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**UNITED STATESSECURITIES AND EXCHANGE COMMISSION** Washington, D.C. 20549

FORM 10-KSB

(Mark One)

x   Annual
  Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the fiscal year ended March 31, 2005

 ̈  Transition
  Report Under Section 13 Or 15(d) Of The Securities Exchange Act Of 1934

For the transition period from _________________ to _________________

COMMISSION FILE NUMBER 000-51152

DIGITAL ECOSYSTEMS CORP.
  (Name of small business issuer in its charter)

|NEVADA                                                               | 98-0431245                     
|-------------------------------------------------------------------- | -------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification
|                                                                     |                                
|#1500, 701 West Georgia Street                                       |                                
|Vancouver, British Columbia                                          | V7Y 1C6                        
|(Address of principal executive offices)                             | (Zip Code)                     
|                                                                     |                                
|(604) 681-7039                                                       |                                
|Issuer's telephone number                                            |                                

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

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

COMMON STOCK, $0.001 PAR VALUE PER SHARE.

Check whether 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. Yes
  xNo  ̈

Check if there is no disclosure of delinquent filers in response
  to Item 405 of Regulation S-B is not contained
  in this form, and no disclosure will be contained, to the best of registrant's
  knowledge, in definitive proxy or 
  information statements incorporated by reference in Part III of this Form 10-KSB
  or any amendment to this 
  Form 10-KSB.  ̈

Revenues for the fiscal year ended March 31, 2005 were: $Nil.

The aggregate value of the voting stock held by non-affiliates
  of the registrant, computed on the basis of the 
  closing price of the registrant’s common stock on July 1, 2005was
  $209,600.

State the number of shares outstanding of each of the issuer’s
  classes of common equity, as of the latest 
  practicable date. Asof July 1, 2005, the Issuer had outstanding
  9,120,000 Shares of Common Stock.

Transitional Small Business Disclosure Format (Check one):
  Yes  ̈  Nox

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TABLE OF CONTENTS

|           |                                                                                                                        | PAGE
|---------- | ---------------------------------------------------------------------------------------------------------------------- | ----
|           |                                                                                                                        |     
|PART I     |                                                                                                                       
|           |                                                                                                                        |     
|Item 1.    | Description of Business.                                                                                               | 3   
|Item 2.    | Description of Property.                                                                                               | 10  
|Item 3.    | Legal Proceedings.                                                                                                     | 10  
|Item 4.    | Submission of Matters to a Vote of Security
      Holders.                                                             | 10  
|           |                                                                                                                        |     
|PART II    |                                                                                                                       
|           |                                                                                                                        |     
|Item 5.    | Market for Common Equity and Related Stockholder
      Matters.                                                        | 11  
|Item 6.    | Management’s Discussion and Analysis
      or Plan of Operation.                                                       | 12  
|Item 7.    | Financial Statements.                                                                                                  | 20  
|Item 8.    | Changes in and Disagreements with Accountants
      on Accounting and Financial Disclosure.                            | 21  
|Item 8A.   | Controls and Procedures.                                                                                               | 21  
|Item 8B.   | Other Information.                                                                                                     | 21  
|           |                                                                                                                        |     
|PART III   |                                                                                                                       
|           |                                                                                                                        |     
|Item 9.    | Directors, Executive Officers, Promoters
      And Control Persons; Compliance with Section 16(a) of the Exchange Act. | 22  
|Item 10.   | Executive Compensation.                                                                                                | 23  
|Item 11.   | Security Ownership of Certain Beneficial
      Owners and Management and Related Stockholder Matters.                  | 25  
|Item 12.   | Certain Relationships and Related Transactions.                                                                        | 26  
|Item 13.   | Exhibits.                                                                                                              | 27  
|Item 14.   | Principal Accountant Fees and Services.                                                                                | 27  
|           |                                                                                                                        |     
|SIGNATURES | 28                                                                                                                    

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PART I

Certain statements contained in this Annual Report on Form
  10-KSB constitute "forward-looking statements". These statements, identified
  by words such as “plan”, "anticipate", "believe", "estimate", "should,"
  "expect" and similar expressions include our expectations and objectives regarding
  our future financial position, operating results and business strategy. These
  statements reflect the current views of management with respect to future events
  and are subject to risks, uncertainties and other factors that may cause our
  actual results, performance or achievements, or industry results, to be materially
  different from those described in the forward-looking statements. Such risks
  and uncertainties include those set forth under the caption "Management's Discussion
  and Analysis or Plan of Operation" and elsewhere in this Form 10-KSB. We advise
  you to carefully review the reports and documents we file from time to time
  with the Securities and Exchange Commission (the “SEC”), particularly
  our quarterly reports on Form 10-QSB and our current reports on Form 8-K.

As used in this Annual Report, the terms "we", "us", "our",
  the “Company”, and “Digital Ecosystems” mean Digital
  Ecosystems Corp., unless otherwise indicated.

ITEM 1.              DESCRIPTION
  OF BUSINESS.

We are a development stage company in the business of developing
  and operating an internet based drinking water information and order service
  (the “Water Business”) at our website “www.digitalecosystems.com”
  (the “Website”). The Website is focused on providing consumers with
  current and comprehensive sources of bottled and bulk water, water information
  and water treatment options delivered through a website that aggregates and
  affiliates with national/regional, state-provincial, and large municipal bottled
  water companies and equipment manufacturers. Our plan of operation is to develop
  a comprehensive one-stop-shop source of water and water information and to become
  established as a significant industry distributor. We conduct our business through
  agreements with consultants and arms-length third parties.

We have not earned any revenues to date. We plan to use the
  Website to earn revenues from advertising, sales of products and all e-commerce
  transactions originating from the Website. We do not anticipate earning revenues
  until such time as we complete the marketing, promotion and development of the
  Website. We estimate that we will be required to spend an additional $20,000
  to complete development and marketing of the Website over the next twelve months.
  We are presently in the development stage of our business and we can provide
  no assurance that we will be able to generate revenues from sales commissions
  and advertising or that the revenues generated will exceed the operating costs
  of the Water Business.

We presently do not have sufficient cash on hand to fund our
  proposed expenditures for the next twelve months, and will require additional
  financing to pursue our stated plan of operations. Depending on the success
  of our initial marketing efforts, we estimate that we will require a further
  $50,000 to implement an advertising campaign to establish and enhance connections
  with potential candidates for supply agreements or representation agreements.
  After the twelve month period, we will require additional financing for operational
  expenses and to pursue our plan of operation.

We anticipate that additional financing will be in the form
  of equity financing from the sale of our common stock. However, we cannot provide
  investors with any assurance that we will be able to raise sufficient funding
  from the sale of our common stock to fund additional expenditures. The risky
  nature of this enterprise and lack of tangible assets places debt financing
  beyond the credit-worthiness required by most banks or typical investors of
  corporate debt until we generate revenues from our Website operations. We do
  not have any arrangements in place for any future equity financing.

CORPORATE BACKGROUND

We were incorporated on February 21, 2002 under the laws of
  the State of Nevada. Our principal offices are located at Suite 1500, 701 West
  Georgia Street, Vancouver, British Columbia, Canada, V7Y 1C6. Our telephone
  number is (604) 681-7039.

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In General

Our Water Business is intended to initially serve customers
  through a website that directs regional sales to the local area affiliate and
  coordinates sales and distribution. We intend to aggregate contacts in the water
  industry to provide the most comprehensive catalog of water products and bring
  them to communities in North America with plans to expand globally. The products
  we intend to offer cover a range from:

| | (a) | Bottled water applications;                                                                                
| | --- | -----------------------------------------------------------------------------------------------------------
| | (b) | Information and reports on the water industry; and                                                         
| | (c) | A community based website whereby people can educate
        themselves about water and the water industry.

Our objective is to provide the consumer and researcher with
  current information about bottled water. By offering a comprehensive one-stop-shop
  source of water and water information, we hope to become established as a significant
  industry distributor. The opportunity exists now because the convergence of
  widespread consumer access to the internet and inexpensive and robust web technology
  has made it feasible to offer information at low cost.

Our business plan is to use the Website to earn revenues from
  the following sources:

| | (a) | Reselling – private label reselling agreements;                                       
| | --- | --------------------------------------------------------------------------------------
| | (b) | Establishing additional affiliations to capture
        advertising revenue; and      
| | (c) | Sale of products and all e-commerce transactions
        originating from the Website.

We intend to seek out affiliations to capture special application
  opportunities as they arise. We do not currently have any private label reselling
  agreements or other affiliations and we have not earned any revenues to date.

The typical seller utilizing our web portal is expected to
  include both major and minor major bottled water providers, data service providers,
  competitive access providers, resellers, agents, and consultants. The typical
  buyer of bulk water is expected to be any company/individual that needs anywhere
  from one case and up of bottled water delivery per month. The typical buyer
  of the private label component of the business is expected to be both event
  driven (parties, weddings, concerts), and of a constant source of marketing
  (hotels, restaurants, etc...).

The following illustrates an example of a typical transaction
  we plan to conduct on our Website. A restaurant may need to purchase his/her
  monthly stock of bottled water, both flat and sparkling. They are also hosting
  a special event in which they want to promote their restaurant on the bottled
  water they serve. The purchaser, who has previously or concurrently registered
  with our site, will go to our web portal and request a quote for his/her needs
  from a number of bottled water providers, and private label providers who have
  also previously registered as vendors with us. The bottled water providers,
  and private label providers are expected to respond to the request through our
  web portal. Once the reseller has selected the best quote and the transaction
  has been agreed upon between both parties, we are expected to receive a 5% commission
  from the vendor, based upon the total value of that sale. The benefits to the
  vendee include getting the best price. The benefits to the vendor are expected
  to include making the sale, gaining a new customer without the added expense
  marketing/advertising campaigns or sales calls.

Revenue Model

We intend to incorporate various revenue models for customer
  centricity.

Brokerage Model. This model is based on the web portal
  acting as a “market maker” bringing buyers and sellers together
  and that facilitate transactions. Generally thought of as B2B, they can also
  be B2C. The natural revenue stream for this model would be the collection of
  a transaction fee.

Content Model. Getting useful content is a second value
  model we may deliver. The value derives from the extent to which the content
  meets customer needs. A news feed directly related to the water industry may
  be

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built into the Website in the near future. Advertising and
  subscription fees are expected to be part of this revenue model.

Search Model. This model is based on offering a search
  engine specifically geared towards the water industry in general. All matter
  of information from global water issues, to finding a local provider would be
  incorporated into this feature. Advertising would also be included in this model.

Integration of Models. These models can be integrated,
  developing multiple streams within each of these models. This is an eventual
  key to success for our web portal, with its inclusion of multiple revenue opportunities,
  along with various modes for attracting web traffic to the site on a returning
  ever increasing basis.

Initially, we do not intend to charge either buyers or sellers
  a "registration" or "subscription" fee to use the site. Instead, we anticipate
  revenue will be generated through the following channels:

| | (a) | Advertising;                                                                                                                                                                           
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (b) | Commissions on closed transactions and lead fees;                                                                                                                                      
|
| | (c) | Third Party Add-On Service Providers: revenue sharing
        agreement with fee-based Third Party Service providers;                                                                  
|
| | (d) | Service Provider Listings: provide vendors and consultants
        a free listing, charging a fee for premium online directory listings (i.e.
        Yellow Pages for water industry);
|
| | (e) | Data Mining and Industry Metrics: Collect valuable
        statistics about aspects of market behaviour. The data would be sold in
        aggregate form to receptive audiences;      
|
| | (f) | Referral fees – fees generated through providing
        customers with information regarding services and products on other sites;                                                    
|
| | (g) | Transaction fees- we would collect a fee for each
        transaction that is conducted through our e-commerce web site;                                                               
|
| | (h) | Subscription fees – regular access to information
        or services provided by the company into the marketplace; and                                                                
|
| | (i) | Margin on sale of good/services – selling
        goods and services through the Website and collecting a margin on it.                                                                

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Marketing Strategy

Our marketing strategy is to be known as the most comprehensive
  source of bottled water and related information on the internet.

