and vesting  annually  over a period of three years from December 29, 2005.
Mr. Rifkin is also eligible to receive  shares of common stock and stock options
from time to time and an annual bonus as determined  by the  Company's  Board of
Directors.  The agreement also contains  customary  provisions  for  disability,
death,  confidentiality,  indemnification  and  non-competition.  If Mr.  Rifkin
voluntarily  terminates  the  agreement  without  good  reason or if the Company
terminates the agreement for cause,  the Company must pay Mr. Rifkin all accrued
compensation  through the date of  termination  and provide  life,  accident and
disability  insurance,  and health, dental and vision benefits to Mr. Rifkin and
his  dependents for a period of three months after  termination.  If the Company
terminates the agreement  without cause, if Mr. Rifkin  terminates the agreement
for good reason or if the agreement is  terminated  upon the death or disability
of Mr.  Rifkin,  then the Company  must pay Mr.  Rifkin or his estate all unpaid
compensation  through the duration of the  three-year  employment  term and must
provide  insurance and health benefits  through the duration of such term. "Good
Reason" is defined in the agreement as: (i) material  breach of the agreement by
the Company  including,  without  limitation,  any diminution in title,  office,
rights and  privileges of Mr. Rifkin or failure to receive base salary  payments
on a timely basis;  (ii)  relocation  of the  principal  place for Mr. Rifkin to
provide his services to any  location  more than 20 miles away from 100 Wilshire
Boulevard,  Santa  Monica,  California  90401;  (iii)  failure of the Company to
maintain in effect  directors' and officers'  liability  insurance  covering Mr.
Rifkin;  (iv) any  assignment or transfer by the Company of any of its rights or
obligations  under the  agreement;  or (v) any change in control of the  Company
including,  without  limitation,  if Mr. Rifkin shall cease to own a majority of
the voting securities of the Company.

                                        4
<PAGE>

Involvement in Certain Legal Proceedings

      Jay Rifkin  serves as President  of Cyberia  Holdings,  Inc.  which is the
majority owner of Media Revolution.  In 2004,  Cyberia Holdings,  Inc. filed for
bankruptcy under Chapter 7 which cased was dismissed in May 2005.

      Except as  described  above,  no  director,  person  nominated to become a
director, executive officer or control person of the Company:

      (1)   was a general partner or executive  officer of any business  against
            which any bankruptcy  petition was filed,  either at the time of the
            bankruptcy or two years prior to that time;
      (2)   was convicted in a criminal proceeding or named subject to a pending
            criminal  proceeding  (excluding  traffic violations and other minor
            offenses);
      (3)   was  subject to any order,  judgment  or  decree,  not  subsequently
            reversed,   suspended   or  vacated,   of  any  court  of  competent
            jurisdiction,   permanently  or  temporarily   enjoining,   barring,
            suspending  or  otherwise  limiting his  involvement  in any type of
            business, securities or banking activities; or
      (4)   was found by a court of competent  jurisdiction (in a civil action),
            the  Securities  and Exchange  Commission or the  Commodity  Futures
            Trading Commission to have violated a federal or state securities or
            commodities  law, and the judgment has not been reversed,  suspended
            or vacated.

      No director,  officer or 5% or other shareholder of the Company is a party
to any legal proceeding in which such person is adverse to the Company or has an
interest adverse to the Company.

                  BUSINESS OF THE COMPANY AFTER THE ACQUISITION

FORWARD-LOOKING STATEMENTS

      Except for historical  information,  matters  discussed in this report are
forward-looking  statements  based on  management's  estimates,  assumptions and
projections.   In   addition,   from  time  to  time,   the   Company  may  make
forward-looking  statements  relating to such  matters as  anticipated  business
prospects,  new  products,  research  and  development  activities,   plans  for
expansion,   acquisitions  and  similar   matters.   Words  such  as  "expects,"
"anticipates,"  "targets," "goals," "projects,"  "intends," "plans," "believes,"
"seeks,"  "estimates,"  "continue," or the negatives  thereof,  or variations on
such words,  and similar  expressions  are  intended  to identify  such  forward
looking statements.  The Company notes that a variety of factors could cause the
Company's   actual  results  and  experience  to  differ   materially  from  the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking   statements.   These   forward-looking   statements   are  mere
predictions and are uncertain. These forward-looking statements speak only as of
the date of this report.  The Company  expressly  disclaims  any  obligation  or
undertaking  to  disseminate  any updates or  revisions  to any  forward-looking
statement contained herein to reflect any change in its expectations with regard
thereto or any change in events,  conditions or  circumstances on which any such
statement is based.

ORGANIZATIONAL HISTORY

      Digicorp was  incorporated on July 19, 1983 under the laws of the State of
Utah for the purpose of developing  and marketing  computer  software  programs.
From 1983 to 1995, the Company's sales and investments were  attributable to the
sale of computer software and investments related to oil, gas and mining.

      On June 30, 1995, the Company became a development  stage  enterprise when
the Company sold its assets and changed its business plan.  Since June 30, 1995,
the Company has been in the developmental stage and until September 19, 2005 has
had no  operations  other than issuing  shares of common stock for financing the
preparation of financial  statements  and for preparing  filings for the SEC. In
August 2001,  the Company  elected to file a Form 10-SB  registration  statement
with the SEC on a voluntary  basis in order to become a reporting  company under
the Exchange Act.

                                        5
<PAGE>

Acquisition of iCodemedia Assets

      On  September  19,  2005,  the  Company  entered  into an  asset  purchase
agreement with Philip Gatch, the Company's Chief Technology Officer, and thereby
completed  the  purchase of certain  assets  from Mr.  Gatch  consisting  of the
iCodemedia   suite  of  websites  and  internet   properties   and  all  related
intellectual  property  (the  "iCodemedia  Assets").  The  iCodemedia  suite  of
websites  consists  of  the  websites   www.icodemedia.com,   www.iplaylist.com,
www.tunecast.com, www.tunebucks.com, www.podpresskit.com and www.tunespromo.com.
Since completing the Acqusition,  the Company may sell the iCodemedia  Assets or
use the websites to provide applications and services to enable content creators
to publish and deliver content to existing and next  generation  devices such as
the Apple iPod and the Sony PSP. As consideration for the iCodemedia Assets, the
Company  issued Mr.  Gatch  1,000,000  shares of common  stock.  The issuance of
shares of common  stock to Mr. Gatch was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Acquisition of Rebel Crew Films

      As further  described on page 1 of this report,  on December 29, 2005, the
Company  acquired all of the issued and outstanding  capital stock of Rebel Crew
Films in consideration  for the issuance of 21,207,080 shares of common stock to
the   shareholders  of  Rebel  Crew  Films.  The  Acquisition  was  exempt  from
registration  requirements  pursuant to Section 4(2) of the  Securities  Act and
Rule 506 promulgated  thereunder.  Rebel Crew Films was organized under the laws
of the  State  of  California  on  August  7,  2002 to  distribute  Latino  home
entertainment  products.  Rebel Crew  Films  currently  maintains  more than 200
Spanish  language  films  and  plans to serve the  nation's  largest  wholesale,
retail, catalog, and e-commerce accounts.

      Except as specifically  stated otherwise,  in the remainder of this report
references  to "the  Company"  refer to Digicorp  together with its wholly owned
subsidiary Rebel Crew Films, Inc.

OVERVIEW

      The Company  currently  maintains more than 200 Spanish language films and
serves some of the nation's largest wholesale,  retail,  catalog, and e-commerce
accounts. The Company's titles can be found at Wal-Mart,  Best Buy, Blockbuster,
K-Mart,  and hundreds of  independent  video outlets across the United States of
America and Canada. The Company's diverse  programming  includes:  New Releases,
Classic  Mexican  Cinema,   animation,   cult,  sports,   martial  arts,  family
entertainment, and more.

      The Company  generates  revenue through either  licensing  agreements with
third parties that distribute the Company's  licensed  content or through direct
sales.  The  Company's  typical  licensing  agreements  consist  of a  three  to
five-year  contract  that carries a 15% - 50% royalty on gross sales of licensed
product.  The Company is currently  expanding its sales force to focus on direct
sales of its licensed content.

      The  Company  is  organized  in a  single  operating  segment.  All of the
Company's  revenues are generated in the United  States,  and the Company has no
long-lived assets outside the United States.

CUSTOMERS

      For direct sales,  the Company's  sales  associates  focus on small retail
stores across the country.  Currently, the sales force manages over 1,100 active
retail store customers. For other licensing activities, there are two companies,
BCI Eclipse LLC, which has licensed 20 titles, and VAS Entertainment/Rise  Above
Entertainment  ("VAS/RA")  which has licensed 17 titles from the  Company.  They
function as manufacturers  for the Company's DVD inventory for those titles,  as
well as a distributor  to large  retailers like  Wal-Mart.  The agreements  with
these companies  consist of a term of three to five years granting the companies
the right to manufacture,  promote, and distribute the licensed movies for a 15%
- 50% royalty on gross sales, depending on title.

                                        6
<PAGE>

      Besides  its direct  selling  effort  through  telemarketing,  the Company
markets its products by placing print ads in a variety of Latino trade magazines
as well as through its  website.  The  Company  has a dedicated  1-800 toll free
number for sales inquiries.

SUPPLIERS

      The Company has three  categories  of  suppliers  - movie  licensors,  DVD
manufacturers,  and finished goods suppliers. Movie licensors consist of Spanish
language  movie  license  holders  primarily  from  Mexico  who enter  licensing
agreements  with the Company to  manufacture  and distribute  their movies.  The
Company is currently in contract with eight different licensors of content. From
these agreements, the Company has manufactured ten titles. Agreements with these
companies  consist  of either a fixed  license  fee or a 40-60%  royalty  on net
revenues for the right to manufacture, promote and distribute the films for four
to five years, depending on title.

      For the  manufacture  of DVD's,  the  Company's  principal  supplier  is a
company called Reptek.  The Company does not have a written  agreement with this
supplier.  There  is no  dependency  on  this  supplier  as  the  supply  of DVD
manufacturing  companies is broad and there are many potential firms that can be
employed to supply the Company's products.

      For DVD titles not owned or licensed by the Company,  a number of finished
goods vendors are utilized.  Among them are Ventura  Distribution  Inc., Cozumel
Films,  Venevision  International,  and Universal (UMVD).  Ventura  Distribution
currently supplies the Company with 21 movies distributed by Unicine, a division
of  Univision.  Venevision  International  has the  highest  number  of  titles,
providing the Company with 51 films.  Universal  (UMVD)  currently  supplies the
Company with 36 films and Cozumel  Films  provides the Company with three films.
There are no  written  agreements  with any of these  companies  to  supply  the
Company with films.

      The  Company is  currently  expanding  its sales  force to focus on direct
sales of its  licensed  content.  The Company is shifting  its efforts on direct
selling  due to two  primary  reasons:  (1)  poor  reliability  of  third  party
distributors generally to pay royalties on time; and (2) to eliminate dependence
on third party  distributors to distribute the Company's  product as one of many
other products they also sell.

COMPETITION

      Although accurate numbers are difficult to obtain due to the hesitation of
privately owned distribution companies to divulge sales figures, it is generally
estimated by an independent  study by Estrenos  magazine (a Latin  Entertainment
Trade Journal) that the Latino home video distribution  market for the first six
months of 2005 sold over three million  units in the U.S.  According to Estrenos
magazine,  of that number three distributors  accounted for approximately 80% of
those  sales  -  Laguna   Films  (43%),   Ventura/Studio   Latino   (26%),   and
Xenon/Televisa  (13%) (data  provided  by each  distributor  or  source).  Other
players  include Image  Entertainment  (7%),  Latin Vision (5%),  Brentwood Home
Video (3%),  Pro-Active  Entertainment  (2%), and Vanguard  Latino (1%) (Source:
Estros  magazine,  September/October  2005).  Based on these  sales  performance
figures, the Company's monthly sales average currently represents  approximately
1.25%  of  the  monthly  average  of  DVD  sales  volume  in  the  Latino  video
entertainment industry

      Major U.S.  movie  studios have  ventured  into  servicing the Latino home
video market as well, selling  approximately 1.5 million units in the first half
of 2005.  Of that  amount,  approximately  60% of sales were  dominated by three
studios - MGM Home Entertainment  (26%),  Columbia Tri-Star (18%) and Lions Gate
Films (16%). Other such competitors  include  UMVD/Visual  Entertainment  (12%),
BVHE/Disney  (8%),  Warner Home Video  (8%),  and Fox Home  Entertainment  (3%).
(Source: Estros magazine, September/October 2005)

      The Company also competes  with retail music and video  stores,  including
online stores, dominated by large companies such as Netflix, Blockbuster,  Trans
World Entertainment, and Movie Gallery Inc.

      The Company competes in the Latino home video market primarily by offering
competitive  prices on a wide  variety  of  quality  titles  through  its direct
selling efforts targeted at retail stores across the entire United States.


                                        7
<PAGE>

GOVERNMENT REGULATION

      The  Company  is  not  aware  of any  existing  or  probable  governmental
regulations  that may have a  material  effect on the normal  operations  of the
Company's business.  There also are no relevant  environmental laws that require
compliance  by the  Company  that  may  have a  material  effect  on the  normal
operations of the business.

EMPLOYEES

      As of January 4, 2006, the Company  employed eight full time employees and
three part time  employees.  None of the  Company's  employees  are covered by a
collective  bargaining  agreement.  The Company believes that relations with its
employees are good.

DESCRIPTION OF PROPERTY

      The Company leases its principal  executive office located at 4143 Glencoe
Avenue,   Marina  Del  Rey,   California  90292.  The  leased  office  space  is
approximately 3,800 rentable square feet. The lease contract term is seven years
and two months  commencing  August 1, 2005 and ending  September 30, 2012.  Base
rent under the lease is $5,890 per month  payable on the first day of each month
commencing  August  15,  2005.  Additionally,  the first two  months  (August to
September  2005) had a base rent of $8,835 and a security  deposit of $5,890 was
required upon signing.

LEGAL PROCEEDINGS

      The Company is not a party to any  pending  legal  proceeding,  nor is its
property the subject of a pending legal  proceeding  that is not in the ordinary
course of  business or  otherwise  material to the  financial  condition  of the
Company's business.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Off-Balance Sheet Arrangements

      We do not have any off  balance  sheet  arrangements  that are  reasonably
likely to have a current or future effect on our financial condition,  revenues,
results of operations, liquidity or capital expenditures.

Critical Accounting Policies

      A  discussion  and  analysis  of our  financial  condition  and results of
operations are based upon our financial statements,  which have been prepared in
accordance with accounting  principles  generally accepted in the United States.
The  preparation  of these  financial  statements  requires  management  to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues and expenses and related  disclosure of contingent assets
and  liabilities.  Note 2 to our  audited  financial  statements  included as an
exhibit to this Form 8-K  describes  the  significant  accounting  policies  and
methods  used in the  preparation  of the  financial  statements.  On an ongoing
basis, management evaluates its estimates,  the most critical are those that are
both  important to the  presentation  of our financial  condition and results of
operations  and require  management's  most  difficult,  complex,  or subjective
judgments.

Accounting Developments

      In December 2004, Statement of Financial Accounting Standards ("SFAS") No.
123(R), "Share-Based Payment," which addresses the accounting for employee stock
options, was issued. SFAS 123(R) revises the disclosure  provisions of SFAS 123,
"Accounting for Stock Based Compensation" and supersedes  Accounting  Principles
Board ("APB") Opinion No. 25,  "Accounting for Stock Issued to Employees."  SFAS
123(R)  requires that the cost of all employee stock  options,  as well as other
equity-based compensation arrangements, be reflected in the financial statements
based on the estimated fair value of the awards. This statement is effective for
us as of the  beginning  of the first  interim or annual  reporting  period that
begins after December 15, 2005. The impact on our operating results or financial
position based on the adoption of SFAS No. 123(R) has not yet been determined.

                                        8
<PAGE>

Liquidity and Capital Resources

      Our total assets were  $519,442 at September  30, 2005 versus  $195,981 at
December 31, 2004.  The change in total assets is primarily  attributable  to an
increase  in our  intangible  assets and  inventory  of  $240,175  and  $36,243,
respectively.  The increases in intangible  assets and inventory  were primarily
financed through monies loaned from related parties in the amount of $552,321.

      At September  30, 2005 and December 30, 2004,  we had $3,404 and $7,856 in
cash and cash equivalents,  respectively. During the nine months ended September
30, 2005, we borrowed  $519,321 from Rebel Holdings,  LLC, a California  limited
liability  company  ("Rebel  Holdings"),  an entity that  during  2005  acquired
approximately  90%  of the  outstanding  shares  of the  our  common  stock.  In
September 2005, we borrowed an additional  $33,000 from the sole member of Rebel
Holdings.  At  September  30,  2005 and  December  31,  2004,  the Company had a
combined  liability of $601,307 and $48,986,  respectively,  due to either Rebel
Holdings or the sole member of Rebel Holdings. On December 29, 2005, we issued a
promissory  note in the amount of $73,000 to the sole  member  (the  "Promissory
Note") of Rebel Holdings. The Promissory Note represented the outstanding amount
borrowed at September 30, 2005 as well as additional  funds borrowed  during the
fourth  quarter of 2005.  The Promissory  Note has a term of  approximately  six
months and bears 5.0% simple interest.  On December 29, 2005, in connection with
the closing of the  Acquisition we also issued a convertible  note in the amount
of $556,307 to Rebel  Holdings (the  "Note").  The Note has a term of five years
from  December 29, 2005,  bears 4.5% simple  interest  and is  convertible  into
shares of our common stock at a conversion price of $1.112614 per share.

      We have  primarily  relied  upon  loans from  related  parties to fund our
operations and, to a lesser extent,  revenues  generated from licensing our film
content,  on a  non-exclusive  basis,  to  other  distributors  of  Latino  home
entertainment  content.  We believe that future  revenues  combined  with either
loans or direct equity  investments  into the Company will be sufficient to fund
our operations for the 12 months  subsequent to September 30, 2005. We expect to
undertake  additional debt or equity  financings to better enable us to grow and
meet  our  future  operating  and  capital  requirements,  however,  there is no
assurance that we will be successful in obtaining such financing.

      Operating  activities  provided $336,762 of cash for the nine months ended
September  30, 2005,  compared to  providing  $161,856 and $62,765 for the years
ended December 31, 2004 and 2003, respectively.

      Cash used in investing  activities for the nine months ended September 30,
2004 and the years ended December 31, 2004 and 2003, of $341,214,  $154,000, and
$72,000,  respectively,  resulted  almost  exclusively  from  the  purchases  of
licensed Spanish language film content that was capitalized.

Results of Operations

      Revenues

      We  recognized  revenues of $140,333 and $27,963 for the nine months ended
September 30, 2005 and the year ended  December 31, 2004,  respectively.  During
2004 all of our  revenues  were  generated  through  licensing  agreements.  The
licensing agreements provide for us to receive advance payments as consideration
for rights granted to third parties that  distribute our licensed  content.  The
advance  payments are initially  recorded as deferred  revenue and  subsequently
recognized in income as royalties  are earned upon shipment of licensed  content
to  customers  by the  sub-licensor.  Deferred  revenue  balances of $75,411 and
$162,971 at September  30, 2005 and December 31, 2004,  respectively,  represent
advance  royalty  payments  that are  expected to be earned over the  subsequent
twelve month periods.

      During the nine months  ended  September  30, 2005,  licensing  revenue of
$85,205  accounted for  approximately  61% of our total  revenue.  The remaining
revenue of $55,128  represents revenue generated through the direct sales of our
licensed content. We expect that direct sales, as a percentage of total revenue,
will  significantly  increase  over the next  year as we focus  our  efforts  on
expanding  our existing  sales force.  Further,  we  anticipate  that  licensing
revenues will significantly be reduced or eliminated in future years as we shift
our focus away from licensing agreements with third parties

                                        9
<PAGE>

      Expenses

      Operating  expenses  were  $247,854  and $80,889 in the nine months  ended
September  30, 2005 and 2004,  respectively  and  $144,434  and  $112,364 in the
fiscal years ended December 31, 2004 and 2003, respectively.  Operating expenses
in  all  periods  primarily   consisted  of  professional  fees,  rent  expense,
amortization expense and general and administrative expenses.

      Professional  fees were  approximately  $40,000  higher in the nine months
ended  September 30, 2005  compared to the nine months ended  September 30, 2004
due to significant increases in amounts paid to consultants as well as legal and
accounting fees. Amounts paid to various consultants  increased by approximately
$24,000  and  related  to  services  to  locate  Spanish  language  content  for
acquisition,  technical assistance in preparing the content for production,  and
sales and marketing of the titles. Legal fees increased by approximately $12,000
due to the preparation and review of an increased amount of license  agreements.
Accounting  fees,  which  increased  by  approximately  $4,000,  relate to costs
incurred  to update  our  accounting  system to  facilitate  a larger  volume of
transactions.

      Professional  fees were  approximately  $36,000  higher in the year  ended
December  31,  2004  compared  to  the  year  ended  December  31,  2003  due to
significant  increases  in amounts  paid to  consultants  as well as legal fees.
Amounts paid to various  consultants  during 2003 related solely for services to
locate Spanish language content for acquisition  whereas during 2004 we incurred
expenses related not only for services to locate Spanish language  content,  but
also technical assistance in preparing the content for production, and sales and
marketing of the titles. Legal fees increased by approximately $8,000 due to the
preparation and review of an increased amount of license agreements.

      Rent expense  increased by approximately  $15,000 in the nine months ended
September 30, 2005  compared to the nine months ended  September 30, 2004 due in
part to our relocation  into  commercial  office space in August 2005, with base
rent of $5,890 per month  combined  with periods of low rates of rent during the
nine months ended September 30, 2004.

      Rent expense increased by approximately  $4,000 in the year ended December
31, 2004  compared to the year ended  December  31,  2003 and is  attributed  to
periods of low rates of rent during 2003.

      Amortization expense increased by approximately $56,000 in the nine months
ended  September 30, 2005  compared to the nine months ended  September 30, 2004
due to an increased number of license agreements.

      Amortization expense increased by approximately  $26,000 in the year ended
December  31,  2004  compared  to the year  ended  December  31,  2003 due to an
increased number of license agreements.

      General and administrative  expense increased by approximately  $50,000 in
the nine  months  ended  September  30, 2005  compared to the nine months  ended
September 30, 2004 and is  attributed  to the overall  expansion of the business
during the nine months ended  September  30, 2005  combined  with the  financial
constraints  placed on us as a result of limited  amounts of  available  working
capital in the nine months ended September 30, 2004.

      General and administrative  expense decreased by approximately  $15,000 in
the year ended  December 31, 2004  compared to the year ended  December 31, 2003
due to  financial  constraints  placed on us as a result of  limited  amounts of
available  working capital in the year ended December 31, 2004.  During the year
ended  December 31,  2003,  as  reflected  by our  deferred  revenue  balance of
approximately  $40,000 and  licensing  revenues of  approximately  $116,000,  we
received a large amount of advance  payments from our licensing  agreements with
third parties.  These advance payments exceeded the cost of our licensed content
in 2003,  thus,  providing an adequate amount of working capital for general and
administrative purposes. During 2004 the amount of advance payments approximated
the cost of our licensed  content thus eliminating a source of funds for general
and administrative expenses.


                                       10
<PAGE>


      Taxes

      We are taxed  under  Title 26,  Chapter 1,  Subchapter  C of the  Internal
Revenue Code of 1986, as amended, and therefore subject to federal income tax on
the portion of our taxable income.

      At  December  31,  2004,  we  had a net  operating  loss  carryforward  of
approximately  $27,000 to offset future  taxable  income for federal  income tax
purposes.  The utilization of the loss  carryforward to reduce any future income
taxes will depend on our ability to generate  sufficient taxable income prior to
the expiration of the net operating loss carryforwards. The carryforward expires
beginning in 2024.

      A change in the  ownership  of a majority of the fair market  value of our
common stock can delay or limit the  utilization  of existing net operating loss
carryforwards  pursuant to Internal  Revenue  Code  Section 382. We believe that
such a  change  occurred  during  the  year  ended  December  31,  2005  and are
evaluating the amount that our net operating loss carryforward  utilization will
be limited to.


                             EXECUTIVE COMPENSATION

      The  following   table  sets  forth   information   concerning  the  total
compensation  that the  Company  has paid or that has  accrued  on behalf of the
Company's  chief  executive  officer and other  executive  officers  with annual
compensation  exceeding  $100,000 during the years ended December 31, 2005, 2004
and 2003.

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                                            Long-Term
                                                                                          Compensation
                                                                            ------------------------------------------
                                              Annual Compensation                      Awards               Payouts
                                      ------------------------------------- ------------------------------ -----------
                                                                  Other                       Securities                   All
                                                                 Annual     Restricted        Under-lying     LTIP        Other
         Name and                                                Compen-    Stock Award(s)    Options/     Payouts       Compen-
    Principal Position        Year     Salary ($)   Bonus ($)  sation ($)   ($)               SARs (#)        ($)      sation ($)
--------------------------- --------- ------------- ---------- ------------ ----------------- ------------ ----------- ------------
<S>                         <C>          <C>          <C>         <C>            <C>         <C>             <C>          <C>
Milton "Todd" Ault III (1)   2005         0            0           0              0           2,000,000       0            0
  CEO and Chairman           2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

William B. Horne (2)         2005         0            0           0              0            500,000        0            0
  CEO, CFO and Chairman      2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

Philip Gatch (3)             2005     $ 23,866         0           0           $ 11,250        250,000        0            0
  CTO                        2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

Jay Rifkin (4)               2005         0            0           0              0           4,400,000       0            0
  CEO and President and      2004         0            0           0              0               0           0            0
  Principal Executive        2003         0            0           0              0               0           0            0
  Officer of Rebel Crew
</TABLE>

      (1)   Mr. Ault was appointed  Chief  Executive  Officer on April 26, 2005,
            and  director  and  Chairman of the Board of  Directors  on July 16,
            2005.  Mr.  Ault  resigned  from the  positions  of Chief  Executive
            Officer  and  director  and  Chairman of the Board of  Directors  on
            September 30, 2005.

      (2)   Mr. Horne was appointed Chief Financial Officer and director on July
            20, 2005, and Chief  Executive  Officer and Chairman of the Board of
            Directors  on  September  30,  2005.  Mr.  Horne  resigned  from the
            position of Chief Executive Officer on December 29, 2005.

      (3)   Mr.  Gatch was hired as Chief  Technology  Officer of the Company on
            September 20, 2005.

                                       11
<PAGE>

      (4)   Mr. Rifkin was appointed  President on September 30, 2005, and Chief
            Executive Officer and director nominee on December 29, 2005.

                               OPTIONS GRANT TABLE

      The  following  table sets  forth  information  with  respect to the named
executive officers  concerning the grant of stock options during the fiscal year
ended  December 31,  2005.  The Company did not have during such fiscal year any
plans providing for the grant of stock appreciation rights ("SARs").

                      Option/SAR Grants in Last Fiscal Year
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                    Potential
                                                                               Realizable Value at
                                                                                  Assumed Annual
                                                                                  Rates of Stock      Alternative to
                                                                                Price Appreciation     (f) and (g):
                              Individual Grants                                  for Option Term     Grant Date Value
------------------------------------------------------------------------------  ----------------     -----------------
<S>        <C>                  <C>          <C>          <C>        <C>         <C>         <C>            <C>
           (a)                  (b)          (c)          (d)        (e)         (f)        (g)            (h)
                                         % of Total
                            Number of    Options/
                            Securities   SARs
                            Underlying   Granted to    Exercise
                            Options/     Employees     or Base                                          Grant Date
                            SARs         in Fiscal     Price      Expiration                             Present
           Name             Granted (#)  Year          ($/Sh)     Date        5% ($)     10% ($)      Value ($) (1)
--------------------------- ------------ ------------- ---------- ----------- ---------- ---------- -------------------
Milton "Todd" Ault III (2)  2,000,000     2,000,000     $ 0.25   7/20/2015     ---        ---            $ 494,200
William B. Horne (3)          500,000       500,000     $ 0.25   7/20/2015     ---        ---            $ 123,550
Philip Gatch (4)              250,000       250,000     $ 0.25   7/20/2015     ---        ---             $ 61,775
Jay Rifkin (5)              4,400,000     4,400,000     $ 0.85   9/30/2015     ---        ---          $ 3,696,620
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

      (1)   The value shown was calculated  utilizing the  Black-Scholes  option
            pricing  model  and  are   presented   solely  for  the  purpose  of
            comparative disclosure in accordance with certain regulations of the
            Securities  and Exchange  Commission.  This model is a  mathematical
            formula  used to value  traded  stock price  volatility.  The actual
            value that an executive officer may realize, if any, is dependent on
            the amount by which the stock price at the time of exercise  exceeds
            the exercise price. There is no assurance that the value realized by
            an executive  officer will be at or near the value  estimated by the
            Black-Scholes  model.  In calculating the grant date present values,
            the Company used the following assumptions:  (a) expected volatility
            of approximately 155%; (b) risk-free rate of return of approximately
            3.75%; (c) no dividends payable during the relevant period;  and (d)
            exercise at the end of a 10 year period from the date of grant.

