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

                                   FORM 10-KSB




[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 For the fiscal year ended   March 31, 2005
                                  -----------------

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

Commission File Number: 000-32797

                            IVI Communications, Inc.
                            -------------------------
             (Exact name of registrant as specified in its charter)

Nevada                                                             33-0965560
------                                                             ----------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)


6171 W Century Blvd Suite 130, Los Angeles, CA                        90045
---------------------------------------------------------------------------
(Address of principal executive offices)                          (Zip Code)

                                 310-216-7740
                                 --------------
              (Registrant's Telephone Number, Including Area Code)

Securities registered under Section 12(b) of the Act:


  Title of Each Class Name of Each Exchange on which to be so Registered: Each
  Class is to be Registered:
  --------------------                          -----------------------
          None                                               None

Securities registered under Section 12(g) of the Act:

Common Stock, Par Value $.001
-----------------------------
(Title of Class)

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
 [X]  Yes  [ ]  No

Check if there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-B is not 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 amendment to this Form 10-KSB. [ ]


State issuer's revenues for its most recent fiscal year. $775,594

State the aggregate market value of the voting and non-voting common equity held
by non-affiliates computed by reference to the price at which the common equity
was sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. (See definition of affiliate in Rule
12b-2 of the Exchange Act.) As of July 8, 2005, approximately $4,134,127.

As of March 31, 2005, there were 66,539,685 shares of the issuer's $.001 par
value common stock issued and outstanding.

Documents incorporated by reference. There are no annual reports to security
holders, proxy information statements, or any prospectus filed pursuant to Rule
424 of the Securities Act of 1933 incorporated herein by reference.

Transitional Small Business Disclosure format (check one):

                         [X]  Yes          [ ]  No


                                       1
<PAGE>



                                TABLE OF CONTENTS

PART 1

Item 1   Description of Business
Item 2   Description of Property
Item 3   Legal Proceedings
Item 4   Submission of Matters to a Vote of Security Holders

PART 2

Item 5   Market for Common Equity and Related Stockholder Matters
Item 6   Management's Discussion and Analysis or Plan of Operation
Item 7   Financial Statements
Item 8   Changed in and Disagreements With Accountants on Accounting
         And Financial Disclosure
Item 8A  Internal Control over Financial Reporting

PART 3

Item 9  Directors, Executive Officers, Promoters and Control Persons
Item 10 Executive Compensation
Item 11 Security Ownership of Certain Beneficial Owners and Management
Item 12 Certain Relationships and Related Transactions
Item 13 Exhibits
Item 14 Principal Accountant Fees and Services Signatures

Certifications



                                       2
<PAGE>


PART 1

ITEM 1            DESCRIPTION OF BUSINESS

IVI Communications intends to acquire, consolidate and profitably operate
locally branded ISPs offering state of the art dialup and nationally branded
wireless Internet access to residential and business customers. Local ISPs are
hampered in their ability to provide the highest quality services and achieve
profitability because they lack buying power. Through consolidation, economies
of scale are achieved and profit is maximized. The Company will deploy, market,
and maintain a nationally branded fixed wireless broadband solution with newly
acquired ISPs in tier 3 markets. As more compelling content becomes available,
the demand for and profitability of broadband services will increase
dramatically. ISPs having a track record of success in broadband will not only
retain customers by converting dialup to broadband but will gain new customers
migrating from other dialup providers.

There has been no research and development.

The Company is not aware of any governmental regulations or approvals that would
effect our business at the present time, nor any environmental laws that would
effect the Company.

As of March 31, 2005 there are 3 corporate employees.



ITEM 2            DESCRIPTION OF PROPERTY

Corporate headquarters are located at 6171 W. Century Blvd., Suite 130, Los
Angeles, CA, very close to the LAX airport. The Company occupies approximately
1,000 square feet of office space on a month-to-month rental of $500 per month.

The accounting and administrative offices are located at 555 H Street, Suite H,
Eureka, CA. The Company has 1,104 square feet on a lease through October 2005 at
$1,195 per month.

Facilities for subsidiaries IBC in Matthews, NC, and AppState.net in Boone, NC
are leased.

ITEM 3            LEGAL PROCEEDINGS

The Company has one lawsuit outstanding and three settled:

1. Confidential settlements have been reached and all parties have dismissed
in the following matters:

A. Qwest Communications Corporation and its affiliated entities ("Qwest")

B. Mathew J. Matern

C.  New Edge Networks

                                       3
<PAGE>



2.  Rastegar and Matern
--------------------------------------------------------------------

In August 2002, a lawsuit was filed against the Company and its subsidiaries for
legal fees and interest allegedly owed in the amount of $46,305 plus interest
accruing since the lawsuit was filed. On August 6, 2003, the parties agreed to
settle this lawsuit for $30,000, payable $15,000 upon execution of the
settlement documents and the remaining $15,000 payable in six monthly
installments of $2,500 each.


3.  Catherine and Joe Santisteven
----------------------------------

On December 1, 2004, a default judgment was entered against Internet Ventures,
Inc., the predecessor company, in favor of Catherine and Joe Santistevan in the
amount of $1,367,500.00. After discussions with legal counsel, the company
believes the amount of the judgment would be mitigated in a full hearing on the
matter, which the company intends to vigorously pursue. The Company currently
has $408,486.00 recorded in notes and notes interest payable, and legal counsel
and management believe this amount is adequate to resolve this matter.

The company filed a motion to set aside the default judgment, and it is
currently under submission in the Superior Court of California, County of San
Joaquin, Stockton Branch, No. CV022344.








                                       4
<PAGE>


The Company has seven default judgments against it for a total amount of
$163,367.

Five of these judgments have settlements in place with total balances of
$85,778. The amounts are recorded in accounts payable.

One judgment in the amount of $62,328 is in favor of an equipment leasing
company and is against a wholly owned subsidiary of Internet Ventures, Inc. This
is recorded under accounts payable and installment debt.

One judgment in the amount of $15,261 is in favor of a debenture holder against
Internet Ventures, Inc. The amount is recorded in debentures payable, debenture
interest payable, and accounts payable.




ITEM 4            SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.



PART 2


ITEM 5            MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

IVI Communications, Inc. trades on the Pink Sheets, symbol IVCM.PK.

On August 16, 2004, Pennaluna & Company filed a Form 211 Application for IVI
Communications, Inc. with the NASD to move from the Pink Sheets to the OTCBB.
The Company is in its third round of questions and responses.

The Company filed S-8 Registration Statements for 12,000,000 shares on June 29,
2004 and November 11, 2004.

On July 1, 2004, S-8 shares were issued as follows: Legal services, 1,100,000,
consulting services 2,275,000, and employees 1,125,000.

On July 1, 2004, the Board of Directors authorized an increase in the authorized
shares of Common Stock from 50,000,000 to 100,000,000.

On July 2, 2004, the Board of Directors authorized a 2:1 split of the Common
Stock.




                                       5
<PAGE>



The following table sets forth the average high and low bid prices for the
common stock for each calendar quarter since April 1, 2004.

                                                  BID PRICE PER SHARE
                                         ---------------------------------------
                                            HIGH                      LOW
                                         ---------------------------------------

2004
April 2004 - June 2004                   $        0.100         $         0.100
July 2004 - September 2004               $        0.430         $         0.095
October 2004 - December 2004             $        0.400         $         0.130
2005
January 2005 - March 2005                $        0.100         $         0.180

STOCKHOLDERS

As of March 31, 2005, we believe there were approximately 592 holders of record
of our common stock.

DIVIDENDS

We have never declared or paid cash dividends on our common stock. We currently
intend to retain all available funds and any future earnings to fund the
development and growth of our business and do not anticipate declaring or paying
any cash dividends on our common stock in the foreseeable future.


THE FOLLOWING SECURITIES HAVE BEEN ISSUED IN THE LAST TWO FISCAL YEARS WITHOUT
REGISTERING UNDER THE SECURITIES ACT.

Fiscal Year ending March 31, 2004:
----------------------------------

1,600,000 shares valued at $640,000 were returned with the reversal of the
QuikCom acquisition.

175,000 shares valued at $70,000 were issued for consulting services.

9,000,000 shares valued at $9,000 were issued in a stock exchange agreement with
Broadspot World Wide Wireless, Inc.

Fiscal Year ending March 31, 2005:
----------------------------------

50,000 shares of common stock were issued to the lender of a $10,000 note
payable for entering into the note agreement. Since the Company's stock at the
time of issuance was not trading, the Company has valued these shares at par
($50).

4,500,000 shares were issued to consultants and management in the form of S-8
stock which was issued July 1, 2004. These shares were valued at $112,500 ($.025
per share), the fair value of the stock at the date the shares were issued.

6,130,827 shares of common stock were issued in the quarter ended September 30,
2004 under a stock subscription agreement. The shares have been valued at
$2,023,173 and reflected as a subscription receivable on the condensed
consolidated balance sheet. There have been no amounts received of this
subscription receivable as of March 31, 2005.


                                       6
<PAGE>


1,838,017 shares of stock were issued in the quarter ended September 30, 2004 to
consultants (1,077,017), and for conversions of notes (362,703) and accounts
payable (398,297) valued at $586,804 (an average of $.31 per share), the fair
value of the stock at the date the shares were issued.

In August, 2004 the Company initiated a private offering of IVIC shares.
Twenty-two accredited investors purchased 2,178,558 shares at $0.14 and one
accredited investor purchased 300,000 shares at $0.10, for a total of $335,000.

In December, 2004, The Company sold 10% Convertible Debentures to 14 accredited
investors for $215,000. These accrue interest at 10% and 2,365,000 shares are
convertible at $0.10 in December, 2005. The Company also issued one Convertible
Debenture for $25,000 in January 2005 for consulting services rendered. This
accrues interest at 10% and 250,000 shares are convertible at $0.10 in January,
2006.

1,057,769 shares of common stock were issued for services valued at $193,113 in
the quarter ended December 31, 2004. 275,000 of these shares were cancelled in
the quarter ended March 31, 2005.

669,000 shares of common stock were issued in the quarter ended March 31, 2005
for consulting services and legal services valued at $14,569; and 70,000 shares
of common stock in connection with a legal settlement valued at $11,200; and
100,000 shares of common stock as the initial installment of shares in
connection with the Internet Business Consulting and AppState.Net, LLC
acquisition agreement valued at $100,000.

SUBSEQUENT EVENTS

On April 21, 2005, in accordance with the purchase agreement, 2,574,312 shares
of IVIC common stock were issued to James Hollis for the IBC/Appstate
acquisition.

In the quarter ending September 30, 2004, 6,130,827 shares of common stock were
issued to be held in escrow under a subscription agreement with a London
Investment Fund. In the event the Fund failed in its efforts to receive trading
status, the subscription agreement would be null and void and the shares held in
escrow would be cancelled. As of the date of these financial statements,
management is uncertain that the UKLA will approve the Fund for trading.


Item 6            MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION

Overview
---------
Internet Ventures, Inc., a wholly owned subsidiary of IVI Communications,  Inc.
was incorporated in September 1995. Its mission was to acquire and operate ISPs
in Tier 3 markets and to rollout a hybrid  broadband  product that was delivered
to the customer in partnership with local cable companies.




                                       7
<PAGE>

Effective May 23, 2002, Internet Ventures, Inc. agreed to recapitalize with
Turer Corporation by becoming a wholly owned subsidiary of Turer. To accommodate
this recapitalization, the 12,350,000 shares then outstanding of Internet
Ventures, Inc. were exchanged for 12,350,000 shares of Turer. In August 2002,
Turer changed its name to IVI Communications, Inc. Because original Turer
shareholders retained only five percent of the combined entity, the purchase was
accounted for as a reverse merger.

March 31, 2004, The Company acquired 23,000,000 shares of Broadspot Worldwide
Wireless, Inc., a Canadian publicly trading corporation (pink sheet symbol
BWWWF), for 9,000,000 shares of IVIC. Broadspot World Wide Wireless, Inc., is a
wireless partner-development company, and may play an integral role in the
development of The Company's nationally branded fixed wireless broadband
product.

On January 31, 2005, IVI Communications, Inc. completed the purchase of Internet
Business Consulting, Inc. and AppState.Net, LLC from James R. Hollis by
acquiring 100% of the stock of IBC and AppState.net, as described in Exhibit
2.4. The Company paid one times annual revenue in a dollar-for-dollar stock
exchange with its stock valued at $1.00 per share, plus $580,000 cash to be paid
over two years. IBC is a leading provider of turnkey wireless networks that has
the expertise required to engineer, install, and support wireless applications
and solutions. AppState.net is an Internet Service Provider founded in July 1999
in the Appalachian State University town of Boone, NC. The audited gross revenue
in 2004 for IBC and AppState.net was $2,574,312. Revenue of $747,594 in the
fourth quarter of the year ending March 31, 2005 is included in the consolidated
financial statements. This acquisition launches IVI Communications business
plan.

The Company launched its service marked brand, Lickity-SplitSM, fixed wireless
broadband service, at AppState.net.


IVIC will also provide professional ISP management services utilizing its
remaining core staff with extensive ISP management expertise and experience.
IVIC is currently negotiating with other businesses to provide contractual ISP
management services for ISPs to be acquired and owned by other businesses. These
management services will include assistance in the due diligence and acquisition
process as well as managing the ongoing operations.

Need For Additional Funding
---------------------------

The Company expects operating losses and negative operating cash flows to
continue for at least the next twelve months, because of expected additional
costs and expenses related to brand development; marketing and other promotional
activities; strategic relationship development; and potential acquisitions of
related complementary businesses.

Liquidity and Capital Resources
-------------------------------

As of March 31, 2005 the Company has an accumulated operating deficit of
$21,486,547 and negative stockholders' equity of $3,227,701.

