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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

FORM 10-KSB

ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
  ACT OF 1934

For the fiscal year ended December 31, 2005.

Commission File Number 033-90355

ACTIONVIEW INTERNATIONAL,
INC.(Exact name of registrant as specified in its
charter)

|Nevada                 | 87-0542172                          
|---------------------- | ------------------------------------
|State of organization) | (I.R.S. Employer Identification No.)

221 East 10th Avenue, Suite #103, Vancouver, British
Columbia,Canada V5T 4V1(Address of principal
executive offices)

(604) 878-0200(Registrant's telephone
number)

Securities registered pursuant to Section 12(b) of the
ActNone

Securities registered under Section 12(g) of the Exchange Act:
Common Stock, $0.001 par value

Check whether the issuer is not required to file reports pursuant
  to Section 13 or 15(d) of the Exchange Act
  []

Check whether the registrant (1) filed all reports required to
  be filed by Section 13 or 15(d) of the Exchange 
  Act during the past 12 months and (2) has been subject to such filing requirements
  for the past 90 days. 
  YES [ X ]

Check if there is no disclosure of delinquent filers in response
to Item 405 of Regulation S-B contained in this form, and no disclosure will
be contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in PART III of this Form
10-KSB or any amendments to this Form 10-KSB.x

Indicate by check mark whether the registrant is a shell company
  (as defined in rule 12b-2 of the Exchange Act) Yes []
  No [ X ]

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The Companys revenues during the year ended December 31, 2005
were $83,182:

The aggregate market value of the voting stock held by
non-affiliates of the Company, (29,291,957 shares) based upon the closing price
of the Companys common stock on December 30, 2005, was approximately
$2,343,350.

As of December 31, 2005 the Company had 39,611,957 issued and
  outstanding shares of common stock. (included in this figure are the 8,072,675
  issued but not outstanding exchangeable shares of common stock held in trust,
  see Item 1(a): The ActionView Advertising System Transaction).

DOCUMENTS INCORPORATED BY REFERENCE: None

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ACTIONVIEW INTERNATIONAL, INC. TABLE OF CONTENTS

|PART I  
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|Item 1  
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|Item 2  
|Item 3  
|Item 4  
|        
|PART II 
|        
|Item 5  
|Item 6  
|Item 7  
|Item 8  
|Item 8A 
|Item 8B 
|        
|PART III
|        
|Item 9  
|
|Item 10 
|Item 11 
|Item 12 
|Item 13 
|Item 14 

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Forward Looking Statements

This report contains forward-looking statements. The
forward-looking statements include all statements that are not statements of
historical fact. The forward-looking statements are often identifiable by their
use of words such as may, expect, believe, anticipate intend, could,
estimate, or continue, or the negative or other variations of these terms or
comparable terms. The Companys actual results could differ materially from the
anticipated results described in the forward-looking statements. Factors that
could effect the Companys results include, but are not limited to, those
discussed in Item 6, Managements Discussion and Analysis and included
elsewhere in this report.

|PART I
|------

ITEM 1          
  DESCRIPTION OF BUSINESS

a) Company History and Development

ActionView International, Inc. formerly known as Acquisition
Media, Inc. (the Company), is a Nevada Corporation which currently trades on
the OTC Bulletin Board under the symbol AVWI and is referred to in this
document as the Company.

The Streamscape Transaction

On November 13, 2000, the Company announced and entered into an
agreement to acquire 100% of Streamscape, a private corporation. Pursuant to the
terms of the acquisition agreement, the Company would acquire all of
Streamscapes issued and outstanding shares (14,610,000 shares of Streamscape's
common stock) in exchange for 17,700,000 shares of the Company's common stock.
The 17,700,000 shares of the Company's common stock were issued and placed in an
escrow, subject to certain escrow conditions being satisfied before they could
be distributed to the shareholders of Streamscape.

By April of 2001, the management of Streamscape could not
deliver all the shares of Streamscape. Additionally, Streamscape was unable to
obtain additional financing to continue operations, a condition to the
consummation of the Streamscape transaction. As a result, in April 2001, the
agreement was rescinded and the acquisition of Streamscape stock in exchange for
the Companys stock was terminated. The rescission occurred prior to the Company
commencing operations with Streamscape and the 17,700,000 shares of the
Company's common stock previously issued were returned to the transfer agent for
cancellation. The financial statements do not include the transaction or
consolidate the operations of Streamscape with the Companys as the ActionView
shares were never distributed to the Streamscape shareholders and the
transaction never consummated.

The Company did advance $340,000 to Streamscape in the form of
loans which were used by Streamscape for operating purposes. For the year-ended
December 31, 2001, the loans to Streamscape were written off by the Company as a
bad debt because Streamscape went into receivership.

The Inform Online, Inc., transaction

On November 26, 2001, the Company entered into an agreement to
acquire substantially all of the assets of Inform Online, Inc., which developed
a system that provided advertisements to digital display systems. The terms of
the asset acquisition called for ActionView to issue 1,000,000 restricted shares
of the Company's common stock. Inform Online, Inc. was unable by June 30, 2002,
to reach an agreement with a major vendor to supply online advertising, and
therefore the November 26, 2001, agreement to acquire all of Inform Online,
Inc.s assets was rescinded and terminated, effective June 24, 2002. The Company
has returned all the transferred assets to Inform Online, Inc. (hardware and
equipment, $70,000; computer

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software, $230,000; and intellectual properties, $250,000) and
has cancelled the 1,000,000 restricted shares of common stock previously issued
to Inform Online, Inc.

The Tele Pacific Communications (Samoa) Inc.,
transaction

On March 25, 2002, the Company entered into an agreement to
acquire all the issued and outstanding shares of Tele Pacific Communications
(Samoa) Inc. from Pacific E-Link Corporation in exchange for 2,500,000
restricted shares of the Company's common stock. Tele Pacific Communications
(Samoa) Inc. owned a 75% interest in Chengdu Publicis International Advertising
Co. Ltd., a Sino-foreign joint venture advertising agency with offices in
Beijing, Shanghai, Chengdu and Guangzhou, China. As of August 8, 2002, Pacific
E-Link Corporation had not provided the Company with the contractually required
two years of audited financial statements for Tele Pacific Communications
(Samoa) Inc., and Chengdu Publicis International Advertising Co. Ltd., nor had
it delivered all of the issued and outstanding shares of Tele Pacific
Communications (Samoa) Inc., the Company decided to rescind the March 25, 2002
agreement with Pacific E-Link Corporation for non-performance on their part, and
has cancelled the 2,500,000 restricted common shares.

On May 7, 2002 the Company announced an agreement to acquire
all of the issued and outstanding shares of J&M Insurance Replacement Centre
Ltd., by the issuance of 4,654,000 restricted common shares to the shareholders
of J&M Insurance Replacement Centre Ltd. Upon the completion of due
diligence, the Company decided not to proceed with this acquisition.

The ActionView Advertising Systems, Inc.,
transaction

In August 2002, the Company changed its name from Inform Media
Group, Inc. to Acquisition Media, Inc. Subsequently, in August 2003, in
preparation for the closing of its acquisition of Action View Advertising
Systems, Inc., Acquisition Media, Inc. changed its name to ActionView
International, Inc. in order to better reflect the new business operations of
the Company. Also, in August 2003, the Company obtained a new CUSIP number and
changed its trading symbol on the OTC Bulletin Board to AVWI and is presently
trading under the name: ActionView International, Inc.

On August 11, 2003, ActionView International Inc., incorporated
a wholly-owned Canadian subsidiary, 6126421 Canada Ltd. Pursuant to an agreement
dated September 9, 2003, ActionView International, Inc., through its
wholly-owned Canadian subsidiary (612 Canada) acquired 100% of the issued and
outstanding shares of ActionView Advertising Systems, Inc. (ActionView), a
British Columbia Canadian Corporation incorporated on July 6, 1999, and issued
1,000,000 exchangeable shares of 612 Canada as consideration. This transaction
was completed during the quarter ended September 30, 2003 with all of the
acquired shares of ActionView Advertising Systems, Inc., being exchanged for the
1,000,000 exchangeable shares of 612 Canada. In conjunction with this
transaction, the Company acquired the Intellectual Property Rights relating to a
computer programmable scrolling, backlit billboard poster sign marketed and sold
through ActionView. This technology forms the basis of the Companys current
operations.

Pursuant to the terms of the agreement, the Exchangeable Shares
can be exchanged into shares of ActionView International, Inc. on a one-for-one
basis at the option of the shareholder. Concurrently, with the acquisition of
Action View Advertising Systems, Inc., acquisition, the Company issued an
additional 327,325 restricted common shares to settle the shareholder's loans
between Action View Advertising Systems, Inc. and its two principals - Chris
Stringer and Rick Mari. A holder of an exchangeable share may, at any time,
require 612 Canada to repurchase the exchangeable share for an amount equal to
the then current market value of the Company's common stock. 612 Canada may, at
its option, satisfy the resulting obligation to repurchase the exchangeable
shares in cash or it may elect to have the obligation satisfied by the issuance
of shares of common stock by the Company. The Company is required to issue to a
trustee, a sufficient number of shares of common stock to satisfy this
obligation. The holders of the exchangeable shares are granted votes in the
Company on the basis of one vote for every exchangeable share held. The
exchangeable shares can be exchanged into shares of the Company on a one-for-one
basis at the option of the exchangeable shareholder. Concurrently with 612
Canada's issuance of 8,422,675 exchangeable shares,

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the Company issued 8,422,675 of its common shares to a Trustee
in the event that the exchangeable shares were exchanged. To-date 350,000
exchangeable shares have been exchanged for company shares.

The Companys Current Business Operations

The Company's principal place of business is located at Suite
103 -221 East 10th Avenue, Vancouver, British Columbia, Canada. It's telephone
number is (604) 878-0200 or toll free (866) 878-0200 and it's facsimile number
is (604) 879-8224. The Company, through ActionView, its wholly-owned subsidiary,
is currently engaged in the business of designing, marketing and manufacturing
proprietary illuminated, programmable, motion billboard signs for use in
airports, mass transit stations, shopping malls, and other high traffic
locations to reach people on-the-go with targeted messaging. The Companys
billboards utilize digital motor controllers for enhanced advertising
capabilities, proprietary source code for enhanced operating performance and LED
displays for timely on-site communications. They offer the following advantages
over their stationary counterparts: (i) the necessary movement to attract the
attention of passersby; and (ii) the display of multiple advertisements (up to
twelve different scrolling images per sign), typically where space is at a
premium, thereby lowering costs to advertisers and increasing revenue to
landlords. Studies have shown that motion billboard advertising increases the
likelihood of attracting attention by 3 to 4 times over static billboards.

Business Background

ActionView Advertising Systems, Inc. (an operating and wholly
owned subsidiary of ActionView International, Inc.) was formed in 1998 as a
British Columbia Corporation. The Managing partners and sole shareholders were
Rick Mari, Founder/Secretary Treasurer and Christopher Stringer, President. The
purpose of the company was to further expand the scrolling backlit sign
technologies that were originally created by Rick Mari and to develop the most
appropriate ways of taking the ActionView products to market.

At the outset, a franchise system was developed with Uniform
Franchise Offering Circular (UFOC) documentation completed. A franchise
marketing program was implemented and 7 franchises were sold over 6 years. This
program has not succeeded to the Companys expectation due to the difficulty
that local franchise owners experienced with finding locations to place their
signs.

In 2002, a revenue sharing program was developed, initially for
point of purchase advertising, with the plan to place the ActionView scrolling
signs in open areas of large retail stores for the vendors of store merchandise
to advertise. The proposed program required that ActionView International would
finance and place the signs at its own cost. The store would assist ActionView
with the acquisition of vendor advertising in return for a share of the revenue.
This program was tested by one Home Depot store in Toronto and by one Shoppers
Drug Mart Store in Canada. But neither company implemented the ActionView
program nor disclosed the test results to ActionView. The program was also
tested at one Canadian Tire store which led to the ordering of 2 signs for newly
constructed stores.

In 2003, the Company began developing its present strategy of
placing scrolling signs into high traffic locations and then marketing
advertising space on the signs by means of new alliances that were developing in
China and other international markets. The intention was for ActionView to
maintain ownership of its signs and share the on-going revenue generated from
the signs with the advertising agency and the location owner. The benefit to
advertisers would be big, bold exposure at top tier locations at much lower
cost. With this new strategy and at this early stage, the Company decided to
move manufacturing off-shore from Canada to China in order to benefit from the
positive trend towards high-tech, good quality mass manufacturing in China at
lower cost. The Company's signs are currently assembled by a team of design
engineers and computer technicians at its contract manufacturing facility
located in Guangdong Province, China.

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In 2003, Spinney supermarkets in Dubai tested and implemented
both the signs and the program. Signs were placed in 6 locations and revenue was
generated by the local ActionView Franchise.

In 2003, FAL Stores /Action Supermarkets in Australia tested
the signs and indicated their intention to proceed with placement in selected
stores. Subsequently, Action Supermarkets were purchased by the IGA food group
and the advertising program, originally intended for 37 stores, was expanded in
early 2006 to over 400 stores within the IGA group of stores. ActionView will
commence the implementation of the program in Brisbane Australia with
approximately 60 signs expected to be installed I in the second quarter of
2006.

In February 2004, the Company completed the incorporation of
ActionView Far East Limited (AVFE) for the purpose of representing the Company
and marketing its scrolling billboard products in both China and Hong Kong. The
Company has a 50.1% interest in AVFE and a voting majority on the Board of
Directors. The other 49.9% owner of AVFE is a local business group headed by
AVFEs Managing Director.

In February 2004, the Company secured the installation of a
backlit, scrolling sign system at the Showcase Store, one of Canada's largest
automotive and hardware products retailer. In December, the company sold and
installed 2 scrolling signs in 2 newly constructed stores for this retailer.

In the second quarter of 2004, the Company delivered 6
ActionView scrolling signs to the ActionView Franchise in the Northwest
Territories, Canada, from which the Company has begun to receive royalty income
in 2005..

In July, 2004 the Company entered into an agreement with Way
Cool Concepts Inc. to develop the Eastern Canadian market from Toronto. However,
this business has since ceased operations for unknown reasons.

In the second quarter 2004, the Company manufactured 10 signs
for installation in the Guangzhou Mass Transit Rail system (MTR) for
beta-testing This was the first contract negotiated by Chuangrun Media Ltd, a
Hong Kong corporation which currently operates an established business in China.
It was followed closely by Chuangrun requesting ActionView to begin product
development for a large Panorama sign for presentation to the new Guangzhou
airport to fulfill a contract that Chuangrun had for airport advertising in the
domestic terminal.

In September 2004, the Company completed a license and supply
agreement with ActionView Australia (Proprietary) Limited (AVAU) for the
purpose of representing the Company and marketing its scrolling sign products in
both Australia and New Zealand. The Company has an option to purchase a 51%
interest in AVAU for a nominal amount at any time. The other 49% owner of AVAU
is a local business group headed by AVAUs Managing Director.

In October 2004, an ActionView sign was installed in the Loews
theatre in Lincoln Square, New York for beta-testing and possible future
expansion to additional Loews theaters. The sign was subsequently removed and to
the best of the Companys knowledge the potential use of ActionView signs is
still under consideration by Loews.

Also, in 2004, ActionView installed 20 signs in two movie
theater chains in Hong Kong for beta-testing. Subsequently, this project and
the Guangzhou MTR project above were put on hold in order to focus its efforts
and resources on the more important Guangzhou Airport contract.

In May 2005, AVFE entered into a five year revenue sharing agreement
  with Chuangrun Media Ltd, Chuangrun is responsible for obtaining site locations
  and advertisers for the Company-owned scrolling signs; the Company is responsible
  for the delivered cost of manufactured signs; and AVFE is responsible for the
  installation and on-going maintenance of the signs. On-going business developments
  in China are reviewed in Item 1(j) entitled Projects in Progress and Strategic
  Alliances.

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In June 2005, AVAU entered into a three year revenue sharing
agreement with Open Media Management Pty Ltd (Open Media), an Australian
corporation with ties to the advertising community and business establishment in
Australia and New Zealand. Open Media and AVAU are responsible for obtaining the
site locations and the advertisers along with installation and on-going
maintenance of the Company-owned scrolling signs; and the Company is responsible
for the delivered cost of manufactured signs. On-going business developments in
Australia are reviewed in Item 1(j) entitled Projects in Progress and Strategic
Alliances.

Also in 2005, the ActionView sign was tested in McCarran International
  Airport in Las Vegas. The testing is now complete and airport management and
  their advertising company are in the process of determining the potential future
  use of the ActionView signs in this location.

b) Principal Products, Services and Product

Over the past six years, the Companys wholly-owned subsidiary,
ActionView Advertising Systems Inc., has researched, designed, and manufactured
programmable, scrolling, backlit billboard poster signs under the guidance of
its founder, Rick Mari, the Companys CEO and a Director. The initial product
was a 4 foot by 6 foot (4x6) sign for use in retail and other high traffic
advertising venues. It was site tested in malls and business concourses in
Vancouver, Canada, with the support of local and national advertisers. Ad
revenues from rental signs placed three years ago continue to flow from three
separate shopping centers in Vancouver.

Since initial product development, the company has developed
several custom designed signs in different sizes to suit specific customer needs
as follows:

Sign
      Size
      List PriceOriginal
      4x6 sign scrolling 12 poster advertisements (*)
      $ 10,0003.5 x 5
      double sided scrolling 12 poster advertisements with LED display on top
      $16,0003.5 x5
      signs scrolling 12 poster advertisements
      $ 10,0003.5 x5
      sign scrolling 6 advertisements (called ActionView Light)
      $ 6,0006x9 sign
      portrait mode scrolling 5 poster advertisements
      $ 18,0005 x10
      sign scrolling 4 poster advertisements
      $ 16,0005 x15
      sign scrolling 3 poster advertisements
      $ 23,000


* The Company also designs and
distributes a 4 x 6 non-scrolling (static) sign with a depth of 5 inches which
is ideal for narrow passage ways where advertising on the walls has typically
been confined to non-backlit products. It has a list price of $2,500.

In general, there are two significant benefits to scrolling
backlit signs compared to static backlit signs:

| | i)  | Scrolling signs permit the display of
      multi-advertisements in a single location. In a world where space is at a
      premium and advertisers are required to compete for their advertising
      positioning, ActionView signs reduce costs to advertisers and increase
      income to property owners who lease advertising sign space.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | ii) | scrolling advertising provides the movement necessary to
        attract the attention of passers-by.                                                                                                                                                                                                                                           

Many innovative technical features and benefits have been
developed by ActionView over the years and built into the their scrolling
backlit smart sign system giving it superior functionality for
advertisers:

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| | i)   | capable of combining motion posters with an LED messaging
      system on top of each sign (hybrid), networked to all other signs in a
      given installation enabling a simultaneous display of ads and messages
      throughout the venue.                                                                                                                                                                                                                                                                                                                                                
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | ii)  | 30% increase in lighting brightness without creating hot
      spots through the use of diffuser lenses creating a highly visible and
      more eye-catching advertisement than standard advertising billboards.
      Other companies put a sheet of opaque glass in front of their bulbs to
      achieve the same purpose which decreases brightness. Furthermore, the
      diffusers in the ActionView sign act as structural components, adding
      strength to the signs and providing channels to hide wiring which makes
      them safer and gives a significantly cleaner look.
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | iii) | equipped with a specially developed computer software to
      provide an easily accessible audit trail for advertisers to track
      billboard location, how many times and how long each ad is shown,
    etc.                                                                                                                                                                                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | iv)  | capable of trouble-free operation with more than 100
      types of poster material having various thicknesses and stiffness. Most
      competitive signs are limited to specific types of poster material, which
      is not practical in this business particularly on an international scale
      when poster material control is very difficult.                                                                                                                                                                                                                                        
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | v)   | capable of being programmed to display a variety of 3 to
      12 posters on the same sign in any order at any time of the day or night
      for 7 day periods to add versatility, spontaneity and relevance to ad
      campaigns.                                                                                                                                                                                                                                                                                                                                                           
| |      |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | vi)  | capable of changing the poster shuttle speed depending on
      the needs of specific advertising venues, ie. slower movement in tranquil
      food court venues and faster movement in the hustle and bustle of airport
      venues.                                                                                                                                                                                                                                                                                                                                                        

The main operating procedures behind the ActionView scrolling
signs are as follows:

- the posters are a series of separate and distinct print
images connected on a continuous roll installed in a display cabinet constructed
from high gloss extruded aluminum for viewing through a plexiglas window located
either in the front or back of the display cabinet.

- the first poster is attached to a roller spanning the top of
the display cabinet and the last poster is attached to the roller spanning the
bottom of the display cabinet.

- with the use of motors and a digital controller, the roll of
posters can be scrolled up to display each poster individually in the window for
a short period of time (generally 15 seconds) before scrolling on to the next
poster. When the roll of posters is wrapped around the top roller the controller
reverses the mechanism to scroll the roll of posters in the same manner to the
bottom roller, in reverse order.

- fluorescent bulbs and diffuser lenses are housed in the
display cabinet behind the advertising posters. The high gloss aluminum display
cabinet can be custom designed and colored to fit advertiser needs.

Product Development

The Company has developed many products that it believes are
versatile, attractive and reliable mainly because of the sophisticated,
digitally controlled, electronic components and high quality mechanics.

Several new products and support technologies have been
researched and developed over the past two years including :

i) several new sizes of signs: the 5x15 scrolling 3 posters,
the 5x10 scrolling 4 posters, the

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| |      | 3.5x5 scrolling 6 posters (known as ActionView Lite) for
      which a new digital controller was developed.                                                                                                                                                                                                       
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                                                                                                    
| | ii)  | the existing digital controller and source code was
      upgraded to work with new billboard models.                                                                                                                                                                                                              
| |      |                                                                                                                                                                                                                                                                                                                    
| | iii) | new poster mounting tools and processes that make
      changing posters faster and more efficient                                                                                                                                                                                                                 
| |      |                                                                                                                                                                                                                                                                                                                    
| | iv)  | upgraded software for programming controllers for sign
      operations utilizing Windows- based hand-held remote units (pocket PCs or
      PDAs) replaced lap top computers.                                                                                                                                   
| |      |                                                                                                                                                                                                                                                                                                                    
| | v)   | LED display unit placed on top and integrated with an
      existing sign to facilitate timely communications throughout a particular
      venue. This is the most significant new development in the ActionView
      scrolling sign system and is a leading feature in the Guangzhou airport
      installation.

The company has spent almost $300,000 in product development
expenses over the past two years under the direction of Rick Mari, the Companys
CEO and founder. In Vancouver, product development is performed at the companys
headquarters and at local independent technical labs. In China, product
development is performed at the Companys contract manufacturing facility
located in Guangdong Province, China under the direction of a full time Company
employee, bilingual in English and Mandarin. This gives the Company considerable
direct input and influence over product development and manufacturing of signs
which for the most part are custom designed for specific end user needs.

