CONTACTS 
0201 - S J Gallina & Company                925 943 1776 fax 1876
020101 - Mr. Edmond E. Traille; Partner  =925 943 1776 ext 33

SUBJECTS
Personal, Finance, Taxes, 99
Tax Return 1999
Individual Taxes 2000
Tax Returns 2000
Tax Return 2000

0707 -    ..
0708 - Summary/Objective
0709 -
070901 - Follow up ref SDS 75 0000, ref SDS 74 0000.
070902 -
070903 - Prepared reports to support tax returns for 2000.
070904 -
070905 - Updated obligations. ref SDS 0 0868
070906 -
070907 - Reported Welch Co progress. ref SDS 0 3978
070908 -
070909 -      [On 010326 submitted tax report to SJ Gallina. ref SDS 87 0001
070910 -
070911 -      [On 010414 Millie owes additional $3,500 in taxes. ref SDS 89
070912 -      0001
070913 -
070914 -
0710 -
0711 -
0712 - Progress
0713 -
071301 - Complete post payables.....
071302 -
071303 -     010106. ref SDS 66 0001
071304 -
071305 -     010206. ref SDS 72 0001
071306 -
071307 -     010317, ref SDS 85 0001
071308 -
071309 -
071310 -
071311 -
071312 -  ..
071313 - Segment Check Registers
071314 -
071315 - Follow up ref SDS 25 8160, ref SDS 14 8160.
071316 -
071317 - Used procedures on 920603. ref SDS 1 2967
071318 -
071319 - Did this for.....
071320 -
071321 -       Millie
071322 -
071323 -          08 02 02 01 2000M.XLS
071324 -          08 02 02 01 2001M.XLS
071325 -
071326 -       Welch Co.
071327 -
071328 -          02 03 02 02 2000W.XLS
071329 -          02 03 02 02 2001W.XLS
071330 -
071331 -
071332 -
071333 -  ..
071334 - Expense and Income Register from Bank Statement
071335 -
071336 - Follow up ref SDS 25 8738, ref SDS 35 8738.
071337 -
071338 - Create tax file spreadsheet by opening the newly modified bank account
071339 - spreadsheet for Welch Company, and saving it to...
071340 -
071341 -
071342 -                   g: 08 03 02 01 14 tx2000.xls
071343 -
071344 -
071345 - Prepared tax report, ref OF 8 0001, using instructions in the record
071346 - on 990209. ref SDS 14 G44O
071347 -
071348 -     Data sort operation is explained on 990209, ref SDS 14 G44O, with
071349 -     link to record on 990211 that has instructions for Excel sorting
071350 -     and formatting. ref SDS 15 9718
071351 -
071352 -
071353 - Decided not to report interest charges on various bank accounts, and
071354 - to allocate the charges to purchased items.
071355 -
071356 -
071357 -  ..
071358 -
071359 - The loan account with MBNA for $35K, ref OF 8 9U5I, is under
071360 - negotiation for settlement of claims against the bank for failure to
071361 - perform and mal-administration that caused damages, reported on
071362 - 001206. ref SDS 61 F49I  On 010307 MBNA is considering a proposal to
071363 - settle pending issues for about $16K, ref SDS 81 6K8N
071364 -
071365 - Pending resolution, the bank is being paid $100 per month to maintain
071366 - good faith.  As a result, interest charges are not reported for tax
071367 - purposes.  The matter requires professional review by Gallina for
071368 - proper accounting.
071369 -
071370 -
071371 -  ..
071372 - Rent charges of $14,040.60, ref OF 8 Q96M, need to be allocated based
071373 - on change in marital status, reported to S.J. Gallina on 000323.
071374 - ref DIP 2 PI7F  The location at 440 Davis Court #1602 is now the Welch
071375 - residence and office.  The living room is the largest area of the
071376 - property.  It is used solely for office operations.  This may justify
071377 - allocating 50% of the annual rent for Welch expenses; however,
071378 - Gallina should make an allocation based on applicable regulations and
071379 - accounting practices.
071380 -
071381 -
071382 -
071383 -  ..
071384 - Obligations
071385 -
071386 - Follow up ref SDS 25 0868, ref SDS 16 0868.
071387 -
071388 - Updated the file....
071389 -
071390 -                   g: 08 03 02 01 0202.XLS
071391 -
071392 - Appended results for 2000 to...
071393 -
071394 -                   g: 08 03 02 01 14 tx2000
071395 -
071396 -     ... ref OF 8 8736
071397 - ..
071398 - The calculation shows interest expense incurred in the amount of
071399 - $48,899. ref OF 8 6L8N  This is less than the amount calculated for
071400 - the return last year, which was $51,860. ref OF 10 QK5M
071401 -
071402 - It is not clear why interst should be less than last year, and so the
071403 - matter requires investigation and adjustment by S.J. Gallina.