The Company's principal source of operating capital has been provided by the
sale of its stock and securities, and fourth quarter revenue from operations. In
August, 2004 the Company initiated a private offering of IVIC shares at $0.14
per share. Twenty-three accredited investors purchased 2,178,558 restricted
shares for $335,000. In December, 2004, The Company sold 10% Convertible
Debentures to 14 accredited investors for $215,000. These accrue interest at 10%
and 2,365,000 shares are convertible at $0.10 in December, 2005.

The Company anticipates expenditures in excess of $1,000,000 to
expand its operation during the next twelve months. The Company believes that
the current cash flows generated from its revenues will not be sufficient to
fund the anticipated expansion of operations. The Company will require
additional funding to finance its operations through private sales and public
debt or equity offerings. However, there is no assurance that the Company can
obtain such financing. Recurring revenues are anticipated from ISP management
services but no management service contracts have been executed at this time.
There can be no assurance that the Company will secure these contracts.


The Company anticipates the use of proceeds of $1,000,000 to be as follows:

Acquistion             $500,000
Capital Expense        $100,000
Wireless Surveys       $16,000
Working Capital        $284,000
Transaction Fees       $100,000


                                       8
<PAGE>


Results of Operations- Twelve Months Ended March 31, 2005 and 2004

Revenue for year ending March 31, 2005 was $775,594 compared to $3,398 for the
year ending March 31, 2004. Revenue of $747,594 in the fourth quarter of the
year ending March 31, 2005 was a result of the acquisition of Internet Business
Consulting, Inc. and Appstate.net,LLC. The Company had no operating revenue in
the year ending March 31, 2004.

In the fourth quarter of the year ending March 31, 2005 Internet Business
Consulting posted revenue in the following categories: equipment sales $658,210,
consulting $31,007, rental $3,000 and other $7,572 for a total of $696,788. In
the same period Appstate.net posted revenue in the following categories:
Internet services $50,742 and other $64 for a total of $50,806. IVI
Communications posted consulting revenue of $25,000 in the fourth quarter of the
year ending March 31, 2005.

General and Administrative expenses for year ending March 31, 2005 were
$1,546,799 compared to $165,785 for the year ending March 31, 2004. The largest
components of expenses for the year ending March 31, 2005 were Compensation of
$596,915, Consulting Fees of $574,577, and Legal and Accounting fees of
$192,063. Consulting Fees were paid to various individuals for expertise in
regard to the company receiving public trading status.

The Company had a net loss for the year ending March 31, 2005 of $1,588,393
compared to a net loss of $260,174 for the year ending March 31, 2004.

Basic and diluted income (loss) per share from continuing operations for the
year ending March 31, 2005 was $(0.03) compared to $(0.02) for the year ending
March 31, 2004.


Critical Accounting Policies
---------------------------

Revenue Recognition

The Company recognizes revenues in accordance to Staff Accounting  Bulletin No.
101, "Revenue Recognition in Financial Statements.".

Internet service subscription revenues are recognized over the
period that services are provided. The Company generally bills
for Internet access service on the terms that range from one
month to one year in advance. Monthly access fees are not
prorated, and refunds are not given for partial months.
Therefore, revenues for the first month of service paid in
advance are recognized at the inception of the service month.
Revenues for terms of service greater than one month that are
paid in advance are deferred and amortized over the period in
which the services are provided.

Consulting revenues are recognized upon the service being
provided. All equipment sales are final upon delivery of the
merchandise.


New Accounting Pronouncements
-----------------------------
On October 3, 2001, the FASB issued Statement of Financial Accounting Standards
No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets" ("SFAS
144"), that is applicable to financial statements issued for fiscal years
beginning after December 15, 2001. The FASB's new rules on asset impairment
supersede SFAS 121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of," and portions of Accounting Principles
Board Opinion 30, "Reporting the Results of Operations." This Standard provides
a single accounting model for long-lived assets to be disposed of and
significantly changes the criteria that would have to be met to classify an
asset as held-for-sale. Classification as held-for-sale is an important
distinction since such assets are not depreciated and are stated at the lower of
fair value and carrying amount. This Standard also requires expected future
operating losses from discontinued operations to be displayed in the period (s)
in which the losses are incurred, rather than as of the measurement date as
presently required. The adoption of SFAS No. 144 did have an impact on the
Company's results of operations or financial position.

         In April 2002, the FASB issued SFAS No. 145, Rescission of FASB
Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical
Corrections. This statement rescinds SFAS No. 4, Reporting Gains and Losses from
Extinguishment of Debt, and an amendment of that statement, SFAS No. 44,
Accounting for Intangible Assets of Motor Carriers, and SFAS No. 64,
Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. This
statement amends SFAS No. 13, Accounting for Leases, to eliminate
inconsistencies between the required accounting for sales-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sales-leaseback transactions.

Also, this statement amends other existing authoritative pronouncements to make
various technical corrections, clarify meanings, or describe their applicability
under changed conditions. Provisions of SFAS No. 145 related to the rescissions
of SFAS No. 4 were effective for the Company on November 1, 2002 and provisions
affecting SFAS No. 13 were effective for transactions occurring after May 15,
2002. The adoption of SFAS No. 145 did not have a significant impact on the
Company's results of operations or financial position.

In June 2003, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. This statement covers restructuring type activities
beginning with plans initiated after December 31, 2002. Activities covered by
this standard that are entered into after that date will be recorded in
accordance with provisions of SFAS No. 146. The adoption of SFAS No. 146 did
have an impact on the Company's results of operations or financial position.

In December 2002, the FASB issued Statement No. 148, "Accounting for Stock-Based
Compensation-Transition and Disclosure, an amendment of FASB Statement No.
123"("SFAS 148"). SFAS 148 amends FASB Statement No. 123, "Accounting for
Stock-Based Compensation," to provide alternative methods of transition for an
entity that voluntarily changes to the fair value based method of accounting for
stock-based employee compensation. It also amends the disclosure provisions of
that Statement 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. Finally, this Statement amends Accounting Principles
Board ("APB") Opinion No. 28, "Interim Financial Reporting", to require
disclosure about those effects in interim financial information. SFAS 148 is
effective for financial statements for fiscal years ending after December 15,
2002. The Company will continue to account for stock-based employee compensation
using the intrinsic value method of APB Opinion No. 25, "Accounting for Stock
Issued to Employees," but has adopted the enhanced disclosure requirements of
SFAS 148.


                                       9
<PAGE>


In April 2003, the FASB issued SFAS Statement No. 149, "Amendment of Statement
133 on Derivative Instruments and Hedging Activities", which amends and
clarifies financial accounting and reporting for derivative instruments,
including certain derivative instruments embedded in other contracts
(collectively referred to as derivatives) and for hedging activities under FASB
Statement No. 133, Accounting for Derivative Instruments and Hedging Activities.
This Statement is effective for contracts entered into or modified after June
30, 2003, except for certain hedging relationships designated after June 30,
2003. Most provisions of this Statement should be applied prospectively. The
adoption of this statement did not have a significant impact on the Company's
results of operations or financial position.

In May 2003, the FASB issued SFAS Statement No. 150, "Accounting for Certain
Financial Instruments with Characteristics of both Liabilities and Equity". This
Statement establishes standards for how an issuer classifies and measures
certain financial instruments with characteristics of both liabilities and
equity. It requires that an issuer classify a financial instrument that is
within its scope as a liability (or an asset in some circumstances). This
statement is effective for financial instruments entered into or modified after
May 31, 2003, and otherwise is effective at the beginning of the first interim
period beginning after June 15, 2003, except for mandatorily redeemable
financial instruments of nonpublic entities, if applicable. It is to be
implemented by reporting the cumulative effect of a change in an accounting
principle for financial instruments created before the issuance date of the
Statement and still existing at the beginning of the interim period of adoption.
The adoption of this statement did not have a significant impact on the
Company's results of operations or financial position.

In November 2002, the FASB issued Interpretation No. 45 ("FIN 45"), Guarantor's
Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness of Others. FIN 45 requires a company, at the time it
issues a guarantee, to recognize an initial liability for the fair value of
obligations assumed under the guarantees and elaborates on existing disclosure
requirements related to guarantees and warranties. The recognition requirements
are effective for guarantees issued or modified after December 31, 2002 for
initial recognition and initial measurement provisions. The adoption of FIN 45
did not have a significant impact on the Company's results of operations or
financial position.

In January 2003, the FASB issued FASB Interpretation No. 46 ("FIN 46"),
Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51.
FIN 46 requires certain variable interest entities to be consolidated by the
primary beneficiary of the entity if the equity investors in the entity do not
have the characteristics of a controlling financial interest or do not have
sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties. FIN 46 is
effective for all new variable interest entities created or acquired after
January 31, 2003. For variable interest entities created or acquired prior to
February 1, 2003, the provisions of FIN 46 must be applied for the first interim
or annual period beginning after June 15, 2003. The adoption of FIN 46 did not
have a significant impact on the Company' results of operations or financial
position.

On December 16, 2004, the Financial Accounting Standards Board ("FASB")
published Statement of Financial Accounting Standards No. 123 (Revised 2004),
"Share-Based Payment" ("SFAS 123R"). SFAS 123R requires that compensation cost
related to share-based payment transactions be recognized in the financial
statements. Share-based payment transactions within the scope of SFAS 123R
include stock options, restricted stock plans, performance-based awards, stock
appreciation rights, and employee share purchase plans. The provisions of SFAS
123R, as amended, are effective for small business issuers beginning as of the
next fiscal year after December 15, 2005. Accordingly, the Company will
implement the revised standard in the first quarter of fiscal year 2006.
Currently, the Company accounts for its share-based payment transactions under
the provisions of APB 25, which does not necessarily require the recognition of
compensation cost in the financial statements (note 3(e)). Management is
assessing the implications of this revised standard, which may materially impact
the Company's results of operations in the first quarter of fiscal year 2006 and
thereafter.


                                       10
<PAGE>


In November 2004, the FASB issued Financial Accounting Standards No. 151 (FAS
151), "Inventory Costs - an amendment of ARB No. 43, Chapter 4". FAS 151
clarifies the accounting for abnormal amounts of idle facility expense, freight,
handling costs and spoilage. In addition, FAS 151 requires companies to base the
allocation of fixed production overhead to the costs of conversion on the normal
capacity of production facilities. FAS 151 is effective for the Company in 2006.
The Company does not expect FAS 151 to have a material impact on its results or
financial statements.


Inflation
---------

In our opinion, inflation has not had a material effect on our operations.


Risk Factors and Cautionary Statements
--------------------------------------

Forward-looking statements in this report are made pursuant to the "safe harbor"
provisions of the Private Securities Litigation Reform Act of 1995. The Company
wishes to advise readers that actual results may differ substantially from such
forward-looking statements. Forward-looking statements involve risks and
uncertainties that could cause actual results to differ materially from those
expressed in or implied by the statements, including, but not limited to, the
following: our ability to meet our cash and working capital needs, our ability
to successfully market our product, and other risks detailed in our periodic
report filings with the Securities and Exchange Commission.

Risks Related To Our Business
We Have Historically Lost Money And Losses May Continue In The Future, Which
Means That We May Not Be Able To Continue Operations Unless We Obtain Additional
Funding

Accordingly, we may experience liquidity and cash flow problems if we are not
able to raise additional capital as needed and on acceptable terms. No
assurances can be given that we will be successful in reaching or maintaining
profitable operations.

We Will Need To Raise Additional Capital To Continue Our Operations And Continue
Making Acquisitions Or We May Be Unable To Fund Our Operations, Or Promote Our
Products.

We have relied almost entirely on external financing to fund our operations and
acquisitions to date. Such financing has historically come from a combination of
borrowings from and sale of common stock to third parties. Over the next two
years we anticipate that we may need to raise additional capital to fund
acquisitions. We anticipate that these additional funds will be in the range of
$5 million to $20 million, depending on the pace and size of our acquisitions.
We cannot assure you that financing whether from external sources or related
parties will be available if needed or on favorable terms. The sale of our
common stock to raise capital may cause dilution to our existing shareholders.
If additional financing is not available when required or is not available on
acceptable terms, we may be unable to fund our operations and expansion,
successfully promote our brand name, products or services, take advantage of
business opportunities or respond to competitive market pressures, any of which
could make it more difficult for us to continue operations. Any reduction in our
operations may result in a lower stock price.


                                       11
<PAGE>

There Is Substantial Doubt About Our Ability To Continue As A Going Concern Due
To Recurring Losses And Working Capital Shortages, Which Means That We May Not
Be Able To Continue Operations Unless We Obtain Additional Funding We anticipate
that we will incur net losses for the immediate future.
Our Common Stock Is Deemed To Be "Penny Stock," Which May Make It More Difficult
For Investors To Resell Their Shares Due To Suitability Requirements.

Our common stock is deemed to be "penny stock" as that term is defined in Rule
3a51-1 promulgated under the Securities Exchange Act of 1934. Penny stocks are
stock:

   o   With a price of less than $5.00 per share;
   o   That are not traded on a "recognized" national exchange;
   o   Whose prices are not quoted on the Nasdaq automated quotation system
       (Nasdaq listed stock must still have a price of not less than $5.00 per
       share); or
   o   In issuers with net tangible assets less than $2.0 million (if the issuer
       has been in continuous operation for at least three years) or $5.0
       million (if in continuous operation for less than three years), or with
       average revenues of less than $6.0 million for the last three years.
       Broker/dealers dealing in penny stocks are required to provide potential
       investors with a document disclosing the risks of penny stocks. Moreover,
       broker/dealers are required to determine whether an investment in a penny
       stock is a suitable investment for a prospective investor. These
       requirements may reduce the potential market for our common stock by
       reducing the number of potential investors. This may make it more
       difficult for investors in our common stock to sell shares to third
       parties or to otherwise dispose of them. This could cause our stock price
       to decline.

We May Not Be Successful In Integrating The Management Teams Of IBC Wireless and
AppState.net, Which Could Adversely Affect The Leadership Of Our Company, Divert
Management Time And Adversely Affect The Business And Results Of Operations.