Product development expenses include the salaries and wages of
two full-time technical employees, a partial allocation of the CEOs
compensation, travel expenses to and from the plant site in China and product
testing venues, the cost of manufacturing products for testing, independent
contractor costs and sundry development costs. Additional qualified employees,
agents, or independent contractors, augmented by the leasing or purchase of
specialized equipment as required, will continue into the future in order to
keep Company products on the leading edge.

c) Target Market, Strategy and Product
Distribution

Since the acquisition of ActionView Advertising Systems Inc in
September 2003, the Company has been focused on developing and implementing its
business plan including building brand recognition, gaining market share,
meeting customer expectations, tailoring products to meet customer
specifications, following up to ensure customer satisfaction, and staying on the
leading edge of technology with product development spending to enhance the
product line.

ActionView markets its multiple poster signs to managers of
high traffic public locations such as airports, train stations, shopping malls,
movie theaters, etc. ActionViews business strategy is to establish
relationships with media advertising companies that will purchase the poster
advertising on the ActionView signs on behalf of their clients. ActionView is
also in the process of selling and/or renting its signs to retail store chains
for placement inside the retail stores or in the store windows. Once signs are
placed in stores at the point of purchase, advertising time will then be sold
to vendors of products.

The Companys business plan is based upon the Company
maintaining ownership of its manufactured signs and generating monthly revenues
from signs placed in airports, train stations, convention centers, shopping
malls, supermarkets, department stores, movie theatres, gas stations, and other
high traffic locations. These revenues from Company signs will be shared with
the sellers of the advertising and the sign location landlord.

10

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The Company sells its signs to locally based franchises and
will receive royalty income from the advertising revenues generated by those
signs. The Company also intends to sell custom manufactured less sophisticated
scrolling signs to customers on a large volume basis if demand for these exists.

ActionViews business strategy is centered around its unique
vertically integrated business model of revenue sharing through international
partnerships and license agreements. The model is supported by in-house
developed products including: the unique sign designs (unlike others in the
industry) the digital motor drive controllers, the integrated LED display unit
for timely communication and the source code used to program and manage the
reliable operation of the signs.

The Companys main target markets at the present time are China
and Australia with the USA also moving ahead, particularly in Las Vegas.

In China the company, through its majority ownership in AVFE,
has contracted with Chuangrun Media to place signs in Chuangruns customers
facilities. The first 2 of these were the MTR railway and the Guangzhou airport.
The MTR railway has been put on hold to focus on the airport contracts with
signs now scheduled for installation in the first quarter 2006. Further airport
contracts are now being negotiated by Chuangrun.

In Australia, the company, through its partnership in ActionView
  Australia, has contracted with Open Media to place signs in the IGA supermarket
  chain with sign installations expected to begin during the 2nd quarter
  2006.

All projects in progress and strategic alliances are reviewed
in detail in Item 1(j) below

Media Advertising Markets in China

According to AC Nielsen Media Research, the China advertising
market will be the 2nd largest in the world by 2010. It is the fastest growing
and largest consumer market and the advertising industry grew by 40% in 2003
(Source:X-tribes China, Xtreme Information). Advertising expenditure in China
soared to US$13 billion in 2003, covering 0.92% of GDP compared to an average of
3% in developed countries. In the past 20+ years, average growth rate was nearly
40% (source: China Advertisement Association). There are more than 100 million
middle class in China today and projected to grow to over 500 million by 2012
(two-fifths of the population), wrote Pacific Chief Economist Andy Xie of Morgan
Stanley Asia. China is already a large consumer market and will become larger as
the economy grows. Some of the statistics collected by AC Capital Consulting
Group as reported by China Online are:

- 38 million urban families can afford US$12,000 on buying a
car;

- More than 70% of adults living in Beijing, Shanghai and
Guangzhou (combined pop. 33 million) plan to buy a car in the next 5 years;

- Housing sales in Beijing, Shanghai and Guangzhou are growing
at close to 40% per annum;

- The market for toiletries and cosmetics has passed US$ 3
billion, expected to reach US$ 22 billion by 2013;

- Chinese tourist currently spent US$ 20 billion+ overseas
every year It will be the country with the largest number of outbound tourists
by 2020.

Registering a 21% year on year growth to nearly US$37 billion
  in 2005, China is now just behind Japan as the 3rd ranked advertising
  economy in the world. In particular over the last 10 years, China has
  witnessed a rapidly expanding outdoor advertising industry averaging 19% growth
  per year according to Chinas State Administration of Industry and Commerce.
  It is a great investment opportunity for foreign investors and local companies
  as well.

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Media Advertising Markets in Australia

According to AC Nielsen Media Research, Australia is now the
2nd largest ad spending market in the Asia Pacific of the 12 markets
measured, behind China only. A sound economy, political stability and on-going
consumer and business confidence contributed to double digit growth in Media
expenditures in 2005. This augers very well for the future in the majority of
the top 10 ad categories including retail, motor vehicles, entertainment &
leisure and real estate.

Media Advertising Markets in USA

A number of qualified sources indicate that strong advertising
spending will continue in the US: -

- The Outdoor Advertising Association of America (OAAA) states
that annual advertising sales approximate US$5.2 billion of out of home
advertising. Since 1998, outdoor advertising has grown at a CAGR (compound
annual growth rate) of approximately 8.1% that is 1% faster growth than the
overall advertising market. Outdoor advertising in such key markets as Europe
and the U.S. grew by a CAGR of 10% with a projected CAGR of 8.7% over the next
three years, compared to 6.7% for the overall advertising market.

- Both Zenith Media and the Outdoor Advertising Association of
Canada (OAAC) report similar growth figures in the US.

- Outdoor Advertising in the USA June 2002, Price Waterhouse
Coopers indicates that Global advertising spending is predicted to increase at
a 4.8% Compound Annual Growth Rate reaching a total of $405 billion in 2006,
compared to $321 billion in 2001. The US market will grow from $46 billion in
2001 to $59 billion in 2006.

d) Competition and Main Competitors

ActionView competes with a variety of other companies providing
advertising space or services. The outdoor advertising segment is highly
competitive and is becoming more concentrated. The top three advertising
companies in the world, Clear Channel Group, Infinity (Viacom) Inc. and the JC
Decaux Group had a 9% market share in 1996 and a 30% market share in 2000 with
consolidation and acquisition of companies taking place in the industry. In
Canada, the Out-Of-Home advertising segment is even more highly concentrated
with Pattison Outdoor Inc. accounting for close to 47% of the outdoor market
segment according to the Canadian Outdoor Advertising Association.

These companies, due to their size, compete with one another
for the largest existing outdoor advertising markets in North America. These
markets include outdoor billboards on buildings and street sides, poster sized
signs in malls, airports, train stations etc. The only company that uses
scroller technology is JC Decaux who is ActionViews main competition in Europe,
Australia and parts of Asia. In Australia the major outdoor competitors are JC
Decaux, EYE Corp, Cody Outdoor and GOA Billboards.

In the scrolling sign product supply market the competitors are
Revolution, Postermatic and Charvet-Industrie in North America.

ActionView will continue to focus on two markets for the
placement of its signs: (i) mass transit locations such as airports and subway
stations; and (ii) point of purchase locations such as high volume retailers
ActionView has created some unique signage products that complement the
heretofor under utilized space at airports with the introduction of the new
Motion poster /LED combinations signs which are now in the process of being
placed at bus stop locations at the Guangzhou Airport.

Currently we know of no other sign manufacturer that supplies
signs at no charge to media companies for a share of the advertising
revenue.

12

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e) Competitive Position and Methods of
Competition

The Company will not attempt to compete in the North American
outdoor advertising markets because of the size, strength and maturity of JC
Decaux, Clear Channel, ViaCom and Pattison. Instead ActionView will concentrate
on the point of purchase market where manufacturers and vendors of retail
products need to advertise in the retail department, hardware or food store
chains at the point of purchase. ActionView intends to place its scrolling signs
in the store windows and inside the entrance and at the end of aisles.
ActionView will receive its revenue from renting the signs to the retail stores
or by receiving a percentage of the ongoing revenue stream generated from the
advertising. Because the Companys business strategy is to maintain ownership of
its signs and enter into revenue sharing agreements with the sign location
hosts, the Company does not intend to compete with sign suppliers for core
business and revenues. However, the Company can and does sell signs and may
increase this portion of its business if sufficient demand for the direct sale
of its products develops. The Company does not anticipate that outdoor
advertising market sign sales will become a substantial portion of its business
or operations and has not relied upon this assumption in its business model.
When the Company does compete in the outdoor advertising sign sales market, it
is comparable in price to similar quality products offered by competitors. At
this time we are not aware of any competition in this market from scrolling
billboard suppliers.

ActionView has no plans to enter the European market in the
near future.

The outdoor advertising market in the Orient and the Middle
East is fragmented. They are serviced by many local companies and a few
international companies like JC Decaux. It is still difficult for the
international companies to gain a foothold because of the protectionist
attitudes in these countries which tend to favor local companies. Because of
ActionViews local partnerships the company is perceived as local with the
benefits of international technology and management input. Accordingly, we do
not perceive any risk from local protectionist attitudes.

In Australia, the market is similar to North America, so the
ActionView strategy is to direct our Australian partner to pursue the point of
purchase market in retail store chains. This has resulted in a contract, through
our joint venture partner Open Media, with the IGA supermarket chain for
multiple store locations for the placement of scrolling signs.

In the competitive marketplace for scrolling sign products, the
Companys dual strategy has always been to provide our customers with top
quality products, well researched and tested before distribution, at competitive
prices. This prompted the change of sign production to China in 2003.

f) Principal Suppliers

The purchase, fabrication and assembly of the aluminum bodies
of the ActionView signs was transferred to a supplier in China to reduce
manufacturing costs.

The electronic components for the circuit boards of the
proprietary digital sign controllers continue to be assembled in Canada for
trans-shipment to China for installation.

g) Dependence on One or a Few Major Customers

Presently, ActionView is dependent on a few major customers.
These are: Chuangrun Media Ltd. in China and Open Media Management Pty Ltd in
Australia. The Companys business model calls for increasing the number and
sources of future clients and advertisers. ActionView is in the process of
setting up distribution channels in North America, China, Australia and the
Middle East. Potential customers are being pursued in all of these countries,
however, the Company has not yet achieved its desired market penetration or
client base. In North America ActionView markets its products and services to
the large multi store chains, movie theaters, gas stations, airports. It has
been the Companys experience that prior to committing to a purchase or entering
into a franchise or strategic alliance, customers typically request a

13

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testing period of 3 to 12 months to determine mechanical
dependability of the signs; to identify sales uplift for advertised products;
and to understand customer comfort with the new scrolling technology.

If the Company is able to install signs in various countries
and realize revenues from them, the Company does not believe it will be
dependent on one customer alone.

h) Intellectual Property, Patents, Trademarks, Licenses,
Franchises, Concessions, RoyaltyAgreements or Labour
Contracts

The Company owns the intellectual property rights to the
ActionView sign technology through its acquisition of 100% of ActionView
Advertising Systems Inc which owns 100% of 6216421 Canada Ltd.

(i) Pending Trademark Applications

ActionView had applied for trademark rights in the United
States and Canada for the trade name

ActionView. This trademark is on the primary register in the
United States as is the phrase ActionView: we leave the competition standing
still.

(ii) Pending Patents, Copyrights and Trade Secrets

ActionView had applied for the following US patents:

Pending Application No. 09/90652: Display Sign End Controller

Pending Application No. 09/528812: System and Method of
Cross-Selling Advertising

The second patent pending application had also been made in
Canada under the Canadian patent pending number 2341053.

Managements determination is that its technology is not a
likely target for intellectual property theft. Company products are not mass
produced for the consumer market and are not sold at the retail level. The
Company believes that it would be difficult and costly to reverse engineer the
source code written onto our microprocessors which is used in our motor
controllers. As financing permits the company will apply for patents on some or
all of its new developments. Currently the company will begin applying for new
patents in the second quarter of 2006. The patent eligibility of any of the
Companys planned applications is uncertain at this time.

Company copyright applications have been processed, registered
and completed with respect to our trade name and marks.

(iii) Royalties and Labour Contracts

The Company does not pay any third party royalty on the use of
its intellectual property.

There are no labour contracts or unionized employees.

(iv) Franchises

There are 10 ActionView franchises at various stages of
development at the present time, as follows:

- In Canada:
    Northwest Territories, Kelowna, Calgary, Toronto and Nova Scotia:
  5 
  - In USA: Houston and Las Vegas: 3

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- In UAE / Dubai: 1- In Australia:
1

i) Staff

ActionView presently has five and one half full-time staff -
two are working in management and sales & marketing activities; two are
working in research and product development; and one and one half are working
primarily in accounting and administration. The Company anticipates the need to
hire an additional four people in the areas of sales, operations and finance
over the next six to nine months as the transition from development stage to
commercial operations takes place. In addition and as required, ActionView
engages independent consultants and contractors to supplement its activities or
conduct specific technical and market research studies.

ActionViews subsidiaries in Hong Kong and Australia will
  hire staff as required in 2006 with a continued emphasis on outsourcing sub-contractors
  as the primary source of supply to keep related costs on variable basis.

j) Projects in Progress and Strategic
Alliances

While the United States would appear to be the obvious market,
large scale replacement of static signs would be required to obtain slotting
space and numerous long term competitor contracts are still in effect at the
high traffic outlets. Thus, a strategy of penetrating newer, rapidly growing and
as yet under-served marketing opportunities appeared to be a logical course of
action to the Company. Through management contacts and long term relationships,
the Company has established strong beachheads in China and Australia and intends
to utilize these installations as a show and tell demonstration method for
rapidly obtaining additional business in those countries.

The Company, through its foreign partners in China and
Australia, has entered into agreements during 2005 for the placement of 350
signs, subsequently increased to 610 signs subject to final written agreements,
in China and Australia as follows:

China and Hong Kong

In May 2005, AVFE entered into a five year revenue sharing
agreement with Chaungrun Media Ltd (Chuangrun), a Hong Kong corporation which
currently operates an established advertising business in China. The Company
owns 50.1% of AVFE and the other 49.9% owner of AVFE is a local business group
headed by AVFEs Managing Director. Chuangrun,is responsible for obtaining the
site locations and the advertisers for the Company-owned scrolling signs; the
Company is responsible for the delivered cost of manufactured signs; and AVFE is
responsible for the installation and on-going maintenance of the signs.

Through Chuangrun and AVFE, the Company has two contracts at
the new Guangzhou Baiyun Airport in Southern China for the placement of: (i) 50
double-sided 4x6 Company-owned billboards in the airport-link outdoor bus stop
locations, each scrolling 12 posters; and (ii) 100 indoor panorama 10x5
Company-owned billboards at the international arrivals and domestic departures
locations, each scrolling 3 posters.

The 50 bus stop signs have been paid for by the Company and are
now ready for installation following unexpected delays relating to custom design
changes requested by the airport authority and the construction / infrastructure
methods used in China to prepare the airport site. When final permits are
received from the airport authority, these signs will be installed which should
lead to revenue generation in the second quarter 2006. After a reasonable
work-in period for the bus stops the 100 indoor panoramas will be manufactured
and installed, provided the necessary funds can be raised by the Company.

Chuangrun has negotiated advertising contracts with a national
Ad Agency in China, Chi Shang Ling Yue Advertising Agency, for $6.425 million
covering their clients use of 60% of the outdoor sign space in the first full
year and $13 million for use of 70% of the indoor sign space in the first full
year. Clients secured

15

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by the Agency include China Mobile, China Unicom, Ping An
Insurance, Samsung, LG, etc. Under the Chuangrun contracts, the ActionView Group
is entitled to approximately 15% of the gross advertising revenues generated
from the signs once they are installed and advertising posters are in place.

Australia and New Zealand

In June 2005, AVAU entered into a three year revenue sharing
agreement with Open Media Management Pty Ltd (Open Media), an Australian
corporation with ties to the advertising community and business establishment in
Australia and New Zealand. The Company has an option to purchase 51% of AVAU for
a nominal amount at any time. The other 49% owner of AVAU is a local business
group headed by AVAUs Managing Director. Open Media and AVAU are responsible
for obtaining the site locations and the advertisers along with installation and
on-going maintenance of the Company-owned scrolling signs; and the Company is
responsible for the delivered cost of manufactured signs.

Open Media has negotiated a contract with IGA Distribution Pty
Ltd for the placement of a minimum 200 4x6 scrolling signs in the IGA
supermarket chain across Australia over the next six to twelve months.
Subsequent to the year end, the minimum number of signs was increased to 460,
subject to completion of a final agreement currently in progress. About 40 of
the 460 signs required by IGA have been built and paid for by the Company.
Approximately $1.4 million is required from new fund raising or operating cash
flows in order for the Company to meet this commitment.

Advertising contracts for the signs are presently being secured
through Open Media and its strategic / operational partner, Adshel/ Clear
Channel which is part of a large global outdoor media company with over 800,000
outdoor advertising displays. Under the Open Media contract, the ActionView
Group is entitled to approximately 20% of the gross advertising revenues
generated from the signs once they are installed and advertising posters are in
place.

Vancouver, British Columbia

The Company continues to generate relatively small amounts of
revenue from 4 rental signs located in 3 Vancouver shopping malls. Expansion
plans are currently in progress.

Other growth opportunities

Asia: News of the innovative ActionView bus-stop signs
in Guangzhou has reached other airports in China and Chuangrun is presently in
negotiations with some of them. Moreover, other markets in Asia are being
explored and the Company believes that opportunities abound in this region. With
a solid base of billboards in the larger countries, expansion into ancillary
areas should be possible on a consistent basis over the next few years.

India:Representatives from a business group in India,
  who learned about the Company success at the Guangzhou airport project, visited
  the ActionView contract manufacturing facility in China in late October with
  the CEO and the Director of Manufacturing. Discussions continue regarding potential
  development of the ActionView airport advertising program in India

Dubai, UAE (franchise):Good potential exists with the
  ActionView franchise in Dubai through the sale of signs and the earning of royalties
  from local advertising. Although this business has proceeded more slowly than
  anticipated, 3 ActionView signs were sold recently for placement and beta-testing
  into a chain of gas stations (Emirate Petroleum). So far the test results have
  gone well with nearly all advertising spaces sold out. The next phase will be
  the placement of 25 more signs throughout the gas station chain which should
  generate revenue for the Company from sign sales and related royalties in the
  coming months.

Yellowknife, Northwest Territories, Canada (franchise):The Company is now receiving royalty revenue from the local advertisments
placed on 8 ActionView signs sold to this franchise operation over the last 2
years. This revenue is expected to continue into the foreseeable future due to a
strong economy in the region.

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Las Vegas, USA (franchise):ActionView Nevada Ltd was
set up during the year as a new franchise to develop the Las Vegas market
including the McCarron International Airport, bus stop shelters along the Las
Vegas strip and casinos. Other US business opportunities are also being pursued
by the companys sales agent in Las Vegas mainly in market sectors less
developed by the major competitors such as convention centers, supermarket
chains and auto dealerships. The Company expects to see meaningful results from
these pursuits during the current fiscal year.

k) Risk Factors

Investors should consider each of the following risk factors
and the other information in this Annual Report, including ActionViews
financial statements and the related notes, in evaluating the Companys business
and prospects. The risks and uncertainties described below are not the only ones
that impact on ActionViews business. Additional risks and uncertainties not
presently known to the Company or that the Company currently considers
immaterial may also impair its business operations. If any of the following
risks actually occur, the Companys business and financial results could be
harmed. In that case, the trading price of ActionViews Common Stock would
probably decline.

Risks associated with ActionView's own business and
products

1. The advertising services industry could be impacted by
global economic weakness which reduces advertising expenditures and which could
negatively affect the Company's revenues and operating results. To the extent
that the global and local economies are weak, the Company will face diminished
ad revenues and sign sales, which may be material to the Companys operations.
The magnitude of such risk cannot be predicted with any degree of certainty.

2. ActionView lacks an operating history and has accumulated
significant losses that may or may not continue into the future. If the losses
continue, the Company might have to suspend or cease operations.

3. ActionView will derive most of its revenues from sales
outside North America and numerous factors related to international business
activities subject the Company to risks that could reduce the demand for its
products and negatively affect its operating results. External risks include
currency risks, foreign governmental regulation, foreign governmental and
economic instability, lack of accessibility to clients and customers in foreign
countries, and the inability to collect receivables from foreign clients and
customers may all adversely effect the Company. Any combination of these factors
would compound the risks to the Company and could result in significant harm to
the Companys operations abroad and thus its results of operations.

4. ActionView depends primarily upon two suppliers for the
components to produce its sign products. Any disruptions in the operations of,
or the loss of, these suppliers could harm the Company's ability to meet its
delivery obligations to its customers and could increase its cost of sales. If
the Company is unable to promptly replace one or both of its suppliers, it would
be unable to meet its contractual obligations and would not be able to
manufacture products which the Company relies upon for its revenues. A reduction
or interruption in sign product supply or a significant increase in product
prices could have a material adverse effect on ActionView's business and
profitability.

5. Defects or errors in ActionView's products or in the
components made by its principal suppliers could harm the Company's relations
with its customers and expose it to forms of product liability. Similar problems
related to the products of ActionView's customers would also harm its business.
If ActionView experiences any product liability claims or recalls, the Company
may also incur significant expenses and experience decreased demand for its
products.

6. ActionView's business and operations would suffer if its
sign products or systems fail. Problems with or failure of the Companys
products might result in a recall of the systems. The need to repair or replace
the systems would likely result in the loss of revenues and additional expenses
incurred by the Company to repair the problems. Additionally, the Company would
likely lose customers and accounts if the sign

17

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systems failed. The failure of a significant number or
percentage of the Companys systems and/or the loss of a significant number of
the Companys customers could have a material adverse effect on ActionView's
business and profitability.

Risks associated with ActionView's industry

7. The out-of-home advertising services industry is subject to
rapid technological change that ActionView must keep pace with to successfully
compete. The Companys inability to adapt to technological change or compete in
the Companys line of business would result in the loss of the Companys
customers, the inability to obtain new customers and market share and would have
a material adverse effect on ActionView's business.

8. ActionView faces significant competition from much larger
companies with greater experience and resources. The Companys inability to
compete in the Companys line of business against larger companies would result
in the loss of the Companys customers, the inability to obtain new customers
and market share and would have a material adverse effect on ActionView's
business.

