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

                         FORM 10-KSB AMENDMENT NUMBER 2

[X]  Annual Report Under Section 13 or 15(d) of the Securities Exchange Act
     of 1934 for the Fiscal Year Ended December 31, 2004.

[ ]  Transition Report Under Section 13 or 15(d) of the Securities Exchange
     Act of 1934 for the transition period from --- to ---

                      Commission file number:     000-31883

                            PROTON LABORATORIES, INC.
                 (Name of small business issuer in its charter)

                    Washington                            91-2022700
         (State or other jurisdiction of              (I.R.S. Employer
          incorporation or organization)             Identification No.)


                1135 Atlantic Avenue, Suite 101
                          Alameda, CA                       94501
            (Address of principal executive offices)     (Zip Code)

                                 (510) 865-6412
                            Issuer's telephone number

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

     Title of Each Class:           Name of exchange on which registered:
           None.                                      None.


              Securities registered under Section 12(g) of the Act:
                         Common Stock, $0.0001 par value
                                (Title of class)

     Check whether the Issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities 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.
Yes [X] [ ] No

     Check if there is no disclosure of delinquent filers in response to Item
405 of Regulation S-B is 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]

     Registrant's revenues for its most recent fiscal year: $379,989

     The aggregate market value of the common stock held by non-affiliates of
the registrant on March 30, 2005, based on the last price which was $0.40 per
share on March 30, 2005, was $1,900,400. On March 30, 2005, the closing bid
price on our common stock on the OTCBB was $0.38.

     On March 30, 2005, the registrant had outstanding 12,975,000 shares of
Common Stock, $0.0001 par value per share. However, 376,500 of those shares have
not been certificated as of April 12, 2005.

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


<PAGE>
Explanatory Paragraph:

     Only those portions of our Form 10-KSB being amended are contained in this
FORM 10-KSB AMENDMENT NUMBER 2. This FORM 10-KSB AMENDMENT NUMBER 2 does not
contain all of the information related to Form 10-KSB, but, rather, only the
information that has been amended. This FORM 10-KSB AMENDMENT NUMBER 2 should be
read in conjunction with our original submission of FORM 10-KSB.

This FORM 10-KSB AMENDMENT NUMBER 2 contains changes to the following sections:

A.   The ITEM 1. DESCRIPTION OF BUSINESS--SUBSEQUENT EVENTS at its paragraph 2
     has been amended to reflect the abandonment of an agreement with J.P.
     Turner & Company, L.L.C.

B.   The CONSOLIDATED STATEMENT OF CASH FLOW had been amended to reflect the
     addition of $27,377 as additional cash paid for inventory in operating cash
     flows and the exclusion of the same amount for property and equipment in
     investing cash flows in 2004.

C.   The CONSOLIDATED STATEMENT OF CASH FLOW had been amended to reflect the use
     of equipment as a long term asset as well as reflecting the cash payment as
     an investing activity. We originally were going to sell, as an inventory
     item, the equipment related to the $64,500 deposit. Subsequently, we
     decided that rather than selling the equipment, we would use this equipment
     for internal use and, as available, allow others to rent this piece of
     equipment.

D.   The NOTES TO THE FINANCIAL STATEMENTS, NOTE 8--SUBSEQUENT EVENTS has been
     amended to reflect that it is an "unaudited" footnote as well as the
     abandonment of the agreement with J.P. Turner. The independent auditor has
     advised us that the independent auditor did not change its procedures and
     therefore it is not necessary for the independent auditor to update its
     report.

E.   Where necessary, the ITEM 6--MANAGEMENT DISCUSS AND ANALYSIS has been
     amended to reflect the above changes.


<PAGE>
ITEM 1.     DESCRIPTION OF BUSINESS.

SUBSEQUENT EVENTS

     In February 2005, MIZ Company, a Japanese company that owns four U.S.
patents whose subject matter is the electrolysis of water, assigned a 50%
ownership interest in those four patents to Mr. Alexander in consideration of
consulting services provided to MIZ Company by Mr. Alexander. Mr. Alexander has
agreed to allow us to exploit the four patents on a royalty-free basis. Since
MIZ Company and Mr. Alexander each has an ownership interest in the four
patents, either Mr. Alexander or the Japanese company could grant licenses to
others to use the four patents, and the Japanese company could exploit the four
patents by itself.

     In March 2005, we proposed to engaged the services of J. P. Turner &
Company, L.L.C. for its best efforts to raise funds for us. We proposed to issue
550,000 shares of our restricted common stock to J. P. Turner & Company, L.L.C.
as a non-refundable fee and we proposed to pay J. P. Turner & Company, L.L.C. a
sales commission of 10% on any funds raised and grant a warrant to J. P. Turner
& Company, L.L.C. to acquire our common stock in the amount of 10% of the
equivalent of the funds that are raised. Upon a successful money raise, we
proposed that J. P. Turner & Company, L.L.C. would act as our investment banker
for a fee of 4.5% of our restricted common stock as calculated immediately after
the funds are raised. These share have not been issued and this agreement has
since been abandoned.

     In March 2005, we issued a note payable in the amount of $164,000 for the
purchase of inventory. The inventory will be held by the lender as collateral
until the note is repaid in May 2005. We also agreed to pay $28,500, or
approximately 17%, in interest. In addition, we will issue to the lender 47,500
shares of common stock, which will be recorded as a $27,075 discount valued on
the date of issuance and amortized over the term of the note. These shares are
to be issued prior to the note's due date.