      (2)   On July 20, 2005, as  consideration  for service as Chief  Executive
            Officer,  the Company  granted  Milton  "Todd" Ault,  III options to
            purchase  2,000,000 shares of common stock with an exercise price of
            $0.25 per share.  These stock  options  would have vested  quarterly
            over two  years,  however,  on  September  30,  2005,  the  Board of
            Directors  accelerated the vesting of such options such that options
            to purchase 475,000 shares of the Company's common stock immediately
            vested and are  exercisable  for a period of 18 months from December
            29, 2005. The remaining options to purchase  1,525,000 shares of the
            Company's common stock were cancelled.

      (3)   On July 20, 2005, as  consideration  for service as Chief  Financial
            Officer and Director,  the Company  granted William B. Horne options
            to purchase 500,000 shares of common stock with an exercise price of
            $0.25 per share.  These stock  options  would have vested  quarterly
            over  two  years,  however,  on  December  29,  2005,  the  Board of
            Directors  accelerated the vesting of such options such that options
            to purchase 400,000 shares of the Company's common stock immediately
            vested and are  exercisable  for a period of 18 months from the date
            the  individual  no longer  performs  services to the  Company.  The
            remaining options to purchase 100,000 shares of the Company's common
            stock were cancelled.

      (4)   On July 20, 2005, as  consideration  for service as Chief Technology
            Officer,  the  Company  granted  Philip  Gatch  options to  purchase
            250,000  shares of our common stock with an exercise  price of $0.25
            per share.  These stock options would have vested quarterly over two
            years,  however,  on  December  29,  2005,  the  Board of  Directors
            accelerated  the  vesting  of such  options  such  that  options  to
            purchase  250,000 shares of the Company's  common stock  immediately
            vested and are  exercisable  for a period of 18 months from the date
            the individual no longer performs services to the Company.

                                       12
<PAGE>

      (5)   On  September  30,  2005,  as  consideration  for service as Interim
            President,  the  Company  granted  Jay Rifkin  options  to  purchase
            4,400,000 shares of common stock with an exercise price of $0.85 per
            share.  These  stock  options  vest  annually  over three years from
            December 29, 2005.

Aggregate Option Exercises in Last Fiscal Year

      No options of the Company were exercised by the named  executive  officers
during the most recent fiscal year ended December 31, 2005.

Securities Authorized for Issuance Under Equity Compensation Plans

      The  following  table  shows  information  with  respect  to  each  equity
compensation  plan under which the  Company's  common  stock is  authorized  for
issuance as of the fiscal year ended December 31, 2005.

<TABLE>
<CAPTION>
                      EQUITY COMPENSATION PLAN INFORMATION
------------------------------------ ------------------------ ----------------------- ---------------------------
                                                                                         Number of securities
                                      Number of securities                             remaining available for
                                        to be issued upon        Weighted average       future issuance under
                                           exercise of          exercise price of     equity compensation plans
                                      outstanding options,     outstanding options,     (excluding securities
           Plan category               warrants and rights     warrants and rights     reflected in column (a))
------------------------------------ ------------------------ ----------------------- ---------------------------
                                               (a) (b) (c)
------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans approved
by security holders                             0                       0                         0
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
<S>                                         <C>                       <C>                     <C>
Equity compensation plans not
approved by security
holders                                     8,862,500                 $0.61                   6,687,500
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
Total                                       8,862,500                 $0.61                   6,137,500
------------------------------------ ------------------------ ----------------------- ---------------------------
</TABLE>

                 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Management of the Company believes that all of the below transactions were
on terms at least as favorable as could have been obtained from unrelated  third
parties.

Relationships with Patient Safety Technologies, Inc.

      On December 29, 2004,  the  Company's  then current  directors  along with
several other  shareholders sold 2,229,527 shares of the Company's common stock,
representing  22.3% of the outstanding  shares of common stock of the Company on
such date, to Patient Safety  Technologies,  Inc.  (formerly,  Franklin  Capital
Corporation)  ("PST"). The Company's directors,  Gregg B. Colton, Don J. Colton,
Norman Sammis and Glenn W. Stewart,  sold 80% of their holdings to PST at $0.135
per share.  Another shareholder who was not a principal  shareholder or director
sold all of his shares to PST at $0.145 per share. The aggregate amount of funds
of PST used to purchase the shares of common stock was  approximately  $301,998.
The  source  for such  funds  was  PST's  working  capital.  The  directors  and
shareholders  agreed to sell an  additional  1,224,000  shares (the  "Additional
Shares") of our common stock of to PST upon the shares being registered with the
SEC by December 29, 2005. In addition,  prior to the  acquisition  and change of
control, PST owned 327,500 shares of the Company's common stock.

                                       13
<PAGE>

      On December 28, 2005, PST assigned its right to purchase  1,000,000 of the
Additional  Shares to Alan  Morelli  (the  "Assignment  Agreement")  and amended
certain  terms of the stock  purchase  agreement  pursuant to which the Original
Purchase  Transaction  was  completed  (the  "Amendment   Agreement").   In  the
Assignment  Agreement,  the Company granted the parties  piggyback  registration
rights  with  respect to the sale of the  Additional  Shares.  In the  Amendment
Agreement,  the Company  agreed that if it does not  register  the resale of the
Additional  Shares on or before June 30, 2005,  then the Company will redeem the
Additional  Shares at a price of $0.145 per share and the Company will thereupon
sell 224,000 shares of the Company's common stock to PST and 1,000,000 shares of
the Company's  common stock to Mr.  Morelli at a price of $0.145 per share.  Mr.
Morelli is a current Director Nominee of the Company.

      Pursuant to the stock  purchase  agreement  with PST,  Melanie  Glazer was
appointed as Chairman of the Company's  Board of Directors on December 30, 2004,
following the  resignation of Glenn W. Stewart,  Norman Sammis and Don J. Colton
as  directors.  Effective  April 26,  2005,  Gregg B. Colton  resigned  from his
positions as President,  Chief Executive Officer and Chief Financial Officer. On
April 26,  2005,  the  Company's  Board of  Directors  appointed  the  following
officers:  (a)  Milton C.  Ault,  III - Chief  Executive  Officer;  (b)  Kathryn
Macenzie Queen - President of Operations; and (c) Lynne Silverstein - Secretary.
Mr. Ault  subsequently  resigned  on  September  30, 2005 and Ms.  Queen and Ms.
Silverstein  resigned on December 29, 2005. Upon Mr. Ault's resignation as Chief
Executive  Officer,  William B. Horne was appointed to succeed Mr. Ault as Chief
Executive Officer. Mr. Horne resigned as Chief Executive Officer upon completing
the Acquisition on December 29, 2005.

      On June 30, 2005,  the Company  appointed  Philip  Gatch as the  Company's
Chief  Technology  Officer.  On September 19, 2005, the Company  entered into an
asset purchase  agreement with Mr. Gatch,  and thereby  purchased the iCodemedia
Assets. As consideration for the iCodemedia Assets, the Company issued Mr. Gatch
1,000,000 shares of common stock.

      Effective July 16, 2005,  Gregg B. Colton  resigned from his position as a
director.  Effective  July 16, 2005,  the Company  appointed  Alice M. Campbell,
Milton "Todd" Ault, III and Darrell Grimsley as directors. Upon his appointment,
Mr. Ault was named Chairman of the Company's  Board of Directors.  Ms.  Campbell
was appointed to chair the Company's  Audit Committee and to chair the Company's
Compensation Committee. Mr. Ault resigned as a director on September 30, 2005.

      Effective  July 20, 2005,  the Company  appointed  Lynne  Silverstein  and
William  B. Horne as  directors.  Ms.  Silverstein  subsequently  resigned  as a
director on December 29, 2005.

      Effective  July 20, 2005,  the Company  appointed  William B. Horne as the
Company's Chief Financial Officer.

      Each of Melanie Glazer, Milton C. Ault, III, Kathryn Macenzie Queen, Lynne
Silverstein,  Philip Gatch,  Alice M. Campbell,  Darrell Grimsley and William B.
Horne had and/or currently have employment positions, directorships and/or other
relationships  with Ault Glazer & Company  Investment  Management  LLC,  Patient
Safety Technologies,  Inc. and/or Ault Glazer & Company Investment  Management's
or Patient Safety Technologies' current officers and directors.

Acquisition of Rebel Crew Films

      On  December  29,  2005,  the  Company  acquired  all  of the  issued  and
outstanding  capital stock of Rebel Crew Films in consideration for the issuance
of 21,207,080 shares of common stock to the shareholders of Rebel Crew Films. Of
these shares,  19,086,372  shares were issued or are issuable to Rebel Holdings,
LLC as  consideration  for its 90%  ownership  interest  in Rebel Crew Films and
2,120,708 were issued or are issuable to Cesar Chatel as  consideration  for his
10%  ownership  interest  in Rebel  Crew  Films.  The  Company's  present  Chief
Executive Officer and Director Nominee,  Jay Rifkin, is the sole managing member
of Rebel  Holdings,  LLC.  Mr.  Chatel  is an  employee  of the  Company  and is
President of the Company's now wholly owned subsidiary Rebel Crew Films.

      On December  29,  2005 the  Company  entered  into a  Securities  Purchase
Agreement with Rebel Holdings,  LLC,  pursuant to which the Company  purchased a
$556,306.53  principal  amount loan receivable owed by Rebel Crew Films to Rebel
Holdings,  LLC in exchange for the issuance of a  $556,306.53  principal  amount
secured  convertible note to Rebel Holdings,  LLC. The secured  convertible note
accrues simple interest at the rate of 4.5%, matures on December 29, 2010 and is
secured by all of the  Company's  assets now owned or  hereafter  acquired.  The
secured  convertible  note is convertible into 500,000 shares of common stock of
the Company at the rate of $1.112614 per share. As described  above, Jay Rifkin,
the Company's  present  Chief  Executive  Officer and a Director  Nominee of the
Company, is the sole managing member of Rebel Holdings, LLC.

                                       14
<PAGE>

      Between  September  2005 and October 2005,  Jay Rifkin loaned an aggregate
total principal amount of $73,000 to Rebel Crew Films. The Company has agreed to
repay  this loan to Mr.  Rifkin  pursuant  to the  terms of a $73,000  principal
amount promissory note due June 30, 2006 which accrues interest at 5% per annum.
In the event of breach of the  promissory  note, the interest rate will increase
to 8% per annum.

      On December  29,  2005,  the Board of  Directors  ratified a grant to Alan
Morelli made on September 15, 2005, as a consultant to the Company,  warrants to
purchase  250,000 shares of the Company's common stock with an exercise price of
$0.145 per share, which warrants vested immediately.  These warrants were issued
to Mr. Morelli as compensation for advisory  services rendered to the Company in
connection with structuring the Acquisition. Mr. Morelli is presently a director
nominee of the Company.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information,  as of January 4, 2006
with respect to the beneficial  ownership of the outstanding common stock by (i)
any  holder of more than five  (5%)  percent;  (ii) each of the named  executive
officers and  directors of the Company;  and (iii) the  Company's  directors and
named executive officers as a group. Except as otherwise indicated,  each of the
stockholders  listed below has sole voting and investment  power over the shares
beneficially owned.


<TABLE>
<CAPTION>
                                                  Common Stock           Percentage of
  Name of Beneficial Owner (1)               Beneficially Owned (2)     Common Stock (2)
  ----------------------------------------- ------------------------- ---------------------
<S>                                             <C>       <C>                 <C>
  Milton "Todd" Ault, III                       3,728,227 (3)                 10.0%
  Bodnar Capital Management, LLC                 2,941,176                     8.0%
  William B. Horne                                400,000 (4)                  1.1%
  Alice M. Campbell                               350,000 (5)                     *
  Jay Rifkin                                   19,586,372 (6)                 52.6%
  Philip Gatch                                  1,250,000 (7)                  3.4%
  Cesar Chatel                                  2,120,708 (8)                  5.8%
  ----------------------------------------- ------------------------- ---------------------
  All  officers  and  directors as a group      21,586,372                    56.5%
  (4 persons)
</TABLE>

      * Less than 1%

      (1)   Except as otherwise indicated,  the address of each beneficial owner
            is c/o Digicorp, 4143 Glencoe Avenue, Marina Del Rey, CA 90292.
      (2)   Applicable  percentage  ownership is based on  36,721,113  shares of
            common  stock  outstanding  as of  January 4,  2006,  together  with
            securities  exercisable or  convertible  into shares of common stock
            within 60 days of January 4, 2006 for each  stockholder.  Beneficial
            ownership  is  determined  in  accordance  with  the  rules  of  the
            Securities and Exchange  Commission and generally includes voting or
            investment power with respect to securities.  Shares of common stock
            that a person has the right to acquire beneficial  ownership of upon
            the exercise or conversion of options,  convertible stock,  warrants
            or other securities that are currently exercisable or convertible or
            that  will  become  exercisable  or  convertible  within  60 days of
            January  4, 2006 are deemed to be  beneficially  owned by the person
            holding such  securities for the purpose of computing the percentage
            of ownership of such person,  but are not treated as outstanding for
            the  purpose of  computing  the  percentage  ownership  of any other
            person.
      (3)   Includes: (a) 475,000 shares issuable upon exercise of stock options
            with an exercise  price of $0.25 per share and which expire June 29,
            2007;  (b)  512,500  shares  beneficially  owned by certain  private
            investment  funds and individual  accounts  managed by Ault Glazer &
            Company  Investment  Management  LLC,  for which Mr.  Ault serves as
            Chief  Investment  Officer and managing  member;  and (c)  2,792,027
            shares of the  common  stock held by  Patient  Safety  Technologies,
            Inc.,  for which Mr.  Ault serves as  Chairman  and Chief  Executive
            Officer.  Mr. Ault and Patient Safety  Technologies,  Inc. each have
            granted Mr. Rifkin an irrevocable proxy to vote the shares of common
            stock  owned by them  for  certain  directors  of the  Company.

                                       15
<PAGE>

      (4)   Represents  shares  issuable  upon exercise of stock options with an
            exercise  price of $0.25 per share and an expiration  date 18 months
            from the date Mr.  Horne's  services to the Company  terminate.  Mr.
            Horne has granted Mr. Rifkin an irrevocable proxy to vote the shares
            of common stock  issuable  upon  exercise of such stock  options for
            certain directors of the Company.
      (5)   Represents  shares  issuable  upon exercise of stock options with an
            exercise  price of $0.25 per share and an expiration  date 18 months
            from the date Ms. Campbell's services to the Company terminate.  Ms.
            Campbell  has granted Mr.  Rifkin an  irrevocable  proxy to vote the
            shares of common stock  issuable upon exercise of such stock options
            for certain directors of the Company.
      (6)   Includes:  (a)  3,600,000  shares  which are held in escrow  pending
            satisfaction  of certain  performance  milestones  through March 31,
            2007;  and  (b)  500,000  shares   issuable  upon  conversion  of  a
            $556,306.53   principal  amount  secured  convertible  note  with  a
            conversion price of $1.112614 per share. All of these securities are
            held by Rebel  Crew  Holdings,  LLC of which Mr.  Rifkin is the sole
            managing member. Mr. Rifkin's reported beneficial ownership does not
            include  approximately  8,762,736  shares of common stock issued and
            issuable  by the  Company  for  which  certain  shareholders  of the
            Company have  granted Mr.  Rifkin an  irrevocable  proxy to vote for
            directors of the Company.
      (7)   Includes 250,000 shares issuable upon exercise of stock options with
            an  exercise  price of $0.25  per share  and an  expiration  date 18
            months from the date Mr. Gatch's services to the Company  terminate.
            Mr. Gatch has granted Mr.  Rifkin an  irrevocable  proxy to vote the
            shares of common  stock  owned by him for certain  directors  of the
            Company.

      (8)   Includes   400,000   shares   which  are  held  in  escrow   pending
            satisfaction  of certain  performance  milesontes  through March 31,
            2007. Mr. Chatel has granted Mr. Rifkin an irrevocable proxy to vote
            the shares of common stock owned by Mr. Chatel for certain directors
            of the Company.

                            DESCRIPTION OF SECURITIES

      The Company's  authorized  capital stock consists of 50,000,000  shares of
common stock, $.001 par value per share, and no shares of preferred stock.

      The holders of common  stock are  entitled to one vote for each share held
of record on all  matters  to be voted on by the  stockholders.  The  holders of
common stock are entitled to receive dividends ratably, when, as and if declared
by the Board of Directors,  out of funds  legally  available  therefore.  In the
event of a liquidation, dissolution or winding-up of the Company's business, the
holders of common stock are entitled to share  equally and ratably in all assets
remaining available for distribution after payment of liabilities.

      The  holders  of shares  of common  stock,  as such,  have no  conversion,
preemptive,  or other subscription rights and there are no redemption provisions
applicable to the common stock.  All of the  outstanding  shares of common stock
are validly issued, fully paid and non-assessable.

      The Company has never paid any cash  dividends on its common stock and the
Company does not anticipate paying any cash dividends in the foreseeable future.
The Company  intends to retain future  earnings to fund ongoing  operations  and
future capital  requirements of its business.  Any future  determination  to pay
cash  dividends  will be at the discretion of the Board of Directors and will be
dependent upon the Company's financial condition, results of operations, capital
requirements and such other factors as the Board of Directors deems relevant.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

      The Company's  common stock is currently  quoted on the OTC Bulletin Board
under the symbol  "DGCO." For the periods  indicated,  the following  table sets
forth the high and low sales prices per share of the Company's common stock.

                                       16
<PAGE>

<TABLE>
<CAPTION>
                                                   Fiscal 2005                      Fiscal 2004
                                         -------------------------------- ---------------------------------
Fiscal Quarter*                               High             Low             High              Low
---------------------------------------- ---------------- --------------- ---------------- ----------------
<S>                       <C>                  <C>             <C>              <C>             <C>
First Quarter Ended March 31                   $0.35           $0.14            $0.13           $0.06
Second Quarter Ended June 30                   $0.45           $0.18            $0.18           $0.07
Third Quarter Ended September 30               $1.37           $0.25            $0.35           $0.06
Fourth Quarter Ended December 31               $1.90           $0.65            $0.35           $0.14
</TABLE>

      *Upon closing the Acquisition, the Company's fiscal year changed from June
30 to December 31.

Holders

      As of January 4, 2006,  the Company's  shares of common stock were held by
approximately 290 stockholders of record.

Dividends

      The Company has not  declared any  dividends  to date.  The Company has no
present  intention  of paying  any cash  dividends  on its  common  stock in the
foreseeable future, as the Company intends to use earnings,  if any, to generate
growth.  The payment by the Company of dividends,  if any, in the future,  rests
within the  discretion  of the Board of Directors  and will depend,  among other
things,  upon the Company's  earnings,  capital  requirements  and our financial
condition,  as well as other relevant factors.  There are no restrictions in the
Company's  articles of  incorporation  or bylaws that  restrict the Company from
declaring dividends.

                     RECENT SALES OF UNREGISTERED SECURITIES

      During  September 2003, the Board of Directors  authorized the issuance of
700,000  restricted  common shares of the Company's  stock at price of $0.01 per
share  (totaling  $7,000) to pay for  expenses  incurred  by the Company for the
audit  of its  financial  statements  and  to  pay  for  costs  associated  with
maintaining  compliance  with the State of Utah along with providing the Company
operating capital for the subsequent year. Of the 700,000 shares issued, 400,000
were issued to Vernal Western Drilling, a company that is owned by Don J. Colton
and Gregg B.  Colton,  former  officers and  directors  of the Company,  150,000
shares were issued to Bonnie Myers and the other  150,000  shares were issued to
Whisper  Investment  Company.  The shares were  issued to the  parties  above on
October 8, 2003 for cash.  The  issuance  of these  securities  was exempt  from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On May 18,  2005,  the Company sold  2,941,176  shares of common stock and
warrants (the "May  Warrants")  to purchase an aggregate of 3,000,000  shares of
common  stock  with  exercise  prices  ranging  from $0.25 to $1.50 per share to
Bodnar  Capital  Management,  LLC ("Bodnar  Capital").  On October 27, 2005, the
Company entered into an agreement with Bodnar Capital to cancel the May Warrants
in exchange  for the  issuance  by the Company of a warrant to purchase  500,000
shares of common stock with a an exercise  price of $0.01 per share  exercisable
for a period of five years.  On November 2, 2005,  Bodnar Capital  exercised its
warrant for cash and the Company issued Bodnar Capital  500,000 shares of common
stock.   The  issuance  of  these   securities  was  exempt  from   registration
requirements  pursuant  to  Section  4(2) of the  Securities  Act and  Rule  506
promulgated thereunder.

      On July 20,  2005,  as  consideration  for  investor  relation  consulting
services,  the Company granted options to Steve  Jafarzadeh to purchase  100,000
shares of common  stock with an  exercise  price of $0.25 per  share.  25,000 of
these options have vested and the  remaining  75,000  options were  cancelled on
December 29, 2005. This grant was exempt from registration  requirement pursuant
to Section 4(2) of the Securities Act.

      On July 20, 2005, as  consideration  for Business  development  consulting
services,  the Company granted  options to Nicolas  Soichet to purchase  100,000
shares of common  stock with an  exercise  price of $0.25 per  share.  50,000 of
these options have vested and the  remaining  50,000  options were  cancelled on
December 29, 2005. This grant was exempt from registration  requirement pursuant
to Section 4(2) of the Securities Act.

      On July 20, 2005, as  consideration  for service on the Company's Board of
Directors,  the Company  granted to each of Melanie  Glazer,  Alice M. Campbell,
Darrell  Grimsley,  Lynne  Silverstein  and William B. Horne options to purchase
250,000 shares of common stock with an exercise price of $0.25 per share. 62,500
of such options vested to Ms. Glazer,  250,000  vested to Ms.  Campbell,  62,500
vested to Mr. Grimsley, 75,000 vested to Ms. Silverstein,  200,000 vested to Mr.
Horne, and the remaining  options of such individuals were cancelled on December
29,  2005.  The  issuance  of these stock  options was exempt from  registration
requirements pursuant to Section 4(2) of the Securities Act.

      On July  20,  2005,  as  consideration  for  service  as  Chairman  of the
Company's Audit Committee,  the Company granted Ms. Campbell options to purchase
100,000 shares of common stock with an exercise price of $0.25 per share. All of
these stock  options are vested.  The issuance of these stock options was exempt
from registration requirements pursuant to Section 4(2) of the Securities Act.

      On July  20,  2005,  as  consideration  for  service  as a  member  of the
Company's  Audit  Committee,  the Company granted Ms. Glazer options to purchase
50,000 shares of common stock with an exercise price of $0.25 per share.  12,500
of such options have vested and the remaining  options were  cancelled  upon Ms.
Glazer's resignation from the Company's Board on December 29, 2005. The issuance
of these stock  options was exempt from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

                                       17
<PAGE>

      On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Executive  Officer,  the Company granted Mr. Ault options to purchase  2,000,000
shares of common  stock with an exercise  price of $0.25 per share.  These stock
options vest quarterly over two years  beginning  September 30, 2005.  Effective
September 30, 2005, the Board of Directors accelerated the vesting of 475,000 of
such  options and fixed the  expiration  date of the options to 18 months  after
completing the Acquisition.  The remaining stock options were cancelled upon Mr.
Ault resigning as an officer and director of the Company.  The issuance of these
stock options was exempt from registration requirements pursuant to Section 4(2)
of the Securities Act.

      On July 20, 2005, as consideration for service as the Company's  President
of Operations,  the Company  granted  Kathryn Queen options to purchase  750,000
shares of common  stock with an  exercise  price of $0.25 per share.  237,500 of
these  options have vested and the  remaining  options were  cancelled  upon Ms.
Queen's resignation on December 29, 2005. Also on July 20, 2005, as an incentive
bonus,  subject to certain milestones being achieved prior to December 31, 2006,
the Company  agreed to grant Ms.  Queen  options to purchase  750,000  shares of
common stock. These stock options were cancelled upon Ms. Queen's resignation on
December  29,  2005.  The  issuance  of these  stock  options  was  exempt  from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Technology Officer, the Company granted Philip Gatch options to purchase 250,000
shares of common stock with an exercise  price of $0.25 per share.  All of these
options  are  vested.  Also on July  20,  2005,  the  Company  agreed  to  issue
restricted  stock valued at $12,500  quarterly during the three-year term of his
employment as Chief Technology Officer.  The issuance of these stock options was
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act.

      On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Financial  Officer,  the Company  granted Mr. Horne options to purchase  250,000
shares of common  stock with an  exercise  price of $0.25 per share.  200,000 of
these options are vested and the remaining  50,000 were cancelled.  The issuance
of these stock  options was exempt from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

      On  July  20,  2005,  as  consideration   for  service  as  the  Company's
Controller,  the Company granted Jeanne Olsky options to purchase 100,000 shares
of common stock with an exercise  price of $0.25 per share.  These stock options
vest  quarterly  over two years  beginning  September 30, 2005.  50,000 of these
options have vested and the remaining  options were  cancelled  upon Ms. Olsky's
resignation on December 29, 2005. The issuance of these stock options was exempt
from registration requirements pursuant to Section 4(2) of the Securities Act.

      On July 20, 2005, as consideration for service as the Company's  Corporate
Secretary,  the Company  granted  Ms.  Silverstein  options to purchase  150,000
shares of common  stock with an exercise  price of $0.25 per share.  These stock
options vest quarterly over two years  beginning  September 30, 2005.  37,500 of
these  options have vested and the  remaining  options were  cancelled  upon Ms.
Silverstein's  resignation  on December  29,  2005.  The issuance of these stock
options was exempt from  registration  requirements  pursuant to Section 4(2) of
the Securities Act.

      On September 19, 2005, the Company  purchased the  iCodemedia  Assets from
Mr. Gatch, the Company's Chief  Technology  Officer.  As  consideration  for the
iCodemedia  Assets,  the Company  issued Mr.  Gatch  1,000,000  shares of common
stock.  The issuance of these  shares to Mr. Gatch was exempt from  registration
requirements  pursuant  to  Section  4(2) of the  Securities  Act and  Rule  506
promulgated  thereunder.  The  issuance of these  stock  options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On  September  30, 2005,  the Company  granted Jay Rifkin,  the  Company's
current Chief Executive  Officer,  options to purchase  4,400,000  shares of the
Company's  common stock with an exercise  price of $0.85 per share,  which stock
options vest  annually over a period of three years from the date of closing the
Acquisition.  The issuance of these stock  options was exempt from  registration
requirements  pursuant to Section  4(2) of the  Securities  Act. The issuance of
these  stock  options  was exempt  from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

                                       18
<PAGE>

      On September 30, 2005, the Company  granted Cesar Chatel,  as President of
Rebel Crew Films,  options to purchase  800,000  shares of the Company's  common
stock  with an  exercise  price of $0.85 per share,  which  stock  options  vest
annually over a period of three years from the date of closing the  Acquisition.
The issuance of these stock  options was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On September 30, 2005, the Company  granted Oscar Carreno,  as Director of
Sales of Rebel Crew Films,  options to purchase  150,000 shares of the Company's
common stock with an exercise price of $0.85 per share, which stock options vest
annually  over a period of four years from the date of closing the  Acquisition.
The issuance of these stock  options was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On  September  30,  2005,  the Company  granted Ian Monsod,  as Manager of
Operations  of Rebel Crew  Films,  options  to  purchase  125,000  shares of the
Company's  common stock with an exercise  price of $0.85 per share,  which stock
options vest  annually  over a period of four years from the date of closing the
Acquisition.  The issuance of these stock  options was exempt from  registration
requirements pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005, the Company  granted Alan Morelli,  as consultant to
the Company,  warrants to purchase  250,000 shares of the Company's common stock
with an exercise price of $0.145 per share,  which warrants vested  immediately.
These warrants were issued to Mr. Morelli as compensation for advisory  services
rendered to the Company in connection  with  structuring  the  Acquisition.  The
issuance  of these  stock  options  was exempt  from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005,  the Company issued Rebel  Holdings,  LLC 19,086,372
shares of common stock as compensation for its 90% equity interest in Rebel Crew
Films. Jay Rifkin,  the Company's current Chief Executive Officer and a director
nominee,  is the sole managing member of Rebel Holdings,  LLC. 3,600,000 of such
shares are held in escrow pending satisfaction of certain performance milestones
through March 31, 2007. This issuance was exempt from registration  requirements
pursuant  to  Section  4(2) of the  Securities  Act  and  Rule  506  promulgated
thereunder.

