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

                                   FORM 10-KSB

[x]   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934

                  For the fiscal year ended December 31, 2004.

                                       OR

[ ]   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES AND
      EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

                ------------------------------------------------
                         Commission File Number 0-29195


                           OnScreen Technologies, Inc.
                 (Name of Small Business Issuer in Its Charter)

Colorado                                  (7310)                 84-1463284
--------------------------------------------------------------------------------
(State or jurisdiction of      (Primary Standard Industrial   (I.R.S. Employer
incorporation or organization)  Classification Code Number)  Identification No.)


                         200 9th Avenue North, Suite 210
                          Safety Harbor, Florida 34695
                                 (727) 797-6664
        (Address and Telephone Number of Principal Executive Offices and
                          Principal Place of Business)

                           OnScreen Technologies, Inc.

                           John "JT" Thatch, President
                           OnScreen Technologies, Inc.
                         200 9th Avenue North, Suite 210
                          Safety Harbor, Florida 34695
                                 (727) 797-6664
            (Name, Address and Telephone Number of Agent for Service)


<PAGE>


Securities registered under Section 12(b) of the Exchange Act: None

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

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

Check if 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. [X]

Transitional Small Business Disclosure Format:          [ ] Yes  [X] No

The issuer's revenues for its most recent fiscal year ended December 31, 2004
were $145,988.

The aggregate market value of the voting common equity held by non-affiliates as
of February 28, 2005 was $46,130,596 (calculated by excluding shares owned
beneficially by affiliates, directors and officers).

As of December 31, 2004, the registrant had 63,680,020 shares of common stock
outstanding, 2,772,205 shares of Series A Convertible Preferred Stock
outstanding and no shares of Series B Convertible Preferred outstanding.


                                       2
<PAGE>

Index
                                     Part I

Item 1.  Description of Business                                               4
             Industry Overview                                                 5
             OnScreen(TM) LED Technology                                       5
             LED Sign Market Potential                                         6
             Market Analysis                                                   7
             OnScreen(TM) Technologies, Inc. Business Strategy                 8
             Rights to OnScreen(TM)                                           10
             Intellectual Property                                            11
             Employees                                                        12
             Risks Related to Our Business                                    12
             Risks Related to Our Common Stock                                15
Item 2.  Description of Property                                              17
Item 3.  Legal Proceedings                                                    18
Item 4.  Submission of Matters to a Vote of Security Holders                  18

                                     Part II

Item 5.  Market for Common Equity and Related Stockholder Matters             18
Item 6.  Management's Discussion and Analysis                                 26
             Liquidity and Capital Resources                                  27
             Results of Operations                                            30
Item 7.  Financial Statements                                                 33
Item 8.  Changes In and Disagreements With Accountants on
             Accounting and Financial Disclosure                              33
Item 8A. Controls and Procedures                                              33
Item 8B. Other Matters                                                        33


                                    Part III

Item 9.  Directors, Executive Officers, Promoters and Control Persons
             Compliance With Section 16(a) of the Exchange Act                33
             Business Experience of Executive Officers and Directors          34
             Audit Committee                                                  36
Item 10. Executive Compensation                                               36
             Employment Agreements                                            38
Item 11. Security Ownership of Certain Beneficial Owners and Management       40
Item 12. Certain Relationships and Related Transactions                       41
Item 13. Exhibits and Reports                                                 42
             Financial Statements and Supplementary Data                      42
Item 14. Principal Accountants Fees and Expenses                              46
             Signatures                                                       47
             Certifications                                                   48


                                       3
<PAGE>

This Annual Report on Form 10-KSB and the documents incorporated herein by
reference contain forward-looking statements that have been made pursuant to the
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations, estimates and
projections about our industry, management's beliefs, and assumptions made by
management. Words such as "anticipates," "expects," "intends," "plans,"
"believes," "seeks," "estimates," variations of such words and similar
expressions are intended to identify such forward-looking statements. These
statements are not guarantees of future performance and are subject to certain
risks, uncertainties and assumptions that are difficult to predict; therefore,
actual results and outcomes may differ materially from what is expressed or
forecasted in any such forward-looking statements.

                                     PART I

Item 1.  Description of Business

General

OnScreen Technologies, Inc. (sometimes hereafter referred to as "OnScreen(TM)"
or "the Company") is a Colorado corporation organized on April 21, 1998. The
Company's principal place of business is located at 200 9th Avenue North, Suite
210, Safety Harbor, Florida 34695. The Company is primarily focused on the
marketing and sale of its sign display platform products under the names
RediAlert(TM), RediAd(TM), Ready Dispatch Emergency Sign(TM) (RDES), Living
Window(TM) and RediDMS(TM).

Our product lines utilize the OnScreen(TM) direct view LED (light emitting
diode) sign display technology (sometimes referred to as the "OnScreen(TM) LED
architecture" or "OnScreen(TM) technology" or "OnScreen(TM) LED technology").
The OnScreen(TM) LED architecture, incorporates a variety of patent pending
designs of a new generation of bright LED products that provide key design
improvements in wind load, heat dissipation, weight and brightness of LED sign
displays. The Company's plan is to focus all of its resources on the
commercialization of the OnScreen(TM) technology.

Our LED products are specially designed to provide display solutions into
vertical markets including commercial and government. The commercial market
targets include, but are not limited to the automotive industry and retail point
of purchase stores. The government market targets are the Department of
Transportation, Homeland Security, Law Enforcement, Emergency Responders and
FEMA.

The OnScreen(TM) LED architecture provides a platform for the production of LED
display products in the current market that are lighter than competitive
products and provides a corresponding reduction in wind loading. These
architectural benefits yield products that could be easy to install, are
portable and require less support infrastructure, which opens new markets for
LED products. Two product lines focus on the company's Redi-Alert(TM) Rapid
Dispatch Emergency Signs and Redi-Ad(TM) Rapid Dispatch Advertising Signs target
markets. These new lines of LED products provide the world's first truly
portable LED products for Emergency Response and commercial advertising using
the OnScreen(TM) LED sign technology. Powered and transported by any vehicle,
these products give highly visible emergency information or advertising messages
in less than five minutes of set up time. The RediAd(TM) Rapid Dispatch
Advertising Signs product lines are specifically developed for special event
advertising where message visibility is key and space for signage is at a
premium.


                                       4
<PAGE>


A third product, focused on the commercial marketplace, is Living Window(TM); a
unique display for commercial advertising that is both see-through and bright.
The see-through capability allows outside light through the sign while not
obstructing sight through the window from the inside. Because of the light
weight and manner of installation, integrity of the building is not disturbed.
As a featured option, all of the Company's products can be controlled and
messages changed wirelessly from nearly any location within the continental
United States.

INDUSTRY OVERVIEW

Utilizing bright LEDs in large and small scale products has been expanding over
the past several years. LED's have become the technology of choice for products
because they offer significant advantages in brightness, energy efficiency and
longer product life over traditional illumination choices. Until the advent of
high-brightness LED display technology, few options existed for videotext and
motion displays to be viewed in direct sunlight.

Significant energy is required to illuminate an LED motion display in direct
sunlight. Energy consumption has become a limiting factor in the advancement of
outdoor LED displays. Also, significant heat is generated when powering LED's to
brightness adequate to be seen in direct sunlight. Current LED packages and heat
transfer mechanisms generally do not easily accommodate close pixel spacing on
this generation of products - a limiting factor when viewed from any distance
less than a couple hundred feet. It also means that previously a commercial
product with real market potential, i. e., outdoor television and medium scale
display advertising, up to now has been technically difficult and expensive to
produce. The required pixel spacing for high resolution displays while limiting
the corresponding heat transfer as with current display architectures has been
difficult and expensive to achieve.

To date, the leading cause preventing a larger proliferation of large-scale LED
products has been cost. The Company believes that a more cost effective display
technology can result in a significantly deeper market penetration for these
displays.

ONSCREEN(TM) LED TECHNOLOGY

OnScreen Technologies, Inc. has created a range of products with significant
architectural benefits and brighter visibility than the current generation of
sign displays. Our sign displays are visible in direct sunlight, avoiding many
of the disadvantages associated with current displays, including sun-loading,
wind-loading and excessive weight. The OnScreen(TM) LED technology is focused on
delivering simple light weight, see-through arrays that eliminate the need for
complex modules.

Basic OnScreen(TM) LED Architecture
-----------------------------------

In our products, LEDs are placed periodically on a porous metal screen or, in
some applications, on a porous rigid material or in a configuration that
encourages rapid heat transfer, is lightweight and encourages convective airflow
cooling. The metal screen forms a grid (similar to a large-scale window screen)
of electrical conductors to provide power for LED operation. In the rigid porous
material application, the electrical conductors are imbedded in the rigid porous
material in similar grid fashion to the metal screen model. The grid is composed
of dielectrically coated metal wires that act as electrical, thermal and
structural conductors. In addition, the grid serves to transfer heat from the
LEDs to the local environment via airflow through and along the grid and the
grid is intended to act as a tensile structural support element.


                                       5
<PAGE>


Materials and Manufacturing Cost
--------------------------------
OnScreen Technologies, Inc. has developed an open system that permits nearly
unobstructed flow of air through the LED screen that significantly reduces wind
loading. This advantage reduces weight of the sign system as well as the cost of
the structure that holds the sign system. These advantages are present in all
OnScreen(TM) LED technology product lines. The RediAlert(TM) design is based on
an arrangement of slats similar to Venetian blinds that provide structural
integrity without sacrificing any of the other advantages. The Company developed
the initial RediAd(TM) product using a thin, light-weight rigid support material
as the principal structure that holds the LEDs, supplies the necessary
circuitry, but yet permits the characteristic OnScreen(TM) LED "see through"
display and lightweight design. The systematic elimination of support material
results in a unique screen effect.

Structure Benefits
------------------
Wind loading is reduced because of the "porous design" that permits air to pass
through the LED grid and, at the same time, the ambient fluid air dissipates the
heat from the LEDs. Because of this lighter weight and the reduced wind loading
of the OnScreen(TM) LED architecture, the foundation and support structure can
be reduced in size and cost. In a typical large scale sign deployment, the cost
allocation is 30% sign and 70% installation and infrastructure.

Storage, Shipping, Handling and Setup Cost
------------------------------------------
Our products are lightweight, lighter than current systems, and offer
significant savings in storage, shipping, handling and installation costs
because of the "foldable" feature of several models that can be shipped laid
back-to-back with greatly decreased volume, weight and shipping expense.

Life Cycle Cost
---------------
Because of increasing LED junction temperature in traditional LED displays, LED
lifetime, brightness, and efficiency degrade. Our products are designed to
dramatically reduce the LED junction-to-environment thermal resistance resulting
in a lower junction temperature for any given brightness. This yields higher
brightness at lower power levels, thus reducing operating cost and increasing
reliability.

Weight
------
The unique OnScreen(TM) LED architecture reduces the weight-per-unit area
compared to current systems primarily due to efficient convective air cooling
that eliminates some of the heavy external cooling needed for traditional
displays and the difference in our base architecture versus complex rigid solid
circuit board modules in present LED displays.

Brightness
----------
Greatly increased brightness can be achieved through the use of innovative
optics that address spatial tuning, horizontal axis optics, angular aperture
control and optical efficiency. While brightness resulting from the OnScreen(TM)
LED architecture can be optimized through the use of our innovative pixel
packages, standard off the shelf pixels are used as well, depending on the
application

LED SIGN MARKET POTENTIAL

The Company believes that there are no new architectural developments in the
area of LED sign technology that address the key limitations of current LED
display systems. The Company is focusing its efforts towards further defining


                                       6
<PAGE>


the market environment, size, growth, trends, competitive analysis, product
roadmap, partnering strategy and commercial sales program. Specific applications
of the OnScreen(TM) LED technology include: billboards, store windows, large
screen indoor and outdoor products, outdoor commercial and residential
televisions, curved and complex shaped displays, artistic light displays, Amber
Alert project, Homeland Security, roadway "intelligent transportation systems"
(ITS) and see-through displays on buildings. An additional potential marketing
strategy is directed toward licensing the OnScreen(TM) LED technology
intellectual property to worldwide manufacturers of LED sign products and
components.


OnScreen Technologies, Inc. is currently pursuing markets related to LED
products that include:

      o     Indoor, see through window, commercial advertising products, Living
            Window(TM). Our market focus is retail level such as automobile
            dealerships, restaurants and markets.
      o     Outdoor, rapidly deployed, mobile, commercial advertising products,
            RediAd(TM). The primary commercial market objective is the short
            term, nonrecurring daily or weekly specials, initial retail
            openings, holiday/special events and sporting events.
      o     Rapidly deployed, highly mobile, emergency response products,
            RediAlert(TM). This product is directed toward government emergency
            response and public safety matters such as homeland security, Amber
            alert, automobile accidents, natural calamity and traffic control.
      o     Stationary or fixed highway signage designed to display both highway
            traffic and emergency messages as well as commercial advertising
            messages, RediDMS(TM). Although these products will be mounted along
            government roadways for the purpose of traffic control and emergency
            information, when the circumstances permit, these products can be
            used for roadway advertising which will defray the signage expense.
      o     All of the products include an optional wireless modem capable of
            transmitting and receiving data to be displayed on the sign at a
            moments notice.

MARKET ANALYSIS

In August 2003, OnScreen Technologies, Inc. contracted with Principia Partners,
an independent third party new product research consulting firm, for a
comprehensive market analysis of standard LED display application programs to
analyze and assist the Company in determining the saleable features and breadth
of applications for the OnScreen(TM) LED technology and the viable options for
generating returns via intellectual property licensing of the OnScreen(TM) LED
technology. This market analysis was designed to accomplish the Company's
objectives of increased revenue and profitability through sale or licensing of
its OnScreen(TM) LED technology. Based upon the market segmentation analysis and
assuming that there are no "technological breakthroughs" in direct competition
with the OnScreen(TM) LED technology, the Company believes that there exists a
directly addressable market of nearly $1 billion for OnScreen(TM) LED
technology-based products.

Market Segmentation.
--------------------
The objective of market segmentation is to provide the Company with the
requisite framework to effectively implement a licensing strategy for the
OnScreen(TM) LED technology. The research consulting firm analyzed the market
segments for the Company by compiling the market size, growth rate, potential
licensees/competitors, estimated time-to-market, value proposition of the
OnScreen(TM) LED technology and competing technologies within each application.
The potential licensees/competitors within each application were assessed in
accordance to their technical/manufacturing capabilities, financial position and
domestic and international distribution capabilities.


                                       7
<PAGE>


The total addressable market in 2002 for the OnScreen(TM) LED technology in
Large Screen Displays was approximately $1.5 billion and the total market
potential for our technology was nearly $1 billion, as shown in the table below
based on a study provided by the research consulting firm.

<TABLE>
<CAPTION>
                             2002 Addressable and OnScreen Technologies, Inc. Market Potential
                                        For Large Screen Displays by Market Segment
---------------------------------- -------------------------------------- --------------------------------------
                                                                             OnScreen(TM) LED technology Market
                                            Addressable Market                          Potential
---------------------------------- -------------------------------------- --------------------------------------
<S>                                <C>                 <C>                <C>                <C>
Market Segment                     $ Million           % of Total         $ Million          % of Total
---------------------------------- ------------------- ------------------ ------------------ -------------------
Retail/Signage/Billboards          $432                29%                $299               31%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Indoor Arenas                      $392                26%                $155               16%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Transportation                     $258                17%                $231               24%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Outdoor Events                     $200                13%                $173               18%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Rental and Mobile                  $177                12%                $82                  9%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Financial Exchanges                $24                   2%               $15                  2%
---------------------------------- ------------------- ------------------ ------------------ -------------------
Total                              $1,483              100%               $956               100%
---------------------------------- ------------------- ------------------ ------------------ -------------------
</TABLE>

ONSCREEN TECHNOLOGIES, INC. BUSINESS STRATEGY

The implemented Company business strategy includes an expanding basis of
innovative ideas and products based on the OnScreen(TM) LED technology. The
Company continues to develop and purchase OnScreen(TM) LED architecture related
new product ideas and enhance its current technology. Examples of potential
areas to which the company will look to create market opportunity include: LED
pixel packages, custom mounting hardware, ventilation support systems and
electronic subsystems.

Licensing
---------
The Company intends to implement a broad intellectual property licensing program
for new products in order to commercialize various segments of the OnScreen(TM)
LED technology on a larger scale than is possible with the financial resources
currently available to the Company. The OnScreen(TM) LED technology will be
exploited through the development of worldwide license and royalty agreements.
This strategy has been adopted for several reasons:

      o     It is considerably less capital intensive than developing
            manufacturing and marketing capabilities.
      o     It provides revenue streams immediately through advance licensing
            fees.
      o     It provides an opportunity to fund further research and to
            build/develop the intellectual property portfolio surrounding the
            Company.
      o     It can provide continuous long-term revenue streams.
      o     It provides a more rapid adaptation and proliferation of the
            OnScreen(TM) LED technology.
      o     It expedites finding potential corporate "copartners".
      o     It provides the opportunity for greater margins.

Manufacturing In-House or Outsource Manufacturing
-------------------------------------------------
The Company will outsource production to a manufacturer and resell the resulting
components. The Company entered into an exclusive manufacturing agreement with
SMTC Manufacturing Corporation for the manufacture and assembly of the


                                       8
<PAGE>


OnScreen(TM) LED technology product lines. The Company has begun the
commercialization of the RediAd(TM), Living Window(TM) and RediAlert(TM) product
lines and expects delivery of the initial products during 2005.

Current Products
----------------
The Company has developed a commercial product line that features a new
generation of bright LED products specifically designed for retail point of
purchase advertising markets. This new product line provides highly effective
advertising to several different vertical markets with very different buying
habits, such as auto dealerships, grocery stores, movie theaters, malls, and
restaurants.

The first commercial product will be marketed under the name, "Living
Window(TM)" and will enable retailers to communicate a bright three-to-six-line
text message directly to its customers through a 15 to 30 square feet,
lightweight, see-through sign that is lighter than most comparable products and
which can be easily installed to any window or suspended in any environment.
Living Window enables any business owner to send a message to one or multiple
locations in a matter of seconds via a remote computer. One of the most
appealing factors of Living Window is its revolutionary product design that does
not interfere with the integrity of the building architecture. The transparent
design allows ambient light to enter, customers to see in and employees to see
out, all while a variety of text and graphics modes are being displayed and
controlled by advertisers or retailers over the Internet through a wireless
network.

As an added feature, this wireless controlled product has the ability to display
Amber Alert and Emergency Messaging to this product in times of need.

The final design is being completed for the second product of the commercial
product line, RediAd(TM). The RediAd(TM) is a compact portable signage system
with the capability of displaying three lines of variable text for detailed
advertising messaging. The RediAd(TM) sign can be placed wherever it is
convenient to quickly deploy a temporary LED advertisement message. This highly
mobile folding 3' x 5' illuminated screen is independently powered and can
interface with an optional remote control. The RediAd(TM) products have been
designed to collapse and fit into the trunk of automobiles and are capable of
being deployed by a single person.

The Company expects to complete the first product in its government emergence
response product line during 2005. The first of this product line is the
RediAlert(TM), Rapid Dispatch Emergency Sign (RDES). The RediAlert(TM) RDES is a
compact portable signage system with the capability of displaying three lines of
variable text for detailed messaging at emergency response incidents where it is
important to quickly convey a message to motorists and pedestrians.
Independently powered and with optional remote control, this easily deployable,
folding 3' x 5' illuminated screen will provide law enforcement and emergency
management personnel with the latest in technology and equipment to assist in
communicating with the public. The RediAlert(TM) products have been designed to
collapse and fit into the trunk of emergency vehicles. These products are
capable of being deployed by a single person and represent a significant new
market for our company. Our target markets include the rapidly expanding
Homeland Security effort, federal and state homeland defense, law enforcement,
military, emergency response and traffic routing.

The third product line in process presently is the RediDMS(TM), Dynamic Message
Signs (DMS). The RediDMS(TM) is a stationary sign capable of displaying variable
text that can be remotely controlled by means of a wireless modem. The Company
intends to outsource the manufacture of the RediDMS(TM) and initially market the


                                       9
<PAGE>


RediDMS(TM) through standard Department of Transportation (DOT) programs.
Contractual relationships with established Department of Transportation
contractors are presently being pursued by the Company. Although the RediDMS(TM)
is intended to be used primarily as roadway information and emergency
information, it is possible that part of the cost to the government could be
defrayed by contracting with commercial advertisers to display their promotional
messages in conjunction with the usage by the DOT for such necessary messaging
relating to Amber Alert, Emergency Ahead, Homeland Security Warnings and other
emergency warnings. The primary benefits of our RediDMS(TM) are associated with
the reduced infrastructure because of the light weight of our product.

RIGHTS TO ONSCREEN(TM)

The following scenario describes the evolution of the license and ownership of
the OnScreen(TM) LED technology patent:

      o     On or about July 23, 2001, the Company entered into a Contract and
            License Agreement (hereafter the "License Agreement") with the
            inventor of the OnScreen(TM) LED technology which agreement entitled
            the Company to 75% of the revenue generated from the direct view
            OnScreen(TM) LED sign technology with angular dimension greater than
            30 inches and guaranteed the inventor a minimum royalty of $50,000
            the first year, $100,000 the second year and $250,000 each year
            thereafter as well as providing that if John "JT" Thatch were no
            longer employed with the Company, he be involved to his satisfaction
            with terms between the Company and himself to continue with the
            OnScreen(TM) project (hereafter "Thatch OnScreen Rights").
      o     On or about August 28, 2002, the Company entered into an agreement
            with Fusion Three, LLC (hereafter "F3") whereby F3 paid the annual
            $50,000 Company license fee in consideration for the Company's
            conveying to F3 5% of the Company's interest in the License
            Agreement. In December 2002 the Company and F3 entered into an
            addendum to the August 28, 2002 agreement whereby F3 paid the
            $100,000 second year revenue guarantee in consideration for an
            additional 10% of the Company's interest in the License Agreement.
      o     In July 2003 F3 entered into an Option Agreement with the inventor
            for F3 to purchase all of the inventor's contract rights, including
            all royalty rights, in the License Agreement in consideration for
            $500,000 (hereafter the "Option Agreement"). This agreement was
            contingent on the Company's consenting to the terms of the Option
            Agreement.
      o     January 14, 2004, the inventor agreed to accept $175,000 in lieu of
            the $250,000 third year annual revenue guarantee payment. The
            Company paid this sum.
      o     January 15, 2004, the Company refused to consent to the July 2003
            Option Agreement and entered into an agreement with the inventor
            wherein it was agreed that in consideration for the sum of $400,000
            to be paid to the inventor by March 31, 2004, the inventor will
            convey to the Company all of the inventor's license and contract
            rights, including all royalty rights, in the License Agreement. This
            $400,000 sum was paid on March 23, 2004.
      o     On February 3, 2004, John "JT" Thatch, CEO/President of the Company,
            agreed to relinquish all Thatch OnScreen Rights in consideration for
            1% of all revenue derived from any licensing fees received by the
            Company in connection with the OnScreen(TM) LED technology.
            Effective March 2005, the CEO/President relinquished his entitlement
            to the said 1% of revenues.


                                       10
<PAGE>

      o     On February 3, 2004, Fusion Three, LLC (hereafter "F3") and the
            Company reached a Master Settlement and Release Agreement whereby,
            in consideration for the exchange of mutual releases and F3
            relinquishing any claim to any of the OnScreen(TM) technology
            (including the 11.25% license payments), the Company paid to F3
            during June 2004 $150,000 plus agreed to pay the following annually
            declining percentages of revenue derived from the commercialization
            of the direct view LED video display technology with angular
            dimension greater than 30 inches: 5% in 2005 declining to 2% in year
            2008 and thereafter. In the event of a change of control of the
            Company, the percentage of revenue stated above shall terminate and
            a single payment transaction fee shall be paid by the Company to F3
            party ranging from 10% of the OnScreen(TM) appraised value up to
            $100,000,000, 7.5% for the appraised value between $100,000,001 and
            $200,000,000, 5% of the appraised value between $200,000,001 and
            $300,000,000, and 4% of the appraised value between $300,000,001 and
            $400,000,000 and 3% for the appraised value between $400,000,001 and
            $500,000,000 and 2% for any appraised amounts between $500,000,001
            and $600,000,000.

      o     Dated February 15, 2005, the inventor/owner of the OnScreen(TM) LED
            technology patent conveyed ownership of the OnScreen(TM) patent to
            CH Capital, Inc. This conveyance is subject to the above stated
            license rights of the Company.
      o     Dated February 16, 2005, in consideration for the payment of two
            hundred thousand dollars ($200,000), CH Capital, Inc. conveyed to
            the Company the OnScreen(TM) patent rights. This conveyance now
            vests in the Company the ownership of the OnScreen(TM) LED
            technology patent subject to the revenue rights of F3 and John "JT"
            Thatch as described above.

INTELLECTUAL PROPERTY

We rely on various intellectual property laws and contractual restrictions to
protect our proprietary rights in products and services. These include
confidentiality, invention assignment and nondisclosure agreements with our
employees, contractors, suppliers and strategic partners. The confidentiality
and nondisclosure agreements with employees, contractors and suppliers are in
perpetuity or for a sufficient length of time so as to not threaten exposure of
proprietary information. In addition, we intend to pursue the registration of
our trademarks and service marks in the U.S. and internationally.

A provisional patent was filed August 26, 2002 on the OnScreen(TM) LED
technology. The patent was filed July 23, 2003 on the OnScreen(TM) LED
technology that contains over 50 separate claims. The Company retained Knobbe,
Martens, Olson & Bear, LLP and Banner & Witcoff, Ltd. to manage our current
interests relative to the prosecution of the national and international patents.