     In January 2005, a shareholder advanced $40,000 to us. This advance bears
interest at 7% with principal and accrued interest due January 2007.


<PAGE>
ITEM 6.     MANAGEMENT'S DISCUSSION AND ANALYSIS.

FORWARD-LOOKING STATEMENT

     Certain statements contained in this report, including, without limitation,
statements containing the words, "believes," "anticipates," "expects," and other
words of similar meaning, constitute "forward-looking statements" within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended. Such forward-looking
statements involve known and unknown risks, uncertainties and other factors
which may cause our actual results, performance or achievements, of to be
materially different from any future results, performance, or achievements
expressed or implied by such forward-looking statements. Given these
uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. We disclaim any obligation to update any such
factors or to announce publicly the results of any revision of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments. In addition to the forward-looking
statements contained in this Form 10-KSB, the following forward-looking factors
could cause our future results to differ materially our forward-looking
statements: competition, funding, government compliance and market acceptance of
our products.

INTRODUCTION

     The following discussion and analysis of our financial condition and
results of operations should be read in conjunction with the audited financial
statements and accompanying notes and the other financial information appearing
elsewhere in this Form 10-KSB. The accompanying consolidated financial
statements have been prepared in conformity with accounting principles generally
accepted in the U.S.A., which contemplate our continuation as a going concern.

     Our independent auditors made a going concern qualification in their report
dated March 7, 2005, which raises substantial doubt about our ability to
continue as a going concern. Our 2004 revenue increased by 59% compared to our
2003 revenue. Capital contributions were required from our President to fund
operations. These conditions raise a substantial doubt about our ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of recorded asset
amounts or amounts and classification of liabilities that might be necessary
should we be unable to continue in existence. Our ability to continue as a going
concern is dependent upon our ability to generate sufficient cash flows to meet
our obligations on a timely basis, to obtain additional financing as may be
required, and ultimately to attain profitable operations. However, there is no
assurance that profitable operations or sufficient cash flows will occur in the
future.

     We have incurred net losses of $965,840 in 2004 and $217,333 in 2003. We
had a working capital deficit of $273,400 at December 31, 2004 and $156,505 at
December 31, 2003.

     Our operations are located in Alameda, California. Our business consists of
the sales and marketing of the industrial, environmental and residential systems
throughout the U.S.A. which alter the properties of water to produce functional
water. We act as an exclusive importer and master distributor of these products
to various companies in which uses for the product range from food processing to
retail water sales. We: formulate intellectual properties under licensing
agreements; supply consumer products; consult on projects utilizing functional
water; facilitate usage, uses and users of functional water between manufacturer
and industry; and act as educators on the benefits of functional water.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

     Our discussion and analysis of our financial condition and results of
operations are based upon our consolidated financial statements, which have been
prepared in accordance with generally accepted accounting principles. The
preparation of these financial statements requires us to make estimates and
judgments that affect the reported amounts of assets, liabilities, revenue and
expenses, and related disclosure of contingent assets and liabilities. On an
ongoing basis, we evaluate our estimates. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances. These estimates and assumptions provide a basis for us
to make judgments about the carrying values of assets and liabilities that are
not readily apparent from other sources. Our actual results may differ from
these estimates under different assumptions or conditions, and these differences
may be material.

     We recognize revenue when all four of the following criteria are met: (i)
persuasive evidence that an arrangement exists; (ii) delivery of the products
and/or services has occurred; (iii) the selling price is both fixed and
determinable and; (iv) collectibility is reasonably probable. Our revenues are


<PAGE>
derived from sales of our industrial, environmental and residential systems
which alter the properties of water to produce functional water. We believe that
this critical accounting policy affects our more significant judgments and
estimates used in the preparation of our consolidated financial statements.

     During the period from March 14, 2000 through November 15, 2002, prior to
our acquisition of Proton Laboratories, LLC in November 2002, we did not engage
in significant operations. No revenues were received by us during that period.

     In November 2002, we acquired Proton Laboratories, LLC, which is active in
the functional water business. This acquisition was reported in detail on our
Form 8-K for the event dated November 15, 2002 as filed with the Commission on
November 25, 2002. Proton Laboratories, LLC is now our wholly-owned subsidiary
and in April 2004 was renamed Water Science Corporation. Since our acquisition
of Proton Laboratories, LLC in November 2002, our business has been focused on
marketing functional water equipment and systems. Alkaline-concentrated
functional water may have health-beneficial properties and may be used for
drinking and cooking purposes. Acidic-concentrated functional water may be used
as a topical, astringent medium

     Our fiscal year end is December 31.

RESULTS OF OPERATIONS-YEARS ENDED DECEMBER 31, 2004 AND 2003.

     We had revenue of $379,989 for the year ended December 31, 2004 compared to
revenue of $238,805 for the year ended December 31, 2003. This increase is a 59%
increase in revenue. This increase in revenue was due primarily to our hiring a
sales manager in 2004.

     We had a net loss $965,840 for the year ended December 31, 2004 compared to
a net loss of $217,333 for the year ended December 31, 2003. This increase in
net loss was due primarily to our increase in equity-based compensation for
sales, general and administrative expenses.

     Cash used by operating activities was $323,722 for the year ended December
31, 2004 compared to cash used by operating activities of $80,587 for the year
ended December 31, 2003. This increase in cash used by operating activities was
due primarily to the issuance of common stock used as in-kind compensation to
pay for legal services and consulting services.