      On December 29, 2005, the Company issued Cesar Chatel  2,120,708 shares of
common stock as  compensation  for his 10% equity  interest in Rebel Crew Films.
Mr. Chatel is President of Rebel Crew Films.  400,000 of such shares are held in
escrow pending satisfaction of certain performance  milestones through March 31,
2007.  This  issuance  was exempt  from  registration  requirements  pursuant to
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder.

      On December 29, 2005 the Company  issued a  $556,306.53  principal  amount
secured  convertible  note to Rebel Holdings,  LLC in exchange for a $556,306.53
loan  receivable  owed by Rebel Crew Films to Rebel  Holdings,  LLC. The secured
convertible  note is  convertible  into  500,000  shares of common  stock of the
Company at the rate of $1.112614 per share. As described above, Jay Rifkin,  the
Company's present Chief Executive Officer and a director nominee of the Company,
is the sole managing member of Rebel Holdings, LLC.

      On December 29, 2005,  the Company  granted  Alan  Morelli,  as a director
nominee of the  Company,  options to purchase  350,000  shares of the  Company's
common stock with an exercise  price equal to the closing price of the Company's
common stock of $1.50 per share, which stock options vest annually over a period
of three years from the date Mr.  Morelli's board  appointment is effective.  In
the event that Mr.  Morelli,  for whatever  reason,  declines the appointment to
serve as a director on the Company's Board of Directors, then these options will
be automatically  cancelled. The issuance of these stock options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005,  the Company  granted  David M. Kaye,  as a director
nominee of the  Company,  options to purchase  350,000  shares of the  Company's
common stock with an exercise  price equal to the closing price of the Company's
common stock of $1.50 per share, which stock options vest annually over a period
of three years from the date Mr. Kaye's board  appointment is effective.  In the
event that Mr. Kaye, for whatever reason, declines the appointment to serve as a
director  on the  Company's  Board of  Directors,  then  these  options  will be
automatically  cancelled.  The  issuance of these stock  options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

                                       19
<PAGE>

                  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

      On October 25,  2005,  the  Company  engaged the firm of Peterson & Co. to
serve as its  independent  registered  public  accountants  for the fiscal  year
ending June 30, 2006. On October 27, 2005,  the Company  notified Jones Simkins,
P.C.  ("Jones  Simkins") that it was terminating  Jones Simkins'  services.  The
decision to change  accountants  was  recommended  and approved by the Company's
Board of Directors.

      During the two fiscal  years  ended June 30,  2005 and 2004,  and  through
October 27, 2005, (i) there were no disagreements  between the Company and Jones
Simkins on any matter of accounting principles or practices, financial statement
disclosure  or  auditing  scope  or  procedure  which,  if not  resolved  to the
satisfaction  of Jones Simkins would have caused Jones Simkins to make reference
to the matter in its reports on the  Company's  financial  statements,  and (ii)
except  for Jones  Simkins'  report on the  Company's  June 30,  2004  financial
statements  dated  September  1, 2004 which  included an  explanatory  paragraph
wherein they expressed substantial doubt about the Company's ability to continue
as a going concern, Jones Simkins' reports on the Company's financial statements
did not contain an adverse opinion or disclaimer of opinion,  or was modified as
to  uncertainty,  audit scope or  accounting  principles.  During the two fiscal
years ended June 30, 2005 and 2004 and through  October 27, 2005,  there were no
reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B.

      During the two fiscal  years  ended June 30,  2005 and 2004,  and  through
October 27, 2005,  the Company has not consulted  with Peterson & Co.  regarding
either:

      1.    The   application   of   accounting   principles   to  any  specific
            transaction,  either  completed  or  proposed,  or the type of audit
            opinion   that  might  be  rendered  on  the   Company's   financial
            statements,  and neither a written report was provided to Peterson &
            Co. nor oral advice was provided that  Peterson & Co.  concluded was
            an important factor considered by the Company in reaching a decision
            as to the accounting, auditing or financial reporting issue; or
      2.    Any matter  that was either  subject of  disagreement  or event,  as
            defined in Item  304(a)(1)(iv)  of  Regulation  S-B and the  related
            instruction to Item 304 of Regulation S-B, or a reportable event, as
            that term is explained in Item 304(a)(1)(iv) of Regulation S-B.

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

      The Company's Bylaws require that the Company  indemnify and hold harmless
officers,  directors  and former  officers  and  directors  for any  obligations
arising by reason of being or having been  directors or officers of the Company,
except in relation to matters as to which any such director or officer or former
director  or  officer  or person is  adjudged  to be liable  for  negligence  or
misconduct in the performance of duty. Such  indemnification is not exclusive of
any other rights to which those  indemnified  may be entitled,  under any Bylaw,
agreement, vote of stockholders, or otherwise.

      Insofar as  indemnification  for liabilities  arising under the Securities
Act may be permitted to directors,  officers or persons  controlling us pursuant
to the foregoing provisions,  or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange  Commission,  such indemnification is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements of business acquired.

      The following financial statements of Rebel Crew Films appear on pages F-1
      through F-19 at the end of this report and such  financial  statements are
      herein incorporated by reference:

       Balance  Sheets as of  September  30,  2005 and  December  31,  2004
       (unaudited)  Statements of Operations  for the three and nine months
       ended September 30, 2005 and 2004 (unaudited)

       Statements  of Cash Flows for the nine months  ended  September  30,
       2005 and 2004 (unaudited)

       Notes to September 30, 2005 financial statements

                                       20
<PAGE>

       Independent Auditor's Report
       Balance Sheets as of December 31, 2004 and 2003
       Statements of Operations for the years ended December 31, 2004 and 2003
       Statements of Stockholders' Equity (Deficit) for the years ended
       December 31, 2004 and 2003 Statements of Cash Flows for the years ended
       December 31, 2004 and 2003 Notes to December 31, 2004 financial
       statements

 (b) Pro forma financial information.

         Not applicable.

 (c) Exhibits


Exhibit Number                            Description
------------------    ----------------------------------------------------------
2.1                     Stock Purchase  Agreement  dated as of December 20, 2005
                        among Digicorp,  Rebel Crew Films, Inc., Rebel Holdings,
                        LLC and Cesar Chatel  (Incorporated  by reference to the
                        Company's   Form  8-K  filed  with  the  Securities  and
                        Exchange Commission on December 21, 2005)

2.2                     Letter Agreement dated December 20, 2005 among Digicorp,
                        Rebel Crew Films,  Inc.,  Rebel Holdings,  LLC and Cesar
                        Chatel  (Incorporated by reference to the Company's Form
                        8-K filed with the Securities and Exchange Commission on
                        December 21, 2005)

2.3                     Purchaser  and  Company  Disclosure  Schedules  to Stock
                        Purchase  Agreement  dated as of December 20, 2005 among
                        Digicorp,  Rebel Crew Films,  Inc., Rebel Holdings,  LLC
                        and Cesar Chatel

2.4                     Lock Up Agreements  of Sellers in connection  with Stock
                        Purchase  Agreement  dated as of December 20, 2005 among
                        Digicorp,  Rebel Crew Films,  Inc., Rebel Holdings,  LLC
                        and Cesar Chatel

2.5                     Escrow  Agreement  dated  December 29, 2005 by and among
                        Digicorp,   Rebel   Holdings,   LLC,  Cesar  Chatel  and
                        Sichenzia Ross Friedman Ference LLP as Escrow Agent

3.1                     Articles of Incorporation  (Incorporated by reference to
                        the Company's registration statement on Form 10-SB (File
                        No.  000-33067)  filed with the  Securities and Exchange
                        Commission on August 9, 2001)

3.2                     Bylaws  (Incorporated  by  reference  to  the  Company's
                        registration   statement   on  Form   10-SB   (File  No.
                        000-33067)   filed  with  the  Securities  and  Exchange
                        Commission on August 9, 2001)

3.3                     Amendment No. 1 to Bylaws  (Incorporated by reference to
                        the  Company's  Form 8-K filed with the  Securities  and
                        Exchange Commission on July 21, 2005)

4.1                     Secured  Convertible  Note due  December 19, 2010 in the
                        principal  amount of  $556,306.53  issued to Rebel  Crew
                        Holdings, LLC

4.2                     Promissory  Note  due  June  30,  2006 in the  principal
                        amount  of  $73,000  issued  to Jay  Rifkin  9.1  Voting
                        Agreement  dated  December  29,  2005 by and  among  Jay
                        Rifkin and the  stockholders  of Digicorp  listed on the
                        signature pages thereto

10.1                    Securities Purchase Agreement dated December 29, 2005 by
                        and among Rebel Holdings, LLC and Digicorp

10.2                    Assignment  Agreement  dated  December  29,  2005 by and
                        among  Rebel  Holdings,  LLC,  Digicorp  and Rebel  Crew
                        Films, Inc.

10.3                    Security  Agreement dated December 29, 2005 by and among
                        Digicorp and Rebel Crew Holdings, LLC

10.4                    Digicorp   Stock  Option  and   Restricted   Stock  Plan
                        (Incorporated  by  reference to the  Company's  Form 8-K
                        filed with the  Securities  and Exchange  Commission  on
                        December 22, 2005)

10.5                    Employment  Agreement  dated  September 20, 2005,  among
                        Digicorp and Philip Gatch  (Incorporated by reference to
                        the  Company's  Form 8-K filed with the  Securities  and
                        Exchange Commission on September 22, 2005)

10.6                    Employment  Agreement effective as of September 30, 2005
                        by and between Digicorp and Jay Rifkin

10.7                    Standard Industrial/Commercial  Multi-Tenant Lease dated
                        July 18, 2005  between The Welk  Group,  Inc.  and Rebel
                        Crew Films, Inc.

                                       21
<PAGE>

10.8                    Videogram License Agreement dated August 19, 2003 by and
                        between Rebel Crew Films and BCI Eclipse, LLC

10.9                    Videogram  License Agreement dated March 29, 2004 by and
                        between Rebel Crew Films and BCI Eclipse Company, LLC

10.10                   Videogram  License  Agreement  dated May 26, 2004 by and
                        between Rebel Crew Films and BCI Eclipse Company, LLC

10.11                   License  Agreement dated November 15, 2002 between Rebel
                        Crew    Films   and   VAS    Entertainment/Rise    Above
                        Entertainment

10.12                   License  Agreement dated December 31, 2002 between Rebel
                        Crew    Films   and   VAS    Entertainment/Rise    Above
                        Entertainment

16.1                    Letter on change in certifying  accountant dated October
                        31,  2005 from  Jones  Simkins,  P.C.  (Incorporated  by
                        reference  to the  Company's  Form  8-K  filed  with the
                        Securities and Exchange  Commission on October 31, 2005)
                        21.1 Subsidiaries

                                       22
<PAGE>





                                   SIGNATURES

      Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

                                      Digicorp


Dated: January 5, 2006                By:  /s/ Jay Rifkin
                                          --------------------------------------
                                      Name:    Jay Rifkin
                                      Title:   Chief Executive Officer


                                        23
<PAGE>



                             REBEL CREW FILMS, INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page

Periods Ended September 30, 2005

Balance Sheets as of
         September 30, 2005 and December 31, 2004 (unaudited)...........F-2

Statements of Operations for the three and nine months
         ended September 30, 2005 and 2004 (unaudited)..................F-3

Statements of Cash Flows for the nine months
         ended September 30, 2005 and 2004 (unaudited)..................F-4

Notes to Financial Statements.........................................F-5 - F-8

Fiscal Years Ended December 31, 2004 and 2003

Independent Auditors' Report............................................F-9

Balance Sheets as of
         December 31, 2004 and 2003.....................................F-10

Statements of Operations for the years
         ended December 31, 2004 and 2003...............................F-11

Statements of Stockholders' Equity (Deficit) for the years
         ended December 31, 2004 and 2003...............................F-12

Statements of Cash Flows for the years
         ended December 31, 2004 and 2003...............................F-13

Notes to Financial Statements........................................F-14 - F-19


                                      F-1
<PAGE>

                             REBEL CREW FILMS, INC.
================================================================================

Condensed Balance Sheets (Unaudited)
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                        September 30,    DECEMBER 31,
                                                            2005            2004
                                                        -------------   --------------

ASSETS

CURRENT ASSETS

<S>                                                       <C>            <C>
Cash and cash equivalents                                 $    3,404     $    7,856
Accounts receivable, net                                      27,290             --
Inventories                                                   36,243             --
Other current assets                                          10,568             --
                                                          ----------     ----------

TOTAL CURRENT ASSETS                                          77,505          7,856

Property and equipment, net                                   13,637             --
Intangible assets, net                                       428,300        188,125
                                                          ----------     ----------

TOTAL ASSETS                                              $  519,442     $  195,981
                                                          ==========     ==========

-----------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities                  $   19,386     $    9,700
Due to related party                                         601,307         48,986
Deferred revenue                                              75,411        162,971
                                                          ----------     ----------

TOTAL CURRENT LIABILITIES                                    696,104        221,657

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, no par value: 100,000 shares authorized;
    100,000 shares issued and outstanding                     14,625         14,625
Accumulated deficit                                         (191,287)       (40,301)
                                                          ----------     ----------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                        (176,662)       (25,676)
                                                          ----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      $  519,442     $  195,981
                                                          ==========     ==========

-----------------------------------------------------------------------------------
</TABLE>

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

                                      F-2
<PAGE>
                REBEL CREW FILMS, INC.
================================================================================

Condensed Statements of Operations (Unaudited)

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                               THREE MONTHS ENDED                NINE MONTHS ENDED
                                                         September 30,      SEPTEMBER 30,  SEPTEMBER 30,     SEPTEMBER 30,
                                                               2005             2004            2005              2004
                                                        -----------------   ------------   ---------------   --------------
REVENUE
<S>                                                     <C>                 <C>            <C>               <C>
Licensing fees                                          $          4,218    $     2,572    $       85,205    $      22,235
Sales                                                             52,046             --            55,128               --
                                                        -----------------     ----------     -------------     ------------

TOTAL REVENUE                                                     56,264          2,572           140,333           22,235

OPERATING EXPENSES
Cost of sales                                                     31,433             --            43,465               --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                     118,495         27,961           247,854           80,889
                                                        -----------------   ------------   ---------------   --------------

TOTAL OPERATING EXPENSES                                         149,928         27,961           291,319           80,889
                                                        -----------------   ------------   ---------------   --------------
OPERATING INCOME (LOSS)                                          (93,664)       (25,389)         (150,986)         (58,654)

OTHER INCOME                                                           --        21,013                 --          75,768
                                                        -----------------   ------------   ---------------   --------------
INCOME (LOSS) BEFORE INCOME TAXES                                (93,664)        (4,376)         (150,986)          17,114

PROVISION FOR INCOME TAXES                                            --             --                --               --
                                                        -----------------   ------------   ---------------   --------------
NET INCOME (LOSS)                                       $        (93,664)   $    (4,376)   $     (150,986)   $      17,114
                                                        =================   ============   ===============   ==============
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE    $          (0.94)   $     (0.04)   $        (1.51)   $        0.17
                                                        =================   ============   ===============   ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                       100,000        100,000           100,000          100,000
                                                        =================   ============   ===============   ==============

---------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                      F-3
<PAGE>

                                REBEL CREW FILMS, INC.
================================================================================

Condensed Statements of Cash Flows (Unaudited)

--------------------------------------------------------------------------------



<TABLE>
<CAPTION>
                                                                                               NINE MONTHS ENDED
                                                                                          September 30,     SEPTEMBER 30,
                                                                                             2005               2004
                                                                                       ----------------   --------------
Cash flows from operating activities:
<S>                                                                                    <C>                <C>
Net income (loss)                                                                      $      (150,986)   $      17,114
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation                                                                                       577               --
Amortization of licenses                                                                        86,825           31,250
Changes in operating assets and liabilities:
Accounts receivable                                                                            (27,290)              --
Inventories                                                                                    (36,243)          (7,920)
Other current assets                                                                           (10,568)              --
Accounts payable and accrued liabilities                                                         9,686          (26,000)
Due to related party                                                                           552,321               --
Deferred revenue                                                                               (87,560)         127,165
                                                                                       ----------------   --------------

          Net cash provided by operating activities                                            336,762          141,609
                                                                                       ----------------   --------------

Cash flows from investing activities:
  Purchases of licenses                                                                       (327,000)        (130,000)
  Purchases of property and equipment                                                          (14,214)               --
                                                                                       ----------------   --------------

          Net cash used in investing activities                                               (341,214)        (130,000)
                                                                                       ----------------   --------------

Net (decrease) increase in cash and cash equivalents                                            (4,452)          11,609

Cash and cash equivalents at beginning of period                                                 7,856               --
                                                                                       ----------------   --------------

Cash and cash equivalents at end of period                                             $         3,404    $      11,609
                                                                                       ================   ==============

----------------------------------------------------------------------------------------------------------------------------
</TABLE>

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

                                      F-4
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2005
1. DESCRIPTION OF BUSINESS

Rebel Crew Films, Inc. ("the Company") was organized under the laws of the State
of  California  on  August  7,  2002 to  distribute  Latino  home  entertainment
products.  The Company currently  maintains more than 200 Spanish language films
and serves wholesale,  retail,  catalog, and e-commerce accounts.  The Company's
titles can be found at major retail outlets and independent video outlets across
the United States of America and Canada.

During the nine months ended September 30, 2004 and 2005, the Company  generated
revenue  through the direct sales of licensed  content and licensing  agreements
with third parties that distributed the Company's licensed content.  The Company
is expanding  its sales force to focus on direct  sales of its licensed  content
and intends to significantly  reduce or eliminate  future  licensing  agreements
with third parties.

The Company is organized in a single  operating  segment.  All of the  Company's
revenues are generated in the United  States,  and the Company has no long-lived
assets outside the United States.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The  accompanying   condensed  financial  statements  do  not  include  all  the
information and disclosures required by accounting principles generally accepted
in the United  States of America.  The  preparation  of financial  statements in
conformity with accounting  principles  generally  accepted in the U.S. requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and accompanying  notes. The actual results may differ
from management's estimates.

The interim  condensed  financial  information  is  unaudited,  but reflects all
normal adjustments that are, in the opinion of management,  necessary to provide
a fair  statement of results for the interim  periods  presented.  The condensed
interim  financial  statements  should be read in connection  with the Company's
audited financial statements for the year ended December 31, 2004.

LIQUIDITY

The  accompanying  financial  statements are prepared  assuming the Company is a
going concern which  contemplates  the realization of assets and satisfaction of
liabilities in the normal course of business.  The Company has a working capital
deficiency of $618,599 at September 30, 2005, which includes deferred revenue of
$75,411 and amounts due to related  parties of  $601,307,  as  discussed  below.
During the nine months ended  September 30, 2005, the Company  primarily  relied
upon loans from a related party to fund its operations  and, to a lesser extent,
revenues generated from licensing its film content, on a non-exclusive basis, to
other distributors of Latino home  entertainment  content.  Management  believes
that future  revenues  combined with either loans or direct  equity  investments
into the Company will be sufficient to fund the Company's  operations for the 12
months subsequent to September 30, 2005.

REVENUE RECOGNITION

The  Company  generates  revenue  through  either the direct  sales of  licensed
content or through  licensing  agreements  whereby the Company  receives advance
payments as  consideration  for rights granted to third parties that  distribute
the  Company's  licensed  content.  The  Company  may  be  entitled  to  receive
additional  royalty  payments  under the licensing  agreements,  but only to the
extent that  royalties  calculated  under the terms of the licensing  agreements
exceed  the amount of the  advance  payments.  Advance  payments  are  initially
recorded as deferred revenue. The Company recognizes revenue under its licensing
agreements  as  royalties  are  earned  upon  shipment  of  licensed  content to
customers by the sub-licensor. Deferred revenue balances of $75,411 and $162,971
at September  30, 2005 and December 31, 2004,  respectively,  represent  advance
royalty payments that are expected to be earned over the subsequent twelve month
periods. Revenues from direct sales are recorded upon shipment.

                                      F-5
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

ACCOUNTS RECEIVABLES

Accounts  receivables  are  recorded  at the  invoice  amount  and  do not  bear
interest.  Accounts  receivable  at September  30, 2005 are  presented net of an
allowance for doubtful  accounts of $5,000.  The allowance for doubtful accounts
is the  Company's  estimate  of the  amount  of  probable  credit  losses in the
Company's  existing accounts  receivable.  The Company  determines the allowance
based on historical write-off experience.  The Company reviews its allowance for
doubtful  accounts  monthly.  Past due balances are  reviewed  individually  for
collectibility. Account balances are charged off against the allowance after all
means of collection have been exhausted and potential for recovery is considered
remote. The Company does not have any off-balance-sheet  exposure related to its
customers.

INVENTORY

Inventories,  consisting primarily of Spanish language DVD titles, are stated at
the lower of cost (first-in, first-out basis) or market.

PROPERTY AND EQUIPMENT

Property  and  equipment  are  recorded  at  cost  and  depreciated   using  the
straight-line method over the useful lives of the assets, generally from five to
seven years.  Property and  equipment at September 30, 2005 are presented net of
accumulated depreciation of $577. Depreciation expense for the nine months ended
September 30, 2005 was $577.

3. INTANGIBLE ASSETS

Intangible  assets consist of capitalized  license fees for licensed content the
Company  acquired from owners  including  producers,  studios and  distributors.
Licensed  content  acquired is capitalized at the time of purchase.  The term of
the  licensed  content  agreements  usually  vary between one to five years (the
"TITLE  Term").  At the end of the Title  Term,  the Company  generally  has the
option of discontinuing distribution of the title or extending the Title Term.

The Company  amortizes  the  capitalized  license fees, on a straight line basis
over the Title Term.  During the nine months ended  September 30, 2005 and 2004,
amortization  expense  related to the licensed  content was $86,825 and $31,250,
respectively.

Licensed content and accumulated amortization at September 30, 2005 and December
31, 2004, consisted of the following:

                                         SEPTEMBER 30,             DECEMBER 31,
                                              2005                     2004

Licensed content                       $      581,000            $     254,000
Less: accumulated amortization               (152,700  )               (65,875)
                                       -----------------         ---------------

   Licensed content, net               $      428,300            $     188,125
                                       =================         ===============

4. INCOME (LOSS) PER COMMON SHARE

Income (loss) per common share is based on the weighted average number of common
shares  outstanding.  The  Company  complies  with SFAS No. 128,  "Earnings  Per
Share," which requires dual presentation of basic and diluted earnings per share
on the face of the  statements of  operations.  Basic per share earnings or loss
excludes  dilution and is computed by dividing income (loss) available to common
stockholders by the  weighted-average  common shares outstanding for the period.
Diluted per share  earnings or loss reflects the  potential  dilution that could
occur if convertible preferred stock or debentures, options and warrants were to
be exercised or converted or otherwise  resulted in the issuance of common stock
that then  shared in the  earnings  of the  entity.  For the nine  months  ended
September  30,  2005  and  2004,  there  were  no  potentially  dilutive  shares
outstanding

                                      F-6
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at September 30, 2005 and December 31,
2004 are comprised of the following:

                                      SEPTEMBER 30,          DECEMBER 31,
                                          2005                   2004
                                    ------------------     ------------------
   Income taxes payable             $           2,400      $           2,400
   Legal fees                                      --                  4,625
   Other                                       16,986                  2,675

                                    ------------------     ------------------
                                    $          19,386      $           9,700
                                    ==================     ==================

6. COMMITMENT AND CONTINGENCIES

In August 2005 the Company entered into a commercial  lease agreement for office
space.  The lease requires monthly payments of base rent in the amount of $5,890
from August 21, 2005 through  September 30, 2012.  Further,  on each anniversary
date  the  base  rent is  subject  to a 3%  increase  over  the  previous  year.
Approximate future minimum rent payments under this lease are as follows:

<TABLE>
<CAPTION>
                                       YEARS ENDED DECEMBER 31,
---------------    -------------    -------------    -------------    -------------    ----------------      --------------
     2005              2006             2007             2008             2009           THEREAFTER              TOTAL
---------------    -------------    -------------    -------------    -------------    ----------------      --------------
<C>                <C>              <C>              <C>              <C>              <C>                   <C>
$       25,500     $     71,400     $     73,500     $     75,700     $     78,000     $       219,400       $     543,500
</TABLE>

7. RELATED PARTY TRANSACTIONS

At September  30, 2005 and  December  31,  2004,  the Company has a liability of
$568,307 and $48,986,  respectively,  due to Rebel  Holdings,  LLC, a California
limited  liability  company  ("REBEL  HOLDINGS"),  an entity  that  during  2005
acquired  approximately  90% of the outstanding  shares of the Company's  common
stock.  Additionally,  at September 30, 2005 and December 31, 2004,  the Company
has a liability of $33,000 and $0, respectively, due to the sole member of Rebel
Holdings. The liabilities are non-interest bearing, due on demand and secured by
all of the assets of the Company.

8. OTHER INCOME

Other income recognized during 2004 consists primarily of finder's fees received
by the  Company  from  a  distributor  of  the  Company's  licensed  content  as
consideration for the Company's efforts in assisting the distributor in securing
rights to other  third party film  distribution  rights.  No finder's  fees were
received during 2005.

9. SUBSEQUENT EVENTS

Acquisition

On December 20, 2005, the Company  entered into a Stock Purchase  Agreement with
Digicorp, Inc., a Utah Corporation ("DIGICORP"),  whereby Digicorp will purchase
(the  "ACQUISITION")  all of the issued and outstanding  shares of the Company's
capital stock. Upon closing the Acquisition,  Digicorp would issue approximately
21 million  shares of its common  stock to the  shareholders  of the  Company as
compensation for the issued and outstanding  capital stock of the Company.  Upon
completion   of  the   Acquisition,   shareholders   of  the  Company  will  own
approximately 58% of Digicorp. The Acquisition closed on December 29, 2005.

                                      F-7
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Promissory Notes

Between  October  2005 and  December  2005,  the  Company  issued  a  series  of
promissory notes in the aggregate  principal amount of $180,000 (the "NOTES") to
Digicorp,  in consideration for loans from Digicorp to the Company in the amount
of $180,000.  The  principal  amount of the Notes and interest at the rate of 5%
per annum is  payable on April 11,  2006.  The  obligations  under the Notes are
collateralized by all of the assets of the Company.

Between October 2005 and December 2005, the Company  borrowed  additional  funds
from the sole member of Rebel Holdings, totaling $40,000, bringing the aggregate
amount owed to the member to $73,000 at December 29, 2005.  In  connection  with
the borrowings, the Company issued a promissory note in the amount of $73,000 to
the member (the "NOTE") on December 29, 2005. The monies loaned by the member to
the Company were utilized to pay for certain  capitalized license agreements and
operating  expenses of the  Company.  The Note has a term of  approximately  six
months and bears 5.0% simple interest.


                                      F-8
<PAGE>

                          INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Rebel Crew Films, Inc.

We have audited the accompanying  balance sheets of Rebel Crew Films,  Inc. (the
"Company")  as of December 31, 2004,  and 2003,  and the related  statements  of
operations,  stockholders  equity  (deficit),  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Rebel Crew Films, Inc. as of
December  31, 2004,  and 2003,  and the results of its  operations  and its cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.

                                                       /s/ Peterson & Co., LLP
                                                       PETERSON & CO., LLP
San Diego, California
December 29, 2005

                                      F-9
<PAGE>

                               REBEL CREW FILMS, INC.
================================================================================

Balance Sheets

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                            December 31,       DECEMBER 31,
                                                                2004              2003
                                                             ---------         ---------

ASSETS

CURRENT ASSETS

<S>                                                          <C>               <C>
Cash and cash equivalents                                    $   7,856         $      --
                                                             ---------         ---------

TOTAL CURRENT ASSETS                                             7,856                --

Intangible assets, net                                         188,125            80,000
                                                             ---------         ---------

TOTAL ASSETS                                                 $ 195,981         $  80,000
                                                             =========         =========
----------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities                     $   9,700         $  27,600
Due to related party                                            48,986                --
Deferred revenue                                               162,971            40,433
                                                             ---------         ---------
TOTAL CURRENT LIABILITIES                                      221,657            68,033

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, no par value: 100,000 shares authorized;
    100,000 shares issued and outstanding                       14,625            14,625
Accumulated deficit                                            (40,301)           (2,658)
                                                             ---------         ---------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                           (25,676)           11,967
                                                             ---------         ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         $ 195,981         $  80,000
                                                             =========         =========
</TABLE>
--------------------------------------------------------------------------------
   The accompanying notes are an integral part of these financial statements.