Failure to successfully integrate the management teams of the two companies
could divert management time and resources, which would adversely affect our
operations. Our future success also depends on our ability to identify, attract,
hire, retain and motivate other well-qualified managerial, technical, sales and
marketing personnel. There can be no assurance that these professionals will be
available in the market or that we will be able to meet their compensation
requirements.

We intend to pursue additional acquisitions to further the development of our
internet services business. Our strategy is unproven and the revenue and income
potential from our strategy is unproven. We will encounter risks and
difficulties frequently encountered by early-stage companies in new and rapidly
changing markets, including the risks described elsewhere in this section. Our
business strategy may not be successful and we may not be able to successfully
address these risks. In addition, because of our limited operating history, we
have limited insights into trends that may emerge and affect our business.

Our Business Revenue Generation Model Is Unproven And Could Fail

Our revenue model is new and evolving, and we cannot be certain that it will be
successful. Our ability to generate revenue depends, among other things, on our
ability to provide quality internet connectivity and services to our customers.
Our success is largely dependent upon our ability to successfully integrate and
manage our acquisitions. Accordingly, we cannot assure you that our business
model will be successful or that we can sustain revenue growth or achieve or
sustain profitability.

If We Are Not Able To Compete Effectively In The Highly Competitive Internet
Service Provider and Wireless Communications Industries We May Be Forced To
Reduce Or Cease Operations.

Our ability to compete effectively with our competitors depends on the following
factors, among others:

   o   the performance of our products, services and technology in a manner that
       meets customer expectations;
   o   the success of our efforts to develop effective channels of distribution
       for our products;
   o   our ability to price our products that are of a quality and at a price
       point that is competitive with similar or comparable products offered by
       our competitors;
   o   general conditions in the wireless communications and internet
       industries;
   o   the success of our efforts to develop, improve and satisfactorily address
       any issues relating to our technology;
   o   our ability to effectively compete with companies that have substantially
       greater market presence and financial, technical, marketing and other
       resources than the Company including (i) local ISPs, (ii) national and
       regional ISPs, (iii) established online services; (iv) nonprofit or
       educational ISPs; (v) national telecommunications companies; (vi)
       Regional Bell Operating Companies ("RBOCs"); (vii) competitive local
       exchange carriers; and (viii) cable operators; and
   o   our ability to adapt to the consolidation of existing ISPs with or into
       larger entities, or entry of new entities into the Internet services
       market, would likely result in greater competition for the Company.
       Consolidations In The Industries In Which We Compete Could Adversely
       Affect Our Businesses To Include A Reduction or Elimination of Our
       Proportionate Share Of Those Markets


                                       12
<PAGE>

The wireless communications industry has experienced consolidation of
participants, and this trend may continue. If wireless carriers consolidate with
companies that utilize technologies that are similar to or compete with our
wireless technology, our proportionate share of the emerging market for wireless
technologies may be reduced or eliminated. This reduction or elimination of our
market share could reduce our ability to obtain profitable operations and could
even cause us to reduce or cease operations. The Company believes that its
ability to compete successfully in the Internet services market depends on a
number of factors, including market presence; the adequacy of its member and
technical support services; the capacity, reliability and security of its
network infrastructure; the ease of access to and navigation of the Internet
provided by the Company's services; the pricing policies of the Company, its
competitors and its suppliers; the timing of introductions of new services by
the Company and its competitors; the Company's ability to support existing and
emerging industry standards; and industry and general economic trends. There can
be no assurance that the Company will have the financial resources, technical
expertise or marketing and support capabilities to compete successfully.

We own several Internet domain names, including, among others, www.ivn.net,
www.ibconsulting.com, www.appstate.net, www.lickity-split.net, and
www.lickitysplit.tv. The regulation of domain names in the United States and in
foreign countries may change. Regulatory bodies could establish additional
top-level domains or modify the requirements for holding domain names, any or
all of which may dilute the strength of our name. We may not acquire or maintain
our domain name or additional common names in all of the countries in which our
marketplace may be accessed, or for any or all of the top-level domains that may
be introduced. The relationship between regulations governing domain names and
laws protecting proprietary rights is unclear. Therefore, we may not be able to
prevent third parties from acquiring domain names that infringe or otherwise
decrease the value of our trademarks and other proprietary rights.

We may have to resort to litigation to enforce our intellectual property rights,
determine the validity and scope of the proprietary rights of others, or defend
ourselves from claims of infringement, invalidity or unenforceability.
Litigation may be expensive and divert resources even if we win. This could
adversely affect our business, financial condition and operating results such
that it could cause us to reduce or cease operations.

We May Not Be Able To Keep Up With Rapid Technological Changes, Which Could
Render Our Products And Processes Obsolete

The wireless communications industry is characterized by rapid technological
change, changes in customer requirements and preferences, frequent introduction
of products and services embodying new technologies and the emergence of new
industry standards and practices that could render our existing technology and
systems obsolete. Our future success will depend on our ability to enhance and
improve the responsiveness, functionality, accessibility and features of our
products. We expect that our marketplace will require extensive technological
upgrades and enhancements to accommodate many of the new products and services
that we anticipate will be added to our marketplace. We cannot assure you that
we will be able to expand and upgrade our technology and systems, or
successfully integrate new technologies or systems we develop in the future, to
accommodate such increases in a timely manner.


                                       13
<PAGE>

We May Not Successfully Execute or Integrate Our Acquisitions Our business model
is dependent upon growth through acquisition of other internet service
providers. Acquisitions involve numerous risks, including the following:

   o   Difficulties in integrating the operations, technologies, products and
       personnel of the acquired companies;
   o   Diversion of management's attention from normal daily operations of the
       business;
   o   Difficulties in entering markets in which we have no or limited direct
       prior experience and where competitors in such markets have stronger
       market positions;
   o   Initial dependence on unfamiliar partners;
   o   Insufficient revenues to offset increased expenses associated with
       acquisitions; and
   o   The potential loss of key employees of the acquired companies.
   o   Acquisitions may also cause us to:
   o   Issue common stock that would dilute our current shareholders' percentage
       ownership;
   o   Assume liabilities;
   o   Record goodwill and non-amortizable intangible assets that will be
       subject to impairment testing on a regular basis and potential periodic
       impairment charges;
   o   Incur amortization expenses related to certain intangible assets;
   o   Incur large and immediate write-offs, and restructuring and other related
       expenses; or
   o   Become subject to litigation.

Mergers and acquisitions of high-technology companies are inherently risky, and
no assurance can be given that our previous or future acquisitions will be
successful and will not materially adversely affect our business, operating
results or financial condition. Failure to manage and successfully integrate
acquisitions we make could harm our business and operating results in a material
way.

We May Not Effectively Manage The Growth Necessary To Execute Our Business Plan,
Which Could Adversely Affect The Quality Of Our Operations And Our Costs

In order to achieve the critical mass of business activity necessary to
successfully execute our business plan, we must significantly increase the
number of strategic partners and customers that use our technology. This growth
will place significant strain on our personnel, systems and resources. We also
expect that we will continue to hire employees, including technical,
management-level employees, and sales staff for the foreseeable future. This
growth will require us to improve management, technical, information and
accounting systems, controls and procedures. We may not be able to maintain the
quality of our operations, control our costs, continue complying with all
applicable regulations and expand our internal management, technical information
and accounting systems in order to support our desired growth. We cannot be sure
that we will manage our growth effectively, and our failure to do so could cause
us to reduce or cease operations.

Our Business Depends On The Growth And Maintenance Of The Internet
Infrastructure

Our success will depend on the continued growth and maintenance of the internet
infrastructure. This includes maintenance of a reliable network backbone with
the necessary speed, data capacity and security for providing reliable internet
services. Internet infrastructure may be unable to support the demands placed on
it if the number of internet users continues to increase, or if existing or
future internet users access the internet more often or increase their bandwidth
requirements. In addition, viruses, worms and similar programs may harm the
performance of the internet. The internet has experienced a variety of outages
and other delays as a result of damage to portions of its infrastructure, and it
could face outages and delays in the future. These outages and delays could
reduce the level of internet usage as well as our ability to provide our
solutions. Additionally, for many of our customers we rely upon ILECs to assist
in provisioning T-1 and dial-up lines. In the event that these ILECs are unable
or unwilling to provide service, our ability to service existing customers or
add new customers could be impaired.


                                       14
<PAGE>


ITEM 7            FINANCIAL STATEMENTS





               IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
            INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS
                        MARCH 31, 2005 AND 2004



                                                                        Page(s)

Report of Independent Registered Public Accounting Firm                     1

Consolidated Balance Sheets as of March 31, 2005 and 2004                   2

Consolidated Statements of Operations for the Years
   Ended March 31, 2005 and 2004                                            3

Consolidated Statement of Changes in Stockholders'
   (Deficit) for the Years Ended March 31, 2005 and 2004                    4

Consolidated Statements of Cash Flow for the Years Ended
   March 31, 2005 and 2004                                               5 - 7
Notes to Consolidated Financial Statements                               8 - 29








                                       15
<PAGE>



                        BAGELL, JOSEPHS & COMPANY, L.L.C.
                          Certified Public Accountants

                               High Ridge Commons
                                 Suites 400-403
                           200 Haddonfield Berlin Road
                           Gibbsboro, New Jersey 08026
                        (856) 346-2828 Fax (856) 346-2882

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

Board of Directors
IVI Communications, Inc. and Subsidiaries
Los Angeles, California

We have audited the accompanying consolidated balance sheets of IVI
Communications, Inc. and Subsidiaries as of March 31, 2005 and 2004 and the
related consolidated statements of operations, changes in stockholders'
(deficit), and cash flows for the years then ended. These consolidated financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.

We have conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
consolidated financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the consolidated 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.

The accompanying consolidated financial statements for the years ended March 31,
2005 and 2004 have been prepared assuming that the Company will continue as a
going concern. As discussed in Note 9 to the consolidated financial statements,
the Company has sustained operating losses and capital deficits that raise
substantial doubt about its ability to continue as a going concern. Management's
operating and financing plans in regard to these matters are also discussed in
Note 9. The consolidated financial statements do not include any adjustments
that might result from the outcome of these uncertainties.

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of IVI Communications,
Inc. and Subsidiaries as of March 31, 2005 and 2004 and the results of its
operations, changes in stockholders' (deficit) and their cash flows for the
years then ended in conformity with accounting principles generally accepted in
the United States of America.

BAGELL, JOSEPHS & COMPANY, L.L.C.
BAGELL, JOSEPHS & COMPANY, L.L.C.
Certified Public Accountants
Gibbsboro, New Jersey
June 30, 2005


              MEMBER OF: AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS
                         NEW JERSEY SOCIETY OF CERTIFIED PUBLIC ACCOUNTANTS
                         PENNSYLVANIA INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS


                                       16
<PAGE>




                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                             MARCH 31, 2005 AND 2004


<TABLE>
<CAPTION>
                                     ASSETS


                                                                    2005            2004
                                                                --------------  -------------
<S>                                                                  <C>             <C>
CURRENT ASSETS
    Cash and cash equivalents                                   $     124,071   $        105
    Accounts receivable, net                                          346,421              -
    Inventory                                                          62,300              -
    Other current assets                                                4,507          1,426
                                                                --------------  -------------

          Total current asset                                         537,299          1,531
                                                                --------------  -------------

Equipment, net of $4,320 in accumulated depreciation                   47,520              -
                                                                --------------  -------------

OTHER ASSET
   Goodwill, net of impairment                                      3,437,548              -
                                                                --------------  -------------

TOTAL ASSETS                                                    $   4,022,367   $      1,531
                                                                ==============  =============

                   LIABILITIES AND STOCKHOLDERS' (DEFICIT)

CURRENT LIABILITIES
    Current portion of installment debt                         $      18,989   $     25,241
    Current portion of notes payable                                1,100,523        948,884
    Accounts payable and accrued liabilities                        2,686,713      4,055,676
    Current portion of obligations under capital lease                 15,561              -
    Liability for stock to be issued                                2,574,312              -
    Convertible debentures                                            576,750        336,750
                                                                --------------  -------------
          Total current liabilities                                 6,972,848      5,366,551
                                                                --------------  -------------

LONG-TERM LIABILITIES
    Installment debt, net of current portion                            1,116         20,106
    Notes payable, net of current portion                             220,000              -
    Obligations under capital lease, net of current portion            30,755              -
    Loan payable officer                                               25,349              -
                                                                --------------  -------------
          Total long-term liabilities                                 277,220         20,106

TOTAL LIABILITIES                                                   7,250,068      5,386,657
                                                                --------------  -------------

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' (DEFICIT)
    Preferred stock, $.001 par value; 5,000,000 shares authorized;
        0 shares issued and outstanding                                     -              -
    Common stock, $.001 par value; 100,000,000 and 50,000,000 shares
       authorized 66,539,685 and 45,420,514 shares issued
       and outstanding                                                 66,539         45,420
    Additional paid-in capital                                     20,215,480     14,467,608
    Subscription receivable                                        (2,023,173)             -
    Accumulated deficit                                           (21,486,547)   (19,898,154)
                                                                --------------  -------------
          Total stockholders' (deficit)                            (3,227,701)    (5,385,126)
                                                                --------------  -------------

TOTAL LIABILITIES AND STOCKHOLDERS' (DEFICIT)                   $   4,022,367   $      1,531
                                                                ==============  =============
</TABLE>





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

                                       17
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                     2005                2004
<S>                                                                   <C>                <C>
OPERATING REVENUE                                               $       775,594    $          3,398

COST OF OPERATIONS                                                      576,436                   -
                                                                ----------------   -----------------

GROSS PROFIT                                                            199,158               3,398
                                                                ----------------   -----------------