A provisional patent application was prepared and filed by Banner & Witcoff,
Ltd., Intellectual Property Attorneys, Washington, D.C. on behalf of the Company
on March 15, 2004 in the U.S. Patent and Trademark Office regarding Rapid
Dispatch Emergency Signs.

In 2004, patent applications were made to protect our intellectual property
rights relating to the RediAlert(TM) and Living Window(TM) products. The
applications will greatly increase the intellectual property portfolio of
OnScreen.

On February 25, 2004, we were notified by the United States Patent and Trademark
Office that the examining attorney reviewed the "OnScreen(TM)" trademark
application and found no similar registered or pending mark registered under
Trademark Act Section 2(d), U.S.C. Section 1052(d) TMEP sect 1105.01. We were,
however, required to disclaim the unitary expression "onscreen technology"
because the individual component words of a complete descriptive phrase are not
registerable. This disclaimer does not impair the "OnScreen(TM)" trademark nor
the "OnScreen(TM) technology" words when used in conjunction with the trademark.


                                       11
<PAGE>


We have recently filed applications for trademark registration relating to
"RediAlert", "Ready Dispatch Emergency Sign", "RediAd", "Living Window" and
"RediDMS" relating to our OnScreen(TM) LED architecture signage. These
applications remain in process.

The Company continuously reviews and updates the existing patent and trademark
filings and files new documentation both nationally and internationally in a
continuing effort to maintain up to date patent and trademark protection.

There is no assurance we will be successful in registering these marks.
Furthermore, we are exposed to the risk that other parties may claim we infringe
their rights on these marks, which could result in our ceasing use of these
marks, licensing the marks or becoming involved in costly and protracted
litigation.

EMPLOYEES

As of December 31, 2004, the Company had seventeen fulltime employees. None of
our employees is represented by a labor union. We consider our relations with
our employees to be good. We plan to add additional staff as needed to handle
all phases of our business.

RISKS RELATED TO OUR BUSINESS

Our limited operating history makes evaluating our business and prospects
difficult.
-------------------------------------------------------------------------
We have been involved in the LED based business since July 2001, but have only
recently begun to direct all of our efforts to commercialization of the
OnScreen(TM) technology. Our limited operating history in this industry and the
unproven nature of the OnScreen(TM) technology makes an evaluation of our future
prospects very difficult. To date we have not achieved profitability and we
cannot be certain that we will sustain profitability on a quarterly or annual
basis in the future. You should carefully consider our prospects in light of the
risks and difficulties frequently encountered by early stage companies in new
and rapidly evolving technology.

We have all the risks of a new product developer in the LED technology business.
--------------------------------------------------------------------------------
The Company, as the owner of the OnScreen(TM) LED technology patents, assumed
the responsibility for completing the development of the OnScreen(TM) technology
as well as determining which products to commercialize utilizing the
OnScreen(TM) technology. Because this is a new and unproven technology, there is
a risk that the technology, operation and development could be unsuccessful or
that the products, if any, developed with the OnScreen(TM) technology will not
be marketable. Such failures would negatively affect our business, financial
condition and results of operations.

There is no assurance we will achieve profitability.
----------------------------------------------------
To date we have not received any revenue from the OnScreen(TM) technology. We
have narrowed our scope of operation from EyeCatcherPlus and traditional LED
screens to the singular product line of the OnScreen(TM) LED sign technology.
For the year ended December 31, 2004 we had a net loss of $7,904,229. We will
need to begin generating significant revenues from the OnScreen(TM) LED
architecture product line to offset current operational and development losses
if the Company is to cover its current overhead expenses and cover further
development and marketing expenses. There is no assurance that we will achieve
profitability.


                                       12
<PAGE>


During 2004 we funded our operations with proceeds of approximately $5,707,194
we received from private offerings of our securities. The Company is adequately
confident that equity financing or debt will be available to fund its operations
until revenue streams are sufficient to fund operations; however, the terms and
timing of such equity or debt cannot be predicted. Management expects the
OnScreen(TM) LED technology to be commercialized during the first half of 2005
and to begin generating revenue from the patent protected OnScreen(TM) LED
architecture product line by the late first half of 2005. The Company cannot
assure that it will generate revenues by that date or that its revenues will be
sufficient to cover all operating and other expenses of the Company. If revenues
are not sufficient to cover all operating and other expenses, the Company will
require additional funding.

We may be dependent on only a few customers for a substantial portion of our
revenues.
----------------------------------------------------------------------------
Licensing of fabrication and marketing of the OnScreen(TM) LED technology
through third-party manufacturers and distributors, will cause us to be
dependent on the manufacturing and marketing expertise of a few customers rather
than many end users. Because of this dependence, if there is a fault in any
single manufacturer/distributor relationship the financial impact could have a
materially adverse affect on the Company. Because of the competitive nature of
our business and the uncertainty of success of new Company OnScreen(TM) LED
architecture products, we may be unable to secure sufficient customers quickly
enough to attain and sustain profitability.

We will be dependent on third parties and certain relationships to fulfill our
obligations.
------------------------------------------------------------------------------
Because manufacturing of the OnScreen(TM) LED technology products is licensed to
companies better equipped financially and technologically to fabricate and
manufacture OnScreen(TM) LED technology end products, we are heavily dependent
on these third parties to adequately and promptly provide the end product. The
Company is dependent upon its ability to maintain the agreements with these
manufacturers and other providers of raw materials and components who provide
these necessary elements to fulfill our product delivery obligations at the
negotiated prices.

We initially depend on commercial sales to the advertising market.
------------------------------------------------------------------
We initially intend to market OnScreen(TM) LED architecture related products to
retail sales businesses such as new and used automobile dealerships, department
stores, restaurants, drug stores, etc. Because our OnScreen(TM) LED architecture
is innovative, it has yet to be presented to the retail advertising market;
therefore, its acceptance at this time is not known. Principally, our RediAd(TM)
product is designed for this purpose.

Our second marketing focus is on government agencies.
-----------------------------------------------------
Our second marketing focus is to sell our products to government agencies, such
as departments of transportation, police departments and other emergency
personnel. Our RediAlert(TM) is our first product directed toward this market.
Generally, the inspection, approval process and funding involved with government
agencies can take many months and are subject to cancellation by the
governmental agency without penalty. Our business could suffer if we are not
successful in marketing our products to a significant number of governmental
agencies or if contracts we enter into with such agencies are cancelled.

The market for LED signage is extremely competitive.
----------------------------------------------------
Because the LED signage industry is highly competitive, we cannot assure you
that we will be able to compete effectively. We are aware of several other
companies that offer LED products, although not identical to our OnScreen(TM)
LED technology. These competitors provide their services primarily to the
billboard industry. All of these competitors have been in business longer than


                                       13
<PAGE>


we have and have significantly greater assets and financial resources than
currently available to us. We expect competition to intensify as innovation in
the LED industry advances and as current competitors expand their market into
the portable, lightweight signage that is the initial market for the
OnScreen(TM) LED architecture. We cannot assure you that we will be able to
compete successfully against current or future competitors. Competitive
pressures could force us to reduce our prices and may make it more difficult for
us to attract new customers and retain current customers.

The use of portable emergency roadway signage is a recent development and the
extent of customer acceptance is not yet known.
-----------------------------------------------------------------------------
Portable emergency roadway signage is a relatively new and evolving industry.
For the Company to be successful, government agencies must be willing to obtain
government administrative approval and public results satisfaction. There is no
way to be sure that a sufficient number of government agencies will utilize our
product to enable us to remain profitable.

We depend on key personnel and will need to recruit new personnel as we grow.
-----------------------------------------------------------------------------
As a small company we are currently dependent on the efforts of a limited number
of management personnel. We believe that given the development stage of our
business and the large amount of responsibility being placed on each member of
our management team, the loss of the services of any member of this team at the
present time would harm our business.

If we are successful in expanding our product and customer base, we will need to
add additional key personnel as we continue to grow. If we cannot attract and
retain enough qualified and skilled staff, the growth of our business may be
limited. Our ability to provide services to customers and expand our business
depends, in part, on our ability to attract and retain staff with professional
experiences that are relevant to technology development and other functions we
perform. Competition for personnel with these skills is intense. We may not be
able to recruit or retain the caliber of staff required to carry out essential
functions at the pace necessary to sustain or expand our business.

We believe our future success will depend in part on the following:

      o     the continued employment and performance of our senior management,
      o     our ability to retain and motivate our officers and key employees,
            and
      o     our ability to identify, attract, hire, train, retain, and motivate
            other highly skilled technical, managerial, marketing and customer
            service personnel.

If we fail to adequately protect our trademarks and proprietary rights, our
business could be harmed.
----------------------------------------------------------------------------
The steps we take to protect our proprietary rights may be inadequate. We regard
our patents, trademarks, trade secrets and similar intellectual property as
critical to our success. We rely on trademark and patent law, trade secret
protection and confidentiality or license agreements with our employees,
customers, partners and others to protect our proprietary rights. Despite these
precautions, it may be possible for a third party to copy or otherwise obtain
and use our intellectual property without our authorization. Although we have
been granted registration rights for our OnScreen(TM) trademark, there is no
assurance our pending trademark applications for RediAlert, RediAd, Living
Window, RDES or RediDMS will be approved. Effective trademark, patent and trade
secret protection may not be available in every country in which we may in the
future offer our products. Therefore, we may be unable to prevent third parties
from infringement on or otherwise decreasing the value of our trademarks,
patents and other proprietary rights.


                                       14
<PAGE>


If we are to remain competitive, we must be able to keep pace with rapid
technological change.
-------------------------------------------------------------------------
Our future success will depend, in part, on our ability to develop or license
leading technologies useful in our business, enhance the ease of use of existing
products, develop new products and technologies that address the varied needs of
our customers, and respond to technological advances and emerging industry
standards and practices on a cost-effective and timely basis. If we are unable,
for technical, legal, financial or other reasons, to incorporate new technology
in new features or products, we may not be able to adapt in a timely manner to
changing market conditions or customer requirements.

We may infringe intellectual property rights of third parties.
--------------------------------------------------------------
Litigation regarding intellectual property rights is common in the software and
technology industries. We may in the future be the subject of claims for
infringement, invalidity or indemnification claims based on such claims of other
parties' proprietary rights. These claims, with or without merit, could be time
consuming and costly to defend or litigate, divert our attention and resources,
or require us to enter into royalty or licensing agreements. There is a risk
that such licenses would not be available on reasonable terms, or at all.
Although we believe we have the ability to use our intellectual property to
operate and market our existing products without incurring liability to third
parties, there is a risk that our products infringe the intellectual property
rights of third parties.

Third parties may infringe on our intellectual property rights
--------------------------------------------------------------
There can be no assurance that other parties will not claim infringement by us
with respect to our current or future technologies. We expect that participants
in our markets will be increasingly subject to infringement claims as the number
of services and competitors in our industry segment grows. Any such claim, with
or without merit, could be time-consuming, result in costly litigation, cause
service upgrade delays or require us to enter into royalty or licensing
agreements. Such royalty or licensing agreements might not be available on terms
acceptable to us, or at all. As a result, any such claim of infringement against
us could have a material adverse effect upon our business, results of operations
and financial condition.

RISKS RELATED TO OUR COMMON STOCK

Our Common Stock price may be volatile, which could result in substantial losses
for individual stockholders.
--------------------------------------------------------------------------------
The market price for our Common Stock is volatile
and subject to wide fluctuations in response to factors including the following,
some of which are beyond our control, which means our market price could be
depressed and could impair our ability to raise capital:

      o     actual or anticipated variations in our quarterly operating results;
      o     announcements of technological innovations or new products or
            services by us or our competitors;
      o     changes in financial estimates by securities analysts;
      o     conditions or trends relating to the LED industry;
      o     changes in the economic performance and/or market valuations of
            other LED related companies;
      o     additions or departures of key personnel;
      o     fluctuations in the stock market as a whole.


                                       15
<PAGE>


Our Certificate of Incorporation limits director liability thereby making it
difficult to bring any action against them for breach of fiduciary duty.
----------------------------------------------------------------------------
As permitted by Colorado law, the Company's Articles of Incorporation limits the
liability of directors to the Company or its stockholders for monetary damages
for breach of a director's fiduciary duty except for liability in certain
instances. As a result of the Company's charter provisions and Colorado law,
stockholders may have limited rights to recover against directors for breach of
fiduciary duty.

We may be unable to meet our future capital requirements.
---------------------------------------------------------
We are substantially dependent on receipt of additional capital to effectively
execute our business plan. If adequate funds are not available to us on
favorable terms we will not be able to develop new services or enhance existing
services in response to competitive pressures, which would affect our ability to
continue as a going concern. We do not anticipate issuing any additional shares
of our Series A or Series B Convertible Preferred Stock as a source of capital.
We cannot be certain that additional financing will be available to us on
favorable terms when required, or at all. If we raise additional funds through
the issuance of equity, equity-related or debt securities, such securities may
have rights, preferences or privileges senior to those of the rights of our
common stock and our stockholders may experience additional dilution.

Penny stock regulations may impose certain restrictions on marketability of our
stock.
-------------------------------------------------------------------------------
The Securities and Exchange Commission (the "Commission") has adopted
regulations which generally define a "penny stock" to be any equity security
that has a market price (as defined) of less than $5.00 per share or an exercise
price of less than $5.00 per share, subject to certain exceptions. As a result,
our Common Stock is subject to rules that impose additional sales practice
requirements on broker-dealers who sell such securities to persons other than
established customers and accredited investors (generally those with assets in
excess of $1,000,000 or annual income exceeding $200,000, or $300,000 together
with their spouse). For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of such
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the rules require the delivery, prior to the transaction,
of a risk disclosure document mandated by the Commission relating to the penny
stock market. The broker-dealer must also disclose the commission payable to
both the broker-dealer and the registered representative, current quotations for
the securities and, if the broker-dealer is the sole market maker, the
broker-dealer must disclose this fact and the broker-dealer's presumed control
over the market. Finally, monthly statements must be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. Consequently, the "penny stock" rules may
restrict the ability of broker-dealers to sell our securities.

We have never paid dividends on our Common Stock and do not expect to pay any in
the foreseeable future. We are subject to restrictions on our ability to pay
dividends.
--------------------------------------------------------------------------------
A potential purchaser should not expect to receive a return on their investment
in the form of dividends on our Common Stock. We have never paid cash dividends
on our Common Stock and we do not expect to pay dividends in the foreseeable
future. Our ability to pay dividends on our Common Stock is restricted by the
terms of our agreements with the holders of our Series A and Series B
Convertible Preferred Stock. Holders of our Series A Preferred Stock are
entitled to annual dividends of 10% (currently aggregating $54,783 quarterly,
assuming no conversion). Holders of our Series B Convertible Preferred Stock are
entitled to annual dividends of $1.00 per share. Currently all Series B
Convertible Preferred Stock has been converted to common shares. To date, we
have fulfilled our dividend obligations on the Series A Convertible Preferred
Stock through the issuance of additional shares of our Series A Convertible
Preferred Stock to the holders of our series A Preferred Stock as well as cash
payments. We have accrued approximately $18,000 regarding the Series B
Convertible Preferred Stock dividends.


                                       16
<PAGE>


Substantial sales of our Common Stock could cause our stock price to rapidly
decline.
----------------------------------------------------------------------------
The market price of our Common Stock may fall rapidly and significantly due to
sales of our Common Stock from other sources such as:
      o     The sale of Common Stock underlying the conversion rights of our
            Series A Convertible Preferred Stock and Series B Convertible
            Preferred Stock.
      o     The sale of shares of our Common Stock underlying the exercise of
            outstanding options and warrants.
      o     The sale of shares of our Common Stock, which are available for
            resale under Rule 144 or are otherwise freely tradable and which are
            not subject to lock-up restrictions.

Any sale of substantial amount of our Common Stock in the public market, or the
perception that these sales might occur, whether as a result of the sale of
Common Stock received by shareholders upon conversion of our Series A or Series
B Convertible Preferred Stock, exercise of outstanding warrants or options or
otherwise, could lower the market price of our Common Stock. Furthermore,
substantial sales of our Common Stock by such parties in a relatively short
period of time could have the effect of depressing the market price of our
Common Stock and could impair our ability to raise capital through the sale of
additional equity securities.

The covenants with our Series A and Series B Convertible Preferred Stock
shareholders restrict our ability to incur debt outside the normal course,
acquire other businesses, pay dividends on our Common Stock, sell assets or
issue our securities without the consent of the Series A Convertible Preferred
and Series B Convertible Preferred Stock Shareholders. Such arrangements may
adversely affect our future operations or may require us to make additional
concessions to the holders of the Series A Convertible Preferred Stock and
Series B Convertible Preferred Stock in order to enter into transactions or take
actions management deems beneficial and in our best interests of the holders of
our Common Stock.

The forward-looking information in this Form 10-KSB may prove inaccurate.
-------------------------------------------------------------------------
This Form 10-KSB contains forward-looking statements and information that are
based on management's beliefs as well as assumptions made by, and information
currently available to, management. When used in this prospectus, words such as
"anticipate," "believe," "estimate," "expect," and, depending on the context,
"will" and similar expressions, are intended to identify forward-looking
statements. Such statements reflect our current views with respect to future
events and are subject to certain risks, uncertainties and assumptions,
including the specific risk factors described above. Should one or more of these
risks or uncertainties materialize, or should underlying assumptions prove
incorrect, actual results may vary materially from those anticipated, believed,
estimated or expected. We do not intend to update these forward-looking
statements and information.

ITEM 2.  DESCRIPTION OF PROPERTY

OnScreen Technologies, Inc. owns no real estate. On March 29, 2001 the Company
signed a lease with Safety Harbor Centre commencing May 1, 2001 for five years
with an option for five additional years. The lease became effective August 27,
2001, the date that the Company first occupied the facility, at an initial
monthly rental of $10,972.24 (Common Area Maintenance and tax not included).
Effective February 1, 2004, the Company negotiated with the lessor a reduction
of the office rental space with a resulting monthly gross rent reduction of
$2,465.97. On October 15, 2004 the Company leased an additional office suite
contiguous to the existing offices at a monthly rental of $2,814 (Common Area
Maintenance and tax not included).


                                       17
<PAGE>


ITEM 3.  LEGAL PROCEEDINGS

On July 1, 2004, the Company filed a lawsuit against Mobile Magic Superscreen,
Ltd. (breach of contract and civil conversion), Capitol City Trailers, Inc.
(civil conversion) and another party (civil fraud) in the Court of Common Pleas
of Franklin County, Ohio, Case Number 04 CVH 6884. This lawsuit relates to the
2001 contract with Mobile Magic Superscreen, Ltd. for the fabrication of a
mobile LED superscreen that Mobile Magic failed to complete and deliver.
Responses to the summons and complaint have been filed and the case is currently
in the discovery process.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No items were submitted to a vote of security holders during the fourth quarter
of 2004.

                                     PART II

ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

Market Value
------------
Our Common Stock is traded on the OTC Bulletin Board (OTCBB) under the trading
symbol "ONSC". The following table sets forth, the high and low bid prices of
our Common Stock for the four quarters of 2003 and 2004 as reported by the
National Quotation Bureau. The bid prices quoted on the OTCBB reflect
inter-dealer prices without retail mark-up, markdown or commission and may not
represent actual transactions.

         Year         Quarter                 High Bid          Low Bid
         ----     -------------               ---------         -------
         2003     First Quarter                 .390               .320
                  Second Quarter                .260               .180
                  Third Quarter                 .300               .240
                  Fourth Quarter               1.050               .850

         2004     First Quarter                1.090               .830
                  Second Quarter                .950               .650
                  Third Quarter                 .920               .610
                  Fourth Quarter               1.070               .620

Description of Securities
-------------------------
During the December 18, 2003 shareholders' meeting, the shareholders voted to
amend the Company's Restated Articles of Incorporation to affect an increase in
the number of $0.001 par value common stock shares from 15,000,000 to
150,000,000 authorized common shares ("Common Stock"). The Company authorized
10,000,000 shares of $0.001 par value Preferred Stock ("Preferred Stock"),
issuable in series. The following description of our capital stock does not
purport to be complete and is subject to and qualified in its entirety by our
Articles of Incorporation and Bylaws, amendments thereto, including the
Certificates of Designation for our Series A Convertible Preferred Stock, and
Series B Convertible Preferred Stock and by the provisions of applicable
Colorado law. Our transfer agent is Computershare Trust Company, Inc., 350
Indiana Street, Suite 800, Golden, Colorado 80401.


                                       18
<PAGE>


Common Stock
------------
As of December 31, 2004, there were 63,680,020 shares of our Common Stock issued
and outstanding and subject to 7,960,000 warrants and options that were issued
principally in consideration for the offering of Units as discussed hereafter
and consulting services rendered by others. The exercise prices range from
$0.001 to $1.50 per share. As of December 31, 2004, we had in excess of 3,000
shareholders of record.

The holders of Common Stock are entitled to one vote per share for the election
of directors and all other purposes and do not have cumulative voting rights.
There is a restriction on the payment of any common stock dividends because any
cumulative preferred stock dividends are required to be paid prior to the
payment of any common stock dividends. Also, the retained earnings of the
Company would be restricted upon an involuntary liquidation by the cumulative
unpaid preferred dividends to the preferred stockholders and for the $1.00 per
share Series A and $240 per share Series B liquidation preferences. Holders of
our Common Stock do not have any pre-emptive or other rights to subscribe for or
purchase additional shares of capital stock, no conversion rights, redemption,
or sinking-fund provisions.

We have not paid any dividends on our common stock since inception. We expect to
continue to retain all earnings generated by our operations for the development
and growth of our business and do not anticipate paying any cash dividends to
our common shareholders in the foreseeable future. The payment of future
dividends on the common stock and the rate of such dividends, if any, will be
determined by our Board of Directors in light of our earnings, financial
condition, capital requirements and other factors.

The Company entered into a stock purchase agreement on October 31, 2003 whereby
the buyer agreed to purchase 1,000,000 shares of the Company's common stock for
$250,000 and also received warrants to purchase up to 1,000,000 shares of the
Company's common stock at an exercise price of $0.50 with an expiration date of
February 28, 2004. Subsequent to year end, this subscription was not fulfilled
and the warrants expired.

During 2004, the Company issued 50,000 shares of its common stock pursuant to
the exercise of the rights of certain note holders granted under the default
provisions of certain promissory notes. The issuance resulted in additional
subscriptions receivable of $1,250 for a total issuance price of $1,250 or
$0.025 per share.

During 2004, warrants to purchase 1,420,736 shares of the Company's common stock
were exercised. The Company received $350,184 of cash and a note for the
remaining $150,000. The $150,000 owed to the Company was not paid for the
300,000 shares that were recorded as issuable during 2004 and on October 11,
2004, the Company and investor agreed that they would not issue the 300,000
shares and would not collect the $150,000 owed for those shares. The Company
issued 1,120,736 shares of its common stock for the warrants that were exercised
and paid.

As part of the October 11, 2004 agreement with a certain investor, the Company
also agreed to issue 100,000 shares of stock to this party for the services they
provided to the Company during the Company's negotiations with a third party
which included the forgiveness by the third party of dividends that accrued on
114,343 shares of Series A Convertible Preferred Stock. These shares were valued
at $0.27 per share based on contemporaneous cash sales around the date of grant.
The Company recorded the $27,000 as general consulting expense.


                                       19
<PAGE>


During 2004, the Company granted and issued 100,000 shares of its common stock
to a research and development provider. These shares were valued at $0.27 per
share based on contemporaneous cash sales around the date of grant. The $27,000
was expensed to research and development costs

During 2004, a former employee exercised an option to purchase 5,000 shares of
the Company's common stock at an exercise price of $0.40 per share. The Company
received $2,000 for the exercise of this option.

During 2004, the Company issued 100,000 shares of its common stock to an
individual for services. These shares were valued based upon the quoted market
price of $1.06 on the date of grant and the expense of $106,000 was recorded
during 2004.

During 2004, the Company issued 1,666,312 shares of its common stock to its
President/CEO in accordance with his employment agreement. These shares were
valued based upon the quoted market price of $0.86 on the grant date and the
expense of $1,433,028 was recorded during 2004.

During 2004, the Company issued 450,000 shares of its common stock to the
President of its OnScreen Products Division. The Company has a right to
repurchase 300,000 of these shares from the employee for $450 if the employee is
terminated for cause or resigns. The amount of shares that can be repurchased by
the Company declines by 150,000 shares each year, resulting in the shares being
fully vested on November 1, 2006. The shares were valued at $454,500 based upon
the quoted market price of $1.01 on the grant date.

Certain notes were paid in full on March 12, 2004 by paying the note holders
$250,000 and issuing 12,500 shares of the Company's common stock. These shares
were valued at $11,500 based on the quoted market price of $0.92 on the
settlement date

During 2004, a note holder exercised the right to convert a $215,861 note into
863,442 shares of the Company's common stock.

A creditor held a convertible promissory note for $234,869 at 8% interest
accruing from the note date of August 1999. The Company disputed the note;
however, as a contingency, the Company recorded a total of $328,058 in accrued
expenses at December 31, 2003 related to this matter. On February 5, 2004, the
Company satisfied this disputed note with 60,000 shares of the Company's common
stock. These shares were valued at $60,600 based upon the quoted market price of
$1.01 on the settlement date.

During 2004, the Company recorded a settlement loss of $13,500 for 50,000 shares
of its common stock that were issued to a third party. These shares were valued
at $0.27 per share based on contemporaneous cash sales.

Convertible Preferred Stock Series A
------------------------------------
The Company designated 5,000,000 shares of preferred stock as new Series A
Convertible Preferred Stock ("Series A"). The Series A is convertible to common
shares on a four-for-one ratio, is due dividends at $0.10 per share as
authorized by the Board, has a liquidation value of $1.00 per share and has
equivalent voting rights as common shares on a share for share basis. As of
December 31, 2004 there were 2,772,205 shares of our Series A Convertible
Preferred Stock issued and outstanding.