LIQUIDITY

     As of December 31, 2004, we had cash on hand of $14,412. Our growth is
dependent on attaining profit from our operations, or our raising additional
capital either through the sale of stock or borrowing. There is no assurance
that we will be able to raise any equity financing or sell any our products at a
profit.

     During the year ended December 31, 2004, our President, Edward Alexander,
advanced to us the amount of $178,000 in cash. This advance accrues interest at
the rate of 7% per annum and is due on dates ranging from March through
September 2006. At December 31, 2004, the aggregate balance we owe on loans from
shareholders is $262,000 which includes $84,000 in loans from prior periods. All
of these loans accrues interest at the rate of 7% per annum and are due on dates
ranging from November 2005 through September 2006. At December 31, 2004, the
aggregate accrued interest on these loans was $16,681.

     During the year ended December 31, 2004, we accrued $60,000 as salary
payable to Mr. Alexander resulting in an aggregate of $105,000 of salary payable
to Mr. Alexander at December 31, 2004.

     During 2004, we raised $276,000 in cash through the sale of our securities.

FUTURE CAPITAL REQUIREMENTS

     Our growth is dependent on attaining profit from our operations, or our
raising additional capital either through the sale of stock or borrowing. There
is no assurance that we will be able to raise any equity financing or sell any
of our products at a profit.

     Our future capital requirements will depend upon many factors, including:


     -    The cost to acquire equipment to resell.

     -    The cost of sales and marketing our products.

     -    The rate at which we expand our operations.

     -    The results of our consulting business.

     -    The response of competitors.


<PAGE>
ITEM 7.     FINANCIAL STATEMENTS.

     The financial statements required by this item are set forth beginning on
page F-1.



ITEM 13.    EXHIBITS.


Exhibit Number  Exhibit Description
----------------------------------------------------------------

31.1            Certification pursuant to Section 13a-14 of CEO

31.2            Certification pursuant to Section 13a-14 of CFO

32.1            Certification pursuant to Section 1350 of CEO

32.2            Certification pursuant to Section 1350 of CFO


<PAGE>
                                   SIGNATURES

     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this FORM 10-KSB AMENDMENT NUMBER 2 to be signed on its behalf by the
undersigned, thereunto duly authorized in Alameda, California.


                                PROTON LABORATORIES, INC.


August 15, 2005              By: /s/ Edward Alexander
                                Edward Alexander
                                Director, Chief Executive Officer, President and
                                Chief Financial Officer


     In accordance with the Exchange Act, this FORM 10-KSB AMENDMENT NUMBER 2
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.


August 15, 2005              By: /s/ Edward Alexander
                                Edward Alexander
                                Director, Chief Executive Officer and
                                Chief Financial Officer


August 15 2005              By: /s/ Michael Fintan Ledwith
                                Michael Fintan Ledwith
                                Director


August 15, 2005              By: /s/ Gary Taylor
                                Gary Taylor
                                Director and President


<PAGE>
                            PROTON LABORATORIES, INC.

               REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
                                      AND
                        CONSOLIDATED FINANCIAL STATEMENTS

                           DECEMBER 31, 2004 AND 2003




                            HANSEN, BARNETT & MAXWELL
                           A Professional Corporation
                          CERTIFIED PUBLIC ACCOUNTANTS



                            PROTON LABORATORIES, INC.
                                TABLE OF CONTENTS


<TABLE>
<CAPTION>
                                                                                             PAGE
<S>                                                                                          <C>
Report of Independent Registered Public Accounting Firm . . . . . . . . . . . . . . . . . .  F-2

Consolidated Balance Sheets - December 31, 2004 and 2003. . . . . . . . . . . . . . . . . .  F-3

Consolidated Statements of Operations for the years ended December 31, 2004 and 2003. . . .  F-4

Consolidated Statements of Stockholders' Deficit for the years ended December 31, 2003
    and 2004. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  F-5

Consolidated Statements of Cash Flows for the years ended December 31, 2004 and 2003. . . .  F-6

Notes to Consolidated Financial Statements. . . . . . . . . . . . . . . . . . . . . . . . .  F-7
</TABLE>


                                      F-1
<PAGE>
   HANSEN, BARNETT & MAXWELL
  A Professional Corporation               REGISTERED WITH THE PUBLIC COMPANY
 CERTIFIED PUBLIC ACCOUNTANTS                   ACCOUNTING OVERSIGHT BOARD
  5 Triad Center, Suite 750
 Salt Lake City, UT 84180-1128                      [GRAPHIC OMITTED]
   Phone: (801) 532-2200                         in independent member of
    Fax: (801) 532-7944                                BAKER TILLY
     www.hbmcpas.com                                  INTERNATIONAL



     REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and the Stockholders
Proton Laboratories, Inc. and subsidiaries

We  have audited the consolidated balance sheets of Proton Laboratories, Inc. as
of  December  31,  2004  and  2003,  and  the related consolidated statements of
operations,  stockholders'  deficit  and cash flows for the years ended December
31,  2004  and  2003.  These  consolidated  financial  statements  are  the
responsibility  of the Company's management. Our responsibility is to express an
opinion  on  these  consolidated  financial  statements  based  on  our  audits.