OPERATING EXPENSES
   Selling                                                                    -                 805
   General and administrative                                           818,920              95,785
   Services paid with stock issuance                                    702,879              70,000
   Services paid with convertible debenture                              25,000                   -
   Impairment                                                                 -             159,500
   Depreciation                                                           4,320              89,776
                                                                ----------------   -----------------

            Total operating expenses                                  1,551,119             415,866
                                                                ----------------   -----------------

OPERATING (LOSS)                                                     (1,351,961)           (412,468)
                                                                ----------------   -----------------

OTHER (EXPENSE)
    Interest expense                                                   (236,432)           (256,635)
                                                                ----------------   -----------------
            Total other (expense)                                      (236,432)           (256,635)
                                                                ----------------   -----------------

LOSS BEFORE INCOME TAXES                                             (1,588,393)           (669,103)
    Provision for income taxes                                                -                   -
                                                                ----------------   -----------------

LOSS FROM CONTINUING OPERATIONS                                      (1,588,393)           (669,103)

    (Loss) from discontinued operations (net of income taxes)                 -          (1,333,133)
    Gain on sale of subsidiaries                                              -           1,742,062
                                                                ----------------   -----------------

NET LOSS                                                        $    (1,588,393)   $       (260,174)
                                                                ================   =================


BASIC AND DILUTED INCOME (LOSS) PER SHARE
    Basic and diluted from continuing operations                $         (0.03)   $          (0.02)
                                                                ================   =================
    Basic and diluted from discontinued operations              $             -    $          (0.05)
                                                                ================   =================
    Basic and diluted from sale of subsidiaries                 $             -    $           0.06
                                                                ================   =================

AVERAGE WEIGHTED NUMBER OF BASIC AND DILUTED
 COMMON SHARES OUTSTANDING                                           58,988,111          29,557,754
                                                                ================   =================
</TABLE>




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

                                       18
<PAGE>





                    IVI COMMUNICATIONS, INC. AND SUBSIDIAIRES
          CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' (DEFICIT)
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

<TABLE>
<CAPTION>
                                                                        ADDITIONAL
                                          PREFERRED STOCK  COMMON STOCK  PAID-IN  SUBSCRIPTION ACCUMULATED
                                            SHARES  AMOUNT   SHARES      AMOUNT     CAPITAL    RECEIVABLE   DEFICITS      TOTAL
                                            ------ ------- ---------- ----------- ----------- -----------  ----------- ------------
<S>                                          <C>     <C>      <C>         <C>         <C>         <C>         <C>         <C>
Balance, March 31, 2003                          -  $   - 30,270,514  $ 30,270   $14,531,557  $       -  $(19,637,980)  $(5,076,153)

Issuance of shares for services                  -      -    350,000       350        69,650                        -        70,000

Cancellation of shares for QuickCom              -      - (3,200,000)   (3,200)     (131,383)                       -      (134,583)

Issuance of shares for Broadspot Agreement       -      - 18,000,000    18,000       (18,000)                       -             -

Discount on note payable and accrued interest    -      -          -         -        15,784                        -        15,784

Net loss for the year                            -      -          -         -             -          -      (260,174)     (260,174)
                                            ------ ------- ----------  --------   ----------- ----------- ----------- -----------

Balance, March 31, 2004                          -      - 45,420,514    45,420    14,467,608          -   (19,898,154)   (5,385,126)

Issuance of shares for services, compensation
   and legal settlements                         -      - 11,648,786    11,649       691,230          -             -       702,879

Issuance of shares for cash                      -      -  8,609,385     8,609     2,349,564 (2,023,173)            -       335,000

Issuance of shares for acquisition               -      -    100,000       100        99,900          -             -       100,000

Issuance of shares in conversion of notes
payable                                          -      -    362,703       363       123,249          -             -       123,612

Issuance of shares in conversion of accounts
  payable and accrued interest                   -      -    398,297       398       135,072          -             -       135,470

Settlement of vendor payables                    -      -          -         -     1,089,637          -             -     1,089,637

Settlement of arbitration/litigation claims      -      -          -         -     1,259,220          -             -     1,259,220

Net loss for the year                            -      -          -         -             -          -    (1,588,393)   (1,588,393)
                                            ------ ------ ----------  --------   ----------- ----------- ------------ -----------

Balance, March 31, 2005                          - $    - 66,539,685  $ 66,539   $20,215,480 $(2,023,173) $(21,486,547) $(3,227,701)
                                            ====== ====== ==========  ========   =========== ===========  =========== ============
</TABLE>




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

                                       19
<PAGE>






                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004


<TABLE>
<CAPTION>
                                                                                           2005              2004
                                                                                     ------------------ ----------------
<S>                                                                                        <C>                <C>
CASH FLOW FROM OPERATING ACTIVITIES
Continuing Operations:
   Net loss                                                                           $     (1,588,393)  $     (260,174)
                                                                                     ------------------ ----------------
   Adjustments to reconcile net loss to net cash
     provided by (used in) operating activities:
     Depreciation                                                                                4,320          108,612
     Issuance of stock for services and interest                                               702,879           70,000
     Impairment                                                                                      -          159,500

  Changes in assets and liabilities
     (Increase) in accounts receivable                                                        (150,894)               -
     (Increase) in inventory                                                                   (62,300)               -
     (Increase) decrease in other current assets                                                (3,081)          25,635
     Increase in accounts payable and accrued liabilities                                      761,950          303,946
     Increase (decrease) in amounts due to officer                                                   -          (92,263)
                                                                                     ------------------ ----------------
     Total adjustments                                                                       1,252,874          575,430
                                                                                     ------------------ ----------------

     Net cash provided by (used in) operating activities - continuing operations              (335,519)         315,256
                                                                                     ------------------ ----------------

Discontinued Operations:
     (Gain) on sale of subsidiaries                                                                  -       (1,742,062)
     Cash (used in) discontinued operations                                                          -         (209,006)
                                                                                     ------------------ ----------------

     Net cash (used in) operating activities - discontinued operations                               -       (1,951,068)
                                                                                     ------------------ ----------------

     Net cash (used in) operating activities                                                  (335,519)      (1,635,812)
                                                                                     ------------------ ----------------

CASH FLOWS FROM INVESTING ACTIVITIES
     Purchase of capital expenditures                                                           (1,840)               -
     Proceeds from sale of subsidiaries, net                                                         -        1,795,000
     Collections of receivables of California operations                                             -           41,062
                                                                                     ------------------ ----------------
       Net cash provided by (used in) investing activities                                      (1,840)       1,836,062
                                                                                     ------------------ ----------------




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

                                       20
<PAGE>




                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004

                                                                                           2005              2004
                                                                                     ------------------ ----------------
CASH FLOWS FROM FINANCING ACTIVITIES
     Proceeds from issuance of common stock, net                                               335,000                -
     Proceeds from note payable                                                                 10,000                -
     Proceeds from convertible debentures                                                      215,000                -
     Payments on installment note payable                                                      (25,242)         (48,603)
     Convertible debenture issued for services                                                  25,000                -
     Payments on obligation of capital lease                                                    (3,684)               -
     Payments on note payable                                                                  (94,749)        (151,799)
                                                                                     ------------------ ----------------
       Net cash provided by (used in) financing activities                                     461,325         (200,402)
                                                                                     ------------------ ----------------

NET INCREASE (DECREASE) IN
    CASH AND CASH EQUIVALENTS                                                                  123,966             (152)

CASH AND CASH EQUIVALENTS -
    BEGINNING OF YEAR                                                                              105              257
                                                                                     ------------------ ----------------

CASH AND CASH EQUIVALENTS - END OF YEAR                                               $        124,071  $           105

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Cash paid during the period for:
         Interest paid                                                                $          9,563  $        87,646
                                                                                     ================== ================
         Income taxes paid                                                                           -                -
                                                                                     ================== ================






                                       21
<PAGE>




                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOW
                   FOR THE YEARS ENDED MARCH 31, 2005 AND 2004



SUPPLEMENTAL DISCLOSURE OF NON-CASH INFORMATION:

Acquisition of Internet Business Consulting / AppState.net, LLC
    Accounts receivable                                                               $         94,108  $ -
    Equipment                                                                                   50,000                -
    Accounts payable and accrued expenses                                                     (277,344)               -
    Obligation under capital lease                                                             (50,000)               -
                                                                                     ------------------ ----------------

    Net liabilities acquired                                                                  (183,236)               -

    Notes payable to IBC/AppState                                                             (580,000)               -
    Issuance of stock ($100,000 issued in FY 2005)                                          (2,674,312)               -
    Goodwill                                                                                 3,437,548                -
                                                                                     ------------------ ----------------

     Total                                                                            $              -  $             -
                                                                                     ================== ================

   Common stock issued for vendor payables and accrued interest                       $        135,470  $             -
                                                                                     ================== ================
   Common stock issued in conversion of notes payable                                 $        123,612  $             -
                                                                                     ================== ================
   Common stock issued for services and debt settlement                               $        702,879  $        70,000
                                                                                     ================== ================
   Settlement of vendor payables and arbitration/litigation claims                    $      2,348,857  $             -
                                                                                     ================== ================
   Discount of note payable and accrued interest                                      $              -  $        15,784
                                                                                     ================== ================

</TABLE>





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

                                       22
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                             MARCH 31, 2005 AND 2004

NOTE 1-  ORGANIZATION AND BASIS OF PRESENTATION

                  The Company was formed in California in September 1995 to
                  acquire traditional local and regional Internet access Service
                  Providers (ISP's) in the Western States to achieve economies
                  of operation and accelerated growth through centralized
                  management.

                  Effective May 23, 2002, Internet Ventures, Inc. agreed to
                  recapitalize with Turer Corporation by becoming a wholly owned
                  subsidiary of Turer. To accommodate this recapitalization, the
                  11,930,746 shares then outstanding of Internet Ventures, Inc.
                  were exchanged for 11,930,746 shares of Turer. In August 2002,
                  Turer changed its name to IVI Communications, Inc.

                  For accounting purposes, the transaction has been accounted
                  for as a reverse acquisition under the purchase method of
                  accounting. Accordingly, IVI Communications, Inc. will be
                  treated as the continuing entity for accounting purposes, and
                  the financial statements presented herein are those of IVI
                  Communications, Inc.

                  From inception through September 1999, 13 acquisitions were
                  completed in Colorado, California, Oregon and Washington
                  state. In August 2000, all of the Washington state operations
                  were sold. In December 2002 and March 2003, all of the
                  California operations were sold. In May 2003, all of the
                  Oregon operations were sold, and in July 2003, the Colorado
                  operations were sold. Assets, liabilities and operating
                  results in these states for the periods presented are
                  segregated on the accompanying consolidated financial
                  statements as discontinued operations.

                  On June 29, 2004, the Company issued 4,500,000 shares of
                  common stock to management and consultants as an S-8 stock
                  issuance. On July 1, 2004, the Company amended its Articles of
                  Incorporation and pursuant to a board resolution, increased
                  the authorized level of common stock from 50,000,000 to
                  100,000,000. In addition, the Company's board of directors'
                  authorized a 2:1 stock split on July 2, 2004. All share and
                  per share amounts have been restated to reflect retroactive
                  treatment of this stock split in 2004 and for 2005 shares
                  issued prior to the stock split.

                  On October 27, 2004, the Company filed an amended S-8,
                  bringing the total number of registered shares that will be
                  classified as unrestricted to 12,000,000.

                  On January 31, 2005, the Company completed the purchase of
                  Internet Business Consulting, Inc. and AppState.Net, LLC. The
                  Company paid one times annual revenue in a stock exchange with
                  the shares valued at $1.00 per share, plus $580,000 cash to be
                  paid over a two-year period. The purchase approximated 3.2
                  million dollars.


                                       23
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  Principles of Consolidation

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

                  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 revenues and expenses during the reporting
                  period. Actual results could differ from those estimates.

                  Cash and Cash Equivalents

                  The Company considers all highly liquid debt instruments and
                  other short-term investments with an initial maturity of three
                  months or less to be cash or cash equivalents. There were no
                  cash equivalents as of March 31, 2005 and 2004.

                  The Company maintains cash and cash equivalent balances at
                  several financial institutions that are insured by the Federal
                  Deposit Insurance Corporation up to $100,000. At March 31,
                  2005 and 2004, the Company had $9,907 and $ 0 in excess of the
                  insured limit, respectively.

                  Revenue Recognition

                  Internet service subscription revenues are recognized over the
                  period that services are provided. The Company generally bills
                  for Internet access service on the terms that range from one
                  month to one year in advance. Monthly access fees are not
                  prorated, and refunds are not given for partial months.
                  Therefore, revenues for the first month of service paid in
                  advance are recognized at the inception of the service month.
                  Revenues for terms of service greater than one month that are
                  paid in advance are deferred and amortized over the period in
                  which the services are provided.

                  Consulting revenues are recognized upon the service being
                  provided. All equipment sales are final upon delivery of the
                  merchandise.



                                       24
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Inventory

                  Inventory is stated at the lower of cost or market, utilizing
                  the first-in, first-out method. The cost of finished goods
                  includes the cost of raw materials, packaging supplies, direct
                  and indirect labor and other indirect manufacturing costs.

                  Income Taxes

                  The Company has adopted the provisions of Statement of
                  Financial Accounting Standards No. 109 (the Statement),
                  Accounting for Income Taxes. The Statement requires an asset
                  and liability approach for financial accounting and reporting
                  for income taxes, and the recognition of deferred tax assets
                  and liabilities for the temporary differences between the
                  financial reporting bases and tax bases of the Company's
                  assets and liabilities at enacted tax rates expected to be in
                  effect when such amounts are realized or settled.

                  Fair Value of Financial Instruments

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

                  Advertising Costs

                  The Company expenses the costs associated with advertising as
                  incurred. Advertising and expenses are included in general and
                  administrative expenses in the consolidated statements of
                  operations for the years ended March 31, 2005 and 2004.
                  Advertising costs for the years ended March 31, 2005 and 2004
                  were $397 and $ 0, respectively.