                                       20
<PAGE>


During 2004, the Company sold and issued 25,000 shares of Series A Convertible
Preferred Stock for cash at $1.00 per share for total proceeds of $25,000. Also,
the Company received payment of $50,000 for the Series A Convertible Preferred
Stock subscription during 2003 and issued the 50,000 shares of Series A
convertible preferred stock that was issuable at December 31, 2003.

During 2004, the Company issued 12,500 shares of its Series A Convertible
Preferred Stock for consulting services totaling $12,500. These shares were
valued at $1.00 per share based on contemporaneous cash sales.

During 2004, the Company issued 24,000 shares of Series A Convertible Preferred
Stock for services totaling $24,000 that was accrued as a liability at December
31, 2003. These shares were valued at $1.00 per share based on contemporaneous
cash sales.

During 2004, the Company issued 120,000 shares of its Series A Convertible
Preferred Stock to its COO/CFO in accordance with his employment agreement.
These 120,000 shares were valued at $1.00 per share based on contemporaneous
cash sales around the grant date. The total value of these shares of $120,000 is
being expensed over the three-year employment agreement with $80,000 deferred
and $40,000 expensed as of December 31, 2004.

During 2004, the Company converted 98,375 shares of Series A Convertible
Preferred Stock into 393,500 shares of the Company's common stock at the request
of certain Series A Convertible Preferred Stock holders.

During 2004, the Company recorded $172,000 for the intrinsic value associated
with the embedded beneficial convertible feature of the Series A Convertible
Preferred Stock. This amount was computed as the difference between the
conversion price and the fair value of the preferred stock, which was computed
as the fair value of the common stock based on the quoted trading price at the
preferred stock issuance dates, multiplied by the conversion ratio of
four-for-one for Series A. This intrinsic value is limited to the amount of the
proceeds allocated to the preferred stock. For financial statement purposes,
this $172,000 was recorded as a preferred stock dividend. Additionally during
2004, the Company recorded Series A convertible preferred stock dividends of
$270,583.

Convertible Preferred Stock Series B
------------------------------------
On February 3, 2004, the Company's board of directors designated 30,000 shares
of preferred stock as Series B Convertible Preferred Stock ("Series B"). The
Series B is convertible to common shares on a one thousand-for-one ratio, is due
dividends at $1.00 per share, payable quarterly, as authorized by the Board and
the dividends are cumulative. Series B has a liquidation value of $240 per share
and has voting rights of one thousand votes per Series B share. There were no
shares of Series B Convertible Preferred Stock issued as of December 31, 2004.
During 2004, the Company recorded 28,568 shares of Series B Convertible
Preferred Stock as issuable. This is comprised of 23,203 Series B shares
issuable to the private placement unit holders during 2003 and the exercise of
certain warrants during 2004 and 5,365 Series B shares issuable to private
placement shareholders during 2004. The 28,568 shares of Series B were converted
to 28,568,240 shares of common stock during 2004

During 2004, the Company recorded $28 for the intrinsic value associated with
the embedded beneficial convertible feature of the Series B convertible
preferred stock. This amount was computed as the difference between the
conversion price and the fair value of the preferred stock, which was computed
as the fair value of the common stock based on the quoted trading price at the


                                       21
<PAGE>


preferred stock issuance dates, multiplied by the conversion ratio of one
thousand-for-one for Series B. This intrinsic value is limited to the amount of
the proceeds allocated to the preferred stock. For financial statement purposes,
this $28 was recorded as a preferred stock dividend. Additionally during 2004,
the Company recorded Series B convertible preferred stock dividends of $17,901.

2003 Private Placement
----------------------
During the fourth quarter of 2003, the Company had a private placement offering
of common stock. From this offering, the Company received $1,575,000 of cash
proceeds and recorded a $100,000 subscriptions receivable at December 31, 2003.
The investors received 6,700,000 common stock shares, 6,700,000 common stock
warrants with an exercise price of $0.50 and an expiration date of February 28,
2004 and 3,350,000 common stock warrants with an exercise price of $0.75 and an
expiration date of May 30, 2004 (See Note 7H for details of warrants). The
Company issued 5,900,000 shares of common stock during the first quarter of 2004
related to this private placement.

The remaining 800,000 shares from this private placement will not be issued
because during July 2004, the Company and this party mutually terminated the
subscription agreement and the Company paid back the $100,000 originally paid,
reduced the subscription receivable of $100,000 to zero and did not issue the
800,000 shares that were recorded as issuable to this investor. The Company also
reduced its Series B convertible preferred stock issuable for the 1,433 shares
of Series B related to this transaction. In addition, the Company paid $68,121
as settlement of other amounts owed to this individual. The $68,121 was recorded
as a settlement loss during 2004.

On February 5, 2004, as part of the private placement the Company's Board of
Directors authorized: a) 12,000 shares of Series B Convertible Preferred Stock
to the private placement unit holders, b) 12,000 shares of Series B Convertible
Preferred Stock upon the exercise of the $0.50 warrant holders of the private
placement and c) 6,000 shares of Series B Convertible Preferred Stock upon the
exercise of the $0.75 warrant holders of the private placement.

During 2004, warrants were exercised to purchase 6,700,000 shares of common
stock from the private placement at $0.50 per share and warrants were exercised
to purchase 355,333 shares of common stock from the private placement at $0.75
per share. The Company received $3,616,500 of cash from the exercise of these
warrants.

In conjunction with raising these funds, the Company paid in cash, offering
costs of $229,750 during 2003 and $482,946 during 2004. The Company also issued
630,000 warrants during 2003 with an exercise price of $0.001 per share that
expire sixty days from their issuance valued at $541,170, which cost is included
in warrants granted for services in the additional paid-in capital (total
offering costs of $770,920 during 2003) (See Note 7H).

2004 Private Placement
----------------------
During the third and fourth quarters of 2004, the Company sold some of its
securities through a private placement. Each unit in the 2004 private placement
was comprised of 666.67 shares of common stock and 1.194 shares of Series B
Preferred Stock for each $500 received. During the third and fourth quarters of
2004, the Company received $2,246,456 of proceeds related to this 2004 private
placement. The Company issued 2,995,274 shares of common stock and the 5,364.54
shares of series B convertible preferred stock were converted into common stock
totaling 5,364,540 shares.


                                       22
<PAGE>


Investment Agreement
--------------------
The Company had a prior agreement with Swartz Private Equity, LLC (Swartz) to
provide certain funding to the Company based upon this agreement. If the Company
did not meet certain requirements in the agreement the Company was also subject
to a penalty of up to $100,000 for each six month period and a $200,000 penalty
if the put agreement is terminated automatically or by the Company. At January
1, 2003, the Company owed $200,000 of penalties and during 2003, the Company
computed $200,000 in penalties and $300,000 in penalties was waived by Swartz
which resulted in a $100,000 accrued commitment penalty at December 31, 2003.

At January 1, 2003, Swartz had warrants to purchase 541,558 shares of the
Company's common stock. During 2003, the Company and Swartz entered into an
amendment to this agreement which extended the terms of each of the 541,558
warrants by two additional years. On October 22, 2003, Swartz exercised all of
the 541,558 warrants in a cashless exercise transaction which resulted in Swartz
being entitled to receive 379,907 shares of the Company's common stock.

On February 3, 2004, the Company and Swartz entered into a settlement and
termination of investment agreement. The Company agreed to: i) pay $10, ii)
promptly issue the 379,907 shares of common stock from the cashless exercise of
the Swartz warrants of which Swartz agreed to limit its sales of these shares of
Company stock to ten percent of the Company's trading volume for any calendar
month, iii) Swartz shall retain the 100,000 shares of stock that had been issued
during 2002 per the initial agreement and then were not valid as put shares as
the put transaction was never executed, but the shares had been issued to Swartz
and v) the investment agreement between the Company and Swartz shall terminate
subject to the completion of items i - iv above. During February 2004, the
Company issued the 379,907 shares of common stock (without any restrictive
legends).

The 100,000 share were valued at $104,000 using the quoted marked price of $1.04
on the date of settlement. This $104,000 settled the $100,000 commitment payable
that was owed to Swartz at December 31, 2003 and the remaining $4,000 was
recognized as a settlement loss.

Non-Employee Stock Warrants
---------------------------
During 2003, the Company reset the exercise price of warrants issued in a prior
year to Swartz as follows: 25,478 warrants at $0.20; and 200,000 warrants at
$0.25. The result under the variable accounting method was a net charge to
commitment expense of $12,349 during 2003. During 2003, the Company and Swartz
entered into an amendment to their agreement which extended the terms of each of
their 541,558 warrants by two additional years and the Company recorded an
additional expense of $53,777 related to these extensions.

During 2003, the Company granted warrants to purchase 2,105,000 shares of the
Company's common stock to certain service providers at exercise prices ranging
from $0.001 to $0.75. These warrants were valued at an aggregate of $766,509.
The Company recorded $541,170 of the value of these warrants as offering costs
during 2003 and the remainder of $225,339 is recognized as consulting expense
over the period of each consultants agreement. These warrants were valued using
the Black-Schools Options Pricing Model using the following assumptions:
expected life of 30 - 428 days, volatility of 161% - 253%, zero expected
dividends and a discount rate of 0.91% to 1.2%. The expiration date of a warrant
that was issued during 2003 for 50,000 shares was extended for one year during
2004. At December 31, 2004, 125,000 of these warrants are outstanding.


                                       23
<PAGE>


On November 12, 2003, the Company granted a warrant to purchase 50,000 shares of
its common stock at an exercise price of $0.25 with an expiration date of
November 11, 2004 in conjunction with a settlement of monies owed. These
warrants were valued at $0.8214 per warrant, or $41,070 using the Black-Schools
Options Pricing Model using the following assumptions: expected life of 1 year,
volatility of 209%, zero expected dividends and a discount rate of 0.94%. These
warrants expired during 2004.

During 2003 the Company granted 300,000 warrants under the default provisions of
certain notes payable which were valued at $122,500 and charged to interest
expense using the Black-Schools option pricing model with a 30 day expected
life, volatility of 110% - 282%, zero expected dividends and a discount rate of
0.89% - 1.20%. All of these warrants were exercised during 2003.

During the fourth quarter of 2003, the Company had a private placement offering
of common stock. In conjunction with this offering, the Company granted
6,700,000 common stock warrants with an exercise price of $0.50 with a February
28, 2004 expiration date and 3,350,000 common stock warrants with an exercise
price of $0.75 with a May 30, 2004 expiration date. During May 2004, the Board
of Directors extended the exercise date of the $0.75 warrants from May 30, 2004
to June 30, 2004. At December 31, 2004, all of these warrants had been
exercised. See Note 7H

On October 31, 2003, the Company granted a warrant to purchase up to 1,000,000
shares of its common stock at an exercise price of $0.50 with an expiration date
of February 28, 2004. These warrants were granted in conjunction with a stock
purchase agreement dated October 31, 2003 to purchase 1,000,000 shares of the
Company's common stock for $0.25 per share. These warrants were expired at
December 31, 2004.

During 2004 the Company granted warrants to purchase 1,395,736 shares of the
Company's common stock to certain service providers at exercise prices ranging
from $0.25 to $0.50. These warrants were valued at an aggregate of $707,352 and
are recognized as consulting expense over the period of each consultant's
agreement. These warrants were valued using the Black-Schools Options Pricing
Model using the following assumptions: expected life of 90 days - 3 years,
volatility of 79% - 309%, zero expected dividends and a discount rate of 0.85%
to 2.03%. At December 31, 2004, 725,000 of these warrants are outstanding.

During 2004 the Company granted warrants to purchase 50,000 shares of the
Company's common stock under the default provisions of certain notes payable at
an exercise price of $0.025. These warrants were valued at $46,500 and charged
to interest expense using the Black-Schools option pricing model with a 30 day
expected life, volatility of 74% - 100%, zero expected dividends and a discount
rate of 0.85% - 0.92%. All of these warrants were exercised during 2004.

Employee Stock Options and Warrants
-----------------------------------
On June 26, 2000, the Company's Board of Directors adopted the OnScreen
Technologies, Inc. 2000 Stock Option Plan (the "Plan"). The Plan provides for
the issuance of incentive stock options (ISO's) to any individual who has been
employed by the Company for a continuous period of at least six months. The Plan
also provides for the issuance of Non Statutory Options (NSOs) to any employee
who has been employed by the Company for a continuous period of at least six
months, any director, or consultant to the Company. The Company may also issue
reload options as defined in the plan. The total number of common shares of
common stock authorized and reserved for issuance under the Plan is 600,000
shares. The Board shall determine the exercise price per share in the case of an


                                       24
<PAGE>


ISO at the time an option is granted and such price shall be not less than the
fair market value or 110% of fair market value in the case of a ten percent or
greater stockholder. In the case of an NSO, the exercise price shall not be less
than the fair market value of one share of stock on the date the option is
granted. Unless otherwise determined by the Board, ISO's and NSOs granted under
the Plan have a maximum duration of 10 years.

The Company accounts for its stock-based compensation using the intrinsic value
method prescribed by Accounting Principles Board Opinion No. 25, "Accounting for
Stock Issued to Employees"; accordingly, the differences between the exercise
prices and the fair values of the common stock underlying the options on the
dates of the grants are recorded as a compensation expense.

During the first quarter of 2004, the Company issued warrants to the COO/CFO and
a director each to purchase 100,000 shares of the Company's common stock
(200,000 in total). These warrants were valued at $149,000 under the intrinsic
value method of APB 25 based on quoted market prices and will be recorded as
compensation expense over the service period.

During 2004, a member of the Board of Directors was granted a five-year warrant
to purchase 600,000 shares of common stock with an exercise price of $0.25 for
services provided.

During 2004, the COO was granted a five-year warrant to purchase 500,000 shares
of common stock with an exercise price of $0.25 for services provided.

For additional services to be provided, the President, OnScreen Products
Division was granted a five-year warrant to purchase 2,000,000 shares of common
stock with an exercise price of $0.25 for services provided. This warrant can be
exercised on or after November 1, 2006. The warrant expires if the employee does
not complete his full employment term through October 31, 2006.

The Director of Administration was granted a five-year warrant to purchase
600,000 shares of common stock with an exercise price of $0.25 for services
provided.

During 2004, a total of 40,000 of stock options were granted to two employees.
The exercise price exceeded the fair value of common stock based on
contemporaneous common stock cash sales during 2004; therefore no compensation
expense was recorded as there was no intrinsic value.

Certain Provisions of the Articles of Incorporation and Colorado Business
Corporation Act
-------------------------------------------------------------------------
Our Articles of Incorporation provides that, "To the fullest extent permitted by
Colorado Business Corporation Act as the same exists or may hereafter be
amended, a director of the corporation shall not be liable to the corporation or
its shareholders for monetary damages for breach of fiduciary duty as a
director."

The Company shall indemnify and advance expenses to a director or officer in
connection with a proceeding to the fullest extent permitted or required by or
in accordance with the indemnification sections of the Colorado Business
Corporation Act that provides that, "The corporation shall indemnify a person
who was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection with
the proceeding."


                                       25
<PAGE>


Shares Eligible for Future Sale
-------------------------------
As of December 31, 2004, we had outstanding 63,680,020 shares of Common Stock.
Of these shares, 12,173,665 shares are freely tradable without restriction or
limitation under the Securities Act.

The 51,506,355 shares of Common Stock held by existing shareholders as of
December 31, 2004 that are "restricted" within the meaning of Rule 144 adopted
under the Securities Act (the "Restricted Shares"), may not be sold unless they
are registered under the Securities Act or sold pursuant to an exemption from
registration, such as the exemption provided by Rule 144 promulgated under the
Securities Act. The Restricted Shares were issued and sold by us in private
transactions in reliance upon exemptions from registration under the Securities
Act and may only be sold in accordance with the provisions of Rule 144 of the
Securities Act, unless otherwise registered under the Securities Act.

As of December 31, 2004, we had issued and outstanding 2,772,205 shares of
Series A Convertible Preferred Stock, all of which are "restricted" within the
meaning of Rule 144 as noted above.

The possibility of future sales by existing stockholders under Rule 144 or
otherwise will, in the future, have a depressive effect on the market price of
our Common Stock, and such sales, if substantial, might also adversely affect
our ability to raise additional capital.

ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS

Overview
--------
OnScreen Technologies, Inc. is a publicly traded company (OTC-BB: ONSC) focused
on commercializing its innovative technology to the world of visual
communications. The company concentrates on motion display solutions and seeks
to develop innovative approaches to visual communication and advertising
products and delivery systems. The Company is focused on the design,
development, licensing and sale of LED products manufactured with the
OnScreen(TM) LED technology architecture.

The Company expects delivery of the initial products in the first half of 2005.
Until the initial products are delivered, the Company does not expect to record
any significant increase in revenues. Although the EyeCatcherPlus and the mobile
LED jumbo screen truck are believed to be economically viable, management has
assigned the rights to the EyeCatcherPlus screens to a third party for 5% of the
revenues generated and continues to receive revenues from the mobile LED unit.
The majority of management's focus is concentrated on the Company product
development and marketing. Through licensing agreements and some established
accounts, the Company expects to receive some revenue from its mobile LED truck
and the motion display boards during 2005. The Company wrote-off the
EyeCatcherPlus screens during 2004 as the revenue generated was not sufficient
enough to support the value of the screens.

A priority of management during 2004 has been and is to raise the capital needed
to continue to fund the development and marketing of the Company's products.
During the year ended December 31, 2004, the Company received proceeds from
sales of common stock totaling $5,632,194 comprised of $3,133,554, net of
offering costs from the exercise of the $0.50 and some of the $0.75 warrants
that were issued to the 2003 private placement unit holders, $2,246,456 from the
2004 private placement, $352,184 from other warrants and options exercised less
$100,000 that was paid back to an investor whose subscription agreement was
terminated. During 2005, management is continuing to pursue private equity
funding. These funds will enable the Company to develop its OnScreen(TM) LED
technology products and continue the Company's operations until the Company
brings the products to market.


                                       26
<PAGE>


During the year ended December 31, 2004, the Company continued to incur
significant losses from operations. The Company incurred a net loss of
$7,904,229 for the year ended December 31, 2004. This net loss of $7,904,229
includes non-cash charges of approximately $4.3 million for equity given to
employees and consultants for services provided.

CRITICAL ACCOUNTING POLICIES

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 have a significant impact on the results we
report in the Company's financial statements. Some of the Company's accounting
policies require us to make difficult and subjective judgments, often as a
result of the need to make estimates of matters that are inherently uncertain.
Actual results may differ from these estimates under different assumptions or
conditions.

Asset Impairment
----------------
The Company reviews its long-lived assets for impairment whenever events or
changes in circumstances indicate that the carrying amount of the asset exceeds
its fair value and may not be recoverable. In performing the review for
recoverability, the Company estimates the future cash flows expected to result
from the use of the asset and its eventual disposition. If the sum of the
expected future cash flows (undiscounted and without interest charges) is less
than the carrying amount of the asset, an impairment loss is recognized as the
excess of the carrying amount over the fair value. Otherwise, an impairment loss
is not recognized. Management estimates the fair value and the estimated future
cash flows expected. Any changes in these estimates could impact whether there
was impairment and the amount of the impairment.

Valuation of Non-Cash Capital Stock Issuances
---------------------------------------------
The Company values its stock transactions based upon the fair value of the
equity instruments. Various methods can be used to determine the fair value of
the equity instrument. The Company may use the fair value of the consideration
received, the quoted market price of the stock or a contemporaneous cash sale of
the common or preferred stock. Each of these methods may produce a different
result. Management uses the method it determines most appropriately reflects the
stock transaction. If a different method was used it could impact the expense,
deferred stock and equity stock accounts.

LIQUIDITY AND CAPITAL RESOURCES

General
-------
The Company's cash and cash equivalents balance at December 31, 2004 is
$1,561,650 and its marketable securities available-for-sale is $401,233. Its
working capital balance at December 31, 2004 is $1,465,819. The Company has
funded its operations and investments in equipment through cash from operations,
equity financings and borrowing from private parties as well as related parties.
It has also funded its operations through stock paid to vendors, consultants and
certain employees.


                                       27
<PAGE>


Cash used in operations
-----------------------
The Company's operating requirements generated a negative cash flow from
operations of $3,868,265 during 2004. This includes payments to settle several
existing payables and accrued expenses, which reduced the payables and accruals
by $460,949 from December 31, 2003. The Company does not expect to have
significant cash settlement payments during 2005.

During 2004, the Company has used stock and warrants as a form of payment to
certain vendors, consultants and employees. The Company expensed approximately
$4.3 million related to these equity payments.

As the Company focuses on the OnScreen(TM) technology during 2004, it will
continue to fund research and development related to the Company's products as
well as sales and marketing efforts related to these products. The Company does
not expect to record much revenue and will continue to use cash in its operating
activities until its product line is commercialized which is expected to be
during the first half of 2005. The Company will outsource the production of its
products during 2005.

Capital Expenditures
--------------------
During the first quarter of 2004, the Company made payments of $575,000, for the
remaining OnScreen(TM) royalty payments and receipt of the inventor's contract
rights, including all royalty rights in the License Agreement of which $522,500
was recorded as an investment in technology rights and will be amortized over a
20-year life.

The Company capitalized $48,657 of patent expenses during 2004. These costs will
be amortized over the life of the patents once approved or expensed if not
approved. The Company will continue to incur and capitalize costs associated
with patenting its technology during 2005.

The Company invested approximately $118,000 in equipment which was mainly
computer equipment used for sales, marketing, research and development and
administration and for two automobiles during 2004. The automobiles display
signage advertising the Company's products and will be used to advertise the
products of the Company at trade shows. During 2005, the Company anticipates
that its capital expenditures will not significantly change. The Company plans
to outsource the manufacture of its products.

Financing activities
--------------------
During the fourth quarter of 2003 and into the first quarter of 2004, the
Company undertook a private placement of investment Units, each investment Unit
consisting of 4,000 shares of our common stock, a warrant to purchase 4,000
shares of common stock at a price of $0.50 per share ("Warrant #1") and a
warrant to purchase 2,000 shares of common stock at a price of $0.75 per share
("Warrant #2"). Additionally, through a 2004 amendment to the private placement,
purchasers of Units received an aggregate of 23,203 shares of our Series B
Convertible Preferred Stock as follows:

          10,567  shares pro-rata upon purchase of Units;
          12,000  shares pro-rata to investors who exercised Warrant #1; and
             636  shares pro-rata to investors who exercised Warrant #2.

During 2004, the Company received $3,350,000 ($2,867,054 net of cash offering
costs) of cash, related to the exercise of the $0.50 Warrants #1 and issued
6,700,000 shares of its common stock and the 12,000 shares of its Series B
Preferred Stock was converted to 12,000,000 shares of common stock.


                                       28
<PAGE>


During 2004, the Company received $266,500 of cash proceeds from the exercise of
some of the $0.75 Warrants #2 and issued 355,333 shares of its common stock and
the 636 shares of its Series B Preferred Stock was converted to 636,402 shares
of common stock.

During the second half of 2004, the Company received $2,246,456 of cash proceeds
from its 2004 private placement and issued 2,995,274 shares of its common stock
and the 5,365 shares of its Series B Preferred Stock was converted to 5,364,536
shares of its common stock. This 2004 private placement was comprised of 666.67
shares of common stock and 1.194 shares of Series B Preferred Stock for each
$500 received.

Also during the third quarter of 2004, the Company paid an investor $100,000
that was previously received for the purchase of common stock as the agreement
with that investor was mutually terminated.

During the year ended December 31, 2004, the Company received $352,184 from the
exercise of other warrants and options.

During the first quarter of 2004, the company received $75,000 from the sale of
Series A Convertible Preferred Stock.

During the first quarter of 2004, the Company paid certain note holders in full
on March 12, 2004 by paying the note holders $250,000 and issuing 12,500 shares
of the Company's common stock. Also, the Company satisfied notes of $50,000 and
$2,511 during 2004.

The Company paid $257,347 of Series A Convertible Preferred Stock dividends
during 2004 and the Company will have Series A Convertible Preferred Stock
dividend payments going forward.

Recap of liquidity and capital resources
----------------------------------------
The Company believes that the cash generated from the late 2003 and 2004 private
placements and the cash generated from operations, should be sufficient to meet
its working capital requirements for the next twelve months. However, the
Company anticipates expanding and developing additional technology and product
lines which may require additional funding. If additional funding is needed, the
Company will attempt to raise these funds through borrowing instruments or
issuing additional equity.

The Company is adequately confident that equity financing or debt will be
available to fund its operations until revenue streams are sufficient to fund
operations; however, the terms and timing of such equity or debt cannot be
predicted. Management expects the OnScreen(TM) LED technology to be
commercialized during the first half of 2005 and to begin generating revenue
from the patent protected OnScreen(TM) LED architecture product line by the late
first half of 2005. The Company cannot assure that it will generate revenues by
that date or that its revenues will be sufficient to cover all operating and
other expenses of the Company. If revenues are not sufficient to cover all
operating and other expenses, the Company will require additional funding.


                                       29
<PAGE>


Off-Balance Sheet Arrangements
------------------------------
As of December 31, 2004, we have no off-balance sheet arrangements.

RESULTS OF OPERATIONS

The accompanying financial statements reflect the operations of the Company for
the fiscal years ended December 31, 2004 and 2003.

