================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

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

                                  FORM 10-KSB/A


(X)  ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE ACT
     --------------------------------------------------------------------------
     OF 1934
     -------

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004    COMMISSION FILE NUMBER: 00031395
-------------------------------------------    --------------------------------


                                  VILLAGEEDOCS
                 (Name of Small Business Issuer in its Charter)
                 ----------------------------------------------

                 CALIFORNIA                                   33-0668917
------------------------------------------              ----------------------
      (State or other jurisdiction of                      (I.R.S. Employer
       incorporation or organization)                     Identification No.)

14471 CHAMBERS ROAD, SUITE 105, TUSTIN, CA                       92780
------------------------------------------              ----------------------
 (Address of principal executive offices)                     (Zip Code)

                Issuer's Telephone Number:              (714) 734-1030

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

                                                        Name of each exchange
      Title of each class                               on which registered
      -------------------                               -------------------
      NONE                                              N/A

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

                           COMMON STOCK, NO PAR VALUE
                           --------------------------
                              (Title of each class)

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(X)     NO( )

Check if disclosure of delinquent filers in response to Item 405 of Regulation
S-B is not contained herein, and will not be contained, to the best of issuer's
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.
(X)


Indicate by a check mark whether the issuer is a shell company. YES ( )   NO (X)


State issuer's revenues for its most recent fiscal year: $6,014,269

State the aggregate market value of the voting stock held by non-affiliates of
the issuer: $1,065,053 AS OF FEBRUARY 28, 2005.

Number of shares of the issuer's common stock, no par value, outstanding as of
February 28, 2005: 76,369,213 SHARES.

DOCUMENTS INCORPORATED BY REFERENCE: None.

Transitional Small Business Disclosure Format YES ( )    NO (X)


Indicate by check mark whether the Issuer is an accelerated filer (as defined in
Rule 12b-2 of the Act YES ( )    NO (X)

<PAGE>


                                EXPLANATORY NOTE

VillageEDOCS (the "Company") is filing this Amendment No. 1 on Form 10-KSB/A to
amend its Annual Report on Form 10-KSB for the year ended December 31, 2004, as
filed with the Securities and Exchange Commission (the "SEC") on March 31, 2005
(the "Original Filing"). The purpose of this Amendment No. 1 is to amend and
restate Part II, Item 6 and Item 7 which set forth the accounting for certain of
its convertible notes payable during 2004. Previously, the Company had not
identified or separately valued derivative instruments later determined to have
been embedded within certain of the notes and has restated its financial
statements to recognize the existence of derivatives, to account for a
derivative liability, and to record the changes in fair value of the
derivatives. In addition, Part II, Item 6, Item 7, and Item 8A have been amended
and restated to reflect changes in the accounting for certain transactions
involving the issuance of its common stock to employees in connection with the
acquisition of Tailored Business Systems, Inc. Accordingly, changes have been
made to the applicable line items associated with goodwill, convertible notes
payable, derivative liability, additional paid-in capital, accumulated deficit,
general and administrative expense, change in fair value of derivative
liability, interest expense, net loss and net loss per common share. In
addition, Part III, Item 13 has been amended to reflect the filing of two
convertible promissory notes that were not included in the Original Filing.
Finally the certifications attached as Exhibits 31.1, 31.2, 32.1 and 32.2 have
been updated to reflect the filing date of this amendment and any interim
changes in the regulations applicable to these certifications. Except as
described above, no additions or modifications have been made to this Amendment
No. 1 to reflect facts or events occurring subsequent to the date of the
Original Filing.


                                  VILLAGEEDOCS
                                FORM 10-KSB INDEX
                   FOR THE FISCAL YEAR ENDED DECEMBER 31, 2004

<TABLE>
<CAPTION>
                                                                                                                             Page
<S>                    <C>                                                                                                   <C>
        PART I

                       Item 1.  Description of Business                                                                        3

                       Item 2.  Description of Property                                                                        6

                       Item 3.  Legal Proceedings                                                                              6

                       Item 4.  Submission of Matters to a Vote of Security Holders                                            6

        PART II

                       Item 5.  Market for Equity Securities and Related Stockholder Matters                                   7

                       Item 6.  Management's Discussion and Analysis or Plan of Operations                                     9

                       Item 7.  Financial Statements                                                                           21

                       Item 8.  Changes In and Disagreements with Accountants on Accounting and Financial Disclosures          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         22
                                16(a) of the Exchange Act

                      Item 10.  Executive Compensation                                                                         25

                      Item 11.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder         34
                                Matters