                  Equipment

                  Equipment is stated at cost. Depreciation is computed using
                  the straight-line method over the estimated useful lives of
                  the assets, generally three to five years.

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



                                       25
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Accounts Receivable

                  The Company conducts business and extends credit based on an
                  evaluation of the customers' financial condition, generally
                  without requiring collateral. Exposure to losses on
                  receivables is expected to vary by customer due to the
                  financial condition of each customer. The Company monitors
                  exposure to credit losses and maintains allowances for
                  anticipated losses considered necessary under the
                  circumstances. The allowance for doubtful accounts as of March
                  31, 2005 is $150,595.

                  Reclassifications

                  Certain amounts for the year ended March 31, 2004 have been
                  reclassified to conform to the presentation of the March 31,
                  2005 amounts. The reclassifications have no effect on net loss
                  for the year ended March 31, 2004.

                  Earnings (Loss) Per Share of Common Stock

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

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

                                        March 31,             March 31,
                                          2005                  2004
                                     -----------------    ------------------

Net loss                              $    (1,588,393)     $       (260,174)
                                     -----------------    ------------------

Weighted-average common shares
Outstanding (Basic)                        58,988,111            29,557,754

Weighted-average common stock
Equivalents
     Stock options                                  -                     -
     Warrants                                       -                     -
                                     -----------------    ------------------

Weighted-average common shares
Outstanding (Diluted)                      58,988,111            29,557,754
                                     =================    ==================



                                       26
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Options and warrants outstanding to purchase stock were not
                  included in the computation of diluted EPS for March 31, 2005
                  and 2004 because inclusion would have been antidilutive.

                  The options that would have been available at March 31, 2005
                  and 2004 are 264,000 and 324,000, respectively. The warrants
                  that would have been available at March 31, 2005 and 2004 are
                  527,705 and 527,705 respectively.

                  Goodwill and Other Intangible Assets

                  In June 2001, the FASB issued Statement No. 142 "Goodwill and
                  Other Intangible Assets". This statement addresses financial
                  accounting and reporting for acquired goodwill and other
                  intangible assets and supersedes APB Opinion No. 17,
                  Intangible Assets. It addresses how intangible assets that are
                  acquired individually or with a group of other assets (but not
                  those acquired in a business combination) should be accounted
                  for in financial statements upon their acquisition. This
                  Statement also addresses how goodwill and other intangible
                  assets should be accounted for after they have been initially
                  recognized in the financial statements. The Company recorded
                  $3,437,548 in goodwill in its acquisition of Internet Business
                  Consulting and AppState.Net, LLC. Management has determined
                  that there has been no impairment of goodwill as of March 31,
                  2005.

                  Stock-Based Compensation

                  Employee stock awards under the Company's compensation plans
                  are accounted for in accordance with Accounting Principles
                  Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued
                  to Employees", and related interpretations. The Company
                  provides the disclosure requirements of Statement of Financial
                  Accounting Standards No. 123, "Accounting for Stock-Based
                  Compensation" ("SFAS 123"), and related interpretations.
                  Stock-based awards to non-employees are accounted for under
                  the provisions of SFAS 123 and has adopted the enhanced
                  disclosure provisions of SFAS No. 148 "Accounting for
                  Stock-Based Compensation- Transition and Disclosure, an
                  amendment of SFAS No. 123".

                  The Company measures compensation expense for its employee
                  stock-based compensation using the intrinsic-value method.
                  Under the intrinsic-value method of accounting for stock-based
                  compensation, when the exercise price of options granted to
                  employees is less than the estimated fair value of the
                  underlying stock on the date of grant, deferred compensation
                  is recognized and is amortized to compensation expense over
                  the applicable vesting period. In each of the periods
                  presented, the vesting period was the period in which the
                  options were granted. All options were expensed to
                  compensation in the period granted rather than the exercise
                  date.



                                       27
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Stock-Based Compensation (Continued)

                  The Company measures compensation expense for its non-employee
                  stock-based compensation under the Financial Accounting
                  Standards Board (FASB) Emerging Issues Task Force (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". The fair value of the option
                  issued is used to measure the transaction, as this is more
                  reliable than the fair value of the services received. The
                  fair value is measured at the value of the Company's common
                  stock on the date that the commitment for performance by the
                  counterparty has been reached or the counterparty's
                  performance is complete. The fair value of the equity
                  instrument is charged directly to compensation expense and
                  additional paid-in capital.

                  Recent Accounting Pronouncements

                  On October 3, 2001, the FASB issued Statement of Financial
                  Accounting Standards No. 144, "Accounting for the Impairment
                  or Disposal of Long-Lived Assets" ("SFAS 144"), that is
                  applicable to financial statements issued for fiscal years
                  beginning after December 15, 2001. The FASB's new rules on
                  asset impairment supersede SFAS 121, "Accounting for the
                  Impairment of Long-Lived Assets and for Long-Lived Assets to
                  Be Disposed Of," and portions of Accounting Principles Board
                  Opinion 30, "Reporting the Results of Operations." This
                  Standard provides a single accounting model for long-lived
                  assets to be disposed of and significantly changes the
                  criteria that would have to be met to classify an asset as
                  held-for-sale. Classification as held-for-sale is an important
                  distinction since such assets are not depreciated and are
                  stated at the lower of fair value and carrying amount. This
                  Standard also requires expected future operating losses from
                  discontinued operations to be displayed in the period (s) in
                  which the losses are incurred, rather than as of the
                  measurement date as presently required. The adoption of SFAS
                  No. 144 had an impact on the Company's results of operations
                  and financial position for the fiscal year ended March 31,
                  2004





                                       28
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Recent Accounting Pronouncements (Continued)

                  In April 2002, the FASB issued SFAS No. 145, Rescission of
                  FASB Statements No. 4, 44 and 64, Amendment of FASB Statement
                  No. 13, and Technical Corrections. This statement rescinds
                  SFAS No. 4, Reporting Gains and Losses from Extinguishment of
                  Debt, and an amendment of that statement, SFAS No. 44,
                  Accounting for Intangible Assets of Motor Carriers, and SFAS
                  No. 64, Extinguishments of Debt Made to Satisfy Sinking-Fund
                  Requirements. This statement amends SFAS No. 13, Accounting
                  for Leases, to eliminate inconsistencies between the required
                  accounting for sales-leaseback transactions and the required
                  accounting for certain lease modifications that have economic
                  effects that are similar to sales-leaseback transactions.

                  Also, this statement amends other existing authoritative
                  pronouncements to make various technical corrections, clarify
                  meanings, or describe their applicability under changed
                  conditions. Provisions of SFAS No. 145 related to the
                  rescissions of SFAS No. 4 were effective for the Company on
                  November 1, 2002 and provisions affecting SFAS No. 13 were
                  effective for transactions occurring after May 15, 2002. The
                  adoption of SFAS No. 145 did not have a significant impact on
                  the Company's results of operations or financial position.

                  In June 2003, the FASB issued SFAS No. 146, Accounting for
                  Costs Associated with Exit or Disposal Activities. This
                  statement covers restructuring type activities beginning with
                  plans initiated after December 31, 2002. Activities covered by
                  this standard that are entered into after that date will be
                  recorded in accordance with provisions of SFAS No. 146. The
                  adoption of SFAS No. 146 had an impact on the Company's
                  results of operations and financial position for the fiscal
                  year ended March 31, 2004.



                                       29
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Recent Accounting Pronouncements (Continued)

                  In December 2002, the FASB issued Statement No. 148,
                  "Accounting for Stock-Based Compensation-Transition and
                  Disclosure, an amendment of FASB Statement No. 123"("SFAS
                  148"). SFAS 148 amends FASB Statement No. 123, "Accounting for
                  Stock-Based Compensation," to provide alternative methods of
                  transition for an entity that voluntarily changes to the fair
                  value based method of accounting for stock-based employee
                  compensation. It also amends the disclosure provisions of that
                  Statement 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. Finally,
                  this Statement amends Accounting Principles Board ("APB")
                  Opinion No. 28, "Interim Financial Reporting", to require
                  disclosure about those effects in interim financial
                  information. SFAS 148 is effective for financial statements
                  for fiscal years ending after December 15, 2002. The Company
                  will continue to account for stock-based employee compensation
                  using the intrinsic value method of APB Opinion No. 25,
                  "Accounting for Stock Issued to Employees," but has adopted
                  the enhanced disclosure requirements of SFAS 148.

                  In April 2003, the FASB issued SFAS Statement No. 149,
                  "Amendment of Statement 133 on Derivative Instruments and
                  Hedging Activities", which amends and clarifies financial
                  accounting and reporting for derivative instruments, including
                  certain derivative instruments embedded in other contracts
                  (collectively referred to as derivatives) and for hedging
                  activities under FASB Statement No. 133, Accounting for
                  Derivative Instruments and Hedging Activities. This Statement
                  is effective for contracts entered into or modified after June
                  30, 2003, except for certain hedging relationships designated
                  after June 30, 2003. Most provisions of this Statement should
                  be applied prospectively. The adoption of this statement did
                  not have a significant impact on the Company's results of
                  operations or financial position.



                                       30
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Recent Accounting Pronouncements (Continued)

                  In May 2003, the FASB issued SFAS Statement No. 150,
                  "Accounting for Certain Financial Instruments with
                  Characteristics of both Liabilities and Equity". This
                  Statement establishes standards for how an issuer classifies
                  and measures certain financial instruments with
                  characteristics of both liabilities and equity. It requires
                  that an issuer classify a financial instrument that is within
                  its scope as a liability (or an asset in some circumstances).
                  This statement is effective for financial instruments entered
                  into or modified after May 31, 2003, and otherwise is
                  effective at the beginning of the first interim period
                  beginning after June 15, 2003, except for mandatorily
                  redeemable financial instruments of nonpublic entities, if
                  applicable. It is to be implemented by reporting the
                  cumulative effect of a change in an accounting principle for
                  financial instruments created before the issuance date of the
                  Statement and still existing at the beginning of the interim
                  period of adoption. The adoption of this statement did not
                  have a significant impact on the Company's results of
                  operations or financial position.

                  In November 2002, the FASB issued Interpretation No. 45 ("FIN
                  45"), Guarantor's Accounting and Disclosure Requirements for
                  Guarantees, Including Indirect Guarantees of Indebtedness of
                  Others. FIN 45 requires a company, at the time it issues a
                  guarantee, to recognize an initial liability for the fair
                  value of obligations assumed under the guarantees and
                  elaborates on existing disclosure requirements related to
                  guarantees and warranties. The recognition requirements are
                  effective for guarantees issued or modified after December 31,
                  2002 for initial recognition and initial measurement
                  provisions. The adoption of FIN 45 did not have a significant
                  impact on the Company's results of operations or financial
                  position.

                  In January 2003, the FASB issued FASB Interpretation No. 46
                  ("FIN 46"), Consolidation of Variable Interest Entities, an
                  Interpretation of ARB No. 51. FIN 46 requires certain variable
                  interest entities to be consolidated by the primary
                  beneficiary of the entity if the equity investors in the
                  entity do not have the characteristics of a controlling
                  financial interest or do not have sufficient equity at risk
                  for the entity to finance its activities without additional
                  subordinated financial support from other parties. FIN 46 is
                  effective for all new variable interest entities created or
                  acquired after January 31, 2003. For variable interest
                  entities created or acquired prior to February 1, 2003, the
                  provisions of FIN 46 must be applied for the first interim or
                  annual period beginning after June 15, 2003. The adoption of
                  FIN 46 did not have a significant impact on the Company'
                  results of operations or financial position.


                                       31
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 2-           SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

                  Recent Accounting Pronouncements (Continued)

                  On December 16, 2004, the Financial Accounting Standards Board
                  ("FASB") published Statement of Financial Accounting Standards
                  No. 123 (Revised 2004), "Share-Based Payment" ("SFAS 123R").
                  SFAS 123R requires that compensation cost related to
                  share-based payment transactions be recognized in the
                  financial statements. Share-based payment transactions within
                  the scope of SFAS 123R include stock options, restricted stock
                  plans, performance-based awards, stock appreciation rights,
                  and employee share purchase plans. The provisions of SFAS
                  123R, as amended, are effective for small business issuers
                  beginning as of the next fiscal year after December 15, 2005.
                  Accordingly, the Company will implement the revised standard
                  in the first quarter of fiscal year 2006. Currently, the
                  Company accounts for its share-based payment transactions
                  under the provisions of APB 25, which does not necessarily
                  require the recognition of compensation cost in the financial
                  statements (note 3(e)). Management is assessing the
                  implications of this revised standard, which may materially
                  impact the Company's results of operations in the first
                  quarter of fiscal year 2006 and thereafter.

                  In November 2004, the FASB issued Financial Accounting
                  Standards No. 151 (FAS 151), "Inventory Costs - an amendment
                  of ARB No. 43, Chapter 4". FAS 151 clarifies the accounting
                  for abnormal amounts of idle facility expense, freight,
                  handling costs and spoilage. In addition, FAS 151 requires
                  companies to base the allocation of fixed production overhead
                  to the costs of conversion on the normal capacity of
                  production facilities. FAS 151 is effective for the Company in
                  2006. The Company does not expect FAS 151 to have a material
                  impact on its results or financial statements.

NOTE 3-           EQUIPMENT

                  Equipment as of March 31, 2005 and 2004 were as follows:
<TABLE>
<CAPTION>
<S>                  <C>                               <C>            <C>           <C>
                                                 Estimated Useful
                                                  Lives (Years)
                                                                     2005          2004
                                                                  ---------     ---------
                  Equipment                            3-5        $  51,840     $       0

                  Less accumulated depreciation                      (4,320)           (0)
                                                                  ---------     ---------
                  Equipment, net                                   $ 47,520     $       0
                                                                  =========     =========
</TABLE>


                                       32
<PAGE>

                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 3-           EQUIPMENT (CONTINUED)

                  Depreciation expense was $ 4,320 and $ 0 for the years ended
                  March 31, 2005 and 2004, respectively.