Revenue
-------
Revenue was lower during year ended December 31, 2004 compared to the same
period in the prior year due to the assignment of EyeCatcherPlus displays and
the current focus on the development of the OnScreenTM LED technology products.
The revenue for the year ended December 31, 2004 was $145,988 comprised mainly
of LED truck revenue of $83,580. The revenue for year ended December 31, 2003
was $308,634 comprised mainly of $62,700 from the sale of EyeCatcherPlus
displays, $93,058 from the rent revenue of the EyeCatcherPlus displays and
$115,204 from LED truck revenue.

During 2005, the Company may receive some indirect revenue from its assignment
of the EyeCatcherPlus business. Although the Company is no longer seeking new
EyeCatcherPlus customers because of the assignment of the EyeCatcherPlus
business, the Company is still encouraging new business development for the
mobile LED truck because it remains a source of revenue. Management does not
expect the Company's revenue to increase until the shipment of the OnScreen(TM)
LED technology product line during the late first half of 2005.

During 2004, 36% of revenues were derived from two customers at 25% and 11%.

Cost of revenue
---------------
There was cost of revenue of $0 and $125,021 for the years ended December 31,
2004 and 2003, respectively. The 2003 cost of sales comprised principally of
$49,112 Boards Shrinkage (damage, lost and stolen boards) and $74,400 related to
the EyeCatcherPlus displays.

Selling, General and Administrative Expenses
--------------------------------------------
Selling, General and Administrative (SG&A) expenses includes such items as
wages, consulting, general office expenses, business promotion expenses and
costs of being a public company including legal and accounting fees, insurance
and investor relations.

SG&A expenses increased from $2,583,857 for year ended December 31, 2003 to
$6,936,155 for the same period during 2004. This increase of $4,352,298 is
primarily the result of increased consulting expenses of approximately
$1,711,000 and increased compensation expenses of approximately $2,377,000.

The majority of the increase in the consulting expense for the year ended
December 31, 2004 compared to 2003 was paid with the issuance of common stock
and warrants. The total non-cash consulting expense for the year ended December
31, 2004 is approximately $2,192,000.

The increase in compensation expense in 2004 compared to 2003 is the result of
hiring the required talent to facilitate commercializing the OnScreen(TM)
products and bringing these products to market by the first half of 2005 and
includes compensation expense of $1,433,028 related to the stock issued to the
President/CEO in accordance with his employment contract. The total non-cash
compensation expense for the year ended December 31, 2004 (including the
$1,433,028) is approximately $2,090,000. At December 31, 2004, the company had
$438,282 remaining in its Deferred Stock Compensation Expense account which will
be expensed over the remaining term of service for the employees.


                                       30
<PAGE>


The company anticipates its sales and marketing and its technology expenditures
to increase during 2005 due to the commercialization and marketing of its
OnScreen(TM) product by the first half of 2005 while the remaining general and
administrative costs are anticipated to be similar to 2004.

Research and Development
------------------------
The research and development costs are related to the OnScreen(TM) LED
technology to which the Company acquired the licensing and patent rights. The
$839,935 increase in research and technology costs during 2004 compared to the
same period in 2003 is a result of activities to further research and develop
the OnScreen(TM) LED technology and products. The Company anticipates its
expenditures in research and development costs will increase during 2005.

Commitment Penalty and Warrant Modification Expense - Swartz
------------------------------------------------------------
At December 31, 2003, the commitment penalty expense - Swartz was $266,126. The
Company had an agreement with Swartz Private Equity, LLC (Swartz) to provide
certain funding to the Company. If the Company did not meet certain requirements
it was subject to a penalty of up to $100,000 for each six-month period. During
2003, the Company computed $200,000 in penalties. During 2003, the Company and
Swartz entered into an amendment that extended the terms of their warrants by
two additional years which resulted in an additional expense of $66,126. During
2004, there were no commitment penalty and warrant modification expense.

Impairment Loss
---------------
During 2004, the impairment loss was $195,398 compared to $270,355 for the same
period during 2003. During 2004, the Company wrote off the remaining balance of
its EyeCatcherPlus displays which resulted in an impairment loss of $195,398.

Prior to 2003, the Company incurred costs totaling $520,355 for the development
of a second LED Truck to be used to generate LED Truck rental revenues. The
development of this second truck experienced technical problems and delays
resulting in cost increases. At December 31, 2003, the Company had not taken
possession of that truck as the truck did not meet the specifications the
Company required, thus the truck had not been placed into service and
accordingly, no depreciation has been taken on that truck. During 2002,
management evaluated the recovery of the recorded value of this truck and
determined there was an impairment loss of $250,000 that was recorded in 2002.
Management is currently in a dispute with the LED truck vendor and since the
outcome is unknown as to whether the Company will receive the truck or any
monetary recovery from the vendor, the Company wrote off the remaining balance
and recorded an impairment loss of $270,355 during 2003.

Bad Debt
--------
Bad debt expense has decreased by $120,205 from $138,667 during 2003 to $18,462
during 2004. During 2003 and 2004, the bad debt expense reflected an allowance
for rent receivable and write off of uncollectible EyeCatcherPlus accounts.

Other Income
------------
The Company recorded $14,510 and $49,198 of other income related primarily to
bookkeeping services and rental income from a sublease to a related party during
2004 and 2003, respectively. This arrangement was cancelled during 2004.


                                       31
<PAGE>


Other Expense
-------------
During 2004, the Company recorded $22,768 related to loss on disposal of certain
fixed assets.

Investment Income
-----------------
During 2004, in order for the Company to optimize its return on the equity funds
it has raised, it invested in certain liquid marketable securities. The Company
recorded $20,969 of investment income related to these investments.

Settlement Gain
---------------
The settlement gain was $335,465 for the year ended December 31, 2004 compared
to $314,192 for the same period in 2003. The main component of the 2004 gain was
from the settlement of a disputed convertible promissory note in the principal
amount of $234,869 plus 8% interest accruing from the note date of August 1999.
On February 5, 2004, the Company satisfied this disputed obligation with 60,000
shares of the Company's common stock. These shares were valued at $60,600 and
the Company recorded a settlement gain of $267,458 in February 2004. The main
component of the 2003 gain was the forgiveness of Swartz penalties of $300,000.

Settlement Loss
---------------
The settlement loss was $139,621 for the year ended December 31, 2004 and
$248,205 for the year ended December 31, 2003. During 2004, the Company paid
approximately $68,000 related to services provided by a consultant that was in
dispute and accrued $67,000 at December 31, 2004 related to a proposed
settlement with another consultant. During 2003, settlement losses reflect the
various issuances of capital stock as settlements of debt or accrued obligations
or other matters where the value of the stock exceeded the recorded obligation

Interest Expense
----------------
The Company incurred $64,071 and $273,549 of interest expense during 2004 and
2003, respectively. The interest expense for the year ended December 31, 2004
includes $46,500 of non-cash interest related to the value of options issued
under default provisions of certain notes and $17,571 of interest paid by the
issuance of equity.

The interest expense for the year ended December 31, 2003 includes $122,500 of
non-cash interest related to the value of options issued under default
provisions of certain notes and $96,499 of interest paid by the issuance of
equity.

Net Loss
--------
The net loss increased $4,465,722 for the year ended December 31, 2004 compared
to the same period in 2003. The increase in net loss during 2004 compared to
2003 is the result of the redirection of the Company's business focus to the
OnScreen(TM) technology and the related increase in research and development,
consulting and general and administrative costs to facilitate commercializing
the OnScreen(TM) products and bringing these products to market during 2005.

Preferred Stock Dividends
-------------------------
During the year ended December 31, 2004, the Company recorded $172,000 and $28
for the intrinsic value associated with the embedded beneficial convertible
feature of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, respectively. During 2003, the Company recorded $951,765 for
the intrinsic value associated with the embedded beneficial convertible feature
of the Series A Convertible Preferred stock.


                                       32
<PAGE>


For financial statement purposes, the intrinsic value associated with the
embedded beneficial convertible feature of Series A and Series B Convertible
Preferred Stock was recorded as a preferred stock dividend.

Additionally, during 2004, the Company recorded Series A Convertible Preferred
Stock dividends of $270,583 and Series B Convertible Preferred Stock dividends
of $17,901 and the Company recorded Series A Convertible Preferred stock
dividends of $102,835 during 2003.

ITEM 7.  FINANCIAL STATEMENTS

The Financial Statements and the report of Salberg & Company, P.A. dated March
15, 2005 are attached hereto and incorporated herein by reference.

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

None.

ITEM 8A. CONTROLS AND PROCEDURES

Evaluation of disclosure controls and procedures.
-------------------------------------------------
Under the supervision and with the participation of our management, including
our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of the design and operations of our disclosure
controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as of December 31, 2004. Based on this
evaluation, our Chief Executive Officer and Chief Financial Officer concluded
that our disclosure controls and procedures were effective such that the
material information required to be included in our Securities and Exchange
Commission ("SEC") reports is recorded, processed, summarized and reported
within the time periods specified in SEC rules and forms relating to OnScreen
Technologies, Inc. during the period when this report was being prepared.

Changes in internal controls over financial reporting.
------------------------------------------------------
In addition, there were no significant changes in our internal control over
financial reporting that could significantly affect these controls during fiscal
year ended December 31, 2004. We have not identified any significant deficiency
or materials weaknesses in our internal controls, and therefore there were no
corrective actions taken.

ITEM 8B. OTHER MATTERS

There are no matters to be reported under this Item.

                                    PART III

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


                                       33
<PAGE>


The following are officers and directors of the Company.

Name                 Age    Position
------------------   ---    ---------------------------------------------------
John Thatch           43    Chief Executive Officer, President and Director

Mark R. Chandler      50    Chief Operating Officer and Chief Financial Officer

Russell L. Wall       61    Director

Bradley J. Hallock    46    Director

Charles Baker         50    Director

Because we are a small company, we are currently dependent on the efforts of a
limited number of management personnel. We believe that because of the large
amount of responsibility being placed on each member of our management team, the
loss of the services of any member of this team at the present time would harm
our business. Each member of our management team supervises the operation and
growth of one or more integral parts of our business.

All directors hold office until the next annual meeting of shareholders of the
Company and until their successors are elected and qualified. Officers hold
office until the first meeting of directors following the annual meeting of
shareholders and until their successors are elected and qualified, subject to
earlier removal by the Board of Directors.

BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS AND DIRECTORS

John "JT" Thatch, President/CEO and Director
--------------------------------------------
Mr. Thatch, age 43 years, has served as, Chief Executive Officer, President and
a Director of the Company since January 2000 and was elected at the June 2004
shareholders' meeting to serve an additional two year term. His responsibility
is to oversee all functions of the company, including day-to-day operations. Mr.
Thatch was directly responsible for securing the OnScreen licensing rights for
the Company and has been instrumental in securing talent and identifying
opportunities associated with the technology. Mr. Thatch has over 15 years of
entrepreneurial business experience that includes executive management positions
in various companies that he has founded or managed. Mr. Thatch holds positions
on various boards of directors ranging from private and public companies to
non-profit organizations and is an active member of the CEO Council. Mr. Thatch
attended Saint Petersburg College and holds a Bachelor of Arts Degree in
Business Administration from Middleham University. He brings leadership,
marketing and strong management skills to the company.

Mark R. Chandler, Chief Operating Officer and Chief Financial Officer
---------------------------------------------------------------------
Mark R. Chandler - Mr. Chandler joined OnScreen in January 2004 after working 23
years with Sara Lee Corporation where he held several senior positions in
finance, general management and operations. He most recently was the CEO of
Business Development Europe and was a member of the Board of Directors of Sara
Lee Apparel Europe. Previously, he was the Group Chief Financial Officer for the
$2 billion European apparel group for Sara Lee and responsible for all financial
and administrative activities, IT, and strategic planning. Additionally, he led
the organization and launch of a new technological breakthrough product for the
European apparel market. Mr. Chandler has extensive and diversified
international experience in finance, IT, strategic planning and implementation,
operations and general management, treasury, business development and corporate
development including acquisitions and divestments. Mr. Chandler began his
career with American Express as an internal consultant and held several
financial positions with General Foods. He moved to Playtex, Inc. in 1980 and
actively participated in two leverage buyouts prior to the company being sold to
Sara Lee in 1991. Mr. Chandler holds a Bachelor of Arts degree in mathematics


                                       34
<PAGE>


and economics from Whitman College in 1976 and a MBA in finance and marketing
from Columbia University Graduate School of Business in 1978. Mr. Chandler is a
member of the European Executive Council and is a Director of the non-profit
Frontier Foundation.

Russell L. Wall, Director
-------------------------
Mr. Wall served on the Board of Directors since November 2003 and was elected at
the June 2004 shareholders' meeting to serve an additional one year term. He
also serves as Chairman of the Audit Committee. Mr. Wall holds a Bachelor of
Science degree in Engineering from Iowa State University, a MBA degree in
finance/marketing from University of Santa Clara and a Chartered Financial
Analyst designation. Prior to his retirement in 2000, Mr. Wall was Chief
Financial Officer for 12 years of a publicly traded company. His
responsibilities included financial/accounting management, internal and external
financial reporting, strategic planning and other operational duties. Mr. Wall
brings 5 years experience in the financial securities industry as a consultant
and portfolio manager with a Wall Street and a private investment management
firm. He also brings 10 years Fortune 100 company experience in the engineering
and construction industry with assignments as Analysis and Development Engineer,
Planning and Control Manager and Project Manager.

Brad Hallock
------------
Brad Hallock, age 46, was appointed to the Board of Directors in April 2004 and
was elected at the June 2004 shareholders' meeting to serve an additional two
year term. Mr. Hallock brings to the board over 25 years of corporate
experience. Mr. Hallock was the founder and Chief Executive Officer of C and R,
Ltd., a provider of wholesale services to the automobile industry with annual
revenue in excess of $10,000,000. For three years, Mr. Hallock served as a
Senior Executive for First America Automotive, Inc. (FAA), an $800,000,000
annual revenue company that was later acquired by Sonic Automotive, Inc.
(NYSE:SAH). As a Senior Executive at FAA, he conceived and implemented the "Auto
Factory" concept to vertically integrate used car operations across disparate
retail franchises on a regional basis. He led the expansion of this concept into
a $100,000,000 annual revenue division of FAA resulting with industry leading
profitability. During his tenure at FAA, Mr. Hallock was a key member of the
merger and acquisition team, where he was instrumental in the successful
acquisition and integration of over 50 new car retail franchises

Charles Baker, Director
-----------------------
Charles Baker was appointed to the Company Board of Directors, effective March
1, 2005. Mr. Baker is an experienced global business executive with a 25 year
track record of building and implementing successful business strategies. Mr.
Baker is currently the President of Vesta International, the premium provider of
stored value, payment and fraud solutions. Prior to Vesta, Mr. Baker was
CEO/Managing Director of Starbucks Coffee Company, Australia. He also spent
several years at NIKE where, as Divisional Vice President/General Manager of
NIKE Global Retail, he led the growth of a $1.2 billion retail business in 16
countries. He was also a member of NIKE's Executive Leadership team which was
responsible for leading the strategy of NIKE's $12 billion worldwide. In
addition, he was CEO of a leading Internet company, Family Wonder, which he
successfully led through its acquisition by Sega, Inc. Earlier in his career,
Mr. Baker was General Manager of Britches of Georgetowne, a leading apparel
company.

Steven Velte, President of the OnScreen(TM) Products Division
-------------------------------------------------------------
Mr. Velte spent 18 years with Hewlett-Packard and the HP spin-off, Agilent
Technologies. He provided first customer market placement and design input for a
variety of technologies including state-of-the-art Remote Fiber Test Systems
deployed in the 1996 Atlanta Olympics, PC- based instrumentation and


                                       35
<PAGE>


Hewlett-Packard's "acceSS7" system. With Mr. Velte as a key team leader,
"acceSS7" system sales grew from zero to over $1 billion of installed base. For
Agilent, Mr. Velte also spearheaded a variety of global partnering arrangements
with companies providing leading edge solutions for telecommunications fraud and
advanced telecom billing. He has been personally recognized by the CEO of
Agilent for his contributions as an editor to the widely respected
Telecommunications News and the creation of the first worldwide "acceSS7" User's
Conference. Mr. Velte personally holds two US patents and received his
electrical engineering degree from Virginia Polytchenic Institute in 1984.

AUDIT COMMITTEE

The Audit Committee is established pursuant to the Sarbanes-Oxley Act of 2002
for the purposes of overseeing the company's accounts and financial reporting
processes and audits of its financial statements. An independent member of the
Board of Directors, Russell L. Wall, was appointed as the Audit Committee's
chairman. The Audit Committee is one of the three elements of financial
reporting, with the other two being the CFO and the independent auditor. The
Audit Committee's role includes oversight of the independent auditor, review of
financial reporting, internal company processes of business/financial risk and
applicable legal, ethical and regulatory requirements. The Audit Committee has
established a procedure to receive complaints regarding accounts, internal
controls and auditing issues.

ITEM 10. EXECUTIVE COMPENSATION

The following tables list the cash and option grant remuneration paid or accrued
and option exercises during 2002, 2003 and 2004 to our officers, executives and
directors who received compensation of $100,000 or more in 2002, 2003 and 2004.

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------------------------------------------
                                                  SUMMARY COMPENSATION TABLE
--------------------------------------------------------------------------------------------------------------------------------
                                                                              Long Term Compensation
                                                                    ------------------------------------------------------------
                                      Annual Compensation                        Awards                Payouts
--------------------------------------------------------------------------------------------------------------------------------
        (a)            (b)       (c)       (d)          (e)             (f)                (g)           (h)          (i)
--------------------------------------------------------------------------------------------------------------------------------
                                                                                        Securities
                                                                    Restricted          Underlying
 Name and Principal                       Bonus    Other Annual        Stock          Options/ SARs    Payouts      All Other
      Position         Year   Salary ($)    ($)  Compensation ($)    Award(s)              (#)           ($)     Compensation ($)
--------------------------------------------------------------------------------------------------------------------------------
<S>                   <C>     <C>         <C>    <C>                <C>               <C>              <C>       <C>
John Thatch,            2004     155,000    --         10,000         1,666,312                --           --             --
Pres./CEO               2003     140,000    --         10,000           311,777                --           --             --
                        2002     120,000    --         10,000           156,706                --           --             --
--------------------------------------------------------------------------------------------------------------------------------
Mark Chandler           2004     155,000    --             --           120,000 (2)       600,000           --             --
COO/CFO (1)             2003          --    --             --                --                --           --             --
                        2002          --    --             --                --                --           --             --
--------------------------------------------------------------------------------------------------------------------------------
Steven Velte            2004     155,000    --             --           450,000         2,000,000           --             --
Pres. of Products       2003      85,000    --             --                --         1,750,000           --             --
Division (3)            2002          --    --             --                --                --           --             --
--------------------------------------------------------------------------------------------------------------------------------
</TABLE>

----------
(1)   Mr. Chandler joined the Company on January 1, 2004.
(2)   Mr. Chandler was issued 120,000 of the Company's Series A Convertible
      Preferred Stock.
(3)   Mr. Velte joined the Company on May 1, 2003.


                                       36
<PAGE>


                                         OPTION GRANTS DURING FISCAL 2004
<TABLE>
<CAPTION>
                                                Percent of
                               Number of       Total Options
                              Securities         Granted to     Exercise    Market
                              Underlying        Employees in   Price Per   Price on
                               Options             Fiscal        Share      Date of
Name                           Granted             Year(3)      ($/Sh)       Grant     Expiration Date
---------------------------------------------------------------------------------------------------------
<S>                           <C>              <C>             <C>         <C>         <C>
John Thatch                           --                  --         --           --                 --

Mark Chandler                    100,000 (1)               3%     $0.25        $0.93   December 1, 2006
                                 500,000 (1)              13%     $0.25        $0.65    October 6, 2009

Steven Velte                   2,000,000 (2)              51%     $0.25        $0.65    ovember 1, 2011
</TABLE>

----------
(1)   The options granted to Mr. Chandler were fully vested on the grant date.
(2)   The options granted to Mr. Velte vest on November 1, 2006.
(3)   During the year ended December 31, 2004, OnScreen granted employees
      options to purchase 3,940,000 shares of common stock.


                 AGGREGATED OPTION EXERCISES DURING FISCAL 2004
                                       AND
                       FISCAL 2004 YEAR-END OPTION VALUES

The following table shows the number of shares underlying both exercisable and
unexercisable stock options held by the executive officers named in the Summary
Compensation Table as of the year ended December 31, 2004, and the values for
exercisable and unexercisable options:
<TABLE>
<CAPTION>

                                                            Number of Securities                Value of Unexercised
                                                           Underlying Unexercised         In-The-Money Options at December
                                                        Options at December 31, 2004                31, 2004 (1)
                      Shares Acquired       Value      --------------------------------------------------------------------
Name                  on Exercise ($)   Realized ($)   Exercisable      Unexercisable     Exercisable     Unexercisable
---------------------------------------------------------------------------------------------------------------------------
<S>                   <C>               <C>            <C>              <C>               <C>             <C>
John Thatch                  --               --                   --              --                 --                 --
Mark Chandler                --               --              600,000              --           $348,000                 --
Steven Velte (2)             --               --            1,050,000       2,000,000           $554,000         $1,160,000
</TABLE>

----------
(1)   Options are in the money if the market value per share of the shares
      underlying the options is greater than the option exercise price. This
      calculation is based on the fair market value at December 31, 2004 of
      $0.83 per share, less the exercise price.
(2)   Mr. Velte assigned 700,000 of his common share warrants to others.

Director Compensation
---------------------
Other than as noted below, no Director is compensated for the performance of
duties in that capacity or for his/her attendance at Director meetings.


                                       37
<PAGE>


In recognition for serving on the Company Board of Directors initially without
the benefit of officers and directors liability insurance, which service is of
benefit to the Company in connection with the Company's management and
compliance with the Sarbanes-Oxley Act of 2002, the Board of Directors
authorized issuance to Russell L. Wall a warrant to purchase 100,000 restricted
common shares at a price of $0.25 per share within 3 years after the date of
issuance. In recognition for past services as a director of the Company, by
August 23, 2004 Board of Directors resolution, the board authorized issuance to
Russell L. Wall of a warrant to purchase 600,000 restricted common shares within
five years from date of issuance at a per share price of $0.25.

In recognition for services to be rendered by Charles Baker as a member of the
Board of Directors, the Board of Directors authorized an honorarium issuance to
Charles Baker of a Warrant to purchase 100,000 Corporation common shares at any
time within three years from date of issuance at the per share price of $0.75.

EMPLOYMENT AGREEMENTS

President/CEO
-------------
In November 1999, the Company executed a three-year employment agreement with
its president and CEO that was amended on June 2000. The agreement provides for
a base salary of $140,000 in year one and $120,000 per year in years two and
three, a non-accountable expense allowance of $10,000 per year, a stock issuance
equal to 10% of the outstanding common shares, and discretionary incentive
compensation payments. It also provided that the President/CEO would receive
incentive compensation payments which are not less than the highest such
payments provided to any other senior executive of the Company. This agreement
was renewed in late 2002 for another three-year term with the same provisions
expiring December 31, 2005.

On February 3, 2004, a Second Addendum to the Employment Agreement was entered
into pursuant to which the Company agreed to cap Mr. Thatch's entitlement to
shares of common stock at 3,000,000 and pay him 1% of all revenue derived from
any licensing fees received by the Company in connection with the OnScreen(TM)
LED technology, provided that the Company consummates the Private Placement in
its entirety and receives the portion of the Unit purchase price to which it is
entitled. On February 10, 2004, the Company's board of directors approved
increasing the President's salary to $150,000 for the duration of his employment
agreement in compliance with the President's employment agreement that includes
a provision that he would get paid equal compensation to any other senior
executive of the Company (President of the OnScreen(TM) Products Division's
salary is $150,000). The President will receive $120,000 in cash and the
remaining $30,000 will be accrued. By August 23, 2004 Board of Directors
resolution, the annual salary of John "JT" Thatch was increased to $180,000
beginning November 1, 2004.

On March 28, 2005, an addendum was made to the CEO/President's employment
agreement. The term of the agreement was extended three years, expiring on
December 31, 2008. The CEO/President is to receive an additional 2.1 million
shares of the Company's common stock and the monthly vehicle allowance was
increased from $500 to $1,500. The CEO/President relinquished his entire
entitlement to any of the Company's revenue.

Chief Operating Officer and Chief Financial Officer
---------------------------------------------------
On December 16, 2003, the Company executed a three-year employment agreement
that is effective January 1, 2004 with its Chief Operating Officer and Chief
Financial Officer. The terms of this agreement are as follows: i) Base salary of
$120,000 during 2004, $150,000 during 2005 and $180,000 during 2006, ii) a
sign-on bonus for $10,000 payable before March 31, 2004 and eligible for the
bonus plan as set up by the Company, iii) receive 120,000 shares of Series A


                                       38
<PAGE>


convertible preferred stock for each period of June 2004, January 2005 and June
2005 and iv) receive a warrant to purchase 100,000 shares of common stock at an
exercise price of $0.25 which expires on November 30, 2006. In the event of a
change of control, the Series A Convertible Preferred stock shall immediately
accelerate and be issued within 30 days of written notice from the employee.

By August 23, 2004 Board of Directors resolution, the annual salary of Mark R.
Chandler was increased to $150,000 retroactive from January 1, 2004 and
Chandler's annual salary beginning November 1, 2004 was increased to $180,000.

In recognition for past services rendered by Mark R. Chandler, by August 23,
2004 Board of Directors resolution, the board authorized issuance to Mark R.
Chandler a warrant to purchase 500,000 restricted common shares within five
years from date of issuance a per share price of $0.25.