                                      F-10
<PAGE>


                         REBEL CREW FILMS, INC.
================================================================================

Statements of Operations

--------------------------------------------------------------------------------

                                                           YEARS ENDED
                                                      December 31, DECEMBER 31,
                                                         2004          2003
                                                       ---------    ---------

REVENUE                                                $  27,963    $ 115,896
                                                       ---------    ---------
EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             144,434      112,364
                                                       ---------    ---------
OPERATING INCOME (LOSS)                                 (116,471)       3,532

OTHER INCOME                                              79,628          800
                                                       ---------    ---------

INCOME (LOSS) BEFORE INCOME TAXES                        (36,843)       4,332

PROVISION FOR INCOME TAXES                                   800          800
                                                       ---------    ---------

NET INCOME (LOSS)                                      $ (37,643)   $   3,532
                                                       =========    =========

BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE   $   (0.38)   $    0.04
                                                       =========    =========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING               100,000      100,000
                                                       =========    =========

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

                                      F-11
<PAGE>

              REBEL CREW FILMS, INC.
================================================================================

Statements of Stockholders' Equity (Deficit)
YEARS ENDED DECEMBER 31, 2004 AND 2003

--------------------------------------------------------------------------------



                                  COMMON STOCK                    TOTAL
                               ------------------- ACCUMULATED  SHAREHOLDERS'
                                SHARES     AMOUNT    DEFICIT   EQUITY (DEFICIT)
                               --------   --------   --------    --------

BALANCES, December 31, 2002     100,000   $  5,500   $ (6,190)   $   (690)

Contributed capital                          9,125                  9,125
Net income                           --         --      3,532       3,532
                               --------   --------   --------    --------

BALANCES, December 31, 2003     100,000   $ 14,625   $ (2,658)   $ 11,967

Net loss                             --         --    (37,643)    (37,643)
                               --------   --------   --------    --------

BALANCES, December 31, 2004     100,000   $ 14,625   $(40,301)   $(25,676)
                               ========   ========   ========    ========

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

                                      F-12
<PAGE>


                                REBEL CREW FILMS, INC.
================================================================================

Statements of Cash Flows

--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                             YEARS ENDED
                                                                                    December 31,       DECEMBER 31,
                                                                                       2004               2003
                                                                                    ---------          ---------
Cash flows from operating activities:
<S>                                                                                 <C>                <C>
Net income (loss)                                                                   $ (37,643)         $   3,532
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of licenses                                                               45,875             20,000
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities                                              (17,900)            (1,200)
Due to related party                                                                   48,986                 --
Deferred revenue                                                                      122,538             40,433
                                                                                    ---------          ---------

          Net cash provided by operating activities                                   161,856             62,765
                                                                                    ---------          ---------

Cash flows from investing activities:
  Purchases of licenses                                                              (154,000)           (72,000)
                                                                                    ---------          ---------

          Net cash used in investing activities                                      (154,000)           (72,000)
                                                                                    ---------          ---------

Cash flows from financing activities:
  Proceeds from issuance of common stock                                                   --              9,125
                                                                                    ---------          ---------

          Net cash used in financing activities                                            --              9,125
                                                                                    ---------          ---------

Net increase (decrease) in cash and cash equivalents                                    7,856               (110)

Cash and cash equivalents at beginning of period                                           --                110
                                                                                    ---------          ---------

Cash and cash equivalents at end of period                                          $   7,856          $      --
                                                                                    =========          =========
</TABLE>

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

                                      F-13
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004

1. DESCRIPTION OF BUSINESS

Rebel Crew Films, Inc. ("the Company") was organized under the laws of the State
of  California  on  August  7,  2002 to  distribute  Latino  home  entertainment
products.  The Company currently  maintains more than 200 Spanish language films
and serves wholesale,  retail,  catalog, and e-commerce accounts.  The Company's
titles can be found at major retail outlets and independent video outlets across
the United States of America and Canada.

During 2003 and 2004, the Company generated revenue through licensing agreements
with third parties that distributed the Company's licensed content.  The Company
is expanding  its sales force to focus on direct  sales of its licensed  content
and intends to significantly  reduce or eliminate  future  licensing  agreements
with third parties.

The Company is organized in a single  operating  segment.  All of the  Company's
revenues are generated in the United  States,  and the Company has no long-lived
assets outside the United States.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

LIQUIDITY

The  accompanying  financial  statements are prepared  assuming the Company is a
going concern which  contemplates  the realization of assets and satisfaction of
liabilities in the normal course of business.  The Company has a working capital
deficiency of $213,801 at December 31, 2004,  which  includes  deferred  revenue
balance of $162,971,  as  discussed  below.  During the year ended  December 31,
2004, the Company  primarily  relied upon revenues  generated from licensing its
film content,  on a non-exclusive  basis,  to other  distributors of Latino home
entertainment  content and, to a lesser extent, from loans by a related party to
fund its  operations.  Management  believes that future  revenues  combined with
either loans or direct equity investments into the Company will be sufficient to
fund the Company's operations for the 12 months subsequent to December 31, 2004.

USE OF ESTIMATES

The  financial  statements  have been  prepared in  accordance  with  accounting
principles generally accepted in the United States ("GAAP").  The preparation of
financial  statements  in  conformity  with  GAAP  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements and  accompanying  notes.  These  estimates are based on knowledge of
current events and anticipated future events and accordingly, actual results may
differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers only highly liquid  investments such as money market funds
and  commercial  paper with  maturities  of 90 days or less at the date of their
acquisition as cash and cash equivalents.

The Company  maintains cash in bank and deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.  The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.

INTANGIBLE ASSETS

Licensed  content  acquired  from  owners   including   producers,   studios  or
distributors is capitalized and amortized on a straight-line basis over the term
of the license agreement, which generally ranges between one and five years. The
carrying values of intangible assets are periodically  reviewed and impairments,
if any, are  recognized  when the expected  future benefit to be derived from an
intangible asset is less than its carrying value.

                                      F-14
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

STOCK BASED COMPENSATION

As of December 31, 2004, no stock options or other equity  instruments  had been
granted to employees.  For future stock-based  compensation  awards, the Company
intends to adopt the provisions of Financial Accounting Standards Board ("FASB")
Statement of Financial  Accounting  Standards  ("SFAS") No. 123(R),  Share-Based
Payment,  that requires  corporations  to account for awards of stock options or
other equity instruments to employees using the fair value method.

REVENUE RECOGNITION

The Company generates revenue through licensing  agreements  whereby the Company
receives advance  payments as consideration  for rights granted to third parties
that distribute the Company's  licensed content.  The Company may be entitled to
receive additional royalty payments under the licensing agreements,  but only to
the extent that royalties calculated under the terms of the licensing agreements
exceed  the amount of the  advance  payments.  Advance  payments  are  initially
recorded as deferred revenue. The Company recognizes revenue under its licensing
agreements  as  royalties  are  earned  upon  shipment  of  licensed  content to
customers by the sub-licensor. Deferred revenue balances of $162,971 and $40,433
at December 31, 2004 and 2003, respectively,  represent advance royalty payments
that are expected to be earned over the subsequent twelve month periods.

INCOME TAXES

Deferred  income  taxes are  provided  in amounts  sufficient  to give effect to
temporary  differences between financial and tax reporting,  principally related
to net operating loss  carryforwards.  Valuation  allowances are provided to the
extent realization of recorded tax assets is not considered likely.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2004, the Emerging  Issues Task Force ("EITF")  reached a consensus
on EITF  Issue  04-08 The  Effect of  Contingently  Convertible  Instruments  on
Diluted  Earnings per Share,  which  requires the inclusion of shares related to
contingently  convertible  debt  instruments for computing  diluted earnings per
share using the  if-converted  method,  regardless  of whether the market  price
contingency  has been met. EITF 04-08 will be effective  for all periods  ending
after  December 15, 2004 and includes  retroactive  adjustment  to  historically
reported  diluted  earnings per share. The adoption of EITF Issue No. 04-08 does
not  currently  have an impact on the Company's  operating  results or financial
position.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. SFAS 151 clarifies that abnormal  inventory costs such as
costs  of idle  facilities,  excess  freight  and  handling  costs,  and  wasted
materials  (spoilage) are required to be recognized as current  period  charges.
The provisions of SFAS 151 are effective for fiscal years  beginning  after June
15, 2005. The adoption of SFAS 151 is not expected to have a significant  impact
on the Company's operating results or financial position.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets,
which eliminates the exception for nonmonetary  exchanges of similar  productive
assets and replaces it with a general  exception  for  exchanges of  nonmonetary
assets that do not have commercial substance. SFAS No. 153 will be effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005.  The  adoption  of SFAS No. 153 is not  expected  to have an impact on the
Company's operating results or financial position.

In December 2004, the FASB issued SFAS No. 123(R),  Share-Based  Payment,  which
establishes  standards for  transactions in which an entity exchanges its equity
instruments  for goods or  services.  This  standard  replaces  SFAS No. 123 and
supercedes APB Opinion No. 25,  Accounting for  Stock-based  compensation.  This
Standard  requires a public  entity 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.  This  eliminates  the  exception  to account  for such
awards using the intrinsic method previously allowable under APB Opinion No. 25.
SFAS No.  123(R)  will be  effective  for  interim or annual  reporting  periods
beginning on or after December 15, 2005.  The impact on the Company's  operating
results or financial  position  based on the adoption of SFAS No. 123(R) has not
yet been determined.


                                      F-15
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INTANGIBLE ASSETS

Intangible  assets consist of capitalized  license fees for licensed content the
Company  acquired from owners  including  producers,  studios and  distributors.
Licensed  content  acquired is capitalized at the time of purchase.  The term of
the  licensed  content  agreements  usually  vary between one to five years (the
"TITLE  TERM").  At the end of the Title  Term,  the Company  generally  has the
option of discontinuing distribution of the title or extending the Title Term.

The Company  amortizes  the  capitalized  license fees, on a straight line basis
over the  Title  Term.  During  the  years  ended  December  31,  2004 and 2003,
amortization  expense  related to the licensed  content was $45,875 and $20,000,
respectively.

Licensed content and accumulated amortization consisted of the following:

                                                 YEARS ENDED
                                      DECEMBER 31,             DECEMBER 31,
                                          2004                     2003

Licensed content                   $      254,000           $      100,000
Less: accumulated amortization            (65,875)                 (20,000)
                                   -----------------      -----------------

   Licensed content, net           $      188,125           $       80,000
                                   =================      =================

In connection with these agreements, the Company expects to record the following
amortization expense over the next five years:

     FISCAL YEAR ENDED                  AMORTIZATION
----------------------------          -----------------

December 31, 2005                     $         58,500
December 31, 2006                     $         58,500
December 31, 2007                     $         58,500
December 31, 2008                     $         12,625
December 31, 2009                     $              --

4. INCOME TAXES

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between  carrying  amounts of assets and  liabilities  for  financial  reporting
purposes and the amounts used for tax  purposes.  Significant  components of our
deferred tax assets as of December 31, 2004 and 2003 are as follows:

                                                2004        2003
                                             --------    --------
Deferred tax assets
   Federal net operating loss carryforward   $  9,185    $    904
   State net operating loss carryforward        2,175          93
   Deferred revenue                             5,343          --
                                             --------    --------
      Total gross deferred tax asset           16,703         997
      Less valuation allowance                (16,703)       (997)
                                             --------    --------
      Net deferred tax asset                 $     --    $     --
                                             ========    ========

                                      F-16
<PAGE>


REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The ultimate  realization  of deferred tax assets depends upon the generation of
future  taxable income during the periods in which those  temporary  differences
become  deductible.  Based upon our loss for the year ended December 31, 2004 we
have  provided a valuation  allowance  in the amount of $16,703,  an increase of
$15,706. The amount of deferred tax asset considered  realizable could change in
the near term if  projected  future  taxable  income is  realized.  Included  in
deferred tax assets is federal and state net  operating  loss carry  forwards of
approximately  $27,000 and $25,000  respectively.  Utilization of operating loss
carryforwards  may be limited if a  cumulative  change in ownership of more than
50% occurs within a three year period.  The net  operating  losses will begin to
expire in 2024 and 2014, respectively.

At December 31, 2004 and 2003, the Company's tax provision consists of:
                               2004                    2003
                           -------------          ------------
Current
         Federal           $          --           $        --
         State                       800                   800
Deferred
         Federal                      --                    --
         State                        --                    --
                           -------------          ------------
Total                      $         800           $       800
                           =============          ============
For the years ended December 31, 2004 and 2003, a reconciliation of the federal
statutory tax rate to the Company's effective tax rate is as follows:

<TABLE>
<CAPTION>
                                                                      2004            2003
                                                                   ---------      -----------
<S>                                                                  <C>              <C>
Federal statutory tax rate                                           (34.00)%         34.00%
State and local income taxes, net of federal tax benefit               1.43           12.19
Non deductible items                                                   0.75              --
Valuation allowance                                                   33.99          (27.73)
                                                                   ---------      -----------

              Total effective tax rate                                 2.17%          18.46%
                                                                   =========      ===========
</TABLE>

5. INCOME (LOSS) PER COMMON SHARE

Income (loss) per common share is based on the weighted average number of common
shares  outstanding.  The  Company  complies  with SFAS No. 128,  "Earnings  Per
Share," which requires dual presentation of basic and diluted earnings per share
on the face of the  statements of  operations.  Basic per share earnings or loss
excludes  dilution and is computed by dividing income (loss) available to common
stockholders by the  weighted-average  common shares outstanding for the period.
Diluted per share  earnings or loss reflects the  potential  dilution that could
occur if convertible preferred stock or debentures, options and warrants were to
be exercised or converted or otherwise  resulted in the issuance of common stock
that then shared in the earnings of the entity. For the years ended December 31,
2004 and 2003, there were no potentially dilutive shares outstanding

                                      F-17
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2004 and 2003 are
comprised of the following:

                                            DECEMBER 31,           DECEMBER 31,
                                               2004                    2003
                                             -------                 -------
Obligations on license agreements            $    --                 $26,000
Income taxes payable                           2,400                   1,600
Legal fees                                   $ 4,625                 $    --
Other                                          2,675                      --
                                             -------                 -------
                                             $ 9,700                 $27,600
                                             =======                 =======

7. RELATED PARTY TRANSACTIONS

At December  31, 2004 and 2003,  the Company has a liability  of $48,986 and $0,
respectively, due to Rebel Holdings, LLC, a California limited liability company
("REBEL HOLDINGS"), an entity that during 2005 acquired approximately 90% of the
outstanding  shares of the Company's common stock. The liability is non-interest
bearing, is due on demand and is secured by all of the assets of the Company.

8. OPERATING LEASE

During 2004 and 2003 the Company  rented space on a month to month  basis.  Rent
expense  during the years  ended  December  31,  2004 and 2003 was  $11,505  and
$8,700, respectively.

9. OTHER INCOME

Other income recognized during 2004 consists primarily of finder's fees received
by the  Company  from  a  distributor  of  the  Company's  licensed  content  as
consideration for the Company's efforts in assisting the distributor in securing
rights to other third party film distribution rights.

10. CONCENTRATION RISK

During 2003,  one  sub-licensor  accounted  for 100% of  licensing  fee revenues
recognized.   During  2004,  two   sub-licensors   accounted  for  70%  and  30%
respectively, of license fee revenues recognized.

11. SUBSEQUENT EVENTS

Operating Lease

In August 2005 the Company entered into a commercial  lease agreement for office
space.  The lease requires monthly payments of base rent in the amount of $5,890
from August 21, 2005 through  September 30, 2012.  Further,  on each anniversary
date the base rent is subject to a 3% increase over the previous year.

Acquisition

On December 20, 2005, the Company  entered into a Stock Purchase  Agreement with
Digicorp, Inc., a Utah Corporation ("DIGICORP"),  whereby Digicorp will purchase
(the  "ACQUISITION")  all of the issued and outstanding  shares of the Company's
capital stock. Upon closing the Acquisition,  Digicorp would issue approximately
21 million  shares of its common  stock to the  shareholders  of the  Company as
compensation for the issued and outstanding  capital stock of the Company.  Upon
completion   of  the   Acquisition,   shareholders   of  the  Company  will  own
approximately 58% of Digicorp. The Acquisition closed on December 29, 2005.

Promissory Notes

Between  September 2005 and December  2005, the Company  borrowed funds from the
sole  member  of  Rebel  Holdings,  totaling  $73,000.  In  connection  with the
borrowings, the Company issued a promissory note in the amount of $73,000 to the
member (the "REBEL NOTE") on December 29, 2005.  The monies loaned by the member
to the Company were utilized to pay for certain  capitalized  license agreements
and  operating  expenses  of  the  Company.   The  Rebel  Note  has  a  term  of
approximately six months and bears 5.0% simple interest.

                                      F-18
<PAGE>

REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Between  October  2005 and  December  2005,  the  Company  issued  a  series  of
promissory notes in the aggregate  principal amount of $180,000 (the "NOTES") to
Digicorp,  in consideration for loans from Digicorp to the Company in the amount
of $180,000.  The  principal  amount of the Notes and interest at the rate of 5%
per annum is  payable on April 11,  2006.  The  obligations  under the Notes are
collateralized by all of the assets of the Company.

During 2005, the Company borrowed additional funds from Rebel Holdings, totaling
$507,321,  bringing the aggregate  amount owed to Rebel  Holdings to $556,307 at
December 29, 2005.  In  connection  with the  borrowings,  the Company  issued a
convertible  note in the amount of $556,307 to Rebel  Holdings  (the  "NOTE") on
December  29,  2005.  The monies  loaned by Rebel  Holdings to the Company  were
utilized  to pay  for  certain  capitalized  license  agreements  and  operating
expenses of the Company.  The Note has a term of five years from closing,  bears
4.5% simple  interest and is  convertible  into shares of the  Company's  common
stock at a conversion price of $1.112614 per share.

                                      F-19
{"company-data": {"conformed-name": "DIGICORP", "cik": "0000728385", "assigned-sic": "6770", "irs-number": "870398271", "state-of-incorporation": "UT", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-33067", "film-number": "06513923"}, "business-address": {"street1": "1206 W SOUTH JORDAN PARKWAY", "street2": "UNIT B", "city": "SOUTH JORDAN", "state": "UT", "zip": "84095", "phone": "8015663000"}, "mail-address": {"street1": "1206 W SOUTH JORDAN PARKWAY", "street2": "UNIT B", "city": "SOUTH JORDAN", "state": "UT", "zip": "84095"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 8-K

                                 CURRENT REPORT
                       PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

       Date of Report (Date of earliest event reported): December 29, 2005

                                    Digicorp
             (Exact name of registrant as specified in its charter)

            Utah                      000-33067             87-0398271
(State or Other Jurisdiction       (Commission File      (I.R.S. Employer
  of Incorporation)                    Number)        Identification Number)

                  4143 Glencoe Avenue, Marina Del Rey, CA 90292
                  (Address of principal executive offices) (zip code)

                                 (310) 728-1450
              (Registrant's telephone number, including area code)

              100 Wilshire Blvd., Ste. 1750, Santa Monica, CA 90401
          (Former name or former address, if changed since last report)

                                   Copies to:
                               Marc J. Ross, Esq.
                       Sichenzia Ross Friedman Ference LLP
                           1065 Avenue of the Americas
                            New York, New York 10018
                              Phone: (212) 930-9700
                               Fax: (212) 930-9725

Check  the  appropriate  box  below  if the  Form  8-K  filing  is  intended  to
simultaneously  satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):

|_|   Written  communications  pursuant to Rule 425 under the Securities Act (17
      CFR 230.425)
|_|   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
      240.14a-12)
|_|   Pre-commencement  communications  pursuant  to  Rule  14d-2(b)  under  the
      Exchange Act (17 CFR 240.14d-2(b))
|_|   Pre-commencement  communications  pursuant  to  Rule  13e-4(c)  under  the
      Exchange Act (17 CFR 240.13e-4(c))
This Current Report responds to the following items on Form 8-K:

Item 1.01  Entry into a Material Definitive Agreement.
Item 2.01  Completion of Acquisition or Disposition of Assets.
Item 2.03 Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant. Item 3.02 Unregistered Sales of
Equity Securities.
Item 5.01  Changes in Control of Registrant.
Item 5.02 Departure of Directors or Principal  Officers;  Election of Directors;
Appointment of Principal Officers.
Item 5.03 Amendments to Articles of  Incorporation  or Bylaws;  Change in Fiscal
Year.
Item 5.06  Change in Shell Company Status.
Item 9.01  Financial Statements and Exhibits.

ENTRY IN A MATERIAL DEFINITIVE  AGREEMENT;  COMPLETION OF ACQUISITION OF ASSETS;
CREATION  OF  A  DIRECT  FINANCIAL  OBLIGATION;  UNREGISTERED  SALES  OF  EQUITY
SECURITIES;  CHANGE IN CONTROL OF REGISTRANT;  CHANGE IN FISCAL YEAR;  CHANGE IN
SHELL COMPANY STATUS

      In a Form 8-K of Digicorp (the  "Company")  dated  December 20, 2005,  the
Company reported that it entered into a Stock Purchase Agreement to acquire (the
"Acquisition")  all of the issued and  outstanding  capital  stock of Rebel Crew
Films, Inc. a California corporation ("Rebel Crew Films"). On December 29, 2005,
the transaction  closed and the Company  completed the acquisition of Rebel Crew
Films. In connection with the  Acquisition,  the Company changed its fiscal year
from June 30 to December 31.

      The  Company  issued  21,207,080  shares of common  stock  (the  "Purchase
Price") to the  shareholders of Rebel Crew Films as compensation  for the issued
and  outstanding  capital  stock of Rebel Crew Films.  From the Purchase  Price,
4,000,000 shares are held in escrow pending  satisfaction of certain performance
milestones.  In addition, from the Purchase Price, 16,666,667 shares are subject
to lock up  agreements as follows:  (a)  3,333,333  shares are subject to lockup
agreements for one year; (b) 6,666,667  shares are subject to lockup  agreements
for two years; and (c) 6,666,667 shares, of which the 4,000,000  escrowed shares
are a component,  are subject to lockup agreements for three years. The issuance
of  the  foregoing   shares  of  common  stock  was  exempt  from   registration
requirements  pursuant to Section 4(2) of the Securities Act of 1933, as amended
(the "Securities Act"), and Rule 506 promulgated thereunder.

      In addition,  on December  29, 2005 the Company  entered into a Securities
Purchase  Agreement  with one of the  shareholders  of Rebel Crew  Films,  Rebel
Holdings,  LLC, pursuant to which the Company purchased a $556,306.53  principal
amount  loan  receivable  owed by Rebel  Crew  Films to Rebel  Holdings,  LLC in
exchange for the issuance of a $556,306.53  principal amount secured convertible
note to Rebel  Holdings,  LLC.  The  secured  convertible  note  accrues  simple
interest at the rate of 4.5%, matures on December 29, 2010 and is secured by all
of the Company's assets now owned or hereafter acquired. The secured convertible
note is  convertible  into 500,000  shares of common stock of the Company at the
rate of $1.112614 per share. Jay Rifkin,  the Company's  present Chief Executive
Officer and a Director  Nominee of the Company,  is the sole managing  member of
Rebel Holdings,  LLC. The issuance of the foregoing secured convertible note was
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act and Rule 506 promulgated thereunder.

      The Company agreed to prepare and file a  registration  statement with the
Securities  and  Exchange  Commission  registering  the  resale  of  the  shares
comprising  the Purchase  Price and the shares  issuable upon  conversion of the
secured convertible note no later than March 29, 2006.

      In  connection  with  the  Acquisition,   Jay  Rifkin  and  certain  other
shareholders  of the Company  entered into a voting  agreement  authorizing  Mr.
Rifkin to vote the shares of the Company's common stock owned by such parties to
designate or elect a simple majority of the Company's Board of Directors, one of
whom will be Mr.  Rifkin,  and to  designate  or elect the  remaining  directors
chosen by Milton "Todd" Ault, III,  former Chairman and Chief Executive  Officer
of the Company.

                                       1
DEPARTURE OF DIRECTORS OR PRINCIPAL OFFICERS; ELECTION OF DIRECTORS;
                        APPOINTMENT OF PRINCIPAL OFFICERS

      Effective  December 29, 2005,  the  following  persons  resigned  from the
indicated  positions as executive officers and/or directors of the Company:  (1)
William B. Horne, Chief Executive Officer; (2) Kathryn Macenzie Queen, President
of  Operations;  (3) Lynne  Silverstein,  Secretary  and  Director;  (4) Melanie
Glazer,  Director and Vice Chairman of the Board of  Directors;  and (5) Darrell
Grimsley,  Jr.,  Director.  Ms.  Glazer  was a  member  of the  Company's  Audit
Committee  at the time of her  resignation.  No other  resigning  director was a
member of any  committee of the  Company's  Board of Directors at the time he or
she resigned.

      The  Company's  Board of Directors  appointed  Jay Rifkin Chief  Executive
Officer of the Company effective as of September 30, 2005, which is the date Mr.
Rifkin began acting as interim President of the Company.

      The Board of Directors  also  nominated  the  following  directors to fill
vacancies  created by the  resignations of Ms.  Silverstein,  Ms. Glazer and Mr.
Grimsley:  Jay  Rifkin,  Alan  Morelli and David M. Kaye.  The Company  plans to
appoint Messrs. Rifkin, Morelli and Kaye to its Board of Directors approximately
ten days after the date the  Company  transmits  to all holders of record of the
Company's  common  stock  information  required by Rule 14f-1 under the Exchange
Act, at which time Mr. Rifkin will serve as Chairman of the  Company's  Board of
Directors.

      Except as described under "Certain Relationships and Related Transactions"
beginning on page 13 of this report,  there has been no  transaction  during the
last two years, or any proposed  transaction,  to which the Company was or is to
be a party,  and in which any of  Messrs.  Rifkin,  Morelli or Kaye had or is to
have a direct or indirect material interest.

      Below  are the names  and  certain  information  regarding  the  Company's
executive officers, directors and director nominees following the Acquisition.

----------------------- ------- ------------------------------------------------
Name                    Age     Position
----------------------- ------- ------------------------------------------------
Jay Rifkin              50      Chief Executive Officer, Director Nominee
----------------------- ------- ------------------------------------------------
William B. Horne        37      Chief Financial Officer and Director
----------------------- ------- ------------------------------------------------
Philip Gatch            41      Chief Technology Officer
----------------------- ------- ------------------------------------------------
Alice M. Campbell       55      Director
----------------------- ------- ------------------------------------------------
Alan Morelli            44      Director Nominee
----------------------- ------- ------------------------------------------------
David M. Kaye           51      Director Nominee
----------------------- ------- ------------------------------------------------

      Officers are elected  annually by the Board of  Directors  (subject to the
terms of any  employment  agreement),  to hold such  office  until an  officer's
successor has been duly appointed and qualified,  unless an officer sooner dies,
resigns or is removed by the Board.  Some of the Company's  directors,  director
nominees  and  executive  officers  also  serve in various  capacities  with the
Company's  subsidiaries.  There  are no  family  relationships  among any of the
Company's directors, director nominees and executive officers.

Background of Executive Officers and Directors

      Jay Rifkin,  Chief  Executive  Officer  and  Director  Nominee.  Effective
September 30, 2005,  the Board of Directors of the Company  appointed Mr. Rifkin
interim President of the Company pending closing of the Acquisition. On December
29,  2005,  Mr.  Rifkin's  title was changed to Chief  Executive  Officer of the
Company effective as of September 30, 2005. From 2004 to Present, Mr. Rifkin has
been the sole Managing Member of Rebel Holdings,  LLC,  through which he is also
the majority  shareholder of Rebel Crew Films,  Inc. In 1995, Mr. Rifkin founded
Mojo Music, Inc., a music publishing company,  and he has been President of Mojo
Music, Inc. since it was founded.  Mr. Rifkin is Chairman and a founder of Media
Revolution,  a  marketing  agency  founded in 1977 that has  executed  marketing
campaigns  for major  Hollywood  studios.  Mr. Rifkin has served as Producer and
Executive  Producer on various motion  pictures with his most recent  production
"Waiting"  (Lion's Gate) released on October 7, 2005. Mr. Rifkin is also a music
producer,  engineer and songwriter.  Mr. Rifkin received a Grammy Award for Best
Children's Album and an American Music Award for Favorite Pop/Rock Album for his
work on Disney's "The Lion King," and received a Tony  nomination  for "The Lion
King" on Broadway.  From 1988 to 2004,  Mr.  Rifkin,  through Mojo Music,  Inc.,
served as a Managing Member of Media Ventures, LLC, an entertainment cooperative
founded by Mr. Rifkin and composer Hans Zimmer. In 1995, Mr. Rifkin founded Mojo
Records,  LLC, which in 1996 became a joint venture with Universal Records,  and
was  subsequently  sold to Zomba/BMG  Records in 2001. Mr. Rifkin also serves as
President  of  Cyberia  Holdings,  Inc.  which  is the  majority  owner of Media
Revolution. In 2004, Cyberia Holdings, Inc. filed for bankruptcy under Chapter 7
which cased was dismissed in May 2005.