071404 -
071405 -        [On 010326 the transmittal letter to S.J. Gallina requests
071406 -        review and correction.
071407 -
071408 -        [On 010327 Ed advised he has not included interest expense owed
071409 -        to Millie in prior years, but will this year.  He will make any
071410 -        needed corrections. ref SDS 88 V33M
071411 -
071412 -        I changed the obligations spreadsheet, as noted in the record
071413 -        on 010327. ref SDS 88 K34I
071414 -
071415 -
071416 -      ..
071417 -     UPR Lawsuit and Judgement
071418 -
071419 -     Follow up ref SDS 25 4611.
071420 -
071421 -     There is no change in the status of this account.  The record for
071422 -     the tax return report prepared last year on 000317, ref SDS 25
071423 -     4611, requires review by Gallina for proper accounting and
071424 -     adjustments to the calculation of interest expense this year in
071425 -     the obligations spreadsheet. ref OF 8 JD6H
071426 -
071427 -         A correction that seems to be needed is to conform the actual
071428 -         amount owed to the amount of the judgement reported in the
071429 -         record on 000317, and make the effective date for interest
071430 -         charges conform to the date of the judgement. ref SDS 25 4611
071431 -
071432 -         What seems to have occurred is that UPR, and its counsel,
071433 -         have dropped the charge for the appeal handled by KHLS, which
071434 -         is the second entry for UPR in the obligatinos list.
071435 -         ref OF 8 0224
071436 -
071437 -
071438 -  ..
071439 - Welch Company Review
071440 -
071441 - Follow up ref SDS 25 3978.
071442 -
071443 - This year produced no revenue again.
071444 -
071445 - As reported in the record on 000317, ref SDS 25 SR9O, for the 1999
071446 - return, we took out a loan of $15K for operating expenses. ref SDS 24
071447 - 5083  On 000810 this was increased by another $20K. ref SDS 43 0001
071448 -
071449 -     For various reasons, this matter is under negotiation, per above.
071450 -     ref SDS 0 8H7M
071451 -
071452 -
071453 -
071454 - Marketing Initiatives
071455 -
071456 - No progress occurred making actual sales of SDS.
071457 -
071458 - At the end of the year, falling earnings and stock prices create
071459 - enabling forces in the broader economy that build a market for SDS to
071460 - meet new realities of expanding complexity that increases problems due
071461 - to information overload.  An example is the report that....
071462 -
071463 -
071464 -          Too many people are having too many problems...
071465 -
071466 -
071467 - ....on 001207. ref SDS 62 V54M
071468 -
071469 - Progress occurred on SDS being recognized as the only software
071470 - solution for a class of work and products that is beginning to gain
071471 - acceptance/interest of customers, called "Knowledge Management" (KM).
071472 - However, no actual customers have yet been identified.
071473 -
071474 -
071475 -     Colloquium at Stanford on Knowledge Management
071476 -
071477 -     Follow up ref SDS 25 WS7N.
071478 -
071479 -     This was identified in the record on 000317 for the 1999 tax
071480 -     report, as one project among many around the world seeking to
071481 -     develop KM capability.  The report on 000317 noted that SDS was
071482 -     singled out by a contributor to the Colloquium as supporting KM.
071483 -     ref SDS 25 SY6J
071484 -
071485 -     Following the Colloquium, and beginning on 000324 Stanford
071486 -     Research Institute (SRI), launched an ad hoc (i.e., unfunded)
071487 -     project to develop KM capability, using volunteers who were
071488 -     attracted by the opportunity to work with Doug Engelbart who led
071489 -     the Colloquium.
071490 -
071491 -         Doug was later awarded the National Medal for Technology by
071492 -         President Clinton for Doug's work inventing the mouse and
071493 -         linking in the 1960s, reported on 001114. ref SDS 54 0001
071494 -
071495 -     Welch contributed to SRI's project in order expose SDS.
071496 -
071497 -     After the first meeting on 000324, Welch was asked to provide
071498 -     project management support. In a letter to Doug Engelbart on
071499 -     000326 this was declined, because it is a full time job, there was
071500 -     no payment, and SRI is promoting an open source development
071501 -     effort, which is not conducive to project management, and would
071502 -     entail Welch giving SDS away.  I did, however, produce a record of
071503 -     weekly meetings, as summarized in the record of the meeting on
071504 -     001017. ref SDS 52 1575  If action items in the SDS record had
071505 -     been performed, SRI would have had a better chance of a successful
071506 -     project.  On 000922 pending Action Items were submitted to
071507 -     illustrate SDS capability. ref SDS 49 0001
071508 -
071509 -     On 000824 report that Doug Engelbart is basing SRI's KM project on
071510 -     SDS design. ref SDS 45 PU5N
071511 -
071512 -         Thus, the plan to expose SDS was marginally successful, though
071513 -         it did not spawn offers to purchase SDS, nor to do a deal for
071514 -         the right to copy SDS.