9. Currency fluctuations could negatively affect future product
sales or advertising revenue and harm

ActionView's ability to collect receivables. Because a portion
of the Companys business is conducted in foreign currencies, the Company is
subjected to foreign currency risks, including adverse trends in valuation or
exchange rates, exchange and transfer fees, inflation and other economic
uncertainties not faced by companies which do not transact their business in
foreign currencies.

10. ActionView's business and operating results may be harmed
by inflation and/or deflation.

11. Government regulation or any change in such regulation may
adversely affect ActionView's business. Governmental regulation of the industry
or specific products which the Company manufactures and sells may increase the
costs associated with such business or may make the business unprofitable to the
Company. Any regulation or laws which hinder the Companys ability to sell its
products or which increases its costs would have a material adverse effect on
ActionView's business.

Risks associated with ActionView and its
subsidiaries

12. ActionView's stock price is volatile with wide fluctuations
in the past that are likely to continue in the future. The Companys common
stock trades domestically on the OTC-BB, a relatively illiquid and extremely
volatile market. In order to maintain its listing status on the OTC-BB, the
Company must file periodic reports with the SEC in a timely manner. If the
Company does not maintain its reporting status it may have its securities
delisted from the OTC-BB.

13. A small number of ActionView's stockholders own a
substantial amount of the Company's Common Stock, and if such stockholders were
to sell those shares in the public market within a short period of time, the
price of ActionView's Common Stock could drop significantly.

14. ActionView may not be able to attract and retain qualified
personnel necessary for the implementation of its business strategy. If the
Company is not able to attract or retain qualified personnel, it is likely that
the Company would be unable to remain competitive in its business resulting in a
material adverse effect on ActionView's operations.

15. ActionView's business and operating results will be harmed
if it is unable to successfully manage growth in its business.

16. ActionView does not expect to pay dividends in the
foreseeable future. Because the Company does not intend to pay dividends in the
foreseeable future, the potential return on an investors investment in the
Companys common stock cannot include any dividend income.

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17. Penny Stock rules may make buying or selling ActionView's
Common Stock difficult, and severely limit market liquidity. The Companys
common stock is defined as a penny stock under applicable federal securities
laws. As such, the Companys shares are more difficult to purchase and sell than
other securities not subject to the penny stock rules.

Additional Risks

18.Future Equity Financings May Dilute Your Ownership
Interests.The Company relies upon the availability of equity capital to
fund its growth, which financing may or may not be available on favorable terms
or at all. We cannot guarantee that additional financing, refinancing or other
capital will be available in the amounts we desire or on favorable terms.

19. As of the date of this prospectus we have raised equity
capital through the issuance of shares of our restricted common stock and will
continue to do so for the foreseeable future. Subject to the implementation of
our ongoing plan of operations and any revenues generated in relation thereto,
we anticipate continuing to rely on equity sales of our common stock in order to
fund our business operations. Issuances of additional shares will result in
dilution to our existing stockholders. There is no assurance that we will
achieve any additional sales of our equity securities or arrange for debt or
other financing to fund our planned business activities.

20. The Company does not carry Officer and Director Liability
Insurance coverage which would reduce the ability of investors to recover
damages in the case of a claim against the Company and or its officers and
directors for breach of duties or other liability claims.

ITEM 2          
  DESCRIPTION OF PROPERTIES

The Company does not own any real estate property as of March
31, 2006.

In addition, the Company, through its wholly-owned subsidiary,
Action View Advertising Systems, Inc. rents administrative offices and warehouse
space at Suite 103  221 East 10th Avenue, Vancouver, British Columbia, Canada.
The premises are approximately 2,200 sq. ft. and are being leased for a three
year period expiring September 30, 2006.

The annual rent for this leased property is approximately $28,680,
  excluding common area charges.

ITEM 3           LEGAL
  PROCEEDINGS

Management is not aware of any legal proceedings (either
presently engaged in or contemplated) by any government authority or other party
involving the Company or its properties.

No directors, offices, or affiliate of the Company is (i) a
party adverse to the Company in any legal proceedings, or (ii) has an adverse
interest to the Company in any legal proceedings.

ITEM 4           SUBMISSION
  OF MATTERS FOR VOTE OF SECURITY HOLDERS

None

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|PART II
|-------

ITEM 5          
  MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS

Market Information

The Companys Common Stock is traded on the OTC Bulletin Board
under the trading symbol AVWI. Set forth below is the range of high and low
bid quotations for the periods indicated as reported by the OTC Bulletin Board.
The market quotations reflect inter-dealer prices, without retail mark-up,
mark-down or commissions and may not necessarily represent actual
transactions.

2005
    2004High Bid
    Low Bid
    High Bid
    Low BidFirst Quarter
    0.115
    0.06
    1.01
    0.40Second Quarter
    0.16
    0.07
    0.44
    0.20Third Quarter
    0.13
    0.08
    0.27
    0.155Fourth Quarter
    0.11
    0.075
    0.22
    0.10


As of March 31, 2006, the Company had 210 shareholders of
record excluding the 43% of issued and outstanding shares held in street name
with CEDE & Co.

Dividends

Holders of common stock are entitled to receive dividends as
may be declared by the Board of Directors and, in the event of liquidation, to
share pro-rate in any distribution of the Companys assets after payment of
liabilities. The Board of Directors is not obligated to declare a dividend. No
dividends have ever been declared or paid by the Board of Directors of the
Company on its common stock. The Companys losses prevent the Company from
paying any cash dividends, and the Company does not intend to pay cash dividends
on its common stock in the foreseeable future.

Recent Sales of Securities

A summary of the shares of common stock issued by the Company
for each of the five seven years is presented below:

During the year ended December 31, 2001:

(i)
  the Company issued 55,000 shares of common stock on settlement of $5,500 owing
  to Company officers.

(ii)
  the Company issued 1,000,000 shares of common stock pursuant to the purchase
  of the assets of Inform Online, Inc. valued at $550,000.

During the year ended December 31, 2002:

(i)
  the Company terminated the 2001 asset acquisition agreement of Inform Online,
  Inc. and the 1,000,000 shares of Company stock were returned to treasury and
  cancelled.

(ii)
  the Company issued 2,500,000 shares of common stock at market price pursuant
  to the purchase of all the shares of Tele-Pacific Communications (Samoa) Inc.
  from Pacific E-Link Corporation. These shares were placed in escrow until completion
  of due diligence and

finalization of the acquisition. Later in the year, the Company
terminated the share acquisition agreement and the 2,500,000 shares of Company
stock were returned to Treasury and cancelled.

20

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During the year ended December 31, 2003:

(i)
  the Company issued 975,000 shares of common stock at market prices in return
  for consulting and professional services valued at $63,375.

(ii)
  the Company issued 7,302,000 units comprised of one common share and one common
  share purchase warrant on conversion of certain convertible notes payable and
  accrued interest in the amount of $523,000.

(iii)
  the Company issued 1,348,570 shares on settlement of $71,645 of accrued interest
  on convertible notes payable.

(iv)
  the Company issued 327,325 shares of common stock at market price on settlement
  of $98,197 owing to Company officers who are also directors, concurrent with
  the acquisition of ActionView.

(v)
  612 Canada issued 8,422,675 exchangeable shares with a fair value of $2,526,803
  and was recorded as a separate component of consolidated stockholders
  equity as described in Notes 5 and 6.

(vi)
  the Company issued 774,446 shares of common stock on settlement of $387,224
  owing to Company directors.

(vii)
  the Company issued 958,000 units at $0.50 per unit for cash consideration of
  $479,000 under a Private Placement Offering Memorandum for 2,000,000 units per
  Regulation S of the Securities and Exchange Act (OM units). Each
  unit consists of one share of restricted common stock at $0.50 per share and
  a non-transferable share purchase warrant entitling the holder to purchase one
  share of rule 144 restricted common stock at an exercise price of $0.55 for
  three years expiring by December 30, 2006. The fair value of the warrants was
  estimated to be $47,900 and was recorded as a separate component of stockholders
  equity.

(viii)
  the Company issued 250,000 shares of common stock on exercise of 250,000 share
  purchase warrants at $0.30 per warrant in settlement of $75,000 of amounts due
  to the warrant holder.

(ix)
  the Company issued 350,000 shares of common stock at $0.30 per share in settlement
  of the purchase price owing by 612 Canada on repurchase of 350,000 exchangeable
  shares of 612 Canada.

During the year ended December 31, 2004:

(i)
  the Company issued 1,741,500 common shares on the exercise of 1,935,000 share
  purchase warrants on a cashless basis.

(ii)
  the Company issued 250,000 OM units at $0.50 per unit for cash consideration
  of $125,000 under the 2003 Private Placement Offering Memorandum above. Each
  unit consists of one share of restricted common stock at $0.50 per share and
  one non-transferable share purchase warrant entitling the holder to purchase
  one share of restricted common stock at $0.55 for three years expiring by February
  20, 2007. The fair value of the warrants was estimated to be $12,500 and was
  recorded as a separate component of stockholders equity.

(iii)
  the Company issued 175,000 of the OM units at $0.40 per unit for cash consideration
  of $70,000 under the 2003 Private Placement Offering Memorandum above. Each
  unit consists of one share of restricted common stock at $0.40 per share and
  one non-transferable share purchase warrant at $0.45 for three years expiring
  by March 9, 2007. The fair value of the warrants was estimated to be $7,000
  and was recorded as a separate component of stockholders equity.

(iv)
  the Company entered into a Private Placement Subscription Escrow Agreement (PPSEA)
  whereby it agreed to offer through a private placement agent not less than 500,000
  and not more than 10,000,000 shares of the Companys common stock at $0.20
  per share, under Rule 506 of Regulation D of the Securities and Exchange Act.
  In return for arranging the financing, the Company

21

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agreed to pay an agents fee of: (a) $10,000 cash upon signing
the agreement; (b) 10% of the gross proceeds from the sale of shares for cash;
and (c) 10% of the common stock sold to investors. Under this agreement, the
Company issued 2,500,000 shares at $0.20 per share for cash consideration of
$440,500 net of share issue costs and fees of $59,500. The Company also recorded
an obligation to issue 250,000 shares to the agent as described in (c) above
with an estimated fair value of $50,000.

(v)
  the Company issued 250,000 shares of common stock on the exercise of 310,000
  share purchase warrants on a cashless basis.

(vi)
  the Company issued 100,000 shares under the PPSEA above at $0.20 per share for
  cash consideration of $18,000, net of share issue costs of $2,000. The Company
  recorded an obligation to issue 250,000 shares to the agent as described in
  (iv) above with at an estimated fair value of $50,000.

During the year ended December 31, 2005:i) the Company
implemented a Retainer Stock Plan which was filed on a Form S-8 Registration
Statement in January 2005. Under the Plan, a total of 3,000,000 shares of common
stock can be issued to compensate directors, employees and consultants for
services rendered to the Company at prices and terms to be determined by the
Board of Directors.

(ii)
  the Company issued 3,025,000 units under Private Placement for cash consideration
  of $250,000 at prices ranging from $0.08 to $0.10 per unit. Each unit consists
  of one share of restricted common stock of the Company and a non-transferable
  share purchase warrant entitling the holder to purchase one-half share of restricted
  common stock at an exercise price of $0.17 for one year expiring by June 30,
  2006. These shares were issued without registration in exempt transactions based
  on Section 4(2) of the Securities Act of 1933 under regulation D rule 501. The
  fair value of the warrants was estimated to be $25,000 and was recorded as a
  separate component of stockholders equity.

(iii)
  the Company issued 1,275,177 shares of Form S-8 registered common stock in return
  for consulting services valued at $124,760 regarding the preparation of legal
  contracts, continuous disclosure documents, business planning and sales &
  marketing at prices ranging from $0.07 to $0.10 per share.

(iv)
  the Company issued 437,500 shares of 144 restricted common stock in return for
  business consulting services valued at $43,500..

(v)
  the Company issued 1,468,000 shares of Form S-8 registered common stock for
  the settlement of accounts payable of $146,800.

(vi)
  the Company issued 2,500,000 shares of 144 restricted common stock for the settlement
  of $200,000 of amounts owing to Company officers who are also directors.

(vii)
  the Company issued 231,390 shares of Rule 144 restricted common stock as an
  equity inducement valued at $23,129 for $335,700 of promissory notes payable
  pursuant to an exemption from registration provided by Section 4 (2) of the
  Securities Act of 1933. (See Note 8)

(viii)
  the Company issued 1,285,700 shares of Rule 144 restricted common stock as an
  equity inducement valued at $141,427 for a $225,000 line of credit agreement
  (See Note 9c)

Stock Option Plan

In September 2003, the Company adopted a Non-Qualified Stock
Option Plan (the Plan) which authorizes the issuance of up to 1,750,000 shares
of common stock on exercise of options granted pursuant to the Plan. In
addition, the Company adopted a Stock Bonus Plan which authorizes the issuance
of up to 1,000,000 shares of common stock. Under the Stock Bonus Plan, the
Companys employees, directors, officers, consultants and advisors are eligible
to receive a grant of the Companys shares, provided however

22

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that bona fide services must be rendered by consultants or
advisors and such services must not be in connection with the offer or sale of
securities in a capital-raising transaction.

In September 2003 and pursuant to the Plan, the Company granted
options to purchase 1,475,000 shares of common stock to the Companys officers,
directors, employees and to consultants of the Company exercisable at a price of
$0.50 per share for the two years ending September 30, 2005. These options were
recorded at a fair value of $446,100 at the date the options were granted using
the Black-Scholes option pricing model assuming a dividend yield of 0%, a
risk-free interest rate of 3%, an expected option life of 2 years and an
expected volatility of 145%. In accordance with the provisions of APB No. 25,
this fair value compensation was expensed in the accounts and credited to
additional paid-in capital. These options expired on September 30, 2005.

In December 2003 and pursuant to the Plan, 50,000 options were
granted to consultants of the company exercisable at a price of $0.50 per share
for the two years ending December 31, 2006. These options were recorded at a
fair value of $30,200 at the date the options were exercisable using the
Black-Scholes option pricing model assuming a dividend yield of 0%, a risk-free
interest rate of 3%, an expected option life of 2 years and an expected
volatility of 139%. In accordance with the provisions of APB No. 25, this fair
value compensation was expensed in the accounts and credited to additional
paid-in capital. These options were subsequently cancelled on December 1,
2005.

ITEM 6          
  MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION

The following discussion should be read in conjunction with the
Companys consolidated financial statements and the notes related thereto which
have been audited and prepared in accordance with the accounting principles
generally accepted in the United States of America. The discussion of results,
causes and trends should not be construed to imply any conclusion that such
results, causes or trends will necessarily continue in the future.

a) Brief Company History and Development

ActionView International, Inc. formerly known as Acquisition
Media, Inc. was incorporated on January 26, 1986, as Vantage, Inc., under the
laws of the State of Nevada. It currently trades on the OTC Bulletin Board under
the symbol "AVWI" and is referred to in this Form 10-KSB as the "Company", the
"Registrant" or the "Issuer".

Following a number of name changes since incorporation, the
Company changed its name again to ActionView International, Inc. on August 20,
2003. This was done to better reflect its new business operations during the
process of acquiring 100% of ActionView Advertising Systems, Inc. (ActionView)
and related Intellectual Property Rights through its 100% owned subsidiary
company, 6126421 Canada Ltd (612 Canada). These acquisitions closed in
September 2003.

The Company custom-designs, markets and manufactures illuminated
  programmable motion billboard signs for use in airports, mass transit stations,
  shopping malls and other high traffic advertising locations designed to reach
  people on the go with targeted messaging. The Companys business model
  has two main revenue streams: (i) advertising revenues from Company- owned signs
  placed in high traffic locations being shared with Ad Agencies, location owners
  and local business partners; and (ii) sale of signs to franchise operators along
  with on-going royalty revenue from the advertising generated from these signs
  in the local market areas. This has been the Companys primary business
  since its inception.

23

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The Business

The business plan is based upon the Company maintaining ownership
  of its manufactured signs to generate recurring monthly revenues from signs
  placed under long term contracts into airports, train stations, convention centers,
  shopping malls, supermarkets, department stores, movie theatres, gas stations,
  and other high traffic locations. These revenues from Company signs will be
  shared with the sellers of the advertising and the sign location landlord.

The Companys billboard signs utilize digital motor controllers
and proprietary source code for enhanced performance and offer the following
advantages over their stationary counterparts: (i) the display of multiple
advertisements in a single location, typically where space is at a premium and
(ii) the necessary movement to attract the attention of passersby. (studies have
shown that motion billboard advertising increases the likelihood of attracting
attention by 3 to 4 times over static billboards) The Company targets the point
of purchase advertising market in North America and the outdoor advertising
market in the Orient, the Middle East and Australia. The significant
developments in China and Australia are described more fully below.

The Company also sells its signs to locally based franchises
and will receive royalty income from the advertising revenues generated by those
signs. The Company also intends to sell custom manufactured less sophisticated
scrolling signs to customers on a large volume basis.

The History

The ActionView 4 feet x 6 feet life sized backlit scrolling
sign has been researched and developed under the guidance of its founder, Rick
Mari, for over 6 years. Site testing has been conducted in the malls and
business concourses of Vancouver, Canada with the support of local and national
advertisers. In Vancouver rental signs have been installed and ad revenues have
been realized in three separate shopping centres.

The R&D process resulted in a product that is versatile,
attractive and technically ahead of its competitors because of its sophisticated
digitally controlled electronic components and high quality mechanics.

Manufacturing was moved off-shore from Canada to China in 2003
in order to benefit from the mass manufacturing capabilities and economies of
scale in China. The Companys signs are being assembled in China by a team of
design engineers and computer technicians located in Guangdong Province,
China.

Sales of the ActionView product began with a franchising
program that exposed the product to shopping mall markets in Canada and the
United States. Over the past 18 to 24 months, the Company has expanded its
business model to international markets through strategic alliances for the
ActionView product lines in conjunction with revenue sharing programs.

The detailed arrangements regarding the acquisition of
ActionView Advertising Systems Inc in September 2003, including related
Intellectual Property Rights, are described fully in Item 1 (a) of this report.

b) Critical Accounting Policies and New Accounting
Pronouncements

Management believes the estimates, assumptions and judgments
  involved in the accounting policies described below have the greatest potential
  impact on our financial statements. So these are considered to be the critical
  accounting policies. Because of the uncertainty inherent in these matters, actual
  results could differ from the estimates used in applying the critical accounting
  policies. Within the context of these critical accounting policies, management
  is not currently aware of any reasonably likely event that would result in materially
  different amounts being reported.

24

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Revenue Recognition

ActionView generates or plans to generate its revenue primarily
  from three sources:

i) revenue from sale of advertising  earned when Company-owned
  signs are placed in point-of-purchase and high traffic advertising locations.
  This revenue is shared with the ad agencies who sell the advertising, the location
  owners and the local business partners who put the contracts together, and is
  recognized over the period when the advertising is provided.

ii) revenue from franchise operators  earned from start-up
  franchise fees, from on-going royalty fees on advertising revenues generated
  on the signs sold to the franchisees, and from fees on signs when sold by the
  franchisees to 3rd parties. Non-refundable franchise fees are earned
  when all material services relating to the sale have been substantially performed
  by the Company including arranging the franchise agreements and providing initial
  training services and related materials.

iii) revenue from sale of signs  earned when signs are sold to
franchise operators or large volume customers.

Revenue from all sources is recognized when the amount is fixed
or determinable, delivery has occurred or initial services have been performed,
and collection is reasonably assured. Any amounts received in advance of the
goods being delivered or services being performed are recorded as deferred
revenue.

Signs manufactured for inventory and/ or fixed assets

Signs manufactured for sale to franchisees and other customers,
located primarily in North American markets, are recorded as inventory at laid
down cost when the signs are received and recorded for financial reporting
purposes at the lower of cost or net realizable market value. Cost of sales is
recorded on the first-in first-out basis.

Signs manufactured for rental to ad agencies and/or sign
location landlords, located primarily in offshore markets, are recorded as fixed
assets at laid down cost. Cost is amortized on a straight line basis less
residual value over the estimated useful life of 5 years. The book value of
rental signs is reviewed for impairment whenever circumstances indicate that it
exceeds fair value and the full amount is not recoverable from undiscounted
future cash flows.

Goodwill and Intangible Assets

The Company has adopted the provisions of the Statement of
Financial Accounting Standards No. 142 (SFAS 142), Goodwill and Other
Intangible Assets. Goodwill and other intangible assets with indefinite lives
are no longer amortized under SFAS 142, but instead are tested for impairment at
least annually. In addition, intangible assets with a definite life are
amortized over that expected life and tested for impairment at least annually or
whenever events or circumstances indicate a revision to the remaining period of
amortization is warranted.

Prior to December 31, 2005, goodwill arising from the
acquisition of ActionView in September 2003 was carried at fair value and the
cost of Intellectual Property Rights acquired was amortized on a straight line
basis over 10 years. The determination of any impairment of goodwill and
Intellectual Property Rights includes a comparison of net carrying value with
estimated future operating cash flows anticipated during the remaining life; and
is dependent on the Companys ability to continue operating as a going concern.
During the annual impairment review the Company determined that the carrying
value of its goodwill and Intellectual Property Rights at December 31, 2005, was
fully impaired.

Recent accounting pronouncements

Of the five recent accounting pronouncements identified in the
notes to the financial statements, management believes that three of them will
have no impact on the financial statements of the Company and two are currently
being evaluated as to possible impact.

25

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The three with no impact on the financial statements of the
Company are:

| | i)   | 'Exchanges of Non-Monetary Assets  An Amendment of APB
      Opinion No. 29 (SFAS No.153) issued by the Financial Accounting Standards
      Boards (FASB) in December 2004 effective for fiscal years ending after
      June 15, 2005.
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                                                                                                                                               
| | ii)  | Accounting for Conditional Asset Retirement Obligations,
      an interpretation of FASB Statement No. 143 (FIN 47) issued in March
      2005 effective for fiscal years beginning after December 15,
  2005.                             
| |      |                                                                                                                                                                                                                                               
| | iii) | Accounting Changes and Error Corrections (SFAS No. 154)
      issued by FASB in May 2005 effective for fiscal years beginning
      immediately.                                                                                            

The two currently being evaluated as to possible impact are:

| | i)  | Share Based Payment (SFAS 123R) issued by FASB in
      December 2004 as a revision to Accounting for Stock-Based Compensation
      effective for fiscal years beginning after December 15, 2005.                     
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |     |                                                                                                                                                                                                                            
| | ii) | The Meaning of Other-Than-Temporary Impairment and Its
      Application to Certain Investments (FSP FAS 115-1) issued by FASB in
      November 2005 effective for fiscal years beginning after December 15,
      2005.

c) Results of Operation

The financial statements for the year ended December 31, 2005
(2005 year) are compared below to the financial statements for the year ended
December 31, 2004 (2004 year).