                      Item 12.  Certain Relationships and Related Transactions                                                 36

                      Item 13.  Exhibits                                                                                       38

                      Item 14.  Principal Accountant Fees and Services                                                         41

                  Signatures                                                                                                   42
</TABLE>


                                       2
<PAGE>

PART I

ITEM 1.  DESCRIPTION OF BUSINESS

FORWARD-LOOKING INFORMATION

THIS ANNUAL REPORT ON FORM 10-KSB INCLUDES FORWARD-LOOKING STATEMENTS WITHIN THE
MEANING OF SECTION 21E OF THE SECURITIES EXCHANGE ACT OF 1934, AS AMENDED. ALL
STATEMENTS THAT DO NOT DIRECTLY AND EXCLUSIVELY RELATE TO HISTORICAL FACTS
CONSTITUTE FORWARD-LOOKING STATEMENTS WITHIN THE MEANING OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995. THESE STATEMENTS ARE BASED ON OUR
PLANS, INTENTIONS, EXPECTATION, AND BELIEF AND ARE SUBJECT TO CERTAIN RISKS AND
UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE
PROJECTED OR EXPRESSED HEREIN. THE WORDS "ANTICIPATED," "BELIEVE," "EXPECT,"
"PLAN," "INTENDED," "SEEK," "ESTIMATE," "PROJECT," "WILL," "COULD," "MAY," AND
SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE
STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS,
FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT
THE COMPANY'S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL
PERFORMANCE AND INVOLVES RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION,
GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL
AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL
REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL
CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY'S
CONTROL, INCLUDING, WITHOUT LIMITATION, THE RISKS DESCRIBED UNDER THE CAPTION
"FACTORS THAT MAY AFFECT FUTURE RESULTS" IN ITEM 6 OF THIS ANNUAL REPORT. OUR
FUTURE RESULTS AND STOCKHOLDER VALUES MAY DIFFER MATERIALLY FROM THOSE EXPRESSED
IN THESE FORWARD- LOOKING STATEMENTS. MANY OF THE FACTORS THAT WILL DETERMINE
THESE RESULTS AND VALUES ARE BEYOND OUR ABILITY TO CONTROL OR PREDICT. INVESTORS
ARE CAUTIONED NOT TO PUT UNDUE RELIANCE ON ANY FORWARD-LOOKING STATEMENTS. FOR
THESE STATEMENTS, WE CLAIM THE PROTECTION OF THE SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS CONTAINED IN SECTION 21E OF THE EXCHANGE ACT.

WEBSITE ACCESS TO REPORTS

The Company's Internet website address is www.villageedocs.com. The Company's
annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, current reports
on Form 8-K, and all amendments thereto, are available free of charge on the
Company's website as soon as reasonably practical after such reports are
electronically filed with, or furnished to, the U.S. Securities and Exchange
Commission.

OVERVIEW

VillageEDOCS (the "Company" or "We") is incorporated in the State of California.
The Company was originally incorporated in 1995 in Delaware as SoftTek, Inc. In
August 1997, we changed our name to SoftTek Technologies Inc. and reincorporated
in California. In 1999 we changed our name to VillageFax.com, Inc., and then, as
of July 11, 2000, to VillageEDOCS. Until late 1998, the Company provided product
marketing services and fax server products, which were discontinued in 1998.
During 1998 to 2003, our exclusive line of business was the provision of
worldwide, Internet-based, business-to-business fax services. In 2003 we made
the decision to accelerate our growth by actively seeking out and pursuing
opportunities to acquire businesses that provide complementary and strategic
document management technologies, greater market penetration, new revenue
streams, or new sales channels for our current service offerings. On February
17, 2004 we acquired Tailored Business Systems, Inc., ("TBS") a company that has
designed, produced, installed, provided and supported computer software systems
and services for the governmental sector since 1973. During 2004 and in
connection with our plan to expand the operations of the Company through
additional acquisitions, we formed MessageVision, Inc. ("MessageVision" or"MVI")
and transferred to it the operations of the fax service. As a result, the
Company is structured as a holding company, with two wholly owned subsidiaries.
It is through these subsidiaries that we perform our business.

Also, unless otherwise indicated by the context, the "Company" means the parent
company, VillageEDOCS.

The Company's principal executive offices are currently located at 14471
Chambers Road, Suite #105, Tustin, CA 92780.

                                       3
<PAGE>

OPERATING SEGMENTS

Segment revenue and profit information is presented in Note 13 (of the Company's
2004 Financial Statements, filed as Exhibit 99.1 to this report. See Item 6
"MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS" for additional financial data and commentary on recent financial
results for operating segments.