In recognition of continuing and additional services to be rendered by Mark R.
Chandler, by August 23, 2004 Board of Directors resolution, the board authorized
issuance to Mark R. Chandler three hundred seventy five thousand (375,000)
Series A Convertible Preferred shares and one thousand five hundred (1,500)
Series B Convertible Preferred shares in the following increments: 125,000
Series A shares and 500 Series B shares on or about January 1, 2006; 125,000
Series A shares and 500 Series B shares on or about July 1, 2006; and 125,000
Series A shares and 500 Series B shares on or about December 31, 2006. The said
shares will be issued so long as Chandler has not terminated employment
voluntarily before the above issue date.

President of the OnScreen(TM) Products Division
-----------------------------------------------
In May 2003, the Company executed a six-month employment agreement with the
President of the OnScreen(TM) Products Division. The employee's compensation was
for $10,000 per month accrued, but payment deferred until such time the
Company's technical division has sufficient cash on hand to pay the salary. At
the employee's option, such accrued salary may be converted to common or
preferred shares of the Company at the current bid price. In addition, the
employee was granted three-year warrants for 500,000 shares of the Company's
common stock at an exercise price of $0.25 per share; 750,000 shares at $0.35
per share upon completion of Phase II prototype as defined in the Agreement;
500,000 shares at $0.40 per share upon receipt by the Company of any Next Stage
OnScreen funding in excess of $150,000 as defined in the Agreement and 250,000
shares at $0.50 per share upon receipt by the Company of payment for commercial
orders in excess of $200,000.

During 2003, the Company issued 1,750,000 of the warrants in accordance with the
President of the OnScreen(TM) Products Division's agreement. The remaining
250,000 warrants were not issued at December 31, 2004, as the criteria for the
shares to be issued had not been met.

The above agreement was extended with an effective date of November 1, 2003 for
a three-year term. The salary will be $150,000 in the first year, $180,000 in
the second year and $240,000 in the third year. This employee has a right to
450,000 shares of the Company's common stock, these shares, if the employee is
terminated for cause or resigns, may be repurchased from the employee for $450.
The amount of shares that can be repurchased by the Company declines by 150,000
shares each year, resulting in the shares being fully vested on November 1,
2006.


                                       39
<PAGE>


In recognition of continuing and additional services to be rendered by Stephen
K. Velte, by August 23, 2004 Board of Directors resolution, the board authorized
issuance to Stephen K. Velte a warrant to purchase 2,000,000 restricted common
shares within five years from date of issuance at a per share price of $0.25. It
is a condition precedent for the vesting of the said warrant and issuance of the
shares through the warrant that Velte is employed by the Company through the
term of his current November 7, 2003 employment agreement.

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information regarding beneficial
ownership of our common stock as of the date of this filing by: (i) each
shareholder known by us to be the beneficial owner of 5% or more of the
outstanding common stock, (ii) each of our directors and executives and (iii)
all directors and executive officers as a group. Except as otherwise indicated,
we believe that the beneficial owners of the common stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where applicable.
Shares of common stock issuable upon exercise of options and warrants that are
currently exercisable or that will become exercisable within 60 days of filing
this document have been included in the table.

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------
                                         BENEFICIAL INTEREST TABLE
------------------------------------------------------------------------------------------------------------
                                                                        Series A Convertible
                                                   Common Stock            Preferred Stock       Percent
                                             -------------------------------------------------      of
                                                             Percent                Percent      all Voting
                                                             of Class               of Class     Securities
Name and Address of Beneficial Owner (1)         Number        (2)        Number       (3)          (4)
------------------------------------------------------------------------------------------------------------
<S>                                          <C>            <C>         <C>        <C>         <C>
Steve Velte (5)                                  6,729,298       9.51%     50,000        2.28%         9.29%
Brad Hallock (6)                                 5,832,090       8.77%         --          --          8.49%
Marc Barhonovich (7)                             4,836,356       7.12%         --          --          6.90%
Sid Ferris & Helen Scott Duewel (8)              4,573,965       6.88%         --          --          6.66%
John Thatch                                      3,000,000       4.51%    231,221       10.55%         4.70%
William F. Ryan (9)                              2,657,372       3.92%    323,098       14.74%         4.26%
Russell Wall (10)                                1,691,493       2.52%         --          --          2.44%
Mark Chandler (11)                                 866,667       1.29%    658,726       30.06%         2.20%
Maryatha Miller                                         --         --     210,000        9.58%          *
Richard S. Kearney                                      --         --     150,000        6.85%          *
Ryan Family Partners, LLC                               --         --     210,667        9.61%          *
Officers, Directors, executives as group        18,119,548      25.14%    939,947       42.89%        25.67%
</TABLE>

----------
*     Less than 1 percent
(1)   Except as otherwise indicated, the address of each beneficial owner is c/o
      OnScreen Technologies, Inc., 200 9th Avenue North, Suite 200, Safety
      Harbor, Florida 34695.
(2)   Calculated on the basis of 66,512,327 shares of common stock issued and
      outstanding at February 28, 2004 except that shares of common stock
      underlying options and warrants exercisable within 60 days of the date
      hereof are deemed to be outstanding for purposes of calculating the
      beneficial ownership of securities of the holder of such options or
      warrants. This calculation excludes shares of common stock issuable upon
      the conversion of Series A Preferred Stock.


                                       40
<PAGE>


(3)   Calculated on the basis of 2,191,316 shares of Series A Preferred Stock
      issued and outstanding at February 28, 2004.
(4)   Calculated on the basis of an aggregate of 66,512,327 shares of common
      stock with one vote per share and 2,191,316 shares of Series A Preferred
      Stock with one vote per share issued and outstanding at February 28, 2004,
      except that shares of common stock underlying options and warrants
      exercisable within 60 days of the date hereof are deemed to be outstanding
      for purposes of calculating beneficial ownership of securities of the
      holder of such options or warrants.
(5)   Includes direct entitlement and third party management shares. Mr. Velte
      has the right to acquire through warrants 3,050,000 common stock shares
      and included in Mr. Velte's number of shares are 1,200,000 common stock
      shares Orion One, LLC has the right to acquire through warrants. Also, the
      number of common stock shares includes 1,457,372 shares owned by Orion
      One, LLC and 318,416 shares owned by RSV Productions.
(6)   Includes direct entitlement and third party management shares. Mr. Brad
      Hallock's common stock shares includes 250,000 shares owned by Hallock
      Trust dtd 6/25/99.
(7)   Includes direct entitlement and third party management shares. Mr.
      Barhonovich's common stock shares include 1,457,372 shares owned by Orion
      One, LLC, 1,202,524 shares owned by Florence H. Ganson Trust, and 120,000
      shares owned by EDS Holdings, LLC. Mr. Barhonovich has the right to
      acquire through warrants 200,000 common stock shares and 1,200,000 common
      stock shares Orion One, LLC has the right to acquire through warrants.
(8)   Mr. Ferris owns 2,791,045 shares of common stock and his wife, Ms Duewel
      owns 1,782,920 shares of common stock. (9) Mr. Ryan's common stock shares
      include 1,457,372 owned by Orion One, LLC and 1,200,000 common stock
      shares Orion One, LLC has the right to acquire through warrants. Mr.
      Ryan's Series A shares include 210,667 shares owned by Ryan Family
      Partners, LLC.
(10)  Mr. Wall's common stock shares include 700,000 shares he has the right to
      purchase pursuant to a warrant
(11)  Mr. Chandler's common stock shares include 600,000 shares he has the right
      to acquire pursuant to a warrant. Mr. Chandler's Series A Preferred shares
      include 250,000 shares owned by his IRA account.

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Except as set forth above, none of our directors or officers, nor any proposed
nominee for election as one of our directors or officers, nor any person who
beneficially owns, directly or indirectly, shares carrying more than 10% of the
voting rights attached to our outstanding shares, nor any relative or spouse of
any of the foregoing persons has any material interest, direct or indirect, in
any transaction in any presently proposed transaction which has or will
materially affect the Company.

We have entered into employment agreements with all of our senior management.
These employment contracts include provisions for the issuance of Common and
Convertible Preferred shares as well as incremental salary increases. For
description of these employment agreements and related rights to our stock
options, see above Item 10, Executive Compensation, Employment Agreements.


                                       41
<PAGE>


ITEM 13.  EXHIBITS AND REPORTS

Indemnification of Directors and Officers
-----------------------------------------
The Colorado General Corporation Act provides that each existing or former
director and officer of a corporation may be indemnified in certain instances
against certain liabilities which he or she may incur, inclusive of fees, costs
and other expenses incurred in connection with such defense, by virtue of his or
her relationship with the corporation or with another entity to the extent that
such latter relationship shall have been undertaken at the request of the
corporation; and may have advanced such expenses incurred in defending against
such liabilities upon undertaking to repay the same in the event an ultimate
determination is made denying entitlement to indemnification. The Company's
bylaws incorporate the statutory form of indemnification by specific reference.
The Company has never acquired or applied for any policy of directors' and
officers' liability insurance as a means of offsetting its obligation for
indemnity.

Reports to Shareholders
-----------------------
We intend to voluntarily send annual reports to our shareholders, which will
include audited financial statements. We are a reporting company, and file
reports with the Securities and Exchange Commission (SEC), including this Form
10-KSB as well as quarterly reports under Form 10-QSB. The public may read and
copy any materials filed with the SEC at the SEC's Public Reference Room at 450
Fifth Street, N.W., Washington, D.C. 20549. Information on the operation of the
Public Reference Room may be obtained by calling the SEC at 1-800-SEC-0330. The
company files its reports electronically and the SEC maintains an Internet site
that contains reports, proxy and information statements and other information
filed by the company with the SEC electronically. The address of that site is
http://www.sec.gov.

The company also maintains an Internet site, which contains information about
the company, news releases and summary financial data. The address of that site
is http://www.onscreentech.com.


                                       42
<PAGE>

(a)   Exhibits

Exhibit No.     Description
-----------     ----------------------------------------------------------------
3.1*            Amended Articles of Incorporation of the Company.

3.2*            Bylaws of the Company.

3.3**           Articles of Amendment to Certificate of Incorporation -
                Certificate of Designations, Preferences, Limitations and
                Relative Rights of the Series A Preferred Stock, filed July 25,
                2002.

3.4**           Articles of Amendment to Articles of Incorporation-Terms of
                Series A Convertible Preferred Stock, filed November 13, 2003.

3.5**           Amendment to Restated Articles of Incorporation, filed December
                23, 2003.

3.6**           Articles of Amendment to Certificate of Incorporation -
                Certificate of Designations of the Series B Convertible
                Preferred Stock, filed April 1, 2004.

3.7****         Restated Articles of Incorporation, Officers' Certificate and
                Colorado Secretary of State Certificate filed June 30, 2004
                showing corporate name change to OnScreen Technologies, Inc.

4.1*            Investment Agreement dated May 19, 2000 by and between the
                Registrant and Swartz Private Equity, LLC.

4.2*            Form of "Commitment Warrant" to Swartz Private Equity, LLC for
                the purchase of 1,000,000 shares common stock in connection with
                the offering of securities.

4.3*            Form of "Purchase Warrant" to purchase common stock issued to
                Swartz Private Equity, LLC from time to time in connection with
                the offering of securities.

4.4*            Warrant Side-Agreement by and between the Registrant and Swartz
                Private Equity, LLC.

4.5*            Registration Rights Agreement between the Registrant and Swartz
                Private Equity, LLC related to the registration of the common
                stock to be sold pursuant to the Swartz Investment Agreement.

10.1**          Employment Agreement between the Registrant and John Thatch,
                dated November 2, 1999.

10.2**          Contract and License Agreement between the Registrant and John
                Popovich, dated July 23, 2001.

10.3**          Agreement by and among the Registrant, John Popovich and Fusion
                Three, LLC, dated January 14, 2004.


                                       44
<PAGE>


10.4**          Letter Agreement between the Registrant and John Popovich, dated
                January 15, 2004.

10.5**          Master Settlement and Release Agreement by and among the
                Registrant, Fusion Three, LLC, Ryan Family Partners, LLC, and
                Capital Management Group, Inc., dated February 3, 2004.

10.6**          First Amendment to Contract and License Agreement, dated
                February 3, 2004.

10.7**          Employment Agreement between the Registrant and Mark R.
                Chandler, COO/CFO, dated December 16, 2003.

10.8**          Employment Agreement between the Registrant and Stephen K.
                Velte, CTO dated November 7, 2003.

10.9**          Reserved.

10.10***        Consulting Services Agreement by and among the Registrant, David
                Coloris, Excipio Group, S.A., dated December 22, 2003.

10.11**         Commission Agreement between the Registrant and Gestibroker
                dated September 12, 2003.

10.12**         Addendum to Lease Agreement dated February 1, 2004.

10.13****       Lease Agreement dated October 15, 2004.

10.14****       Second Addendum to the Employment Agreement of John "JT" Thatch
                dated February 3, 2004.

10.15**         Lockup Agreement between the Registrant and Excipio Group, S.A.,
                dated December 12, 2003.

10.16**         Agreement between the Registrant and Visual Response Media
                Group, Inc., dated February 3, 2004.

10.17****       Assignment, dated February 16, 2005, of OnScreen(TM) technology
                patents ownership from inventor to CH Capital, Inc.

10.18****       Assignment, dated February 16, 2005, of OnScreen(TM) technology
                patents ownership from CH Capital, Inc. to Company.

10.19****       Contract between SMTC Manufacturing Corporation and Company
                dated November 9, 2004

10.20****       Technology Reseller Agreement between eLutions, Inc. and Company
                dated January 31, 2005

10.21****       Third Addendum to the Employment Agreement of John "JT" Thatch
                dated March 28, 2005.


                                       45
<PAGE>

10.22****       Promissory Note evidencing $1,500,000 unsecured short term loan.

31**            Certification of Chief Executive Officer and Chief Financial
                Officer Pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e),
                As Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
                2002.

32**            Certification of Chief Executive Officer and Chief Financial
                Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant
                to Section 906 of the Sarbanes-Oxley Act of 2002.

99**            Senior Financial Officers Code of Ethics.

*               Incorporated by reference to our Registration Statement on Form
                SB-2/A filed with the Commission on October 26, 2001.

**              Incorporated by reference to our Form 10-KSB filed with the
                Commission on April 14, 2004.

***             Incorporated by reference to our Report on Form S-8 filed with
                the Commission on January 15, 2004.

****            Filed herewith.

(b)   Reports on Form 8-K

The Company filed a Current Report on Form 8-K on May 4, 2004 in connection with
the appointment of Bradley J. Hallock to the Board of Directors.

The Company filed a Current Report on Form 8-K on July 19, 2004 in connection
with changing the name of the Company from New Millennium Media International,
Inc. to OnScreen Technologies, Inc.

The Company filed a Current Report on Form 8-K on March 3, 2005 in connection
with the appointment of Charles Baker to the Board of Directors.

ITEM 14.  PRINCIPAL ACCOUNTANTS FEES AND EXPENSES

Compensation of Auditors
------------------------
Audit Fees. The financial statements of the Company, which are furnished herein
as of December 31, 2004, have been audited by Salberg & Company, P.A., Boca
Raton, Florida, Independent Registered Public Accounting Firm. Salberg &
Company, P.A. billed the Company an aggregate of $50,000 in fees and expenses
for professional services rendered in connection with the audit of the Company's
financial statements for the fiscal year ended December 31, 2004 and the reviews
of the financial statements included in each of the Company's Quarterly Reports
on Form 10-QSB during the fiscal year ended December 31, 2004. Salberg &
Company, P.A. billed the Company an aggregate of $46,200 in fees and expenses
for professional services rendered in connection with the audit of the Company's
financial statements for the fiscal year ended December 31, 2003 and the reviews
of the financial statements included in each of the Company's Quarterly Reports
on Form 10-QSB during the fiscal year ended December 31, 2003. Audit related
fees for 2003 were $4,800 and for 2004 were $0.

The Company paid these sums.


                                       46
<PAGE>

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the registrant has duly caused this report to be signed by the
following persons on behalf of the Registrant and in the capacities and on the
dates indicated.

OnScreen Technologies, Inc.

Name                             Title                      Date
------------------------------   ----------------------     --------------


/s/                              CEO/President/Director     March 31, 2005
------------------------------
      John "JT" Thatch

/s/                              COO/CFO                    March 31, 2005
------------------------------
       Mark R. Chandler

/s/                              Director/Audit Committee   March 31, 2005
------------------------------
       Russell L. Wall



                                       47
<PAGE>




                           OnScreen Technologies, Inc.

                              Financial Statements

                           December 31, 2004 and 2003













                                       1
<PAGE>



                           OnScreen Technologies, Inc.


                                    Contents


                                                                            Page
                                                                            ----
Report of Independent Registered Public Accounting Firm                      F-3

Balance Sheet                                                                F-4

Statements of Operations                                                     F-5

Statement of Changes in Stockholders' Equity                               F-6-7

Statements of Cash Flows                                                   F-8-9

Notes to Financial Statements                                            F-10-34



                                       2
<PAGE>


             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Shareholders of:
Onscreen Technologies, Inc.:

We have audited the accompanying balance sheet of Onscreen Technologies, Inc. as
of December 31,  2004,  and the related  statements  of  operations,  changes in
stockholders' equity  (deficiency),  and cash flows for the years ended December
31, 2004 and 2003.  These  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
financial statements based on our audits.

We conducted our audits in accordance  with the 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
financial  statements  are free of  material  misstatement.  An  audit  includes
examining,  on a test basis,  evidence supporting the amounts and disclosures in
the  financial  statements.  An audit also  includes  assessing  the  accounting
principles  used  and  significant  estimates  made  by  management,  as well as
evaluating the overall  financial  statement  presentation.  We believe that our
audits provide a reasonable basis for our opinion.

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

The accompanying  financial  statements have been prepared  assuming the Company
will  continue  as a going  concern.  As  discussed  in Note 1 to the  financial
statements, the Company has a net loss of $7,904,229 and cash used in operations
of $3,868,265 in 2004 and an accumulated  deficit of $19,773,674 at December 31,
2004. These matters raise  substantial  doubt about its ability to continue as a
going concern. Management's plans as to these matters are also described in Note
1. The  financial  statements do not include any  adjustments  that might result
from the outcome of this uncertainty.


SALBERG & COMPANY, P.A.
Boca Raton, Florida
March 15, 2005


                                       3
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                                  BALANCE SHEET
                                DECEMBER 31, 2004
<TABLE>
<CAPTION>

                                                  Assets
<S>                                                                           <C>
 CURRENT ASSETS
 Cash and cash equivalents                                                     $  1,561,650
 Marketable securities available-for-sale                                           401,233

 Accounts receivable                                                                  1,605
 Prepaid expenses and other                                                          38,354
                                                                               ------------
 TOTAL CURRENT ASSETS                                                             2,002,842
                                                                               ------------

 PROPERTY AND EQUIPMENT, NET                                                        299,951
                                                                               ------------

 OTHER ASSETS
 Restricted Marketable securities available-for-sale                                 30,000
 Technology rights, net                                                             391,667
 Patent Costs                                                                        48,657
 Deposits                                                                            14,360
                                                                               ------------
 TOTAL OTHER ASSETS                                                                 484,684
                                                                               ------------
 TOTAL ASSETS                                                                  $  2,787,477
                                                                               ============
                        LIABILITIES AND STOCKHOLDERS' EQUITY
 CURRENT LIABILITIES
 Accounts payable                                                              $    128,858
 Preferred stock dividends payable                                                   84,368
 Accrued expenses                                                                   283,797
 Accrued compensation                                                                40,000
                                                                               ------------
 TOTAL CURRENT LIABILITIES                                                          537,023
 Accrued expenses payable with common stock                                         245,669
                                                                               ------------
 TOTAL LIABILITIES                                                                  782,692
                                                                               ------------
Commitments and contingencies (Note 6)

 STOCKHOLDERS' EQUITY
 Preferred stock, par value $0.001; 10,000,000 shares authorized Convertible
      Series A, preferred stock, 5,000,000 shares authorized,
          2,772,205 shares issued and outstanding at December 31, 2004;
          liquidation preference of $2,772,205 at December 31, 2004                   2,772
       Convertible Series B preferred stock, 30,000 shares authorized, no
           shares issued and outstanding, 28,568 shares converted to common              --
           stock, liquidation preference of $240 per share
 Common stock, par value $0.001; 150,000,000 shares authorized,
     63,680,020 shares issued and outstanding at December 31, 2004                   63,680
 Additional paid-in capital                                                      22,150,289
 Accumulated deficit                                                            (19,773,674)
                                                                               ------------
                                                                                  2,443,067
 Less deferred compensation expense                                                (438,282)
                                                                               ------------
 TOTAL STOCKHOLDERS' EQUITY                                                       2,004,785
                                                                               ------------
 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                                    $  2,787,477
                                                                               ============
</TABLE>

                 See accompanying notes to financial statements


                                       4
<PAGE>


                           ONSCREEN TECHNOLOGIES, INC.
                            STATEMENTS OF OPERATIONS
                 FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

<TABLE>
<CAPTION>
                                                                       2004            2003
                                                                  ------------    ------------
<S>                                                               <C>             <C>
REVENUES                                                          $    145,988    $    308,634

COST OF REVENUES                                                            --         125,021
                                                                  ------------    ------------

GROSS PROFIT                                                           145,988         183,613
OPERATING EXPENSES
Selling, general and administrative                                  6,936,155       2,583,857
Research and development                                             1,044,686         204,751

Commitment penalty and warrant modification expense                         --         266,126
Impairment loss                                                        195,398         270,355
Bad debt                                                                18,462         138,667
                                                                  ------------    ------------

TOTAL OPERATING EXPENSES                                             8,194,701       3,463,756
                                                                  ------------    ------------

LOSS FROM OPERATIONS                                                (8,048,713)     (3,280,143)
                                                                  ------------    ------------
OTHER INCOME (EXPENSE)
Other income                                                            14,510          49,198
Other expense                                                          (22,768)             --
Investment income                                                       20,969              --
Settlement gain                                                        335,465         314,192
Settlement loss                                                       (139,621)       (248,205)
Interest expense                                                       (64,071)       (273,549)
                                                                  ------------    ------------

TOTAL OTHER INCOME (EXPENSES), NET                                     144,484        (158,364)
                                                                  ------------    ------------
NET LOSS                                                            (7,904,229)     (3,438,507)

Preferred stock dividends                                             (460,512)     (1,054,600)
                                                                  ------------    ------------

NET LOSS ALLOCABLE TO COMMON STOCKHOLDERS                         $ (8,364,741)   $ (4,493,107)
                                                                  ============    ============

Basic and diluted net loss per common share                       $      (0.22)   $      (0.28)
                                                                  ============    ============
Basic and diluted net loss per common share allocable to common
stockholders                                                      $      (0.23)   $      (0.37)
                                                                  ============    ============

Weighted average common shares outstanding                          36,144,257      12,087,148
                                                                  ============    ============
</TABLE>

                 See accompanying notes to financial statements


                                       5
<PAGE>

<TABLE>
<CAPTION>
                                                     ONSCREEN TECHNOLOGIES, INC.
                                      STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIENCY)
                                               YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                                                        SERIES A
                                                           SERIES B                 PREFERRED STOCK               COMMON STOCK
                                                           PREFERRED                 AND PREFERRED                 AND COMMON
                                                             STOCK                   STOCK ISSUABLE              STOCK ISSUABLE
                                                       SHARES       AMOUNT      SHARES         AMOUNT        SHARES         AMOUNT
                                                     ---------    ----------    ----------    ----------    ----------   ----------
<S>                                                  <C>          <C>           <C>           <C>           <C>          <C>
Balance, December 31, 2002                                  --    $       --        12,173    $       12    10,254,508   $   10,255
      Warrants and options granted
       Warrants extension and price reset
         pursuant to investment agreement
       Common stock issued for exercise of
          options                                                                                              679,907          680
       Common stock issued for services,
         compensation and debt settlement                                                                    3,155,268        3,155
       Common stock issuable for cash under
         private placement and for subscription
         receivable                                                                                          7,700,000        7,700
       Offering costs of private placement
       Series A Preferred stock issued for cash
         and subscriptions receivable                                            1,245,000         1,245
       Series A Preferred stock issued for
         accrued services, notes payable,
         accounts payable, preferred stock
         dividends and services of employees                                     1,431,907         1,432
       Series A Preferred stock dividends, $0.10
         per share
       Series A Preferred stock dividend
         resulting from intrinsic value of
         convertible preferred stock
       Settlement gain with related party
         Amortization of deferred consulting
       Net loss for the year ended December 31,2003
                                                     ---------    ----------    ----------    ----------    ----------   ----------
Balance, December 31, 2003                                  --            --     2,689,080         2,689    21,789,683       21,790
      Warrants granted for services, compensation
         and under default provisions of
         promissory notes

       Subscription receivables not paid                (1,433)           (1)                               (1,800,000)      (1,800)
       Common stock issued for warrants exercised
         from the private placement                     12,636            13                                 7,055,333        7,055
       Common stock issued for options and other
         warrants exercised                                                                                  1,175,736        1,176
      Common stock issued for services,
         compensation, debt payment and
         settlements                                                                                         3,502,254        3,502
       Common stock issued for cash from private
         offering                                        5,365             5                                 2,995,274        2,995
       Offering costs
       Series A & Series B preferred stock
         dividend resulting from intrinsic value
         of convertible preferred stock
       Series A and B Preferred Stock converted
         to common stock                               (28,568)          (29)      (98,375)          (99)   28,961,740       28,962
       Series B Preferred Stock issuable to
         private placement holders                      12,000            12
       Series B Preferred Stock dividends, $1 per
         share

       Series A Preferred Stock issued for cash                                     25,000            25
       Series A Preferred Stock issued for
         services of employees, non-employees and
         accrued expenses                                                          156,500           157
       Series A Preferred Stock dividends, $0.10
         per share
       Amortization of deferred compensation and
         consulting
       Net loss for the year ended December 31,2004
                                                     ---------    ----------    ----------    ----------    ----------   ----------
Balance, December 31, 2004                                  --    $       --     2,772,205    $    2,772    63,680,020   $   63,680
                                                     =========    ==========    ==========    ==========    ==========   ==========
</TABLE>