Net Sales

The Company reported revenues of $83,182 for the 2005 year
compared to $130,866 for the 2004 year. This revenue decrease resulted from
lower advertising revenue from signs placed in three Vancouver shopping malls;
significantly lower sign sales to franchisees and other customers, offset to
some extent by increased royalties from an existing franchisee. Advertising
revenue from the installation of Company-owned signs at the Guangzhou airport
was fully expected by the 4th quarter 2005 but was delayed due to
requested billboard modifications and Chinese construction / infrastructure
methodology. At present, revenue start-up from the first phase of the China
Airport project is expected in the second quarter 2006 subject to the receipt of
final installation permits from the airport authority.

Gross Profit

The Company realized a 53% gross margin in the 2005 year
generating a gross profit of $43,962 compared to 50% and $65,660 in the 2004
year.

Operating Expenses

The Company reported operating expenses of $1,196,396 in the
2005 year compared to $1525,372 in the 2004 year. This net $328,976 decrease in
operating expenses in the 2005 year was due to the following:

| |  | significant decrease in consulting fees to $3,750 from $215,200 due to
      changes in financial management / reporting personnel in 2005, now being
      charged to salaries and management fees at much lower rates.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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| |  | decrease in product development expenses to $134,938
      from $151,362 due to third quarter completion of the bus stop sign improvements
      at the Guangzhou airport including four-line LED display, new exterior finish,
      relocated control unit, and a new lighting system. These signs have been
      ready for installation since September 2005.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
|
|
| |  | small decrease in depreciation and amortization expense to
      $267,805 from $269,588.                                                                                                                                                                                                                                                                         
| |  | small decrease in marketing expenses to $76,078 from
      $79,542 despite making good progress in the Australian and Las Vegas markets.                                                                                                                                                                                                                         
|
| |  | significant decrease in investor relations expense
      to $108,722 from $367,287 due to reduction in press releases caused by delays
      in the Guangzhou project following the distribution of a high cost investor
      awareness package to 450,000 prospective investors in the 2004 year.                                                              
|
|
| |  | small decrease in professional fees to $77,971 from
      $80,223 as audit and legal costs leveled off pending transition from development
      stage to commercial operations.                                                                                                                                                                                 
|
| |  | increase in management fees to $279,215 from $187,434
      due to the addition of a contract financial professional to the management
      team primarily for stock-based compensation.                                                                                                                                                                        
|
| |  | increase in office and administration expenses to
      $158,795 from $151,953 due to increase in management travel, long distance
      phone charges and other corporate overheads in support of increased marketing
      activities in China and Australia partially offset by a reduction in bad
      debts.                                               
|
|
| |  | significant increase in finance and interest expense
      to $76,737 from $16,171 due to $534,000 of new interest bearing debt during
      2005 (net of repayments) required to build the signs for China and Australia
      and also provide working capital for on-going Company operations.                                                                
|
|

Intangible Assets Written-off

The carrying value of Intellectual Property ($1,707,216) and
Goodwill ($431,572) was subject to significant judgment and estimation along
with an annual impairment assessment. During the December 31 2005 assessment,
the Company decided to write-off both of these assets, except for nominal value
of $1, primarily due to the installation delays at the Guangzhou airport and for
accounting and transparency reasons. However, these one time non-cash charges
will be of benefit to reporting in future years by not having to absorb the
amortization expenses against the Companys earnings.

Net Loss

The net loss increased to $3,291,221 in the 2005 year from
$1,459,712 in the 2004 year mainly due to the intangible assets written-off of
$2,138,787 which was partially offset by the $328,976 decrease in operating
expenses, both explained above in detail.

d) Liquidity and Capital Resources

At December 31, 2005, the Company had a cash balance of
$130,739 together with a working capital deficiency of $230,793 compared to a
cash balance of $32,305 and a working capital deficiency of $360,661 at December
31, 2004.

The $98,434 increase in cash during the 2005 year ($9,550
decrease during the 2004 year) relates to the following:

| |  | Net cash used in operating activities was $679,172 in the 2005 year ($685,529
      in the 2004 year) arising from the years net loss significantly offset
      by the add-back of non-cash charges including stock-based compensation,
      finance expense on beneficial conversion features and the intangible asset
      write-offs.
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                             
| |  | Net cash used in investing activities was $205,985 in the 2005 year ($115,940
      in the 2004 year) due to the continued investment in rental signs for the
      Guangzhou and IGA projects in China and Australia respectively.                                                                                                         

27

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| |  | Net cash flow from financing activities was $983,591 in the 2005 year
      ($791,919 in the 2004 year) arising primarily from debt and equity financing
      but also from the accrued but unpaid compensation due to related parties.
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

As at December 31, 2005, the Company had debt obligations totaling $667,788
  as follows:

(i) Royal Bank of Canada (RBC) line
of credit of $34,305, bearing interest at RBC prime plus 1.55% per annum
repayable on demand.

(ii) Convertible promissory notes of
$335,700, bearing interest at 15% per annum repayable in cash or shares at the
option of the note holder one year from the date of issuance.

(iii) Business Development Corporation
(BDC) loan of $18,524, bearing interest at BDC prime plus 4% per annum with
monthly principal repayments of $686 (Cdn $800) plus interest commencing October
2002 and maturing March 2008.

(iv) BDC loan of $15,780, bearing
interest at BDC prime plus 2% per annum with monthly principal repayments of
$686 (Cdn $800) plus interest commencing June 2002 and maturing November 23,
2008.

(v) Convertible non-interest bearing
loans of $61,500 discounted to $38,479 with unspecified repayment terms.

(vi) CLX Investment Company line of
credit of $225,000, bearing interest at 8% per annum repayable by an amount
equal to 25% of net quarterly income of the Company or $75,000 whichever is
greater, commencing on the earlier of May 31, 2007 or the month following the
quarter in which the Company generates net quarterly income of at least
$150,000. At present, there are no outstanding repayment obligations.

The Company's continuation as a going concern is uncertain and
dependant upon successfully bringing its products and services to market;
achieving profitable business operations in the future; and obtaining additional
sources of financing to sustain its operations, the outcome of which cannot be
predicted at this time. In the event the Company cannot obtain the necessary
funds, it will be necessary to delay, curtail or cancel further development of
its products and services.

e)Plan of Operation for Next Twelve
Months

Current Projects and Operating Agreements

While the United States would appear to be the obvious market,
large scale replacement of static signs would be required to obtain slotting
space and numerous long term competitor contracts are still in effect at the
high traffic outlets. Thus, a strategy of penetrating newer, rapidly growing and
as yet under-served marketing opportunities appeared to be a logical course of
action to the Company. Through management contacts and long term relationships,
the Company has established strong beachheads in China and Australia and intends
to utilize these installations as a show and tell demonstration method for
rapidly obtaining additional business in those countries.

The Company, through its foreign partners, has entered into
agreements during 2005 for the placement of 350 signs, subsequently increased to
610 signs subject to final written agreements, in China and Australia as
follows:

China and Hong Kong

In May 2005, AVFE entered into a five year revenue sharing
agreement with Chaungrun Media Ltd (Chuangrun), a Hong Kong corporation which
currently operates an established advertising business in

28

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China. The Company owns 50.1% of AVFE and the other 49.9% owner
of AVFE is a local business group headed by AVFEs Managing Director.
Chuangrun,is responsible for obtaining the site locations and the advertisers
for the Company-owned scrolling signs; the Company is responsible for the
delivered cost of manufactured signs; and AVFE is responsible for the
installation and on-going maintenance of the signs.

Through Chuangrun and AVFE, the Company has two contracts at
the new Guangzhou Baiyun Airport in Southern China for the placement of: (i) 50
double-sided 4x6 Company-owned billboards in the airport-link outdoor bus stop
locations, each scrolling 12 posters; and (ii) 100 indoor panorama 10x5
Company-owned billboards at the international arrivals and domestic departures
locations, each scrolling 3 posters.

The 50 bus stop signs have been paid for by the Company and are
now ready for installation following unexpected delays relating to custom design
changes requested by the airport authority and the construction / infrastructure
methods used in China to prepare the airport site. When final permits are
received from the airport authority, these signs will be installed which should
lead to revenue generation in the second quarter 2006. After a reasonable
work-in period for the bus stops the 100 indoor panoramas will be manufactured
and installed, provided the necessary funds can be raised by the Company.

Chuangrun has negotiated advertising contracts with a national
Advertising Agency in China, Chi Shang Ling Yue Advertising Agency, for $6.425
million covering their clients use of 60% of the outdoor sign space in the
first full year and $13 million for use of 70% of the indoor sign space in the
first full year. Clients secured by the Agency include China Mobile, China
Unicom, Ping An Insurance, Samsung, LG, etc. Under the Chuangrun contracts, the
ActionView Group is entitled to approximately 15% of the gross advertising
revenues generated from the signs once they are installed and advertising
posters are in place.

Australia and New Zealand

In June 2005, AVAU entered into a three year revenue sharing
agreement with Open Media Management Pty Ltd (Open Media), an Australian
corporation with ties to the advertising community and business establishment in
Australia and New Zealand. The Company has an option to purchase 51% of AVAU for
a nominal amount at any time. The other 49% owner of AVAU is a local business
group headed by AVAUs Managing Director. Open Media and AVAU are responsible
for obtaining the site locations and the advertisers along with installation and
on-going maintenance of the Company-owned scrolling signs; and the Company is
responsible for the delivered cost of manufactured signs.

Open Media has negotiated a contract with IGA Distribution Pty
Ltd for the placement of a minimum 200 4x6 scrolling signs in the IGA
supermarket chain across Australia over the next six to twelve months.
Subsequent to the year end, the minimum number of signs was increased to 460,
subject to completion of a final agreement currently in progress. About 40 of
the 460 signs required by IGA have been built and paid for by the Company.
Approximately $1.4 million is required from new fund raising or operating cash
flows in order for the Company to meet this commitment.

Advertising contracts for the signs are presently being secured
through Open Media and its strategic / operational partner, Adshel/ Clear
Channel which is part of the worlds largest global outdoor media company with
over 800,000 outdoor advertising displays. Under the Open Media contract, the
ActionView Group is entitled to approximately 20% of the gross advertising
revenues generated from the signs once they are installed and advertising
posters are in place.

Vancouver, British Columbia

The Company continues to generate relatively small amounts of
revenue from 4 rental signs located in 3 Vancouver shopping malls. Some
expansion plans are currently in progress.

Other growth opportunities

Asia: News of the innovative ActionView bus-stop signs
in Guangzhou has reached other airports in China and Chuangrun is presently in
negotiations with some of them. Moreover, other markets in Asia are being

29

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explored and the Company believes that opportunities abound in
this region. With a solid base of billboards in the larger countries, expansion
into ancillary areas should be possible on a consistent basis over the next few
years.

India:Representatives from a business group in India,
who learned about the Company success at the Guangzhou airport project, visited
the ActionView manufacturing facility in China in late October with the CEO and
the Director of Manufacturing. Discussions continue regarding potential
development of the ActionView airport advertising program in India Dubai,
UAE:Good potential exists with the ActionView franchise in Dubai through
the sale of signs and the earning of royalties from local advertising. Although
this business has proceeded more slowly than anticipated, 3 ActionView signs
were sold recently for placement and beta-testing into a chain of gas stations
(Emirate Petroleum). So far the test results have gone well with nearly all
advertising spaces sold out. The next phase will be the placement of 25 more
signs throughout the gas station chain which should generate revenue for the
Company from sign sales and related royalties in the coming months.

Yellowknife, Northwest Territories, Canada:The Company
is now receiving royalty revenue from the local advertisments placed on 8
ActionView signs sold to this franchise operation over the last 2 years. This
revenue is expected to continue into the foreseeable future due to a strong
economy in the region.

Las Vegas, USA:ActionView Nevada Ltd was set up during
the year as a new franchise to help develop the lucrative Las Vegas market
including the McCarron International Airport, bus stop shelters along the Las
Vegas strip and casinos. Other US business opportunities are also being pursued
by the companys sales agent in Las Vegas mainly in market sectors less
developed by the major competitors such as convention centers, supermarket
chains and auto dealerships. The Company expects to see meaningful results from
these pursuits during the current fiscal year.

Product Development

The Company's design and production staff was successful in
developing several new products and support technologies during 2004 and 2005
which helped to secure the two China contracts at the Guangzhou Airport. The
most significant of these new products has been the designing and manufacturing
of the ActionView double sided 12 poster scrolling sign combined with an LED
sign attached on the top. The LED feature is used by the airport to convey
messages to the general public using the airport. The scrolling posters generate
revenue for the airport from the advertising displayed on them.

The Company is committed to continuing its product development
efforts in order to keep meeting ongoing customer demands for new and improved
products. A more detailed discussion of the Companys product development
program is included in Item 1b) above.

Expected profitability and capital requirements

The Companys primary goal over the next eighteen months is to
place or sell up to 1000 signs into a growing network of international contacts
and business relationships. The Company is well on its way with 60% of the
objective already under contracts in China and Australia. It is expected that
Q2-06 will be a turn-around quarter leading to the start of a break-even year in
2006 for the ActionView Group based on generating approximately $2.3 million in
consolidated revenues.

While the Companys financial projections are relatively easy
to determine and verify, ie. cost of each sign, advertising revenues per sign,
etc., it is rather more difficult to project the signing of new contracts. This
means the projections can be skewed upward or downward depending on the
completion or otherwise of the contracts currently in progress. However, some
should be close at hand after the first 150 signs are installed at Guangzhou.
Moreover, the manufacture and installation of the signs are subject to a number
of scheduling issues and the challenges of dealing with remote markets, eg. the
Chinese New Year in February caused an additional 4 week delay in the
installation of the first signs at the Guangzhou Airport.

30

---

Accordingly, the Company has chosen to take a conservative
approach to its revenue projections as follows:

(i) only those signs to be installed under signed contracts
and/or contracts currently being negotiated with a high probability of
completion have been included;

(ii) only 80% of expected monthly advertising revenues from the
signs in the pipeline has been included starting the month after installation;

(iii) 45 days have been added to the anticipated installation
dates of the signs across the board.

Should all of the signed and known potential contracts come to
fruition by end of the 2nd half 2006, the 2007 revenues for the
ActionView Group would be approximately $7 million or 3 times greater than 2006
producing bottom line income of approximately $1.7 million. This is the result
of adopting a unique profit sharing arrangement which provides incentives to all
parties and allows the Company to leverage their opportunities rapidly without
the addition of technical staff, an in house sales force and other costly
administrative personnel. Thus, profit growth will increase proportionally over
costs as revenues ramp up because selling, general and administrative expenses
are projected to rise only moderately and decline as an overall percentage of
revenues.

As mentioned above, these projections do not take into
consideration the high probability of further expansion into China, Australia
and North America nor the possibility of selling the signs to third party owners
and operators in any of these markets should management decide it is prudent to
do so.

This business plan is quite ambitious and requires the Company
to raise approximately $2.0 million in financing over the next six months
primarily for inventory buildup against firm orders. A two stage financing is
expected, raising approximately $1,000,000 equity in the first round with a
strong possibility of debt in the second round as cash flow will be much
stronger and more predictable later in the year, and assets (the signs) will
have been bolstered considerably.

The approximate use of the funds will be as follows:

Sign manufacturing
    $1,500,000Working capital for on-going operating expenses
    $ 350,000Product development
    $ 100,000Contingency allowance
    $ 50,000Total
    $2,000,000


However, there are various risk factors beyond the Companys
control. There can be no assurance it will be able to obtain this additional
financing required to meet its objectives. Failure to do so could result in the
Company being unable to meet its commitments and continue its operations.

Additions to Management Team

The Company plans to expand its management team with two key
appointments scheduled for the second quarter 2006, Director of Sales &
Marketing for North America and Chief Financial Officer.

Filling these positions will allow existing management to
concentrate on business strategy, operations, manufacturing and product
development for benefit of the business in general and the shareholders in
particular.

31

---

f) Contractual Obligations and Off-Balance Sheet
Arrangements

The following table provides a summary of the Companys
contractual obligations at December 31, 2005:

2006
    2007
    2008Convertible promissory notes payable
    $335,700 (1)
    Nil
    NilLong term debt repayments
    $16,466
    $241,466 (2)
    $1,373Office/ warehouse lease payments
    $ 28,680
    Nil
    NilTotal
    $380,846
    $246,466
    $1,373


(1) may be converted into common stock of the Company at a 15%
  discount to the volume weighted average price during the 10 days prior to the
  due dates after one year from issuance at the note holders’ option.

(2) excludes non-interest bearing convertible loans amounting
to $61,500 which will be converted into common stock of the Company at
maturity.

As of the date of this Report, the Company does not have any
off-balance sheet arrangements that have or are reasonably likely to have a
current or future effect on the Company's financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that are material to investors. The
term "off-balance sheet arrangement" generally means any transactions, agreement
or other contractual arrangement to which an entity unconsolidated with the
Company is a party, under which the Company has (i) any obligation arising under
a guarantee contract, derivative instrument or variable interest: or (ii) a
retained or contingent interest in assets transferred to such entity or similar
arrangement that serves as credit, liquidity or market risk support of such
assets.

g) Inflation

Management does not believe that inflation has had or will have
a material adverse affect on its operations.

h) Uncertainties Relating to Forward Looking
Statements

This Form 10-KSB Annual Report contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These statements may be identified by their use of words like plans,
expect, aim, believe, projects, anticipate, intend, estimate,
will, should, could and other expressions that indicate future events and
trends. All statements that address expectations or projections about the
future, including statements about the Companys strategy for growth, product
development, market position, expenditures and financial results are
forward-looking statements.

All forward-looking statements are made as of the date of
filing of this Form 10-KSB and the Company disclaims any duty to update such
statements.

The Company may, from time to time, make oral forward-looking
statements. The Company strongly advises that the above paragraph and the risk
factors described in this annual report and in the Companys other documents
filed with the United States Securities and Exchange Commission should be read
for a description of certain factors that could cause the actual results of the
Company to materially differ from those in the oral forward-looking statements.
The Company disclaims any intention or obligation to update

32

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or revise any oral or written forward-looking statements
whether as a result of new information, future events or otherwise.

ITEM 7           
  FINANCIAL STATEMENTS

The audited Consolidated Financial Statements are included in
this Form 10-KSB beginning on page F-1 following the signature page.

ITEM 8           
  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Effective August 5, 2003, the Company retained Dale Matheson
Carr-Hilton,(DMCL) formerly LaBonte & Company, Chartered Accountants to
act as Companys independent Chartered Accountants. In this regard, DMCL
replaced Stonefield Josephson, Inc. as the Companys independent Chartered
Accountants. The Company replaced Stonefield Josephson, Inc. with DMCL as a
result of the change in the Companys management and the relocation of the
Companys officers from Washington to British Columbia, Canada. Stonefield
Josephson, Inc. audited the Companys financial statements for the fiscal years
ended December 31, 2001 and 2002. The Stonefield Josephson, Inc. audit reports
for those fiscal years did not contain an adverse opinion, or disclaimer of
opinion and was not qualified or modified as to audit scope or accounting
principles. However, the report of Stonefield Josephson for those fiscal years
contained an explanatory paragraph with respect to uncertainty as to the
Companys ability to continue as a going concern.

The change in the Companys auditors was recommended and
approved by the Board of Directors of the Company. The Company does not at
present, have an audit committee.

During the Companys two most recent fiscal years, there have
been no disagreements with the Companys independent accountants on any matter
of accounting principle or practices, financial statement disclosure or auditing
scope or procedure. In addition, there were no reportable events as described in
Item 304(a)(1)(iv)(B)1 through 3 of Regulation S-B that occurred within the
Companys two most recent fiscal years and the subsequent interim periods.

ITEM 8A          
  CONTROLS AND PROCEDURES

The Company has established and currently maintains disclosure
controls and other procedures designed to ensure that material information
required to be disclosed in its reports filed under the Securities Exchange Act
of 1934 is recorded, processed, summarized and reported, within the time periods
specified by the Securities and Exchange Commission. In conjunction with the
close of each fiscal quarter, the Company conducts a review and evaluation of
the effectiveness of the Companys disclosure controls and procedures.

It is the opinion of the Companys principal accounting officer
and President, based upon an evaluation completed within 90 days prior to the
filing of this report, that the Companys disclosure controls and procedures are
effective and ensure that any material information relating to the Company is
recorded, processed, summarized and reported to its principal officers to allow
timely decisions regarding required disclosures.

There have been no significant changes in the Company's
internal controls over financial reporting during the fiscal year ended December
31, 2005 that have materially affected or are reasonably likely to materially
affect, the internal controls over financial reporting.

ITEM 8B          
  OTHER INFORMATION

There were no events or activities required to be reported
hereunder during fourth quarter of the year covered by this report which have
not previously been reported on Form 8K.

33

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|PART III
|--------

ITEM 9           DIRECTORS,
  EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS; COMPLIANCE WITH SECTION
  16(a) OF THE EXCHANGE ACT

The following table contains disclosure concerning the
directors, officers and control persons of the Company. There are no persons who
have acted as a promoter, controlling person, or significant employee of the
Company other than as disclosed below.

Name
    Position
    Ages
    Date ElectedChristopher Stringer
    President, Chief Financial
      Officer and Director
    62
    August 2003 to presentRick Mari
    Chief Executive Officer,
      Treasurer and Director
    52
    August 2003 to present


Christopher Stringer, President, CFO and Director

Christopher Stringer, age 62, is the President, Chief Financial
Officer, and a Director of the Company and a Director of its wholly-owned
Canadian subsidiary, ActionView Advertising Systems, Inc. Mr. Stringer has been
with ActionView Advertising Systems, Inc. for over six years and is one of its
founders. Prior to that, he was a self-employed franchise management consultant
and has spent the past 25 years as a business innovator, with specific expertise
in the initial organization, development, operations and leadership of both new
and established service companies.

As President of ActionView International, Mr Stringer brings a
strong background as a business leader of international companies. He was a
founder of Molly Maid International, Inc., which now has 500 franchisees in four
countries. He has also managed the development of ServiceMaster in Canada. Prior
to that he managed the expansion of Loomis Courier Services into the Eastern
United States and Canada.

Rick Mari, CEO, Secretary and Director

Rick Mari, age 52, is the Chief Executive Officer and a
Director of the Company and a Director of its wholly-owned Canadian subsidiary
ActionView Advertising Systems, Inc. for the last six years. Prior to that, he
was employed by Productive Electronic Marketing Inc., a company which developed
electronic advertising and signage products.

Rick directs the product development and manufacturing of the
ActionView scrolling sign and still-view product. Over the past eight years, he
developed the original ActionView scrolling billboard, 4x6 sign, and all related
improvements in the technology taking advantage of his twenty years of
experience as President and owner of Productive Electronic Marketing Ltd.