NOTE 4-           INSTALLMENT DEBT

                  Installment debt consists of approximately 11 notes for
                  various pieces of equipment. The Company has not reflected the
                  asset value on the books because the assets are considered to
                  have no value remaining.

                  These assets are however collateral for the debt. The Company
                  has reflected these balances in the consolidated balance
                  sheets as installment debt and in accounts payable. The
                  portion in accounts payable represents the amounts overdue,
                  and the portion in installment debt represents the amounts
                  still due under the agreements.

                  The installment debt liability at March 31, 2005 and 2004 is
                  $20,105 and $45,347, respectively. Of the $20,105 remaining at
                  March 31, 2005, $18,989 is current, and the remaining $1,116
                  is due through fiscal 2007.

NOTE 5-  NOTES PAYABLE

                  In accordance with the purchase agreement between the Company
                  and Internet Business Consulting and AppState.net, LLC, the
                  Company entered into two separate note agreements.

                  The Company agrees to make 12 monthly payments of $8,334 with
                  the first payment due with the signing of the agreement. The
                  Company made 1 payment in fiscal 2005 and has a remaining
                  balance of $91,674, which is all reflected as a current
                  liability in the consolidated balance sheet at March 31, 2005.
                  The Company also entered into an agreement to make 24 payments
                  of $20,000 all due no later than the 1st day of the month
                  following completion of IBC's and AppState's audits (April
                  2005) and then on the 1st day of each subsequent month
                  thereafter until paid in full. IBC and AppState may, at their
                  option up and until all payments have been made, have any or
                  all of this paid as part of an employment contract with James
                  Hollis, the owner of IBC, as compensation. The Company made 1
                  payment in fiscal 2005 and has a remaining balance of $460,000
                  with $220,000 reflected as a long-term liability and $240,000
                  reflected as a current liability in the consolidated balance
                  sheet at March 31, 2005.




                                       33
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 5-           NOTES PAYABLE (CONTINUED)

                  The Company borrowed a total of $1,077,955 from 22 different
                  individuals during 1999 through the present, at interest rates
                  ranging from 7-12%, with no collateral and payment terms of 2
                  or 3 years. As of March 31, 2005 and 2004, all amounts unpaid
                  are overdue. As of March 31, 2005, the note payable balance is
                  $768,849 and the accrued interest on those notes as of March
                  31, 2005 is $434,680. These amounts are reflected as current
                  liabilities in the consolidated balance sheet at March 31,
                  2005.

                  During the year ended March 31, 2005, 603,498 shares of common
                  stock were issued to convert $123,612 in notes payable and
                  $81,920 in accrued interest associated with the debt. The
                  stock and values were done at fair market value.

                  In connection with the acquisition of QuickCom, the Company
                  borrowed $100,000 from an investor at 12% interest, unsecured,
                  and with 125,000 additional warrants exercisable at $.10 per
                  share. These warrants have a fair value estimated by
                  Management at $.38 per share, with the $.28 per share
                  difference of $35,000 recognized as interest expense in the
                  year ended March 31, 2003. The note was repaid in November
                  2003 at a discount of $92,000. The remaining $8,000 was
                  reclassified to additional paid in capital along with accrued
                  interest of $7,584.

NOTE 6-           CONVERTIBLE DEBENTURES

                  The Company sold units of securities for $984,428 to about 100
                  individuals during 1998 and 1999. Each unit consisted of one
                  share of common stock and one debenture with interest at 12%,
                  no collateral, and an original due date of December 2001. The
                  debentures are convertible at any time at $7.50 per share. In
                  late 1999 to early 2000, the Company converted $373,128 in
                  debentures into common stock. In mid-2002, the Company offered
                  conversions at $.40 per share and 32 individuals with a face
                  amount of $274,550 plus accrued interest of $101,254 accepted
                  this conversion to 939,511 shares of common stock.

                  The Company sold units of securities for $215,000 to 14
                  individuals/entities in December 2004. The debentures accrue
                  interest at 10% per annum and are due December 31, 2005. The
                  conversion price shall be $.10 per common share. Additionally,
                  the Company sold $25,000 to 1 entity in January 2005. This
                  debenture, which was for services rendered, also accrues
                  interest at 10% per annum and is due January 31, 2006. The
                  conversion price shall be $.10 per common share. No
                  conversions or repayments of the debentures have occurred as
                  of March 31, 2005. No beneficial conversion feature was
                  recorded due to the conversion price exceeding the fair market
                  value of the shares of common stock.


                                       34
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 7-           OBLIGATION UNDER CAPITAL LEASE

                  AppState is the lessee of equipment under a capital lease
                  expiring in December 2007.

                  Minimum lease payments under capital leases at March 31, 2005,
                  are as follows:

                  2006                                             $  19,020
                  2007                                                19,020
                  2008                                                15,336
                                                                   ---------
                                                                      53,376

                           Less: amounts representing interest        (7,060)
                           Less: current portion                     (15,561)
                                                                   ---------

                                   Long-term portion               $  30,755
                                                                   =========

NOTE 8-           STOCKHOLDERS' DEFICIT

                  Common Stock

                  As of March 31, 2005 and 2004, the Company has 100,000,000 and
                  50,000,000 shares of common stock authorized and 66,539,686
                  and 45,420,514 issued and outstanding, respectively.

                  The following details the stock transactions for the year
                  ended March 31, 2004.

                  The Company issued 350,000 shares of common stock for services
                  valued at $70,000.

                  On March 31, 2004, the Company entered into a Stock Exchange
                  Agreement with Broadspot World Wide Wireless, Inc. In
                  accordance with the agreement, the Company exchanged
                  18,000,000 shares (post split) of its common stock for
                  23,000,000 shares of Broadspot.

                  The 23,000,000 shares represent a 76% interest in the Company.
                  Broadspot, a Canadian company (re-domiciled to Nevada) trading
                  on the pink sheets, has not conducted any business other than
                  the issuance of stock and has been consolidated into these
                  statements at March 31, 2004 the date the exchange took place.
                  The Company recorded the transaction at par value ($18,000),
                  with the offset adjusting paid in capital.




                                       35
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 8-           STOCKHOLDERS' DEFICIT (CONTINUED)

                  Common Stock (Continued)

                  The Company also cancelled 3,200,000 shares of common stock it
                  issued in the QuickCom acquisition. These shares had been
                  issued in the year ended March 31, 2003.

                  The following details the stock transactions for the year
                  ended March 31, 2005.

                  On July 2, 2004, the Company's board of directors approved a
                  2:1 stock split that increased the issued and authorized
                  shares 27,235,257.

                  The Company issued 50,000 shares of common stock to the lender
                  of a $10,000 note payable for entering into the note
                  agreement. Since the Company's stock at the time of issuance
                  was not trading, the Company has valued these shares at par
                  ($50).

                  The Company issued 9,000,000 shares to consultants and
                  management in the form of S-8 stock, which was issued July 1,
                  2004 (subsequent to the 2:1 split). These shares were valued
                  at $225,000 ($.025 per share), the fair value of the stock at
                  the date the shares were issued.

                  The Company issued 6,130,827 shares of common stock in the
                  quarter ended September 30, 2004 under a stock subscription
                  agreement. The shares have been valued at $2,023,173 and
                  reflected as a subscription receivable on the condensed
                  consolidated balance sheet. There have been no amounts
                  received of this subscription receivable as of March 31, 2005.

                  The Company in the quarter ended September 30, 2004 issued a
                  total of 1,838,017 shares of stock to consultants (1,077,017),
                  and for conversions of notes (362,703) and accounts payable
                  (398,297) valued at $586,804 (an average of $.31 per share),
                  the fair value of the stock at the date the shares were
                  issued.

                  The Company issued 1,999,987 shares of common stock for
                  $280,000 in the quarter ended September 30, 2004.

                  The Company issued 1,057,769 shares of common stock for
                  services valued at $193,113 in the quarter ended December 31,
                  2004 (275,000 of these shares were cancelled in the quarter
                  ended March 31, 2005).

                  The Company issued 178,571 shares of common stock for $25,000
                  in the quarter ended December 31, 2004.

                  The Company issued 300,000 shares of common stock for cash of
                  $30,000 in the quarter ended March 31, 2005.


                                       36
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 8-           STOCKHOLDERS' DEFICIT (CONTINUED)

                  Common Stock (Continued)

                  In the quarter ended March 31, 2005, the Company issued
                  669,000 shares of common stock for consulting services and
                  legal services valued at $14,569; and 70,000 shares of common
                  stock in connection with a legal settlement valued at $11,200;
                  and 100,000 shares of common stock as the initial installment
                  of shares in connection with the Internet Business Consulting
                  and AppState.Net, LLC acquisition agreement valued at
                  $100,000.

                  Preferred Stock

                  The Company has 5,000,000 shares of preferred stock authorized
                  and 0 shares of preferred stock issued and outstanding as of
                  March 31, 2005 and 2004, respectively.

                  Stock Options and Warrants

                  The Company in 1995 adopted three stock option plans allowing
                  the issuance of both qualified and nonqualified options for up
                  to 1,200,000 shares to directors, employees and consultants of
                  the Company. The plans and warrants issuance are administered
                  by the Board of Directors, who have substantial discretion
                  with regards to persons, amounts, time, price, exercise terms,
                  and restrictions, if any.

                  Under the Black-Scholes option-pricing model, the total value
                  of the stock options granted in 2003 is charged to operations
                  as these options are fully vested. SFAS No. 123, "Accounting
                  for Stock-Based Compensation", encourages adoption of a
                  fair-value-based method for valuing the cost of stock-based
                  compensation. However, it allows companies to continue to use
                  the intrinsic-value method for options granted to employees
                  and disclose pro forma net loss. All of these options are
                  vested as of March 31, 2005 and 2004.

                  The following tables summarize the activity of the Company's
                  stock option plan:



                                              Year Ended March 31, 2005

                                         Number of            Weighted-average
                                          Options              Exercise Price
                                       ------------------   ------------------
Outstanding - beginning of period                324,000     $           1.60
Granted                                                -     $              -
Forfeited                                        (60,000)    $          (6.00)
                                       ------------------   ------------------
Outstanding - end of period                      264,000     $           0.63
                                       ==================   ==================

                                                            ------------------
Exercisable - end of period                      264,000     $           0.63
                                       ==================   ==================




                                       37
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 8-           STOCKHOLDERS' DEFICIT (CONTINUED)

                  Stock Options and Warrants (Continued)


                                              Year Ended March 31, 2004
                                         Number of            Weighted-average
                                          Options              Exercise Price
                                      -------------------   -----------------
Outstanding - beginning of period                462,534     $         4.39
Granted                                                -     $            -
Forfeited                                       (138,534)    $       (11.00)
                                      -------------------   -----------------
Outstanding - end of period                      324,000     $         1.60
                                      ===================   =================
                                                            -----------------
Exercisable - end of period                      324,000     $         1.60
                                      ===================   =================



                  For disclosure purposes, the fair value of each stock option
                  granted is estimated on the date of grant using the
                  Black-Scholes option-pricing model, which approximates fair
                  value.

                  If compensation expense for the Company's stock-based
                  compensation plans had been determined consistent with SFAS
                  123, the Company's net income and net income per share
                  including pro forma results would have been the amounts
                  indicated below:

<TABLE>
<CAPTION>
                                                                               Year Ended March 31,
                                                                               2005              2004
                                                                               ----              ----
                        <S>                                                     <C>               <C>
                  Net loss:
                    As reported                                              ($1,588,393)   ($260,174)
                    Total stock-based employee compensation
                       expense determined under fair value based
                       method for all awards, net of related tax
                  effects                                                         (0)               (0)
                                                                               -----            ------
                     Pro forma                                              ($1,588,393)     ($260,174)
                  Net loss per share:
                     As reported:
                        Basic                                                 ($0.03)           ($0.06)
                        Diluted                                               ($0.03)           ($006)
                     Pro forma:
                        Basic                                                 ($0.03)           ($0.06)
                        Diluted                                               ($0.03)           ($0.06)

                  The Company has 527,705 stock warrants outstanding and vested
                  as of March 31, 2005 and 2004. There were no warrants issued
                  during 2005 and 2004.
</TABLE>




                                       23


<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 8-  STOCKHOLDERS' DEFICIT (CONTINUED)

                  Stock Options and Warrants (Continued)

                  The Company has the following warrants exercisable for the
purchase of its common stock:

                                                     Year Ended
 Exercise                                             March 31,
  Price                  Expiration Date               2005           2004
---------     ----------------------------         ------------    ---------
 $0.50        February, 2007                           26,880          26,880
 $5.00        June, 2010                              250,000         250,000
 $2.50        June, 2010                               80,000          80,000
 $5.00        July, 2010                               50,000          50,000
 $2.50        July, 2010                                2,500           2,500
 $2.50        August, 2010                             18,325          18,325
 $2.00        August, 2010                            100,000         100,000
                                                   ------------     ---------
                                                      527,705         527,705
              Weighted average exercise price           $3.72           $3.72
                                                   =============    =========

NOTE 9-  GOING CONCERN

                  As shown in the accompanying consolidated financial statements
                  the Company has sustained net operating losses for the years
                  ended March 31, 2005 and 2003, and has sustained large
                  accumulated deficits. In addition, the Company has sold off
                  its operations in Colorado, Oregon and California, and was
                  operating essentially as a shell company up until January
                  2005, when it acquired Internet Business
                  Consulting/AppState.net, LLC. This raises substantial doubt
                  about the Company's ability to continue as a going concern.

                  Management is in the process of restructuring the Company and
                  is continuing to search for more profitable internet and
                  communications related service companies to acquire.