                                                                 6
<PAGE>

<TABLE>
<CAPTION>

(Continued)
                                                                                                                  TOTAL
                                                    ADDITIONAL                    DEFERRED                     STOCKHOLDERS'
                                                     PAID-IN      ACCUMULATED   COMPENSATION   SUBSCRIPTION       EQUITY
                                                     CAPITAL       DEFICIT      & CONSULTING    RECEIVABLE     (DEFICIENCY)
                                                   -----------    ------------  ------------  -------------    -------------
<S>                                                <C>            <C>           <C>           <C>              <C>
Balance, December 31, 2002                         $ 5,101,664    $ (6,915,826) $    (44,104) $     (10,075)   $  (1,858,074)

     Warrants and options granted                    1,225,579                      (232,673)                        992,906
      Warrants extension and price reset
       pursuant to investment agreement                 66,126                                                        66,126
      Common stock issued for exercise of
       options                                           6,820                                       (7,250)             250
      Common stock issued for services,
       compensation and debt settlement              1,922,406                    (1,342,419)            --          583,142
      Common stock issuable for cash under
       private placement and for
       subscription receivable                       1,917,300                                     (350,000)       1,575,000

      Offering costs of private placement             (770,920)                                                     (770,920)
      Series A Preferred stock issued for
       cash and subscriptions receivable             1,243,755                                      (50,000)       1,195,000
      Series A Preferred stock issued for
       accrued services, notes payable,
       accounts payable, preferred stock
       dividends and services of employees           1,420,474                                           --        1,421,906
      Series A Preferred stock dividends,
       $0.10 per share                                                (102,835)                                     (102,835)
      Series A Preferred stock dividend
       resulting from intrinsic value of
       convertible preferred stock                     951,765        (951,765)                                           --

      Settlement gain with related party                40,480                                                        40,480

      Amortization of deferred consulting                                            200,889                         200,889
      Net loss for the year ended December
       31, 2003                                                     (3,438,507)                                   (3,438,507)
                                                   -----------    ------------  ------------  -------------    -------------
Balance, December 31, 2003                          13,125,449     (11,408,933)   (1,418,307)      (417,325)         (94,637)
     Warrants granted for services,
       compensation and under default
       provisions of promissory notes                  976,852              --      (591,360)            --          385,492

      Subscription receivables not paid               (448,199)                                     350,000         (100,000)
      Common stock issued for warrants
       exercised from the private placement          3,609,432                                                     3,616,500
      Common stock issued for options and
       other warrants exercised                        352,258                                       (1,250)         352,184
     Common stock issued for services,
       compensation, debt payment and
       settlements                                   2,449,487                      (391,375)        18,575        2,080,189
      Common stock issued for cash from
       private offering                              2,243,456                                                     2,246,456

      Offering costs                                  (482,946)                                                     (482,946)
      Series A & Series B preferred stock
       dividend resulting from intrinsic
       value of convertible preferred stock            172,028        (172,028)                                           --
      Series A and B Preferred Stock
       converted to common stock                       (28,834)                                                           --
      Series B Preferred Stock issuable to
       private placement holders                           (12)                                                           --
      Series B Preferred Stock dividends, $1
       per share                                                       (17,901)                                      (17,901)
      Series A Preferred Stock issued for
       cash                                             24,975                                       50,000           75,000
      Series A Preferred Stock issued for
       services of employees, non-employees
       and accrued expenses                            156,343                      (100,000)                         56,500
      Series A Preferred Stock dividends,
       $0.10 per share                                                (270,583)                                     (270,583)
      Amortization of deferred compensation
       and consulting                                                              2,062,760                       2,062,760
      Net loss for the year ended December
       31, 2004                                                     (7,904,229)                                   (7,904,229)
                                                   -----------    ------------  ------------  -------------    -------------
Balance, December 31, 2004                         $22,150,289    $(19,773,674) $   (438,282) $          --    $   2,004,785
                                                   ===========    ============  ============  =============    =============

                                       See accompanying notes to financial statements
</TABLE>


                                                             7
<PAGE>

<TABLE>
<CAPTION>
                                             ONSCREEN TECHNOLOGIES, INC.
                                               STATEMENTS OF CASH FLOWS
                                    FOR THE YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                                                               2004          2003
                                                                                           -----------    -----------
<S>                                                                                        <C>            <C>
    CASH FLOWS FROM OPERATING ACTIVITIES:
    Net Loss                                                                               $(7,904,229)   $(3,438,507)
    Adjustments to reconcile net loss to net cash used in operating activities:
         Stock, warrants and notes issued for compensation and services                      2,027,645        686,307
         Gain from settlement of certain accruals and accounts payable                        (335,466)      (314,192)
         Stock based settlement loss                                                            71,500        248,205
         Non-cash interest expense for stock issued to note holders that were in default        46,500        122,500
         Non-cash interest expense                                                              17,571         96,499
         Non-cash interest related party                                                            --         16,435
         Bad debt                                                                               18,462        138,667
         Amortization of technology rights                                                     130,833             --
         Amortization of deferred consulting and compensation                                2,062,760        200,889
         Loss on disposal of assets and asset shrinkage                                         22,768         49,112
         Impairment of long-lived assets                                                       195,398        270,355
         Compensation expense payable in common stock                                          191,669             --
         Depreciation                                                                          169,205        175,192
    (INCREASE) DECREASE IN ASSETS:
         Accounts receivable and other receivables                                              (8,974)      (139,354)
         Due from affiliate                                                                     (2,863)        (3,646)
         Prepaid expenses and other current assets                                             (38,354)            --
         Deferred royalty expense                                                                   --         75,000
         Deposits and other assets                                                             (71,741)            --
    INCREASE (DECREASE) IN LIABILITIES:
         Accounts payable                                                                     (198,026)         6,344
         Royalties payable                                                                     (52,501)       106,701
         Accrued expenses                                                                      174,505         83,222
         Accrued compensation                                                                 (176,689)       178,184
         Customer deposits                                                                          --        (28,500)
         Deferred revenues                                                                     (58,238)        16,629
         Accrued commitment penalty                                                                 --        200,000
         Deferred gain on sale of future revenues                                             (150,000)            --
                                                                                           -----------    -----------
              NET CASH USED IN OPERATING ACTIVITIES                                         (3,868,265)    (1,253,958)
                                                                                           -----------    -----------
    CASH FLOWS FROM INVESTING ACTIVITIES:
         Investment in technology rights                                                      (522,500)            --
         Investment in marketable securities                                                  (401,233)            --
         Proceeds from sale of property and equipment                                              850          1,500
         Purchase of property and equipment                                                   (118,461)            --
                                                                                           -----------    -----------
              NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES                           (1,041,344)         1,500
                                                                                           -----------    -----------
    CASH FLOWS FROM FINANCING ACTIVITIES:
         Series A convertible preferred stock dividends paid                                  (257,347)        (7,534)
         Proceeds from notes and loans payable                                                      --         38,423
         Payments on notes payable - related party                                                  --        (11,343)
         Payments on notes and loans payable                                                  (302,511)            --
         Proceeds from sales of common stock and exercise of warrants and options, net
            of offering costs                                                                5,632,194      1,345,500
         Proceeds from issuance of preferred stock - Series A                                   75,000      1,195,000
                                                                                           -----------    -----------
              NET CASH PROVIDED BY FINANCING ACTIVITIES                                      5,147,336      2,560,046
                                                                                           -----------    -----------
    NET INCREASE IN CASH AND CASH EQUIVALENTS                                              $   237,727    $ 1,307,588
    Cash and Cash Equivalents at Beginning of Year                                           1,323,923         16,335
                                                                                           -----------    -----------
    CASH AND CASH EQUIVALENTS AT END OF YEAR                                               $ 1,561,650    $ 1,323,923
                                                                                           ===========    ===========
(continued)
</TABLE>



                                                          8
<PAGE>


(continued)
<TABLE>
<CAPTION>
                                                                                                2004        2003
                                                                                           -----------    --------
<S>                                                                                        <C>            <C>
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
     Approximate interest paid in cash                                                     $        --    $        --
     Income taxes paid                                                                     $        --    $        --

SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:

     Debt and accrued interest settled with common stock, net of subscriptions receivable  $   227,361    $    74,553
                                                                                           ===========    ===========
     Subscription receivable paid with reduction of debt                                   $    18,575    $        --
                                                                                           ===========    ===========
     Debt  and accrued interest - related party settled with capital stock                 $        --    $   305,721
                                                                                           ===========    ===========
     Debt and accrued interest settled with Series A preferred stock                       $        --    $   909,368
                                                                                           ===========    ===========
     Royalties paid with common stock                                                      $        --    $   138,124
                                                                                           ===========    ===========
     Series A dividends paid with preferred stock                                          $        --    $    29,976
                                                                                           ===========    ===========
     Series A and Series B preferred stock dividends from intrinsic value                  $   172,028    $   951,765
                                                                                           ===========    ===========
     Accounts payable and accrued expenses settled with Series A preferred stock           $    24,000    $    89,343
                                                                                           ===========    ===========
     Common stock issued for cashless exercise of warrants                                 $        --    $       380
                                                                                           ===========    ===========
     Common stock issued for conversion of Series A preferred stock                        $        99    $        --
                                                                                           ===========    ===========
     Common stock issued for conversion of Series B preferred stock                        $        29    $        --
                                                                                           ===========    ===========
     Common stock issued for accrued expense settlements                                   $   160,600    $        --
                                                                                           ===========    ===========
     Common stock issued for deferred consulting and compensation                          $ 1,082,735    $        --
                                                                                           ===========    ===========


                                    See accompanying notes to financial statements
</TABLE>


                                                          9
<PAGE>


                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

NOTE 1   NATURE OF OPERATIONS AND BASIS OF PRESENTATION

         During the 2004 annual meeting of the  shareholders,  the  shareholders
         voted  to  change  the  corporation  name  from  New  Millennium  Media
         International Inc. to OnScreen  Technologies,  Inc. to reflect the main
         focus of the Company which is to market and license products  utilizing
         the OnScreen(TM) technology.

         OnScreen  Technologies,  Inc.  (the  Company)  is  commercializing  its
         innovative  OnScreen(TM)  light emitting diode (LED)  technology to the
         world of visual  communications.  The  Company  concentrates  on motion
         display advertising and emergency/first  responders solutions and seeks
         to develop  innovative  approaches  to motion LED products and delivery
         systems. The Company is focused on the design,  development and sale of
         LED sign displays based on the OnScreen(TM) architecture.

         The  accompanying  financial  statements  have  been  prepared  on  the
         assumption  that the  Company  will  continue  as a going  concern.  As
         reflected in the accompanying  financial statements,  the Company has a
         net loss of $7,904,229  and cash used in  operations of $3,868,265  for
         the  year  ended  December  31,  2004  and an  accumulated  deficit  of
         $19,773,674  at  December  31,  2004.  The  ability  of the  Company to
         continue as a going  concern is dependent on the  Company's  ability to
         bring the OnScreen(TM)  products to market,  generate  increased sales,
         obtain positive cash flow from operations and raise additional capital.
         The financial statements do not include any adjustments that may result
         from the outcome of this uncertainty.

         The   Company   continues   to  raise   additional   capital   for  the
         commercialization  of its  OnScreen(TM)  technology  product lines. The
         Company  believes  it will  have  sufficient  cash to meet its  funding
         requirements  to bring the  OnScreen(TM)  technology  product line into
         production during 2005. The Company has experienced negative cash flows
         from operations and incurred net losses in the past and there can be no
         assurance  as to  the  availability  or  terms  upon  which  additional
         financing and capital might be available, if needed.

NOTE 2   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         (A) 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. Significant estimates
         in 2004  and  2003  include  estimates  used to  review  the  Company's
         long-lived  assets for impairment  and  valuations of non-cash  capital
         stock issuances.


                                       10
<PAGE>


                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (B) CASH AND CASH EQUIVALENTS

         For  purposes of the cash flow  statement,  the Company  considers  all
         highly liquid  investments  with  maturities of three months or less at
         the time of purchase to be cash equivalents.

         (C)  MARKETABLE SECURITIES AVAILABLE-FOR-SALE

         In order for the Company to optimize  its return on the equity funds it
         has raised,  it invested in certain liquid marketable  securities.  The
         Company classifies these marketable  securities as  available-for-sale.
         The cost approximately  equaled fair market value at December 31, 2004;
         therefore,  no  unrealized  gain or loss was  recorded  during 2004 for
         these  securities.  The  marketable  securities  are comprised of bonds
         which have maturities of less than one year.

         (D) ACCOUNTS RECEIVABLE

         Accounts  receivable  consist of the  receivables  associated  with the
         revenue  derived from the Company's  LED truck.  We record an allowance
         for  doubtful  accounts  to  allow  for  any  amounts  that  may not be
         recoverable,  which is based on an  analysis  of our  prior  collection
         experience,  customer credit  worthiness,  and current economic trends.
         Based on management's review of accounts  receivable,  an allowance for
         doubtful accounts of $-0- at December 31, 2004 is considered  adequate.
         We determine  receivables  to be past due based on the payment terms of
         original invoices.

         (E) CONCENTRATION OF CREDIT RISK

         The  Company   maintains   its  cash  in  bank  deposit  and  financial
         institution deposit accounts, which, at times, exceed federally insured
         limits.  The Company has not  experienced  any losses in such  accounts
         through December 31, 2004.

         (F) PROPERTY AND EQUIPMENT

         Property and equipment are recorded at the lower of fair value or cost,
         less  accumulated  depreciation and  amortization.  Major additions are
         capitalized.  Minor additions and maintenance and repairs, which do not
         extend the useful  life of an asset,  are  charged to  operations  when
         incurred.  When property and  equipment are sold or otherwise  disposed
         of, the asset account and related accumulated  depreciation account are
         relieved, and any gain or loss is included in operations.  Depreciation
         is provided  primarily using the straight-line  method over the assets'
         estimated useful lives of three to seven years.  Estimated useful lives
         are  periodically  reviewed and,  where  appropriate,  changes are made
         prospectively.

         (G) LONG-LIVED ASSETS

         The  Company  periodically  reviews its  long-lived  assets and certain
         identifiable  assets  related to those assets for  impairment  whenever
         circumstances  and  situations  change such that there is an indication
         that the carrying amounts may not be recoverable. If the non-discounted
         future  cash  flows of the  enterprise  are less  than  their  carrying
         amount,  their  carrying  amounts  are  reduced  to fair  value  and an
         impairment  loss is recognized.  See Note 3 for the impairment  amounts
         that were recorded during 2004 and 2003.


                                       11
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (H) IDENTIFIABLE INTANGIBLE ASSETS

         At December 31, 2004, the Company had capitalized  $522,500  related to
         technology  rights it had  acquired.  The Company is  amortizing  these
         technology rights over a one to twenty year life.

         At December  31,  2004,  the Company had  capitalized  $48,657 of costs
         related to filing patent applications during 2004. When the patents are
         approved,  the Company will then amortize  these costs over the life of
         the patent.  Any patents that are not approved will be expensed at that
         time. At December 31, 2004, all of the patents are pending approval.

         (I) STOCK-BASED COMPENSATION

         For the stock  options,  warrants  and stock issued to  employees,  the
         Company  has  elected  to apply the  intrinsic  value  based  method of
         accounting  prescribed by Accounting  Principles  Board ("APB") Opinion
         No.  25,  "Accounting  for Stock  Issued  to  Employees,"  and  related
         interpretations.  Under the intrinsic value based method,  compensation
         cost is  measured  on the date of grant as the  excess  of the  current
         market  price of the  underlying  stock over the  exercise  price.  For
         options,  the  compensation  amounts are amortized  over the respective
         vesting  periods  of the  option  grant.  For stock  compensation,  the
         amounts are amortized over the period of service the award pertains to.
         The Company  provides pro forma  disclosures  of net loss and pro forma
         loss per share as if the fair value based method of accounting had been
         applied,  as  required  by SFAS No. 123,  "Accounting  for  Stock-Based
         Compensation" and SFAS 148 "Accounting for Stock-Based  Compensation" -
         transition and disclosure, an amendment of SFAS No. 123.

         The following  table  illustrates  the effect on net loss  available to
         common  stockholders  and loss per common share had the Company applied
         the fair value  recognition  provisions of SFAS No. 123 to  stock-based
         employee compensation during 2004 and 2003:

<TABLE>
<CAPTION>
                                                                          2004             2003
                                                                   -------------     ---------------
         <S>                                                       <C>               <C>
         Net Loss Available to Common Stockholders:
           Net loss available to common stockholders as reported   $  (8,364,741)    $    (4,493,107)
         Plus total stock-based employee compensation cost
           included in the net loss, net of related tax
           effects                                                       142,468             295,500
         Less total stock-based employee compensation
           expenses determined under fair value based method
           for all awards, net of related tax effects                   (665,710)           (765,006)
                                                                   -------------     ---------------
         Pro forma net loss                                        $  (8,887,983)    $    (4,962,613)
                                                                   =============     ===============

         Loss per share:
           As reported                                             $       (0.23)    $         (0.37)
                                                                   =============     ===============
         Pro forma                                                 $       (0.25)    $         (0.41)
                                                                   =============     ===============
</TABLE>

                                       12
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         See Note 7 I, for additional disclosure and discussion of the Company's
         employee stock plan and activity.

         The Company  accounts for services  provided by  non-employees  who are
         issued equity  instruments based on the fair value of the consideration
         received or the fair value of the equity instruments, whichever is more
         reliably  measurable on the measurement date. The amount related to the
         value of the stock awards is amortized  on a  straight-line  basis over
         the required service periods.

         (J) REVENUE RECOGNITION
         The  Company  operates  as  one  segment.  All  internal  analysis  and
         financial  reporting by  management  is  performed as one segment.  The
         Company's  revenues are  recognized  as the services are  completed and
         delivered and no additional performance is required by the Company. The
         Company's  revenue  recognition  criteria  includes  assessing  whether
         pervasive  evidence of an arrangement  exists, the sales price is fixed
         or determinable,  and  collectability is reasonably  assured.  Deferred
         revenue represents the unearned portion of payments received in advance
         of services being completed.

         During 2004, the Company  focused on  development  of its  OnScreen(TM)
         technology and related products.  The OnScreen(TM) products were in the
         prototype  stage  during  2004.  In  conjunction  with this focus,  the
         Company conveyed and assigned its right, title and interest relating to
         the  EyeCatcherPlus  displays to a third party during 2004. The Company
         retains  ownership and a security  interest in all assets  conveyed and
         assigned.  The third  party will pay the  Company  five  percent of the
         gross  advertising  sales revenue derived from these  displays.  During
         2003, the EyeCatcherPlus  Displays were placed in service for a fee and
         revenue was  recognized  over the placement  period.  On occasion,  the
         EyeCatcherPlus Displays were sold on a special order basis. Revenue and
         cost  of  revenue  from  these   special   order  basis  sales  of  the
         EyeCatcherPlus  Displays  were  recognized  at the time the boards were
         shipped to the customer.

         LED Truck  rental  revenue is  recognized  pro-rata  as earned over the
         rental period which generally does not exceed 14 days.

         Territory fees from exclusive distributors are recorded as a deferred
         revenue liability and then recognized over the term of the distributor
         contract.

         (K) ADVERTISING

         In accordance with Accounting  Standards  Executive Committee Statement
         of Position  93-7,  costs  incurred  for  producing  and  communicating
         advertising  of the  Company  are charged to  operations  as  incurred.
         Advertising  expense for the years ended December 31, 2004 and 2003 was
         $19,422 and $1,510, respectively.


                                       13
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (L) INCOME TAXES

         Income taxes are accounted for under the asset and liability  method of
         Statement of Financial  Accounting  Standards No. 109,  "Accounting for
         Income  Taxes" ("SFAS  109").  Under SFAS 109,  deferred tax assets and
         liabilities are recognized for the future tax consequences attributable
         to  differences  between the financial  statement  carrying  amounts of
         existing  assets  and  liabilities  and  their  respective  tax  bases.
         Deferred  tax assets and  liabilities  are measured  using  enacted tax
         rates  expected to apply to taxable  income in the years in which those
         temporary  differences  are expected to be  recovered  or settled.  The
         effect on deferred tax assets and  liabilities of a change in tax rates
         is recognized as income in the period that includes the enactment date.

         Valuation  allowances  have  been  established  against  the  Company's
         deferred tax assets due to  uncertainties  in the Company's  ability to
         generate   sufficient   taxable   income  in  future  periods  to  make
         realization  of such assets  more likely than not.  The Company has not
         recognized  an income tax benefit for its  operating  losses  generated
         during 2004 and 2003 based on  uncertainties  concerning  the Company's
         ability to  generate  taxable  income in future  periods.  There was no
         income tax receivable at December 31, 2004 and 2003. In future periods,
         tax benefits and related  deferred tax assets will be  recognized  when
         management considers realization of such amounts to be more likely than
         not.

         (M) LOSS PER SHARE

         In accordance with Statement of Financial Accounting Standards No. 128,
         "Earnings per Share",  basic net loss per share is computed by dividing
         the net loss  available  to common  stockholders  for the period by the
         weighted average number of common shares outstanding during the period.
         Diluted net loss per share is computed by dividing  net loss  available
         to common  stockholders  by the weighted  average  number of common and
         common  equivalent  shares  outstanding   during  the  period.   Common
         equivalent  shares  outstanding as of December 31, 2004 and 2003, which
         consist  of  options,  warrants,   convertible  notes  and  convertible
         preferred  stock,  have been  excluded  from the  diluted  net loss per
         common share calculations because they are anti-dilutive.  Accordingly,
         diluted  net loss per share is the same as basic net loss per share for
         2004 and 2003.  The following  table  summarizes  the Company's  common
         stock  equivalents  outstanding  at December  31, 2004 which may dilute
         future earning per share.

         Convertible preferred stock                  11,088,820
         Warrants and options                          7,960,000
         Contingently returnable shares                  200,000
                                                  --------------
                                                  $   19,248,820
                                                  ==============

         (N) FAIR VALUE OF FINANCIAL INSTRUMENTS

         Statement of Financial Accounting Standards No. 107, "Disclosures about
         Fair  Value  of  Financial   Instruments,"   requires   disclosures  of
         information about the fair value of certain  financial  instruments for
         which it is  practicable  to estimate that value.  For purposes of this
         disclosure,  the fair value of a financial  instrument is the amount at
         which  the  instrument  could be  exchanged  in a  current  transaction
         between willing parties, other than in a forced sale or liquidation.


                                       14
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         The Company believes the carrying  amounts of the short-term  financial
         instruments,   including  accounts  receivable,  marketable  securities
         available-for-sale   and   current   liabilities   reflected   in   the
         accompanying  balance sheet approximate fair value at December 31, 2004
         due to the relatively short-term nature of these instruments.

         (O) RECENT ACCOUNTING PRONOUNCEMENTS

         In November 2004,  the Financial  Accounting  Standards  Board ("FASB")
         issued  Statement of Financial  Accounting  Standard  ("SFAS") No. 151,
         "Inventory  Costs."  The  new  statement  amends  Accounting   Research
         Bulletin ("APB") No. 43, Chapter 4, "Inventory Pricing," to clarify the
         accounting  for abnormal  amounts of idle  facility  expense,  freight,
         handling costs, and wasted material. This statement requires that those
         items  be  recognized  as  current-period  charges  and  requires  that
         allocation of fixed  production  overheads to the cost of conversion be
         based  on the  normal  capacity  of  the  production  facilities.  This
         statement is effective for fiscal years  beginning after June 15, 2005.
         The  Company  does not  expect  adoption  of this  statement  to have a
         material impact on its financial condition or results of operations.

         In December  2004,  the FASB issued SFAS No. 123 (revised  2004) ("SFAS
         123(R)"),  "Share-Based  Payment." This statement replaces SFAS No. 123
         "Accounting for Stock-Based  Compensation,"  and supersedes APB Opinion
         No. 25,  "Accounting  for Stock Issued to Employees."  SFAS 123(R) will
         require the fair value of all stock option  awards  issued to employees
         to be  recorded  as an expense  over the related  vesting  period.  The
         statement also requires the recognition of compensation expense for the
         fair value of any unvested stock option awards  outstanding at the date
         of  adoption.  The  adoption  of SFAS 123(R) will impact the Company by
         requiring  it to use the  fair-value  based  method of  accounting  for
         future  and  unvested  employee  stock  transactions  rather  than  the
         intrinsic  method the Company  currently  uses.  The Company will adopt
         this SFAS as of  January  1,  2006.  The  Company  does not  expect the
         adoption  of this SFAS  123(R) to have a material  impact  relating  to
         outstanding  options/warrants since a majority of the awards granted at
         December 31, 2004 will be fully vested prior to our adoption.

         In December 2004, the FASB issued SFAS No. 153 ("SFAS 153"), "Exchanges
         of  Nonmonetary  Assets-an  amendment  of APB  Opinion  No.  29".  This
         statement  amends APB 29 which is based on the principle that exchanges
         of nonmonetary assets should be measured based on the fair value of the
         assets  exchanged.  SFAS 153 eliminates  the exception for  nonmonetary
         exchanges of similar  productive  assets and replaces it with a general
         exception  for  exchanges  of  nonmonetary  assets  that  do  not  have
         commercial substance.  The Company adopted this FASB on January 1, 2005
         and it did not have a material impact on its financial statements.

         (P) RECLASSIFICATION

         Certain  2003  amounts  have been  reclassified  to conform to the 2004
         presentation.