ITEM 10           
  EXECUTIVE COMPENSATION

The following table sets forth in summary form, the
compensation received by the directors and senior officers of the Company for
the three years ended December 31 2004, 2003 and 2002. The Company does not have
a Compensation Committee.

34

---

Name and principal position (a)
    Year
      (b)
    Annual
      Compensation
    Long-term
      compensationSalary
      ($) (c)
    Bonus
      ($) (d)
    Other
      Annual Compensation ($)
      (e)
    Awards
    Payouts
    All
      other Compen sation ($)
      (i)Restricted **Stock** Awards
      ($) (f)
    **Securities**
      Underlyingoptions/ SARs (#)
      (g)
    LTIP
      **payouts** ($) (h)Chris Stringer- 
        President ,Chief
      Financial Officer and Director
    2005 2004 2003
    100,840 99,696 33,485
    0 0 0
    0 0 0
    0 0 0
    0 0 0
    0 0 0
    0 0 0Rick Mari  Chief 
        Executive Officer,
      Treasurer and Director
      2005 
        2004 2003
      100,840 
        99,696 25,200
      0 
        0 0
      0 
        0 0
      0 
        0 0
      0 
        0 0
      0 
        0 0
    0 0 0


|(c) | The dollar value of base salary accrued of which $26,206
        was paid in cash to Mr Stringer ($24,452 in 2004) and $11,371 was paid
        in cash to Mr Mari ($24,452 in 2004). During the current year, the company
        issued 2,500,000 shares of Rule 144 restricted common stock at $0.08 per
        share for the settlement of $200,000 of these amounts and similar related
        party debt from the prior year.                                                                                                               
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | The dollar value of bonus received (cash and non-cash)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|(e) | Any other annual compensation not properly categorized
        as salary or bonus, including perquisites and other personal benefits,
        securities or property                                                                                                                                                                                                                                                                                                                                                                                
|(f) | During the periods covered by the table, the value of
        the shares of restricted stock issued as compensation for services to
        the persons listed in the table                                                                                                                                                                                                                                                                                                                                                                         
|(g) | The shares of common stock to be received upon the exercise
        of all stock options granted during the periods covered by the Table                                                                                                                                                                                                                                                                                                                                                                                                            
|(h) | All other compensation received that the Company could
        not properly report in any other column of the Table including annual
        Company contributions or other allocations to vested and unvested defined
        contribution plans, and the dollar value of any insurance premiums paid
        by, or on behalf of, the Company with respect to term life insurance for
        the benefit of the named executive officer, and the full dollar value
        of the remainder of the premium paid by, or on behalf of, the Company.

Employment Contracts

The Company does not have any employment contracts with its
executive officers.

Employee Pension, Profit Sharing or Other Retirement
Plans

None

Compensation of Directors and Senior Officers

i) Standard Arrangements.

Currently the Company does not pay its directors for serving as
directors. The Company has no standard arrangement pursuant to which directors
of the Company are compensated for any services provided as a director or for
committee participation or special assignments.

ii) Other Arrangements.

35

---

Stock Option Plans

In September 2003, the Company adopted a Non-Qualified Stock
Option Plan (the Plan) which authorizes the issuance of up to 1,750,000 shares
of common stock on exercise of options granted pursuant to the Plan. In
addition, the Company adopted a Stock Bonus Plan which authorizes the issuance
of up to 1,000,000 shares of common stock. Under the Stock Bonus Plan, the
Companys employees, directors, officers, consultants and advisors are eligible
to receive a grant of the Companys shares, provided however that bona fide
services must be rendered by consultants or advisors and such services must not
be in connection with the offer or sale of securities in a capital-raising
transaction.

In September 2003 and pursuant to the Plan, the Company granted
options to purchase 1,475,000 shares of common stock to the Companys officers,
directors, employees and to consultants of the Company exercisable at a price of
$0.50 per share for the two years ending September 30, 2005. These options were
recorded at a fair value of $446,100 at the date the options were granted using
the Black-Scholes option pricing model assuming a dividend yield of 0%, a
risk-free interest rate of 3%, an expected option life of 2 years and an
expected volatility of 145%. In accordance with the provisions of APB No. 25,
this fair value compensation was expensed in the accounts and credited to
additional paid-in capital. These options expired on September 30, 2005.

In December 2003 and pursuant to the Plan, 50,000 options were
granted to consultants of the company exercisable at a price of $0.50 per share
for the two years ending December 31, 2006. These options were recorded at a
fair value of $30,200 at the date the options were exercisable using the
Black-Scholes option pricing model assuming a dividend yield of 0%, a risk-free
interest rate of 3%, an expected option life of 2 years and an expected
volatility of 139%. In accordance with the provisions of APB No. 25, this fair
value compensation was expensed in the accounts and credited to additional
paid-in capital. These options were subsequently cancelled on December 1,
2005.

A summary of the Companys outstanding stock options to
directors, employees and consultants as of December 31, 2005 and 2004 and
changes during these years is presented below:

|                            | 2005        | 2004    
|--------------------------- | ----------- | --------
|                            |             | Exercise
|                            | Options     | Price   
|Balance, beginning of year  | 1,275,000   | $0.50   
|Granted                     | -           | -       
|Exercised/expired/cancelled | (1,275,000) | -       
|Balance, end of year        | -           | -       

Each option represents the right to purchase one share of the
Companys common stock. The Plans have not been approved by the Companys
shareholders. A summary of the Companys remaining stock options available for
granting to directors, employees and consultants pursuant to the plans as of
December 31, 2005 is as follows:

Name of Plan
      Total Shares Reserved Under Plans
      Shares Reserved for Outstanding Options
      Shares Issued as Stock Bonus
      Remaining Options/ Shares Under PlansNon-Qualified Stock 
        Option
      1,750,000
      0
      0
      1,750,000Stock Bonus Plan
      1,000,000
      0
      0
      1,000,000


36

---

Retainer Stock Plan

In January 2005, the Company implemented a Retainer Stock Plan.
Under the Plan, 3,000,000 shares of common stock of the Company can be issued to
compensate directors, employees and consultants for services rendered to the
Company. In January 2006, the Company registered an additional 3,000,000 shares
of common stock under the plan. To date, 3,358,677 shares have been issued under
the Plan.

The terms of the Plan are fully disclosed in the Form S-8
registration statements filed with respect to the Plan, including the following:

| |  | price and other terms of issuance of shares under the Plan are to be determined
      by the Board of Directors, who administer the Plan and who will take into
      account the market price of the Companys securities at the date of
      any agreement to issue shares under the Plan.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                              
| |  | the shares of common stock issuable under the Plan have the same rights
      and restrictions as all other issued and issuable shares of common stock
      of the Company.                                                                                                                 

Any shares issuable under the Plan, although registered by way of the Form
  S-8 registration statement, may require a resale prospectus prior to resale
  by affiliates or others.

ITEM 11           
  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth the name and address, as of the
date of this Annual Report, and the approximate number of shares of common stock
of the Company owned of record or beneficially by each person who owned of
record, or was known by the Company to own beneficially, more than five percent
(5%) of the Company's common stock, and the name and shareholdings of each
officer and director, and all officers and directors as a group.

At the date of this Annual Report, the Company had 29,569,100
shares of common stock issued (including the 7,492,675 issued to CD Farber Law
Corporation-In Trust, see Item 1: Share Exchange Agreement). The following table
sets forth certain information regarding the beneficial ownership of the common
stock of the Company as of April 5, 2005 of (1) each person who is known to the
Company to own beneficially more than 5% of the Companys outstanding common
stock, (2) each of the Companys directors, officers, and (3) all directors and
officers of the Company as a group:

Name and Address
      Position
      Amount of Stock Beneficially Owned
      Percentage of ClassRick Mari 
        4329 West 3rdAve 
        Vancouver, 
        BC Canada
      Chief Executive Officer, 
        Secretary, Director and 
        greater than 5% 
        shareholder
      6,463,216 (1)
      16.1%Christopher Stringer 
        1121 Crestline Rd 
        West Vancouver 
        BC Canada
      President, Chief Financial 
        Officer, Director, and 
        greater then 5% 
        shareholder
      3,856,784 (2)
      9.6%Thomas Schulte 
        1900 Faywood St
        Las Vegas, NV
      Franchisee and sales 
        agent
      2,523,760
      6.3%Directors, Officers and 5% stockholders in total (3 Persons)
      
      12,843,760
      31.9%


37

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|1. | Of the 6,463,216 common shares attributed to Rick Mari,
      1,468,216 are common shares which he owns and which were issued to him in
      settlement of debts the Company incurred to him. The remaining 4,995,450
      shares are held in trust by the Trustee in the event that Rick Mari wishes
      to exchange his 4,995,450 Exchangeable Shares for them. Rick Mari, not the
      Trustee, has the right to vote these Exchangeable Shares at any meeting of
      the Companys shareholders.                                    
|-- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|2. | Of the 3,856,784 common shares attributed to Christopher
      Stringer, 1359,109 are common shares which he owns and which were issued
      to him in settlement of debts the Company incurred to him. The remaining
      2,497,675 shares are held in trust by the Trustee in the event that
      Christopher Stringer wishes to exchange his 2,497,675 Exchangeable Shares
      for them. Christopher Stringer, not the Trustee, has the right to vote
      these Exchangeable Shares at any meeting of the Companys
    shareholders.

ITEM 12           
  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Shares Issued to Officers and Directors

Pursuant to an agreement stated September 9, 2003, the Company,
through its wholly-owned Canadian subsidiary (6126421 Canada Ltd.) acquired 100%
of the issued and outstanding common shares of Action View Advertising Systems,
Inc. 6126421 issued 1,000,000 exchangeable shares to the existing shareholders
of Action View Advertising Systems, Inc. in exchange for 100% ownership of the
Company.

Of the 1,000,000 Exchangeable Shares issued to the shareholders
of Action View Advertising Systems, Inc., 200,000 were issued to Rick Mari and
100,000 were issued to Chris Stringer.

Pursuant to an agreement dated September 9, 2003, the Company,
through its wholly-owned Canadian subsidiary (6126421 Canada Ltd.) issued
7,422,675 Exchangeable Shares to the principals of Action View Advertising
Systems, Inc. (Rick Mari and Christopher Stringer) for the Intellectual Property
Rights they held as the developers of the ActionView products. Of the 7,422,675
Exchangeable Shares issued, 4,948,450 were issued to Rick Mari, and 2,474,225
were issued to Christopher Stringer. Subsequently in 2003, 350,000 Exchangeable
Shares were converted into shares of common stock in the Company.

A holder of an exchangeable share may, at any time, require
6126421 Canada Ltd. to repurchase the exchangeable share for an amount equal to
the then current market value of the Companys common stock. 6126421 Canada Ltd.
may, at its option, satisfy the resulting obligation to repurchase the
exchangeable shares in cash or it may elect to have the obligation satisfied by
the issuance of shares of common stock by the Company. The Company is required
to issue to a trustee, a sufficient number of shares of common stock to satisfy
this obligation. The holders of the exchangeable shares will be granted votes in
the Company on a basis of one vote for every exchangeable share held.

Concurrent with the acquisition of Action View Advertising
Systems, Inc., the Company issued 327,325 rule 144 restricted shares of common
stock in settlement of a total of $98,198 owing to two officers of ActionView
who became directors of the Company. 218,216 shares were issued to Rick Mari and
109,109 shares were issued to Christopher Stringer.

During the year ended December 31, 2005, the Company issued 2,500,000
  shares of Rule 144 restricted shares of common stock in settlement of $200,000
  of amounts owing to the Company officers who are also directors. 1,250,000 shares
  were issued to both Rick Mari and Christopher Stringer.

38

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ITEM 13           
  EXHIBITS AND REPORTS ON FORM 8-K

The exhibits to be filed with this Form 10-KSB are listed below
in the Exhibit Index.

There were no Reports on Form 8-K filed during the fourth
quarter of the fiscal year ended December 31, 2005.

ITEM 14           
  PRINCIPAL ACCOUNTANT FEES AND SERVICES

As of the date of this Annual Report, the Company has not
appointed members to an audit committee and, therefore, the respective role of
an audit committee has been conducted by the board of directors of the Company.
When established, the audit committees primary function will be to provide
advice with respect to the Companys financial matters and to assist the board
of Directors in fulfilling its oversight responsibilities regarding finance,
accounting, tax and legal compliance.

The audit committees primary duties and responsibilities will
be to: (i) serve as an independent and objective party to monitor the Companys
financial reporting process and internal control system; (ii) review and
appraise the audit efforts of the Companys independent accountants; (iii)
evaluate the Companys quarterly financial performance as well as its compliance
with laws and regulations; (iv) oversee managements establishment and
enforcement of financial policies and business practices; and (v) provide an
open avenue of communication among the independent accountants, management and
the board of directors.

The board of directors has considered whether the regulatory
provision of non-audit services is compatible with maintaining the principal
independent accountants independence.

Audit fees

During the fiscal years ended December 31, 2005 and December
31, 2004, the Company incurred approximately $35,000 and $34,000 respectively in
fees to its principal independent accountants for professional services rendered
in connection with the audits of the Companys financial statements and for
other accounting services consisting of review of the Companys quarterly
reports filed on Forms 10Q-SB and its annual report filed on Form 10K-SB.

Financial Information Systems Design and Implementation
Fees

During fiscal year ended December 31, 2005, the Company did not
incur any fees for professional services rendered by its principal independent
accountant for certain information technology services which may include, but is
not limited to, operating or supervising or managing the Companys information
or local area network or designing or implementing a hardware or software system
that aggregate source data underlying the financial statements.

All Other Fees

During fiscal year ended December 31, 2005, the Company
incurred $8,000 in other fees for professional services rendered by its
principal independent accountant for all other non-assurance services which may
include, but are not limited to tax-related services, actuarial services or
valuation services.

39

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EXHIBIT INDEX

|Number | Exhibit Description                                                                                                                                                  
|------ | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|       |                                                                                                                                                                      
|3.1    | Articles of Incorporation (incorporated
      by reference to Exhibit 3.2 of the Report on Form 10KSB for the year ended
      December 31, 1997) - previously filed.
|
|       |                                                                                                                                                                      
|3.2    | By-Laws (incorporated by reference to
      Exhibit 3.3 of the Report on Form 10KSB for the year ended December 31,
      1997) - previously filed.                  
|
|       |                                                                                                                                                                      
|31.1   | Section 302 certification
      of Chief Executive Officer                                                                                                           
|       |                                                                                                                                                                      
|31.2   | Section 302 certification
      of Chief Financial Officer                                                                                                           
|       |                                                                                                                                                                      
|32.1   | Section 906 certification
      of Chief Executive Officer                                                                                                           
|       |                                                                                                                                                                      
|32.2   | Section 906 certification
      of Chief Financial Officer                                                                                                           

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly authorized.

ACTIONVIEW INTERNATIONAL, INC.

|Dated: March 30, 2006 | By: | /s/ Christopher Stringer                       
|--------------------- | --- | -----------------------------------------------
|                      |     | Christopher Stringer                           
|                      |     | President, Chief Financial Officer and Director
|                      |     |                                                
|                      |     |                                                
|Dated: March 30, 2006 | By: | /s/ Rick Mari                                  
|                      |     | Rick Mari                                      
|                      |     | Chief Executive Officer, Secretary and Director

40

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|ACTIONVIEW INTERNATIONAL, INC.   
|---------------------------------
|                                 
|(A Development Stage Company)    
|                                 
|CONSOLIDATED FINANCIAL STATEMENTS
|                                 
|DECEMBER 31, 2005                









|REPORT OF INDEPENDENT REGISTERED PUBLIC
      ACCOUNTING FIRM
|-------------------------------------------------------------
|                                                             
|CONSOLIDATED BALANCE SHEETS                                  
|                                                             
|CONSOLIDATED STATEMENTS OF OPERATIONS
      AND DEFICIT      
|                                                             
|CONSOLIDATED STATEMENT OF STOCKHOLDERS
      EQUITY         
|                                                             
|CONSOLIDATED STATEMENTS OF CASHFLOWS                         

F-1

---

|REPORT OF INDEPENDENT
      REGISTERED PUBLIC ACCOUNTING FIRM
|-------------------------------------------------------------

To the Stockholders and Board of Directors of ActionView International,
  Inc.

We have audited the consolidated balance sheets of ActionView
  International, Inc. (the Company) (a development-stage company)
  as of December 31, 2005 and 2004 and the related consolidated statements of
  operations and deficit, stockholders equity and cash flows for the years
  then ended and for the period from January 26, 1986 (inception) to December
  31, 2005. 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. The Companys financial statements as at December
  31, 2002, and for the year then ended were audited by other auditors whose report
  dated March 9, 2003 included an explanatory paragraph regarding the Company's
  ability to continue as a going concern. The Companys financial statements
  as at December 31, 2001, and for the period from January 26, 1986 (date of inception)
  to December 31, 2001 were audited by other auditors whose report dated March
  12, 2002, included an explanatory paragraph regarding the Companys ability
  to continue as a going concern. The financial statements for the period from
  January 26, 1986 (date of inception) to December 31, 2002 reflect a total net
  loss of $1,591,629 of the related cumulative totals. The other auditors
  reports have been furnished to us, and our opinion, insofar as it relates to
  amounts included for such prior periods, is based solely on the reports of such
  other auditors.

We conducted our audits in accordance with the standards of the
  Public Company Accounting Oversight Board (United States). Those standards require
  that we plan and perform an audit to obtain reasonable assurance whether the
  financial statements are free of material misstatement. The Company is not required
  to have, nor were we engaged to perform, an audit of its internal control over
  financial reporting. Our audits included consideration of internal control over
  financial reporting as a basis for designing audit procedures that are appropriate
  in the circumstances, but not for the purpose of expressing an opinion on the
  effectiveness of the Companys internal control over financial reporting.
  Accordingly, we express no such opinion. An audit also 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, based on our audits and the reports of other
  auditors, these consolidated financial statements present fairly, in all material
  respects, the financial position of the Company as at December 31, 2005 and
  2004 and the results of its operations and its cash flows and the changes in
  stockholders equity for the years then ended and for the period from January
  26, 1986 (date of inception) to December 31, 2005 in conformity with accounting
  principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As discussed
  in Note 1 to the financial statements, to date the Company has realized significant
  losses and further losses are anticipated. At December 31, 2005 the Company
  had a working capital deficiency of $230,793, has incurred losses since inception
  of $7,303,976 and requires additional funds to meet its obligations and fund
  the costs of its operations. These factors raise substantial doubt about the
  Companys ability to continue as a going concern. Managements plans
  in this regard are described in Note 1. These financial statements do not include
  any adjustments that might result from the outcome of this uncertainty.

|Dale Matheson Carr-Hilton LaBonte
|-----------------------------------
|                                   
|CHARTERED ACCOUNTANTS              

Vancouver, B.C. 
  March 24, 2006



F-2

---

|ACTIONVIEW INTERNATIONAL, INC.
|------------------------------
|(A Development Stage Company) 
|CONSOLIDATED BALANCE SHEETS   

|                                                                         |  | December 31, |   |  | December 31, |  
|------------------------------------------------------------------------ |  | ------------ | - |  | ------------ | -
|                                                                         |  | 2005         |   |  | 2004         |  
|                                                                         |  | $            |   |  | $            |  
|ASSETS                                                                   | 
|                                                                         |  |              |   |  |              |  
|CURRENT ASSETS                                                           |  |              |   |  |              |  
|Cash                                                                     |  | 130,739      |   |  | 32,305       |  
|Accounts receivable, net
      of allowance for doubtful accounts        |  | 19,865       |   |  | 25,734       |  
|Inventory                                                                |  | 121,964      |   |  | 139,531      |  
|Deferred finance charges
      and prepaids (Note 3)                     |  | 210,986      |   |  | 30,279       |  
|                                                                         |  | 483,554      |   |  | 227,849      |  
|                                                                         |  |              |   |  |              |  
|PROPERTY AND EQUIPMENT(Note 4)                                           |  | 311,663      |   |  | 150,803      |  
|LONG TERM DEFERRED FINANCE CHARGES(Note 9)                               |  | 41,125       |   |  | -            |  
|INTELLECTUAL PROPERTY RIGHTS(Note
      5)                               |  | 1            |   |  | 1,929,896    |  
|GOODWILL(Note 6)                                                         |  | -            |   |  | 431,572      |  
|                                                                         |  |              |   |  |              |  
|                                                                         |  | 836,343      |   |  | 2,740,120    |  
|                                                                         |  |              |   |  |              |  
|LIABILITIES                                                              | 
|                                                                         |  |              |   |  |              |  
|CURRENT LIABILITIES                                                      |  |              |   |  |              |  
|Bank indebtedness
      (Notes 4, 7 and 15)                              |  | 34,305       |   |  | 83,084       |  
|Accounts payable and accrued
      liabilities                           |  | 182,485      |   |  | 318,137      |  
|Deferred
      revenue                                                   |  | 1,338        |   |  | 2,335        |  
|Convertible promissory notes
      payable (Note 8)                      |  | 335,700      |   |  | -            |  
|Current portion
      of convertible and other long-term debt (Note 9)   |  | 16,466       |   |  | 17,307       |  
|Due to related parties (Note
      10)                                   |  | 144,053      |   |  | 167,647      |  
|                                                                         |  | 714,347      |   |  | 588,510      |  
|                                                                         |  |              |   |  |              |  
|CONVERTIBLE AND OTHER LONG-TERM DEBT(Note 9)                             |  | 281,317      |   |  | 33,234       |  
|                                                                         |  |              |   |  |              |  
|                                                                         |  | 995,664      |   |  | 621,744      |  
|                                                                         |  |              |   |  |              |  
|CONTINGENCIES AND COMMITMENTS(Notes
      1 and 14)                      |  |              |   |  |              |  
|                                                                         |  |              |   |  |              |  
|STOCKHOLDERS' EQUITY                                                     | 
|                                                                         |  |              |   |  |              |  
|COMMON STOCK(Note 11)                                                    |  |              |   |  |              |  
|$0.001 par value; 75,000,000 shares authorized                           |  |              |   |  |              |  
|31,539,282 issued and outstanding
      (December 31, 2004 - 21,316,515) |  | 31,539       |   |  | 21,316       |  
|EXCHANGEABLE SHARES(Note 6)                                              |  | 2,421,803    |   |  | 2,421,803    |  
|ADDITIONAL PAID IN CAPITAL                                               |  | 4,508,513    |   |  | 3,559,812    |  
|OBLIGATION TO ISSUE SHARES                                               |  | 52,000       |   |  | 52,000       |  
|COMMON STOCK PURCHASE WARRANTS                                           |  | 130,800      |   |  | 76,200       |  
|DEFICIT ACCUMULATED DURING DEVELOPMENT STAGE                             |  | (7,303,976   | ) |  | (4,012,755   | )
|                                                                         |  |              |   |  |              |  
|                                                                         |  | (159,321     | ) |  | 2,118,376    |  
|                                                                         |  |              |   |  |              |  
|                                                                         |  | 836,343      |   |  | 2,740,120    |  
|SUBSEQUENT EVENTS(Note 15)                                               |  |              |   |  |              |  