071515 -
071516 -     On 000929 Doug Engelbart advised that he likes SDS for supporting
071517 -     his OHS/DKR project. ref SDS 51 6S9H
071518 -
071519 -     On 001027 Doug advised SDS is the best KM capability he has seen
071520 -     in 40 years working to develop KM. ref SDS 53 XV6F
071521 -
071522 -     On 010111 Doug is considering hiring Welch for Com Metrics
071523 -     support; however, he is not likely in a position to do that.
071524 -     ref SDS 67 KX5N and ref SDS 67 N85H
071525 -
071526 -      ..
071527 -     SDS Only Knowledge Management Program; KM is a Secret of SDS
071528 -
071529 -     On 991217 the most common request by attendees at a conference on
071530 -     KM was for a program to support KM. ref SDS 23 9030
071531 -
071532 -     On 000829 at a World Conference on KM in Montreal, the only KM
071533 -     program cited at the conference was planned for release later in
071534 -     the year by IBM.  Later on 001130 IBM pulled release of Raven, as
071535 -     not ready to support KM.  Raven is based on Lotus Notes, which IBM
071536 -     purchased for $4B after seeing SDS demonstrated on 941114.
071537 -     ref SDS 59 F26K
071538 -
071539 -     Over the remainder of the year, SDS was recognized by a wider
071540 -     group of people as a result of the record for weekly meetings, and
071541 -     other support of Engelbart's KM project at SRI.
071542 -
071543 -        1.  On 000425 analysis indicated SDS is a unique solution for
071544 -            Knowledge Management, making KM essentially a secret of
071545 -            SDS. ref SDS 34 0480
071546 -
071547 -        2.  On 010315, there is no discernable competition for SDS; no
071548 -            other software or business system supports daily management
071549 -            and other knowledge work, remotely close to SDS.
071550 -            ref SDS 83 OM9L
071551 -
071552 -            None-the-less people resist improving knowledge work, and
071553 -            so existing methods are significant competition, as related
071554 -            in the record of the meeting at SRI on 010122. ref SDS 69
071555 -            5P6L
071556 -
071557 -
071558 -     Additionally, people from around the world began calling this
071559 -     year, and sending inquiries about SDS, including notifying it has
071560 -     solved problems that saved time and money for them, as a result of
071561 -     encountering SDS records on the web from doing general searches
071562 -     for particular topics.
071563 -
071564 -        1.  On 000809. ref SDS 42 0001
071565 -
071566 -        2.  On 000925 inquiry about business proposition for SDS.
071567 -            ref SDS 50 0001
071568 -
071569 -        3.  On 001116 SDS to support Project Office. ref SDS 55 0001
071570 -
071571 -        4.  On 001217 inquiry about buying SDS, ref SDS 64 0001; which
071572 -            later seemed to turn out on 001231 to be an effort to
071573 -            obtain the SDS program in order to reverse engineer KM
071574 -            capability. ref SDS 65 0001
071575 -
071576 -        5.  On 010114 SDS "intelligence" saved time and money for
071577 -            someone. ref SDS 68 0001
071578 -
071579 -        6.  On 010123 request to use SDS record on the Internet, and
071580 -            Welch papers on knowledge theory, ref OF 4 1850, for
071581 -            doctoral thesis. ref SDS 70 0001
071582 -
071583 -        7.  On 010207 inquiry about SDS for executive training.
071584 -            ref SDS 73 0001
071585 -
071586 -        8.  On 010217 request that Welch participate in KM forum.
071587 -            ref SDS 76 0001
071588 -
071589 -
071590 -     SDS Business Plan and Sales Offer with Royalty
071591 -
071592 -     On 000725 SRI requested a business plan to promote SDS to its
071593 -     business contacts for the purpose of developing an entity SRI can
071594 -     partner up for developing its own KM solution. ref SDS 38 5722
071595 -
071596 -     On 000726 a contributor to the SRI project on KM submitted ideas
071597 -     for an SDS business plan. ref SDS 39 0050
071598 -
071599 -     On 000802 preliminary business plan was prepared, ref OF 3 0111,
071600 -     and later submitted to SRI on 000804. ref SDS 41 0001
071601 -
071602 -         Key provision is making SDS source code available for royalty.
071603 -         ref SDS 40 3353
071604 -
071605 -     On 000829 SRI advised of new initiatives where SDS can contribute.
071606 -     ref SDS 47 MJ6F
071607 -
071608 -     On 001121 offered to sell SDS to contributors on SRI project so
071609 -     they can learn how to develop KM; this would require granting
071610 -     Welch a royalty on sales of derivative products. ref SDS 56 XU8I
071611 -
071612 -     No sales resulted.