                                       15
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

NOTE 3   PROPERTY AND EQUIPMENT, NET

Property and equipment is summarized as follows at December 31, 2004:

         LED truck                                           $ 450,000
         Equipment                                              48,180
         Furniture & fixtures                                   17,870
         Computers and software                                 52,585
         Vehicles                                               38,173
         Leasehold improvements                                 10,988
         Boards , net of impairment                                 --
         LED Truck (under construction), net of impairment          --
                                                             ---------
                                                               617,796
         Less accumulated depreciation                        (317,845)
                                                             ---------
                                                             $ 299,951
                                                             =========

Depreciation  expense for the years ended December 31, 2004 and 2003 amounted to
$169,205 and $175,192, respectively.

During  2003,  the Company  wrote-off  $103,112  of fixed  assets and $54,000 of
accumulated  depreciation related to boards that could no longer be used or were
no longer in the possession of the Company.  The net impact of this shrinkage of
$49,112 was included in cost of sales.  During 2004,  management  evaluated  the
recovery of the recorded value of the boards and  determined  since during 2004,
the Company did not receive any revenue  from these boards and the fair value of
the  boards  was less  than  the net  book  value  of the  boards  there  was an
impairment  loss of  $195,398  which  was  included  in  impairment  loss on the
Statements of Operations.

Prior to 2003,  the Company  engaged a vender to build  another  LED truck.  The
development  of this second  truck  experienced  technical  problems  and delays
resulting  in cost  increases.  The Company has never taken  possession  of this
truck as the truck did not meet the specifications  the Company required;  thus,
the truck had not been placed into service and no depreciation has been taken on
this truck. Management is legally pursuing their rights in this dispute with the
LED truck vendor and since the outcome is unknown as to whether the Company will
receive the truck or any monetary  recovery  from the vendor,  the Company wrote
off the  remaining  balance and recorded an impairment  loss of $270,355  during
2003.

NOTE 4   TECHNOLOGY RIGHTS AND LICENSE AND ROYALTY AGREEMENTS

TECHNOLOGY RIGHTS UNDER LICENSE 1
During  2001,  the  Company,  under a license  agreement,  obtained an exclusive
license in a patent for the  manufacture,  sale,  and  marketing  of direct view
video  displays  with an  angular  dimension  of greater  than 30  inches.  This
agreement  had  certain  minimum  payment  requirements.  The product was in R&D
stages,  and no  product  was  available  for  marketing  or sale  during  2003;
therefore,  the  Company  recorded a royalty  expense of  $75,000  during  2003,
included in selling,  general and administrative in the statement of operations.
On January 14,  2004,  this  licensor  agreed to accept  $175,000 in lieu of the
remaining $250,000 minimum payment owed during 2004, which the Company paid on


                                       16
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

January 15, 2004 and the licensor agreed to accept an additional  $400,000 which
the  Company  paid on March 16,  2004.  After  this  payment,  there are no more
royalty  payments  owed to this  licensor.  The  Company  recorded  $52,500 as a
reduction in accrued royalty payments and the remaining $522,500 of the $575,000
payments as a technology right intangible asset which is amortized over the one-
to  twenty-year  estimated  life of the  technology.  The  Technology  Rights at
December 31, 2004 were as follows:

         Technology Rights                  $ 522,500
         Accumulated Amortization           $(130,833)
                                            ---------
                                             391, 667

The  amortization  of the  technology  rights  during  2004  was  $130,833.  The
estimated  annual  amortization  expense is  $20,000  for each for the next five
years.

LICENSE 2
On February 3, 2004, a third party and the Company  reached a Master  Settlement
and Release  Agreement  whereby,  in  consideration  for the  exchange of mutual
releases  and the third  party  relinquishing  any claim to any of the  OnScreen
technology  (including  the 11.25% license  payments),  the Company paid to this
third party during June 2004 $150,000 plus agreed to pay the following  annually
declining percentage of revenue derived from the commercialization of the direct
view LED video display technology with angular dimension greater than 30 inches:
5% in 2005 declining to 2% in year 2008 and thereafter. The $150,000 reduced the
deferred gain on sale of future revenues recorded on the Company's balance sheet
which the third party initially paid. In the event of a change of control of the
Company,  the  percentage of revenue  stated above shall  terminate and a single
payment transaction fee shall be paid by the Company to this third party ranging
from  10% of the  OnScreen  appraised  value  up to  $100,000,000,  7.5% for the
appraised value between $100,000,001 and $200,000,000, 5% of the appraised value
between  $200,000,001  and  $300,000,000,  and 4% of the appraised value between
$300,000,001   and   $400,000,000   and  3%  for  the  appraised  value  between
$400,000,001  and  $500,000,000  and  2%  for  any  appraised   amounts  between
$500,000,001 and $600,000,000.

EYECATCHERPLUS BOARDS
On February 3, 2004 (and amended  June 15,  2004),  the Company  entered into an
agreement  with a third party  whereby the Company  conveyed  and  assigned  its
right,  title and interest that the Company has relating to  EyeCatcherPlus  and
Drive Time  Network  (except  to its board  assets) as well as the right for the
third party to place the Company's  EyeCatcherPlus  boards.  The Company retains
ownership and a security interest in all assets conveyed and assigned. The third
party will pay the Company five percent of the gross  advertising  sales revenue
derived from these boards.  The five percent fee will continue until the Company
receives  the  pre-agreed  total  amount for the  boards.  The  Company  has not
received any fees during 2004 related to this agreement.  Given that the Company
has not  received  any fees for these  boards  during  2004 and is not sure what
fees, if any it will receive going forward,  the Company decided the boards were
impaired  and wrote them to -0- during  2004 (see Note 3). The third party shall
issue fifteen  percent of its stock to the Company at the time of the agreement.
The Company  recorded  this 15%  investment  at -0- during 2004.  During  second
quarter 2004,  the Company  issued a warrant to purchase  200,000  shares of its
common  stock to this third party (See Note 7H).  During the first six months of
2004 in accordance with the agreement,  the Company  contributed  $5,000 monthly
for five months to this third party. This $30,000 was expensed during 2004.


                                       17
<PAGE>


                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

SETTLEMENT OF LICENSE AGREEMENT OF EYECATCHERPLUS BACK LIT BOARDS

On October 31, 2003  ("Settlement  Date") a settlement  was reached  relating to
royalties that were in dispute. In accordance with this settlement,  the Company
issued  150,000  shares of its  common  stock on  October  31,  2003 and  during
November  2003 paid the  first of four  $18,750  quarterly  payments  owed.  The
remaining  $56,250 was paid during  2004.  The 150,000  shares of the  Company's
common stock were valued at the quoted trading price of $0.90,  or $135,000,  on
the Settlement Date. The Company had accrued $156,875 in royalty's payable as of
the Settlement Date and recognized a settlement loss of $53,125 during 2003.

NOTE 5   NOTES AND LOANS PAYABLE

The note holders with an original  principal of $250,000 had a right to purchase
50,000  additional common shares for January and February 2004 since the Company
was not current on these notes during  those  months.  The Company  recorded the
value  of the  right  to buy  the  50,000  shares  of  common  stock  using  the
Black-Scholes  Options  Pricing  Model at $46,500  (See Note 7). This amount was
recorded as interest  expense during the first quarter of 2004.  These notes and
accrued  interest were paid in full on March 12, 2004 by paying the note holders
$250,000 and issuing 12,500 shares of the Company's  common stock.  These shares
issued were valued at $11,500 and after consideration of additional interest due
for 2004 and a  receivable  of $18,575  due from the note  holders  from  option
exercises, the Company recognized a gain of $7,103 in 2004.

The note payable dated October 31, 2002, with a balance of $50,000,  was paid in
full during the first quarter of 2004.

During  April 2004, a payment of $2,511 was paid to a note holder which paid the
note and accrued interest in full.

During May 2004, a note holder  exercised  the right to convert a $215,861  note
into 863,442 shares of the Company's common stock. (See Note 7)

NOTE 6   COMMITMENTS AND CONTINGENCIES

         (A) LEGAL MATTERS

         The Company may be involved in certain legal  actions  arising from the
         ordinary  course of  business.  While it is not  feasible to predict or
         determine the outcome of these matters, the Company does not anticipate
         that any of these matters or these matters in the aggregate will have a
         material  adverse  effect on the  Company's  business or its  financial
         position or results of operations.


                                       18
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (B) ROYALTY AND LICENSE FEE AGREEMENTS

         See  Note  4-License  and  Royalty   Agreements  for  a  discussion  of
         commitments owed under royalty and license fee agreements.

         (C) EMPLOYMENT AGREEMENTS

         President/Chief Executive Officer

         The  employment  agreement,  as  amended,  between  the Company and its
         President/Chief   Executive   Officer   (President/CEO)   provides  the
         President/CEO  to be  paid a base  salary,  a  non-accountable  expense
         allowance of $10,000 per year and discretionary  incentive compensation
         payments.  It  also  provided  that  the  President/CEO  would  receive
         incentive  compensation  payments  which are not less than the  highest
         such  payments  provided to any other senior  executive of the Company.
         This agreement as amended expires on December 31, 2005.

         On February 3, 2004, an addendum was made to this employment  agreement
         whereby  the  President/CEO  receives  one  percent of all  revenue the
         Company derives from the commercialization of the direct view LED video
         display technology with angular dimension greater than 30 inches.

         On  October  31,  2004,  the  Compensation  Committee  of the  Board of
         Directors approved an increase in the President/CEO's  annual salary to
         $180,000 effective November 1, 2004.

         On March 28, 2005, an addendum was made to this  employment  agreement.
         See Note 12.

         PRESIDENT OF THE ONSCREEN PRODUCTS DIVISION
         The Company and its President of the OnScreen Products Division entered
         into  an  employment  agreement  that  expires  November  1,  2006.  In
         accordance with his employment  agreement,  upon receipt by the Company
         of payment  for  commercial  orders in excess of  $200,000,  he will be
         granted three-year warrants for 250,000 shares at $0.50 per share.

         In accordance with his employment  agreement as amended,  the President
         of the OnScreen Products  Division's salary will be $180,000  effective
         November 1, 2004 and $240,000 effective November 1, 2005. This employee
         was issued 450,000  shares of the Company's  common stock in accordance
         with his employment agreement.  If the employee is terminated for cause
         or  resigns,  300,000  of  these  shares  may be  repurchased  from the
         employee for $450 through  November 1, 2005 and 150,000 of these shares
         may be  repurchased  from the employee for $450 after  November 1, 2005
         until they are completely vested on November 1, 2006.

         During  2004,  the  President  of the  OnScreen  Products  Division was
         granted a  five-year  warrant to  purchase  2,000,000  shares of common
         stock with an  exercise  price of $0.25 for  additional  services to be
         provided.  This warrant can be exercised on or after  November 1, 2006.
         The  warrant  expires  if the  employee  does  not  complete  his  full
         employment  term through  October 31,  2006.  This warrant is valued at
         $40,000  under  the   intrinsic   value  method  of  APB  25  based  on
         contemporaneous  cash  sales  during  2004 of common  stock and will be
         recorded to  compensation  expense through the vesting date of November
         1, 2006.


                                       19
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         CHIEF OPERATING OFFICER AND CHIEF FINANCIAL OFFICER
         On December 16,  2003,  the Company  executed a  three-year  employment
         agreement  that is effective  January 1, 2004 with its Chief  Operating
         Officer and Chief Financial Officer (COO/CFO).  On October 6, 2004, the
         Compensation Committee of the Board of Directors authorized an increase
         in the COO/CFO's salary to $150,000  retroactive to January 1, 2004 and
         an increase to $180,000  effective November 1, 2004. In accordance with
         the employee  agreement,  the COO/CFO will  receive  120,000  shares of
         Series A  convertible  preferred  stock for each period of January 2005
         and June  2005.  In the  event of a change  of  control,  the  Series A
         convertible preferred stock shall immediately  accelerate and be issued
         within 30 days of written notice from the employee.

         On  October  6,  2004,  the  Compensation  Committee  of the  Board  of
         Directors  also  granted  the  COO/CFO  375,000  Series  A  Convertible
         Preferred shares and 1,500 Series B Convertible Preferred shares in the
         following  increments:  125,000 Series A shares and 500 Series B shares
         on or about January 1, 2006;  125,000  Series A shares and 500 Series B
         shares on or about July 1, 2006,  and  125,000  Series A shares and 500
         Series B shares on or about  December  31,  2006.  These shares will be
         issued  with the  provision  that the COO/CFO  has not  terminated  his
         employment voluntarily prior to the issuance of the shares. The 375,000
         shares of Series A Convertible  Preferred Stock are valued at $1.00 per
         share based on contemporaneous  cash sales during 2004. The total value
         of these  Series A shares is  $375,000  and will be  expensed  over the
         remaining term of the COO's employment  agreement.  The 1,500 shares of
         Series B Convertible Preferred Stock are valued at $270 per share based
         on  contemporaneous  cash sales during 2004 of common stock  multiplied
         times the conversion  ratio of 1,000. The total value of these Series B
         shares is $405,000 and will be expensed over the remaining  term of the
         COO/CFO's employment agreement.

         DIRECTOR OF ADMINISTRATION
         In  accordance  with  the  Director  of   Administration's   employment
         agreement,  he is paid an annual salary of $75,000 and a stock bonus of
         the Company's  registered common stock equal in value to $25,000 within
         two and one-half months after the end of each year of employment during
         which he was employed by the Company.  The employment agreement expires
         May 21, 2005.

         (D) LEASES

         The Company  executed a  non-cancelable  5-year office lease commencing
         May 1, 2001. With sixty days prior written notice,  the Company has the
         right to renew this lease for an  additional  five years.  During 2004,
         the  Company  needed   additional  space  and  executed  an  additional
         non-cancelable  5-year office lease commencing on December 1, 2004. The
         annual rent escalation for both leases is the greater of the CPI or 3%.
         Future minimum lease payments under these leases are as follows:

         Year Ending December 31,
                            2005                      $ 153,000
                            2006                         76,000
                            2007                         37,000
                            2008                         37,000
                            2009                         35,000
                                                      ---------
                                                      $ 338,000
                                                      =========

                                       20
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         Rental   expense  was   $142,766   and   $147,478  in  2004  and  2003,
         respectively,  included in selling,  general and  administrative on the
         statement of operations.

         During August 2003,  the Company  issued 200,000 shares of common stock
         as additional security for this office lease. For accounting  purposes,
         according to FASB 128, the shares are not  considered  outstanding  and
         not included in the computation of loss per share.

NOTE 7   STOCKHOLDERS' EQUITY


         (A) CONVERTIBLE PREFERRED STOCK SERIES A

         The  Company  designated  5,000,000  shares of  preferred  stock as new
         Series A  Convertible  Preferred  Stock  ("Series  A"). The Series A is
         convertible to common shares on a four-for-one  basis, is due dividends
         at $0.10 per share as authorized by the Board, has a liquidation  value
         of $1.00 per share and has equivalent voting rights as common shares on
         a share for share basis.

         During  2004,  the Company  sold and issued  25,000  shares of Series A
         convertible  preferred  stock  for cash at $1.00  per  share  for total
         proceeds of $25,000.  Also the Company  received payment of $50,000 for
         the Series A Convertible  Preferred Stock subscription  recorded during
         2003 and  issued the 50,000  shares of Series A  convertible  preferred
         stock that was issuable at December 31, 2003.

         During  2004,  the  Company  issued  12,500  shares  of  its  Series  A
         convertible  preferred stock for consulting  services totaling $12,500.
         These  shares were  valued at $1.00 per share based on  contemporaneous
         cash sales.  The measurement date was the date at which the performance
         of the services had been completed.

         During 2004,  the Company  issued 24,000 shares of Series A convertible
         preferred  stock for  services  totaling  $24,000 that was accrued as a
         liability at December  31, 2003.  These shares were valued at $1.00 per
         share based on contemporaneous cash sales. The measurement date was the
         date at which the performance of the services had been completed.

         During  2004,  the  Company  issued  120,000  shares  of its  Series  A
         Preferred  Stock to its  COO/CFO  in  accordance  with  his  employment
         agreement. These 120,000 shares were valued at $1.00 per share based on
         contemporaneous  cash sales  around the grant date.  The total value of
         these  shares  of  $120,000  is  being  expensed  over  the  three-year
         employment  agreement with $80,000  deferred and $40,000 expensed as of
         December 31, 2004.


                                       21
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         During  2004,  the  Company   converted   98,375  shares  of  Series  A
         convertible preferred stock into 393,500 shares of the Company's common
         stock at the request of certain  Series A convertible  preferred  stock
         holders.

         During 2004,  the Company  recorded  $172,000 for the  intrinsic  value
         associated  with the  embedded  beneficial  convertible  feature of the
         Series A convertible  preferred stock.  This amount was computed as the
         difference  between  the  conversion  price  and the fair  value of the
         preferred  stock,  which was  computed  as the fair value of the common
         stock based on the quoted trading price at the preferred stock issuance
         dates, multiplied by the conversion ratio of four-for-one for Series A.
         This intrinsic value is limited to the amount of the proceeds allocated
         to the preferred stock. For financial statement purposes, this $172,000
         was recorded as a preferred stock dividend.  Additionally  during 2004,
         the Company recorded Series A convertible  preferred stock dividends of
         $270,583.

         (B) CONVERTIBLE PREFERRED STOCK SERIES B

         On February 3, 2004, the Company's board of directors designated 30,000
         shares of  preferred  stock as  Series B  Convertible  Preferred  Stock
         ("Series  B"). The Series B is  convertible  to common  shares on a one
         thousand-for-one  ratio,  is due  dividends  at $1 per  share,  payable
         quarterly, as authorized by the Board and the dividends are cumulative.
         Series  B has a  liquidation  value of $240 per  share  and has  voting
         rights of one  thousand  votes per  Series B share.  During  2004,  the
         Company recorded 28,568 shares of Series B Convertible  Preferred Stock
         as issuable.  This is comprised of 23,203  Series B shares  issuable to
         the private  placement  unit  holders  during 2003 and the  exercise of
         certain  warrants  during  2004 and 5,365  Series B shares  issuable to
         private placement shareholders during 2004. The 28,568 shares of Series
         B were converted to 28,568,240 shares of common stock during 2004

         During  2004,  the  Company   recorded  $28  for  the  intrinsic  value
         associated  with the  embedded  beneficial  convertible  feature of the
         Series B convertible  preferred stock.  This amount was computed as the
         difference  between  the  conversion  price  and the fair  value of the
         preferred  stock,  which was  computed  as the fair value of the common
         stock based on the quoted trading price at the preferred stock issuance
         dates,  multiplied by the conversion ratio of one  thousand-for-one for
         Series B. This intrinsic value is limited to the amount of the proceeds
         allocated to the preferred  stock.  For financial  statement  purposes,
         this $28 was  recorded  as a  preferred  stock  dividend.  Additionally
         during 2004, the Company recorded Series B convertible  preferred stock
         dividends of $17,901.

         (C) COMMON STOCK AUTHORIZED

         During the December 18, 2003  shareholders'  meeting,  the shareholders
         voted to amend the  Company's  Restated  Articles of  Incorporation  to
         affect an  increase  in the  number of $0.001  par value  common  stock
         shares from 15,000,000 to 150,000,000 authorized common shares.

         There is a restriction on the common stock  dividends as any cumulative
         preferred  stock  dividends are required to be paid prior to any common
         stock dividends being paid. Also, the retained  earnings of the Company
         would be restricted  upon an involuntary  liquidation by the cumulative
         unpaid preferred dividends to the preferred stockholders and for the $1
         per share Series A and $240 per share Series B liquidation preferences.


                                       22
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (D) 2003 PRIVATE PLACEMENT

         During the fourth quarter of 2003, the Company had a private  placement
         offering of common  stock.  From this  offering,  the Company  received
         $1,575,000  of cash  proceeds  and  recorded a  $100,000  subscriptions
         receivable  at December  31, 2003.  The  investors  received  6,700,000
         common stock shares,  6,700,000  common stock warrants with an exercise
         price  of  $0.50  and an  expiration  date of  February  28,  2004  and
         3,350,000  common stock warrants with an exercise price of $0.75 and an
         expiration  date of May 30, 2004 (See Note 7H for details of warrants).
         The Company  issued  5,900,000  shares of common stock during the first
         quarter of 2004 related to this private placement.

         The remaining  800,000  shares from this private  placement will not be
         issued  because  during July 2004,  the Company and this party mutually
         terminated  the  subscription  agreement  and the Company paid back the
         $100,000  originally  paid,  reduced  the  subscription  receivable  of
         $100,000  to zero  and did not  issue  the  800,000  shares  that  were
         recorded as issuable to this  investor.  The Company  also  reduced its
         Series B convertible  preferred  stock issuable for the 1,433 shares of
         Series B related to this  transaction.  In  addition,  the Company paid
         $68,121 as  settlement of other  amounts owed to this  individual.  The
         $68,121 was recorded as a settlement loss during 2004.

         On February 5, 2004,  as part of the private  placement  the  Company's
         Board of Directors  authorized a) 12,000 shares of Series B Convertible
         Preferred Stock to the private placement unit holders, b) 12,000 shares
         of Series B Convertible  Preferred Stock upon the exercise of the $0.50
         warrant holders of the private  placement and c) 6,000 shares of Series
         B  Convertible  Preferred  Stock upon the exercise of the $0.75 warrant
         holders of the private placement.

         During 2004,  warrants were exercised to purchase  6,700,000  shares of
         common stock from the private placement at $0.50 per share and warrants
         were  exercised  to purchase  355,333  shares of common  stock from the
         private  placement at $0.75 per share. The Company received  $3,616,500
         of cash from the exercise of these warrants.

         In  conjunction  with raising  these  funds,  the Company paid in cash,
         offering  costs of $229,750  during 2003 and $482,946  during 2004. The
         Company also issued 630,000 warrants during 2003 with an exercise price
         of $0.001 per share that expire sixty days from their  issuance  valued
         at $541,170, which cost is included in warrants granted for services in
         the additional paid-in capital (total offering costs of $770,920 during
         2003) (See Note 7H).

         (E) 2004 PRIVATE PLACEMENT

         During the third and fourth  quarters of 2004, the Company sold some of
         its  securities  through  a  private  placement.  Each unit in the 2004
         private  placement  was  comprised of 666.67 shares of common stock and
         1.194 shares of Series B Preferred Stock for each $500 received. During
         the third and fourth quarters of 2004, the Company received  $2,246,456
         of proceeds related to this 2004 private placement.  The Company issued
         2,995,274  shares of common stock and the  5,364.54  shares of series B
         convertible  preferred  stock were converted into common stock totaling
         5,364,540 shares.


                                       23
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         (F) COMMON STOCK ISSUANCES

         The Company entered into a stock purchase agreement on October 31, 2003
         whereby the buyer agreed to purchase  1,000,000 shares of the Company's
         common stock for $250,000 and also received  warrants to purchase up to
         1,000,000  shares of the Company's common stock at an exercise price of
         $0.50  with an  expiration  date of  February  28,  2004.  The  Company
         recorded  $1,000 in its common stock  issuable  equity  account for the
         1,000,000  shares which are to be issued upon  receipt of payment.  The
         Company  recorded  the  purchase  price of $250,000  for the  1,000,000
         shares of the Company's common stock in subscriptions receivable as the
         funds had not been  received  by the  Company  at  December  31,  2003.
         Subsequent  to year end,  this  subscription  was not fulfilled and the
         warrants  expired.  Therefore,  the Company  reduced  its  subscription
         receivable  for the $250,000 and reduced the common stock  issuable for
         the 1,000,000 shares.

         During  2004,  the Company  issued  50,000  shares of its common  stock
         pursuant to the exercise of the rights of certain note holders  granted
         under the default  provisions of certain promissory notes. The issuance
         resulted in additional  subscriptions  receivable of $1,250 for a total
         issuance price of $1,250 or $0.025 per share.

         During 2004,  warrants to purchase  1,420,736  shares of the  Company's
         common stock were exercised.  The Company received $350,184 of cash and
         a note for the remaining $150,000. The $150,000 owed to the Company was
         not paid for the 300,000  shares that were recorded as issuable  during
         2004 and on October 11, 2004, the Company and investor agreed that they
         would not issue the 300,000  shares and would not collect the  $150,000
         owed for those  shares.  The  Company  issued  1,120,736  shares of its
         common stock for the warrants that were exercised and paid.

         As part of the October 11, 2004 agreement with a certain investor,  the
         Company also agreed to issue 100,000  shares of stock to this party for
         the  services  they  provided  to  the  Company  during  the  Company's
         negotiations  with a third party which included the  forgiveness by the
         third party of  dividends  that  accrued on 114,343  shares of Series A
         Convertible  Preferred  Stock.  These  shares  were valued at $0.27 per
         share based on contemporaneous cash sales around the date of grant. The
         Company  recorded  the $27,000 as general  consulting  expense and also
         recorded a settlement gain of $12,093 related to the Series A dividends
         that were forgiven.

         During  2004,  the  Company  granted and issued  100,000  shares of its
         common stock to a research and development provider.  These shares were
         valued at $0.27 per share based on  contemporaneous  cash sales  around
         the date of grant. The $27,000 was expensed to research and development
         costs


                                       24
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         During 2004, a former  employee  exercised an option to purchase  5,000
         shares of the Company's  common stock at an exercise price of $0.40 per
         share. The Company received $2,000 for the exercise of this option.

         During 2004,  the Company  issued 100,000 shares of its common stock to
         an  individual  for  services.  These shares were valued based upon the
         quoted  marked  price of $1.06 on the date of grant and the  expense of
         $106,000 was recorded during 2004.

         During 2004, the Company issued 1,666,312 shares of its common stock to
         its  President/CEO in accordance with his employment  agreement.  These
         shares were valued  based upon the quoted  market price of $0.86 on the
         grant date and the expense of $1,433,028 was recorded during 2004.