We  conducted  our  audits  in  accordance  with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and  perform  the  audits  to  obtain  reasonable  assurance  about  whether the
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 consolidated financial statements referred to above present
fairly,  in all material respects, the consolidated financial position of Proton
Laboratories  as  of  December  31,  2004  and  2003,  and  the results of their
consolidated  operations  and  their 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  consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 2 to the
consolidated  financial  statements, the Company has an accumulated deficit, has
suffered  reoccurring  losses from operations, has negative working capital, and
has  required  loans from the Company's majority shareholder to fund operations.
These  factors  raise substantial doubt about its ability to continue as a going
concern.  Management's  plans  in regards to these matters are also described in
Note  2.  The  consolidated  financial statements do not include any adjustments
that  might  result  from  the  outcome  of  this  uncertainty.


                            HANSEN, BARNETT & MAXWELL


Salt Lake City, Utah
March 7, 2005


                                      F-2
<PAGE>
<TABLE>
<CAPTION>
                                   PROTON LABORATORIES, INC
                                 CONSOLIDATED BALANCE SHEETS
                                  DECEMBER 31, 2004 AND 2003

                                                                       2004          2003
<S>                                                                <C>           <C>
=============================================================================================

ASSETS
CURRENT ASSETS
Cash                                                               $    14,412   $     4,423
Accounts receivable, less allowance for doubtful accounts of
  $16,522 and $10,092, respectively                                     10,633        24,583
Inventory                                                               34,097        27,800

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

    TOTAL CURRENT ASSETS                                                59,142        56,806
---------------------------------------------------------------------------------------------

PROPERTY AND EQUIPMENT
Furniture and fixtures                                                  18,438         4,670
Equipment and machinery                                                 95,039        43,724
Leasehold improvements                                                  10,995         1,886
Deposit on equipment                                                    69,500             -
Less:  accumulated depreciation                                        (19,160)      (11,672)
---------------------------------------------------------------------------------------------

    NET PROPERTY AND EQUIPMENT                                         174,812        38,608
---------------------------------------------------------------------------------------------

TOTAL ASSETS                                                       $   233,954   $    95,414
=============================================================================================

LIABILITIES AND STOCKHOLDERS' DEFICIT

CURRENT LIABILITIES
Accounts payable                                                   $   134,780   $   197,576
Accrued expenses                                                       110,562        15,735
Preferred dividends payable                                              3,200             -
Stockholder loan, current portion                                       84,000             -
---------------------------------------------------------------------------------------------

  TOTAL CURRENT LIABILITIES                                            332,542       213,311
---------------------------------------------------------------------------------------------

STOCKHOLDER LOAN, NET OF CURRENT PORTION                               178,000        84,000
---------------------------------------------------------------------------------------------

STOCKHOLDERS' DEFICIT
Series A convertible preferred stock, 400,000 shares authorized
  with a par value of $0.0001; 8,000 and no shares issued and
  outstanding, respectively; liquidation preference of $80,000
  and $0, respectively                                                  80,000             -
Undesignated preferred stock, 19,600,000 shares authorized with a
  par value of $0.0001; no shares issued or outstanding                      -             -
Common stock, 100,000,000 common shares authorized with a par
  value of $0.0001; 12,975,000 and 11,250,000 shares issued and
  outstanding, respectively                                              1,299         1,126
Additional paid in capital                                           1,350,616       536,440
Accumulated deficit                                                 (1,708,503)     (739,463)
---------------------------------------------------------------------------------------------

  TOTAL STOCKHOLDERS' DEFICIT                                         (276,588)     (201,897)
---------------------------------------------------------------------------------------------

TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT                        $   233,954   $    95,414
=============================================================================================
</TABLE>

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


                                      F-3
<PAGE>
<TABLE>
<CAPTION>
                                 PROTON LABORATORIES, INC
                           CONSOLIDATED STATEMENTS OF OPERATIONS
                        FOR YEARS ENDED DECEMBER 31, 2004 AND 2003

                                                                    2004          2003
<S>                                                             <C>           <C>
==========================================================================================

SALES                                                           $   379,989   $   238,805

COST OF GOODS SOLD                                                  263,395       175,505
------------------------------------------------------------------------------------------

GROSS PROFIT                                                        116,594        63,300
------------------------------------------------------------------------------------------

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES (including
  equity-based expenses of $663,349 and $45,000, respectively)    1,065,595       270,420
------------------------------------------------------------------------------------------

LOSS FROM OPERATIONS                                               (949,001)     (207,120)

OTHER INCOME AND (EXPENSE)
Loss on disposal of property and equipment                           (1,648)       (9,483)
Interest income                                                          20             5
Interest expense                                                    (15,211)         (735)
------------------------------------------------------------------------------------------
  NET OTHER EXPENSE                                                 (16,839)      (10,213)
------------------------------------------------------------------------------------------

    NET LOSS                                                       (965,840)     (217,333)

PREFERRED STOCK DIVIDEND                                             (3,200)            -
------------------------------------------------------------------------------------------

LOSS APPLICABLE TO COMMON SHAREHOLDERS                          $  (969,040)  $  (217,333)
==========================================================================================

BASIC AND DILUTED LOSS PER
  COMMON SHARE                                                  $     (0.08)  $     (0.02)
==========================================================================================

BASIC AND DILUTED WEIGHTED AVERAGE
  SHARES OUTSTANDING                                             11,525,510    11,250,000
==========================================================================================
</TABLE>

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


                                      F-4
<PAGE>
<TABLE>
<CAPTION>
                                                    PROTON LABORATORIES, INC
                                        CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                                         FOR THE YEARS ENDED DECEMBER 31, 2003 AND 2004