Our initial focus is on the markets in the United States and
  Canada. We have identified additional regions to be targeted over the next 48
  months, including:

| | (a) | Oceana;   
| | --- | ----------
|
| | (b) | Caribbean;
|
| | (c) | Asia; and 
|
| | (d) | Europe.   

Additional markets may be pursued as opportunities and demands
  arise. The majority of marketing performed by us is intended to be directed
  to establish and enhance connections with potential candidates for supply agreements
  or representation agreements. Supplier candidates are expected to be identified
  for each geographic region we have targeted. Candidates for supply or representation
  agreements are intended to be bottled water companies. Alliances may be formed
  with local companies in the bottled industry in each area. A similar process
  is expected to be followed in each region as we expand.

We intend to host a comprehensive online catalogue of products
  and services that is expected to link directly with suppliers in every area.
  Retail and wholesale clients are expected to be able to easily navigate the
  site in pursuit of defining their water product needs and obtaining a reliable
  nearby source for them. We intend to use forms of traditional and online marketing
  techniques designed to position it as a premier site for all water supplies.

The continued development of our Website is expected to be
  engineered by qualified personnel able to program specifically for the purpose
  of displaying and selling bottled water. The site is intended to offer all the
  features such as information sources, links, chat rooms, posting sections etc.
  A reliable hosting facility is expected to be used to maintain the stability
  of the Website.

Our Website is intended to be marketed with several marketing
  techniques, including:

|1. | Opt-in newsletters;          
|-- | -----------------------------
|  
|2. | Links;                       
|  
|3. | Cross branding;              
|  
|4. | Banner ads; and              
|  
|5. | Participation in trade shows.

Operations

We do not own the servers that host the Website. Our current
  state of technology involves utilizing commercially available licensed technology
  to operate our web portal, through Kekko Enterprises Inc., the host and monitor
  of our Website and our internet service provider. Our servers are located in
  British Columbia on the premises of our internet service provider. Our internet
  service provider provides us with the following services: use of servers, internet
  connection services, and internet band-width.

The operation of the servers which host the Website depends
  on operating system software, database software, and server software developed,
  produced by third parties. We use commercially available

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technology whenever possible instead of purchasing custom-made
  or internally developed solutions. We presently do not license any software
  or have any custom-made or internally developed solutions.

Intellectual Property

Presently our intellectual property consists of our domain
  name www.digitalecosystems.com and our trade
  name “Digital Ecosystems”.

Internet Gateway

We do not own a gateway onto the internet, but instead rely
  on an internet service provider to connect the Website to the internet. We use
  internet service providers to provide connectivity to the internet, internet
  traffic and data routing services and e-mail services. The internet service
  provider provides us with a high speed internet access line to the World Wide
  Web. We believe that these telecommunication and internet service facilities
  will need to be upgraded in the future as usage of our Website increases.

Strategic Alliances

We recognize the importance of key strategic alliances. These
  alliances are intended to be formalized with competent, quality orientated companies,
  on both a national, state, provincial, and municipal level (cities larger than
  two million people). Each affiliate partner is expected to be selected based
  on our criteria established to ensure our growth in revenues and global reputation
  for quality and good corporate citizenship.

Partnerships, reselling, and affiliate programs are expected
  to be enacted. These are intended to encourage expansion into new territories
  with associations in place. We intend to continue to develop and establish strategic
  alliances and acquire relevant technologies developed by third party organizations.

INDUSTRY BACKGROUND

Growth of the Internet and the World Wide Web (the “Web”)

The internet and the Web are experiencing dramatic growth
  in terms of the number of Web users. The growth in the number of Web users and
  the amount of time users spend on the Web is being driven by the increasing
  importance of the internet as a communications medium and an information resource
  and a sales and distribution channel.

Growth of Online Electronic Commerce

The internet is dramatically affecting the methods by which
  consumers, organizations and businesses are buying and selling goods and services.
  The internet provides online businesses and organizations with the ability to
  reach a global audience and to operate with minimal infrastructure, reduced
  overhead and greater economies of scale, while providing consumers and businesses
  with a broad selection, increased pricing power and unparalleled convenience.
  As a result, a growing number of parties are transacting business on the Web.

COMPETITION

We currently compete with a variety of competitors involved
  in providing services via the internet. These competitors include:

http://www.culligan.com 
  http://www.pentawater.com 
  http://www.waternet.com 
  http://www.lakotawater.com 
  http://www.purewaterinc.com 
  http://www.bottledwaterweb.com 
  http://www.allwater.com

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There are a number of web based water sites that offer similar
  content and services to Digital Ecosystems. They are, however, usually concerned
  with either contextual education such as current events related to the water
  industry, and or they sell only one particular product. We intend to aggregate
  a considerable line of products both in the bottled water sector and in the
  preparation of clean water with filters, reverse osmosis or desalination products.

We are committed to ongoing development and enhancement of
  our product line and associated technologies to ensure our partners continue
  to provide leading edge, cost effective solutions for water and water treatment.

Increased competition may result in the reduction in advertising
  fees, the reduction of use of the Website and the inability of our company to
  generate acceptance of the Website. Each of these factors would likely result
  in increased operating costs and the inability to generate revenues, any one
  of which could materially adversely affect our business, results of operations
  and financial condition. Many of our current and potential competitors have
  significantly greater financial, marketing, customer support, technical and
  other resources than us. As a result, such competitors may be able to attract
  potential users away from the Website, and they may be able to respond more
  quickly to changes in customer preferences or to devote greater resources to
  the development and promotion of their websites than we can.

GOVERNMENT REGULATION

General

We anticipate that the Website will be used by customers from
  multiple state and international jurisdictions. Due to the increasing popularity
  and use of the internet, it is possible that a number of laws and regulations
  may be adopted with respect to the internet generally, covering issues such
  as user privacy, pricing, and characteristics and quality of products and services.
  Similarly, the growth and development of the market for internet commerce may
  prompt calls for more stringent consumer protection laws that may impose additional
  burdens on those companies conducting business over the internet. The adoption
  of any additional laws or regulations may decrease the growth of commerce over
  the internet, increase our cost of doing business or otherwise have a harmful
  effect on the Water Business.

Water Regulations

The bottled water industry in the United States is regulated
  on three levels: federal, state and trade association. U.S. Food and Drug Administration
  (the “FDA”) regulations, coupled with state and industry standards,
  offer consumers assurance that the bottled water they purchase is stringently
  regulated, tested and of the highest quality. The International Bottled Water
  Association (the “IBWA”) has been a long-standing proponent of additional
  federal regulations for bottled water and is active at all levels of the local,
  state and federal government assisting in the development of such regulations.

Water is subject to health, safety and environmental regulations
  in some countries and for some applications. Each Joint Venture is expected
  to be responsible for understanding the applicable regulations and working within
  any constraints presented.

US Federal Regulations

Bottled water is regulated as a food product by the FDA. Bottled
  water companies must adhere to the FDA's Quality Standards, Standards of Identity
  (Labeling Regulations) and Good Manufacturing Practices.

| | • | Quality Standards: All bottled water products
        must comply with the FDA's Quality Standards in Section 165.110(b) of
        Title 21 of the Code of Federal Regulations (the “CFR”). These
        standards, along with the FDA's Good Manufacturing Practices, ensure the
        safety of all bottled water products from production to packaging to consumption.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                              
| | • | Standards of Identity (Labeling Regulations):
        FDA's labeling rules for bottled water (see below) establish standards
        of identity and standardized definitions for terms found on bottled water
        labels                                                                                                                                                

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| |   | such as "artesian," "distilled," "drinking," "mineral,"
        "purified," "sparkling" and "spring" seltzer, soda water and tonic water
        are considered soft drinks; therefore, they are excluded from these regulations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| | • | Good Manufacturing Practices: Bottled water
        is subject to both general food Good Manufacturing Practices (GMPs) and
        GMPs specific to bottled water processing and bottling. General food GMPs
        govern such areas as plant and ground maintenance, sanitary maintenance
        of buildings and fixtures, and sanitary facilities, including water supply,
        plumbing and sewage disposal. Bottled water GMPs provide detailed regulations
        governing plant construction and design, sanitary facilities and operations,
        equipment design and construction, production and process controls specific
        to the production and processing of bottled drinking water, and record
        keeping.

US State Standards

In addition to FDA's extensive regulatory requirements, the bottled water
  industry is subject to state regulatory requirements as well.

| | • | Inspections:A significant responsibility
        of the states is inspecting, sampling, analyzing and approving sources
        of water. Under the federal GMPs, only approved sources of water can be
        used to supply a bottling plant.                                                                                          
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   |                                                                                                                                                                                                                                                                                                                                           
| | • | Laboratory Certification: Another area in
        which some states have important responsibilities that complement federal
        regulation is the certification of testing laboratories. As with any food
        establishment, the states perform unannounced plant inspections, and some
        states perform annual inspections.

Canadian Federal Regulations

Bottled water is regulated as a food product under the federal
  Food and Drugs Act. Bottled water companies must adhere to quality standards,
  good manufacturing practices and labeling requirements. The federal government
  inspectors of the Canadian Food Inspection Agency regularly audit the operations
  of all bottled water companies to ensure compliance.

Canadian Provincial Regulations

In addition to the extensive federal regulatory requirements,
  the provinces also regulate bottled waters. The most significant responsibility
  of the provinces is approving sources of water, including drilling practices,
  borehole construction practices, and allowable rates of production and watershed
  protection.

CBWA Standards

The Canadian Bottled Water Association (the “CBWA”)
  model code is a quality assurance program with more extensive requirements than
  federal and provincial authorities. For these reasons, bottled water produced
  by CBWA members is always top quality and safe.

CBWA bottlers are subject to a third level of regulation involving
  third-party inspections, water testing and analysis, and adherence to the CBWA
  model code.

As a condition of membership, bottler must pass an annual,
  unannounced plant inspection administered by an independent, internationally
  recognized organization. This inspection audits quality and testing records,
  reviews all areas of plant operation from source through finished product, and
  checks adherence to the CBWA model code and its code of ethics. The CBWA code
  of ethics adheres to a philosophy of sustainable development, environmental
  protection, and collaboration with local communities in the management of the
  water resource.

A second condition of membership is that bottlers pass an
  annual water analysis administered by an independent government certified laboratory
  and regularly conduct microbial testing by qualified personnel.

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Bottled water produced by CBWA members is protected by a multi-barrier
  approach, which may include steps such as source protection and monitoring,
  as well as multi-stage filtration including micro filtration, reverse osmosis,
  distillation, ozonation, the application of ultraviolet light or other appropriate
  processing measures.

IBWA Standards

Third-party Inspections: As a condition of membership to the
  International Bottled Water Association (the “IBWA”), bottlers must
  submit to an annual, unannounced plant inspection administered by an independent,
  internationally recognized third-party inspection organization. This inspection
  audits quality and testing records; reviews all areas of plant operation from
  source through finished product; and checks compliance with FDA Quality Standards,
  Good Manufacturing Practices and any state regulations.