                  The Company's future success is dependent upon its ability to
                  achieve profitable operations and generate cash from operating
                  activities, and upon additional financing. There is no
                  guarantee that the Company will be able to raise enough
                  capital or generate revenues to sustain its operations.

                  The consolidated financial statements do not include any
                  adjustments that might result from the outcome of this
                  uncertainty.

NOTE 10- ACQUISITIONS

                  On December 1, 2002, 1,250,000 shares were issued to acquire
                  equipment valued at $239,084 and the intellectual property of
                  the development stage enterprise Quick Communications Hosting,
                  Inc. (QuickCom). This transaction also included a consulting
                  contract with an investor for 250,000 shares, a finders' fee
                  paid of 100,000 shares and a $100,000 loan from that investor.



                                       38
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 10-          ACQUISITIONS (CONTINUED)

                  The transaction was valued at $640,000, or $.40 per share for
                  the total 1,600,000 shares issued. The assets acquired did not
                  constitute an ongoing business enterprise. Therefore,
                  Management impaired a total of $466,658, which comprised of
                  the $640,000 net of the $239,084 assets less $65,742 of
                  liabilities assumed. The impairment occurred in the year ended
                  March 31, 2003.

                  On January 31, 2005, the Company completed the purchase of
                  Internet Business Consulting, Inc. and AppState.Net, LLC from
                  James R. Hollis by acquiring 100% of the stock of IBC and
                  AppState.

                  The Company acquired 100% of the stock in IBC and the
                  corporation of AppState in exchange for restricted shares of
                  the Company's common stock valued at $1 per share on a
                  dollar-for-dollar exchange equal to one times the annual
                  revenue of IBC plus one times the annualized revenue of
                  AppState estimated at 2,674,312 shares. Such shares will be
                  restricted stock with 100,000 shares paid within 10 days of
                  the agreement (which were issued in the quarter ended March
                  31, 2005 and the balance issued no later than 10 days after
                  completion of the audits of IBC and AppState (which occurred
                  in April 2005). The Company agrees that should the market
                  value of its stock not be $1 per share by January 1, 2007,
                  this will result in an adjustment of the number of shares
                  issued in conjunction with the purchase price ("make-good"
                  clause). The Company has recognized a liability for stock to
                  be issued of $2,574,312 of the value of the common stock
                  issued in April 2005.

                  The Company also agrees to make 12 monthly payments of $28,334
                  with the first payment due with the signing of this agreement,
                  followed by 12 payments of $20,000 all due no later than the
                  1st day of the month following completion of IBC's and
                  AppState's audits and then on the 1st day of each subsequent
                  month thereafter until paid in full. IBC and AppState may, at
                  their option up and until all payments have been made, have
                  any or all of this paid as part of an employment contract with
                  Hollis as compensation.

                  The Company also agrees to authorize Internet Business
                  Consulting, Inc. and AppState.Net, LLC to enter into a `sell
                  leaseback' financial transaction ("Lease") so that certain
                  assets may, at the Company's option, be put on the Lease to
                  enable IBC and AppState to be paid for the assets. The Company
                  agreed to select certain assets to be put on the Lease no
                  later than April 15, 2005.




                                       39
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 10-          ACQUISITIONS (CONTINUED)

                  Any assets not on the Lease shall remain the property of IBC
                  and AppState. IBC and AppState has the option to store the
                  assets at the offices of IBC and AppState until all
                  consideration due to IBC and AppState has been paid in full.
                  IBC and AppState agreed to the following terms of the Lease
                  and the full terms and conditions of the Lease:

                  1. 24-month term with 24 equal payments.
                  2. $1.00 Purchase Option at the end of the Lease.
                  3. Acceptance Date of January 1 and a Commencement Date of May
                  1, 2005 (120 day `no pay' period).
                  4. 10% Interest Rate (rate factor of .04577).
                  5. Up to $100,000. The allocation of the total purchase price
                  paid shall be determined solely by IBC and AppState, and
                  adhere to generally acceptable accounting principals, and
                  notice given to the Company by December 31, 2005.

NOTE 11-          PROVISION FOR INCOME TAXES

                  Deferred income taxes will be determined using the liability
                  method for the temporary differences between the financial
                  reporting basis and income tax basis of the Company's assets
                  and liabilities. Deferred income taxes will be measured based
                  on the tax rates expected to be in effect when the temporary
                  differences are included in the Company's consolidated tax
                  return. Deferred tax assets and liabilities are recognized
                  based on anticipated future tax consequences attributable to
                  differences between financial statement carrying amounts of
                  assets and liabilities and their respective tax bases.

                  At March 31, 2005 and 2004, deferred tax assets approximated
                  the following:

                                                     2005             2004
                                                ------------     -------------
                  Deferred tax assets            $7,305,000      $  6,780,000
                  Less:  valuation allowance     (7,305,000)       (6,780,000)
                                                ------------     -------------

                  Net deferred tax assets       $        -0-     $         -0-
                                                ============     =============

                  At March 31, 2005 and 2004, the Company had accumulated
                  deficits approximating $21,486,547 and $19,898,154,
                  respectively, available to offset future taxable income
                  through 2023. The Company established valuation allowances
                  equal to the full amount of the deferred tax assets due to the
                  uncertainty of the utilization of the operating losses in
                  future periods.



                                       40
<PAGE>



                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 12-          LITIGATION/ ARBITRATION

                  The Company was involved in arbitration with one of their
                  major vendors that was set for November 15, 2004. The major
                  vendor had claimed the Company owed them in excess of
                  $900,000, and the Company had previously filed a complaint
                  against this vendor for breaches of contract, fraud,
                  misrepresentation, unfair business practices, injunction and
                  accounting. Pursuant to mutual agreement of the parties, their
                  respective disputes and claims were pending resolution through
                  binding arbitration. The Company reached a confidential
                  settlement and all parties dismissed their complaints during
                  the quarter ended March 31, 2005.

                  The Company had another arbitration hearing set for November
                  15, 2004 with another vendor over charges the Company was
                  billed for improper termination fees. The Company reached a
                  confidential settlement and all parties dismissed their
                  complaints during the quarter ended March 31, 2005.

                  On December 1, 2004, a judgment was entered against Internet
                  Ventures, Inc., the predecessor Company, in favor of Catherine
                  and Joe Santistevan in the amount of $1,367,500. After
                  discussions with legal counsel, the Company believes the
                  amount of the judgment would be mitigated in a full hearing on
                  the matter, which the company intends to vigorously pursue.
                  The Company currently has $408,487 recorded in notes and notes
                  interest payable, and legal counsel and management believe
                  this amount is adequate to resolve this matter. The judgment
                  is currently under submission by the Judge of the Superior
                  Court of San Joaquin County, Stockton, CA.

                  The Company has seven default judgments against it for a total
                  amount of $163,367.

                   Five of these judgments have settlements in place with total
                  balances of $85,778. The amounts are recorded in accounts
                  payable.

                  One judgment in the amount of $62,328 is in favor of an
                  equipment leasing company and is against a wholly owned
                  subsidiary of Internet Ventures, Inc. This is recorded under
                  accounts payable and installment debt.


                                       41
<PAGE>


                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004

NOTE 12-          LITIGATION/ ARBITRATION (CONTINUED)

                  One judgment in the amount of $15,261 is in favor of a
                  debenture holder against Internet Ventures, Inc. The amount is
                  recorded in debentures payable, debenture interest payable,
                  and accounts payable.

                  In addition, the Company is currently negotiating settlements
                  with vendors and debt holders for amounts currently
                  outstanding. The Company has converted $1,089,637 in old
                  vendor payables to equity.


NOTE 13-          DISCONTINUED OPERATIONS

                  Sale of California Operations

                  On December 18, 2002 and March 12, 2003, the customer list and
                  all operations in California were sold for approximately seven
                  times monthly recurring revenue, or an after-the-fact
                  determined $278,654. Net proceeds to the Company were $232,367
                  after $18,566 in offsets for customer deposits and a
                  transaction finders' fee of $27,721.

                  Sale of Oregon Operations

                  On May 1, 2003, the customer list and all operations in Oregon
                  were sold for $550,000. Net proceeds to the Company were
                  $202,339 after payment of a related transaction finders' fee
                  of $55,000, other transaction costs of $763 and various
                  liabilities of $291,898.

                  Sale of Colorado Operations

                  On July 31, 2003, the customer list and all operations in
                  Colorado were sold for $1,300,000. Net proceeds to the Company
                  were $1,192,093 after payment of a related transaction
                  finders' fee and other transaction costs.




                                       42
<PAGE>

                    IVI COMMUNICATIONS, INC. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
                             MARCH 31, 2005 AND 2004


NOTE 14-          SUBSEQUENT EVENTS

                  On April 21, 2005, in accordance with the purchase agreement,
                  2,574,312 shares of IVIC common stock were issued to James
                  Hollis for the IBC/Appstate acquisition.

                  As previously disclosed in Note 8, the Company had issued
                  6,130,827 shares of common stock to be held in escrow under a
                  subscription agreement with a London Investment Fund. In the
                  event the Fund failed in its efforts to receive trading
                  status, the subscription agreement would be null and void and
                  the shares held in escrow would be cancelled. As of the date
                  of these financial statements, management is uncertain that
                  the UKLA will approve the Fund for trading.





                                       43
<PAGE>



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

On July 2, 2004, the Registrant engaged Bagell, Josephs & Company, LLC as the
Registrant's independent accountants.

On July 2, 2004, the Registrant's independent accountants, Malone & Bailey,
PLLC, notified the Registrant that it would cease providing services as the
Registrant's independent accountants.

The Registrant's Board of Directors approved the change of independent
accountants. Malone & Bailey, PLLC's reports on our financial statements for the
past two fiscal years did not contain an adverse opinion or a disclaimer of
opinion nor were they qualified or modified as to uncertainty, audit scope or
accounting principle. In connection with its audits for the two most recent
fiscal years and through July 2, 2004, there have been no disagreements with
Malone & Bailey, PLLC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements if not resolved to the satisfaction of Malone & Bailey, PLLC would
have caused them to make reference thereto in their report on the financial
statements for such years.

The Registrant has requested that Malone & Bailey, PLLC furnish it with a letter
addressed to the SEC stating whether or not it agrees with the above statements.
A copy of such letter, dated July 7, 2004, is filed as Exhibit 16.1.



ITEM 8A           INTERNAL CONTROL OVER FINANCIAL REPORTING

Evaluation of disclosure controls and procedures.
------------------------------------------------
We maintain controls and procedures designed to ensure that information required
to be disclosed in this report is recorded, processed, accumulated and
communicated to our management, including our chief executive officer and our
chief financial officer, to allow timely decisions regarding the required
disclosure.

As of March 31, 2005, our management, with the participation of our chief
executive officer and chief financial officer, carried out an evaluation of the
effectiveness of the design and operation of these disclosure controls and
procedures. Our chief executive officer and chief financial officer concluded
that these disclosure controls and procedures are effective.

Changes in internal controls.
----------------------------
We have made no changes in our internal controls or in other factors that could
significantly affect these controls, nor did we take any corrective action, as
the evaluation revealed no significant deficiencies or material weaknesses.





                                       44
<PAGE>


PART 3


ITEM 9            DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

Directors and Executive Officers
--------------------------------

Name                  Age     Position
------------------   -----    --------------------------------------------
Nyhl Henson           56      Chief Executive Officer, President, Chairman
                              and Director
Charles Roodenburg    52      Chief Financial Officer, Chief Operating Officer
                              and Director

Terms of Directors
------------------
The Director's terms expire at the next annual shareholder's meeting following
their election. Mr. Henson and Mr. Roodenburg have served as directors of IVI
Communications, Inc. since the Turer acquisition in May 2002, and prior to that,
Mr. Henson was a director of Internet Ventures, Inc.

BUSINESS EXPERIENCE OF THE DIRECTORS AND EXECUTIVE OFFICERS

Nyhl Henson, President, Chief Executive Officer and Chairman of the Board of
Directors
----------------------------------------------------------------------------

Nyhl Henson is Chairman and CEO of IVI Communications, Inc. Mr. Henson served as
Chairman and CEO of Internet Ventures, Inc. from June 2000 until the reverse
merge in Turer Corporation in April 2002. Under Mr. Henson's leadership, IVI
Communications is developing a nationally branded broadband network,
Lickity-SplitSM, currently being tested in the company's Boone, North Carolina
ISP, Appstate.Net. IVI Communications recently acquired IBC Wireless, a leading
broadband network system designer and equipment reseller since 1997. By these
strategic acquisitions Mr. Henson has positioned IVI Communications to implement
the Company's plan to deliver broadband Internet access to underserved markets
across the country.

Mr. Henson is most noted for his role in the development of Nickelodeon, MTV
Networks, Inc., and CMT (Country Music Television). He is considered to be a
pioneer in pay-per-view television spearheading such live events as the boxing
matches of Leonard vs. Hearns and Holmes vs. Cooney, "Rolling Stones" and "The
Who" rock concerts, and the musical "Sophisticated Ladies," live from Broadway.
Previously, Mr. Henson served on the task force for Warner Cable's precursor to
the Internet, Qube, the nation's first 30 channel two-way interactive cable
system.

Mr. Henson helped to create Music Village Group, a Nashville-based entertainment
Company, and Music Village USA, a 40-acre theme park. Mr. Henson was named
Chairman and CEO of Country Music Television when Music Village acquired the
fledgling network. Mr. Henson has served as CEO of Craftsman and Scribes
Creative Workshop, an award-winning New York City-based children's television
production company. He also has been involved in the development of several
land-based entertainment complexes including projects in Branson, Missouri and
Nashville, Tennessee.

While completing a graduate level curriculum in broadband communications at
Southern Illinois University Mr. Henson obtained cable franchises and produced
original programming for two local markets. He was subsequently recruited by
TelePromTer, then the nation's largest cable operator, to create a 24 hour cable
programming format for their Reno, Nevada system. While there, he developed
TeleAuction, considered to be the nation's first home shopping program, later
airing in Los Angeles and in seventeen other markets.