                                         PREFERRED STOCK              COMMON STOCK         ADDITIONAL
                                 ==============================  ========================   PAID IN     ACCUMULATED
                                     SHARES          AMOUNT        SHARES       AMOUNT      CAPITAL       DEFICIT       TOTAL
<S>                              <C>              <C>            <C>         <C>           <C>         <C>            <C>
================================================================================================================================
BALANCE - DECEMBER 31, 2002                    -  $           -  11,250,000         1,126     491,440      (522,130)    (29,564)

Fair value of officer services,
  no additional shares issued                  -              -           -             -      45,000             -      45,000

Net loss for the period                        -              -           -             -           -      (217,333)   (217,333)
--------------------------------------------------------------------------------------------------------------------------------

BALANCE - DECEMBER 31, 2003                    -              -  11,250,000         1,126     536,440      (739,463)   (201,897)

Sale of preferred stock                    8,000         80,000           -             -           -             -      80,000

Issuance of shares                             -              -     100,000            10      39,990             -      40,000
  for legal services

Issuance of shares for                         -              -   1,345,000           135     578,214             -     578,349
  consulting services

Issuance of common stock                       -              -     280,000            28     195,972             -     196,000
  for cash

Dividends accrued                              -              -           -             -           -        (3,200)     (3,200)

Net loss for the period                        -              -           -             -           -      (965,840)   (965,840)
--------------------------------------------------------------------------------------------------------------------------------

BALANCE - DECEMBER 31, 2004                8,000  $      80,000  12,975,000  $      1,299  $1,350,616  $ (1,708,503)  $(276,588)
================================================================================================================================
</TABLE>

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


                                      F-5
<PAGE>
<TABLE>
<CAPTION>
                                PROTON LABORATORIES, INC
                          CONSOLIDATED 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                                                          $(965,840)  $(217,333)
Adjustments to reconcile net loss to cash used
  in operating activities:
  Depreciation                                                        9,814       7,480
  Bad debt expense                                                    6,430           -
  Loss on disposal of property and equipment                          1,648       9,483
  Fair value of officer services                                          -      45,000
  Common stock issued for legal services and consulting services    618,349           -
  Changes in operating assets and liabilities
    Accounts receivable                                               7,520       8,172
    Inventory                                                       (33,674)    (18,879)
    Accounts payable                                                (62,796)     69,938
    Accrued expenses                                                 94,827      15,552
----------------------------------------------------------------------------------------

  NET CASH FROM OPERATING ACTIVITIES                               (323,722)    (80,587)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of property and equipment                                (120,289)       (375)
----------------------------------------------------------------------------------------

  NET CASH FROM INVESTING ACTIVITIES                               (120,289)       (375)
----------------------------------------------------------------------------------------

CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from stockholder loans                                     178,000      84,000
Proceeds from sale of preferred stock                                80,000           -
Proceeds from sale of common stock                                  196,000           -
----------------------------------------------------------------------------------------

  NET CASH FROM FINANCING ACTIVITIES                                454,000      84,000
----------------------------------------------------------------------------------------

NET INCREASE IN CASH                                                  9,989       3,038

CASH AT BEGINNING OF PERIOD                                           4,423       1,385
----------------------------------------------------------------------------------------

CASH AT END OF PERIOD                                             $  14,412   $   4,423
========================================================================================

NON-CASH INVESTING AND FINANCING ACTIVITIES:
Transfer of inventory to equipment                                $  27,377   $  11,740
----------------------------------------------------------------------------------------
</TABLE>

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


                                      F-6
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATIONS

ORGANIZATION-  Proton  Laboratories,  LLC. (Proton) was incorporated on February
16,  2000  in the State of California. Proton did not begin its operations until
January  1,  2001. On January 1, 2001, Proton's sole owner contributed inventory
and  property  and  equipment  to  the  Company.

BentleyCapitalCorp.com  Inc.  (Bentley)  was  incorporated  in  the  State  of
Washington,  U.S.A. on March 14, 2000. On November 15, 2002, Proton entered into
an  Agreement and Plan of Reorganization with Bentley whereby the Company merged
with  and  into  VWO  I  Inc.  (VWO),  a wholly owned subsidiary of Bentley (the
"Merger").  In April 2004 the subsidiary changed its name to Water Science, Inc.

For financial statement purposes Proton is considered the parent corporation and
originally elected to maintain BentleyCapitalCorp.com, Inc as its business name.
In  December  2003  the  Company's  board  elected  to change its name to Proton
Laboratories,  Inc.,  and  hereafter  collectively referred to as the "Company".

CONSOLIDATION  POLICY  -  The  accompanying  consolidated  financial  statements
reflect  the  financial  position of and operations for Proton as of and for the
years  ended  December  31,  2004  and  2003.  All  significant  intercompany
transactions  have  been  eliminated  in  consolidation.

NATURE  OF  OPERATIONS  -  The  Company's  operations  are  located  in Alameda,
California. The core business of the Company consists of the sales and marketing
of  the  Company's  industrial, environmental and residential systems throughout
the  United  States  of  America  which alter the properties of water to produce
functional  water.  The  Company  acts  as  an  exclusive  importer  and  master
distributor of these products to various companies in which uses for the product
range  from  food  processing  to  retail water sales. Additionally, the Company
formulates intellectual properties under licensing agreements, supplies consumer
products,  consults  on projects utilizing functional water, facilitates between
manufacturer  and  industry  and acts as educators on the benefits of functional
water.