IBWA Model Code: The IBWA has established a quality
  assurance program, a strict set of standards called the Model Code. The Model
  Code establishes tougher requirements than federal and state authorities.

Future Products and Plans

We intend to keep abreast of innovations in water products
  and treatments and add these to our online catalogue. We also intend to arrange
  licensing or joint venture agreements with third parties that will manage regional
  sales and distribution.

Employees

We have no employees. We conduct our business largely through
  agreements with consultants and arms-length third parties. We do not intend
  to hire any employees over the next twelve months.

Research and Development Expenditures

We have not incurred any research or development expenditures
  since our incorporation.

Subsidiaries

We have no subsidiaries.

Patents and Trademarks

We do not own, either legally or beneficially, any patent
  or trademark.

ITEM 2.             
  DESCRIPTION OF PROPERTY.

We currently do not own any physical property or own or lease
  any real property. We rent approximately 500 square feet of office space located
  at Suite 1500, 701 West Georgia Street, Vancouver, British Columbia, Canada
  at a cost of $175 per month. This rental is on a month-to-month basis with
  no formal agreements.

Our month-to-month rental arrangements will allow us flexibility
  in moving if we employ more personnel, however, we believe these facilities
  are adequate in size to handle all of our current operations for the foreseeable
  future.

ITEM 3.             
  LEGAL PROCEEDINGS.

None.

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

None.

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PART II

ITEM 5.              MARKET
  FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

Market Information

Our shares of common stock have traded on the OTC Bulletin
  Board under the symbol “DECS” since April 20, 2005. The high and
  the low bid prices for our shares since April 20, 2005, as reported by the OTC
  Bulletin Board were:

|QUARTER         | HIGH ($) | LOW ($)
|--------------- | -------- | -------
|2ndQuarter 2005 | $0.09    | $0.06  

The trades reflect inter-dealer prices, without retail mark-up,
  markdown or commission and may not represent actual transactions.

Holders of Common Stock

As of July 1, 2005, we had forty three (43) registered stockholders.

Dividends

We have neither declared nor paid any cash dividends on our
  capital stock and do not anticipate paying cash dividends in the foreseeable
  future. Our current policy is to retain any earnings in order to finance the
  expansion of our operations. Our board of directors will determine future declaration
  and payment of dividends, if any, in light of the then-current conditions they
  deem relevant and in accordance with applicable corporate law.

Recent Sales of Unregistered Securities

None.

Use of Proceeds

We registered the resale of 1,580,000 shares of our common
  stock (the “Shares”) offered by selling stockholders of Digital
  Ecosystems at a price of $0.05 per share pursuant to a registration statement
  on Form SB-2 under the Securities Act of 1933 (the “Offering”).
  The SEC declared our registration statement on Form SB-2 (File No. 333-119073),
  effective on February 7, 2005 (the “Effective Date”). We did not
  sell any shares of our common stock in the Offering and therefore will not receive
  any proceeds from the Offering. The Offering will terminate nine months after
  the Effective Date. None of the securities were sold through an underwriter
  and accordingly, there were no underwriting discounts or commissions involved.
  We are paying all expenses of the Offering. No portion of these expenses will
  be paid by the selling stockholders. The selling stockholders, however, will
  pay any other expenses incurred in selling their common stock, including any
  brokerage commissions or costs of sale. To date we have expended $12,000
  on the costs of the Offering.

11

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ITEM 6.              MANAGEMENT'S
  DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

FORWARD-LOOKING STATEMENTS

Certain statements contained in this Management's Discussion
  and Analysis or Plan of Operations and other sections of this annual report
  constitute "forward-looking statements". These statements, identified by words
  such as “plan”, "anticipate", "believe", "estimate", "should", "expect"
  and similar expressions include our expectations and objectives regarding our
  future financial position, operating results and business strategy. These statements
  reflect the current views of management with respect to future events and are
  subject to risks, uncertainties and other factors that may cause our actual
  results, performance or achievements, or industry results, to be materially
  different from those described in the forward-looking statements. We advise
  you to carefully review the reports and documents we file from time to time
  with the SEC, particularly our quarterly reports on Form 10-QSB and our current
  reports on Form 8-K.

PLAN OF OPERATION

We have completed development of our Website. Our business
  plan is to continue to develop, maintain and promote our Website to earn revenues
  from advertising, sales of products and all e-commerce transactions originating
  from the Website. We do not anticipate earning revenues until such time as we
  complete the marketing, promotion and development of the Website. We are presently
  in the development stage of our business and we can provide no assurance that
  we will be able to generate revenues from sales commissions and advertising
  or that the revenues generated will exceed the operating costs of the Water
  Business. We have no employees as of July 1, 2005. We conduct our business largely
  through agreements with consultants and arms-length third parties. We do not
  intend to hire any employees over the next twelve months.

The table below highlights our milestones and objectives over
  the next twelve months:

|Milestones and Objectives                                                                                                                                                 | Anticipated Costs | Time Frame   
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------- | -------------
|1.      Registering vendors/vendees 
                 –
      contacting and signing up related parties                                                                   | $1,000            | 4 - 6 months 
|2.      Building an experienced
      advisory board             –
      recruiting key, seasoned personnel                                                               | $2,000            | 6- 8 months  
|3.      Developing key industry
      relationships             –
      building out web portal with related industry groups                                              | $1,000            | 9 – 12 months
|6.      Build relationships
      with key players in industry             –
      attend trade shows, join industry organizations                                        | $2,000            | 9 – 12 months
|7.      Develop private water
      label distribution             –
      secure relationship with water supplier, label supplier,            expand
      sales mission | $2,000            | 8-12 months  
|8.      Implement marketing
      and advertising campaign                                                                                                                | $12,000           | 9 – 12 months
|TOTAL                                                                                                                                                                     | $20,000           | –            

12

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In addition to the above expenses, we anticipate that we will
  incur over the next twelve months the following expenses:

|Category          | Planned Expenditures Over The Next Twelve Months (US$)
|----------------- | ------------------------------------------------------
|Professional Fees | $15,000                                               
|Office Expenses   | $5,000                                                
|TOTAL             | $20,000                                               

To date, we have expended a total of $58,995 on developing
  our Website and have completed development of the Website. We have cash of approximately
  $800 and a working capital deficit of approximately $10,000 as of July
  11, 2005. Our total expenditures over the next twelve months are anticipated
  to be approximately $40,000, the majority of which is due to the development
  and marketing of our Website and general, legal, accounting and administrative
  expenses associated with this offering and as a result of our becoming a reporting
  issuer under the Exchange Act.

We presently do not have sufficient cash on hand to fund our
  proposed expenditures for the next twelve months, and will require additional
  financing to pursue our stated plan of operations. Depending on the success
  of our initial marketing efforts, we estimate that we will require a further
  $50,000 to implement an advertising campaign to establish and enhance connections
  with potential candidates for supply agreements or representation agreements.
  After the twelve month period, we will require additional financing for operational
  expenses and to pursue our plan of operation.

We anticipate that additional financing will be in the form
  of equity financing from the sale of our common stock. However, we cannot provide
  investors with any assurance that we will be able to raise sufficient funding
  from the sale of our common stock to fund additional expenditures. The risky
  nature of this enterprise and lack of tangible assets places debt financing
  beyond the credit-worthiness required by most banks or typical investors of
  corporate debt until we generate revenues from our Website operations. We do
  not have any arrangements in place for any future equity financing.

LIQUIDITY AND FINANCIAL CONDITION

|Cash Flows                                     |                   | Year Ended March 31 |                      
|---------------------------------------------- | ----------------- | ------------------- | ---------------------
|                                               |                   | 2005                | 2004                 
|Net Cash from (used in) Development Activities |                   | $(55,538)           | $(22,373)            
|Net Cash from (used in) Investing Activities   |                   | --                  | --                   
|Net Cash from (used in) Financing Activities   |                   | $37,569             | $21,498              
|Net Increase (decrease) in Cash During Period  |                   | $(17,969)           | $(875)               
|                                               |                   |                     |                      
|Working Capital                                |                   |                     |                      
|                                               |                   |                     | Percentage           
|                                               | At March 31, 2005 | At March 31, 2004   | Increase / (Decrease)
|Current Assets                                 | $4,014            | $23,117             | (82%)                
|Current Liabilities                            | $27,932           | $5,000              | 458%                 
|Working Capital Surplus (Deficiency)           | $(23,918)         | $18,117             | (232%)               

We presently do not have sufficient cash on hand to fund the
  $40,000 we anticipate spending over the next twelve months to pursue our
  plan of operation. In addition, once we have completed our twelve month plan
  for developing and marketing our Website, depending on the success of our initial
  marketing efforts, we

13

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estimate that we will require an additional $50,000 to
  implement an advertising campaign to establish and enhance connections with
  potential candidates for supply agreements or representation agreements.

From inception to March 31, 2005, we have suffered cumulative
  losses in the amount of $165,385. We expect to continue to incur substantial
  losses as we continue the development of our business. Since our inception,
  we have funded operations through common stock issuances, related party loans,
  and the support of creditors in order to meet our strategic objectives. Our
  management believes that sufficient funding will be available to meet our business
  objectives and working capital needs and are currently evaluating several financing
  options, including a public offering of securities. However, there can be no
  assurance that we will be able to obtain sufficient funds to continue the development
  of and, if successful, to earn revenues from the operation of, our Website.
  As a result of the foregoing, our independent auditors believe there exists
  a substantial doubt about our ability to continue as a going concern.

We anticipate continuing to rely on equity sales of our common
  stock in order to continue to fund our business operations. Issuances of additional
  shares will result in dilution to our existing stockholders. There is no assurance
  that we will achieve any of additional sales of our equity securities or arrange
  for debt or other financing for to fund our planned business activities.

OFF-BALANCE SHEET ARRANGEMENTS

We have no significant off-balance sheet arrangements that
  have or are reasonably likely to have a current or future effect on our financial
  condition, changes in financial condition, revenues or expenses, results of
  operations, liquidity, capital expenditures or capital resources that are material
  to stockholders.

CRITICAL ACCOUNTING POLICIES

The preparation of financial statements in conformity with
  United States generally accepted accounting principles requires our management
  to make estimates and assumptions that affect the reported amount 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.
  Our management routinely makes judgments and estimates about the effects of
  matters that are inherently uncertain.

We have identified certain accounting policies, described below,
  that are most important to the portrayal of our current financial condition
  and results of operations. Our significant accounting policies are disclosed
  in Note 2 to the consolidated financial statements included in this Annual Report.

Revenue Recognition

We are not currently earning any revenue. We expect to earn
  revenue by (i) re-selling private labels; (ii) advertising by other businesses
  on our website; and (iii) sale of third party products originating from the
  website. Revenues are recognized once they are earned, specifically when: (a)
  services are provided or products are delivered to customers; (b) clear proof
  that an arrangement exists; (c) amounts are fixed or can be determined and;
  (d) our ability to collect is reasonably assured.

In particular, we will recognize:

| | i)   | sales of private labels upon title transfer on shipment;                                                        
| | ---- | ----------------------------------------------------------------------------------------------------------------
| | ii)  | advertising revenue straight-line over the term of the advertising term;                                        
| | iii) | commission revenue on a net basis as we act as the
        broker for the products originating from the website.