The two operating businesses that are reported as segments are electronic
document delivery services (MVI) and government accounting products and services
(TBS). There is appropriate elimination of the net assets or liabilities of
subsidiaries and the immaterial effect of transactions between segments to
arrive at total consolidated data. A summary description of both of our
operating segments follows.

ELECTRONIC DOCUMENT DELIVERY SERVICES

MessageVision (45% of consolidated revenues in 2004) is a California corporation
formed in 2004 to operate the historical business of VillageEDOCS, an
Internet-based fax service that enables a user to send an electronic fax
document to an individual or to a broadcast list of thousands through a web
browser (i.e. Microsoft Explorer, etc.), e-mail package (i.e. Microsoft
Exchange, Microsoft Outlook, Lotus, etc.), Microsoft Windows-based application,
Enterprise Resource Planning or Customer Relationship Management system, or
proprietary corporate information system. As of February 28, 2005, we had
approximately 377 active clients. During 2004, no single customer accounted for
more than 10% of net sales.

We use proprietary, internally-developed document processing and transmission
systems to create and send or receive documents for our clients. We provide
Internet-based fax services that integrate with existing Internet-connected
systems within companies where invoices, statements, purchase orders, ticket
confirmations, and other key documents originate. A typical application is
characterized by the need to deliver time sensitive, personalized documents to a
disparate group of recipients in multiple formats and delivery methods. Our
services are designed for use by a wide range of industries and enterprise sizes
using such diverse platforms as Microsoft Windows NT/2000/XP, UNIX, and IBM
iSeries (AS/400). Our clients currently include manufacturing companies,
E-commerce providers, application service providers, food service corporations,
value added resellers, weather reporting services, public relations firms, and
direct marketing organizations. Businesses using J.D. Edwards, Oracle,
Peoplesoft, Infinium, IBS and SAP environments, among others, can use our
service to become fax-enabled without traditional capital expenditures and
ongoing maintenance costs. We offer our clients the flexibility to send
Microsoft Office, Corel, IBM PCL, Adobe PDF, next-generation HTML, and other
types of documents through our Internet fax service. In addition, our service is
compatible with virtually any foreign language including character-based Pacific
Rim, Middle and Far Eastern languages. In addition, we offer our clients robust
activity reporting and job control functions that are not offered by many of our
competitors. In 2003, we introduced, in concert with a business partner, new
document management solutions that provide electronic document presentation
functions that enable our clients to automatically generate and deliver
presentation-quality documents from enterprise systems such as ERP, CRM, and
E-Commerce and to populate a database with data from a document that has either
been scanned or received as a fax.

We charge our clients a fee primarily based upon either the number of pages
delivered and received, or upon the number of minutes expended, for the delivery
or receipt of our clients' documents during the month. In some cases, we charge
one-time and annual perpetuation fees for custom-developed client solutions.

Net sales for the fiscal years ended December 31, 2004 and 2003 were $2,685,882
and $1,882,027, respectively.

GOVERNMENT ACCOUNTING PRODUCTS AND SERVICES
-------------------------------------------

TBS (55% of consolidated revenues in 2004) is a Georgia corporation established
in 1973. As a result of the Company pursuing its acquisition strategy, we
acquired TBS in February 2004. As a result, we are engaged in the


                                       4
<PAGE>

business of creating, maintaining, training, customizing and supporting computer
application programs primarily for the use of city and county governments, the
sale and installation of computer equipment and supplies, the printing and
ordering of forms, the furnishing of consulting services, and the implementation
of internal computer networks in communication with IBM iSeries servers. We
generate revenues from TBS' established client base in the form of printing,
billing, and fulfillment services as well as maintenance and training revenues.
We have achieved a dominant share of the Georgia market for small to medium
government entities, enjoying 70% of the municipal government market and 65% of
the county government market in that state. Our goals include expanding our
business model to governmental entities regionally and, eventually, nationwide.
In addition, we intend to expand revenue both from printing and from
subscription-based hosted solutions.

We charge for our proprietary software and for general-purpose hardware used in
providing in-house solutions. When a client elects to use the hosted Application
Service Provider service, we charge a monthly fee per seat for the use of the
Internet based services. In addition to both offerings, we charge for
consulting, installation, implementation, support, annual maintenance and
training. We charge separately for printing and forms jobs based on the specific
nature of the requirements. For printing, it is generally per mailing and for
forms on a per page basis. Net sales for the period from February 17, 2004 (date
of acquisition) through December 31, 2004 were $3,328,387.