                                        2
William B. Horne, Chief Financial Officer and Director. Mr. Horne has been
the Company's Chief  Financial  Officer and a director since July 20, 2005. From
September  30,  2005 until  December  29,  2005,  Mr.  Horne also  served as the
Company's  Chief  Executive  Officer  and  Chairman  of the  Company's  Board of
Directors.  Since July 5, 2005, Mr. Horne has been the Chief  Financial  Officer
and a director of Ault Glazer  Bodnar & Company,  Inc.  Since July 5, 2005,  Mr.
Horne has also been Chief Financial Officer of Patient Safety Technologies, Inc.
and its  subsidiaries.  From May 2002 to April 2005, Mr. Horne held the position
of Chief Financial Officer of Alaska Wireless  Communications,  a privately held
advanced cellular communications company. Since January 2002, Mr. Horne has also
provided  strategic  financial  consulting  services to both  private and public
companies.  From November 1996 to December  2001, Mr. Horne held the position of
Chief  Financial  Officer of The Phoenix  Partners,  a venture  capital  limited
partnership located in Seattle, Washington.

      Philip Gatch, Chief Technology  Officer.  Mr. Gatch has been the Company's
Chief  Technology  Officer since June 30, 2005. From June 30, 2005 until October
14,  2005,  Mr.  Gatch was also  Chief  Technology  Officer  of  Patient  Safety
Technologies, Inc. Since May 12, 2005, Mr. Gatch has been President and owner of
Cinapse   Digital  Media,   LLC,  a  company  that  operates  a  production  and
post-production  media content  facility.  From September 2003 to June 2005, Mr.
Gatch was Director of Technical  Services of The DR Group. From February 2002 to
April 2003,  Mr. Gatch was Director of Research and  Development  for Media.net.
From 1999 to 2002,  Mr.  Gatch was  Director of  Research  and  Development  for
Digital Entertainment Solutions.

      Alice M.  Campbell,  Director.  Ms.  Campbell  has  been a  member  of the
Company's  Board of  Directors  since July 16, 2005.  Since June 23,  2005,  Ms.
Campbell has been a director of IPEX,  Inc., a public  company quoted on the OTC
Bulletin  Board.  Since  October 22, 2004,  Ms.  Campbell has been a director of
Patient Safety Technologies, Inc., a public company listed on the American Stock
Exchange.  Since 2001, Ms. Campbell has been, and is currently,  an investigator
and  consultant,  specializing  in research and litigation  services,  financial
investigations  and  computer  forensics,  for  major  companies  and law  firms
throughout the United States.  Ms. Campbell is a certified fraud specialist,  as
well as a certified  instructor for the Regional  Training  Center of the United
States Internal Revenue Service and for the National  Business  Institute.  From
1979 to 2001,  Ms.  Campbell  served as a special  agent for the  United  States
Treasury  Department  where she  conducted  criminal  investigations  and worked
closely  with the  United  States  Attorney's  Office and with  several  federal
agencies,   including  the  Internal   Revenue   Service,   Federal   Bureau  of
Investigation,   Secret  Service,   Customs  Service,  State  Department,   Drug
Enforcement  Agency,  Bureau of Alcohol,  Tobacco and Firearms  and U.S.  Postal
Service.

      Alan Morelli, Director Nominee. Mr. Morelli is a consultant who has served
as Managing  Director of Analog  Ventures,  LLC, a  consulting  firm  located in
Pacific Palisades, California, since 1997. Mr. Morelli is also currently serving
as a director of PT Holdings,  Inc.,  RADD Holdings,  Inc. and Precise  Exercise
Equipment.  PT  Holdings,  Inc. is a  development-stage  company in the physical
therapy  industry.  RADD  Holdings  licenses  intellectual  property  to  retail
distributors.  Precise develops innovative  commercial fitness or rehabilitation
technology  currently used in most health clubs today.  Mr.  Morelli  received a
B.S. from Rutgers  University  (1983) and a J.D. from Georgetown  University Law
Center (1986).

      David M. Kaye,  Director  Nominee.  Mr. Kaye is an attorney and has been a
partner  in the law firm of Danzig  Kaye  Cooper  Fiore & Kay,  LLP  located  in
Florham Park, New Jersey,  since the firm's  inception in February  1996.  Since
1980, Mr. Kaye has been a practicing  attorney in the New York City metropolitan
area  specializing  in  corporate  and  securities  matters.  He is  currently a
director of Dionics,  Inc.,  a company  which  designs,  manufactures  and sells
semiconductor  electronic  products.  Mr.  Kaye  received  his B.A.  from George
Washington University (1976) and his J.D. from the Benjamin N. Cardozo School of
Law, Yeshiva University (1979).

                                        3
Audit Committee

      The Audit  Committee is appointed by the Board of Directors in  fulfilling
its  responsibilities  to oversee:  (1) the integrity of the Company's financial
statements and disclosure  controls;  (2) the qualifications and independence of
our independent accountants; (3) the performance of our independent accountants;
and (4) compliance with legal and regulatory requirements.  Alice M. Campbell is
presently the only member of the Company's  Audit  Committee and she is Chairman
of the Audit Committee.  The Board has determined that Ms. Campbell is an "audit
committee  financial  expert"  as  defined  under  Item  401 of  Regulation  S-B
promulgated pursuant to the Exchange Act.

Compensation Committee

      The  Compensation  Committee  is  appointed  by the Board of  Directors to
discharge the  responsibilities  of the Board  relating to  compensation  of the
Company's executive officers.  Alice M. Campbell is currently the only member of
the Compensation Committee and she is Chairman of the Compensation Committee.

Employment Agreements

      On September 20, 2005,  the Company  entered into an employment  agreement
with Philip Gatch documenting the terms of his employment as the Company's Chief
Technology  Officer.  The term of the  employment  continues  for 36 months from
September 20, 2005 and automatically renews for successive one-year terms unless
either party  delivers to the other party written notice of termination at least
30 days before the end of the then current term. Mr.  Gatch's base  compensation
under the  agreement  is  $95,000 in cash per year and  $45,000 in a  restricted
stock grants each year. Prior to signing the employment  agreement,  the Company
granted Mr. Gatch  options  entitling him to purchase  250,000  shares of common
stock vesting  annually over three years with a strike price of $0.25 per share,
which stock options are reflected in the employment agreement. Mr. Gatch is also
eligible to receive an annual  performance  bonus  determined  by the  Company's
chief  executive  officer.  In addition,  Mr. Gatch was granted rights for three
years to (a) veto a chief executive officer candidate as a replacement to Milton
"Todd"  Ault,  III,  and (b) veto a decision  to sell the  Company or any of the
Company's core assets or  technologies  related to the iCodemedia  Assets in the
event the Company is sold for less than $50,000,000.  If Mr. Gatch's  employment
is terminated for any reason,  the veto rights will be forfeited.  The agreement
also contains  customary  provisions  for  disability,  death,  confidentiality,
indemnification  and  non-competition.  If Mr. Gatch voluntarily  terminates the
agreement or if the Company  terminates the agreement for cause,  Mr. Gatch will
not be  entitled  to any  compensation  for the  period  between  the  effective
termination date and the end of the employment term and all unvested  restricted
stock and stock options will be forfeited. If the Company voluntarily terminates
the agreement  without cause, the Company must pay Mr. Gatch a cash sum equal to
(a) all accrued  base salary  through the date of  termination  plus all accrued
vacation  pay and cash  bonuses,  if any,  plus (b) as  severance  compensation,
500,000 unrestricted shares of common stock and $250,000 cash. In the event of a
merger,  consolidation,  sale, or change of control,  the surviving or resulting
company is required to honor the terms of the agreement with Mr. Gatch.

      In  connection  with the  Acquisition,  on December 29, 2005,  the Company
entered into an  employment  agreement  with Jay Rifkin as the  Company's  Chief
Executive Officer effective as of September 30, 2005. The term of the employment
continues for three years from September 30, 2005 and  automatically  renews for
successive  one-year  terms  unless  either  party  delivers  to the other party
written  notice  of  termination  at  least 30 days  before  the end of the then
current term. Mr.  Rifkin's base  compensation  in the first year of the term is
$150,000, will increase at least 10% in the second year of the term and at least
10% more in the third  year of the  employment  term.  Mr.  Rifkin  was  granted
options to  purchase  4,400,000  shares of the  Company's  common  stock with an
exercise  price equal to the FMV of the Company's  common stock on September 30,
2005 and vesting  annually  over a period of three years from December 29, 2005.
Mr. Rifkin is also eligible to receive  shares of common stock and stock options
from time to time and an annual bonus as determined  by the  Company's  Board of
Directors.  The agreement also contains  customary  provisions  for  disability,
death,  confidentiality,  indemnification  and  non-competition.  If Mr.  Rifkin
voluntarily  terminates  the  agreement  without  good  reason or if the Company
terminates the agreement for cause,  the Company must pay Mr. Rifkin all accrued
compensation  through the date of  termination  and provide  life,  accident and
disability  insurance,  and health, dental and vision benefits to Mr. Rifkin and
his  dependents for a period of three months after  termination.  If the Company
terminates the agreement  without cause, if Mr. Rifkin  terminates the agreement
for good reason or if the agreement is  terminated  upon the death or disability
of Mr.  Rifkin,  then the Company  must pay Mr.  Rifkin or his estate all unpaid
compensation  through the duration of the  three-year  employment  term and must
provide  insurance and health benefits  through the duration of such term. "Good
Reason" is defined in the agreement as: (i) material  breach of the agreement by
the Company  including,  without  limitation,  any diminution in title,  office,
rights and  privileges of Mr. Rifkin or failure to receive base salary  payments
on a timely basis;  (ii)  relocation  of the  principal  place for Mr. Rifkin to
provide his services to any  location  more than 20 miles away from 100 Wilshire
Boulevard,  Santa  Monica,  California  90401;  (iii)  failure of the Company to
maintain in effect  directors' and officers'  liability  insurance  covering Mr.
Rifkin;  (iv) any  assignment or transfer by the Company of any of its rights or
obligations  under the  agreement;  or (v) any change in control of the  Company
including,  without  limitation,  if Mr. Rifkin shall cease to own a majority of
the voting securities of the Company.

                                        4
Involvement in Certain Legal Proceedings

      Jay Rifkin  serves as President  of Cyberia  Holdings,  Inc.  which is the
majority owner of Media Revolution.  In 2004,  Cyberia Holdings,  Inc. filed for
bankruptcy under Chapter 7 which cased was dismissed in May 2005.

      Except as  described  above,  no  director,  person  nominated to become a
director, executive officer or control person of the Company:

      (1)   was a general partner or executive  officer of any business  against
            which any bankruptcy  petition was filed,  either at the time of the
            bankruptcy or two years prior to that time;
      (2)   was convicted in a criminal proceeding or named subject to a pending
            criminal  proceeding  (excluding  traffic violations and other minor
            offenses);
      (3)   was  subject to any order,  judgment  or  decree,  not  subsequently
            reversed,   suspended   or  vacated,   of  any  court  of  competent
            jurisdiction,   permanently  or  temporarily   enjoining,   barring,
            suspending  or  otherwise  limiting his  involvement  in any type of
            business, securities or banking activities; or
      (4)   was found by a court of competent  jurisdiction (in a civil action),
            the  Securities  and Exchange  Commission or the  Commodity  Futures
            Trading Commission to have violated a federal or state securities or
            commodities  law, and the judgment has not been reversed,  suspended
            or vacated.

      No director,  officer or 5% or other shareholder of the Company is a party
to any legal proceeding in which such person is adverse to the Company or has an
interest adverse to the Company.

                  BUSINESS OF THE COMPANY AFTER THE ACQUISITION

FORWARD-LOOKING STATEMENTS

      Except for historical  information,  matters  discussed in this report are
forward-looking  statements  based on  management's  estimates,  assumptions and
projections.   In   addition,   from  time  to  time,   the   Company  may  make
forward-looking  statements  relating to such  matters as  anticipated  business
prospects,  new  products,  research  and  development  activities,   plans  for
expansion,   acquisitions  and  similar   matters.   Words  such  as  "expects,"
"anticipates,"  "targets," "goals," "projects,"  "intends," "plans," "believes,"
"seeks,"  "estimates,"  "continue," or the negatives  thereof,  or variations on
such words,  and similar  expressions  are  intended  to identify  such  forward
looking statements.  The Company notes that a variety of factors could cause the
Company's   actual  results  and  experience  to  differ   materially  from  the
anticipated   results  or  other   expectations   expressed  in  the   Company's
forward-looking   statements.   These   forward-looking   statements   are  mere
predictions and are uncertain. These forward-looking statements speak only as of
the date of this report.  The Company  expressly  disclaims  any  obligation  or
undertaking  to  disseminate  any updates or  revisions  to any  forward-looking
statement contained herein to reflect any change in its expectations with regard
thereto or any change in events,  conditions or  circumstances on which any such
statement is based.

ORGANIZATIONAL HISTORY

      Digicorp was  incorporated on July 19, 1983 under the laws of the State of
Utah for the purpose of developing  and marketing  computer  software  programs.
From 1983 to 1995, the Company's sales and investments were  attributable to the
sale of computer software and investments related to oil, gas and mining.

      On June 30, 1995, the Company became a development  stage  enterprise when
the Company sold its assets and changed its business plan.  Since June 30, 1995,
the Company has been in the developmental stage and until September 19, 2005 has
had no  operations  other than issuing  shares of common stock for financing the
preparation of financial  statements  and for preparing  filings for the SEC. In
August 2001,  the Company  elected to file a Form 10-SB  registration  statement
with the SEC on a voluntary  basis in order to become a reporting  company under
the Exchange Act.

                                        5
Acquisition of iCodemedia Assets

      On  September  19,  2005,  the  Company  entered  into an  asset  purchase
agreement with Philip Gatch, the Company's Chief Technology Officer, and thereby
completed  the  purchase of certain  assets  from Mr.  Gatch  consisting  of the
iCodemedia   suite  of  websites  and  internet   properties   and  all  related
intellectual  property  (the  "iCodemedia  Assets").  The  iCodemedia  suite  of
websites  consists  of  the  websites   www.icodemedia.com,   www.iplaylist.com,
www.tunecast.com, www.tunebucks.com, www.podpresskit.com and www.tunespromo.com.
Since completing the Acqusition,  the Company may sell the iCodemedia  Assets or
use the websites to provide applications and services to enable content creators
to publish and deliver content to existing and next  generation  devices such as
the Apple iPod and the Sony PSP. As consideration for the iCodemedia Assets, the
Company  issued Mr.  Gatch  1,000,000  shares of common  stock.  The issuance of
shares of common  stock to Mr. Gatch was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act of 1933, as amended.

Acquisition of Rebel Crew Films

      As further  described on page 1 of this report,  on December 29, 2005, the
Company  acquired all of the issued and outstanding  capital stock of Rebel Crew
Films in consideration  for the issuance of 21,207,080 shares of common stock to
the   shareholders  of  Rebel  Crew  Films.  The  Acquisition  was  exempt  from
registration  requirements  pursuant to Section 4(2) of the  Securities  Act and
Rule 506 promulgated  thereunder.  Rebel Crew Films was organized under the laws
of the  State  of  California  on  August  7,  2002 to  distribute  Latino  home
entertainment  products.  Rebel Crew  Films  currently  maintains  more than 200
Spanish  language  films  and  plans to serve the  nation's  largest  wholesale,
retail, catalog, and e-commerce accounts.

      Except as specifically  stated otherwise,  in the remainder of this report
references  to "the  Company"  refer to Digicorp  together with its wholly owned
subsidiary Rebel Crew Films, Inc.

OVERVIEW

      The Company  currently  maintains more than 200 Spanish language films and
serves some of the nation's largest wholesale,  retail,  catalog, and e-commerce
accounts. The Company's titles can be found at Wal-Mart,  Best Buy, Blockbuster,
K-Mart,  and hundreds of  independent  video outlets across the United States of
America and Canada. The Company's diverse  programming  includes:  New Releases,
Classic  Mexican  Cinema,   animation,   cult,  sports,   martial  arts,  family
entertainment, and more.

      The Company  generates  revenue through either  licensing  agreements with
third parties that distribute the Company's  licensed  content or through direct
sales.  The  Company's  typical  licensing  agreements  consist  of a  three  to
five-year  contract  that carries a 15% - 50% royalty on gross sales of licensed
product.  The Company is currently  expanding its sales force to focus on direct
sales of its licensed content.

      The  Company  is  organized  in a  single  operating  segment.  All of the
Company's  revenues are generated in the United  States,  and the Company has no
long-lived assets outside the United States.

CUSTOMERS

      For direct sales,  the Company's  sales  associates  focus on small retail
stores across the country.  Currently, the sales force manages over 1,100 active
retail store customers. For other licensing activities, there are two companies,
BCI Eclipse LLC, which has licensed 20 titles, and VAS Entertainment/Rise  Above
Entertainment  ("VAS/RA")  which has licensed 17 titles from the  Company.  They
function as manufacturers  for the Company's DVD inventory for those titles,  as
well as a distributor  to large  retailers like  Wal-Mart.  The agreements  with
these companies  consist of a term of three to five years granting the companies
the right to manufacture,  promote, and distribute the licensed movies for a 15%
- 50% royalty on gross sales, depending on title.

                                        6
Besides  its direct  selling  effort  through  telemarketing,  the Company
markets its products by placing print ads in a variety of Latino trade magazines
as well as through its  website.  The  Company  has a dedicated  1-800 toll free
number for sales inquiries.

SUPPLIERS

      The Company has three  categories  of  suppliers  - movie  licensors,  DVD
manufacturers,  and finished goods suppliers. Movie licensors consist of Spanish
language  movie  license  holders  primarily  from  Mexico  who enter  licensing
agreements  with the Company to  manufacture  and distribute  their movies.  The
Company is currently in contract with eight different licensors of content. From
these agreements, the Company has manufactured ten titles. Agreements with these
companies  consist  of either a fixed  license  fee or a 40-60%  royalty  on net
revenues for the right to manufacture, promote and distribute the films for four
to five years, depending on title.

      For the  manufacture  of DVD's,  the  Company's  principal  supplier  is a
company called Reptek.  The Company does not have a written  agreement with this
supplier.  There  is no  dependency  on  this  supplier  as  the  supply  of DVD
manufacturing  companies is broad and there are many potential firms that can be
employed to supply the Company's products.

      For DVD titles not owned or licensed by the Company,  a number of finished
goods vendors are utilized.  Among them are Ventura  Distribution  Inc., Cozumel
Films,  Venevision  International,  and Universal (UMVD).  Ventura  Distribution
currently supplies the Company with 21 movies distributed by Unicine, a division
of  Univision.  Venevision  International  has the  highest  number  of  titles,
providing the Company with 51 films.  Universal  (UMVD)  currently  supplies the
Company with 36 films and Cozumel  Films  provides the Company with three films.
There are no  written  agreements  with any of these  companies  to  supply  the
Company with films.

      The  Company is  currently  expanding  its sales  force to focus on direct
sales of its  licensed  content.  The Company is shifting  its efforts on direct
selling  due to two  primary  reasons:  (1)  poor  reliability  of  third  party
distributors generally to pay royalties on time; and (2) to eliminate dependence
on third party  distributors to distribute the Company's  product as one of many
other products they also sell.

COMPETITION

      Although accurate numbers are difficult to obtain due to the hesitation of
privately owned distribution companies to divulge sales figures, it is generally
estimated by an independent  study by Estrenos  magazine (a Latin  Entertainment
Trade Journal) that the Latino home video distribution  market for the first six
months of 2005 sold over three million  units in the U.S.  According to Estrenos
magazine,  of that number three distributors  accounted for approximately 80% of
those  sales  -  Laguna   Films  (43%),   Ventura/Studio   Latino   (26%),   and
Xenon/Televisa  (13%) (data  provided  by each  distributor  or  source).  Other
players  include Image  Entertainment  (7%),  Latin Vision (5%),  Brentwood Home
Video (3%),  Pro-Active  Entertainment  (2%), and Vanguard  Latino (1%) (Source:
Estros  magazine,  September/October  2005).  Based on these  sales  performance
figures, the Company's monthly sales average currently represents  approximately
1.25%  of  the  monthly  average  of  DVD  sales  volume  in  the  Latino  video
entertainment industry

      Major U.S.  movie  studios have  ventured  into  servicing the Latino home
video market as well, selling  approximately 1.5 million units in the first half
of 2005.  Of that  amount,  approximately  60% of sales were  dominated by three
studios - MGM Home Entertainment  (26%),  Columbia Tri-Star (18%) and Lions Gate
Films (16%). Other such competitors  include  UMVD/Visual  Entertainment  (12%),
BVHE/Disney  (8%),  Warner Home Video  (8%),  and Fox Home  Entertainment  (3%).
(Source: Estros magazine, September/October 2005)

      The Company also competes  with retail music and video  stores,  including
online stores, dominated by large companies such as Netflix, Blockbuster,  Trans
World Entertainment, and Movie Gallery Inc.

      The Company competes in the Latino home video market primarily by offering
competitive  prices on a wide  variety  of  quality  titles  through  its direct
selling efforts targeted at retail stores across the entire United States.

                                        7
GOVERNMENT REGULATION

      The  Company  is  not  aware  of any  existing  or  probable  governmental
regulations  that may have a  material  effect on the normal  operations  of the
Company's business.  There also are no relevant  environmental laws that require
compliance  by the  Company  that  may  have a  material  effect  on the  normal
operations of the business.

EMPLOYEES

      As of January 4, 2006, the Company  employed eight full time employees and
three part time  employees.  None of the  Company's  employees  are covered by a
collective  bargaining  agreement.  The Company believes that relations with its
employees are good.

DESCRIPTION OF PROPERTY

      The Company leases its principal  executive office located at 4143 Glencoe
Avenue,   Marina  Del  Rey,   California  90292.  The  leased  office  space  is
approximately 3,800 rentable square feet. The lease contract term is seven years
and two months  commencing  August 1, 2005 and ending  September 30, 2012.  Base
rent under the lease is $5,890 per month  payable on the first day of each month
commencing  August  15,  2005.  Additionally,  the first two  months  (August to
September  2005) had a base rent of $8,835 and a security  deposit of $5,890 was
required upon signing.

LEGAL PROCEEDINGS

      The Company is not a party to any  pending  legal  proceeding,  nor is its
property the subject of a pending legal  proceeding  that is not in the ordinary
course of  business or  otherwise  material to the  financial  condition  of the
Company's business.

                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Off-Balance Sheet Arrangements

      We do not have any off  balance  sheet  arrangements  that are  reasonably
likely to have a current or future effect on our financial condition,  revenues,
results of operations, liquidity or capital expenditures.

Critical Accounting Policies

      A  discussion  and  analysis  of our  financial  condition  and results of
operations are based upon our financial statements,  which have been prepared in
accordance with accounting  principles  generally accepted in the United States.
The  preparation  of these  financial  statements  requires  management  to make
estimates  and  assumptions   that  affect  the  reported   amounts  of  assets,
liabilities,  revenues and expenses and related  disclosure of contingent assets
and  liabilities.  Note 2 to our  audited  financial  statements  included as an
exhibit to this Form 8-K  describes  the  significant  accounting  policies  and
methods  used in the  preparation  of the  financial  statements.  On an ongoing
basis, management evaluates its estimates,  the most critical are those that are
both  important to the  presentation  of our financial  condition and results of
operations  and require  management's  most  difficult,  complex,  or subjective
judgments.

Accounting Developments

      In December 2004, Statement of Financial Accounting Standards ("SFAS") No.
123(R), "Share-Based Payment," which addresses the accounting for employee stock
options, was issued. SFAS 123(R) revises the disclosure  provisions of SFAS 123,
"Accounting for Stock Based Compensation" and supersedes  Accounting  Principles
Board ("APB") Opinion No. 25,  "Accounting for Stock Issued to Employees."  SFAS
123(R)  requires that the cost of all employee stock  options,  as well as other
equity-based compensation arrangements, be reflected in the financial statements
based on the estimated fair value of the awards. This statement is effective for
us as of the  beginning  of the first  interim or annual  reporting  period that
begins after December 15, 2005. The impact on our operating results or financial
position based on the adoption of SFAS No. 123(R) has not yet been determined.

                                        8
Liquidity and Capital Resources

      Our total assets were  $519,442 at September  30, 2005 versus  $195,981 at
December 31, 2004.  The change in total assets is primarily  attributable  to an
increase  in our  intangible  assets and  inventory  of  $240,175  and  $36,243,
respectively.  The increases in intangible  assets and inventory  were primarily
financed through monies loaned from related parties in the amount of $552,321.

      At September  30, 2005 and December 30, 2004,  we had $3,404 and $7,856 in
cash and cash equivalents,  respectively. During the nine months ended September
30, 2005, we borrowed  $519,321 from Rebel Holdings,  LLC, a California  limited
liability  company  ("Rebel  Holdings"),  an entity that  during  2005  acquired
approximately  90%  of the  outstanding  shares  of the  our  common  stock.  In
September 2005, we borrowed an additional  $33,000 from the sole member of Rebel
Holdings.  At  September  30,  2005 and  December  31,  2004,  the Company had a
combined  liability of $601,307 and $48,986,  respectively,  due to either Rebel
Holdings or the sole member of Rebel Holdings. On December 29, 2005, we issued a
promissory  note in the amount of $73,000 to the sole  member  (the  "Promissory
Note") of Rebel Holdings. The Promissory Note represented the outstanding amount
borrowed at September 30, 2005 as well as additional  funds borrowed  during the
fourth  quarter of 2005.  The Promissory  Note has a term of  approximately  six
months and bears 5.0% simple interest.  On December 29, 2005, in connection with
the closing of the  Acquisition we also issued a convertible  note in the amount
of $556,307 to Rebel  Holdings (the  "Note").  The Note has a term of five years
from  December 29, 2005,  bears 4.5% simple  interest  and is  convertible  into
shares of our common stock at a conversion price of $1.112614 per share.

      We have  primarily  relied  upon  loans from  related  parties to fund our
operations and, to a lesser extent,  revenues  generated from licensing our film
content,  on a  non-exclusive  basis,  to  other  distributors  of  Latino  home
entertainment  content.  We believe that future  revenues  combined  with either
loans or direct equity  investments  into the Company will be sufficient to fund
our operations for the 12 months  subsequent to September 30, 2005. We expect to
undertake  additional debt or equity  financings to better enable us to grow and
meet  our  future  operating  and  capital  requirements,  however,  there is no
assurance that we will be successful in obtaining such financing.

      Operating  activities  provided $336,762 of cash for the nine months ended
September  30, 2005,  compared to  providing  $161,856 and $62,765 for the years
ended December 31, 2004 and 2003, respectively.

      Cash used in investing  activities for the nine months ended September 30,
2004 and the years ended December 31, 2004 and 2003, of $341,214,  $154,000, and
$72,000,  respectively,  resulted  almost  exclusively  from  the  purchases  of
licensed Spanish language film content that was capitalized.

Results of Operations

      Revenues

      We  recognized  revenues of $140,333 and $27,963 for the nine months ended
September 30, 2005 and the year ended  December 31, 2004,  respectively.  During
2004 all of our  revenues  were  generated  through  licensing  agreements.  The
licensing agreements provide for us to receive advance payments as consideration
for rights granted to third parties that  distribute our licensed  content.  The
advance  payments are initially  recorded as deferred  revenue and  subsequently
recognized in income as royalties  are earned upon shipment of licensed  content
to  customers  by the  sub-licensor.  Deferred  revenue  balances of $75,411 and
$162,971 at September  30, 2005 and December 31, 2004,  respectively,  represent
advance  royalty  payments  that are  expected to be earned over the  subsequent
twelve month periods.