Website Development Costs

Pursuant to Emerging Issues Task Force No. 00-2 – “Website
  Development Costs” (“EITF 00-2”), we apply American Institute
  of Certified Public Accountants Statement of Position No. 98-1 to account for
  website development costs. In accordance with EITF 00-2, we expense all costs
  incurred during the preliminary project stage and capitalize all internal and
  external direct costs of materials and services consumed in developing the software,
  once the development has reached the application development stage. Application
  development stage costs are amortized over their estimated useful life. All
  costs incurred for upgrades, maintenance and enhancements, including the cost
  of website content, that does not result in additional functionality, are expensed
  as incurred.

Foreign Currency Translation

For our international operations, local currencies are considered
  their functional currencies. We translate assets and liabilities to their U.S.
  dollar equivalents at rates in effect at the balance sheet date, and revenue
  and expenses are translated at average monthly exchange rates. Translation adjustments
  resulting from this process are recorded in stockholders’ equity as a
  component of accumulated other comprehensive income. The amount was not material
  from inception to 2005.

Transaction gains and losses that arise from exchange rate
  fluctuations on transactions denominated in a currency other than the local
  functional currency are in the statement of operations.

14

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RISK FACTORS

We Have Yet To Attain Profitable Operations And Because
  We Will Need Additional Financing To Fund The Development Of Our Website, Our
  Accountants Believe There Is Substantial Doubt About Our Ability To Continue
  As A Going Concern

We have incurred a net loss of $165,385 for the period
  from inception to March 31, 2005, and have earned no revenues to date. Our future
  is dependent upon future profitable operations from the development of our Website.
  These factors raise substantial doubt that we will be able to continue as a
  going concern. We have cash in the amount of approximately $800 as of July
  11, 2005. Our total expenditures over the next twelve months are anticipated
  to be approximately $40,000, the majority of which is due to the development
  and marketing of our Website and general, legal, accounting and administrative
  expenses associated with this offering and as a result of our becoming a reporting
  issuer under the Exchange Act. We presently do not have sufficient cash on hand
  to fund our proposed expenditures for the next twelve months and will require
  additional financing. Further marketing and development work on our Website
  will also require additional funding in the event that our cash on hand is insufficient
  for any additional work proposed. We currently do not have any arrangements
  for financing and we may not be able to obtain financing when required.

Our financial statements included with this Annual Report
  have been prepared assuming that we will continue as a going concern. If we
  are not able to earn revenues, then we may not be able to continue as a going
  concern and our financial condition and business prospects will be adversely
  affected. These factors raise substantial doubt that we will be able to continue
  as a going concern and adversely affect our ability to obtain additional financing.

Our Short Operating History Makes our Business Difficult
  To Evaluate, Accordingly, We Have A Limited Operating History Upon Which To
  Base An Evaluation Of Our Business And Prospects

Our business is in the early stage of development and we have
  not generated any revenues or profit to date. Additional development and marketing
  of our Water Business is necessary prior to our achieving revenues or profitability.
  We estimate that we will expend $20,000 over the next twelve months on the
  development and marketing of our Website. Our Website is intended to be marketed
  through various techniques including: search engine placement, opt-in newsletters,
  links, cross branding and banner ads. Supplier candidates are expected to be
  identified for each geographic region we have targeted. Depending on the success
  of our initial marketing efforts, we estimate that we will require a further
  $50,000 to implement an advertising campaign to establish and enhance connections
  with potential candidates for supply agreements or representation agreements.
  Candidates for supply or representation agreements are expected to be bottled
  water companies. Alliances are expected to be formed with local companies in
  the bottled industry in each area. A similar process is intended to be followed
  in each region as we expand.

We have a limited operating history upon which to base an
  evaluation of our business and prospects. Our business and prospects must be
  considered in light of the risks, expenses and difficulties frequently encountered
  by companies in their early stage of development, particularly companies in
  new and rapidly evolving markets such as electronic commerce. These risks include:
  the initial completion of a developed product, the demand for the company’s
  product, the company’s ability to adapt to rapid technological change,
  the level of product and price competition, the company’s success in setting
  up and expanding distribution channels and whether the company can develop and
  market new products and control costs.

To address these risks, we must successfully implement our
  business plan and marketing strategies. We may not successfully implement all
  or any of our business strategies or successfully address the risks and uncertainties
  that we encounter.

We Have No Revenues, Accordingly, There Is No Assurance
  That We Will Be Able To Generate Revenues From Sales Commissions And Advertising
  Or That The Revenues Generated Will Exceed The Operating Costs Of Our Business

Our business and marketing strategy contemplates that we will
  earn a substantial portion of our revenues from sales commissions and advertising.
  We have no history of earning revenues and there is no assurance that we will
  be able to generate revenues from sales commissions and advertising or that
  the revenues generated will exceed the operating costs of our business. Customers
  may not accept our Website as an acceptable source of water supply services.

Operating Results Are Difficult To Predict, With The Result
  That We May Not Achieve Profitability And Our Business May Fail

Our future financial results are uncertain due to a number
  of factors, many of which are outside our control. These factors include:

15

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|• | Our ability to successfully market our Website and
        the Water Business;                                  
|- | ----------------------------------------------------------------------------------------------------------------
|  |                                                                                                                 
|• | Our ability to generate revenue through the Website
        and the Water Business;                             
|  |                                                                                                                 
|• | The timing, cost and availability of services on
        Websites comparable to ours and other non-web services;
|  |                                                                                                                 
|• | The amount and timing of costs relating to expansion
        of our operations;                                 
|  |                                                                                                                 
|• | The announcement or introduction of competing websites
        and products of competitors; and                 
|  |                                                                                                                 
|• | General economic conditions and economic conditions
        specific to the internet and electronic commerce.   

These factors could negatively impact on our financial results,
  with the result that we may not achieve profitability and our business may fail.

We Will Require Additional Financing And May Not Be Able
  To Continue Operations If Additional Financing Is Not Obtained

As of July 11, 2005, we had cash in the amount of approximately
  $800. Our total expenditures over the next twelve months are anticipated
  to be approximately $40,000, the majority of which is due to the development
  and marketing of our Website and general, legal, accounting and administrative
  expenses associated with our reporting obligations under the Exchange Act. Depending
  on the success of our initial marketing efforts, we estimate that we will require
  a further $50,000 to implement an advertising campaign to establish and
  enhance connections with potential candidates for supply agreements or representation
  agreements.

We presently do not have sufficient cash on hand to fund our
  proposed expenditures for the next twelve months, and will require additional
  financing to pursue our stated plan of operations. After the twelve month period,
  we will require additional financing for any operational expenses and to pursue
  our plan of operation. We have no agreements for additional financing and there
  can be no assurance that additional funding will be available to us on acceptable
  terms in order to enable us to complete our plan of operation.

Recognition Of The Website Is Essential To Growth Of The
  Water Business, If We Are Unsuccessful In Building Strong Recognition Of The
  Website, Then We May Not Be Able To Achieve Revenues

We believe that the successful marketing, development and
  promotion of the Website is critical to our success in attracting customers.
  Furthermore, we believe that the importance of customer awareness will increase
  as low barriers to entry encourage the proliferation of websites. If we are
  unsuccessful in building strong recognition of the Website, then we may not
  be able to achieve revenues.

We estimate that we will expend $20,000 over the next
  twelve months on the development and marketing of our Website. Our Website is
  intended to be marketed through various techniques including: search engine
  placement, opt-in newsletters, links, cross branding and banner ads. Supplier
  candidates are expected to be identified for each geographic region we have
  targeted. Depending on the success of our initial marketing efforts, we estimate
  that we will require a further $50,000 to implement an advertising campaign
  to establish and enhance connections with potential candidates for supply agreements
  or representation agreements. Candidates for supply or representation agreements
  are expected to be bottled water companies. Alliances are intended to be formed
  with local companies in the bottled industry in each area. A similar process
  is intended to be followed in each region as we expand.

The marketing and promotion efforts contemplated by us may
  not be successful in creating business awareness of the Website or in enabling
  us to achieve revenues.

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We Will Rely On Our Internet Service Provider For The Operation
  Of Our Business, If The Quality Of Products And Services Provided By Our Internet
  Service Provider Falls Below A Satisfactory Standard, Our Business Could Be
  Harmed

Our current state of technology involves utilizing commercially
  available licensed technology to operate our web portal, through Kekko Enterprises
  Inc., the host and monitor of our Website and our internet service provider.
  The hosting is run through a server called Hayasa Networks at www.hayasa.com.
  The server is co-located in Kelowna, British Columbia and connected to large
  local providers including SHAW BigPipe, TELUS Business Internet services and
  other smaller local providers in the area.

We depend on our internet service provider for the following:

|- | we do not own a gateway onto the internet, but instead
        rely on an internet service provider to connect the Website to the internet;
        and
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                        
|- | the Website depends on operating system, database,
        and server software that has been developed, produced by third parties.                     

We are not substantially dependent on any third party. We
  have no formal agreements with our internet service provider and do not anticipate
  any difficulty in locating another internet service provider in the event we
  experience any disruption in service. However, if we are unable to locate another
  internet service provider within a sufficient amount of time, or if the quality
  of products and services provided by such third parties falls below a satisfactory
  standard, our business could be harmed. A disruption in service, whether due
  to internal technical or external factors, could result in customer dissatisfaction
  and loss of credibility. Also, our loss of or inability to maintain or obtain
  upgrades to certain licensed technology could result in delays in developing
  our systems until equivalent technology could be identified or developed, and
  integrated.

We Depend On Recruiting And Retaining Qualified Personnel
  And The Inability To Do So Would Seriously Harm Our Business

Our success is dependent in part on the services of certain
  key management personnel, including Valentina Tuss, our President, and Geoffrey
  Last, our Secretary and Treasurer. We presently do not have any formal or written
  agreements with our key management personnel or any third parties providing
  services to us. The experience of these individuals is an important factor contributing
  to our success and growth and the loss of one or more of these individuals could
  have a material adverse effect on our company. Our future success also depends
  on our attracting, retaining and motivating highly skilled personnel and we
  may be unable to retain our key personnel or attract, assimilate or retain other
  highly qualified personnel in the future.

We may also experience difficulty in hiring and retaining
  highly skilled consultants with appropriate qualifications. Because of the technical
  nature of our products and services and the market in which we compete, our
  success depends on the continued services of our current executive officers
  and our ability to attract and retain qualified personnel in the information
  technology industry. Competition for qualified personnel in the information
  technology industry is intense. Even if we invest significant resources to recruit,
  train and retain qualified personnel, we may not be successful in our efforts.

Because Our President And Our Secretary And Treasurer Have
  Only Agreed To Provide Their Services On A Part-Time Basis, They May Not Be
  Able Or Willing To Devote A Sufficient Amount Of Time To Our Business Operations,
  Causing Our Business To Fail

Our directors and officers are employed on a full time basis
  by other companies. Because we are in the early stages of our business, Ms.
  Tuss, our President, and Mr. Last, our Secretary and Treasurer, are not expected
  to spend a significant amount of time on our business. Ms. Tuss and Mr. Last
  each expect to expend approximately 8-10 hours per week on our business. Competing
  demands on their time may lead to a divergence between their interests and the
  interests of other shareholders.

17

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A Disruption In Our Hosting Services, Whether Due To Internal
  Technical Or External Factors, Could Result In Customer Dissatisfaction And
  Loss Of Credibility

Substantially all of our communications software and hardware
  and computer hardware is expected to be hosted at a remote facility in Vancouver,
  British Columbia. The host’s systems are vulnerable to damage from earthquake,
  fire, floods, power loss, telecommunications failures, break-ins and similar
  events. Despite the host’s implementation of network security measures,
  its servers may also be vulnerable to computer viruses, physical or electronic
  break-ins, attempts by third parties deliberately to exceed the capacity of
  the hosts’ systems and similar disruptive problems. A disruption in service,
  whether due to internal technical or external factors, could result in customer
  dissatisfaction and loss of credibility. We do not have property and business
  interruption insurance to compensate for losses that may occur resulting from
  such problems.