PRODUCTS AND SERVICES DEVELOPMENT

The Company actively and continually engages in development of additional
products and services to offer to our existing and potential new clients.

Our ability to sustain our development activities is dependent upon the
availability of sufficient funds from operations or other sources such as
proceeds received by the Company from the sale of common stock, bank lines of
credit or other credit facilities.

COMPETITION

Many of our existing competitors, as well as a number of potential new
competitors, have longer operating histories, greater name recognition, larger
customer bases and significantly greater financial, technical and marketing
resources than the Company's subsidiaries. Such competitors may be able to
undertake more extensive marketing campaigns, adopt more aggressive pricing
policies and make more attractive offers to potential employees and distribution
partners. While we believe that MVI can compete effectively because we offer our
clients certain capabilities that much of the competition does not offer, such
as custom integration, private-labeling, and electronic document presentation,
and while we believe TBS can compete effectively because we provide affordable
and reliable full-service solutions tailored to the needs of local governments,
there can be no assurance that the Company's competitors will not develop
similar products and services that are equal or superior to ours, or that
achieve greater market acceptance than the Company's offerings.

OUTLOOK AND STRATEGY

During 2005, we intend to continue our focus on obtaining growth from higher
margin products and services at MVI and TBS, as well as growth from acquisitions
of companies that consistently generate net income and positive cash flows. We
believe that this strategy offers the best opportunity for the Company's
operations to continue to generate positive operating income and cash flows from
operations and to achieve net income in 2005.

To reach this goal, we intend to continue our strategy of cost containment.
Should additional growth capital become available during 2005, we intend to
direct the capital toward increasing sales and marketing while holding down
costs for general and administrative as well as product and technology expenses.

                                       5
<PAGE>

EMPLOYEES

As of February 28, 2005, the holding company had 3 full-time employees, each of
whom are executive officers. MessageVision had 15 full-time employees. These
employees include 6 engaged in sales and marketing, 2 in technology development,
5 in operations, and 2 in administration. TBS had 20 full-time employees,
including 2 engaged in sales and marketing, 3 in technology development, 10 in
operations, and 5 in administration.

ITEM 2.  DESCRIPTION OF PROPERTY

The Company occupies office space in California and Georgia. The operations of
both the Company and MessageVision are conducted from approximately 3,600 square
feet of leased office space located at 14471 Chambers Road, Suite 105, Tustin,
California 92780. The Company leases the Tustin office space pursuant to an
operating lease agreement expiring in May 2007 at a cost of $5,380 per month.
The operations of TBS are conducted from approximately 6,200 square feet of
leased office space located at 40 Joe Kennedy Blvd., Statesboro, GA 30458. The
Company leases the Statesboro office space pursuant to an operating agreement
expiring in January 2009 at a cost of $6,200 per month. The office building is
owned by a partnership controlled by TBS' former owners, who are presently
significant employees of TBS (see Item 12 "CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS").

Additionally, the Company leases space and operating systems equipment from SBC
in Irvine, California at a cost of approximately $6,400 per month primarily to
support the service operations of MessageVision. The highly secure SBC facility
is served by all major global telecommunications carriers and is a physically-,
environmentally-, and utility-redundant site with multiple telecommunications
feeds, multiple emergency power generators, and emergency fuel reserves. These
fully redundant systems and emergency power provisions are designed to provide
non-stop service and no single point of failure.

ITEM 3.  LEGAL PROCEEDINGS

The Company is not a party in any lawsuits.

In early 1999, the Company received communications from a company asserting the
ownership of certain United States and Canadian patents and making a licensing
proposal for these patents on unspecified terms. The Company did not accept the
licensing proposal. If these claims prove accurate and the Company is not able
to enter into a licensing agreement on acceptable terms, it would have a
material adverse effect on MVI and the Company.

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

On June 16, 2004, holders of a majority of the voting capital stock of the
Company acted by written consent in lieu of a special meeting of shareholders to
provide for the following:

1.       Amendment to the Certificate of Incorporation increasing the number of
         authorized no par value shares of the Common Stock from 90,000,000 to
         175,000,000, with no stated par value per share.
2.       Approval of a Plan of Restructuring (the "Plan"), which includes the
         reorganization of the Company's electronic document delivery business
         by transferring all assets pertaining to the electronic document
         delivery business into a wholly-owned subsidiary of the Company to be
         formed for the purpose of the reorganization.
3.       Election of directors.
4.       Modification of the Company's 2002 Equity Incentive Plan to increase
         the number of shares reserved for issuance under the plan from
         11,634,584 to 28,000,000.
5.       Ratification and approval of Executive Employment Agreements and Equity
         Incentive Arrangements with K. Mason Conner, H. Jay Hill, Michael
         Richard and J. Thomas Zender.