Charlie Roodenburg, Chief Financial Offier, Chief Operating Officer and Member
of the Board of Directors
--------------------------------------------------------------------------------
Charlie Roodenburg has more than 25 years of business management experience in
fields as diverse as distribution, automotive parts marketing and the Internet
communications industry. Mr. Roodenburg has a B.S. in Finance from the
University of Southern California and an M.B.A. from Pepperdine University. From
1982-92 he held various corporate management positions in the Japanese import
automotive industry, working for such giants as Mitsubishi, Toyota and Mazda.
During an eight-year period with Mazda (1984-1992) Mr. Roodenburg was accessory
development manager, overseeing inventory control, purchasing, marketing
management and international business. His entrepreneurial skills were honed by
a six-year consulting stint which included such projects as the design and


                                       45
<PAGE>


production of direct mail marketing programs, sales incentive programs and the
development of an intranet based collateral material ordering software package.
In 1997, Mr. Roodenburg, who perceived that the Internet industry offered
significant long term opportunity, accepted a management position with
Northcoast Internet, an Internet Ventures subsidiary located in Eureka,
California. He was responsible for the launch of PeRKInet, a telco return cable
broadband service in 1998 and launched a DSL broadband offering in 1999.
Subsequent to his promotion to California Regional Manager, he was responsible
for the operation of five brands throughout the state and completed the
assimilation of a sixth brand, TomatoWeb, located in Sacramento, California. Mr.
Roodenburg's division has achieved and maintained EBIDTA earnings in excess of
20% since April 2001. In October 2002, Mr. Roodenburg was elevated to Executive
Vice President and moved to corporate headquarters to assume responsibility for
corporate administration and all IVI ISP operations. In May 2002 Mr. Roodenburg
was named Chief Operating Officer.

SIGNIFICANT EMPLOYEES

Name             Age      Position
------------     ---      --------------------------
Robin Tjon       60       Vice President and Controller

Robin Tjon, Vice President and Controller, has been with the Company since 1997
and has 40 years of experience in both public and private companies in a variety
of industries. She was instrumental in setting accounting policies and
procedures and was a key member of the team that implemented the standardized
billing system for the Company. Ms. Tjon assumed total responsibility for IVIC
accounting and was named VP & Controller in May 2002. She managed the completion
of the four-year audit by Malone and Bailey and is responsible for preparing
IVIC's SEC filings.

Family Relationships
--------------------

THERE ARE NO FAMILY RELATIONSHIPS AMONG DIRECTORS OR EXECUTIVE OFFICERS.

Involvement in Certain Legal Proceedings
----------------------------------------
The Company is not aware of any material legal proceedings that have occurred
within the past five years concerning any director, director nominee, promoter
or control person which involved a criminal conviction, a pending criminal
proceeding, a pending or concluded administrative or civil proceeding limiting
one's participation in the securities or banking industries, or a finding of
securities or commodities law violations. Moreover, no bankruptcy petition has
been filed by or against any business of which a director, director nominee,
promoter or control person was a general partner or executive officer either at
the time of such bankruptcy or within two years prior to that time.


ITEM 10           EXECUTIVE COMPENSATION

The following table sets forth the compensation paid by the Company to its Chief
Executive Officer and Directors for services in all capacities to the Company.


                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
                                                                 Annual                          Long-Term
                                                              Compensation                      Compensation
---------------------------------------------------------------------------------------------------------------------
              (a)                   (b)              ( c)         (d)             (e)                  (f)
---------------------------------------------------------------------------------------------------------------------
                                                                                                    Restricted
           Name and                                                          Other Annual             Stock
           principal                                Salary       Bonus       Compensation             Awards
---------------------------------------------------------------------------------------------------------------------
           position                Year               ($)         ($)             ($)                  ($)
---------------------------------------------------------------------------------------------------------------------
<S>          <C>                     <C>              <C>         <C>            <C>                   <C>
---------------------------------------------------------------------------------------------------------------------
Nyhl Henson-                        3/31/05 (1)       240,000 None        None                                15,625
---------------------------------------------------------------------------------------------------------------------
CEO / Chairman                      3/31/04           240,000 None        None                None
---------------------------------------------------------------------------------------------------------------------
                                    3/31/03 (2)       240,000 None        None                               320,000
---------------------------------------------------------------------------------------------------------------------
                                    3/31/02 (3)       228,333 None        None                                80,000
---------------------------------------------------------------------------------------------------------------------

---------------------------------------------------------------------------------------------------------------------
Charles Roodenburg-                 3/31/05 (4)        84,000 None        None                                 7,500
---------------------------------------------------------------------------------------------------------------------
CFO/COO/Director                    3/31/04            84,000 None        None                None
---------------------------------------------------------------------------------------------------------------------
                                    3/31/03 (5)        84,000 None        None                                20,000
---------------------------------------------------------------------------------------------------------------------
                                    3/31/02 (6)        37,000 None        None                                70,000
---------------------------------------------------------------------------------------------------------------------
</TABLE>
-------------------------------------------------------------------------------
(1) In fiscal 2005 Nyhl Henson received $121,175 cash salary, $118,825
accrued salary and 625,000 shares of the Company's stock valued at $15,625
-------------------------------------------------------------------------------
(2) In fiscal 2003 Nyhl Henson received $240,000 cash salary and 800,000
shares of the Company's stock valued at $0.40 per share.
-------------------------------------------------------------------------------
(3) In fiscal 2002 Nyhl Henson received $228,333 cash salary and 200,000
shares of the Company's stock valued at $0.40 per share.
-------------------------------------------------------------------------------
(4) In fiscal 2005 Charles Roodenburg received $40,684 cash salary,
$43,316 accured salary and 300,000 shares of the Company's stock
valued at $7,500.
-------------------------------------------------------------------------------
(5) In fiscal 2003 Charles Roodenburg received $84,000 cash salary and
50,000 shares of the Company's stock valued at $0.40 per share.
-------------------------------------------------------------------------------
(6) In fiscal 2002 Charles Roodenburg received $37,000 cash salary and
175,000 shares of the Company's stock valued at $0.40 per share.
-------------------------------------------------------------------------------


                                       46
<PAGE>


There is no Director Compensation.

Audit Committee

The Company does not have an Audit Committee. The members of the Board sit as
the Audit Committee. No qualified financial expert has been hired because the
company is too small to afford such expense.

Code of Ethics

The Code of Ethics is incorporated by reference to the exhibits filed with the
Form 10KSB/A filed on March 8, 2004, File No 000-32797.

Committees and Procedures

   (1)  The registrant has no standing audit, nominating and compensation
        committees of the Board of Directors, or committees performing similar
        functions. The Board acts itself, in lieu of committees, due to its
        small size.

   (2)  The view of the Board of directors is that it is appropriate for the
        registrant not to have such a committees because all directors
        participate in the consideration of director nominees and the Board is
        so small.

   (3)  Each of the members of the Board which acts as nominating committee is
        not independent, pursuant to the definition of independence of a
        national securities exchange registered pursuant to section 6(a) of the
        Act (15 U.S.C. 781(a).

   (4)  The nominating committee has no policy with regard to the consideration
        of any director candidates recommended by security holders, but the
        committee will consider director candidates recommended by security
        holders.

   (5)  The basis for the view of the Board of Directors that it is appropriate
        for the registrant not to have such a policy is that there is no need to
        adopt a policy for a small company.

   (6)  The nominating committee will consider candidates recommended by
        security holders; and by security holders in submitting such
        recommendations, should provide a completed Directors Questionnaire to
        the Company.

   (7)  There are no specific, minimum qualifications that the nominating
        committee believes must be met by a nominee recommended by security
        holders except to find anyone willing to serve who has a clean
        background. There are no differences in the manner in which the
        nominating committee evaluates nominees for director based on whether
        the nominee is recommended by a security holder, or found by the board.

   (8)  The nominating committee's process for identifying and evaluation of
        nominees for director, including nominees recommended by security
        holders, is to find anyone willing to serve who has a clean background.
        There are no differences in the manner in which the nominating committee
        evaluates nominees for director based on whether the nominee is
        recommended by a security holder, or found by the board.


                                       47

<PAGE>

ITEM 11           SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth as of March 31, 2005 information regarding the
beneficial ownership of Common Stock (i) by each stockholder who is known by the
Company to own beneficially in excess of 5% of the outstanding Common Stock;
(ii) by each director; (iii) by each executive officer; and (iv) by all
executive officers and directors as a group. Except as otherwise indicated, all
persons listed below have (i) sole voting power and investment power with
respect to their shares of Common Stock, except to the extent that authority is
shared by spouses under applicable law, and (ii) record and beneficial ownership
with respect to their shares of Common Stock.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------
      <S>                     <C>                                 <C>                   <C>
    Title of            Name and Address of               Amount and Nature of        Percent of
     Class              Beneficial Owner                 Beneficial Ownership         Class (1)
     -----              ----------------                 --------------------         ---------

Common Stock           IVI Shareholder Trust                   25,770,514               38.73%
                       6171 W Century Blvd Suite 130
                       Los Angeles, CA 90045
                       Nyhl Henson, Trustee

Common Stock           Broadspot World Wide Wireless, Inc.     18,000,000               27.05%
                       6171 W Century Blvd Suite 130
                       Los Angeles, CA 90045
                       Nyhl Henson, CEO/Director

Common Stock           London Investment Firm                  6,130,827                 9.21%
                       London, England

Common Stock           Nyhl Henson, CEO/Director               1,250,000                 1.88%
                       6171 W Century Blvd Suite 130
                       Los Angeles, CA 90045

Common Stock           Charles Roodenburg, CFO/Director         600,000                  0.90%
                       6171 W Century Blvd Suite 130
                       Los Angeles, CA 90045

Common Stock           Directors & Officers As A Group         45,620,514               68.56%

-------------------------------------------------------------------------------------------------
(1)This table is based on 66,539,685 shares of Common Stock outstanding on March
31, 2005.
</TABLE>


ITEM 12           CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

There are no related transactions or relationships.

ITEM 13           EXHIBITS

The following exhibits are filed with this Annual Report or are incorporated by
reference:
<TABLE>
<CAPTION>
EXHIBIT
NUMBER          TITLE OF EXHIBIT
   <S>               <C>
       2.1      Agreement and Plan of Reorganization**
       2.2      Certificate of Amendment to Articles of Incorporation**
       2.3      Certificate of Amendment to Articles of Incorporation increasing authorized shares of common stock******
       2.4      Business Purchase Agreement ("Agreement") Between IVI Communications, Inc., Internet Business Consulting, Inc.
                 and AppState.Net, Llc.********
       3.1      Articles of Incorporation**
       3.2      Bylaws**
       4.1      2005 Employee Stock Compensation Plan***
       4.2      Amended 2005 Employee Stock Compensation Plan*******
         9      Voting Trust Agreement**
      10.1      Employment Agreement for Nyhl Henson dated May 1, 2001**
10.2 A & B      Sale Agreements for California ISPs**
      10.3      Sale Agreement for Oregon ISPs**
      10.4      Purchase Agreement for Quik Communications**
      10.5      Sale Agreement for Colorado ISPs**
10.6 A B & C    Settlement Agreements with Quik Communications*
      10.7      Stock Exchange Agreement IVIC and Broadspot World Wide Wireless*****
      10.8      Consulting Contract with Keith Jablon dated July 1, 2004******
      10.9      Consulting Contract with Big Apple Consulting USA, Inc. dated July 6, 2004******
      10.1      Advisory Agreement with Hunter Wise, LLC dated August 17, 2004
     10.11      Agreement with The Research Works dated August 31, 2004
     10.12      Stock Purchase Agreement between IVIC and Seaside Investments PLC dated August 16, 2004
        14      Code of Ethics**
      16.1      Malone & Bailey, PLLC letter on change in accountants****
      31.1      Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer of the Registrant
      31.2      Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer of the Registrant
      32.1      Section 906 Certification by Chief Executive Officer
      32.2      Section 906 Certification by Chief Financial Officer

*          Incorporated by reference to the exhibits filed with the Form 10QSB/A filed on March 8, 2004, File No 000-32797
**         Incorporated by reference to the exhibits filed with the Form 10KSB/A filed on March 8, 2004, File No 000-32797
***        Incorporated by reference to the exhibits filed with the Form S-8 on June 29, 2004, File No 333-116954
****       Incorporated by reference to the exhibits filed with the Form 8-K filed on July 7, 2004, File No 000-32797
*****      Incorporated by reference to the exhibits filed with the Form 10KSB filed on July 14, 2004, File No 000-32797
******     Incorporated by reference to the exhibits filed with the Form 10QSB filed on August 16, 2004, File No 000-32797
*******    Incorporated by reference to the exhibits filed with the Form S-8 on November 11, 2004, File No 333-120231
********   Incorporated by reference to the exhibits filed with the Form 8-K filed on February 4, 2005,File No 000-32797
</TABLE>


ITEM 14           PRINCIPAL ACCOUNTANT FEES AND SERVICES


During fiscal 2005 Malone & Bailey, PLLC were paid $5,825.00 for auditing
related services. During fiscal 2005 Malone & Bailey, PLLC were not paid for any
other services.

During fiscal 2005 Bagell Josephs & Company, LLC were paid $11,000 for
audit-related services. During fiscal 2005 Bagell Josephs & Company, LLC were
not paid for any other services.






                                       48
<PAGE>






                                   Signatures


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

Date:       July 13, 2005            By:     /s/ Nyhl Henson
                                                -----------------------
                                                Nyhl Henson
                                                Chief Executive Officer



Date:       July 13, 2005           By:     /s/ Charles Roodenburg
                                                 ----------------------
                                                Charles Roodenburg
                                                Chief Financial Officer