      During the nine months  ended  September  30, 2005,  licensing  revenue of
$85,205  accounted for  approximately  61% of our total  revenue.  The remaining
revenue of $55,128  represents revenue generated through the direct sales of our
licensed content. We expect that direct sales, as a percentage of total revenue,
will  significantly  increase  over the next  year as we focus  our  efforts  on
expanding  our existing  sales force.  Further,  we  anticipate  that  licensing
revenues will significantly be reduced or eliminated in future years as we shift
our focus away from licensing agreements with third parties

                                        9
Expenses

      Operating  expenses  were  $247,854  and $80,889 in the nine months  ended
September  30, 2005 and 2004,  respectively  and  $144,434  and  $112,364 in the
fiscal years ended December 31, 2004 and 2003, respectively.  Operating expenses
in  all  periods  primarily   consisted  of  professional  fees,  rent  expense,
amortization expense and general and administrative expenses.

      Professional  fees were  approximately  $40,000  higher in the nine months
ended  September 30, 2005  compared to the nine months ended  September 30, 2004
due to significant increases in amounts paid to consultants as well as legal and
accounting fees. Amounts paid to various consultants  increased by approximately
$24,000  and  related  to  services  to  locate  Spanish  language  content  for
acquisition,  technical assistance in preparing the content for production,  and
sales and marketing of the titles. Legal fees increased by approximately $12,000
due to the preparation and review of an increased amount of license  agreements.
Accounting  fees,  which  increased  by  approximately  $4,000,  relate to costs
incurred  to update  our  accounting  system to  facilitate  a larger  volume of
transactions.

      Professional  fees were  approximately  $36,000  higher in the year  ended
December  31,  2004  compared  to  the  year  ended  December  31,  2003  due to
significant  increases  in amounts  paid to  consultants  as well as legal fees.
Amounts paid to various  consultants  during 2003 related solely for services to
locate Spanish language content for acquisition  whereas during 2004 we incurred
expenses related not only for services to locate Spanish language  content,  but
also technical assistance in preparing the content for production, and sales and
marketing of the titles. Legal fees increased by approximately $8,000 due to the
preparation and review of an increased amount of license agreements.

      Rent expense  increased by approximately  $15,000 in the nine months ended
September 30, 2005  compared to the nine months ended  September 30, 2004 due in
part to our relocation  into  commercial  office space in August 2005, with base
rent of $5,890 per month  combined  with periods of low rates of rent during the
nine months ended September 30, 2004.

      Rent expense increased by approximately  $4,000 in the year ended December
31, 2004  compared to the year ended  December  31,  2003 and is  attributed  to
periods of low rates of rent during 2003.

      Amortization expense increased by approximately $56,000 in the nine months
ended  September 30, 2005  compared to the nine months ended  September 30, 2004
due to an increased number of license agreements.

      Amortization expense increased by approximately  $26,000 in the year ended
December  31,  2004  compared  to the year  ended  December  31,  2003 due to an
increased number of license agreements.

      General and administrative  expense increased by approximately  $50,000 in
the nine  months  ended  September  30, 2005  compared to the nine months  ended
September 30, 2004 and is  attributed  to the overall  expansion of the business
during the nine months ended  September  30, 2005  combined  with the  financial
constraints  placed on us as a result of limited  amounts of  available  working
capital in the nine months ended September 30, 2004.

      General and administrative  expense decreased by approximately  $15,000 in
the year ended  December 31, 2004  compared to the year ended  December 31, 2003
due to  financial  constraints  placed on us as a result of  limited  amounts of
available  working capital in the year ended December 31, 2004.  During the year
ended  December 31,  2003,  as  reflected  by our  deferred  revenue  balance of
approximately  $40,000 and  licensing  revenues of  approximately  $116,000,  we
received a large amount of advance  payments from our licensing  agreements with
third parties.  These advance payments exceeded the cost of our licensed content
in 2003,  thus,  providing an adequate amount of working capital for general and
administrative purposes. During 2004 the amount of advance payments approximated
the cost of our licensed  content thus eliminating a source of funds for general
and administrative expenses.

                                       10
Taxes

      We are taxed  under  Title 26,  Chapter 1,  Subchapter  C of the  Internal
Revenue Code of 1986, as amended, and therefore subject to federal income tax on
the portion of our taxable income.

      At  December  31,  2004,  we  had a net  operating  loss  carryforward  of
approximately  $27,000 to offset future  taxable  income for federal  income tax
purposes.  The utilization of the loss  carryforward to reduce any future income
taxes will depend on our ability to generate  sufficient taxable income prior to
the expiration of the net operating loss carryforwards. The carryforward expires
beginning in 2024.

      A change in the  ownership  of a majority of the fair market  value of our
common stock can delay or limit the  utilization  of existing net operating loss
carryforwards  pursuant to Internal  Revenue  Code  Section 382. We believe that
such a  change  occurred  during  the  year  ended  December  31,  2005  and are
evaluating the amount that our net operating loss carryforward  utilization will
be limited to.

                             EXECUTIVE COMPENSATION

      The  following   table  sets  forth   information   concerning  the  total
compensation  that the  Company  has paid or that has  accrued  on behalf of the
Company's  chief  executive  officer and other  executive  officers  with annual
compensation  exceeding  $100,000 during the years ended December 31, 2005, 2004
and 2003.

                           SUMMARY COMPENSATION TABLE
Long-Term
                                                                                          Compensation
                                                                            ------------------------------------------
                                              Annual Compensation                      Awards               Payouts
                                      ------------------------------------- ------------------------------ -----------
                                                                  Other                       Securities                   All
                                                                 Annual     Restricted        Under-lying     LTIP        Other
         Name and                                                Compen-    Stock Award(s)    Options/     Payouts       Compen-
    Principal Position        Year     Salary ($)   Bonus ($)  sation ($)   ($)               SARs (#)        ($)      sation ($)
--------------------------- --------- ------------- ---------- ------------ ----------------- ------------ ----------- ------------
Milton "Todd" Ault III (1)   2005         0            0           0              0           2,000,000       0            0
  CEO and Chairman           2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

William B. Horne (2)         2005         0            0           0              0            500,000        0            0
  CEO, CFO and Chairman      2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

Philip Gatch (3)             2005     $ 23,866         0           0           $ 11,250        250,000        0            0
  CTO                        2004         0            0           0              0               0           0            0
                             2003         0            0           0              0               0           0            0

Jay Rifkin (4)               2005         0            0           0              0           4,400,000       0            0
  CEO and President and      2004         0            0           0              0               0           0            0
  Principal Executive        2003         0            0           0              0               0           0            0
  Officer of Rebel Crew
(1)   Mr. Ault was appointed  Chief  Executive  Officer on April 26, 2005,
            and  director  and  Chairman of the Board of  Directors  on July 16,
            2005.  Mr.  Ault  resigned  from the  positions  of Chief  Executive
            Officer  and  director  and  Chairman of the Board of  Directors  on
            September 30, 2005.

      (2)   Mr. Horne was appointed Chief Financial Officer and director on July
            20, 2005, and Chief  Executive  Officer and Chairman of the Board of
            Directors  on  September  30,  2005.  Mr.  Horne  resigned  from the
            position of Chief Executive Officer on December 29, 2005.

      (3)   Mr.  Gatch was hired as Chief  Technology  Officer of the Company on
            September 20, 2005.

                                       11
(4)   Mr. Rifkin was appointed  President on September 30, 2005, and Chief
            Executive Officer and director nominee on December 29, 2005.

                               OPTIONS GRANT TABLE

      The  following  table sets  forth  information  with  respect to the named
executive officers  concerning the grant of stock options during the fiscal year
ended  December 31,  2005.  The Company did not have during such fiscal year any
plans providing for the grant of stock appreciation rights ("SARs").

                      Option/SAR Grants in Last Fiscal Year
--------------------------------------------------------------------------------
Potential
                                                                               Realizable Value at
                                                                                  Assumed Annual
                                                                                  Rates of Stock      Alternative to
                                                                                Price Appreciation     (f) and (g):
                              Individual Grants                                  for Option Term     Grant Date Value
------------------------------------------------------------------------------  ----------------     -----------------
(a)                  (b)          (c)          (d)        (e)         (f)        (g)            (h)
                                         % of Total
                            Number of    Options/
                            Securities   SARs
                            Underlying   Granted to    Exercise
                            Options/     Employees     or Base                                          Grant Date
                            SARs         in Fiscal     Price      Expiration                             Present
           Name             Granted (#)  Year          ($/Sh)     Date        5% ($)     10% ($)      Value ($) (1)
--------------------------- ------------ ------------- ---------- ----------- ---------- ---------- -------------------
Milton "Todd" Ault III (2)  2,000,000     2,000,000     $ 0.25   7/20/2015     ---        ---            $ 494,200
William B. Horne (3)          500,000       500,000     $ 0.25   7/20/2015     ---        ---            $ 123,550
Philip Gatch (4)              250,000       250,000     $ 0.25   7/20/2015     ---        ---             $ 61,775
Jay Rifkin (5)              4,400,000     4,400,000     $ 0.85   9/30/2015     ---        ---          $ 3,696,620
-----------------------------------------------------------------------------------------------------------------------
(1)   The value shown was calculated  utilizing the  Black-Scholes  option
            pricing  model  and  are   presented   solely  for  the  purpose  of
            comparative disclosure in accordance with certain regulations of the
            Securities  and Exchange  Commission.  This model is a  mathematical
            formula  used to value  traded  stock price  volatility.  The actual
            value that an executive officer may realize, if any, is dependent on
            the amount by which the stock price at the time of exercise  exceeds
            the exercise price. There is no assurance that the value realized by
            an executive  officer will be at or near the value  estimated by the
            Black-Scholes  model.  In calculating the grant date present values,
            the Company used the following assumptions:  (a) expected volatility
            of approximately 155%; (b) risk-free rate of return of approximately
            3.75%; (c) no dividends payable during the relevant period;  and (d)
            exercise at the end of a 10 year period from the date of grant.

      (2)   On July 20, 2005, as  consideration  for service as Chief  Executive
            Officer,  the Company  granted  Milton  "Todd" Ault,  III options to
            purchase  2,000,000 shares of common stock with an exercise price of
            $0.25 per share.  These stock  options  would have vested  quarterly
            over two  years,  however,  on  September  30,  2005,  the  Board of
            Directors  accelerated the vesting of such options such that options
            to purchase 475,000 shares of the Company's common stock immediately
            vested and are  exercisable  for a period of 18 months from December
            29, 2005. The remaining options to purchase  1,525,000 shares of the
            Company's common stock were cancelled.

      (3)   On July 20, 2005, as  consideration  for service as Chief  Financial
            Officer and Director,  the Company  granted William B. Horne options
            to purchase 500,000 shares of common stock with an exercise price of
            $0.25 per share.  These stock  options  would have vested  quarterly
            over  two  years,  however,  on  December  29,  2005,  the  Board of
            Directors  accelerated the vesting of such options such that options
            to purchase 400,000 shares of the Company's common stock immediately
            vested and are  exercisable  for a period of 18 months from the date
            the  individual  no longer  performs  services to the  Company.  The
            remaining options to purchase 100,000 shares of the Company's common
            stock were cancelled.

      (4)   On July 20, 2005, as  consideration  for service as Chief Technology
            Officer,  the  Company  granted  Philip  Gatch  options to  purchase
            250,000  shares of our common stock with an exercise  price of $0.25
            per share.  These stock options would have vested quarterly over two
            years,  however,  on  December  29,  2005,  the  Board of  Directors
            accelerated  the  vesting  of such  options  such  that  options  to
            purchase  250,000 shares of the Company's  common stock  immediately
            vested and are  exercisable  for a period of 18 months from the date
            the individual no longer performs services to the Company.

                                       12
(5)   On  September  30,  2005,  as  consideration  for service as Interim
            President,  the  Company  granted  Jay Rifkin  options  to  purchase
            4,400,000 shares of common stock with an exercise price of $0.85 per
            share.  These  stock  options  vest  annually  over three years from
            December 29, 2005.

Aggregate Option Exercises in Last Fiscal Year

      No options of the Company were exercised by the named  executive  officers
during the most recent fiscal year ended December 31, 2005.

Securities Authorized for Issuance Under Equity Compensation Plans

      The  following  table  shows  information  with  respect  to  each  equity
compensation  plan under which the  Company's  common  stock is  authorized  for
issuance as of the fiscal year ended December 31, 2005.
EQUITY COMPENSATION PLAN INFORMATION
------------------------------------ ------------------------ ----------------------- ---------------------------
                                                                                         Number of securities
                                      Number of securities                             remaining available for
                                        to be issued upon        Weighted average       future issuance under
                                           exercise of          exercise price of     equity compensation plans
                                      outstanding options,     outstanding options,     (excluding securities
           Plan category               warrants and rights     warrants and rights     reflected in column (a))
------------------------------------ ------------------------ ----------------------- ---------------------------
                                               (a) (b) (c)
------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans approved
by security holders                             0                       0                         0
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
Equity compensation plans not
approved by security
holders                                     8,862,500                 $0.61                   6,687,500
------------------------------------ ------------------------ ----------------------- ---------------------------

------------------------------------ ------------------------ ----------------------- ---------------------------
Total                                       8,862,500                 $0.61                   6,137,500
------------------------------------ ------------------------ ----------------------- ---------------------------
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

      Management of the Company believes that all of the below transactions were
on terms at least as favorable as could have been obtained from unrelated  third
parties.

Relationships with Patient Safety Technologies, Inc.

      On December 29, 2004,  the  Company's  then current  directors  along with
several other  shareholders sold 2,229,527 shares of the Company's common stock,
representing  22.3% of the outstanding  shares of common stock of the Company on
such date, to Patient Safety  Technologies,  Inc.  (formerly,  Franklin  Capital
Corporation)  ("PST"). The Company's directors,  Gregg B. Colton, Don J. Colton,
Norman Sammis and Glenn W. Stewart,  sold 80% of their holdings to PST at $0.135
per share.  Another shareholder who was not a principal  shareholder or director
sold all of his shares to PST at $0.145 per share. The aggregate amount of funds
of PST used to purchase the shares of common stock was  approximately  $301,998.
The  source  for such  funds  was  PST's  working  capital.  The  directors  and
shareholders  agreed to sell an  additional  1,224,000  shares (the  "Additional
Shares") of our common stock of to PST upon the shares being registered with the
SEC by December 29, 2005. In addition,  prior to the  acquisition  and change of
control, PST owned 327,500 shares of the Company's common stock.

                                       13
On December 28, 2005, PST assigned its right to purchase  1,000,000 of the
Additional  Shares to Alan  Morelli  (the  "Assignment  Agreement")  and amended
certain  terms of the stock  purchase  agreement  pursuant to which the Original
Purchase  Transaction  was  completed  (the  "Amendment   Agreement").   In  the
Assignment  Agreement,  the Company granted the parties  piggyback  registration
rights  with  respect to the sale of the  Additional  Shares.  In the  Amendment
Agreement,  the Company  agreed that if it does not  register  the resale of the
Additional  Shares on or before June 30, 2005,  then the Company will redeem the
Additional  Shares at a price of $0.145 per share and the Company will thereupon
sell 224,000 shares of the Company's common stock to PST and 1,000,000 shares of
the Company's  common stock to Mr.  Morelli at a price of $0.145 per share.  Mr.
Morelli is a current Director Nominee of the Company.

      Pursuant to the stock  purchase  agreement  with PST,  Melanie  Glazer was
appointed as Chairman of the Company's  Board of Directors on December 30, 2004,
following the  resignation of Glenn W. Stewart,  Norman Sammis and Don J. Colton
as  directors.  Effective  April 26,  2005,  Gregg B. Colton  resigned  from his
positions as President,  Chief Executive Officer and Chief Financial Officer. On
April 26,  2005,  the  Company's  Board of  Directors  appointed  the  following
officers:  (a)  Milton C.  Ault,  III - Chief  Executive  Officer;  (b)  Kathryn
Macenzie Queen - President of Operations; and (c) Lynne Silverstein - Secretary.
Mr. Ault  subsequently  resigned  on  September  30, 2005 and Ms.  Queen and Ms.
Silverstein  resigned on December 29, 2005. Upon Mr. Ault's resignation as Chief
Executive  Officer,  William B. Horne was appointed to succeed Mr. Ault as Chief
Executive Officer. Mr. Horne resigned as Chief Executive Officer upon completing
the Acquisition on December 29, 2005.

      On June 30, 2005,  the Company  appointed  Philip  Gatch as the  Company's
Chief  Technology  Officer.  On September 19, 2005, the Company  entered into an
asset purchase  agreement with Mr. Gatch,  and thereby  purchased the iCodemedia
Assets. As consideration for the iCodemedia Assets, the Company issued Mr. Gatch
1,000,000 shares of common stock.

      Effective July 16, 2005,  Gregg B. Colton  resigned from his position as a
director.  Effective  July 16, 2005,  the Company  appointed  Alice M. Campbell,
Milton "Todd" Ault, III and Darrell Grimsley as directors. Upon his appointment,
Mr. Ault was named Chairman of the Company's  Board of Directors.  Ms.  Campbell
was appointed to chair the Company's  Audit Committee and to chair the Company's
Compensation Committee. Mr. Ault resigned as a director on September 30, 2005.

      Effective  July 20, 2005,  the Company  appointed  Lynne  Silverstein  and
William  B. Horne as  directors.  Ms.  Silverstein  subsequently  resigned  as a
director on December 29, 2005.

      Effective  July 20, 2005,  the Company  appointed  William B. Horne as the
Company's Chief Financial Officer.

      Each of Melanie Glazer, Milton C. Ault, III, Kathryn Macenzie Queen, Lynne
Silverstein,  Philip Gatch,  Alice M. Campbell,  Darrell Grimsley and William B.
Horne had and/or currently have employment positions, directorships and/or other
relationships  with Ault Glazer & Company  Investment  Management  LLC,  Patient
Safety Technologies,  Inc. and/or Ault Glazer & Company Investment  Management's
or Patient Safety Technologies' current officers and directors.

Acquisition of Rebel Crew Films

      On  December  29,  2005,  the  Company  acquired  all  of the  issued  and
outstanding  capital stock of Rebel Crew Films in consideration for the issuance
of 21,207,080 shares of common stock to the shareholders of Rebel Crew Films. Of
these shares,  19,086,372  shares were issued or are issuable to Rebel Holdings,
LLC as  consideration  for its 90%  ownership  interest  in Rebel Crew Films and
2,120,708 were issued or are issuable to Cesar Chatel as  consideration  for his
10%  ownership  interest  in Rebel  Crew  Films.  The  Company's  present  Chief
Executive Officer and Director Nominee,  Jay Rifkin, is the sole managing member
of Rebel  Holdings,  LLC.  Mr.  Chatel  is an  employee  of the  Company  and is
President of the Company's now wholly owned subsidiary Rebel Crew Films.

      On December  29,  2005 the  Company  entered  into a  Securities  Purchase
Agreement with Rebel Holdings,  LLC,  pursuant to which the Company  purchased a
$556,306.53  principal  amount loan receivable owed by Rebel Crew Films to Rebel
Holdings,  LLC in exchange for the issuance of a  $556,306.53  principal  amount
secured  convertible note to Rebel Holdings,  LLC. The secured  convertible note
accrues simple interest at the rate of 4.5%, matures on December 29, 2010 and is
secured by all of the  Company's  assets now owned or  hereafter  acquired.  The
secured  convertible  note is convertible into 500,000 shares of common stock of
the Company at the rate of $1.112614 per share. As described  above, Jay Rifkin,
the Company's  present  Chief  Executive  Officer and a Director  Nominee of the
Company, is the sole managing member of Rebel Holdings, LLC.

                                       14
Between  September  2005 and October 2005,  Jay Rifkin loaned an aggregate
total principal amount of $73,000 to Rebel Crew Films. The Company has agreed to
repay  this loan to Mr.  Rifkin  pursuant  to the  terms of a $73,000  principal
amount promissory note due June 30, 2006 which accrues interest at 5% per annum.
In the event of breach of the  promissory  note, the interest rate will increase
to 8% per annum.

      On December  29,  2005,  the Board of  Directors  ratified a grant to Alan
Morelli made on September 15, 2005, as a consultant to the Company,  warrants to
purchase  250,000 shares of the Company's common stock with an exercise price of
$0.145 per share, which warrants vested immediately.  These warrants were issued
to Mr. Morelli as compensation for advisory  services rendered to the Company in
connection with structuring the Acquisition. Mr. Morelli is presently a director
nominee of the Company.

         SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

      The following table sets forth certain information,  as of January 4, 2006
with respect to the beneficial  ownership of the outstanding common stock by (i)
any  holder of more than five  (5%)  percent;  (ii) each of the named  executive
officers and  directors of the Company;  and (iii) the  Company's  directors and
named executive officers as a group. Except as otherwise indicated,  each of the
stockholders  listed below has sole voting and investment  power over the shares
beneficially owned.
Common Stock           Percentage of
  Name of Beneficial Owner (1)               Beneficially Owned (2)     Common Stock (2)
  ----------------------------------------- ------------------------- ---------------------
Milton "Todd" Ault, III                       3,728,227 (3)                 10.0%
  Bodnar Capital Management, LLC                 2,941,176                     8.0%
  William B. Horne                                400,000 (4)                  1.1%
  Alice M. Campbell                               350,000 (5)                     *
  Jay Rifkin                                   19,586,372 (6)                 52.6%
  Philip Gatch                                  1,250,000 (7)                  3.4%
  Cesar Chatel                                  2,120,708 (8)                  5.8%
  ----------------------------------------- ------------------------- ---------------------
  All  officers  and  directors as a group      21,586,372                    56.5%
  (4 persons)
* Less than 1%

      (1)   Except as otherwise indicated,  the address of each beneficial owner
            is c/o Digicorp, 4143 Glencoe Avenue, Marina Del Rey, CA 90292.
      (2)   Applicable  percentage  ownership is based on  36,721,113  shares of
            common  stock  outstanding  as of  January 4,  2006,  together  with
            securities  exercisable or  convertible  into shares of common stock
            within 60 days of January 4, 2006 for each  stockholder.  Beneficial
            ownership  is  determined  in  accordance  with  the  rules  of  the
            Securities and Exchange  Commission and generally includes voting or
            investment power with respect to securities.  Shares of common stock
            that a person has the right to acquire beneficial  ownership of upon
            the exercise or conversion of options,  convertible stock,  warrants
            or other securities that are currently exercisable or convertible or
            that  will  become  exercisable  or  convertible  within  60 days of
            January  4, 2006 are deemed to be  beneficially  owned by the person
            holding such  securities for the purpose of computing the percentage
            of ownership of such person,  but are not treated as outstanding for
            the  purpose of  computing  the  percentage  ownership  of any other
            person.
      (3)   Includes: (a) 475,000 shares issuable upon exercise of stock options
            with an exercise  price of $0.25 per share and which expire June 29,
            2007;  (b)  512,500  shares  beneficially  owned by certain  private
            investment  funds and individual  accounts  managed by Ault Glazer &
            Company  Investment  Management  LLC,  for which Mr.  Ault serves as
            Chief  Investment  Officer and managing  member;  and (c)  2,792,027
            shares of the  common  stock held by  Patient  Safety  Technologies,
            Inc.,  for which Mr.  Ault serves as  Chairman  and Chief  Executive
            Officer.  Mr. Ault and Patient Safety  Technologies,  Inc. each have
            granted Mr. Rifkin an irrevocable proxy to vote the shares of common
            stock  owned by them  for  certain  directors  of the  Company.

                                       15
(4)   Represents  shares  issuable  upon exercise of stock options with an
            exercise  price of $0.25 per share and an expiration  date 18 months
            from the date Mr.  Horne's  services to the Company  terminate.  Mr.
            Horne has granted Mr. Rifkin an irrevocable proxy to vote the shares
            of common stock  issuable  upon  exercise of such stock  options for
            certain directors of the Company.
      (5)   Represents  shares  issuable  upon exercise of stock options with an
            exercise  price of $0.25 per share and an expiration  date 18 months
            from the date Ms. Campbell's services to the Company terminate.  Ms.
            Campbell  has granted Mr.  Rifkin an  irrevocable  proxy to vote the
            shares of common stock  issuable upon exercise of such stock options
            for certain directors of the Company.
      (6)   Includes:  (a)  3,600,000  shares  which are held in escrow  pending
            satisfaction  of certain  performance  milestones  through March 31,
            2007;  and  (b)  500,000  shares   issuable  upon  conversion  of  a
            $556,306.53   principal  amount  secured  convertible  note  with  a
            conversion price of $1.112614 per share. All of these securities are
            held by Rebel  Crew  Holdings,  LLC of which Mr.  Rifkin is the sole
            managing member. Mr. Rifkin's reported beneficial ownership does not
            include  approximately  8,762,736  shares of common stock issued and
            issuable  by the  Company  for  which  certain  shareholders  of the
            Company have  granted Mr.  Rifkin an  irrevocable  proxy to vote for
            directors of the Company.
      (7)   Includes 250,000 shares issuable upon exercise of stock options with
            an  exercise  price of $0.25  per share  and an  expiration  date 18
            months from the date Mr. Gatch's services to the Company  terminate.
            Mr. Gatch has granted Mr.  Rifkin an  irrevocable  proxy to vote the
            shares of common  stock  owned by him for certain  directors  of the
            Company.

      (8)   Includes   400,000   shares   which  are  held  in  escrow   pending
            satisfaction  of certain  performance  milesontes  through March 31,
            2007. Mr. Chatel has granted Mr. Rifkin an irrevocable proxy to vote
            the shares of common stock owned by Mr. Chatel for certain directors
            of the Company.

                            DESCRIPTION OF SECURITIES

      The Company's  authorized  capital stock consists of 50,000,000  shares of
common stock, $.001 par value per share, and no shares of preferred stock.

      The holders of common  stock are  entitled to one vote for each share held
of record on all  matters  to be voted on by the  stockholders.  The  holders of
common stock are entitled to receive dividends ratably, when, as and if declared
by the Board of Directors,  out of funds  legally  available  therefore.  In the
event of a liquidation, dissolution or winding-up of the Company's business, the
holders of common stock are entitled to share  equally and ratably in all assets
remaining available for distribution after payment of liabilities.

      The  holders  of shares  of common  stock,  as such,  have no  conversion,
preemptive,  or other subscription rights and there are no redemption provisions
applicable to the common stock.  All of the  outstanding  shares of common stock
are validly issued, fully paid and non-assessable.

      The Company has never paid any cash  dividends on its common stock and the
Company does not anticipate paying any cash dividends in the foreseeable future.
The Company  intends to retain future  earnings to fund ongoing  operations  and
future capital  requirements of its business.  Any future  determination  to pay
cash  dividends  will be at the discretion of the Board of Directors and will be
dependent upon the Company's financial condition, results of operations, capital
requirements and such other factors as the Board of Directors deems relevant.

            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Information

      The Company's  common stock is currently  quoted on the OTC Bulletin Board
under the symbol  "DGCO." For the periods  indicated,  the following  table sets
forth the high and low sales prices per share of the Company's common stock.

                                       16
Fiscal 2005                      Fiscal 2004
                                         -------------------------------- ---------------------------------
Fiscal Quarter*                               High             Low             High              Low
---------------------------------------- ---------------- --------------- ---------------- ----------------
First Quarter Ended March 31                   $0.35           $0.14            $0.13           $0.06
Second Quarter Ended June 30                   $0.45           $0.18            $0.18           $0.07
Third Quarter Ended September 30               $1.37           $0.25            $0.35           $0.06
Fourth Quarter Ended December 31               $1.90           $0.65            $0.35           $0.14
*Upon closing the Acquisition, the Company's fiscal year changed from June
30 to December 31.

Holders

      As of January 4, 2006,  the Company's  shares of common stock were held by
approximately 290 stockholders of record.

Dividends

      The Company has not  declared any  dividends  to date.  The Company has no
present  intention  of paying  any cash  dividends  on its  common  stock in the
foreseeable future, as the Company intends to use earnings,  if any, to generate
growth.  The payment by the Company of dividends,  if any, in the future,  rests
within the  discretion  of the Board of Directors  and will depend,  among other
things,  upon the Company's  earnings,  capital  requirements  and our financial
condition,  as well as other relevant factors.  There are no restrictions in the
Company's  articles of  incorporation  or bylaws that  restrict the Company from
declaring dividends.