NOTE 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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,  disclosure  of  contingent  assets  and
liabilities  and  the  reported  amounts  of  revenues  and  expenses during the
reporting  period.  Actual  results  could  differ  from  those  estimates.

FINANCIAL  INSTRUMENTS  -The  Company is subject to concentration of credit risk
with  respect to sales primarily in the functional water industry and sales to a
significant  customer  and  purchases  from  a  significant  vendor.  Accounts
receivable  are  generally unsecured. The Company normally obtains payments from
customers prior to delivery of the related products. Otherwise, the Company does
not  require  collateral  for  accounts  receivable.

The  carrying  value  of  the  note  payable approximates fair value based on it
bearing  interest at a rate which approximates market rates. The amount reported
as  inventory  is  considered  to  be  a  reasonable


                                      F-7
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


approximation  of its fair value. The fair value estimates presented herein were
based  on  market  information  available  to  management  at  the  time  of the
preparation  of  the  financial  statements.

BUSINESS  CONDITION  -  The  accompanying consolidated financial statements have
been prepared in conformity with accounting principles generally accepted in the
United  States  of  America,  which contemplate continuation of the Company as a
going  concern. The Company has incurred net losses of $965,840 and $217,333 for
the  years  ended  December  31,  2004 and 2003, respectively. The Company had a
working  capital deficit of $273,400 and $156,505 at December 31, 2004 and 2003,
respectively.  Loans  from  the  Company's  president  were  required  to  fund
operations.  These  conditions  raise  a  substantial  doubt about the Company's
ability  to continue as a going concern. The financial statements do not include
any  adjustments  relating  to the recoverability and classification of recorded
asset  amounts  or  amounts  and  classification  of  liabilities  that might be
necessary  should  the  Company  be  unable  to  continue  in  existence.

The  Company is working towards raising public funds to expand its marketing and
revenues.  The  Company  has spent considerable time in contracting with several
major  overseas  corporations  for  the  co-development  of enhanced antioxidant
beverages  for  distribution into the overseas markets. In addition, the Company
is  working  with  its  Canadian  business  associates to identify institutional
businesses  to  market  various  disinfection applications based upon functional
water,  pending  government  approval.

The  Company's  ability  to  continue  as  a going concern is dependent upon its
ability  to  generate  sufficient cash flows to meet its obligations on a timely
basis,  to  obtain  additional  financing  as may be required, and ultimately to
attain  profitable  operations.  However,  there is no assurance that profitable
operations  or  sufficient  cash  flows  will  occur  in  the  future.

CASH  AND CASH EQUIVALENTS - The Company considers all highly liquid instruments
purchased  with  a  maturity  of  less than three months to be cash equivalents.

ACCOUNTS  RECEIVABLE  -  Accounts receivable are recorded at the invoiced amount
and  do  not bear interest. The allowance for doubtful accounts is the Company's
best  estimate of the amount of probable credit losses in the Company's existing
accounts  receivable.  The  Company determines the allowance based on historical
write-off  experience. Past due balances over 90 days and a specified amount are
reviewed  individually  for  collectibility.  Account  balances  are charged off
against  the allowance after all means of collection have been exhausted and the
potential  for  recovery  is  considered  remote.  The Company does not have any
off-balance  sheet  credit  exposure  related  to  its  customers.

INVENTORY  - Inventory consists of purchased finished goods and is stated at the
lower  of  cost  (using  the  first-in,  first-out  method)  or  market  value.

PROPERTY  AND  EQUIPMENT  -  Equipment, and furniture and fixtures are stated at
cost. Depreciation is computed using the straight-line method over the estimated
useful  lives  of  the  assets.  Estimated useful lives range from 3 to 7 years.
Depreciation  expense for the years ended December 31, 2004 and 2003, was $9,814
and  $7,480,  respectively.  Expenditures for maintenance, repairs, and renewals
are  charged  to  expense  as  incurred.  Expenditures  for  major  renewals and
betterments  that  extend the useful lives of existing equipment are capitalized
and  depreciated.  On  retirement  or disposition of property and equipment, the
cost  and accumulated depreciation are removed and any resulting gain or loss is
recognized  in  the  statement  of  operations.


                                      F-8
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


Long-lived  assets  are reviewed for impairment yearly. Recoverability of assets
to be held and used is measured by comparison of the carrying amount of an asset
to  future  net cash flows expected to be generated by the asset. If such assets
are  considered  to  be impaired, the impairment to be recognized is measured by
the  amount that the carrying amount of the assets exceeds the fair value of the
assets.  Assets  to  be  disposed  of  are reported at the lower of the carrying
amount  or fair value less costs to sell. Based on the evaluation, no impairment
was  considered  necessary  during  the  years  ended December 31, 2004 or 2003.

INCOME TAXES - The Company recognizes an asset or liability for the deferred tax
consequences  of  all  temporary  differences between the tax bases of assets or
liabilities  and  their  reported amounts in the financial statements. That will
result  in  taxable  or  deductible  amounts  in  future years when the reported
amounts  of  the  assets or liabilities are recovered. These deferred tax assets
and  or  liabilities  are  measured  using the enacted tax rates that will be in
effect  when  the  differences  are expected to reverse. Deferred tax assets are
reviewed  periodically  for  recoverability  and  valuation  allowances  and
adjustments  are  provided  as  necessary.

ADVERTISING - The Company follows the policy of charging the cost of advertising
to expense as incurred. Advertising expense for the year ended December 31, 2004
and  2003  was  $10,776  and  $3,952,  respectively.