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

F-3

---

|ACTIONVIEW INTERNATIONAL, INC.                   
|-------------------------------------------------
|(A Development Stage Company)                    
|CONSOLIDATED STATEMENTS OF OPERATIONS AND DEFICIT

|                                                        |  |                     |   |  |                       |   |  | Cumulative        |  
|------------------------------------------------------- |  | ------------------- | - |  | --------------------- | - |  | ----------------- | -
|                                                        |  | For the Years Ended |   |  | From Inception        |  
|                                                        |  | December 31,        |   |  | (January 26, 1986) to |  
|                                                        |  | 2005                |   |  | 2004                  |   |  | December 31, 2005 |  
|                                                        |  | **$**               |   |  | **$**                 |   |  | **$**             |  
|REVENUE                                                 |  |                     |   |  |                       |   |  |                   |  
|Advertising
      revenue                               |  | 45,148              |   |  | 50,558                |   |  | 123,554           |  
|Sign sales                                              |  | 19,328              |   |  | 69,200                |   |  | 90,080            |  
|Royalties
      and other                               |  | 18,706              |   |  | 11,108                |   |  | 41,204            |  
|Total
      sales                                       |  | 83,182              |   |  | 130,866               |   |  | 254,838           |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|COST OF SALES                                           |  | 39,220              |   |  | 65,206                |   |  | 122,526           |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|Gross Profit                                            |  | 43,962              |   |  | 65,660                |   |  | 132,312           |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|OPERATING EXPENSES                                      |  |                     |   |  |                       |   |  |                   |  
|Consulting
      fees                                   |  | 3,750               |   |  | 215,200               |   |  | 691,950           |  
|Product development                                     |  | 134,938             |   |  | 151,362               |   |  | 286,300           |  
|Depreciation
      and amortization                     |  | 267,805             |   |  | 269,588               |   |  | 618,254           |  
|Marketing                                               |  | 76,078              |   |  | 79,542                |   |  | 191,857           |  
|Investor
      relations                                |  | 108,722             |   |  | 367,287               |   |  | 529,576           |  
|Professional
      fees                                 |  | 77,971              |   |  | 80,223                |   |  | 299,596           |  
|Salaries
      and management fees                      |  | 279,215             |   |  | 187,434               |   |  | 664,120           |  
|Office and
      general administration                 |  | 158,795             |   |  | 151,953               |   |  | 1,464,367         |  
|Finance
      and interest expense                      |  | 76,737              |   |  | 16,171                |   |  | 532,484           |  
|Loss on foreign
      exchange                          |  | 12,385              |   |  | 6,612                 |   |  | 18,997            |  
|                                                        |  | 1,196,396           |   |  | 1,525,372             |   |  | 5,297,501         |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|NET LOSS BEFORE WRITE-OFFS                              |  | (1,152,434          | ) |  | (1,459,712            | ) |  | (5,165,189        | )
|                                                        |  |                     |   |  |                       |   |  |                   |  
|Intellectual
      Property Rights written-off (Note 5) |  | (1,707,215          | ) |  | -                     |   |  | (1,707,215        | )
|Goodwill written-off
      (Note 6)                     |  | (431,572            | ) |  | -                     |   |  | (431,572          | )
|                                                        |  |                     |   |  |                       |   |  |                   |  
|NET LOSS                                                |  | (3,291,221          | ) |  | (1,459,712            | ) |  | (7,303,976        | )
|                                                        |  |                     |   |  |                       |   |  |                   |  
|DEFICIT, BEGINNING                                      |  | (4,012,755          | ) |  | (2,553,043            | ) |  | -                 |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|DEFICIT, END                                            |  | (7,303,976          | ) |  | (4,012,755            | ) |  | (7,303,976        | )
|                                                        |  |                     |   |  |                       |   |  |                   |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|BASIC NET LOSS PER SHARE                                |  | (0.13               | ) |  | (0.07                 | ) |  |                   |  
|                                                        |  |                     |   |  |                       |   |  |                   |  
|WEIGHTED AVERAGE COMMON                                 |  |                     |   |  |                       |   |  |                   |  
|SHARES OUTSTANDING                                      |  | 25,410,175          |   |  | 19,802,542            |   |  |                   |  

The accompanying notes are an integral part of these consolidated
  financial statements

F-4

---

|ACTIONVIEW INTERNATIONAL, INC.                
|----------------------------------------------
|(A Development Stage Company)                 
|CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

|                                                                                  |               |                     |            |            |            |          | Common   |             |              
|--------------------------------------------------------------------------------- | ------------- | ------------------- | ---------- | ---------- | ---------- | -------- | -------- | ----------- | -------------
|                                                                                  | Common Shares | Exchangeable Shares | Additional | Obligation | Stock      |          | Total   
|                                                                                  | Number of     |                     | Number of  |            | Paid-in    | to Issue | Purchase | Accumulated | Stockholders'
|                                                                                  | Shares        | Amount              | Shares     | Amount     | Capital    | Shares   | Warrants | Deficit     | Equity       
|                                                                                  |               |                     |            |            |            |          |          |             |              
|Balance - December 31, 2003                                                       | 16,300,015    | $16,300             | 8,072,675  | $2,421,803 | $2,952,628 | $0       | $56,700  | -$2,553,043 | $2,894,388   
|Stock options granted                                                             |               |                     |            |            | $30,200    |          |          |             | $30,200      
|Exercise of warrants on a cashless basis at
      $0.001 per share                | 1,741,500     | $1,741              |            |            | -$1,741    |          |          |             | $0           
|Units issued under Regulation S for cash of $0.50 per unit                        | 250,000       | $250                |            |            | $112,250   |          | $12,500  |             | $125,000     
|Units issued under Regulation S for cash of
      $0.40 per unit                  | 175,000       | $175                |            |            | $62,825    |          | $7,000   |             | $70,000      
|Private placement shares issued under Reg D, Rule 506 for
      cash of           |               |                     |            |            |            |          |          |             |              
|$0.20 per share, net of share issue costs                                         | 2,500,000     | $2,500              |            |            | $388,000   | $50,000  |          |             | $440,500     
|Exercise of warrants on a cashless basis at $0.001 per share                      | 250,000       | $250                |            |            | -$250      |          |          |             | $0           
|Private placement shares issued under Reg
      D, Rule 506 for cash of           |               |                     |            |            |            |          |          |             |              
|$0.20 per share, net of share issue costs                                         | 100,000       | $100                |            |            | $15,900    | $2,000   |          |             | $18,000      
|Changes in capital accounts
      for the year                                    | 5,016,500     | $5,016              |            |            | $607,184   | $52,000  | $19,500  |             | $683,700     
|Net loss for year ended December 31, 2004                                         |               |                     |            |            |            |          |          | -$1,459,712 | -$1,459,712  
|Balance December 31, 2004                                                         | 21,316,515    | $21,316             | 8,072,675  | $2,421,803 | $3,559,812 | $52,000  | $76,200  | -$4,012,755 | $2,118,376   
|Private placement units issued under Reg D, Rule 501 for cash
      of            |               |                     |            |            |            |          |          |             |              
|$0.08 to $0.10 per unit                                                           | 3,025,000     | $3,025              |            |            | $221,975   |          | $25,000  |             | $250,000     
|S8 stock issued for various consulting services at $0.07 to
      $0.10 per share | 1,275,177     | $1,275              |            |            | $123,485   |          |          |             | $124,760     
|144 stock issued for consulting services at
      $0.10 per share                 | 437,500       | $438                |            |            | $43,063    |          |          |             | $43,500      
|S8 stock issued in settlement of account payable at $0.10
      per share         | 1,468,000     | $1,468              |            |            | $145,332   |          |          |             | $146,800     
|144 stock issued in settlement of Director's
      advances at $0.10 per share    | 2,500,000     | $2,500              |            |            | $197,500   |          |          |             | $200,000     
|144 stock issued as equity inducement for financing services
      and one        |               |                     |            |            |            |          |          |             |              
|promissory note at $0.15 per share                                                | 231,390       | $231                |            |            | $22,898    |          |          |             | $23,129      
|144 stock issued as equity inducement for financing services
      and a          |               |                     |            |            |            |          |          |             |              
|drawdown line of credit at $0.11 per share                                        | 1,285,700     | $1,286              |            |            | $140,141   |          |          |             | $141,427     
|Stock purchase warrants granted as discount on convertible
      debt             |               |                     |            |            |            |          | $29,600  |             | $29,600      
|Intrinsic value of beneficial conversion rights
      of promissory notes and     |               |                     |            |            |            |          |          |             |              
|convertible debt                                                                  |               |                     |            |            | $54,308    |          |          |             | $54,308      
|Changes in capital accounts
      for the year                                    | 10,222,767    | $10,223             |            |            | $948,701   |          | $54,600  |             | $1,013,524   
|Net loss for year ended December 31, 2005                                         |               |                     |            |            |            |          |          | -$3,291,221 | -$3,291,221  
|Balance December 31, 2005                                                         | 31,539,282    | $31,539             | 8,072,675  | $2,421,803 | $4,508,513 | $52,000  | $130,800 | -$7,303,976 | -$159,321    

The accompanying notes are an integral part of these consolidated
  financial statements

F-5

---

|ACTIONVIEW INTERNATIONAL, INC.       
|-------------------------------------
|(A Development Stage Company)        
|CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                             |  |                     |   |  |                       |   |  | Cumulative        |  
|---------------------------------------------------------------------------- |  | ------------------- | - |  | --------------------- | - |  | ----------------- | -
|                                                                             |  | For the Years Ended |   |  | From Inception        |  
|                                                                             |  | December 31,        |   |  | (January 26, 1986) to |  
|                                                                             |  | 2005                |   |  | 2004                  |   |  | December 31, 2005 |  
|                                                                             |  | $                   |   |  | $                     |   |  | $                 |  
|CASH FLOW FROM (USED IN ) OPERATING ACTIVITIES                               |  |                     |   |  |                       |   |  |                   |  
|Net loss                                                                     |  | (3,291,221          | ) |  | (1,459,712            | ) |  | (7,303,976        | )
|Non-cash items included in net loss                                          |  |                     |   |  |                       |   |  |                   |  
|Depreciation and amortization                                                |  | 267,805             |   |  | 269,588               |   |  | 619,437           |  
|Stock
      based operating expenses                                         |  | 174,120             |   |  | 30,200                |   |  | 824,795           |  
|Finance expense on beneficial conversion features                            |  | 18,558              |   |  | -                     |   |  | 381,692           |  
|Intellectual
      Property Rights written-off                               |  | 1,707,215           |   |  | -                     |   |  | 1,707,215         |  
|Goodwill written-off                                                         |  | 431,572             |   |  | -                     |   |  | 431,572           |  
|Warrants
      issued for services                                           |  | -                   |   |  | -                     |   |  | 98,713            |  
|Changes in non-cash
      working capital                                    |  |                     |   |  |                       |   |  |                   |  
|Accounts
      receivable                                                    |  | 5,869               |   |  | 61,729                |   |  | 51,475            |  
|Inventories                                                                  |  | 17,567              |   |  | (22,685               | ) |  | (93,320           | )
|Prepaid
      expenses and other assets, net of stock payments               |  | (20,808             | ) |  | 272,597               |   |  | (11,584           | )
|Accounts payable and accrued liabilities                                     |  | 11,148              |   |  | 162,064               |   |  | 831,999           |  
|Deferred
      revenue                                                       |  | (997                | ) |  | 690                   |   |  | (1,474            | )
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|NET CASH USED IN OPERATING ACTIVITIES                                        |  | (679,172            | ) |  | (685,529              | ) |  | (2,463,456        | )
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|CASH FLOW FROM (USED IN ) INVESTING ACTIVITIES                               |  |                     |   |  |                       |   |  |                   |  
|Investment in rental
      signs and other property                          |  | (205,985            | ) |  | (115,940              | ) |  | (375,922          | )
|Net cash acquired on acquisition
      of ActionView                         |  | -                   |   |  | -                     |   |  | (53,439           | )
|Cash acquired on
      reorganization                                        |  | -                   |   |  | -                     |   |  | 23,540            |  
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|NET CASH USED
      IN INVESTING ACTIVITIES                                  |  | (205,985            | ) |  | (115,940              | ) |  | (405,821          | )
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|CASH FLOW FROM (USED IN ) FINANCING
      ACTIVITIES                         |  |                     |   |  |                       |   |  |                   |  
|Increase (decrease) in bank indebtedness                                     |  | (48,779             | ) |  | 17,634                |   |  | (5,363            | )
|Advances from related
      parties                                          |  | 176,406             |   |  | 147,715               |   |  | 336,514           |  
|Proceeds from convertible promissory
      notes payable                     |  | 335,700             |   |  | -                     |   |  | 878,700           |  
|Increase (decrease)
      convertible and other long term debt for cash, net |  | 270,264             |   |  | (26,930               | ) |  | 238,677           |  
|Issuance of common stock for cash                                            |  | 250,000             |   |  | 653,500               |   |  | 1,469,000         |  
|Additional contributed
      capital                                         |  | -                   |   |  | -                     |   |  | 82,488            |  
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|NET CASH FROM
      FINANCING ACTIVITIES                                     |  | 983,591             |   |  | 791,919               |   |  | 3,000,016         |  
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|INCREASE (DECREASE) IN CASH                                                  |  | 98,434              |   |  | (9,550                | ) |  | 130,739           |  
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|CASH, BEGINNING                                                              |  | 32,305              |   |  | 41,855                |   |  | -                 |  
|                                                                             |  |                     |   |  |                       |   |  |                   |  
|CASH, END                                                                    |  | 130,739             |   |  | 32,305                |   |  | 130,739           |  

Supplemental disclosure with respect to cash flows(Note
  13)

The accompanying notes are an integral part of these consolidated
  financial statements

F-6

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(1) NATURE OF BUSINESS AND CONTINUANCE OF OPERATIONS

ActionView International, Inc. (formerly Acquisition Media, Inc.)
  (the "Company"), was incorporated on January 26, 1986, as Vantage, Inc., under
  the laws of the State of Nevada.

Following a number of name changes since incorporation, the Company
  changed its name again to ActionView International, Inc. on August 20, 2003.
  This was done to better reflect its new business operations during the process
  of acquiring 100% of ActionView Advertising Systems, Inc. (ActionView)
  and related Intellectual Property Rights through its 100% owned subsidiary company,
  6126421 Canada Ltd (612 Canada). These acquisitions closed in September
  2003. (See Notes 5 and 6).

The Company custom-designs, markets and manufactures illuminated
  programmable motion billboard signs for use in airports, mass transit stations,
  shopping malls and other high traffic advertising locations designed to reach
  people on the go with targeted messaging. The Companys business model
  has two main revenue streams: (i) advertising revenues from Company- owned signs
  placed in high traffic locations being shared with Ad Agencies, location owners
  and local business partners; and (ii) sale of signs to franchise operators along
  with on-going royalty revenue from the advertising generated from these signs
  in the local market areas.

In connection with its advertising business from Company-owned
  signs, the Company completed the incorporation of ActionView Far East Limited
  (AVFE) in February 2004 for the purpose of representing the Company
  and marketing its scrolling billboard products in both China and Hong Kong.
  The Company has a 50.1% interest in AVFE and a voting majority on the Board
  of Directors. Commercial operations have not yet commenced. (See Note 14).

Similarly, the Company completed a license and supply agreement
  with ActionView Australia (Proprietary) Limited (AVAU) in September
  2004 for the purpose of representing the Company and marketing its scrolling
  sign products in both Australia and New Zealand. The Company has an option to
  purchase a 51% interest in AVAU for a nominal amount at any time. (See Note
  14).

The Company is currently considered a Development Stage Enterprise,
  under the guidelines of Statement of Financial Accounting Standards (SFAS)
  No. 7.

Going concernThese consolidated financial statements have been prepared in accordance
  with United States generally accepted accounting principles, on a going concern
  basis, which contemplates the realization of assets and the satisfaction of
  liabilities and commitments in the normal course of business. As at December
  31, 2005 the Company has a working capital deficiency of $230,793 has incurred
  losses since inception of $7,303,976, including the write-off of Intellectual
  Property Rights and goodwill amounting to $2,138,787 at December 31, 2005. Further
  losses are anticipated in the development of its business and there can be no
  assurance that the Company will be able to achieve or maintain profitability.
  Accordingly, these factors raise substantial doubt as to the Companys
  ability to continue as a going concern.

F-7

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

The continuing operations of the Company and the recoverability
  of the carrying value of assets is dependent upon the ability of the Company
  to obtain necessary financing to fund its working capital requirements, and
  upon future profitable operations. The accompanying financial statements do
  not include any adjustments relative to the recoverability and classification
  of asset carrying amounts or the amount and classification of liabilities that
  might result from the outcome of this uncertainty.

There can be no assurance that capital will be available as necessary
  to meet the Companys working capital requirements or, if the capital is
  available, that it will be on terms acceptable to the Company. The issuances
  of additional equity securities by the Company may result in dilution in the
  equity interests of its current stockholders. Obtaining commercial loans, assuming
  those loans would be available, will increase the Company's liabilities and
  future cash commitments. If the Company is unable to obtain financing in the
  amounts and on terms deemed acceptable, the business and future success may
  be adversely affected.

The Company is planning additional ongoing equity and/or debt
  financing by way of private placements and/or commercial loan agreements to
  fund its obligations and operations.

(2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Consolidated Financial StatementsThese consolidated financial statements include the accounts of: (i) the
  Company, (ii) 612 Canada, a 100% owned Canadian subsidiary incorporated August,
  2003, (iii) ActionView, a British Columbia corporation acquired effective September
  9, 2003 which is 100% owned by 612 Canada, and (iv) AVFE, a 50.1% owned subsidiary
  incorporated in Hong Kong.

(b) Cash and Cash EquivalentsCash equivalents consist of highly liquid investments that are readily convertible
  into cash with maturity of three months or less when purchased. As at December
  31, 2005, the cash and cash equivalents consist of bank deposits.

(c) InventoryInventory consists of illuminated programmable motion billboard signs held
  for sale along with related spare component parts valued at the lower of cost
  or net realizable value. Cost is determined on "the first-in, first-out basis."

(d) Property and equipmentProperty and equipment is recorded at cost. Depreciation is computed using
  the following methods and rates to depreciate the cost of the property and equipment
  less residual values over estimated useful lives.

Rental Signs
      5 yearsLeasehold Improvements
      3 yearsFurniture and fixtures
      4 years


Property and equipment are reviewed annually for impairment and
  whenever circumstances indicate that the carrying amount is not fully recoverable
  and exceeds fair value. The carrying amount of property and equipment is

F-8

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

determined to be non-recoverable if it exceeds the sum of
  the undiscounted cash flows expected to result from its use and eventual disposal.

The cost of rental signs includes component parts, labour
  and freight up to the point of substantial completion of the signs. The signs
  are considered substantially complete and ready for their intended use at the
  earlier of the date of completion of their construction or the date when related
  revenue recognition commences.

(e) Disposal of long-lived assets
  In accordance with SFAS 144, Accounting for the Impairment on Disposal
  of Long-Lived Assets (SFAS 144), the Company measures all
  long-lived assets that are to be disposed of by sale at the lower of book value
  or fair value less disposal costs.

(f) Goodwill and other intangible assets
  The Company has adopted the provisions of the Statement of Financial Accounting
  Standards No. 142 (SFAS 142), Goodwill and Other Intangible
  Assets. Goodwill and other intangible assets with indefinite lives are
  no longer amortized under SFAS 142, but instead are tested for impairment at
  least annually. In addition, intangible assets with a definite life are amortized
  over that expected life and tested for impairment at least annually or whenever
  events or circumstances indicate a revision to the remaining period of amortization
  is warranted.

Prior to December 31, 2005, goodwill arising from the acquisition
  of ActionView in September 2003 was carried at fair value and the cost of Intellectual
  Property Rights acquired was amortized on a straight line basis over 10 years.
  The determination of any impairment of goodwill and Intellectual Property Rights
  includes a comparison of net carrying value with estimated future operating
  cash flows anticipated during the remaining life; and is dependent on the Companys
  ability to continue operating as a going concern. (See Note 1).

During the annual impairment review the Company determined
  that the carrying value of its goodwill and Intellectual Property Rights at
  December 31, 2005, was fully impaired as described in Notes 5 and 6.

(g) Foreign currency transactions
  The functional currency of the Company and 612 Canada Ltd is the U.S. dollar
  and that of ActionView is the Canadian dollar. In accordance with Statement
  of Financial Accounting Standards No. 52, Foreign Currency Translation,
  the foreign currency financial statements of the Companys subsidiaries
  are remeasured into U.S. dollars. Monetary assets and liabilities are re-measured
  using the foreign exchange rate that prevailed at the balance sheet date. Revenue
  and expenses are translated at weighted average rates of exchange during the
  period and stockholders equity accounts and capital asset accounts are
  translated by using historical exchange rates. The resulting re-measurement
  gain or loss is included in the consolidated statement of operations statement.

(h) Revenue Recognition
  ActionView generates its revenue primarily from three sources:

i) revenue from sale of advertising  earned when Company-owned
  signs are placed in point-of-purchase and high traffic advertising locations.
  This revenue is shared with the ad agencies who sell the advertising, the location

F-9

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

owners and the local business partners who put the contracts
  together, and is recognized over the period when the advertising is provided.

ii) revenue from franchise operators  earned from start-up
  franchise fees, from on-going royalty fees on advertising revenues generated
  on the signs sold to the franchisees, and from fees on signs when sold by the
  franchisees to 3rd parties. Non-refundable franchise fees are earned
  when all material services relating to the sale have been substantially performed
  by the Company including arranging the franchise agreements and providing initial
  training services and related materials.

iii) revenue from sale of signs  earned when signs are
  sold to franchise operators or large volume customers.

Revenue from all sources is recognized when the amount is
  fixed or determinable, delivery has occurred or initial services have been performed,
  and collection is reasonably assured. Any amounts received in advance of the
  goods being delivered or services being performed are recorded as deferred revenue.

(i) Income Taxes
  The Company follows the liability method of accounting for income taxes. Under
  this method, deferred tax assets and liabilities are recognized for the deferred
  tax consequences attributable to differences between the financial statement
  carrying amounts of existing assets and liabilities and their respective tax
  balances. Deferred tax assets and liabilities are measured using enacted tax
  rates expected to apply to the taxable income in the years in which those differences
  are expected to be recovered or settled. The effect on deferred tax assets and
  liabilities of a change in tax rates is recognized in income in the period that
  includes the date of enactment.