We May Not Be Able To Protect Our Proprietary Rights, And
  Our Inability Or Failure To Do So Could Result In Loss Of Competitive And Commercial
  Advantages That We Hold

Our performance and ability to compete are dependent to a
  significant degree on our ability to protect and enforce our intellectual property
  rights. Presently our intellectual property consists of our domain name www.digitalecosystems.com and our trade name “Digital
  Ecosystems”.

We may not be able to protect our proprietary rights, and
  our inability or failure to do so could result in loss of competitive and commercial
  advantages that we hold. Additionally, we may choose to litigate to protect
  our intellectual property rights, which could result in a significant cost of
  resources and money. We cannot assure success in any such litigation that we
  might undertake.

Because We Are Significantly Smaller And Less Established
  Than A Majority Of Our Competitors, We May Lack The Financial Resources Necessary
  To Compete Effectively And Sustain Profitability

We operate in competitive, fragmented industries and
  compete for clients with a variety of larger and smaller companies that offer
  similar products and services. Many of these competitors are more established,
  offer more products, services and features, have a greater number of clients,
  locations, and employees, and also have significantly greater financial, technical,
  marketing, public relations, name recognition, and other resources than we have.
  While our objective is to continue to develop our Website, we currently or potentially
  compete with a variety of competitors involved in providing services via the
  internet. These competitors include:

http://www.culligan.com 
  http://www.pentawater.com 
  http://www.waternet.com 
  http://www.lakotawater.com 
  http://www.purewaterinc.com 
  http://www.bottledwaterweb.com 
  http://www.allwater.com

There are a number of web based water sites that offer similar
  content and services to us. They are, however, usually concerned with either
  contextual education such as current events related to the water industry, and
  or they sell only one particular product. We intend to aggregate a considerable
  line of products both in the bottled water sector and in the preparation of
  clean water with filters, reverse osmosis or desalination products.

Increased competition may result in the reduction in advertising
  fees, the reduction of use of the Website and the inability of our company to
  generate acceptance of the Website. Each of these factors would likely result
  in increased operating costs and the inability to generate revenues, any one
  of which could materially adversely affect our business, results of operations
  and financial condition. Many of our current and potential competitors have
  significantly greater financial, marketing, customer support, technical and
  other resources than us. As a result, such competitors may be able to attract
  potential users away from the Website, and they may be able to respond more
  quickly to changes in customer preferences or to devote greater resources to
  the development and promotion of their websites than we can.

18

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Because Our Stock Is A Penny Stock, Stockholders Will Be
  More Limited In Their Ability To Sell Their Stock

The shares of our common stock constitute “penny stocks”
  under the Exchange Act. The shares will remain classified as a penny stock for
  the foreseeable future. The classification as a penny stock makes it more difficult
  for a broker/dealer to sell the stock into a secondary market, which makes it
  more difficult for a purchaser to liquidate his or her investment. Any broker/dealer
  engaged by the purchaser for the purpose of selling his or her shares will be
  subject to rules 15g-1 through 15g-10 of the Exchange Act. Rather than having
  to comply with these rules, some broker-dealers will refuse to attempt to sell
  a penny stock.

The "penny stock" rules adopted by the SEC under the Exchange
  Act subjects the sale of the shares of our common stock to certain regulations
  which impose sales practice requirements on broker/dealers. For example, brokers/dealers
  selling such securities must, prior to effecting the transaction, provide their
  customers with a document that discloses the risks of investing in such securities.
  Included in this document are the following:

| | (i)   | the bid and offer price quotes in and for the "penny
        stock", and the number of shares to which the quoted prices apply;
| | ----- | -------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  | the brokerage firm's compensation for the trade;
        and                                                                   
|
| | (iii) | the compensation received by the brokerage firm's
        sales person for the trade.                                          

In addition, the brokerage firm must send the investor:

| | (i)  | a monthly account statement that gives an estimate
        of the value of each "penny stock" in the investor's account; and
| | ---- | ----------------------------------------------------------------------------------------------------------------------------
|
| | (ii) | a written statement of the investor's financial
        situation and investment goals.                                     

Legal remedies, which may be available to you as an investor in "penny stocks", are as follows:

| | (i)   | if "penny stock" is sold to you in violation of
        your rights listed above, or other federal or states securities laws,
        you may be able to cancel your purchase and get your money back.
| | ----- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|
| | (ii)  | if the stocks are sold in a fraudulent manner, you
        may be able to sue the persons and firms that caused the fraud for damages.                                                                
|
| | (iii) | if you have signed an arbitration agreement, however,
        you may have to pursue your claim through arbitration.                                                                                  

If the person purchasing the securities is someone other than
  an accredited investor or an established customer of the broker/dealer, the
  broker/dealer must also approve the potential customer's account by obtaining
  information concerning the customer's financial situation, investment experience
  and investment objectives. The broker/dealer must also make a determination
  whether the transaction is suitable for the customer and whether the customer
  has sufficient knowledge and experience in financial matters to be reasonably
  expected to be capable of evaluating the risk of transactions in such securities.
  Accordingly, the SEC's rules may limit the number of potential purchasers of
  the shares of our common stock.

19

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ITEM 7.              FINANCIAL
  STATEMENTS.

|Index to Financial Statements:                                      | Page                                                                                                                                 
|------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------
|                                                                    |                                                                                                                                      
|Audited financial statements as of March 31, 2005,
      including: |                                                                                                                                      
|                                                                    |                                                                                                                                      
|1.                                                                  | Report of Independent Registered Accounting
      Firm;                                                                              
|                                                                    |                                                                                                                                      
|2.                                                                  | Balance Sheets as of March 31, 2005 and
      2004;                                                                                  
|                                                                    |                                                                                                                                      
|3.                                                                  | Statements of Operations for the years
      ended March 31, 2005 and 2004 and cumulative from inception to March 31,
      2005;    
|                                                                    |                                                                                                                                      
|4.                                                                  | Statements of Cash Flows for the years
      ended March 31, 2005 and 2004 and cumulative from inception to March 31,
      2005; and
|                                                                    |                                                                                                                                      
|5.                                                                  | Statement of Stockholders’ Equity
      (Deficiency) from inception to March 31, 2005;                                               
|                                                                    |                                                                                                                                      
|6.                                                                  | Notes to the Financial Statements.                                                                                                   

20

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DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)



FINANCIAL STATEMENTS



MARCH 31, 2005 AND 2004





F-1

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of 
  Digital Ecosystems Corp. 
  (A Development Stage Company) 
  Las Vegas, Nevada

We have audited the accompanying Balance Sheets of Digital
  Ecosystems Corp. (a Development Stage Company) as of March 31, 2005 and 2004
  and the related Statements of Operations, Stockholders’ Equity (Deficiency)
  and Cash Flows for the years then ended and from February 21, 2002 (inception)
  to March 31, 2005. These financial statements are the responsibility of the
  Company’s management. Our responsibility is to express an opinion on these
  financial statements based on our audits.

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 audit to obtain reasonable assurance about
  whether the financial statements are free of material misstatement. The Company
  is not required to have, nor were we engaged to perform, an audit of its internal
  control over financial reporting. Our audit included consideration of internal
  control over financial reporting as a basis for designing audit procedures that
  are appropriate in the circumstances, but not for the purpose of expressing
  an opinion on the effectiveness of the Company’s internal control over
  financial reporting. Accordingly, we express no such opinion. An audit also
  includes examining, on a test basis, evidence supporting the amounts and disclosures
  in the financial statements, 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 of Digital
  Ecosystems Corp. (a Development Stage Company) as of March 31, 2005 and 2004,
  and the results of its operations and its cash flows for the years then ended
  and from February 21, 2002 (inception) to March 31, 2005, in conformity with
  accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming
  that Digital Ecosystems Corp. (a Development Stage Company) will continue as
  a going concern. As discussed in Note 1 to the financial statements, the Company’s
  losses from operations since inception raises substantial doubt as to the Company’s
  ability to continue as a going concern, unless the Company attains future profitable
  operations and/or obtains additional financing. These financial statements do
  not include any adjustments relating to the recoverability and classification
  of assets and liabilities that might result from the outcome of this uncertainty.

|                       | /s/ TELFORD SADOVNICK, P.L.L.C.
|---------------------- | -------------------------------
|                       |                                
|                       | CERTIFIED PUBLIC ACCOUNTANTS   
|                       |                                
|Bellingham, Washington |                                
|July 5, 2005           |                                

F-2

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

BALANCE SHEETS

|                                                       |   | MARCH 31 |  
|------------------------------------------------------ | - | -------- | -
|                                                       |   | 2005     |  
|                                                       |   |          |  
|ASSETS                                                 |   |          |  
|                                                       |   |          |  
|Current                                                |   |          |  
|Cash                                                   | $ | 4,014    |  
|Amounts
      receivable                               |   | -        |  
|                                                       |   |          |  
|                                                       | $ | 4,014    |  
|                                                       |   |          |  
|LIABILITIES                                            |   |          |  
|                                                       |   |          |  
|Current                                                |   |          |  
|Accounts
      payable and accrued liabilities         | $ | 26,932   |  
|Due
      to related party                             |   | 1,000    |  
|                                                       |   |          |  
|                                                       |   | 27,932   |  
|                                                       |   |          |  
|STOCKHOLDERS’ EQUITY (DEFICIENCY)                      |   |          |  
|                                                       |   |          |  
|Capital Stock                                          |   |          |  
|Authorized:                                            |   |          |  
|100,000,000 common voting stock with a par value of    |   |          |  
|$0.001 per share                                       |   |          |  
|100,000,000 preferred stock with a par value of $0.001 |   |          |  
|per share                                              |   |          |  
|                                                       |   |          |  
|Issued
      and outstanding                           |   |          |  
|9,120,000 common shares at March 31, 2005 and          |   |          |  
|8,120,000 common shares at March 31, 2004              |   | 9,120    |  
|                                                       |   |          |  
|Additional
      paid-in capital                       |   | 132,347  |  
|                                                       |   |          |  
|Deficit Accumulated During The Development Stage       |   | (165,385 | )
|                                                       |   |          |  
|                                                       |   | (23,918  | )
|                                                       |   |          |  
|                                                       | $ | 4,014    |  