                     RECENT SALES OF UNREGISTERED SECURITIES

      During  September 2003, the Board of Directors  authorized the issuance of
700,000  restricted  common shares of the Company's  stock at price of $0.01 per
share  (totaling  $7,000) to pay for  expenses  incurred  by the Company for the
audit  of its  financial  statements  and  to  pay  for  costs  associated  with
maintaining  compliance  with the State of Utah along with providing the Company
operating capital for the subsequent year. Of the 700,000 shares issued, 400,000
were issued to Vernal Western Drilling, a company that is owned by Don J. Colton
and Gregg B.  Colton,  former  officers and  directors  of the Company,  150,000
shares were issued to Bonnie Myers and the other  150,000  shares were issued to
Whisper  Investment  Company.  The shares were  issued to the  parties  above on
October 8, 2003 for cash.  The  issuance  of these  securities  was exempt  from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On May 18,  2005,  the Company sold  2,941,176  shares of common stock and
warrants (the "May  Warrants")  to purchase an aggregate of 3,000,000  shares of
common  stock  with  exercise  prices  ranging  from $0.25 to $1.50 per share to
Bodnar  Capital  Management,  LLC ("Bodnar  Capital").  On October 27, 2005, the
Company entered into an agreement with Bodnar Capital to cancel the May Warrants
in exchange  for the  issuance  by the Company of a warrant to purchase  500,000
shares of common stock with a an exercise  price of $0.01 per share  exercisable
for a period of five years.  On November 2, 2005,  Bodnar Capital  exercised its
warrant for cash and the Company issued Bodnar Capital  500,000 shares of common
stock.   The  issuance  of  these   securities  was  exempt  from   registration
requirements  pursuant  to  Section  4(2) of the  Securities  Act and  Rule  506
promulgated thereunder.

      On July 20,  2005,  as  consideration  for  investor  relation  consulting
services,  the Company granted options to Steve  Jafarzadeh to purchase  100,000
shares of common  stock with an  exercise  price of $0.25 per  share.  25,000 of
these options have vested and the  remaining  75,000  options were  cancelled on
December 29, 2005. This grant was exempt from registration  requirement pursuant
to Section 4(2) of the Securities Act.

      On July 20, 2005, as  consideration  for Business  development  consulting
services,  the Company granted  options to Nicolas  Soichet to purchase  100,000
shares of common  stock with an  exercise  price of $0.25 per  share.  50,000 of
these options have vested and the  remaining  50,000  options were  cancelled on
December 29, 2005. This grant was exempt from registration  requirement pursuant
to Section 4(2) of the Securities Act.

      On July 20, 2005, as  consideration  for service on the Company's Board of
Directors,  the Company  granted to each of Melanie  Glazer,  Alice M. Campbell,
Darrell  Grimsley,  Lynne  Silverstein  and William B. Horne options to purchase
250,000 shares of common stock with an exercise price of $0.25 per share. 62,500
of such options vested to Ms. Glazer,  250,000  vested to Ms.  Campbell,  62,500
vested to Mr. Grimsley, 75,000 vested to Ms. Silverstein,  200,000 vested to Mr.
Horne, and the remaining  options of such individuals were cancelled on December
29,  2005.  The  issuance  of these stock  options was exempt from  registration
requirements pursuant to Section 4(2) of the Securities Act.

      On July  20,  2005,  as  consideration  for  service  as  Chairman  of the
Company's Audit Committee,  the Company granted Ms. Campbell options to purchase
100,000 shares of common stock with an exercise price of $0.25 per share. All of
these stock  options are vested.  The issuance of these stock options was exempt
from registration requirements pursuant to Section 4(2) of the Securities Act.

      On July  20,  2005,  as  consideration  for  service  as a  member  of the
Company's  Audit  Committee,  the Company granted Ms. Glazer options to purchase
50,000 shares of common stock with an exercise price of $0.25 per share.  12,500
of such options have vested and the remaining  options were  cancelled  upon Ms.
Glazer's resignation from the Company's Board on December 29, 2005. The issuance
of these stock  options was exempt from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

                                       17
On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Executive  Officer,  the Company granted Mr. Ault options to purchase  2,000,000
shares of common  stock with an exercise  price of $0.25 per share.  These stock
options vest quarterly over two years  beginning  September 30, 2005.  Effective
September 30, 2005, the Board of Directors accelerated the vesting of 475,000 of
such  options and fixed the  expiration  date of the options to 18 months  after
completing the Acquisition.  The remaining stock options were cancelled upon Mr.
Ault resigning as an officer and director of the Company.  The issuance of these
stock options was exempt from registration requirements pursuant to Section 4(2)
of the Securities Act.

      On July 20, 2005, as consideration for service as the Company's  President
of Operations,  the Company  granted  Kathryn Queen options to purchase  750,000
shares of common  stock with an  exercise  price of $0.25 per share.  237,500 of
these  options have vested and the  remaining  options were  cancelled  upon Ms.
Queen's resignation on December 29, 2005. Also on July 20, 2005, as an incentive
bonus,  subject to certain milestones being achieved prior to December 31, 2006,
the Company  agreed to grant Ms.  Queen  options to purchase  750,000  shares of
common stock. These stock options were cancelled upon Ms. Queen's resignation on
December  29,  2005.  The  issuance  of these  stock  options  was  exempt  from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Technology Officer, the Company granted Philip Gatch options to purchase 250,000
shares of common stock with an exercise  price of $0.25 per share.  All of these
options  are  vested.  Also on July  20,  2005,  the  Company  agreed  to  issue
restricted  stock valued at $12,500  quarterly during the three-year term of his
employment as Chief Technology Officer.  The issuance of these stock options was
exempt from registration requirements pursuant to Section 4(2) of the Securities
Act.

      On July 20, 2005,  as  consideration  for service as the  Company's  Chief
Financial  Officer,  the Company  granted Mr. Horne options to purchase  250,000
shares of common  stock with an  exercise  price of $0.25 per share.  200,000 of
these options are vested and the remaining  50,000 were cancelled.  The issuance
of these stock  options was exempt from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

      On  July  20,  2005,  as  consideration   for  service  as  the  Company's
Controller,  the Company granted Jeanne Olsky options to purchase 100,000 shares
of common stock with an exercise  price of $0.25 per share.  These stock options
vest  quarterly  over two years  beginning  September 30, 2005.  50,000 of these
options have vested and the remaining  options were  cancelled  upon Ms. Olsky's
resignation on December 29, 2005. The issuance of these stock options was exempt
from registration requirements pursuant to Section 4(2) of the Securities Act.

      On July 20, 2005, as consideration for service as the Company's  Corporate
Secretary,  the Company  granted  Ms.  Silverstein  options to purchase  150,000
shares of common  stock with an exercise  price of $0.25 per share.  These stock
options vest quarterly over two years  beginning  September 30, 2005.  37,500 of
these  options have vested and the  remaining  options were  cancelled  upon Ms.
Silverstein's  resignation  on December  29,  2005.  The issuance of these stock
options was exempt from  registration  requirements  pursuant to Section 4(2) of
the Securities Act.

      On September 19, 2005, the Company  purchased the  iCodemedia  Assets from
Mr. Gatch, the Company's Chief  Technology  Officer.  As  consideration  for the
iCodemedia  Assets,  the Company  issued Mr.  Gatch  1,000,000  shares of common
stock.  The issuance of these  shares to Mr. Gatch was exempt from  registration
requirements  pursuant  to  Section  4(2) of the  Securities  Act and  Rule  506
promulgated  thereunder.  The  issuance of these  stock  options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On  September  30, 2005,  the Company  granted Jay Rifkin,  the  Company's
current Chief Executive  Officer,  options to purchase  4,400,000  shares of the
Company's  common stock with an exercise  price of $0.85 per share,  which stock
options vest  annually over a period of three years from the date of closing the
Acquisition.  The issuance of these stock  options was exempt from  registration
requirements  pursuant to Section  4(2) of the  Securities  Act. The issuance of
these  stock  options  was exempt  from  registration  requirements  pursuant to
Section 4(2) of the Securities Act.

                                       18
On September 30, 2005, the Company  granted Cesar Chatel,  as President of
Rebel Crew Films,  options to purchase  800,000  shares of the Company's  common
stock  with an  exercise  price of $0.85 per share,  which  stock  options  vest
annually over a period of three years from the date of closing the  Acquisition.
The issuance of these stock  options was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On September 30, 2005, the Company  granted Oscar Carreno,  as Director of
Sales of Rebel Crew Films,  options to purchase  150,000 shares of the Company's
common stock with an exercise price of $0.85 per share, which stock options vest
annually  over a period of four years from the date of closing the  Acquisition.
The issuance of these stock  options was exempt from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On  September  30,  2005,  the Company  granted Ian Monsod,  as Manager of
Operations  of Rebel Crew  Films,  options  to  purchase  125,000  shares of the
Company's  common stock with an exercise  price of $0.85 per share,  which stock
options vest  annually  over a period of four years from the date of closing the
Acquisition.  The issuance of these stock  options was exempt from  registration
requirements pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005, the Company  granted Alan Morelli,  as consultant to
the Company,  warrants to purchase  250,000 shares of the Company's common stock
with an exercise price of $0.145 per share,  which warrants vested  immediately.
These warrants were issued to Mr. Morelli as compensation for advisory  services
rendered to the Company in connection  with  structuring  the  Acquisition.  The
issuance  of these  stock  options  was exempt  from  registration  requirements
pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005,  the Company issued Rebel  Holdings,  LLC 19,086,372
shares of common stock as compensation for its 90% equity interest in Rebel Crew
Films. Jay Rifkin,  the Company's current Chief Executive Officer and a director
nominee,  is the sole managing member of Rebel Holdings,  LLC. 3,600,000 of such
shares are held in escrow pending satisfaction of certain performance milestones
through March 31, 2007. This issuance was exempt from registration  requirements
pursuant  to  Section  4(2) of the  Securities  Act  and  Rule  506  promulgated
thereunder.

      On December 29, 2005, the Company issued Cesar Chatel  2,120,708 shares of
common stock as  compensation  for his 10% equity  interest in Rebel Crew Films.
Mr. Chatel is President of Rebel Crew Films.  400,000 of such shares are held in
escrow pending satisfaction of certain performance  milestones through March 31,
2007.  This  issuance  was exempt  from  registration  requirements  pursuant to
Section 4(2) of the Securities Act and Rule 506 promulgated thereunder.

      On December 29, 2005 the Company  issued a  $556,306.53  principal  amount
secured  convertible  note to Rebel Holdings,  LLC in exchange for a $556,306.53
loan  receivable  owed by Rebel Crew Films to Rebel  Holdings,  LLC. The secured
convertible  note is  convertible  into  500,000  shares of common  stock of the
Company at the rate of $1.112614 per share. As described above, Jay Rifkin,  the
Company's present Chief Executive Officer and a director nominee of the Company,
is the sole managing member of Rebel Holdings, LLC.

      On December 29, 2005,  the Company  granted  Alan  Morelli,  as a director
nominee of the  Company,  options to purchase  350,000  shares of the  Company's
common stock with an exercise  price equal to the closing price of the Company's
common stock of $1.50 per share, which stock options vest annually over a period
of three years from the date Mr.  Morelli's board  appointment is effective.  In
the event that Mr.  Morelli,  for whatever  reason,  declines the appointment to
serve as a director on the Company's Board of Directors, then these options will
be automatically  cancelled. The issuance of these stock options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

      On December 29, 2005,  the Company  granted  David M. Kaye,  as a director
nominee of the  Company,  options to purchase  350,000  shares of the  Company's
common stock with an exercise  price equal to the closing price of the Company's
common stock of $1.50 per share, which stock options vest annually over a period
of three years from the date Mr. Kaye's board  appointment is effective.  In the
event that Mr. Kaye, for whatever reason, declines the appointment to serve as a
director  on the  Company's  Board of  Directors,  then  these  options  will be
automatically  cancelled.  The  issuance of these stock  options was exempt from
registration requirements pursuant to Section 4(2) of the Securities Act.

                                       19
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS

      On October 25,  2005,  the  Company  engaged the firm of Peterson & Co. to
serve as its  independent  registered  public  accountants  for the fiscal  year
ending June 30, 2006. On October 27, 2005,  the Company  notified Jones Simkins,
P.C.  ("Jones  Simkins") that it was terminating  Jones Simkins'  services.  The
decision to change  accountants  was  recommended  and approved by the Company's
Board of Directors.

      During the two fiscal  years  ended June 30,  2005 and 2004,  and  through
October 27, 2005, (i) there were no disagreements  between the Company and Jones
Simkins on any matter of accounting principles or practices, financial statement
disclosure  or  auditing  scope  or  procedure  which,  if not  resolved  to the
satisfaction  of Jones Simkins would have caused Jones Simkins to make reference
to the matter in its reports on the  Company's  financial  statements,  and (ii)
except  for Jones  Simkins'  report on the  Company's  June 30,  2004  financial
statements  dated  September  1, 2004 which  included an  explanatory  paragraph
wherein they expressed substantial doubt about the Company's ability to continue
as a going concern, Jones Simkins' reports on the Company's financial statements
did not contain an adverse opinion or disclaimer of opinion,  or was modified as
to  uncertainty,  audit scope or  accounting  principles.  During the two fiscal
years ended June 30, 2005 and 2004 and through  October 27, 2005,  there were no
reportable events as the term described in Item 304(a)(1)(iv) of Regulation S-B.

      During the two fiscal  years  ended June 30,  2005 and 2004,  and  through
October 27, 2005,  the Company has not consulted  with Peterson & Co.  regarding
either:

      1.    The   application   of   accounting   principles   to  any  specific
            transaction,  either  completed  or  proposed,  or the type of audit
            opinion   that  might  be  rendered  on  the   Company's   financial
            statements,  and neither a written report was provided to Peterson &
            Co. nor oral advice was provided that  Peterson & Co.  concluded was
            an important factor considered by the Company in reaching a decision
            as to the accounting, auditing or financial reporting issue; or
      2.    Any matter  that was either  subject of  disagreement  or event,  as
            defined in Item  304(a)(1)(iv)  of  Regulation  S-B and the  related
            instruction to Item 304 of Regulation S-B, or a reportable event, as
            that term is explained in Item 304(a)(1)(iv) of Regulation S-B.

                    INDEMNIFICATION OF DIRECTORS AND OFFICERS

      The Company's Bylaws require that the Company  indemnify and hold harmless
officers,  directors  and former  officers  and  directors  for any  obligations
arising by reason of being or having been  directors or officers of the Company,
except in relation to matters as to which any such director or officer or former
director  or  officer  or person is  adjudged  to be liable  for  negligence  or
misconduct in the performance of duty. Such  indemnification is not exclusive of
any other rights to which those  indemnified  may be entitled,  under any Bylaw,
agreement, vote of stockholders, or otherwise.

      Insofar as  indemnification  for liabilities  arising under the Securities
Act may be permitted to directors,  officers or persons  controlling us pursuant
to the foregoing provisions,  or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange  Commission,  such indemnification is
against  public  policy as expressed in the  Securities  Act and is,  therefore,
unenforceable.

ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS

(a) Financial statements of business acquired.

      The following financial statements of Rebel Crew Films appear on pages F-1
      through F-19 at the end of this report and such  financial  statements are
      herein incorporated by reference:

       Balance  Sheets as of  September  30,  2005 and  December  31,  2004
       (unaudited)  Statements of Operations  for the three and nine months
       ended September 30, 2005 and 2004 (unaudited)

       Statements  of Cash Flows for the nine months  ended  September  30,
       2005 and 2004 (unaudited)

       Notes to September 30, 2005 financial statements

                                       20
Independent Auditor's Report
       Balance Sheets as of December 31, 2004 and 2003
       Statements of Operations for the years ended December 31, 2004 and 2003
       Statements of Stockholders' Equity (Deficit) for the years ended
       December 31, 2004 and 2003 Statements of Cash Flows for the years ended
       December 31, 2004 and 2003 Notes to December 31, 2004 financial
       statements

 (b) Pro forma financial information.

         Not applicable.

 (c) Exhibits

Exhibit Number                            Description
------------------    ----------------------------------------------------------
2.1                     Stock Purchase  Agreement  dated as of December 20, 2005
                        among Digicorp,  Rebel Crew Films, Inc., Rebel Holdings,
                        LLC and Cesar Chatel  (Incorporated  by reference to the
                        Company's   Form  8-K  filed  with  the  Securities  and
                        Exchange Commission on December 21, 2005)

2.2                     Letter Agreement dated December 20, 2005 among Digicorp,
                        Rebel Crew Films,  Inc.,  Rebel Holdings,  LLC and Cesar
                        Chatel  (Incorporated by reference to the Company's Form
                        8-K filed with the Securities and Exchange Commission on
                        December 21, 2005)

2.3                     Purchaser  and  Company  Disclosure  Schedules  to Stock
                        Purchase  Agreement  dated as of December 20, 2005 among
                        Digicorp,  Rebel Crew Films,  Inc., Rebel Holdings,  LLC
                        and Cesar Chatel

2.4                     Lock Up Agreements  of Sellers in connection  with Stock
                        Purchase  Agreement  dated as of December 20, 2005 among
                        Digicorp,  Rebel Crew Films,  Inc., Rebel Holdings,  LLC
                        and Cesar Chatel

2.5                     Escrow  Agreement  dated  December 29, 2005 by and among
                        Digicorp,   Rebel   Holdings,   LLC,  Cesar  Chatel  and
                        Sichenzia Ross Friedman Ference LLP as Escrow Agent

3.1                     Articles of Incorporation  (Incorporated by reference to
                        the Company's registration statement on Form 10-SB (File
                        No.  000-33067)  filed with the  Securities and Exchange
                        Commission on August 9, 2001)

3.2                     Bylaws  (Incorporated  by  reference  to  the  Company's
                        registration   statement   on  Form   10-SB   (File  No.
                        000-33067)   filed  with  the  Securities  and  Exchange
                        Commission on August 9, 2001)

3.3                     Amendment No. 1 to Bylaws  (Incorporated by reference to
                        the  Company's  Form 8-K filed with the  Securities  and
                        Exchange Commission on July 21, 2005)

4.1                     Secured  Convertible  Note due  December 19, 2010 in the
                        principal  amount of  $556,306.53  issued to Rebel  Crew
                        Holdings, LLC

4.2                     Promissory  Note  due  June  30,  2006 in the  principal
                        amount  of  $73,000  issued  to Jay  Rifkin  9.1  Voting
                        Agreement  dated  December  29,  2005 by and  among  Jay
                        Rifkin and the  stockholders  of Digicorp  listed on the
                        signature pages thereto

10.1                    Securities Purchase Agreement dated December 29, 2005 by
                        and among Rebel Holdings, LLC and Digicorp

10.2                    Assignment  Agreement  dated  December  29,  2005 by and
                        among  Rebel  Holdings,  LLC,  Digicorp  and Rebel  Crew
                        Films, Inc.

10.3                    Security  Agreement dated December 29, 2005 by and among
                        Digicorp and Rebel Crew Holdings, LLC

10.4                    Digicorp   Stock  Option  and   Restricted   Stock  Plan
                        (Incorporated  by  reference to the  Company's  Form 8-K
                        filed with the  Securities  and Exchange  Commission  on
                        December 22, 2005)

10.5                    Employment  Agreement  dated  September 20, 2005,  among
                        Digicorp and Philip Gatch  (Incorporated by reference to
                        the  Company's  Form 8-K filed with the  Securities  and
                        Exchange Commission on September 22, 2005)

10.6                    Employment  Agreement effective as of September 30, 2005
                        by and between Digicorp and Jay Rifkin

10.7                    Standard Industrial/Commercial  Multi-Tenant Lease dated
                        July 18, 2005  between The Welk  Group,  Inc.  and Rebel
                        Crew Films, Inc.

                                       21
10.8                    Videogram License Agreement dated August 19, 2003 by and
                        between Rebel Crew Films and BCI Eclipse, LLC

10.9                    Videogram  License Agreement dated March 29, 2004 by and
                        between Rebel Crew Films and BCI Eclipse Company, LLC

10.10                   Videogram  License  Agreement  dated May 26, 2004 by and
                        between Rebel Crew Films and BCI Eclipse Company, LLC

10.11                   License  Agreement dated November 15, 2002 between Rebel
                        Crew    Films   and   VAS    Entertainment/Rise    Above
                        Entertainment

10.12                   License  Agreement dated December 31, 2002 between Rebel
                        Crew    Films   and   VAS    Entertainment/Rise    Above
                        Entertainment

16.1                    Letter on change in certifying  accountant dated October
                        31,  2005 from  Jones  Simkins,  P.C.  (Incorporated  by
                        reference  to the  Company's  Form  8-K  filed  with the
                        Securities and Exchange  Commission on October 31, 2005)
                        21.1 Subsidiaries

                                       22
SIGNATURES

      Pursuant to the requirements of the Securities and Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.

                                      Digicorp

Dated: January 5, 2006                By:  /s/ Jay Rifkin
                                          --------------------------------------
                                      Name:    Jay Rifkin
                                      Title:   Chief Executive Officer

                                        23
REBEL CREW FILMS, INC.

                          INDEX TO FINANCIAL STATEMENTS

                                                                        Page

Periods Ended September 30, 2005

Balance Sheets as of
         September 30, 2005 and December 31, 2004 (unaudited)...........F-2

Statements of Operations for the three and nine months
         ended September 30, 2005 and 2004 (unaudited)..................F-3

Statements of Cash Flows for the nine months
         ended September 30, 2005 and 2004 (unaudited)..................F-4

Notes to Financial Statements.........................................F-5 - F-8

Fiscal Years Ended December 31, 2004 and 2003

Independent Auditors' Report............................................F-9

Balance Sheets as of
         December 31, 2004 and 2003.....................................F-10

Statements of Operations for the years
         ended December 31, 2004 and 2003...............................F-11

Statements of Stockholders' Equity (Deficit) for the years
         ended December 31, 2004 and 2003...............................F-12

Statements of Cash Flows for the years
         ended December 31, 2004 and 2003...............................F-13

Notes to Financial Statements........................................F-14 - F-19

                                      F-1
REBEL CREW FILMS, INC.
================================================================================

Condensed Balance Sheets (Unaudited)
--------------------------------------------------------------------------------
September 30,    DECEMBER 31,
                                                            2005            2004
                                                        -------------   --------------

ASSETS

CURRENT ASSETS
Cash and cash equivalents                                 $    3,404     $    7,856
Accounts receivable, net                                      27,290             --
Inventories                                                   36,243             --
Other current assets                                          10,568             --
                                                          ----------     ----------

TOTAL CURRENT ASSETS                                          77,505          7,856

Property and equipment, net                                   13,637             --
Intangible assets, net                                       428,300        188,125
                                                          ----------     ----------

TOTAL ASSETS                                              $  519,442     $  195,981
                                                          ==========     ==========

-----------------------------------------------------------------------------------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities                  $   19,386     $    9,700
Due to related party                                         601,307         48,986
Deferred revenue                                              75,411        162,971
                                                          ----------     ----------

TOTAL CURRENT LIABILITIES                                    696,104        221,657

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, no par value: 100,000 shares authorized;
    100,000 shares issued and outstanding                     14,625         14,625
Accumulated deficit                                         (191,287)       (40,301)
                                                          ----------     ----------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                        (176,662)       (25,676)
                                                          ----------     ----------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)      $  519,442     $  195,981
                                                          ==========     ==========

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

                                      F-2
REBEL CREW FILMS, INC.
================================================================================

Condensed Statements of Operations (Unaudited)

--------------------------------------------------------------------------------
THREE MONTHS ENDED                NINE MONTHS ENDED
                                                         September 30,      SEPTEMBER 30,  SEPTEMBER 30,     SEPTEMBER 30,
                                                               2005             2004            2005              2004
                                                        -----------------   ------------   ---------------   --------------
REVENUE
Licensing fees                                          $          4,218    $     2,572    $       85,205    $      22,235
Sales                                                             52,046             --            55,128               --
                                                        -----------------     ----------     -------------     ------------

TOTAL REVENUE                                                     56,264          2,572           140,333           22,235

OPERATING EXPENSES
Cost of sales                                                     31,433             --            43,465               --
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                     118,495         27,961           247,854           80,889
                                                        -----------------   ------------   ---------------   --------------

TOTAL OPERATING EXPENSES                                         149,928         27,961           291,319           80,889
                                                        -----------------   ------------   ---------------   --------------
OPERATING INCOME (LOSS)                                          (93,664)       (25,389)         (150,986)         (58,654)

OTHER INCOME                                                           --        21,013                 --          75,768
                                                        -----------------   ------------   ---------------   --------------
INCOME (LOSS) BEFORE INCOME TAXES                                (93,664)        (4,376)         (150,986)          17,114

PROVISION FOR INCOME TAXES                                            --             --                --               --
                                                        -----------------   ------------   ---------------   --------------
NET INCOME (LOSS)                                       $        (93,664)   $    (4,376)   $     (150,986)   $      17,114
                                                        =================   ============   ===============   ==============
BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE    $          (0.94)   $     (0.04)   $        (1.51)   $        0.17
                                                        =================   ============   ===============   ==============
WEIGHTED AVERAGE COMMON SHARES OUTSTANDING                       100,000        100,000           100,000          100,000
                                                        =================   ============   ===============   ==============

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

                                      F-3
REBEL CREW FILMS, INC.
================================================================================

Condensed Statements of Cash Flows (Unaudited)

--------------------------------------------------------------------------------
NINE MONTHS ENDED
                                                                                          September 30,     SEPTEMBER 30,
                                                                                             2005               2004
                                                                                       ----------------   --------------
Cash flows from operating activities:
Net income (loss)                                                                      $      (150,986)   $      17,114
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation                                                                                       577               --
Amortization of licenses                                                                        86,825           31,250
Changes in operating assets and liabilities:
Accounts receivable                                                                            (27,290)              --
Inventories                                                                                    (36,243)          (7,920)
Other current assets                                                                           (10,568)              --
Accounts payable and accrued liabilities                                                         9,686          (26,000)
Due to related party                                                                           552,321               --
Deferred revenue                                                                               (87,560)         127,165
                                                                                       ----------------   --------------

          Net cash provided by operating activities                                            336,762          141,609
                                                                                       ----------------   --------------

Cash flows from investing activities:
  Purchases of licenses                                                                       (327,000)        (130,000)
  Purchases of property and equipment                                                          (14,214)               --
                                                                                       ----------------   --------------

          Net cash used in investing activities                                               (341,214)        (130,000)
                                                                                       ----------------   --------------

Net (decrease) increase in cash and cash equivalents                                            (4,452)          11,609

Cash and cash equivalents at beginning of period                                                 7,856               --
                                                                                       ----------------   --------------

Cash and cash equivalents at end of period                                             $         3,404    $      11,609
                                                                                       ================   ==============

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

                                      F-4
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS - UNAUDITED
SEPTEMBER 30, 2005
1. DESCRIPTION OF BUSINESS

Rebel Crew Films, Inc. ("the Company") was organized under the laws of the State
of  California  on  August  7,  2002 to  distribute  Latino  home  entertainment
products.  The Company currently  maintains more than 200 Spanish language films
and serves wholesale,  retail,  catalog, and e-commerce accounts.  The Company's
titles can be found at major retail outlets and independent video outlets across
the United States of America and Canada.

During the nine months ended September 30, 2004 and 2005, the Company  generated
revenue  through the direct sales of licensed  content and licensing  agreements
with third parties that distributed the Company's licensed content.  The Company
is expanding  its sales force to focus on direct  sales of its licensed  content
and intends to significantly  reduce or eliminate  future  licensing  agreements
with third parties.

The Company is organized in a single  operating  segment.  All of the  Company's
revenues are generated in the United  States,  and the Company has no long-lived
assets outside the United States.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

BASIS OF PRESENTATION

The  accompanying   condensed  financial  statements  do  not  include  all  the
information and disclosures required by accounting principles generally accepted
in the United  States of America.  The  preparation  of financial  statements in
conformity with accounting  principles  generally  accepted in the U.S. requires
management to make estimates and assumptions that affect the amounts reported in
the financial  statements and accompanying  notes. The actual results may differ
from management's estimates.

The interim  condensed  financial  information  is  unaudited,  but reflects all
normal adjustments that are, in the opinion of management,  necessary to provide
a fair  statement of results for the interim  periods  presented.  The condensed
interim  financial  statements  should be read in connection  with the Company's
audited financial statements for the year ended December 31, 2004.

LIQUIDITY

The  accompanying  financial  statements are prepared  assuming the Company is a
going concern which  contemplates  the realization of assets and satisfaction of
liabilities in the normal course of business.  The Company has a working capital
deficiency of $618,599 at September 30, 2005, which includes deferred revenue of
$75,411 and amounts due to related  parties of  $601,307,  as  discussed  below.
During the nine months ended  September 30, 2005, the Company  primarily  relied
upon loans from a related party to fund its operations  and, to a lesser extent,
revenues generated from licensing its film content, on a non-exclusive basis, to
other distributors of Latino home  entertainment  content.  Management  believes
that future  revenues  combined with either loans or direct  equity  investments
into the Company will be sufficient to fund the Company's  operations for the 12
months subsequent to September 30, 2005.