For deferred tax assets, the full amount of the potential
  future benefit is recorded. A valuation allowance is then used to adjust for
  the probability of realization.

(j) Financial Instruments
  In accordance with the requirements of SFAS No. 107, the Company has determined
  the estimated fair value of financial instruments using available market information
  and appropriate valuation methodologies. The fair value of financial instruments
  classified as current assets or liabilities including cash, accounts receivable,
  accounts payable, loans payable and amounts due to related parties approximate
  carrying value due to the immediate or short-term maturity of these financial
  instruments.

Fair values of long-term debt are based on market prices where
  available. When quoted market prices are not available, fair values are estimated
  using discounted cash flow analysis, based on the Company's current incremental
  borrowing rates for similar types of borrowing arrangements.

(k) Use of Estimates
  The preparation of financial statements in conformity with accounting principles
  generally accepted in the United States of America requires management to make
  estimates and assumptions that affect the reported amounts of assets and liabilities
  and disclosure of contingent assets and liabilities at the date of the financial
  statements and the reported amounts of revenue

F-10

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

and expenses during the reporting period. Actual results could
  differ from these estimates. Significant estimates used in preparing these financial
  statements are: valuation of goodwill, Intellectual Property Rights, stock purchase
  warrants, and the realizable value of inventories and equity component of debt.

(l) Stock-based compensation
  In December 2002, the FASB issued Financial Accounting Standard (SFAS)
  No. 148, Accounting for Stock-Based Compensation  Transition and
  Disclosure (SFAS No. 148), an amendment of SFAS No. 123 Accounting
  for Stock-Based Compensation (SFAS No. 123). The purpose of
  SFAS No. 148 is to: (1) provide alternative methods of transition for an entity
  that voluntarily changes to the fair value based method of accounting for stock-based
  employee compensation, (2) amend the disclosure provisions to require prominent
  disclosure about the effects on reported net income of an entitys accounting
  policy decisions with respect to stock-based employee compensation, and (3)
  to require disclosure of those effects in interim financial information. The
  disclosure provisions of SFAS No. 148 were effective for the period ended December
  31, 2003. The Company has elected to account for stock-based employee compensation
  arrangements in accordance with the provisions of Accounting Principles Board
  Opinion No. 25, Accounting for Stock Issued to Employees, (APB
  No. 25) and comply with the disclosure provisions of SFAS No. 123 as amended
  by SFAS No. 148 as described above.

In addition, in accordance with SFAS No. 123 the Company applies
  the fair value method using the Black-Scholes option-pricing model in accounting
  for options granted to consultants. Under APB No. 25, compensation expense is
  recognized based on the difference, if any, on the date of grant between the
  estimated fair value of the Companys stock and the amount a consultant
  must pay to acquire the stock. Compensation expense is recognized immediately
  for past services and pro-rata for future services over the option-vesting period.

(m) Loss Per Share
  The computation of basic net loss per share is computed by dividing net loss
  available to common stockholders by the weighted average number of outstanding
  common shares during the period, excluding the exchangeable shares as described
  in note 6, which have not yet been exchanged into common stock of the Company.
  Diluted loss per share gives effect to all dilutive potential common shares
  outstanding during the period. The computation of diluted loss per share does
  not assume conversion, exercise or contingent exercise of securities that would
  have an anti-dilutive effect on net loss.

As of December 31, 2005, the Company had 12,751,247 potentially
  dilutive securities (December 31, 2004  16,537,675 potentially dilutive
  securities) in the form of exchangeable shares and share purchase warrants.
  The accompanying presentation only includes the basic net loss per share since
  the potentially dilutive securities are anti-dilutive to basic net loss per
  share.

(n) Comparative figures
  Certain comparative figures have been reclassified to conform to the current
  years presentation.

F-11

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(o) Recent accounting pronouncements
  In December 2004, the FASB issued SFAS No. 153, Exchanges of Non-monetary
  Assets - An Amendment of APB Opinion No. 29. The guidance in APB Opinion
  No. 29, Accounting for Non-monetary Transactions, is based on the
  principle that exchanges of non-monetary assets should be measured based on
  the fair value of the assets exchanged. The guidance in that Opinion, however,
  included certain exceptions to that principle. SFAS No. 153 amends Opinion No.
  29 to eliminate the exception for non-monetary exchanges of similar productive
  assets and replaces it with a general exception for exchanges of non-monetary
  assets that do not have commercial substance. A non-monetary exchange has commercial
  substance if the future cash flows of the entity are expected to change significantly
  as a result of the exchange. The provisions of SFAS No. 153 are effective for
  non-monetary asset exchanges occurring in fiscal periods beginning after June
  15, 2005. Early application is permitted and companies must apply the standard
  prospectively. Management is currently evaluating the impact, which the adoption
  of this standard will have on the Companys results of operations or financial
  position.

In December 2004, the FASB issued SFAS No. 123R, Share
  Based Payment. SFAS 123R is a revision of SFAS No. 123 Accounting
  for Stock-Based Compensation, and supersedes APB Opinion No. 25, Accounting
  for Stock Issued to Employees and its related implementation guidance.
  SFAS 123R establishes standards for the accounting for transactions in which
  an entity exchanges its equity instruments for goods or services. It also addresses
  transactions in which an entity incurs liabilities in exchange for goods or
  services that are based on the fair value of the entitys equity instruments
  or that may be settled by the issuance of those equity instruments. SFAS 123R
  focuses primarily on accounting for transactions in which an entity obtains
  employee services in share-based payment transactions. SFAS 123R does not change
  the accounting guidance for share-based payment transactions with parties other
  than employees provided in SFAS 123 as originally issued and EITF Issue No.
  96-18, Accounting for Equity Instruments That Are Issued to Other Than
  Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
  SFAS 123R does not address the accounting for employee share ownership plans,
  which are subject to AICPA Statement of Position 93-6, Employers
  Accounting for Employee Stock Ownership Plans. SFAS 123R 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
  (with limited exceptions).

That cost will be recognized over the period during which
  an employee is required to provide service in exchange for the award 
  the requisite service period (usually the vesting period). SFAS 123R requires
  that the compensation cost relating to share-based payment transactions be recognized
  in financial statements. That cost will be measured based on the fair value
  of the equity or liability instruments issued. The scope of SFAS 123R includes
  a wide range of share-based compensation arrangements including share options,
  restricted share plans, performance-based awards, share appreciation rights,
  and employee share purchase plans. Public entities (other than those filing
  as small business issuers) will be required to apply SFAS 123R as of the first
  interim or annual reporting period that begins after June 15, 2005. Public entities
  that file as small business issuers will be required to apply SFAS 123R in the
  first interim or annual reporting period that begins after December 15, 2005.
  Management is currently evaluating the impact, which the

F-12

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

adoption of this standard will have on the Companys
  results of operations or financial position.

In March 2005, the interpretations in Staff Accounting Bulletin
  (SAB) No. 107 expressed the views of the Securities and Exchange
  Commission (SEC) staff regarding the interaction between SFAS Statement
  No. 123 (revised 2004), Share-Based Payment (Statement 123R or the
  Statement) and rules and regulations and provide the staffs
  views regarding the valuation of share-based payment arrangements for public
  companies. In particular, this SAB provides guidance related to share-based
  payment transactions with non-employees, the transition from nonpublic to public
  entity status, valuation methods (including assumptions such as expected volatility
  and expected term), the accounting for certain redeemable financial instruments
  issued under share-based payment arrangements, the classification of compensation
  expense, non-GAAP financial measures, first-time adoption of Statement 123R
  in an interim period, capitalization of compensation cost related to share-based
  payment arrangements, the accounting for income tax effects of share-based payment
  arrangements upon adoption of Statement 123R, the modification of employee share
  options prior to adoption of Statement 123R and disclosures in Managements
  Discussion and Analysis (MD&A) subsequent to adoption of Statement
  123R. Management is currently evaluating the impact, which the adoption of this
  standard will have on the Companys results of operations or financial
  position.

In March 2005, the FASB issued FASB Interpretation No. 47,
  Accounting for Conditional Asset Retirement Obligations, an interpretation
  of FASB

Statement No. 143 (FIN 47). Asset retirement
  obligations (AROs) are legal obligations associated with the retirement of long-lived
  assets that result from the acquisition, construction, development and/or normal
  operation of a long-lived asset, except for certain obligations of lessees.
  FIN 47 clarifies that liabilities associated with asset retirement obligations
  whose timing or settlement method are conditional on future events should be
  recorded at fair value as soon as fair value is reasonably estimable. FIN 47
  also provides guidance on the information required to reasonably estimate the
  fair value of the liability. FIN 47 is intended to result in more consistent
  recognition of liabilities relating to AROs among companies, more information
  about expected future cash outflows associated with those obligations stemming
  from the retirement of the asset(s) and more information about investments in
  long-lived assets because additional asset retirement costs will be recognized
  by increasing the carrying amounts of the assets identified to be retired. FIN
  47 is effective for fiscal years ending after December 15, 2005. Management
  believes this Statement will have no impact on the financial statements of the
  Company.

In May 2005, the FASB issued SFAS No. 154, Accounting
  Changes and Error Corrections. This Statement replaces APB Opinion No.
  20, Accounting Changes, and SFAS No. 3, Reporting Accounting
  Changes in Interim Financial Statements, and changes the requirements
  for the accounting for and reporting of a change in accounting principle. This
  Statement applies to all voluntary changes in accounting principle. Management
  believes this Statement will have no impact on the financial statements of the
  Company.

In November 2005, the FASB issued FSP FAS 115-1 and FAS 124-1,
  The Meaning of Other-Than-Temporary Impairment and Its Application to
  Certain Investments (FSP FAS 115-1), which provides guidance
  on determining when

F-13

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

investments in certain debt and equity securities are considered
  impaired, whether that impairment is other-than-temporary, and on measuring
  such impairment loss. FSP FAS 115-1 also includes accounting considerations
  subsequent to the recognition of an other-than temporary impairment and requires
  certain disclosures about unrealized losses that have not been recognized as
  other-than-temporary impairments. FSP FAS 115-1 is required to be applied to
  reporting periods beginning after December 15, 2005. Management is currently
  evaluating the impact, which the adoption of this standard will have on the
  Companys financial statements.

(3) DEFERRED FINANCE CHARGES AND PREPAIDS

December 31,
      December 31,2005
      2004Deferred finance charges
      $147,935
      $0Prepaid expenses
      63,051
      30,279Total
      $210,986
      $30,279


At December 31, 2005, the deferred finance charges relate to
  the convertible promissory notes payable described in Note 8 and are comprised
  of the inducement fee, the embedded beneficial conversion feature and the quarterly
  prepaid cash interest.

(4) PROPERTY AND EQUIPMENT

December 31,
      December 31,2005
      2004$
      $Rental signs
      461,235
      256,973Furniture and computers
      6,249
      4,174Leasehold improvements
      10,785
      10,785478,269
      271,932Less: accumulated depreciation
      (166,606)
      (121,129)Net book value
      311,663
      150,803


Both the bank indebtedness and the Business Development Corporation
  loan, described in notes 7 and 9(i) respectively, are secured by a general security
  agreement over all the Company assets and are guaranteed by the Companys
  two directors.

(5) INTELLECTUAL PROPERTY RIGHTS

By agreement effective September 9, 2003, the Company through
  612 Canada acquired the Intellectual Property Rights relating to an illuminated
  programmable motion backlit billboard sign. 612 Canada issued 7,422,675 Exchangeable
  Shares to the two principals of ActionView in exchange for the

F-14

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

Intellectual Property Rights described above. The Exchangeable
  Shares can be exchanged into shares of the Company on a one-for-one basis at
  the option of the exchangeable shareholders. The Exchangeable Shares were issued
  at a fair value of $0.30 per share for a total acquisition price of $2,226,803.

In accordance with the provisions of SFAS 142 Goodwill
  and other Intangible Assets, the Company was amortizing the cost of the
  Intellectual Property Rights, on a straight-line basis, over the estimated life
  which was determined, by management, to be ten years.

However, during its annual review at December 31, 2005, the Company
  determined that, due to the delays in the installation of signs under its contracts
  in southern China and Australia (See Note 14) and the uncertainty as to the
  realization of the carrying value of its Intellectual Property Rights, a full
  impairment provision was required. Accordingly, the Companys Intellectual
  Property was written down to a nominal value of $1 resulting in an impairment
  loss of $1,707,215.

A summary of the Companys Intellectual Property Rights
  as at December 31, 2005 and 2004 is presented below:

December
      December31, 2005
      31, 2004$
      $Intellectual Property Rights
      2,226,803
      2,226,803Less: year end impairment provision
      (1,707,215)
      -Less: accumulated amortization
      (519,587)
      (296,907)Carrying value
      1
      1,929,896


(6) ACQUISITION OF ACTIONVIEW ADVERTISING SYSTEMS, INC.

By agreement effective September 9, 2003, between the Company,
  612 Canada, ActionView, the ActionView shareholders and the two principals of
  ActionView, 100% of the issued and outstanding common shares of ActionView were
  acquired by 612 Canada in exchange for 1,000,000 exchangeable shares of 612
  Canada. In addition, 612 Canada issued a further 7,422,675 Exchangeable Shares
  to the two principals of ActionView in exchange for Intellectual Property Rights
  held by the two principals relating to the development of ActionViews
  products.

The holders of Exchangeable Shares may, at any time, require
  612 Canada to repurchase the Exchangeable Shares for an amount equal to the
  then current market value of the Companys common stock. 612 Canada may,
  at its option, satisfy the resulting obligation to repurchase the Exchangeable
  Shares in cash or it may elect to have the obligation satisfied by the issuance
  of shares of the common stock of the Company on the basis of one common share
  for one Exchangeable Share. The Company issued 8,422,675 shares of common

F-15

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

stock to a trustee to satisfy this obligation. The holders of
  the Exchangeable Shares will be granted votes in the Company on a basis of one
  vote for every Exchangeable Share held. During the year ended December 31, 2003,
  350,000 Exchangeable Shares were exchanged for shares of the Company at $0.30
  each, leaving 8,072,675 Exchangeable Shares issued and outstanding as at December
  31, 2005.

On September 9, 2003, the acquisition of ActionView was accounted
  for as a business combination using the purchase method of accounting in accordance
  with SFAS 141 whereby the fair value of the consideration paid has been allocated
  to the fair value of the underlying net assets acquired as follows:

Assets acquired at fair value:$Current assets
      128,719Fixed assets
      34,407Goodwill (see below)
      431,572594,698Liabilities acquired at fair value:Current liabilities
      81,825Long term debt
      53,437Due to related parties
      159,436294,698Purchase price  1,000,000 Exchangeable
      $Shares
      300,000


The consolidated results of operations of the Company include
  the results of operations of ActionView from the date of acquisition on September
  9, 2003.

In accordance with the provisions of SFAS 142 Goodwill
  and other Intangible Assets, the Company is required to test for the recoverability
  of goodwill annually and, when the carrying amount of goodwill exceeds its fair
  value, is required to recognize an impairment loss.

During its annual review at December 31, 2005, the Company determined
  that due to the delays in generating revenue from the sale or rental of signs
  and lack of profitability to date, the carrying value of its goodwill amounting
  to $431,572 was impaired. Accordingly, the Company has written off the carrying
  value of Goodwill resulting in a loss of $431,572.

A summary of the Companys goodwill as at December 31, 2005
  and 2004 is presented below:

F-16

---

ACTIONVIEW INTERNATIONAL, INC
  (A development Stage Company)NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 
  December 31, 2005

|                                    | December  | December
|----------------------------------- | --------- | --------
|                                    | 31, 2005  | 31, 2004
|                                    | $         | $       
|Goodwill                            | 431,572   | 431,572 
|Less: year end impairment provision | (431,572) | -       
|                                    |           |         
|Carrying value                      | -         | 431,572 

(7) BANK INDEBTEDNESS

At December 31, 2005, the Companys bank indebtedness was
  $34,305 (December 31, 2004 - $83,084) which is payable on demand; bears interest
  at the banks prime rate plus 1.55% per annum; is secured by a general
  security agreement over all Company assets; and is guaranteed by the Companys
  two directors. Subsequent to December 31, 2005, the bank indebtedness was repaid
  by the Company. The line of credit of $86,000 remains available for future use
  as required.

(8) CONVERTIBLE PROMISSORY NOTES PAYABLE

During 2005, the Company borrowed $335,700 from seven lenders
  by way of promissory notes bearing interest at 15% per annum, payable quarterly
  in advance, and principal is repayable in cash or shares, at the option of the
  note holder, after one year from the date of issuance. As an inducement fee
  to the note holders, the Company issued 231,390 shares of rule 144 restricted
  common stock, with a fair value of $23,129, pursuant to an exemption from registration
  provided by Section 4 (2) of the Securities Act of 1933. This fee was recorded
  as a current deferred charge (See Note 3) and is amortized straight-line as
  interest expense over the twelve month term of the notes. In this regard, $4,766
  was expensed as non-cash interest for the year ended December 31, 2005.

At the note holders option, the notes may be converted
  into common stock of the Company at a 15% discount to the volume weighted average
  price during the ten days prior to the due dates. In accordance with EITF 98-5
  Accounting for Convertible Securities with Beneficial Conversion Features
  or Contingently Adjustable Conversion Ratios, the Company recognized the
  value of the embedded beneficial conversion feature of $41,355. This value was
  also deferred (see note 3) and amortized straight-line as interest expense over
  the twelve month term of the notes. In this regard, $9,102 was expensed as non-cash
  interest for the year ended December 31, 2005.

The Company has guaranteed an annualized return of 40% to all
  lenders including the sum of cash interest payable and the market value of the
  231,390 bonus shares at the due date. If there is a shortfall in this return
  at maturity the Company has agreed to issue further rule 144 restricted common
  stock to make up the shortfall. At December 31, 2005 the Company is

F-17

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

contingently liable for this shortfall amounting to approximately
  693,000 shares valued at $62,380.

(9) CONVERTIBLE AND OTHER LONG TERM DEBT

At December 31, 2005, the long term debt of $281,317 (December
  31, 2004 -$33,234) is comprised of term loans, convertible loans and a draw-down
  line of credit as follows:

(i) Term Loans - $17,838 (December
  31, 2004 - $33,324)

December 31
      December 312005
      2004Term loan with the Royal Bank, bearing
        interest at Royal Bank prime plus 2.25% per annum with monthly principal
        payments of $1,425 (Cdn $1,715) plus interest.
      
      $ -
      $ 1,355Business Development Corporation (BDC)
        loan, bearing interest at BDC prime plus 4% per annum with monthly principal
        payments of $686 (Cdn $800) commencing October 2002 and maturing March
        2008
      
      $18,524
      $25,921BDC loan, bearing interest at BDC prime
        plus 2% per annum with monthly principal payments of $686 (Cdn $800) commencing
        June 2002 and maturing November 2008.
      
      $15,780
      $23,265$34,304
      $50,541Less: current portion
      
      (16,466)
      (17,307)Long term portion
      
      $17,838
      $33,234


The term loans are secured by a general security agreement over
  all Company assets and guaranteed by the Companys two directors.

ii) Convertible Loans - $38,479 (December
  31, 2004 - $nil)

During the year ended December 31, 2005, the company borrowed
  $61,500 of non-interest bearing loans from two individuals with unspecified
  repayment terms. After March 2007, the loans are convertible at the lenders
  option into units consisting of 715,536 shares of common stock and an equivalent
  number of share purchase warrants exercisable at $0.10 per share.

F-18

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

In accordance with EITF 98-5 Accounting for Convertible
  Securities with Beneficial Conversion Features or Contingently Adjustable Conversion
  Ratios, the Company recognized the value of the embedded beneficial conversion
  feature of $12,953. This value was recorded as a deferred charge and is being
  amortized over the eighteen month term of the notes. In this connection, $2,878
  was expensed as non-cash interest for the year ended December 31, 2005.

In addition and in accordance with EITF 00-27 Application
  of Issue No. 98-5 to Certain Convertible Instruments, the Company has
  allocated the proceeds of issuance between the convertible debt and the detachable
  warrants based on their relative fair values. Accordingly, the Company recognized
  the fair value of the detachable warrants of $29,600 as common stock purchase
  warrants and will record further interest expense over the term of the Convertible
  Loans resulting from this difference between the stated value and carrying value
  at the date of issuance. As an offset, the carrying value of the Convertible
  Loans will be accreted to the face value of $61,500 at maturity. In this connection,
  interest expense of $6,578 has been accreted for the year ended December 31,
  2005, increasing the carrying value of the Convertible Loans from $31,900 at
  the date funds were received to $38,479.

iii) Drawdown Line of Credit - $225,000 (December
  31, 2004 - $nil)

During the year ended December 31, 2005, the Company borrowed
  $225,000 under a maximum $350,000 draw-down line of credit from CLX Investment
  Company, Inc. (CLX) of Temecula, California, bearing interest at
  8% per annum compounded quarterly in arrears. The loan is repayable to CLX in
  an amount equal to 25% of net quarterly income of the Company or $75,000 whichever
  is greater, commencing on the earlier of May 31, 2007 or the month following
  the quarter in which the Company generates net quarterly income of at least
  $150,000. As an inducement fee to CLX, the Company issued 1,285,700 shares of
  restricted common stock with a fair value of $141,427 pursuant to an exemption
  from registration provided by Section 4(2) of the Securities Act of 1933. This
  fee was recorded as a deferred charge and is being amortized straight-line as
  interest expense over the twenty-one month term of the credit line. In this
  connection, $24,095 was expensed as non-cash interest for the year ended December
  31, 2005.

The unused line of credit of $125,000 is available upon mutual
  consent between the Company and CLX at which time additional restricted shares
  will be issued pro-rata as an additional loan fee.

Principal repaymentsThe aggregate amount of principal payments required in each of the next
  three years to meet the long term debt retirement provisions is as follows:

Year ending
      December 31, 2006
      $ 16,466December 31, 2007
      $241,466December 31, 2008
      $ 1,373$259,305


F-19

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(10) RELATED PARTY TRANSACTIONS

At December 31, 2005, the Company owed a total of $144,053 (December
  31, 2004 - $167,647) to the two Company officers who are also directors and
  their private companies. For the year ended December 31, 2005, management fees
  of $201,680 (2004 - $199,392) were accrued for the two Company officers and
  their private companies as compensation for the day-to-day management of the
  Company.

During the current year, the company issued 2,500,000 shares
  of rule 144 restricted common stock at $0.08 per share for the settlement of
  $200,000 of this debt leaving a balance owing of $144,053 which is unsecured,
  non-interest bearing and has no specific terms of repayment.

All related party transactions are conducted in the ordinary
  course of business and measured at the exchange amount, which is the consideration
  established and agreed by the related parties.