The accompanying notes are an integral part of these financial
  statements

F-3

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

STATEMENTS OF OPERATIONS

|                                          |   |             |   |   |           |   |   | CUMULATIVE  |  
|----------------------------------------- | - | ----------- | - | - | --------- | - | - | ----------- | -
|                                          |   |             |   |   |           |   |   | PERIOD FROM |  
|                                          |   |             |   |   |           |   |   | FEBRUARY 21 |  
|                                          |   |             |   |   |           |   |   | 2002        |  
|                                          |   |             |   |   |           |   |   | (INCEPTION) |  
|                                          |   | YEARS ENDED |   |   | TO        |  
|                                          |   | MARCH 31    |   |   | MARCH 31  |  
|                                          |   | 2005        |   |   | 2004      |   |   | 2005        |  
|                                          |   |             |   |   |           |   |   |             |  
|Expenses                                  |   |             |   |   |           |   |   |             |  
|Professional
      fees                   | $ | 67,728      |   |   | 5,354     |   | $ | 77,605      |  
|Consulting
      – officers and directors |   | 24,000      |   | $ | 10,800    |   |   | 44,700      |  
|Consulting
      – website development    |   | 299         |   |   | 3,500     |   |   | 10,094      |  
|Consulting
      – Other                  |   | 6,446       |   |   | 16,500    |   |   | 22,946      |  
|Office
      and miscellaneous            |   | 8,150       |   |   | 2,889     |   |   | 12,345      |  
|Telephone                                 |   | 367         |   |   | 213       |   |   | 830         |  
|Foreign
      exchange                    |   | (3,386      | ) |   | (409      | ) |   | (3,815      | )
|Transfer
      agent                      |   | -           |   |   | 680       |   |   | 680         |  
|                                          |   |             |   |   |           |   |   |             |  
|Net Loss For The Period                   | $ | (103,604    | ) | $ | (39,527   | ) | $ | (165,385    | )
|                                          |   |             |   |   |           |   |   |             |  
|                                          |   |             |   |   |           |   |   |             |  
|Net Loss Per Share– Basic                 | $ | (0.00       | ) | $ | (0.00     | ) |   |             |  
|                                          |   |             |   |   |           |   |   |             |  
|Weighted Average Number Of Shares         |   |             |   |   |           |   |   |             |  
|Outstanding                               |   | 8,985,753   |   |   | 7,119,014 |   |   |             |  

The accompanying notes are an integral part of these financial
  statements

F-4

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

STATEMENTS OF CASH FLOWS

|                                               |   |             |   |   |          |   |   | CUMULATIVE  |  
|---------------------------------------------- | - | ----------- | - | - | -------- | - | - | ----------- | -
|                                               |   |             |   |   |          |   |   | PERIOD FROM |  
|                                               |   |             |   |   |          |   |   | FEBRUARY 21 |  
|                                               |   |             |   |   |          |   |   | 2002        |  
|                                               |   |             |   |   |          |   |   | (INCEPTION) |  
|                                               |   | YEARS ENDED |   |   | TO       |  
|                                               |   | MARCH 31    |   |   | MARCH 31 |  
|                                               |   | 2005        |   |   | 2004     |   |   | 2005        |  
|                                               |   |             |   |   |          |   |   |             |  
|Cash Flows (Used in) Development Activities    |   |             |   |   |          |   |   |             |  
|Net
      loss for the period                  | $ | (103,604    | ) | $ | (39,527  | ) | $ | (165,385    | )
|Item
      not involving cash:                 |   |             |   |   |          |   |   |             |  
|Non-cash services from officers and            |   |             |   |   |          |   |   |             |  
|directors                                      |   | 24,000      |   |   | 10,800   |   |   | 44,700      |  
|                                               |   |             |   |   |          |   |   |             |  
|                                               |   | (79,604     | ) |   | (28,727  | ) |   | (120,685    | )
|Changes in non-cash operating working          |   |             |   |   |          |   |   |             |  
|capital
      items:                           |   |             |   |   |          |   |   |             |  
|Decrease
      in amounts receivable           |   | 1,134       |   |   | 1,354    |   |   | -           |  
|Advances
      from related party              |   | -           |   |   | 1,000    |   |   | 1,000       |  
|Increase
      in accounts payable and accrued |   |             |   |   |          |   |   |             |  
|liabilities                                    |   | 22,932      |   |   | 4,000    |   |   | 26,932      |  
|                                               |   |             |   |   |          |   |   |             |  
|                                               |   | (55,538     | ) |   | (22,373  | ) |   | (92,753     | )
|                                               |   |             |   |   |          |   |   |             |  
|Cash Flows From Financing Activity             |   |             |   |   |          |   |   |             |  
|Proceeds from issuance of common
      stock   |   | 37,569      |   |   | 21,498   |   |   | 96,767      |  
|                                               |   |             |   |   |          |   |   |             |  
|Net Increase (Decrease) In Cash                |   | (17,969     | ) |   | (875     | ) |   | 4,014       |  
|                                               |   |             |   |   |          |   |   |             |  
|Cash, Beginning Of Period                      |   | 21,983      |   |   | 22,858   |   |   | -           |  
|                                               |   |             |   |   |          |   |   |             |  
|Cash, End Of Period                            | $ | 4,014       |   | $ | 21,983   |   | $ | 4,014       |  

The accompanying notes are an integral part of these financial
  statements

F-5

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

STATEMENT OF STOCKHOLDERS’ EQUITY (DEFICIENCY)

PERIOD FROM FEBRUARY 21, 2002 (INCEPTION) TO MARCH 31, 2005

|                        |           |  |   |        |  |   |            |  |   |               |   |   | DEFICIT     |   |   |          |  
|----------------------- | --------- |  | - | ------ |  | - | ---------- |  | - | ------------- | - | - | ----------- | - | - | -------- | -
|                        |           |  |   |        |  |   |            |  |   |               |   |   | ACCUMULATED |   |   |          |  
|                        | NUMBER    |  |   |        |  |   | ADDITIONAL |  |   | STOCK         |   |   | DURING THE  |   |   |          |  
|                        | OF        |  |   |        |  |   | PAID-IN    |  |   | SUBSCRIPTIONS |   |   | DEVELOPMENT |   |   |          |  
|                        | SHARES    |  |   | AMOUNT |  |   | CAPITAL    |  |   | RECEIVED      |   |   | STAGE       |   |   | TOTAL    |  
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Common stock issued     |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|for cash at $0.001 per  |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|share                   | 1,500,000 |  | $ | 1,500  |  | $ | -          |  | $ | -             |   | $ | -           |   | $ | 1,500    |  
|Net loss for the period | -         |  |   | -      |  |   | -          |  |   | -             |   |   | (1,770      | ) |   | (1,770   | )
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Balance, March 31, 2002 | 1,500,000 |  |   | 1,500  |  |   | -          |  |   | -             |   |   | (1,770      | ) |   | (270     | )
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Common stock issued     |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|for cash at $0.001 per  |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|share                   | 5,000,000 |  |   | 5,000  |  |   | -          |  |   | -             |   |   | -           |   |   | 5,000    |  
|Cash received for stock |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|subscriptions           | -         |  |   | -      |  |   | -          |  |   | 31,200        |   |   | -           |   |   | 31,200   |  
|Non-cash services from  |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|officers and directors  | -         |  |   | -      |  |   | 9,900      |  |   | -             |   |   | -           |   |   | 9,900    |  
|Net loss for the year   | -         |  |   | -      |  |   | -          |  |   | -             |   |   | (20,484     | ) |   | (20,484  | )
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Balance, March 31, 2003 | 6,500,000 |  |   | 6,500  |  |   | 9,900      |  |   | 31,200        |   |   | (22,254     | ) |   | 25,346   |  
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Common stock issued     |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|for cash for various    |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|prices from $0.003 to   |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|$0.004 per share        | 1,620,000 |  |   | 1,620  |  |   | 51,078     |  |   | (31,200       | ) |   | -           |   |   | 21,498   |  
|Non-cash services from  |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|officers and directors  | -         |  |   | -      |  |   | 10,800     |  |   | -             |   |   | -           |   |   | 10,800   |  
|Net loss for the year   | -         |  |   | -      |  |   | -          |  |   | -             |   |   | (39,527     | ) |   | (39,527  | )
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Balance, March 31, 2004 | 8,120,000 |  |   | 8,120  |  |   | 71,778     |  |   | -             |   |   | (61,781     | ) |   | 18,117   |  
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Common stock issued     |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|for cash at $0.037569   | 1,000,000 |  |   | 1,000  |  |   | 36,569     |  |   | -             |   |   | -           |   |   | 37,569   |  
|Non-cash services from  |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|officers and directors  | -         |  |   | -      |  |   | 24,000     |  |   | -             |   |   | -           |   |   | 24,000   |  
|Net loss for the year   | -         |  |   | -      |  |   | -          |  |   | -             |   |   | (103,604    | ) |   | (103,604 | )
|                        |           |  |   |        |  |   |            |  |   |               |   |   |             |   |   |          |  
|Balance, March 31, 2005 | 9,120,000 |  | $ | 9,120  |  | $ | 132,347    |  | $ | -             |   | $ | (165,385    | ) | $ | (23,918  | )

The accompanying notes are an integral part of these financial
  statements

F-6

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

1.          ORGANIZATION AND
  BASIS OF PRESENTATION

Organization

Digital Ecosystems Corp. (the “Company”),
  a development stage company, was incorporated in Nevada on February 21, 2002.

The Company is engaged in the business
  to provide both clean and pure bottled and bulk drinking water through various
  distribution methods, and to provide the various technologies that make water
  purification possible, available to the consumer.

Basis of Presentation

The accompanying financial statements
  have been presented on the basis that it is a going concern, which contemplates
  the realization of assets and the satisfaction of liabilities in the normal
  course of business. As of March 31, 2005, the Company had $4,014 in cash,
  negative working capital of $23,918, and accumulated net losses of $165,385
  since inception. The financial statements do not include any adjustments relating
  to the recoverability and classification of recorded asset amounts or the amounts
  and classification of liabilities that might be necessary should the Company
  be unable to continue as a going concern. The Company does not have sufficient
  cash on hand to fund its proposed expenditures for the next twelve months and
  will require additional funding. These factors raise substantial doubts that
  the Company will be able to continue as a going concern. Its continuation as
  a going concern is dependent upon its ability to generate sufficient cash flow
  to meet its obligations on a timely basis, to obtain additional financing or
  refinancing as may be required, to develop commercially viable products and
  processes, and ultimately to establish successful operations. The Company anticipates
  covering its costs by operating revenues and additional equity financing. If
  the Company is unable to complete its financing requirements or achieve revenue
  as projected, it will then modify its expenditures and plan of operations to
  coincide with the actual financing completed and actual operating revenues.

The Company is not currently earning
  any revenues.

F-7

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

2.          SUMMARY OF SIGNIFICANT
  ACCOUNTING POLICIES

Estimates

The preparation of the financial statements
  in conformity with United States generally accepted accounting principles requires
  management to make estimates and assumptions that affect the reported amounts
  of assets and liabilities, and disclosure of contingent assets and liabilities
  as of the date of the balance sheet, and revenues and expenses for the reporting
  period. Actual results in future periods could be different from these estimates
  made.

Start Up and Development Costs

Since inception, certain expenditures
  have been incurred primarily for product development, business development,
  market development and financing purposes. While these expenditures are intended
  to benefit future periods, the Company follows the accounting policy of expensing,
  as incurred, those expenditures not identified with specific projects or financing
  activities.

Financial Instruments

The Company’s financial instruments
  consist of cash, amounts receivable, accounts payable and accrued liabilities
  and due to related party. The carrying value of these financial instruments
  approximate their fair value due to their liquidity or their short-term nature.

Cash

Cash consists of cash on deposit with
  a bank. The Company places its cash with a high quality financial institution
  and, to date, has not experienced losses on any of its balances.

Comprehensive Income (Loss)

SFAS No. 130 establishes standards
  for reporting comprehensive income (loss) and its components in financial statements.
  Comprehensive loss, as defined, includes all changes in equity (net assets)
  during a period from non-owner sources. To date, the Company has not had any
  significant transactions that are required to be reported in other comprehensive
  income (loss).

F-8

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

2.          SUMMARY OF SIGNIFICANT
  ACCOUNTING POLICIES (Continued)

Foreign Currency Translation

For the Company’s international
  operations, local currencies are considered their functional currencies. The
  Company translates assets and liabilities to their U.S. dollar equivalents at
  rates in effect at the balance sheet date, and revenue and expenses are translated
  at average monthly exchange rates. Translation adjustments resulting from this
  process are recorded in stockholders’ equity as a component of accumulated
  other comprehensive income. The amount was not material from inception to 2005.