                                       6
<PAGE>

                                     PART II

ITEM 5.  MARKET FOR EQUITY SECURITIES AND RELATED STOCKHOLDER MATTERS

On January 29, 2002, trading in the Company's common stock commenced on the
Over-The-Counter Bulletin Board ("OTCBB"). The following sets forth the range of
high and low bid quotations for the periods indicated as reported by Nasdaq
Trading and Market Services. Such quotations reflect prices between dealers
without retail mark-up, markdown or commission and may not represent actual
transactions. The Company's common stock is quoted on the OTCBB under the symbol
VEDO. The stock is thinly traded and transactions in the stock are sporadic and
infrequent.

          Quarter Ended                           High Bid      Low Bid
          --------------------------------        --------      -------
          March 31, 2004                           $0.180       $0.095
          June 30, 2004                            $0.190       $0.110
          September 30, 2004                       $0.200       $0.110
          December 31, 2004                        $0.190       $0.110

As of December 31, 2004, there were 320 holders of record of the Company's
common stock.

The Company has never paid a cash dividend on its common stock nor does the
Company anticipate paying cash dividends on its common stock in the near future.
It is the present policy of the Company not to pay cash dividends on the common
stock but to retain earnings, if any, to fund growth and expansion. Any payment
of cash dividends on the common stock in the future will be dependent upon the
Company's financial condition, results of operations, current and anticipated
cash requirements, plan for expansion, as well as other factors the Board of
Directors deems relevant.

Recent Sales of Unregistered Securities
---------------------------------------

The following provides information concerning all sales of securities within the
last fiscal year that were not registered under the Securities Act of 1933, as
amended (the "Securities Act"):

On February 17, 2004, the Company issued 2,200,000 shares of restricted common
stock to each of Stephen A. Garner and James L. Campbell in partial payment of
the total purchase price for 100% of the common stock of TBS. All 4,400,000
shares were valued at $0.10 per share, the fair market value of the Company's
common stock on the date of acquisition.

On February 17, 2004 and in connection with the acquisition of TBS, the Company
agreed to issue 132,000 shares of its restricted common stock to H. Jay Hill,
who is an officer and director of the Company, pursuant to Mr. Hill's employment
agreement. The shares were valued at $0.10 per share, the fair market value on
the date of the acquisition. The shares were issued on March 11, 2004.

On February 17, 2004 and in connection with the acquisition of TBS, the Company
agreed to issue 220,000 shares of its restricted common stock to a non-affiliate
pursuant to a finder's fee agreement. The shares were valued at $0.10 per share,
the fair market value on the date of the acquisition. The shares were issued on
March 11, 2004.

On March 11, 2004, the Company issued 24,019 shares of restricted common stock
for $240 in cash in connection with the exercise of a warrant.

On December 29, 2004, the Company issued 125,000 shares of restricted common
stock at $0.13 per share (fair value on date of issuance) in connection with an
employment agreement.

                                       7
<PAGE>

During 2004, the Company granted to its employees options to purchase shares of
its common stock under the 2002 Plan as follows: 5,150,000 shares at $0.15 per
share, 150,000 shares at $0.17 per share, 2,990,000 shares at $0.18 per share,
10,000 shares at $0.1875 per share, 25,000 shares at $0.19 per share, 35,000
shares at $0.20 per share. All options were issued above or at the fair market
value on the dates of grant and vest on various dates from the date of grant
through October 2009.

During the year ended December 31, 2004, the Company borrowed $345,000 from C.
Alan and Joan P. Williams and issued convertible promissory notes bearing
interest at 10 percent per annum (the "Notes"). The Notes are secured by a
security interest in all of the Company's assets. The notes and accrued interest
are due at the earlier of one of three events: 1) October 31, 2005; 2)
acquisition of controlling interest in the Company by a third party; or 3) the
Company achieves equity financing of a minimum of $3,000,000. If the Company is
acquired, the principal and accrued interest on the Notes, as modified, are
convertible into shares of the Company's common stock at the lower of $2.50 per
share or the price paid per share by the acquirer. In addition, the principal
and accrued interest on the Notes, as modified, are convertible into shares of
the Company's common stock at a conversion price equal to the lower of $0.07 per
share or the average of the Company's common stock closing bid price on the
OTCBB, NASDAQ or other established securities exchange or market for the ten
(10) consecutive trading days prior to the date Mr. or Mrs. Williams delivers
written notice of his or her conversion election to the Company.