(11) COMMON STOCK

A summary of the shares of common stock issued by the Company
  for each of the last eight years is presented below:

During the year ended December 31, 1998:          (i) the Company
  completed a 1-for-3 reverse stock split thereby reducing the number of shares
  issued and outstanding from 8,984,025 to 2,994,675.

(ii)
  following the reverse stock split in 1998, the Company issued 910,000 shares
  of common stock at market prices in return for consulting services valued at
  $1,249,220.

During the years ended December 31, 1999 and 2000:no
  transactions

During the year ended December 31, 2001:          (i) the Company
  issued 55,000 shares of common stock on settlement of $5,500 owing to Company
  officers.

(ii)
  the Company issued 1,000,000 shares of common stock pursuant to the purchase
  of the assets of Inform Online, Inc. valued at $550,000.

During the year ended December 31, 2002:          (i) the Company
  terminated the 2001 asset acquisition agreement of Inform Online, Inc. and the
  1,000,000 shares of Company stock were returned to treasury and cancelled.

(ii)
  the Company issued 2,500,000 shares of common stock at market price pursuant
  to the purchase of all the shares of Tele-Pacific Communications (Samoa) Inc.
  from Pacific E-Link Corporation. These shares were placed in escrow until completion
  of due diligence and finalization of the acquisition. Later in the year, the
  Company terminated the share acquisition agreement and the 2,500,000 shares
  of Company stock were returned to Treasury and cancelled.

F-20

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

During the year ended December 31, 2003:          (i) the Company
  issued 975,000 shares of common stock at market prices in return for consulting
  and professional services valued at $63,375.

(ii)
  the Company issued 7,302,000 units comprised of one common share and one common
  share purchase warrant on conversion of certain convertible notes payable and
  accrued interest in the amount of $523,000.

(iii)
  the Company issued 1,348,570 shares on settlement of $71,645 of accrued interest
  on convertible notes payable.

(iv)
  the Company issued 327,325 shares of common stock at market price on settlement
  of $98,197 owing to Company officers who are also directors, concurrent with
  the acquisition of ActionView.

(v)
  612 Canada issued 8,422,675 exchangeable shares with a fair value of $2,526,803
  and was recorded as a separate component of consolidated stockholders
  equity as described in Notes 5 and 6.

(vi)
  the Company issued 774,446 shares of common stock on settlement of $387,224
  owing to Company directors.

(vii)
  the Company issued 958,000 units at $0.50 per unit for cash consideration of
  $479,000 under a Private Placement Offering Memorandum for 2,000,000 units per
  Regulation S of the Securities and Exchange Act (OM units). Each
  unit consists of one share of restricted common stock at $0.50 per share and
  a non-transferable share purchase warrant entitling the holder to purchase one
  share of rule 144 restricted common stock at an exercise price of $0.55 for
  three years expiring by December 30, 2006. The fair value of the warrants was
  estimated to be $47,900 and was recorded as a separate component of stockholders
  equity.

(viii)
  the Company issued 250,000 shares of common stock on exercise of 250,000 share
  purchase warrants at $0.30 per warrant in settlement of $75,000 of amounts due
  to the warrant holder.

(ix)
  the Company issued 350,000 shares of common stock at $0.30 per share in settlement
  of the purchase price owing by 612 Canada on repurchase of 350,000 exchangeable
  shares of 612 Canada.

During the year ended December 31, 2004:          (i) the Company
  issued 1,741,500 common shares on the exercise of 1,935,000 share purchase warrants
  on a cashless basis.

(ii)
  the Company issued 250,000 OM units at $0.50 per unit for cash consideration
  of $125,000 under the 2003 Private Placement Offering Memorandum above. Each
  unit consists of one share of restricted common stock at $0.50 per share and
  one non-transferable share purchase warrant entitling the holder to purchase
  one share of restricted common stock at $0.55 for three years expiring by February
  20, 2007. The fair value of the warrants was estimated to be $12,500 and was
  recorded as a separate component of stockholders equity.

F-21

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(iii)
  the Company issued 175,000 of the OM units at $0.40 per unit for cash consideration
  of $70,000 under the 2003 Private Placement Offering Memorandum above. Each
  unit consists of one share of restricted common stock at $0.40 per share and
  one non-transferable share purchase warrant at $0.45 for three years expiring
  by March 9, 2007. The fair value of the warrants was estimated to be $7,000
  and was recorded as a separate component of stockholders equity.

(iv)
  the Company entered into a Private Placement Subscription Escrow Agreement (PPSEA)
  whereby it agreed to offer through a private placement agent not less than 500,000
  and not more than 10,000,000 shares of the Companys common stock at $0.20
  per share, under Rule 506 of Regulation D.of the Securities and Exchange Act.
  In return for arranging the financing, the Company agreed to pay an agents
  fee of: (a) $10,000 cash upon signing the agreement; (b) 10% of the gross proceeds
  from the sale of shares for cash; and (c) 10% of the common stock sold to investors.
  Under this agreement, the Company issued 2,500,000 shares at $0.20 per share
  for cash consideration of $440,500 net of share issue costs and fees of $59,500.
  The Company also recorded an obligation to issue 250,000 shares to the agent
  as described in (c) above with an estimated fair value of $50,000.

(v)
  the Company issued 250,000 shares of common stock on the exercise of 310,000
  share purchase warrants on a cashless basis.

(vi)
  the Company issued 100,000 shares under the PPSEA above at $0.20 per share for
  cash consideration of $18,000, net of share issue costs of $2,000. The Company
  recorded an obligation to issue 250,000 shares to the agent as described in
  (iv) above with at an estimated fair value of $50,000.

During the year ended December 31, 2005:          (i) the Company
  implemented a Retainer Stock Plan which was filed on a Form S-8 Registration
  Statement in January 2005. Under the Plan, a total of 3,000,000 shares of common
  stock can be issued to compensate directors, employees and consultants for services
  rendered to the Company at prices and terms to be determined by the Board of
  Directors.

(ii)
  the Company issued 3,025,000 units under Private Placement for cash consideration
  of $250,000 at prices ranging from $0.08 to $0.10 per unit. Each unit consists
  of one share of restricted common stock of the Company and a non-transferable
  share purchase warrant entitling the holder to purchase one-half share of restricted
  common stock at an exercise price of $0.17 for one year expiring by June 30,
  2006. These shares were issued without registration in exempt transactions based
  on Section 4(2) of the Securities Act of 1933 under regulation D rule 501. The
  fair value of the warrants was estimated to be $25,000 and was recorded as a
  separate component of stockholders equity.

(iii)
  the Company issued 1,275,177 shares of Form S-8 registered common stock in return
  for consulting services valued at $124,760 regarding the preparation of legal
  contracts, continuous disclosure documents, business planning and sales &
  marketing at prices ranging from $0.07 to $0.10 per share.

(iv)
  the Company issued 437,500 shares of Rule 144 restricted common stock in return
  for business consulting services valued at $43,500.

F-22

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(v)
  the Company issued 1,468,000 shares of Form S-8 registered common stock for
  the settlement of accounts payable of $146,800.

(vi)
  the Company issued 2,500,000 shares of Rule 144 restricted common stock for
  the settlement of $200,000 of amounts owing to Company officers who are also
  directors.

(vii)
  the Company issued 231,390 shares of Rule 144 restricted common stock as an
  equity inducement valued at $23,129 for $335,700 of promissory notes payable
  pursuant to an exemption from registration provided by Section 4 (2) of the
  Securities Act of 1933. (See Note 8)

(viii)
  the Company issued 1,285,700 shares of Rule 144 restricted common stock as an
  equity inducement valued at $141,427 for a $225,000 line of credit agreement.
  (See Note 9 (iii))

STOCK OPTION PLANS

In September 2003, the Company adopted a Non-Qualified Stock
  Option Plan (the Plan) which authorizes the issuance of up to 1,750,000
  shares of common stock on exercise of options granted pursuant to the Plan.
  In addition, the Company adopted a Stock Bonus Plan which authorizes the issuance
  of up to 1,000,000 shares of common stock. Under the Stock Bonus Plan, the Companys
  employees, directors, officers, consultants and advisors are eligible to receive
  a grant of the Companys shares, provided however that bona fide services
  must be rendered by consultants or advisors and such services must not be in
  connection with the offer or sale of securities in a capital-raising transaction.

In September 2003 and pursuant to the Plan, the Company granted
  options to purchase 1,475,000 shares of common stock to the Companys officers,
  directors, employees and to consultants of the Company exercisable at a price
  of $0.50 per share for the two years ending September 30, 2005. These options
  were recorded at a fair value of $446,100 at the date the options were granted
  using the Black-Scholes option pricing model assuming a dividend yield of 0%,
  a risk-free interest rate of 3%, an expected option life of 2 years and an expected
  volatility of 145%. In accordance with the provisions of APB No. 25, this fair
  value compensation was expensed in the accounts and credited to additional paid-in
  capital. These options expired on September 30, 2005.

In December 2003 and pursuant to the Plan, 50,000 options were
  granted to consultants of the company exercisable at a price of $0.50 per share
  for the two years ending December 31, 2006. These options were recorded at a
  fair value of $30,200 at the date the options were exercisable using the Black-Scholes
  option pricing model assuming a dividend yield of 0%, a risk-free interest rate
  of 3%, an expected option life of 2 years and an expected volatility of 139%.
  In accordance with the provisions of APB No. 25, this fair value compensation
  was expensed in the accounts and credited to additional paid-in capital. These
  options were subsequently cancelled on December 1, 2005.

F-23

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

A summary of the Companys outstanding stock options to
  directors, employees and consultants as of December 31, 2005 and 2004 and changes
  during these years is presented below:

| |                             | 2005        | 2004    
| | --------------------------- | ----------- | --------
| |                             |             | Exercise
| |                             | Options     | Price   
| | Balance, beginning of year  | 1,275,000   | $0.50   
| | Granted                     | -           | -       
| | Exercised/expired/cancelled | (1,275,000) | -       
| | Balance, end of year        | -           | -       

STOCK PURCHASE WARRANTS

During the year ended December 31, 2000,the Company issued
  8% convertible notes payable in the amount of $335,000. These notes payable
  were convertible into units of the Company at a conversion price of $0.20 per
  Unit. Each unit is comprised of one fully-paid non-assessable common share of
  the Company and one Share Purchase Warrant entitling the holder to purchase
  an additional common share at a purchase price of $0.25 per common share. In
  2003, the conversion price of these units was reduced to $0.05 and the exercise
  price of the warrants was reduced to $0.10 and $335,000 of the 8% convertible
  notes payable were settled through the issuance of 6,700,000 common shares and
  6,700,000 common share purchase warrants. In 2004, 2,245,000 of these warrants
  were exercised on a cashless basis and in 2005, the balance of 4,455,000 warrants
  expired.

During the year ended December 31, 2001,the Company issued
  1,000,000 warrants to purchase 1,000,000 shares of the Companys common
  stock at $0.20 per share to six parties. In January 2003, the Company reduced
  the exercise price to $0.05 per share and in 2005, these warrants expired.

During the year ended December 31, 2003,the Company issued
  1,310,000 warrants to purchase 1,310,000 shares of the Companys common
  stock at $0.30 to $0.55 per share to six parties. These warrants expire in three
  years from date of issuance by December 31, 2006.

During the year ended December 31, 2004,the Company issued
  425,000 warrants to purchase 425,000 shares of the Companys common stock
  at $0.45 to $0.55 per share as part of a private placement. These warrants expire
  in three years from date of issuance by March 10, 2007.

During the year ended December 31, 2005,the Company issued
  two lots of warrants as follows:

i)
  1,512,500 warrants to purchase 1,512,500 shares of the Companys common
  stock at $0.17 per share as part of a private placement. These warrants expire
  on June 15, 2006.

F-24

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

ii)
  715,536 warrants to purchase 715,536 shares of the Companys common stock
  at $0.10 per share as part of a convertible debt instrument with two investors.
  These warrants have an indefinite expiry date.

A summary of the Companys warrants as at December 31, 2005
  and 2004 and changes during the current year is presented below:

| |               |          | Number of    |           |           |             | Number of   
| | ------------- | -------- | ------------ | --------- | --------- | ----------- | ------------
| |               |          | Shares       |           |           |             | Shares      
| |               | Exercise | Issuableat   |           |           |             | Issuable at 
| | Expiry Date   | Price    | Dec 31, 2004 | Issued    | Exercised | Expired     | Dec 31, 2005
| |               |          |              |           |           |             |             
| | Aug 21, 2005  | 0.10     | 1,190,000    | -         | -         | (1,190,000) | -           
| | Aug 22, 2005  | 0.10     | 1,400,000    | -         | -         | (1,400,000) | -           
| | Sept 15, 2005 | 0.10     | 400,000      | -         | -         | (400,000)   | -           
| | Sept 22, 2005 | 0.10     | 750,000      | -         | -         | (750,000)   | -           
| | Oct 3, 2005   | 0.10     | 400,000      | -         | -         | (400,000)   | -           
| | Oct 27, 2005  | 0.10     | 315,000      | -         | -         | (315,000)   | -           
| | Mar 25, 2005  | 0.05     | 1,000,000    | -         | -         | (1,000,000) | -           
| | Oct 10, 2006  | 0.55     | 30,000       | -         | -         | -           | 30,000      
| | Oct 15, 2006  | 0.55     | 70,000       | -         | -         | -           | 70,000      
| | Oct 28, 2006  | 0.55     | 120,000      | -         | -         | -           | 120,000     
| | Nov 4, 2006   | 0.55     | 50,000       | -         | -         | -           | 50,000      
| | Nov 26, 2006  | 0.55     | 108,000      | -         | -         | -           | 108,000     
| | Dec 8, 2006   | 0.55     | 540,000      | -         | -         | -           | 540,000     
| | Dec 31, 2006  | 0.55     | 40,000       | -         | -         | -           | 40,000      
| | July 25, 2006 | 0.30     | 102,000      | -         | -         | -           | 102,000     
| | Sept 2, 2006  | 0.45     | 250,000      | -         | -         | -           | 250,000     
| | Jan 15, 2007  | 0.55     | 150,000      | -         | -         | -           | 150,000     
| | Jan 22, 2007  | 0.55     | 50,000       | -         | -         | -           | 50,000      
| | Feb 20, 2007  | 0.55     | 50,000       | -         | -         | -           | 50,000      
| | Mar 10, 2007  | 0.45     | 175,000      | -         | -         | -           | 175,000     
| | Apr 15, 2006  | 0.17     | -            | 1,412,500 | -         | -           | 1,412,500   
| | Jun 20, 2006  | 0.17     |              | 100,000   | -         |             | 100,000     
| | Indefinite    | 0.10     |              | 715,536   |           |             | 715,536     
| |               |          | 7,190,000    | 2,228,036 | -         | (5,455,000) | 3,963,036   

The weighted average exercise price and remaining life of the
  stock purchase warrants is $0.31 and one year, respectively.

At December 31, 2005, the Company had 12,751,247 potentially
  dilutive securities outstanding (December 31, 2004  16,537,675) in the
  form of exchangeable shares (8,072,675), stock purchase warrants (3,963,036),
  and convertible loans (715,536).

(12) INCOME TAXES

Potential benefits of income tax losses are not recognized in
  the accounts until realization is more likely than not. The Company
  has incurred net operating tax losses of approximately $4,340,000, which commence
  expiring in 2018 after a carry forward period of 21 years. Pursuant to SFAS
  No. 109, the Company is required to compute tax asset

F-25

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

benefits for net operating losses carried forward. Potential
  benefit of net operating losses have not been recognized in these financial
  statements because the Company cannot be assured it is more likely than
  not it will utilize the net operating losses carried forward in future
  years. For the years ended December 31, 2005 and 2004, the valuation allowance
  established against the deferred tax assets increased by $317,000 and $545,000
  respectively. The components of the net deferred tax asset at December 31, 2005
  and 2004, and the statutory tax rate, the effective tax rate and the elected
  amount of the valuation allowance are indicated below:

2005
      2004$
      $Net operating losscarry forwards
      4,340,000
      3,536,000Statutory tax rate
      35%
      34%Effective tax rate
      
      Deferred tax asset
      1,519,000
      1,202,000Less: valuation allowance
      (1,519,000)
      (1,202,000)Net deferred tax asset
      
      


Availability of tax loss carry forwards is subject to change
  of ownership limitations under Internal Revenue Code 382.

(13) SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS

CumulativeFrom InceptionYear ended
      Year ended
      (Jan 26, 1989) toDecember 31, 2005
      December 31, 2004
      Dec
        31, 2005Cash paid during year for:Interest and bank charges
      $ 29,318
      $ 16,171
      $ 485,065Income taxes
      -
      -
      -


A summary of the shares of common stock issued by the Company
  for non-cash consideration during the years ended December 31, 2004 and 2005
  is presented below.

During the year ended December 31, 2004,no shares of
  common stock of the Company were issued in settlement of consulting services,
  accounts payable or debt financing obligations.

F-26

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

During the year ended December 31, 2005,the Company issued
  7,197,767 shares of common stock in settlement of various consulting services,
  accounts payable and debt financing obligations valued at $763,525 as follows:

(i)
  the Company issued 1,275,177 shares of Form S-8 registered common stock in return
  for consulting services valued at $124,760 regarding the preparation of legal
  contracts, continuous disclosure documents, business planning and sales &
  marketing at market prices ranging from $0.07 to $0.10 per share.

(ii)
  the Company issued 437,500 shares of Rule 144 restricted common stock in return
  for business consulting services valued at $43,500.

(iii)
  the Company issued 1,468,000 shares of Form S-8 registered common stock for
  the settlement of accounts payable of $146,800.

(iv)
  the Company issued 2,500,000 shares of Rule 144 restricted common stock for
  the settlement of $200,000 of amounts owing to Company officers who are also
  directors.

(v)
  the Company issued 231,390 shares of Rule 144 restricted common stock as an
  equity inducement valued at $23,129 for $335,700 of promissory notes payable
  pursuant to an exemption from registration provided by Section 4 (2) of the
  Securities Act of 1933.

(vi)
  the Company issued 1,285,700 shares of Rule 144 restricted common stock as an
  equity inducement valued at $141,427 for a $225,000 line of credit agreement.
  (See Note 9(iii))

(14) CURRENT PROJECTS AND OPERATING AGREEMENTS

The Company, through its foreign partners, has entered into agreements
  during 2005 for the placement of 350 signs, which was subsequently increased
  to 610 signs, subject to final written agreements, in China and Australia as
  follows:

China and Hong Kong:In May 2005, AVFE entered into a five year revenue sharing agreement with
  Chaungrun Media Ltd (Chuangrun), a Hong Kong corporation which currently
  operates an established advertising business in China. The Company owns 50.1%
  of AVFE and the other 49.9% owner of AVFE is a local business group headed by
  AVFEs Managing Director. Chuangrun is responsible for obtaining the site
  locations and the advertisers for the Company-owned scrolling signs; the Company
  is responsible for the delivered cost of manufactured signs; and AVFE is responsible
  for the installation and on-going maintenance of the signs.

Corporation, a public company associated with Chuangrun Media
  Ltd (Chuangrun). Chuangrun is responsible for obtaining the site
  locations and the advertisers for the Company-owned scrolling signs; the Company
  is responsible for the delivered cost of manufactured signs; and AVFE is responsible
  for the installation and on-going maintenance of the signs.

F-27

---

|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

Through Chuangrun and AVFE, the Company has two contracts
  at the new Guangzhou Baiyun Airport in Southern China for the placement of:
  (i) 50 double-sided 4x6 Company-owned billboards in the airport-link
  outdoor bus stop locations, each scrolling 12 posters; and (ii) 100 indoor panorama
  10x5 Company-owned billboards at the international arrivals and
  domestic departures locations, each scrolling 3 posters.

The 50 bus stop signs have been paid for by the Company and
  are now ready for installation following unexpected delays relating to requested
  design changes and the construction / infrastructure methods used in China to
  prepare the airport site. When final permits are received from the airport authority,
  these signs will be installed. After a reasonable work-in period for the bus
  stops, the 100 indoor panoramas will be manufactured and installed provided
  the necessary funds can be raised by the Company.

Chuangrun has negotiated advertising contracts with a national
  Ad Agency in China for their clients use of 60% of the outdoor sign space
  in the first full year and 70% of the indoor sign space, also in the first full
  year. Under the Chuangrun contract, the ActionView Group is entitled to approximately
  15% of the gross advertising revenues generated from the signs once they are
  installed and advertising posters are in place.

Australia and New Zealand:
  In June 2005, AVAU entered into a three year revenue sharing agreement with
  Open Media Management Pty Ltd (Open Media), an Australian corporation
  with ties to the advertising community and business establishment in Australia
  and New Zealand. The Company has an option to purchase 51% of AVAU for a nominal
  amount at any time. The other 49% owner of AVAU is a local business group headed
  by AVAUs Managing Director. Open Media and AVAU are responsible for obtaining
  the site locations and the advertisers along with installation and on-going
  maintenance of the Company-owned scrolling signs; and the Company is responsible
  for the delivered cost of manufactured signs.

Open Media has negotiated a contract with IGA Distribution
  Pty Ltd for the placement of a minimum 200 4x6 scrolling signs in
  the IGA supermarket chain across Australia. Subsequent to the year end, the
  minimum number of signs was increased to 460, subject to completion of a final
  agreement currently in progress. About 40 of the 460 signs required by IGA have
  been built and paid for by the Company. Approximately $1.4 million is required
  from new fund raising or operating cash flows in order for the Company to meet
  this commitment.

Advertising contracts for the signs are presently being secured
  through Open Media and its strategic / operational partner, Adshel/ Clear Channel,
  which is part of a large global outdoor media company. Under the Open Media
  contract, the ActionView Group is entitled to approximately 20% of the gross
  advertising revenues generated from the signs once they are installed and advertising
  posters are in place.

(15) SUBSEQUENT EVENTS

Significant Company events subsequent to December 31, 2005
  are as follows:

(i)
  the Company repaid its bank indebtedness of $34,305.

F-28

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|ACTIONVIEW INTERNATIONAL, INC             
|------------------------------------------
|(A development Stage Company)             
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
|December 31, 2005                         

(ii)
  the Company registered an additional 3,000,000 shares of common stock under
  its 2005 Retainer Stock Plan on a Form S-8 Registration Statement in January
  2006. Under the Plan, these shares can be issued to compensate directors, employees
  and consultants of the Company for services rendered to the Company at prices
  and terms to be determined by the Board of Directors.

(iii)
  the Company issued 615,500 shares of Form S-8 registered common stock, 228,000
  shares for cash consideration of $20,178 and 387,500 shares for consulting
  services valued at $31,000, at prices ranging from $0.08 to $0.09
  per share.

F-29

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