REVENUE RECOGNITION

The  Company  generates  revenue  through  either the direct  sales of  licensed
content or through  licensing  agreements  whereby the Company  receives advance
payments as  consideration  for rights granted to third parties that  distribute
the  Company's  licensed  content.  The  Company  may  be  entitled  to  receive
additional  royalty  payments  under the licensing  agreements,  but only to the
extent that  royalties  calculated  under the terms of the licensing  agreements
exceed  the amount of the  advance  payments.  Advance  payments  are  initially
recorded as deferred revenue. The Company recognizes revenue under its licensing
agreements  as  royalties  are  earned  upon  shipment  of  licensed  content to
customers by the sub-licensor. Deferred revenue balances of $75,411 and $162,971
at September  30, 2005 and December 31, 2004,  respectively,  represent  advance
royalty payments that are expected to be earned over the subsequent twelve month
periods. Revenues from direct sales are recorded upon shipment.

                                      F-5
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

ACCOUNTS RECEIVABLES

Accounts  receivables  are  recorded  at the  invoice  amount  and  do not  bear
interest.  Accounts  receivable  at September  30, 2005 are  presented net of an
allowance for doubtful  accounts of $5,000.  The allowance for doubtful accounts
is the  Company's  estimate  of the  amount  of  probable  credit  losses in the
Company's  existing accounts  receivable.  The Company  determines the allowance
based on historical write-off experience.  The Company reviews its allowance for
doubtful  accounts  monthly.  Past due balances are  reviewed  individually  for
collectibility. Account balances are charged off against the allowance after all
means of collection have been exhausted and potential for recovery is considered
remote. The Company does not have any off-balance-sheet  exposure related to its
customers.

INVENTORY

Inventories,  consisting primarily of Spanish language DVD titles, are stated at
the lower of cost (first-in, first-out basis) or market.

PROPERTY AND EQUIPMENT

Property  and  equipment  are  recorded  at  cost  and  depreciated   using  the
straight-line method over the useful lives of the assets, generally from five to
seven years.  Property and  equipment at September 30, 2005 are presented net of
accumulated depreciation of $577. Depreciation expense for the nine months ended
September 30, 2005 was $577.

3. INTANGIBLE ASSETS

Intangible  assets consist of capitalized  license fees for licensed content the
Company  acquired from owners  including  producers,  studios and  distributors.
Licensed  content  acquired is capitalized at the time of purchase.  The term of
the  licensed  content  agreements  usually  vary between one to five years (the
"TITLE  Term").  At the end of the Title  Term,  the Company  generally  has the
option of discontinuing distribution of the title or extending the Title Term.

The Company  amortizes  the  capitalized  license fees, on a straight line basis
over the Title Term.  During the nine months ended  September 30, 2005 and 2004,
amortization  expense  related to the licensed  content was $86,825 and $31,250,
respectively.

Licensed content and accumulated amortization at September 30, 2005 and December
31, 2004, consisted of the following:

                                         SEPTEMBER 30,             DECEMBER 31,
                                              2005                     2004

Licensed content                       $      581,000            $     254,000
Less: accumulated amortization               (152,700  )               (65,875)
                                       -----------------         ---------------

   Licensed content, net               $      428,300            $     188,125
                                       =================         ===============

4. INCOME (LOSS) PER COMMON SHARE

Income (loss) per common share is based on the weighted average number of common
shares  outstanding.  The  Company  complies  with SFAS No. 128,  "Earnings  Per
Share," which requires dual presentation of basic and diluted earnings per share
on the face of the  statements of  operations.  Basic per share earnings or loss
excludes  dilution and is computed by dividing income (loss) available to common
stockholders by the  weighted-average  common shares outstanding for the period.
Diluted per share  earnings or loss reflects the  potential  dilution that could
occur if convertible preferred stock or debentures, options and warrants were to
be exercised or converted or otherwise  resulted in the issuance of common stock
that then  shared in the  earnings  of the  entity.  For the nine  months  ended
September  30,  2005  and  2004,  there  were  no  potentially  dilutive  shares
outstanding

                                      F-6
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

5. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at September 30, 2005 and December 31,
2004 are comprised of the following:

                                      SEPTEMBER 30,          DECEMBER 31,
                                          2005                   2004
                                    ------------------     ------------------
   Income taxes payable             $           2,400      $           2,400
   Legal fees                                      --                  4,625
   Other                                       16,986                  2,675

                                    ------------------     ------------------
                                    $          19,386      $           9,700
                                    ==================     ==================

6. COMMITMENT AND CONTINGENCIES

In August 2005 the Company entered into a commercial  lease agreement for office
space.  The lease requires monthly payments of base rent in the amount of $5,890
from August 21, 2005 through  September 30, 2012.  Further,  on each anniversary
date  the  base  rent is  subject  to a 3%  increase  over  the  previous  year.
Approximate future minimum rent payments under this lease are as follows:
YEARS ENDED DECEMBER 31,
---------------    -------------    -------------    -------------    -------------    ----------------      --------------
     2005              2006             2007             2008             2009           THEREAFTER              TOTAL
---------------    -------------    -------------    -------------    -------------    ----------------      --------------
$       25,500     $     71,400     $     73,500     $     75,700     $     78,000     $       219,400       $     543,500
7. RELATED PARTY TRANSACTIONS

At September  30, 2005 and  December  31,  2004,  the Company has a liability of
$568,307 and $48,986,  respectively,  due to Rebel  Holdings,  LLC, a California
limited  liability  company  ("REBEL  HOLDINGS"),  an entity  that  during  2005
acquired  approximately  90% of the outstanding  shares of the Company's  common
stock.  Additionally,  at September 30, 2005 and December 31, 2004,  the Company
has a liability of $33,000 and $0, respectively, due to the sole member of Rebel
Holdings. The liabilities are non-interest bearing, due on demand and secured by
all of the assets of the Company.

8. OTHER INCOME

Other income recognized during 2004 consists primarily of finder's fees received
by the  Company  from  a  distributor  of  the  Company's  licensed  content  as
consideration for the Company's efforts in assisting the distributor in securing
rights to other  third party film  distribution  rights.  No finder's  fees were
received during 2005.

9. SUBSEQUENT EVENTS

Acquisition

On December 20, 2005, the Company  entered into a Stock Purchase  Agreement with
Digicorp, Inc., a Utah Corporation ("DIGICORP"),  whereby Digicorp will purchase
(the  "ACQUISITION")  all of the issued and outstanding  shares of the Company's
capital stock. Upon closing the Acquisition,  Digicorp would issue approximately
21 million  shares of its common  stock to the  shareholders  of the  Company as
compensation for the issued and outstanding  capital stock of the Company.  Upon
completion   of  the   Acquisition,   shareholders   of  the  Company  will  own
approximately 58% of Digicorp. The Acquisition closed on December 29, 2005.

                                      F-7
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Promissory Notes

Between  October  2005 and  December  2005,  the  Company  issued  a  series  of
promissory notes in the aggregate  principal amount of $180,000 (the "NOTES") to
Digicorp,  in consideration for loans from Digicorp to the Company in the amount
of $180,000.  The  principal  amount of the Notes and interest at the rate of 5%
per annum is  payable on April 11,  2006.  The  obligations  under the Notes are
collateralized by all of the assets of the Company.

Between October 2005 and December 2005, the Company  borrowed  additional  funds
from the sole member of Rebel Holdings, totaling $40,000, bringing the aggregate
amount owed to the member to $73,000 at December 29, 2005.  In  connection  with
the borrowings, the Company issued a promissory note in the amount of $73,000 to
the member (the "NOTE") on December 29, 2005. The monies loaned by the member to
the Company were utilized to pay for certain  capitalized license agreements and
operating  expenses of the  Company.  The Note has a term of  approximately  six
months and bears 5.0% simple interest.

                                      F-8
INDEPENDENT AUDITORS' REPORT

To the Shareholders of
Rebel Crew Films, Inc.

We have audited the accompanying  balance sheets of Rebel Crew Films,  Inc. (the
"Company")  as of December 31, 2004,  and 2003,  and the related  statements  of
operations,  stockholders  equity  (deficit),  and cash flows for the years then
ended.  These  financial  statements  are the  responsibility  of the  Company's
management.  Our  responsibility  is to express  an  opinion on these  financial
statements based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all material  respects,  the financial  position of Rebel Crew Films, Inc. as of
December  31, 2004,  and 2003,  and the results of its  operations  and its cash
flows  for the  years  then  ended  in  conformity  with  accounting  principles
generally accepted in the United States of America.

                                                       /s/ Peterson & Co., LLP
                                                       PETERSON & CO., LLP
San Diego, California
December 29, 2005

                                      F-9
REBEL CREW FILMS, INC.
================================================================================

Balance Sheets

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

ASSETS

CURRENT ASSETS
Cash and cash equivalents                                    $   7,856         $      --
                                                             ---------         ---------

TOTAL CURRENT ASSETS                                             7,856                --

Intangible assets, net                                         188,125            80,000
                                                             ---------         ---------

TOTAL ASSETS                                                 $ 195,981         $  80,000
                                                             =========         =========
----------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

CURRENT LIABILITIES

Accounts payable and accrued liabilities                     $   9,700         $  27,600
Due to related party                                            48,986                --
Deferred revenue                                               162,971            40,433
                                                             ---------         ---------
TOTAL CURRENT LIABILITIES                                      221,657            68,033

STOCKHOLDERS' EQUITY (DEFICIT)

Common stock, no par value: 100,000 shares authorized;
    100,000 shares issued and outstanding                       14,625            14,625
Accumulated deficit                                            (40,301)           (2,658)
                                                             ---------         ---------

TOTAL STOCKHOLDERS' EQUITY (DEFICIT)                           (25,676)           11,967
                                                             ---------         ---------

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)         $ 195,981         $  80,000
                                                             =========         =========
--------------------------------------------------------------------------------
   The accompanying notes are an integral part of these financial statements.

                                      F-10
REBEL CREW FILMS, INC.
================================================================================

Statements of Operations

--------------------------------------------------------------------------------

                                                           YEARS ENDED
                                                      December 31, DECEMBER 31,
                                                         2004          2003
                                                       ---------    ---------

REVENUE                                                $  27,963    $ 115,896
                                                       ---------    ---------
EXPENSES
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES             144,434      112,364
                                                       ---------    ---------
OPERATING INCOME (LOSS)                                 (116,471)       3,532

OTHER INCOME                                              79,628          800
                                                       ---------    ---------

INCOME (LOSS) BEFORE INCOME TAXES                        (36,843)       4,332

PROVISION FOR INCOME TAXES                                   800          800
                                                       ---------    ---------

NET INCOME (LOSS)                                      $ (37,643)   $   3,532
                                                       =========    =========

BASIC AND DILUTED NET INCOME (LOSS) PER COMMON SHARE   $   (0.38)   $    0.04
                                                       =========    =========

WEIGHTED AVERAGE COMMON SHARES OUTSTANDING               100,000      100,000
                                                       =========    =========

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

                                      F-11
REBEL CREW FILMS, INC.
================================================================================

Statements of Stockholders' Equity (Deficit)
YEARS ENDED DECEMBER 31, 2004 AND 2003

--------------------------------------------------------------------------------

                                  COMMON STOCK                    TOTAL
                               ------------------- ACCUMULATED  SHAREHOLDERS'
                                SHARES     AMOUNT    DEFICIT   EQUITY (DEFICIT)
                               --------   --------   --------    --------

BALANCES, December 31, 2002     100,000   $  5,500   $ (6,190)   $   (690)

Contributed capital                          9,125                  9,125
Net income                           --         --      3,532       3,532
                               --------   --------   --------    --------

BALANCES, December 31, 2003     100,000   $ 14,625   $ (2,658)   $ 11,967

Net loss                             --         --    (37,643)    (37,643)
                               --------   --------   --------    --------

BALANCES, December 31, 2004     100,000   $ 14,625   $(40,301)   $(25,676)
                               ========   ========   ========    ========

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

                                      F-12
REBEL CREW FILMS, INC.
================================================================================

Statements of Cash Flows

--------------------------------------------------------------------------------
YEARS ENDED
                                                                                    December 31,       DECEMBER 31,
                                                                                       2004               2003
                                                                                    ---------          ---------
Cash flows from operating activities:
Net income (loss)                                                                   $ (37,643)         $   3,532
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of licenses                                                               45,875             20,000
Changes in operating assets and liabilities:
Accounts payable and accrued liabilities                                              (17,900)            (1,200)
Due to related party                                                                   48,986                 --
Deferred revenue                                                                      122,538             40,433
                                                                                    ---------          ---------

          Net cash provided by operating activities                                   161,856             62,765
                                                                                    ---------          ---------

Cash flows from investing activities:
  Purchases of licenses                                                              (154,000)           (72,000)
                                                                                    ---------          ---------

          Net cash used in investing activities                                      (154,000)           (72,000)
                                                                                    ---------          ---------

Cash flows from financing activities:
  Proceeds from issuance of common stock                                                   --              9,125
                                                                                    ---------          ---------

          Net cash used in financing activities                                            --              9,125
                                                                                    ---------          ---------

Net increase (decrease) in cash and cash equivalents                                    7,856               (110)

Cash and cash equivalents at beginning of period                                           --                110
                                                                                    ---------          ---------

Cash and cash equivalents at end of period                                          $   7,856          $      --
                                                                                    =========          =========
--------------------------------------------------------------------------------
   The accompanying notes are an integral part of these financial statements.

                                      F-13
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 2004

1. DESCRIPTION OF BUSINESS

Rebel Crew Films, Inc. ("the Company") was organized under the laws of the State
of  California  on  August  7,  2002 to  distribute  Latino  home  entertainment
products.  The Company currently  maintains more than 200 Spanish language films
and serves wholesale,  retail,  catalog, and e-commerce accounts.  The Company's
titles can be found at major retail outlets and independent video outlets across
the United States of America and Canada.

During 2003 and 2004, the Company generated revenue through licensing agreements
with third parties that distributed the Company's licensed content.  The Company
is expanding  its sales force to focus on direct  sales of its licensed  content
and intends to significantly  reduce or eliminate  future  licensing  agreements
with third parties.

The Company is organized in a single  operating  segment.  All of the  Company's
revenues are generated in the United  States,  and the Company has no long-lived
assets outside the United States.

2. BASIS OF PRESENTATION AND SIGNIFICANT ACCOUNTING POLICIES

LIQUIDITY

The  accompanying  financial  statements are prepared  assuming the Company is a
going concern which  contemplates  the realization of assets and satisfaction of
liabilities in the normal course of business.  The Company has a working capital
deficiency of $213,801 at December 31, 2004,  which  includes  deferred  revenue
balance of $162,971,  as  discussed  below.  During the year ended  December 31,
2004, the Company  primarily  relied upon revenues  generated from licensing its
film content,  on a non-exclusive  basis,  to other  distributors of Latino home
entertainment  content and, to a lesser extent, from loans by a related party to
fund its  operations.  Management  believes that future  revenues  combined with
either loans or direct equity investments into the Company will be sufficient to
fund the Company's operations for the 12 months subsequent to December 31, 2004.

USE OF ESTIMATES

The  financial  statements  have been  prepared in  accordance  with  accounting
principles generally accepted in the United States ("GAAP").  The preparation of
financial  statements  in  conformity  with  GAAP  requires  management  to make
estimates  and  assumptions  that affect the amounts  reported in the  financial
statements and  accompanying  notes.  These  estimates are based on knowledge of
current events and anticipated future events and accordingly, actual results may
differ from those estimates.

CASH AND CASH EQUIVALENTS

The Company considers only highly liquid  investments such as money market funds
and  commercial  paper with  maturities  of 90 days or less at the date of their
acquisition as cash and cash equivalents.

The Company  maintains cash in bank and deposit  accounts which,  at times,  may
exceed federally  insured limits.  The Company has not experienced any losses in
such accounts.  The Company believes it is not exposed to any significant credit
risk on cash and cash equivalents.

INTANGIBLE ASSETS

Licensed  content  acquired  from  owners   including   producers,   studios  or
distributors is capitalized and amortized on a straight-line basis over the term
of the license agreement, which generally ranges between one and five years. The
carrying values of intangible assets are periodically  reviewed and impairments,
if any, are  recognized  when the expected  future benefit to be derived from an
intangible asset is less than its carrying value.

                                      F-14
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

STOCK BASED COMPENSATION

As of December 31, 2004, no stock options or other equity  instruments  had been
granted to employees.  For future stock-based  compensation  awards, the Company
intends to adopt the provisions of Financial Accounting Standards Board ("FASB")
Statement of Financial  Accounting  Standards  ("SFAS") No. 123(R),  Share-Based
Payment,  that requires  corporations  to account for awards of stock options or
other equity instruments to employees using the fair value method.

REVENUE RECOGNITION

The Company generates revenue through licensing  agreements  whereby the Company
receives advance  payments as consideration  for rights granted to third parties
that distribute the Company's  licensed content.  The Company may be entitled to
receive additional royalty payments under the licensing agreements,  but only to
the extent that royalties calculated under the terms of the licensing agreements
exceed  the amount of the  advance  payments.  Advance  payments  are  initially
recorded as deferred revenue. The Company recognizes revenue under its licensing
agreements  as  royalties  are  earned  upon  shipment  of  licensed  content to
customers by the sub-licensor. Deferred revenue balances of $162,971 and $40,433
at December 31, 2004 and 2003, respectively,  represent advance royalty payments
that are expected to be earned over the subsequent twelve month periods.

INCOME TAXES

Deferred  income  taxes are  provided  in amounts  sufficient  to give effect to
temporary  differences between financial and tax reporting,  principally related
to net operating loss  carryforwards.  Valuation  allowances are provided to the
extent realization of recorded tax assets is not considered likely.

RECENT ACCOUNTING PRONOUNCEMENTS

In September 2004, the Emerging  Issues Task Force ("EITF")  reached a consensus
on EITF  Issue  04-08 The  Effect of  Contingently  Convertible  Instruments  on
Diluted  Earnings per Share,  which  requires the inclusion of shares related to
contingently  convertible  debt  instruments for computing  diluted earnings per
share using the  if-converted  method,  regardless  of whether the market  price
contingency  has been met. EITF 04-08 will be effective  for all periods  ending
after  December 15, 2004 and includes  retroactive  adjustment  to  historically
reported  diluted  earnings per share. The adoption of EITF Issue No. 04-08 does
not  currently  have an impact on the Company's  operating  results or financial
position.

In November 2004, the FASB issued SFAS No. 151, Inventory Costs, an amendment of
ARB No. 43, Chapter 4. SFAS 151 clarifies that abnormal  inventory costs such as
costs  of idle  facilities,  excess  freight  and  handling  costs,  and  wasted
materials  (spoilage) are required to be recognized as current  period  charges.
The provisions of SFAS 151 are effective for fiscal years  beginning  after June
15, 2005. The adoption of SFAS 151 is not expected to have a significant  impact
on the Company's operating results or financial position.

In December 2004, the FASB issued SFAS No. 153, Exchanges of Nonmonetary Assets,
which eliminates the exception for nonmonetary  exchanges of similar  productive
assets and replaces it with a general  exception  for  exchanges of  nonmonetary
assets that do not have commercial substance. SFAS No. 153 will be effective for
nonmonetary asset exchanges occurring in fiscal periods beginning after June 15,
2005.  The  adoption  of SFAS No. 153 is not  expected  to have an impact on the
Company's operating results or financial position.

In December 2004, the FASB issued SFAS No. 123(R),  Share-Based  Payment,  which
establishes  standards for  transactions in which an entity exchanges its equity
instruments  for goods or  services.  This  standard  replaces  SFAS No. 123 and
supercedes APB Opinion No. 25,  Accounting for  Stock-based  compensation.  This
Standard  requires a public  entity 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.  This  eliminates  the  exception  to account  for such
awards using the intrinsic method previously allowable under APB Opinion No. 25.
SFAS No.  123(R)  will be  effective  for  interim or annual  reporting  periods
beginning on or after December 15, 2005.  The impact on the Company's  operating
results or financial  position  based on the adoption of SFAS No. 123(R) has not
yet been determined.

                                      F-15
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

3. INTANGIBLE ASSETS

Intangible  assets consist of capitalized  license fees for licensed content the
Company  acquired from owners  including  producers,  studios and  distributors.
Licensed  content  acquired is capitalized at the time of purchase.  The term of
the  licensed  content  agreements  usually  vary between one to five years (the
"TITLE  TERM").  At the end of the Title  Term,  the Company  generally  has the
option of discontinuing distribution of the title or extending the Title Term.

The Company  amortizes  the  capitalized  license fees, on a straight line basis
over the  Title  Term.  During  the  years  ended  December  31,  2004 and 2003,
amortization  expense  related to the licensed  content was $45,875 and $20,000,
respectively.

Licensed content and accumulated amortization consisted of the following:

                                                 YEARS ENDED
                                      DECEMBER 31,             DECEMBER 31,
                                          2004                     2003

Licensed content                   $      254,000           $      100,000
Less: accumulated amortization            (65,875)                 (20,000)
                                   -----------------      -----------------

   Licensed content, net           $      188,125           $       80,000
                                   =================      =================

In connection with these agreements, the Company expects to record the following
amortization expense over the next five years:

     FISCAL YEAR ENDED                  AMORTIZATION
----------------------------          -----------------

December 31, 2005                     $         58,500
December 31, 2006                     $         58,500
December 31, 2007                     $         58,500
December 31, 2008                     $         12,625
December 31, 2009                     $              --

4. INCOME TAXES

Deferred  income  taxes  reflect  the net tax effects of  temporary  differences
between  carrying  amounts of assets and  liabilities  for  financial  reporting
purposes and the amounts used for tax  purposes.  Significant  components of our
deferred tax assets as of December 31, 2004 and 2003 are as follows:

                                                2004        2003
                                             --------    --------
Deferred tax assets
   Federal net operating loss carryforward   $  9,185    $    904
   State net operating loss carryforward        2,175          93
   Deferred revenue                             5,343          --
                                             --------    --------
      Total gross deferred tax asset           16,703         997
      Less valuation allowance                (16,703)       (997)
                                             --------    --------
      Net deferred tax asset                 $     --    $     --
                                             ========    ========

                                      F-16
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

The ultimate  realization  of deferred tax assets depends upon the generation of
future  taxable income during the periods in which those  temporary  differences
become  deductible.  Based upon our loss for the year ended December 31, 2004 we
have  provided a valuation  allowance  in the amount of $16,703,  an increase of
$15,706. The amount of deferred tax asset considered  realizable could change in
the near term if  projected  future  taxable  income is  realized.  Included  in
deferred tax assets is federal and state net  operating  loss carry  forwards of
approximately  $27,000 and $25,000  respectively.  Utilization of operating loss
carryforwards  may be limited if a  cumulative  change in ownership of more than
50% occurs within a three year period.  The net  operating  losses will begin to
expire in 2024 and 2014, respectively.

At December 31, 2004 and 2003, the Company's tax provision consists of:
                               2004                    2003
                           -------------          ------------
Current
         Federal           $          --           $        --
         State                       800                   800
Deferred
         Federal                      --                    --
         State                        --                    --
                           -------------          ------------
Total                      $         800           $       800
                           =============          ============
For the years ended December 31, 2004 and 2003, a reconciliation of the federal
statutory tax rate to the Company's effective tax rate is as follows:
2004            2003
                                                                   ---------      -----------
Federal statutory tax rate                                           (34.00)%         34.00%
State and local income taxes, net of federal tax benefit               1.43           12.19
Non deductible items                                                   0.75              --
Valuation allowance                                                   33.99          (27.73)
                                                                   ---------      -----------

              Total effective tax rate                                 2.17%          18.46%
                                                                   =========      ===========
5. INCOME (LOSS) PER COMMON SHARE

Income (loss) per common share is based on the weighted average number of common
shares  outstanding.  The  Company  complies  with SFAS No. 128,  "Earnings  Per
Share," which requires dual presentation of basic and diluted earnings per share
on the face of the  statements of  operations.  Basic per share earnings or loss
excludes  dilution and is computed by dividing income (loss) available to common
stockholders by the  weighted-average  common shares outstanding for the period.
Diluted per share  earnings or loss reflects the  potential  dilution that could
occur if convertible preferred stock or debentures, options and warrants were to
be exercised or converted or otherwise  resulted in the issuance of common stock
that then shared in the earnings of the entity. For the years ended December 31,
2004 and 2003, there were no potentially dilutive shares outstanding

                                      F-17
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

6. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

Accounts payable and accrued liabilities at December 31, 2004 and 2003 are
comprised of the following:

                                            DECEMBER 31,           DECEMBER 31,
                                               2004                    2003
                                             -------                 -------
Obligations on license agreements            $    --                 $26,000
Income taxes payable                           2,400                   1,600
Legal fees                                   $ 4,625                 $    --
Other                                          2,675                      --
                                             -------                 -------
                                             $ 9,700                 $27,600
                                             =======                 =======

7. RELATED PARTY TRANSACTIONS

At December  31, 2004 and 2003,  the Company has a liability  of $48,986 and $0,
respectively, due to Rebel Holdings, LLC, a California limited liability company
("REBEL HOLDINGS"), an entity that during 2005 acquired approximately 90% of the
outstanding  shares of the Company's common stock. The liability is non-interest
bearing, is due on demand and is secured by all of the assets of the Company.

8. OPERATING LEASE

During 2004 and 2003 the Company  rented space on a month to month  basis.  Rent
expense  during the years  ended  December  31,  2004 and 2003 was  $11,505  and
$8,700, respectively.

9. OTHER INCOME

Other income recognized during 2004 consists primarily of finder's fees received
by the  Company  from  a  distributor  of  the  Company's  licensed  content  as
consideration for the Company's efforts in assisting the distributor in securing
rights to other third party film distribution rights.

10. CONCENTRATION RISK

During 2003,  one  sub-licensor  accounted  for 100% of  licensing  fee revenues
recognized.   During  2004,  two   sub-licensors   accounted  for  70%  and  30%
respectively, of license fee revenues recognized.

11. SUBSEQUENT EVENTS

Operating Lease

In August 2005 the Company entered into a commercial  lease agreement for office
space.  The lease requires monthly payments of base rent in the amount of $5,890
from August 21, 2005 through  September 30, 2012.  Further,  on each anniversary
date the base rent is subject to a 3% increase over the previous year.

Acquisition

On December 20, 2005, the Company  entered into a Stock Purchase  Agreement with
Digicorp, Inc., a Utah Corporation ("DIGICORP"),  whereby Digicorp will purchase
(the  "ACQUISITION")  all of the issued and outstanding  shares of the Company's
capital stock. Upon closing the Acquisition,  Digicorp would issue approximately
21 million  shares of its common  stock to the  shareholders  of the  Company as
compensation for the issued and outstanding  capital stock of the Company.  Upon
completion   of  the   Acquisition,   shareholders   of  the  Company  will  own
approximately 58% of Digicorp. The Acquisition closed on December 29, 2005.

Promissory Notes

Between  September 2005 and December  2005, the Company  borrowed funds from the
sole  member  of  Rebel  Holdings,  totaling  $73,000.  In  connection  with the
borrowings, the Company issued a promissory note in the amount of $73,000 to the
member (the "REBEL NOTE") on December 29, 2005.  The monies loaned by the member
to the Company were utilized to pay for certain  capitalized  license agreements
and  operating  expenses  of  the  Company.   The  Rebel  Note  has  a  term  of
approximately six months and bears 5.0% simple interest.

                                      F-18
REBEL CREW FILMS, INC.
NOTES TO FINANCIAL STATEMENTS (CONTINUED)

Between  October  2005 and  December  2005,  the  Company  issued  a  series  of
promissory notes in the aggregate  principal amount of $180,000 (the "NOTES") to
Digicorp,  in consideration for loans from Digicorp to the Company in the amount
of $180,000.  The  principal  amount of the Notes and interest at the rate of 5%
per annum is  payable on April 11,  2006.  The  obligations  under the Notes are
collateralized by all of the assets of the Company.

During 2005, the Company borrowed additional funds from Rebel Holdings, totaling
$507,321,  bringing the aggregate  amount owed to Rebel  Holdings to $556,307 at
December 29, 2005.  In  connection  with the  borrowings,  the Company  issued a
convertible  note in the amount of $556,307 to Rebel  Holdings  (the  "NOTE") on
December  29,  2005.  The monies  loaned by Rebel  Holdings to the Company  were
utilized  to pay  for  certain  capitalized  license  agreements  and  operating
expenses of the Company.  The Note has a term of five years from closing,  bears
4.5% simple  interest and is  convertible  into shares of the  Company's  common
stock at a conversion price of $1.112614 per share.

                                      F-19