CONCENTRATIONS  OF  RISK  - Sales to major customers are defined as sales to any
one  customer  which  exceeded  10%  of total sales. The risk of loss of a major
customer  subjects  the Company to the possibility of decreased sales. Purchases
from  major vendors are defined as inventory purchases from any one vendor which
exceeded  10%  of  total inventory purchases. The risk of loss of a major vendor
subjects the Company to the possibility of increased costs and not being able to
fulfill  customer  orders.  See  Note  7.

REVENUE  RECOGNITION  -  The  Company  recognizes  revenue  when all four of the
following  criteria  are  met:  (i) persuasive evidence that arrangement exists;
(ii)  delivery  of  the products and/or services has occurred; (iii) the selling
price  is  both  fixed  and  determinable and; (iv) collectibility is reasonably
probable.  The  Company's  revenues  are derived from sales of their industrial,
environmental  and  residential  systems  which alter the properties of water to
produce  functional  water.

BASIC  AND  DILUTED  LOSS  PER  COMMON  SHARE  -  Basic loss per common share is
calculated  by dividing net loss by the weighted-average number of common shares
outstanding. Diluted loss per common share is calculated by dividing net loss by
the  weighted-average number of Series A convertible preferred shares and common
shares  outstanding  to give effect to potentially issuable common shares except
during  loss  periods  when those potentially issuable shares are anti-dilutive.
Potential  common shares from convertible preferred stock have not been included
as  they  are  anti-dilutive.

NEW  ACCOUNTING  STANDARDS  -  In  December  2004,  the FASB issued SFAS No. 123
(revised  2004),  "Share-Based  Payment," which is an amendment to SFAS No. 123,
"Accounting  for  Stock-Based  Compensation."  This  new standard eliminates the
ability  to  account  for share-based compensation transactions using Accounting
Principles  Board  (APB) No. 25, "Accounting for Stock Issued to Employees" (APB
25)  and requires such transactions to be accounted for using a fair-value-based
method  and the resulting cost recognized in the Company's financial statements.
This  new  standard  is effective for interim and annual periods beginning after
June  15,  2005. The Company is currently evaluating SFAS No. 123 as revised and
intends to implement it in the third quarter of 2005 and will not presently have
an  effect  on  the  Company's  financial  statements.


                                      F-9
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


In  December  2004,  the  FASB  issued  SFAS  Statement  No.  153, "Exchanges of
Non-monetary  Assets-an  amendment of APB Opinion No. 29." This Statement amends
APB  Opinion 29 to eliminate the exception for non-monetary exchanges of similar
productive  assets  and  replaces  it  with a general exception for exchanges of
non-monetary  assets  that  do  not  have  commercial  substance. A non-monetary
exchange  has  commercial  substance  if the future cash flows of the entity are
expected to change significantly as a result of the exchange. The Statement will
be  effective  in January 2006. The Company does not expect that the adoption of
SFAS  No.  153  will  have  a  material  impact  on  its  Consolidated Financial
Statements.

NOTE  3  -  RELATED  PARTY  TRANSACTIONS

During  the  years ended December 31, 2004 and 2003, the Company's president and
majority  shareholder  advanced  the Company $178,000 and $84,000, respectively.
These  advances  bear  interest  at  7%  with principal and accrued interest due
between  November  2005  and  September 2006. At December 31, 2004 and 2003, the
accrued  interest  was  $15,946  and  $735,  respectively.

NOTE  4  -  INCOME  TAXES

There  was  no  provision  for  or  benefit  from income tax for any period. The
components  of  the  net deferred tax asset at December 31, 2004 and 2003 are as
follows:

<TABLE>
<CAPTION>
                                    2004       2003
<S>                              <C>         <C>
======================================================

Net operating loss carryforward  $ 416,124   $ 71,395
Bad debt reserve                     6,381      3,898
Accrued salaries                    29,000      5,793
Less: valuation allowance         (451,505)   (81,086)
------------------------------------------------------

NET DEFERRED TAX ASSET           $       -   $      -
======================================================
</TABLE>

For tax reporting purposes, the Company has net operating loss carry forwards in
the  amount  of  $1,077,482  which  will  begin  expiring  in  2023.

The following is a reconciliation of the amount of tax benefit that would result
from  applying  the  federal statutory rate to pretax loss with the benefit from
income  taxes  for  the  years  ended  December  31,  2004  and  2003:


<TABLE>
<CAPTION>
                                                  2004       2003
<S>                                            <C>         <C>
====================================================================

Benefit as statutory rate (34%)                $(328,386)  $(73,893)
Non-deductible expenses                            2,589     17,567
Change in valuation allowance                    370,419     66,367
State tax benefit, net of federal tax effect     (44,622)   (10,041)
--------------------------------------------------------------------

NET BENEFIT FROM INCOME TAXES                  $       -   $      -
====================================================================
</TABLE>

NOTE  5  -  PREFERRED  STOCK

During May 2004, the Company designated 400,000 shares of the preferred stock as
Series  A  convertible  preferred  stock.

The holders of Series A convertible preferred stock are entitled to a cumulative
dividend  of  8%  per  year  in  cash  payable  in  arrears.

The  holders  of  Series A convertible preferred stock may convert any or all of
their shares plus all accrued dividends on the preferred stock into common stock
at  any  time.  Each  share  of  preferred  stock  may  be


                                      F-10
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


converted  into  5  shares of common stock. The holder will receive one share of
common  stock  for  $2  of  accrued  dividends.