On February 17, 2004, the Company issued a $1,700,000 secured convertible
promissory note for cash. The note was issued to a related party, C. Alan and
Joan P. Williams, and bears interest at 10 percent per annum. The note and
accrued interest are due at the earlier of one of three events: 1) October 31,
2007; 2) acquisition of controlling interest in the Company by a third party; or
3) the Company achieves equity financing of a minimum of $3,000,000. If the
Company is acquired, the principal and accrued interest on the note are
convertible into shares of the Company's common stock at the lower of $2.50 per
share or the price paid per share by the acquirer. In addition, the principal
and accrued interest on the note are convertible into shares of the Company's
common stock at a conversion price equal to eighty five percent of average of
the Company's common stock closing bid price on the OTCBB, NASDAQ or other
established securities exchange or market for the ten (10) consecutive trading
days prior to the date Mr. and Mrs. Williams deliver written notice of their
conversion election to the Company. As an inducement for Mr. and Mrs. Williams
to provide the loan, the Company agreed to issue them a warrant to purchase
5,000,000 shares of the Company's restricted common stock at $0.10 per share
until February 17, 2009.

In connection with the acquisition of TBS, the Company issued a $300,000
convertible promissory note to Stephen A. Garner and a $300,000 convertible
promissory note to James L. Campbell (the "TBS Notes"). Each of the TBS Notes
bears interest at 5 percent per annum and is due and payable in three equal
annual installments of $100,000, with the first installment paid in full during
February 2005 and subsequent installments due on February 17, 2006 and February
17, 2007. The TBS Notes are secured by a Stock Pledge Agreement and a Security
Agreement. In addition, Messrs. Garner and Campbell have the right to convert
the balance of unpaid principal and interest of the TBS Notes into shares of the
Company's common stock at the rate of 9.8 shares of Common Stock for each $1.00
of principal and interest to be converted.

All offers and sales of our securities described above were made pursuant to
Section 4(2) of the Securities Act of 1933 and Regulation D promulgated
thereunder.






                                       8
<PAGE>

ITEM 6.  MANAGEMENT'S DISCUSSION OR PLAN OF OPERATIONS

WEBSITE ACCESS TO REPORTS

The Company's Internet website address is www.villageedocs.com. The Company's
annual reports on Form 10-KSB, quarterly reports on Form 10-QSB, and current
reports of Form 8-K, and all amendments thereto, are available free of charge on
the Company's website as soon as reasonably practical after such reports are
electronically filed with, or furnished to, the U.S. Securities and Exchange
Commission.

GENERAL OVERVIEW

The following Management Discussion and Analysis or Plan of Operations should be
read in conjunction with the audited consolidated balance sheet as of December
31, 2004 and the audited consolidated statements of operations, stockholders'
equity and cash flows for each of the years in the two-year period then ended
and the related notes thereto. This discussion contains forward-looking
statements based upon current expectations that involve risks and uncertainties,
such as our plans, objectives, expectations and intentions.

As reported in the Report of Independent Registered Public Accounting Firm on
our December 31, 2004 consolidated financial statements, the Company has
suffered recurring losses from operations, and has a working capital deficit
that raises substantial doubt about our ability to continue as a going concern.


On March 28, 2006, the Company's Board of Directors determined that the Company
was required to restate and reissue its annual report for the year ended
December 31, 2004, as well as the quarterly reports for the quarters ended March
31, 2005, June 30, 2005 and September 30, 2005. The audited consolidated
financial statements included in this annual report reflect all adjustments we
have made to our audited consolidated financial statements for the years ended
December 31, 2004 and 2003 as a result of the restatements. Specifically, we
strongly encourage you refer to Footnote No. 1 RESTATEMENT OF PREVIOUSLY ISSUED
FINANCIAL STATEMENTS in the accompanying audited consolidated financial
statements. We have used the restated amounts in the comparative discussions for
2003 and 2004 that follow.


The Company cautions readers that important facts and factors described in this
Management's Discussion and Analysis or Plan of Operations and elsewhere in this
document sometimes have affected, and in the future could affect, the Company's
actual results, and could cause the Company's actual results during 2005 and
beyond to differ materially from those expressed in any forward-looking
statements made by, or on behalf of, the Company.