Transaction gains and losses that arise
  from exchange rate fluctuations on transactions denominated in a currency other
  than the local functional currency are in the statement of operations.

Net Income (Loss) Per Share

Statements of Financial Accounting
  Standards No. 128 – “Earnings Per Share”, requires dual presentation
  of basic earnings per share (“EPS”) and diluted EPS on the face
  of all income and loss statements, for all entities with complex capital structures.
  Basic EPS is computed as net income divided by the weighted average number of
  common shares outstanding for the period. Diluted EPS reflects the potential
  dilution that could occur from common shares issuable through stock options,
  warrants and other convertible securities. At March 31, 2005 and 2004, the Company
  had no outstanding stock options, warrants and other convertible securities;
  accordingly, only basic EPS is presented.

Revenue Recognition

The Company is not currently earning
  any revenue. The Company expects to earn its revenue by (i) re-selling private
  labels; (ii) advertising by other businesses on the Company’s website;
  and (iii) sale of third party products originating from the website. Revenues
  are recognized once they are earned, specifically when: (a) services are provided
  or products are delivered to customers; (b) clear proof that an arrangement
  exists; (c) amounts are fixed or can be determined and; (d) the Company’s
  ability to collect is reasonably assured.

In particular, the Company will recognize:

| |  | i)   | sales of private labels upon title transfer on shipment;                                                                  
| |  | ---- | --------------------------------------------------------------------------------------------------------------------------
| |  | ii)  | advertising revenue straight-line over the term
        of the advertising term;                                          
| |  | iii) | commission revenue on a net basis as the Company
        acts as the broker for the products originating from the website.

F-9

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

2.          SUMMARY OF SIGNIFICANT
  ACCOUNTING POLICIES (Continued)

Advertising Expenses

Advertising costs are expensed as incurred.
  No advertising expense was incurred from inception to 2005.

Website Development Costs

Pursuant to Emerging Issues Task Force
  No. 00-2 – “Website Development Costs” (“EITF 00-2”),
  the Company applies American Institute of Certified Public Accountants Statement
  of Position No. 98-1 to account for website development costs. In accordance
  with EITF 00-2, the Company expenses all costs incurred during the preliminary
  project stage and capitalizes all internal and external direct costs of materials
  and services consumed in developing the software, once the development has reached
  the application development stage. Application development stage costs are amortized
  over their estimated useful life. All costs incurred for upgrades, maintenance
  and enhancements, including the cost of website content, that does not result
  in additional functionality, are expensed as incurred.

Income Taxes

Income taxes are accounted for under
  the asset and liability method. 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, operating loss and tax credit carryforwards. 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 in income in the period that includes the
  enactment date. To the extent that it is not considered to be more likely than
  not that a deferred tax asset will be realized, a valuation allowance is provided.

Segmented Information

The Company follows FAS No. 131 disclosures
  about segments of an enterprise and related information about operating segments
  in financial statements, as well as additional disclosures about products and
  services, geographic areas and major customers.

The Company conducts substantially
  all of its operations in Canada in one business segment.

F-10

---

DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

|3. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   | a)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   | b)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|4. | CAPITAL STOCK
      From inception on February 21, 2002 to March 31, 2002,
        the Company issued 1,500,000 common shares at $0.001 per share in
        exchange for cash proceeds of $1,500.
      During the year ended March 31, 2003, the Company issued
        5,000,000 common shares at $0.001 per share, in exchange for cash
        proceeds of $5,000. It also received $31,200 for stock subscriptions
        for shares issued the following year.
      During the year ended March 31, 2004, the Company issued
        1,620,000 common shares in exchange for cash proceeds of $52,698 including
        the $31,200 received for share subscriptions in 2003. The shares were
        issued for various prices from $0.003 to $0.004 per share.
      During the year ended March 31, 2005, the Company issued
        1,000,000 common shares in exchange for cash proceeds of $37,569.
        Shares were issued at a price of $0.037569 per share.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|5. | INCOME TAXES
      No provision for income taxes has been made for the period as the Company
        incurred net losses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       

F-11

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DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

|5. | INCOME TAXES (Continued)                                                                                                                                                                                                                                                       
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                
|a) | Income tax provision
      The provision for income taxes differs from the result
        which would be obtained by applying the statutory income tax rate of 34%
        (2004 – 34%) to income before income taxes. The difference results
        from the following items:

|   |                                                                                          |   | 2005    |   |   | 2004   |  
|-- | ---------------------------------------------------------------------------------------- | - | ------- | - | - | ------ | -
|   |                                                                                          |   |         |   |   |        |  
|   | Computed expected (benefit of) income taxes                                              | $ | (27,066 | ) | $ | (9,767 | )
|   |                                                                                          |   |         |   |   |        |  
|   | Increase in valuation allowance                                                          |   | 27,066  |   |   | 9,767  |  
|   |                                                                                          |   |         |   |   |        |  
|   |                                                                                          | $ | -       |   | $ | -      |  
|   |                                                                                          |   |         |   |   |        |  
|b) | Significant components of the Company’s
      deferred income tax assets are as follows:

| |                                               |   | 2005    |   |   | 2004    |  
| | --------------------------------------------- | - | ------- | - | - | ------- | -
| |                                               |   |         |   |   |         |  
| | Total income tax operating loss carry forward | $ | 120,685 |   | $ | 41,081  |  
| |                                               |   |         |   |   |         |  
| | Statutory tax rate                            |   | 34%     |   |   | 34%     |  
| |                                               |   |         |   |   |         |  
| | Deferred income tax asset                     |   | 41,033  |   |   | 13,967  |  
| |                                               |   |         |   |   |         |  
| | Valuation allowance                           |   | (41,033 | ) |   | (13,967 | )
| |                                               |   |         |   |   |         |  
| |                                               | $ | -       |   | $ | -       |  

|c) | The Company has incurred operating losses and approximately
        $120,685, which, if unutilized, will expire through to 2025. Future
        tax benefits, which may arise as a result of these losses, have not been
        recognized in these financial statements, and have been offset by a valuation
        allowance. The following table lists the fiscal year in which the loss
        was incurred and the expiration date of the operating loss carry forwards:
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

| |                                       |   | Income Tax Operating Loss Carry
| | ------------------------------------- | - | -------------------------------
| |                                       |   | Forward                        
| |                                       |   | Amount                         
| |                                       |   |                                
| | 2002                                  | $ | 1,770                          
| | 2003                                  |   | 10,584                         
| | 2004                                  |   | 28,727                         
| | 2005                                  |   | 79,604                         
| |                                       |   |                                
| |                                       |   |                                
| | Total income tax operating loss carry |   |                                
| | forward                               | $ | 120,685                        

F-12

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DIGITAL ECOSYSTEMS CORP.(A Development Stage Company)

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2005 AND 2004

|5. | INCOME TAXES (Continued)
      Utilization of the Company’s net operating loss
        carryforwards may be subject to a substantial annual limitation due to
        ownership change limitations provided by the Internal Revenue Code of
        1986 and similar state provisions. The annual limitation may result in
        the expiration of net operating losses before utilization.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|6. | RECENT ACCOUNTING PRONOUNCEMENTS
      a) In November 2004, the FASB issued Statement 151 –
        “Inventory Costs”. This Statement amends the guidance in ARB
        No. 43, Chapter 4 – “Inventory Pricing”, to clarify
        the accounting for abnormal amounts of idle facility expense, freight,
        handling costs, and wasted material (spoilage). Statement 151 requires
        that those items be recognized as current period charges regardless of
        whether they meet the criterion of “so abnormal”. In addition,
        this Statement requires that allocation of fixed production overheads
        to the costs of conversion be based on the normal capacity of the production
        facilities. Statement 151 is effective for inventory costs incurred during
        fiscal years beginning after June 15, 2005, with earlier application permitted
        in certain circumstances. Adopting the new standard is not expected to
        have a significant impact on the Company’s financial statements.
      b) In December 2004, FASB issued Statement of Financial
        Accounting Standards No. 153 (“SFAS 153”), “Exchanges
        of Non-monetary Assets – an amendment of APB Opinion No. 29”.
        The Company has determined that the adoption of SFAS 153 does not have
        an impact on its results of operations or financial position.
      c) In December 2004, FASB issued Statement of Financial
        Accounting Standards No. 123 (revised 2004) (“SFAS 123”),
        “Share-Based Payment”. The Statement establishes fair value
        as the measurement objective in accounting for share-based payment arrangements
        and requires all entities to apply a fair-value-based measurement in accounting
        for share-based payment transactions with employees. The provisions of
        this Statement will be effective for the Company beginning January 1,
        2007.
      Management does not believe that any other recently issued,
        but not yet effective, accounting standards, if currently adopted, could
        have a material effect on the accompanying financial statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|7. | COMMITMENTS AND CONTRACTUAL OBLIGATIONS
      The Company has no significant commitments or contractual
        obligations with any parties respecting executive compensation, consulting
        arrangements or other matters. Rental of premises is on a month-to-month
        basis.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

F-13

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

None.

ITEM 8A.            CONTROLS
  AND PROCEDURES.

|(A) | Evaluation Of Disclosure Controls And Procedures                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|    | As of the end of the period covered by this report,
        we carried out an evaluation, under the supervision and with the participation
        of our principal executive officer and principal financial officer, of
        the effectiveness of the design and operation of our disclosure controls
        and procedures. Our disclosure controls and procedures are designed to
        provide a reasonable level of assurance that our disclosure control objectives
        are achieved. Our principal executive officer and principal financial
        officer have concluded that our disclosure controls and procedures are,
        in fact, effective at providing this reasonable level of assurance as
        of the period covered.
|   
|(B) | Changes In Internal Controls Over Financial Reporting                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|    | In connection with the evaluation of our internal
        controls during our last fiscal quarter, our principal executive officer
        and principal financial officer has determined that there are no changes
        to our internal controls over financial reporting that has materially
        affected, or is reasonably likely to materially effect, our internal controls
        over financial reporting.                                                                                                                                                                                                                                                                                                                                  

ITEM 8B.            OTHER
  INFORMATION.

None.

21

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PART III

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

The following information sets forth the names of our officers
  and directors, their present positions with our company, and their biographical
  information.

|Name of Director | Age | Position                                                  
|---------------- | --- | ----------------------------------------------------------
|                 |     |                                                           
|Valentina Tuss   | 63  | President ,Chief Executive Officer and Director           
|                 |     |                                                           
|Geoffrey O. Last | 40  | Secretary, Treasurer, Chief Financial Officer and Director

Set forth below is a brief description of the background and
  business experience of each of our executive officers and directors for the
  past five years:

Valentina Tuss,is our President, Chief Executive Officer
  and a director and has served in those capacities since our inception on February
  21, 2002. From August 1997 to present, Ms. Tuss was an independent marketing
  executive with INC 500 Corporation – Melaleuca Inc., promoting the company’s
  products and signing new customers for the company. Also, from 2000 to present,
  Ms. Tuss has acted as an advisor to LFI Ltd., a Taiwanese organization engaged
  in promoting trade and commerce between Canada and Taiwan, inclusive of sourcing
  out investment opportunities both in North America and South East Asia.

Ms. Tuss’s experience includes working with government
  officials in the strategic planning and development of Western Canada as a tourist
  destination to offshore markets. She has developed programs to market wilderness
  and adventure to markets in Japan and Germany. Her interest in the environment
  has led her to develop Digital Ecosystems.