         During 2004,  the Company  issued 450,000 shares of its common stock to
         the  President of its  OnScreen  Products  Division.  The Company has a
         right to repurchase  300,000 of these shares from the employee for $450
         if the  employee  is  terminated  for cause or  resigns.  The amount of
         shares  that can be  repurchased  by the  Company  declines  by 150,000
         shares  each  year,  resulting  in the  shares  being  fully  vested on
         November 1, 2006.  The shares  were  valued at $454,500  based upon the
         quoted  market price of $1.01 on the grant date and will be recorded as
         an expense over the employee's three-year employment agreement.

         Certain  notes  were paid in full on March 12,  2004 by paying the note
         holders  $250,000 and issuing  12,500  shares of the  Company's  common
         stock.  These shares were valued at $11,500  based on the quoted market
         price of $0.92  on the  settlement  date  and  after  consideration  of
         additional  interest due for 2004 and a receivable  of $18,575 due from
         the note holders from option exercises,  the Company  recognized a gain
         of $7,103 in 2004.

         During  2004, a note holder  exercised  the right to convert a $215,861
         note into 863,442 shares of the Company's common stock.

         A  plaintiff  held a  convertible  promissory  note for  $234,869 at 8%
         interest  accruing  from the note  date of  August  1999.  The  Company
         disputed the note;  however,  as a contingency,  the Company recorded a
         total of $328,058 in accrued  expenses at December  31, 2003 related to
         this matter.  On February 5, 2004, the Company  satisfied this disputed
         note with 60,000  shares of the Company's  common  stock.  These shares
         were valued at $60,600  based upon the quoted  market price of $1.01 on
         the settlement date. The Company recorded a settlement gain of $267,458
         during 2004.

         During  2004,  the Company  recorded a  settlement  loss of $13,500 for
         50,000  shares of its common  stock that were issued to a third  party.
         These  shares were  valued at $0.27 per share based on  contemporaneous
         cash sales.

         (G) INVESTMENT AGREEMENT

         The  Company had a prior  agreement  with Swartz  Private  Equity,  LLC
         (Swartz)  to provide  certain  funding to the  Company  based upon this
         agreement.  If the Company  did not meet  certain  requirements  in the
         agreement  the Company was also  subject to a penalty of up to $100,000


                                       25
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         for each six month period and a $200,000  penalty if the put  agreement
         is terminated  automatically or by the Company. At January 1, 2003, the
         Company  owed  $200,000  of  penalties  and during  2003,  the  Company
         computed  $200,000 in penalties and $300,000 in penalties was waived by
         Swartz  which  resulted  in a $100,000  accrued  commitment  penalty at
         December 31, 2003.

         At January 1, 2003,  Swartz had warrants to purchase  541,558 shares of
         the Company's common stock. During 2003, the Company and Swartz entered
         into an amendment to this agreement which extended the terms of each of
         the 541,558  warrants by two  additional  years.  On October 22,  2003,
         Swartz  exercised  all of the 541,558  warrants in a cashless  exercise
         transaction  which resulted in Swartz being entitled to receive 379,907
         shares of the Company's common stock.

         On February 3, 2004,  the Company and Swartz  entered into a settlement
         and termination of investment  agreement.  The Company agreed to i) pay
         $10,  ii)  promptly  issue the 379,907  shares of common stock from the
         cashless  exercise  of the Swartz  warrants of which  Swartz  agreed to
         limit its sales of these shares of Company  stock to ten percent of the
         Company's  trading  volume for any  calendar  month,  iii) Swartz shall
         retain the 100,000 shares of stock that had been issued during 2002 per
         the initial  agreement and then were not valid as put shares as the put
         transaction  was never  executed,  but the  shares  had been  issued to
         Swartz and v) the investment  agreement  between the Company and Swartz
         shall terminate subject to the completion of items i - iv above. During
         February  2004,  the Company  issued the 379,907 shares of common stock
         (without any restrictive legends).

         The 100,000 share were valued at $104,000 using the quoted marked price
         of $1.04 on the date of settlement.  This $104,000 settled the $100,000
         commitment payable that was owed to Swartz at December 31, 2003 and the
         remaining $4,000 was recognized as a settlement loss.

         (H) NON-EMPLOYEE STOCK WARRANTS

         During 2003, the Company reset the exercise price of warrants issued in
         a prior  year to Swartz  as  follows:  25,478  warrants  at $0.20;  and
         200,000  warrants  at $0.25 The result  under the  variable  accounting
         method was a net charge to commitment  expense of $12,349  during 2003.
         During 2003,  the Company and Swartz entered into an amendment to their
         agreement which extended the terms of each of their 541,558 warrants by
         two additional years and the Company recorded an additional  expense of
         $53,777 related to these extensions.

         During 2003, the Company granted warrants to purchase  2,105,000 shares
         of the Company's common stock to certain service  providers at exercise
         prices  ranging from $0.001 to $0.75.  These warrants were valued at an
         aggregate of $766,509.  The Company  recorded  $541,170 of the value of
         these  warrants as offering  costs  during  2003 and the  remainder  of
         $225,339 is recognized  as  consulting  expense over the period of each
         consultants   agreement.   These   warrants   were  valued   using  the
         Black-Scholes  Options  Pricing Model using the following  assumptions:
         expected  life  of 30 - 428  days,  volatility  of  161% -  253%,  zero
         expected dividends and a discount rate of 0.91% to 1.2%. The expiration
         date of a warrant  that was issued  during  2003 for 50,000  shares was
         extended  for  one  year  during  2004  and  the  Company  recorded  an
         additional expense of $4,424 related to this extension. At December 31,
         2004, 125,000 of these warrants are outstanding.


                                       26
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         On November 12, 2003, the Company  granted a warrant to purchase 50,000
         shares  of its  common  stock at an  exercise  price  of $0.25  with an
         expiration  date of November 11, 2004 in conjunction  with a settlement
         of monies owed.  These warrants were valued at $0.8214 per warrant,  or
         $41,070  using  the  Black-Scholes  Options  Pricing  Model  using  the
         following  assumptions:  expected  life of 1 year,  volatility of 209%,
         zero expected dividends and a discount rate of 0.94%.  During 2003, the
         Company   recorded  a  settlement  loss  of  $28,570  related  to  this
         settlement of monies owed. These warrants expired during 2004.

         During  2003 the Company  granted  300,000  warrants  under the default
         provisions  of certain  notes payable which were valued at $122,500 and
         charged to interest  expense  using the  Black-Scholes  option  pricing
         model with a 30 day  expected  life,  volatility  of 110% - 282%,  zero
         expected  dividends and a discount rate of 0.89% - 1.20%.  All of these
         warrants were exercised during 2003.

         During the fourth quarter of 2003, the Company had a private  placement
         offering  of common  stock.  In  conjunction  with this  offering,  the
         Company granted  6,700,000 common stock warrants with an exercise price
         of $0.50 with a February 28, 2004 expiration date and 3,350,000  common
         stock  warrants  with an  exercise  price of $0.75 with a May 30,  2004
         expiration date.  During May 2004, the Board of Directors  extended the
         exercise date of the $0.75 warrants from May 30, 2004 to June 30, 2004.
         At December 31, 2004,  all of these  warrants had been  exercised.  See
         Note 7H

         On October 31,  2003,  the Company  granted a warrant to purchase up to
         1,000,000 shares of its common stock at an exercise price of $0.50 with
         an expiration date of February 28, 2004. These warrants were granted in
         conjunction  with a stock purchase  agreement dated October 31, 2003 to
         purchase  1,000,000  shares of the Company's common stock for $0.25 per
         share. These warrants were expired at December 31, 2004.

         During 2004 the Company granted  warrants to purchase  1,395,736 shares
         of the Company's common stock to certain service  providers at exercise
         prices  ranging from $0.25 to $0.50.  These  warrants were valued at an
         aggregate of $707,352 and are recognized as consulting expense over the
         period of each consultant's agreement. These warrants were valued using
         the   Black-Scholes   Options   Pricing   Model  using  the   following
         assumptions:  expected  life of 90 days - 3 years,  volatility of 79% -
         309%, zero expected dividends and a discount rate of 0.85% to 2.03%. At
         December 31, 2004, 725,000 of these warrants are outstanding.

         During 2004 the Company  granted  warrants to purchase 50,000 shares of
         the  Company's  common  stock under the default  provisions  of certain
         notes  payable at an  exercise  price of $0.025.  These  warrants  were
         valued  at  $46,500  and  charged  to   interest   expense   using  the
         Black-Scholes  option  pricing  model  with  a 30  day  expected  life,
         volatility of 74% - 100%,  zero expected  dividends and a discount rate
         of 0.85% - 0.92%. All of these warrants were exercised during 2004.


                                       27
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         A summary of the warrants  issued to  non-employees  for services as of
         December  31, 2004 and 2003 and changes  during the years is  presented
         below (this does not include  11,050,000  warrants  related to the 2003
         offering and a common stock subscription):

<TABLE>
<CAPTION>

                                                                 2004                                    2003
                                                 -------------------------------------    ------------------------------------
                                                                         Weighted                                Weighted
                                                    Number of             Average           Number of             Average
                                                    Warrants          Exercise Price         Warrants         Exercise Price
                                                 ----------------     ----------------    ---------------     ----------------
<S>                                              <C>               <C>                   <C>              <C>
         Balance at beginning of period               3,055,000    $       0.47               2,066,558    $       0.68
         Granted                                      1,395,736    $       0.28               2,455,000    $       0.25
         Exercised                                   (1,470,736)   $       0.34                (841,558)   $       0.49
         Forfeited                                     (830,000)   $       0.15                (625,000)   $       0.27
                                                 ----------------                         ---------------
         Balance at end of period                     2,150,000    $       0.55               3,055,000    $       0.47
                                                 ================                         ===============
         Warrants exercisable at end of period        2,150,000    $       0.55               3,055,000    $       0.47
                                                 ----------------                         ---------------
         Weighted average fair value of                            $       0.30                            $       0.36
           warrants granted during the period
</TABLE>

         The following table summarizes  information  about  non-employee  stock
         warrants  outstanding  that were issued for  services  at December  31,
         2004:

                          Warrants Outstanding and Exercisable

                                                  Weighted
                                                  Average          Weighted
                               Number            Remaining          Average
          Range of         Outstanding at       Contractual        Exercise
       Exercise Price     December 31, 2003         Life             Price
       ----------------   ------------------   ---------------   ------------
  $         0.25                    650,000         0.9 Years   $    0.25
            0.35                    300,000         0.9 Years        0.35
            0.50                    500,000         0.7 Years        0.50
            0.75                    300,000         0.9 Years        0.75
            1.00                    300,000         0.9 Years        1.00
  $         1.50                    100,000         0.6 Years        1.50
                          ------------------
                                  2,150,000         0.8 Years   $    0.55
                          ==================

         (I) EMPLOYEE STOCK OPTIONS AND WARRANTS

         On June 26, 2000, the Company's Board of Directors adopted the OnScreen
         Technologies,  Inc.  2000  Stock  Option  Plan (the  "Plan").  The Plan
         provides  for the issuance of incentive  stock  options  (ISO's) to any
         individual who has been employed by the Company for a continuous period
         of at least six months.  The Plan also provides for the issuance of Non


                                       28
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         Statutory  Options (NSO's) to any employee who has been employed by the
         Company for a continuous  period of at least six months,  any director,
         or consultant to the Company. The Company may also issue reload options
         as defined  in the plan.  The total  number of common  shares of common
         stock  authorized  and reserved for issuance  under the Plan is 600,000
         shares.  The Board shall  determine the exercise price per share in the
         case of an ISO at the time an option is granted and such price shall be
         not less than the fair market value or 110% of fair market value in the
         case of a ten  percent or greater  stockholder.  In the case of an NSO,
         the exercise  price shall not be less than the fair market value of one
         share of stock on the date the  option  is  granted.  Unless  otherwise
         determined by the Board,  ISO's and NSO's granted under the Plan have a
         maximum duration of 10 years.

         The  Company  accounts  for  its  stock-based  compensation  using  the
         intrinsic  value  method  prescribed  by  Accounting  Principles  Board
         Opinion  No.  25,   "Accounting   for  Stock   Issued  to   Employees";
         accordingly,  the differences  between the exercise prices and the fair
         values of the common stock  underlying  the options on the dates of the
         grants are recorded as a compensation expense.

         During the first quarter of 2004,  the Company  issued  warrants to the
         COO/CFO and a director each to purchase 100,000 shares of the Company's
         common stock (200,000 in total). These warrants were valued at $149,000
         under the  intrinsic  value  method  of APB 25 based on  quoted  market
         prices and will be recorded as  compensation  expense  over the service
         period.

         During 2004, a member of the Board of Directors was granted a five-year
         warrant to  purchase  600,000  shares of common  stock with an exercise
         price of $0.25 for services provided. This warrant is valued at $12,000
         under the  intrinsic  value  method of APB 25 based on  contemporaneous
         cash sales during 2004 of common stock and was recorded to compensation
         expense during 2004.

         During  2004,  the COO was  granted a  five-year  warrant  to  purchase
         500,000  shares of common  stock  with an  exercise  price of $0.25 for
         services  provided.  This  warrant  is  valued  at  $10,000  under  the
         intrinsic  value method of APB 25 based on  contemporaneous  cash sales
         during 2004 of common  stock and was recorded to  compensation  expense
         during 2004.

         For  additional  services  to  be  provided,  the  President,  OnScreen
         Products Division was granted a five-year warrant to purchase 2,000,000
         shares of common  stock with an  exercise  price of $0.25 for  services
         provided.  This warrant can be exercised on or after  November 1, 2006.
         The  warrant  expires  if the  employee  does  not  complete  his  full
         employment  term through  October 31, 2006. . This warrant is valued at
         $40,000  under  the   intrinsic   value  method  of  APB  25  based  on
         contemporaneous  cash  sales  during  2004 of common  stock and will be
         recorded to  compensation  expense through the vesting date of November
         1, 2006.

         The  Director of  Administration  was  granted a  five-year  warrant to
         purchase 600,000 shares of common stock with an exercise price of $0.25
         for  services  provided.  This  warrant is valued at $12,000  under the
         intrinsic  value method of APB 25 based on  contemporaneous  cash sales
         during 2004 of common  stock and was recorded to  compensation  expense
         during 2004.


                                       29
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         During  2004,  a total of 40,000 of stock  options  were granted to two
         employees.  The exercise  price exceeded the fair value of common stock
         based on contemporaneous common stock cash sales during 2004; therefore
         no compensation expense was recorded as there was no intrinsic value.

         A  summary  of the  warrants  and  options  issued to  employees  as of
         December  31, 2004 and 2003 and changes  during the year are  presented
         below:
<TABLE>
<CAPTION>
                                                        2004                                   2003
                                         -----------------------------------     ---------------------------------
                                                                 Weighted                              Weighted
                                            Number of            Average           Number of           Average
                                           Warrants and          Exercise         Warrants and         Exercise
                                             Options              Price             Options             Price
                                         -----------------     -------------     ---------------     -------------
<S>                                      <C>                <C>                 <C>              <C>
Balance at beginning of period                 1,885,000    $      0.33                100,000    $      0.25
Granted                                        3,940,000           0.25              1,785,000           0.34
Exercised                                         (5,000)          0.35                     --             --
Forfeited                                        (10,000)          0.35                     --             --
                                         -----------------                       ---------------
Balance at end of period                       5,810,000    $      0.28              1,885,000    $      0.33
                                         =================                       ===============
Warrants and options exercisable at            3,805,000    $      0.29              1,885,000    $      0.33
end of period                            =================     =============     ===============     =============
Weighted average fair value of                              $      0.34                           $      0.43
warrants and options granted during
the period                                                     =============                         =============
</TABLE>

         The fair value of warrants  granted  during 2004 was  estimated  on the
         dates  of the  grants  using  the  following  approximate  assumptions:
         dividend yield of 0%, expected  volatilities of 166% - 312%,  risk-free
         interest rates of .85% - 3.46%,  and expected lives of 2 - 5 years. The
         fair value of warrants  granted  during 2003 was estimated on the dates
         of the grants using the  following  approximate  assumptions:  dividend
         yield of 0%, expected  volatilities of 230% - 354%,  risk-free interest
         rates of .91% - 2.18%, and expected lives of 3 years.


                                       30
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

         The  following  table  summarizes   information  about  employee  stock
         warrants and options outstanding at December 31, 2004:

<TABLE>
<CAPTION>

                     Warrants and Options Outstanding                           Warrants and Options Exercisable
----------------------------------------------------------------------------    ---------------------------------
                                             Weighted
                           Number             Average            Weighted           Number            Weighted
        Range of       Outstanding at        Remaining           Average         Exercisable          Average
        Exercise        December 31,        Contractual          Exercise        at December          Exercise
          Price             2004               Life               Price            31, 2004            Price
       ------------   -----------------   ----------------     -------------    ---------------     -------------
<S>                   <C>                 <C>              <C>                  <C>             <C>
    $         0.25           4,505,000          4.2 Years   $          0.25          2,505,000   $          0.25
              0.35             760,000          1.7 Years              0.35            755,000              0.35
        0.40- 0.50             535,000          1.9 Years              0.41            535,000              0.41

    $         1.00              10,000          1.0 Years              1.00             10,000              1.00
                      -----------------                                         ---------------
                             5,810,000          3.6 Years   $          0.28          3,805,000   $          0.29
                      =================                                         ===============
</TABLE>


         (J) DEFERRED CONSULTING AND COMPENSATION EXPENSE FROM STOCK AND WARRANT
             ISSUANCES

         During  2003 and 2004,  the Company  entered  into  several  consulting
         agreements  with  various  consultants  to  provide  services  for  the
         Company.  The  measurement  date was typically the grant date for these
         agreements  since  the  shares  were  contractually  fully  vested  and
         nonforfeitable  at the grant date.  The Company  amortizes  the cost of
         each  agreement  over the contract  term.  At December  31,  2004,  the
         Company had amortized all of the deferred consulting expense.

         During 2004,  the Company  issued  common  stock,  preferred  stock and
         warrants to certain  employees.  The Company amortizes the cost of this
         equity  compensation  over  the  service  period  of the  employee.  At
         December  31,  2004,  the  Company  had  $438,282  of  deferred  equity
         compensation.

NOTE 8   RELATED PARTY TRANSACTIONS

The Company  subleases  part of its corporate  office space to another  company,
under  common  management,  for $4,800 per month  under a one -year  lease which
expired  January 31, 2003. The receivable from this Company of $78,139 was fully
reserved  during 2003 due to the Company's  assessment  that the tenant does not
have the  current  ability  to pay.  The  total  other  income in 2003 from this
affiliate was $29,644.  Later in 2003, the Company received property & equipment
valued at $40,480 as partial  payment of the monies  owed by this  company.  The
gain on this  transaction  of $40,480  was  recorded in the  additional  paid in
capital  equity  account since it resulted from a company under common  control.
During the first half of 2004,  the Company leased space to this third party for
a total of $4,500,  but the Company  never  received  payment and this was fully
reserved for at December 31, 2004.

The Company had loans payable  including  accrued interest to its  President/CEO
totaling $303,657 at January 1, 2003. During 2003, the Company recorded interest
expense of $16,435,  made loan  payments of $4,371 and  converted the total loan
and accrued interest of $315,721 to Series A Convertible preferred Stock.

At January 1, 2003,  the company had a short-term  loan payable from its current
President of the OnScreen Products Division totaling $50,000. This loan was paid
off in full during March 2004.  The Company did not record any interest  expense
related to this loan.


                                       31
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

On July 1,  2003,  Orion One,  LLC  ("Orion")  and the  Company  entered  into a
one-year  consulting  agreement whereby for the services  provided,  the Company
would issue to Orion  warrants to purchase  600,000 share of its common stock at
an exercise price of $0.25 to be exercised  within six months (these lapsed) and
a warrant to purchase 600,000 shares of its common stock at an exercise price of
$0.50 to be exercised  within a year (warrant was exercised to purchase  300,000
shares for $150,000.  These  warrants  were  recorded as  consulting  expense of
$186,600  during 2003. On April 15, 2004,  Orion and the Company  entered into a
ninety day consulting  agreement  whereby as compensation for the services Orion
was granted a warrant to purchase  600,000 shares of the Company's  common stock
at an exercise  price of $0.25 to be exercised  within  ninety days (warrant was
exercised and 600,000 share issued for $150,000).  The warrant was recorded as a
consulting  expense of $402,360 during 2004. On October 11, 2004,  Orion and the
Company  entered into an agreement  whereby Orion would provide  services to the
Company and for these  services,  the Company would issue 100,000  shares of its
common stock which was valued at $27,000. The President of our OnScreen Products
Division is an investor in Orion.

On February 3, 2004, a third party and the Company  reached a master  settlement
and release  agreement  whereby,  in  consideration  for the  exchange of mutual
releases and the third party  relinquishing  any claim to any of the benefits of
the OnScreen (including the 11.25% license payments),  the Company agreed to pay
to this third party  $150,000  within five days of  receiving  the $7.2  million
funding plus an annually declining percentage of revenue of 5% in 2005 declining
to 2% in year 2008 and thereafter from the OnScreen revenues.  In the event of a
change of control of the Company,  the percentage of revenue shall terminate and
a single  payment  transaction  fee shall be paid by the  Company  to this third
party ranging from 10% of the OnScreen  appraised  value up to  $100,000,000,  7
1/2% for the appraised value between  $100,000,001 and  $200,000,000,  5% of the
appraised value between  $200,000,001 and $300,000,000,  and 4% of the appraised
value between  $300,000,001  and  $400,000,000  and 3% for the  appraised  value
between  $400,000,001 and $500,000,000 and 2% for any appraised  amounts between
$500,000,001  and  $600,000,000.  (See Note 4 - License  1). At the time of this
agreement,  the President of the OnScreen  Products  Division was the manager in
this third party company.

NOTE 9   INCOME TAXES

The Company  recognized  losses for both  financial and tax  reporting  purposes
during  each  of the  periods  in the  accompanying  statements  of  operations.
Accordingly,  no provision for income taxes and/or deferred income taxes payable
has been provided for in the accompanying financial statements.

At December  31,  2004,  the  Company has  available  net  operating  loss carry
forwards of approximately  $11 million.  These net operating loss carry forwards
expire in various  years  through the year ending  December 31,  2024;  however,
because the Company has incurred  significant  operating losses,  utilization of
the income tax loss carry forwards are not assured. As a result, the non-current
deferred  income tax asset arising from these net operating  loss carry forwards
and from  other  temporary  differences  are not  recorded  in the  accompanying
balance  sheets  because we  established a valuation  allowance to fully reserve
such assets due to the uncertainty of the Company's realization of this benefit.

After  consideration  of all the evidence  management has determined that a full
valuation allowance is necessary to reduce the deferred tax assets to the amount
that will more likely than not be realized.


                                       32
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

The  Company's  tax  expense  differs  from the  "expected"  tax expense for the
periods  ended  December  31, 2004 and 2003,  computed  by applying  the Federal
Corporate tax rate of 34% to loss before taxes, as follows:

                                                      2004           2003
                                                 -----------    -----------
Computed "expected" tax benefit                  $(2,687,000)    (1,169,000)
State tax benefit, net of federal effect            (287,000)      (125,000)
Change in valuation allowance                      1,523,000        500,000
Intrinsic value of convertible preferred stock            --        359,000
Equity instruments for services                    1,451,000        435,000
                                                 -----------    -----------
                                                 $        --    $        --
                                                 ===========    ===========



At December 31, 2004, the tax effects of temporary differences that gave rise to
significant portions of deferred tax assets and liabilities are as follows:

                                                    2004
                                                -----------
Deferred tax assets:
Net operating loss carry forwards               $ 4,166,000
Difference between book and tax, fixed assets       212,000
Valuation allowance for deferred tax asset       (4,546,000)
Other                                               168,000
                                                -----------
                                                $        --
                                                ===========


NOTE 10  OTHER SETTLEMENTS

During 2004, the Company settled several payables owed and recorded a settlement
gain of $48,811 during 2004 related to these settlements.

NOTE 11  CONCENTRATIONS

During 2004,  36% of revenues  were  derived from two  customers at 25% and 11%.
During 2003, 55% of revenues were derived from two customers at 32% and 23%.

The Company's major products are reliant upon the OnScreen(TM)  technology which
it has purchased the rights to and it has applied for several patents related to
this technology.

NOTE 12  SUBSEQUENT EVENTS

On February 16, 2005, the inventor of the OnScreen  technology,  who licensed to
the Company the rights of the direct view LED video display technology, conveyed
to a third party company, all of the inventor's right, title and interest of the
OnScreen technology.  The Company purchased the right, title and interest of the
OnScreen technology for $200,000.  The Company now owns all patent rights to the


                                       33
<PAGE>

                           ONSCREEN TECHNOLOGIES, INC.
                          NOTES TO FINANCIAL STATEMENTS
                           DECEMBER 31, 2004 AND 2003
                           --------------------------

OnScreen  technology  unencumbered  subject to the rights of F3  relating to the
percentages  of revenue  from  commercialization  of the  direct  view LED video
display  technology.  One of the Company's board of directors has an interest in
the third party company that conveyed these rights to the Company.

During late March 2005,  the Company signed a $1.5 million  unsecured  six-month
promissory note. The interest rate is 15%, payable monthly. One of the Company's
board of directors has an interest in the company that is the note holder.

On March  28,  2005,  an  addendum  was made to the  CEO/President's  employment
agreement.  The term of the  agreement  was  extended  three  years  expiring on
December 31, 2008.  The  CEO/President  is to receive an additional  2.1 million
shares of the  Company's  common  stock and the monthly  vehicle  allowance  was
increased  from  $500 to  $1,500.  The  CEO/President  relinquished  his  entire
entitlement to any of the Company's revenue.


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