On February 17, 2004, the Company acquired TBS. During its fiscal year ended
October 31, 2003, TBS's net revenues were $3,324,059. During the fiscal year
ended December 31, 2003, the Company's net revenues were $1,882,027. This
acquisition has caused the Company's results of operations during 2004 to vary
significantly from those reported for 2003 due to the consolidation of TBS
during most of 2004. Accordingly, management believes that the following
presentation of comparative results of operations, while required, may not be
meaningful for 2004.

In November 2004, the Company signed a letter of intent to acquire a Document
Management Solutions Provider. The acquisition is contingent on financing and
other customary closing conditions. There can be no assurances that the Company
will successfully complete this transaction.

Management is actively seeking additional financing by issuing equity or a
combination of equity and debt financing from new shareholders and/or lenders in
2005. If the planned financings are obtained, the Company believes it will
generate adequate cash to sustain operations at current levels until it begins
to operate profitably. There can be no assurance that funding will be available
on acceptable terms, if at all, or that such funds, if raised, would enable the
Company to maintain profitable operations.

                                       9
<PAGE>

CRITICAL ACCOUNTING POLICIES

In preparing our financial statements, we make estimates, assumptions and
judgments that can have a significant effect on our revenues, income/loss from
operations, and net income/net loss, as well as on the value of certain assets
on our consolidated balance sheet. We believe that there are several accounting
policies that are critical to an understanding of our historical and future
performance as these policies affect the reported amounts of revenues, expenses,
and significant estimates and judgments applied by management. While there are a
number of accounting policies, methods and estimates affecting our consolidated
financial statements, areas that are particularly significant include revenue
recognition, stock-based compensation, and goodwill and long-lived assets. In
addition, please refer to Note 3 to the accompanying consolidated financial
statements for further discussion of our significant accounting policies.

REVENUE RECOGNITION. The Company recognizes revenue in accordance with Staff
Accounting Bulletin ("SAB") No. 101, "REVENUE RECOGNITION IN FINANCIAL
STATEMENTS", as revised by SAB No. 104. As such, the Company recognizes revenue
when persuasive evidence of an arrangement exists, title transfer has occurred,
or the services have been performed, the price is fixed or readily determinable
and collectibility is probable. Sales are recorded net of sales discounts.

The Company has adopted Statement of Position ("SOP") 97-2, "SOFTWARE REVENUE
RECOGNITION," as well as SOP 98-9, "MODIFICATION OF SOP 97-2, SOFTWARE REVENUE
RECOGNITION WITH RESPECT TO CERTAIN TRANSACTIONS." The SOPs generally require
revenue earned on software arrangements involving multiple elements to be
allocated to each element based on the relative fair market values of each of
the elements. The fair value of an element must be based on vendor-specific
objective evidence ("VSOE") of fair value. Software license revenue allocated to
a software product is recognized upon delivery of the product, or deferred and
recognized in future periods to the extent that an arrangement includes one or
more elements that are to be delivered at a future date and for which VSOE has
not been established. Maintenance and support revenue is recognized ratably over
the maintenance term. First-year maintenance typically is sold with the related
software license and renewed on an annual basis thereafter. Estimated fair
values of ongoing maintenance and support obligations are based on separate
sales of renewals to other customers or upon renewal rates quoted in the
contracts. For such arrangements with multiple obligations, the Company
allocates revenue to each component of the arrangement based on the estimated
fair value of the undelivered elements. Fair value of services, such as
consulting or training, is based upon separate sales of these services. The
Company at times may enter into multiple-customer contracts in which the Company
allocates revenue based on the number of specified users at each customer, and
recognizes revenue upon customer acceptance and satisfying the other applicable
conditions of the above described accounting policy.

Services revenue is recognized as the service is performed assuming that
sufficient evidence exists to estimate the fair value of the services.
Consulting and training services are billed based on contractual hourly rates
and revenues are recognized as the services are performed. Consulting services
primarily consist of implementation services related to the installation of the
Company's products which do not require significant customization to or
modification of the underlying software code.

Significant management judgments and estimates must be made in connection with
determination of the revenue to be recognized in any accounting period. If the
Company made different judgments or utilized different estimates for any period,
material differences in the amount and timing of revenue recognized could
result.