071613 -
071614 -     On 001126 SRI contributor reported people want to learn KM by
071615 -     doing IT with greater diligence. ref SDS 57 QW8I
071616 -
071617 -     Experience shows over the past 20 years that people cannot learn
071618 -     KM by doing IT, and no amount of diligence can accomplish the work
071619 -     of SDS, explained to SRI team in a letter on 000920. ref DIP 1
071620 -     007H
071621 -
071622 -
071623 -
071624 -     SDS Sales Promoted by Volunteers
071625 -
071626 -     John Deneen is a contributor to the KM project being promoted by
071627 -     SRI. ref SDS 30 5839
071628 -
071629 -     Near the end of the year, and continuing into the current year
071630 -     John has been actively promoting SDS at conferences and through
071631 -     contacts at IBM, HP, and venture capitalists, with the
071632 -     understanding that, if successful, he would get a position in a
071633 -     project that might result.  An example is the meeting with Pacific
071634 -     Consultants John arranged on 010228.  Although the meeting turned
071635 -     out differently from John's expectation on 010227, ref SDS 79
071636 -     CG5J, having someone talking to people everyday about SDS is a big
071637 -     asset.
071638 -
071639 -
071640 -     SDS Business Deals Pending
071641 -
071642 -     Bill DeHart promoted SDS for a $500M fiber optic project planned
071643 -     at PG&E.
071644 -
071645 -        001129 explanation of opportunity. ref SDS 58 0001
071646 -
071647 -        001212 meeting at PG&E. ref SDS 63 0001
071648 -
071649 -        010220 PG&E's financial problems delayed project. ref SDS 77
071650 -        0001
071651 -
071652 -        010323 growing awareness that fiber optic may be over-built in
071653 -        telecommunications; interest shifting to constructing power
071654 -        capacity. ref SDS 86 0001
071655 -
071656 -     Jack Park is promoting SDS as core of KM capability.  Jack is a
071657 -     another contributor in SRI's project, but seeking an independent
071658 -     solution.  He has software engineering skills, and possibly access
071659 -     to capital, that provide a means to make progress.
071660 -
071661 -        On 000726 Jack submits business plan for SDS project.
071662 -        ref SDS 39 0001
071663 -
071664 -        On 001130 Jack submits detailed plans for "improving" SDS.
071665 -        ref SDS 60 0001
071666 -
071667 -        On 010223 Jack has more ideas on KM project that makes SDS the
071668 -        core of enterprise management. ref SDS 78 0001
071669 -
071670 -        On 010316 Jack is developing KM project and lists SDS as core
071671 -        component. ref SDS 84 0001
071672 -
071673 -           Jack's work is centered on an open source idea, which at
071674 -           this time has not demonstrated a revenue source for Welch,
071675 -           so the viability of this has yet to be established.
071676 -
071677 -           People working on developing applications for SDS are a
071678 -           strong sign of market potential and demand for this
071679 -           capability.
071680 -
071681 -     SRI is continuing periodic discussions on partnering to promote
071682 -     SDS, and to use for improving SRI management, which likely a
071683 -     predicate to an actual business deal.  On 010122 met with Curt
071684 -     Carlson, CEO of SRI, and Pat Lincoln, Director of Computer
071685 -     Science. ref SDS 69 0001  There is no real discernable progress,
071686 -     but SRI has a strong interest in KM, and so far there no other
071687 -     source for realizing that objective.
071688 -
071689 -
071690 -
071691 - SDS technology was improved this year....
071692 -
071693 -     Improvements were done to make SDS easier to use, and to add
071694 -     features that experience has shown are helpful.  A list is
071695 -     reported on 000824. ref SDS 46 0001
071696 -
071697 -     On 000904 improvements to subject management and document
071698 -     management were developed. ref SDS 48 0001
071699 -
071700 -     On 010202 encountered problems running SDS on high performance
071701 -     processors, P4 1.4 GHz, 400 MHz bus, etc. ref SDS 71 IY4I  These
071702 -     were eventually solved on 010301. ref SDS 80 0001  This was
071703 -     important to establish, because evolution in technology creates
071704 -     constant problems for maintaining capability.
071705 -
071706 -     On 010311 simplified SDS Doc Log management. ref SDS 82 0001
071707 -
071708 -     In sum, the SDS environment is providing a virtually endless
071709 -     opportunity for improving daily handling of working information.
071710 -     This addresses industry objective to find a new development path
071711 -     for technology, voiced by Larry Ellison at Oracle on 970222.
071712 -     ref SDS 2 3967
071713 -
071714 -
071715 -
071716 -
071717 -
071718 -
071719 -
071720 -
071721 -
071722 -
071723 -