Upon  the  liquidation,  dissolution  or  winding  up of the Company, holders of
Series  A  convertible  preferred stock, are entitled to receive, out of legally
available  assets,  a  liquidation  preference  of $10 per share, plus an amount
equal  to  any  unpaid dividends through the payment date, before any payment or
distribution  was  made  to  holders  of  common  stock. The holders of Series A
convertible  preferred  stock  are  not  entitled  to  vote.

During  the  July  2004,  the Company issued 8,000 shares of preferred stock for
$80,000.  At  December  31,  2004, dividends payable was $3,200, or 40 cents per
share.

NOTE  6  -  COMMON  STOCK

During  September  2004,  the  Company issued 100,000 shares of common stock for
$40,000  of  legal  services.  These shares were valued using the per share fair
value  of  the  Company's  common  stock  on  the  date  of  issuance.

In  December  2003, the Company's shareholders approved the 2004 Stock and Stock
Option  Plan  effective  January  1,  2004  whereby  up to 500,000 shares may be
granted,  optioned  or sold. The plan is for its key employees and directors who
contribute materially to the success and profitability of the Company as well as
attracting  other  key employees and directors. In November 2004, 400,000 common
shares  were  issued  pursuant to this plan, resulting in $172,000 in consulting
expense.  These  shares  were  valued  using  the  per  share  fair value of the
Company's  common  stock  on  the  date  of  issuance.

In  November  2004, the Company's board of directors approved the 2004 Marketing
Consultant  Stock  Plan  whereby  up  to  945,000  common shares may be granted,
optioned  or sold. The plan is for its consultants, key employees, and directors
who  contribute  materially  to  the success and profitability of the Company as
well  as attracting other key employees and directors. In November 2004, 945,000
shares  were  issued  under  this  plan  resulting in $406,349 of consulting and
employee  expense  valued using the per share fair value of the Company's common
stock  on  the  date  of  issuance.

NOTE  7  -  COMMITMENTS  AND  CONTINGENCIES

OPERATING  LEASES - The Company currently leases office and storage space from a
third  party.  On  August 1, 2004, the Company entered into a lease agreement to
pay  a  monthly  lease  payment  of  $3,066  until  June  2005.

Future  minimum  lease payments under operating lease obligations as of December
31,  2004,  were  as  follows:


Year Ending December 31,
---------------------------------

         2005             $21,462
---------------------------------

Rent  expense  for  the  years  ended December 31, 2004 and 2003 was $33,678 and
$27,097,  respectively.


                                      F-11
<PAGE>
                            PROTON LABORATORIES, INC
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


MAJOR  CUSTOMER  -  During  the  year  ended  December  31, 2004, sales to three
customers  accounted for 37% of total sales. As of December 31, 2004, there were
no  amounts  due  from these customers. During the year ended December 31, 2003,
sales to one customer accounted for 11% of total sales. As of December 31, 2003,
there  were  no  amounts  due  from  this  customer.

MAJOR  VENDOR  -  During  the year ended December 31, 2004, purchases from three
vendors accounted for 96% of total inventory purchases. As of December 31, 2004,
amounts  due  to these vendors accounted for 54% of accounts payable. During the
year  ended  December  31, 2003, purchases from two vendors accounted for 87% of
total inventory purchases. As of December 31, 2003, amounts due to these vendors
accounted  for  65%  of  accounts  payable.

NOTE  8  -  SUBSEQUENT  EVENTS (Unaudited)

COMMON STOCK - During March 2005, the Company entered into a tentative agreement
with  a  consultant  related  to  promoting the Company and the possibility of a
future offering of the Company's common stock. Under this agreement, the Company
agreed  to  immediately  issue  the  consultant  550,000 shares of the Company's
common  stock. In addition, the Company agreed to pay a cash fee equal to 10% of
the  gross proceeds of any future common stock offering. The Company also agreed
to  issue  the  investment  bank  company  a warrant to purchase a number of the
Company's  common  shares equal to 10% of the gross proceeds of the offering. As
part  of  the  agreement,  the consultant is to provide advisory services for 12
months  from the close of the offering. In consideration for these services, the
Company  will  issue  the  consultant  common  shares equal to 4.5% of the total
number  of  common  shares outstanding following the close of the offering. This
agreement  was  abandoned  with  no  shares  or  funds  being  delivered.

NOTES  PAYABLE  -  In  March  2005 the Company also issued a note payable in the
amount  of $164,000 for the purchase of inventory. The inventory will be held by
the  lender  as collateral until the note is repaid in May 2005. The Company has
also  agreed to pay $28,500, or approximately 17%, in interest. In addition, the
Company  is  to  issue  the  lender 47,500 shares of common stock, which will be
recorded as a $27,075 discount valued on the date of issuance and amortized over
the  term  of  the  note.  These shares are to be issued prior to the note's due
date.

During  January  2005,  a shareholder advanced the Company $40,000. This advance
bears  interest  at  7%  with  principal  and accrued interest due January 2007.


                                      F-12
<PAGE>
                                  EXHIBIT INDEX

Exhibit Number  Exhibit Description
----------------------------------------------------------------

31.1            Certification pursuant to Section 13a-14 of CEO

31.2            Certification pursuant to Section 13a-14 of CFO

32.1            Certification pursuant to Section 1350 of CEO

32.2            Certification pursuant to Section 1350 of CFO