Ms. Tuss has developed a network of international business
  contacts as a direct result of global travel in locations including, Australia,
  the U.K., Continental Europe, the Caribbean, Canada and the U.S.A. Ms. Tuss
  has handled public relations and media for high profile individuals and created
  tours that generate interest in the sensitivity of various ecosystems. Ms. Tuss
  obtained a marketing diploma from the University of British Columbia in 1988.

Geoffrey O. Last, Mr. Last is our Secretary, Treasurer
  a director and has served in those capacities since February 21, 2002. Mr. Last
  has been active in corporate finance and capital development for several years.
  From September 2001 to present, Mr. Last has been involved in coordinating bridge
  financing, corporate development and stockholder communications for Internet
  Studios-Venture Capital. Also since 1991, Mr. Last has served as president of
  Last Motorcar Company. As president of the Last Motorcar Company, his leadership
  resulted in annual sales of $2 million to $5 million from inception.

From February 1992 to September 1999 Mr. Last worked as a
  private consultant responsible for the activation of mergers and acquisitions
  for Triumph Foods International and for the distribution strategy for Amesco
  – Americas Coffee Corporation that developed $3 million to $5
  million in annual sales. Mr. Last’s contribution to our company will primarily
  be in business and corporate development.

Committees of the Board Of Directors

We presently do not have an audit committee, compensation
  committee, nominating committee, an executive committee of our board of directors,
  stock plan committee or any other committees. However, our board of directors
  will consider establishing various committees during the current fiscal year.

Audit Committee Financial Expert

We have no financial expert. We believe the cost related to
  retaining a financial expert at this time is prohibitive.

Terms of Office

Our directors are appointed for one-year terms to hold office
  until the next annual general meeting of the holders of our Common Stock or
  until removed from office in accordance with our by-laws. Our officers are appointed
  by our board of directors and hold office until removed by our board of directors.

22

---

Code of Ethics

We adopted a Code of Ethics applicable to our Chief Executive
  Officer, Chief Financial Officer, Corporate Controller and certain other finance
  executives, which is a "code of ethics" as defined by applicable rules of the
  SEC. Our Code of Ethics is attached as an exhibit to this Annual Report on Form
  10-KSB for the year ended March 31, 2005. If we make any amendments to our Code
  of Ethics other than technical, administrative, or other non-substantive amendments,
  or grant any waivers, including implicit waivers, from a provision of our Code
  of Ethics to our chief executive officer, chief financial officer, or certain
  other finance executives, we will disclose the nature of the amendment or waiver,
  its effective date and to whom it applies in a Current Report on Form 8-K filed
  with the SEC.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Exchange Act requires our executive officers
  and directors and persons who own more than 10% of a registered class of our
  securities (“Reporting Persons”) to file reports of ownership and
  changes in ownership with the SEC. Reporting Persons are required by SEC regulations
  to furnish us with copies of all forms they file pursuant to Section 16(a).
  Based solely on our review of such reports received by the Company, and written
  representations from certain Reporting Persons that no other reports were required
  for those persons, we believe that during the year ended March 31, 2005, all
  Reporting Persons complied with all Section 16(a) filing requirements applicable
  to them.

ITEM 10.             EXECUTIVE
  COMPENSATION.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth certain compensation information
  as to the following individuals (our “named executive officers”)
  for the three most recently completed fiscal years ended March 31, 2005, 2004
  and 2003:

| | (a) | our chief executive officer and chief financial
        officer; and
| | --- | --------------------------------------------------------------------
|
| | (b) | our most highly compensated executive officer.                      

No other compensation was paid to our named executive officers
  other than the compensation set forth below.

|SUMMARY COMPENSATION TABLE
|--------------------------
|                          
|Name                      
|Restricted Stock Awarded  
|Valentina Tuss            
|Geoffrey Last             

STOCK OPTION GRANTS

We did not grant any stock options to our executive officers
  or directors during our most recent fiscal year ended March 31, 2005. We also
  have not granted any stock options to our executive officers or directors

23

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since March 31, 2005. In addition, as of March 31, 2005, no
  retirement, pension or insurance programs or other similar programs have been
  adopted by us for the benefit of our employees.

EXERCISES OF STOCK OPTIONS AND YEAR-END OPTION VALUES

No stock options were exercised by our executive officers
  or directors during the financial year ended March 31, 2005 and no stock options
  have been exercised since March 31, 2005.

LONG-TERM INCENTIVE PLANS

We do not have any long-term incentive plans, pension plans,
  or similar compensatory plans for our directors or executive officers.

COMPENSATION OF DIRECTORS

We presently do not pay our directors and officers any salary
  or consulting fee. We anticipate that compensation may be paid to directors
  and officers in the event that we generate revenues from sales commissions and
  advertising or that the revenues generated will exceed the operating costs of
  the Water Business.

EMPLOYMENT CONTRACTS

We do not have employment contracts with any of our executive
  officers or directors. We also do not have any termination of employment or
  change-in-control arrangements with any of our executive officers or directors.

24

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|ITEM 11. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
        AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.
|-------- | -------------------------------------------------------------------------------------------------------

The following table sets forth certain information concerning
  the number of shares of our common stock owned beneficially as of July 1, 2005
  by: (i) each person (including any group) known to us to own more than five
  percent (5%) of any class of our voting securities, (ii) each of our directors,
  and (iii) officers and directors as a group. Unless otherwise indicated, the
  shareholders listed possess sole voting and investment power with respect to
  the shares shown.

|Title of Class | Name and Address of Beneficial Owner                                                                                                | Amount and Nature of Beneficial Ownership | Percentage of Common Stock(1)
|-------------- | ----------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------- | -----------------------------
|Common Stock   | Valentina Tuss   President and Chief
      Executive Officer   105 – 5158 48thAvenue 
       Delta, BC, Canada V4K 5B6              | 6,500,000 Direct                          | 71.3%                        
|Common Stock   | Geoffrey O. Last   Secretary, Treasurer
      and Chief Financial Officer   1245 Homer Street   Vancouver,
      BC, Canada V6B 2Y9 | NIL                                       | N/A                          
|Common Stock   | All Officers and Directors   as a Group
      (2 persons)                                                                           | 6,500,000                                 | 71.3%                        

|(1) | Applicable percentage of ownership is based on 9,120,000
        shares of common stock issued and outstanding as of July 1, 2005, together
        with securities exercisable or convertible into shares of common stock
        within 60 days of July 1, 2005 for each stockholder. Beneficial ownership
        is determined in accordance with the rules of the SEC and generally includes
        voting or investment power with respect to securities. Shares of common
        stock subject to securities exercisable or convertible into shares of
        common stock that are currently exercisable or exercisable within 60 days
        of July 1, 2005 are deemed to be beneficially owned by the person holding
        such options for the purpose of computing the percentage of ownership
        of such person, but are not treated as outstanding for the purpose of
        computing the percentage ownership of any other person.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Security Ownership of Management

We are not aware of any arrangement that might result in a
  change in control in the future.

25

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|EQUITY COMPENSATION PLAN INFORMATION AS AT MARCH 31, 2005           
|--------------------------------------------------------------------
|Plan Category                                                       
|Equity Compensation Plans   approved
      by security holders      
|Equity Compensation Plans   not approved
      by security   holders
|Total                                                               

ITEM 12.             CERTAIN
  RELATIONSHIPS AND RELATED TRANSACTIONS.

Except as disclosed below, none of the following parties has,
  during the last two years, had any material interest, direct or indirect, in
  any transaction with us or in any presently proposed transaction that has or
  will materially affect us:

| | • | Any of our directors or officers;                                                                                                                                               
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | • | Any person proposed as a nominee for election as
        a director;                                                                                                            
| | • | Any person who beneficially owns, directly or indirectly,
        shares carrying more than 10% of the voting rights attached to our outstanding
        shares of common stock;
| | • | Any of our promoters; and                                                                                                                                                       
| | • | Any relative or spouse of any of the foregoing persons
        who has the same house as such person.                                                                           

We issued 6,500,000 shares of common stock on August 1, 2002
  to Ms. Valentina Tuss at a price of $0.001 per share, for total proceeds
  of $6,500. Ms. Tuss is a director and our president and chief executive
  officer. These shares were issued pursuant to Section 4(2) of the Securities
  Act. The 6,500,000 shares of common stock are restricted shares as defined in
  the Securities Act. This issuance was made to Ms. Tuss who is a sophisticated
  individual and, by way of her position as president of our company, is in a
  position of access to relevant and material information regarding our operations.

We have been provided with non-cash services from our two
  directors. Accordingly, consulting services have been recorded in the accompanying
  financial statements at a value of $44,700 from inception to March 31, 2005,
  and our additional paid-in capital has been increased by the corresponding amount.
  The value of the consulting services has been calculated by establishing the
  fair value of the hourly rate, times the estimated total hours spent by the
  directors. No monetary amount will be paid or exchanged for these services.

26

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ITEM 13.             EXHIBITS.

The following exhibits are either provided with this Annual
  Report or are incorporated herein by reference:

|Exhibit |                                                                                                                                                                       
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  | Description of Exhibits                                                                                                                                               
|3.1     | Articles of Incorporation.(1)                                                                                                                                         
|3.2     | Bylaws, as amended.(1)                                                                                                                                                
|4.1     | Form of Share Certificate.(1)                                                                                                                                         
|14.1    | Code
        of Ethics.                                                                                                                                               
|31.1    | Certification
        of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.                                               
|31.2    | Certification
        of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley
        Act of 2002.                                               
|32.1    | Certification
        of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|32.2    | Certification
        of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as
        adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

|(1) | Filed with the SEC as an exhibit to our registration
        statement on Form SB-2 originally filed on September 16, 2004, as amended.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------

ITEM 14.             PRINCIPAL
  ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed and/or accrued for the two most
  recently completed fiscal years ended March 31, 2005 and March 31, 2004 for
  professional services rendered by the principal accountant for the audit of
  our annual financial statements and review of the financial statements included
  our Quarterly Reports on Form 10-QSB and services that are normally provided
  by the accountant in connection with statutory and regulatory filings or engagements
  for these fiscal periods were as follows:

|                   | Year Ended March 31, 2005 | Year Ended March 31, 2004
|------------------ | ------------------------- | -------------------------
|Audit Related Fees | $5,000                    | $8,500                   
|Tax Fees           | -                         | $850                     
|All Other Fees     | -                         | $7,650                   
|Total              | $5,000                    | $17,000                  

27

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SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act,
  the registrant caused this report to be signed on its behalf by the undersigned,
  thereunto duly authorized.

| | DIGITAL ECOSYSTEMS CORP.
| | ------------------------
| |                         
| |                         
| | By:                     
| |                         
| |                         
| |                         
| |                         
| |                         
| | Date:                   

In accordance with the Exchange Act, this report has been
  signed below by the following persons on behalf of the registrant and in the
  capacities and on the dates indicated.

| | By:   | /s/ Valentina
      Tuss                        
| | ----- | ------------------------------------------------
| |       | VALENTINA TUSS                                  
| |       | President and Chief Executive Officer           
| |       | Director                                        
| |       | (Principal Executive Officer)                   
| |       |                                                 
| | Date: | July 11, 2005                                   
| |       |                                                 
| |       |                                                 
| |       |                                                 
| |       |                                                 
| | By:   | /s/ Geoffrey
      O. Last                      
| |       | GEOFFREY O. LAST                                
| |       | Secretary, Treasurer and Chief Financial Officer
| |       | Director                                        
| |       | (Principal Accounting Officer)                  
| |       |                                                 
| | Date: | July 11, 2005                                   

---