STOCK-BASED COMPENSATION. The Company accounts for non-employee stock-based
compensation under Statement of Financial Accounting Standards No. 123 ("SFAS
123"), "ACCOUNTING FOR STOCK-BASED COMPENSATION." SFAS 123 defines a fair value
based method of accounting for stock-based compensation. However, SFAS 123
allows an entity to continue to measure compensation cost related to stock and
stock options issued to employees using the intrinsic method of accounting
prescribed by Accounting Principles Board Opinion No. 25, as amended ("APB 25"),
"ACCOUNTING FOR STOCK ISSUED TO EMPLOYEES." Under APB 25, compensation cost, if
any, is recognized over the respective vesting period based on the difference,
on the date of grant, between the fair value of the Company's common stock and
the grant price. Entities electing to remain with the accounting method of APB
25 must make pro

                                       10
<PAGE>

forma disclosures of net income and earnings per share, as if the fair value
method of accounting defined in SFAS 123 had been applied. The Company has
elected to account for its stock-based compensation to employees under APB 25.
See NEW ACCOUNTING PRONOUNCEMENTS below.

GOODWILL AND OTHER INTANGIBLE ASSETS. The Company has adopted SFAS No. 142
"GOODWILL AND OTHER INTANGIBLE ASSETS." Under SFAS No. 142, goodwill and other
intangible assets with indefinite lives are no longer subject to periodic
amortization but are instead reviewed annually for impairment, or more
frequently if impairment indicators arise.

Identifiable assets and liabilities acquired in connection with business
acquisitions accounted for under the purchase method are recorded at their
respective fair values. Deferred income taxes have been recorded to the extent
of differences between the fair value and the tax basis of the assets acquired
and liabilities assumed.

LONG-LIVED ASSETS. The Company's management assesses the recoverability of its
long-lived assets by determining whether the depreciation and amortization of
long-lived assets over their remaining lives can be recovered through projected
undiscounted future cash flows. The amount of long-lived asset impairment, if
any, is measured based on fair value and is charged to operations in the period
in which long-lived asset impairment is determined by management.

BENEFICIAL CONVERSION FEATURE. The convertible feature of certain of our
convertible notes provides for a rate of conversion that is below market value.
Such feature is normally characterized as a "beneficial conversion feature"
("BCF"). Pursuant to Emerging Issues Task Force Issue No. 98-5 ("EITF 98-5"),
"ACCOUNTING FOR CONVERTIBLE SECURITIES WITH BENEFICIAL CONVERSION FEATURES OR
CONTINGENTLY ADJUSTABLE CONVERSION RATIO" and Emerging Issues Task Force Issue
No. 00-27,"APPLICATION OF EITF ISSUE NO. 98-5 TO CERTAIN CONVERTIBLE
INSTRUMENTS," the relative fair values of the BCFs have been recorded as a
discount from the face amount of the respective debt instrument. The Company is
amortizing the discount using the effective interest method through maturity of
such instruments. The Company will record the corresponding unamortized debt
discount related to the BCF and warrants as interest expense when the related
instrument is converted into the Company's common stock.


DERIVATIVE FINANCIAL INSTRUMENTS. In connection with the issuance of certain
convertible notes payable, the terms of the notes payable provided for a
conversion of the notes into shares of the Company's common stock at a rate
which was determined to be variable. The Company determined that the variable
conversion feature was an embedded derivative instrument pursuant to SFAS No.
133, "ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES," as amended.
The accounting treatment of derivative financial instruments required that the
Company record the derivatives and related warrants at their fair values as of
the inception date of the note agreements and at fair value as of each
subsequent balance sheet date. In addition, under the provisions of EITF Issue
No. 00-19, "ACCOUNTING FOR DERIVATIVE FINANCIAL INSTRUMENTS INDEXED TO, AND
POTENTIALLY SETTLED IN, A COMPANY'S OWN STOCK," as a result of entering into the
note agreements, the Company was required to classify all other non-employee
warrants as derivative liabilities and record them at their fair values at each
balance sheet date. Any change in fair value was recorded as non-operating,
non-cash income or expense at each balance sheet date. If the fair value of the
derivatives was higher at the subsequent balance sheet date, the Company
recorded a non-operating, non-cash charge. If the fair value of the derivatives
was lower at the subsequent balance sheet date, the Company recorded
non-operating, non-cash income.


RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2004 COMPARED TO YEAR ENDED DECEMBER 31, 2003

NET SALES
---------

Net sales for the year ended December 31, 2004 were $6,014,269, a 220% increase
over 2003 net sales of $1,882,027. The increase of $4,132,242 in 2004 resulted
from an increase of $803,855, or 43%, in revenue from

                                       11
<PAGE>

MVI (which resulted from growth in the number of higher margin clients) as well
as the addition of $3,328,387 in revenue from TBS. TBS generated 55% of the
Company's 2004 revenue between February 17, 2004 (the date of acquisition) and
December 31, 2004. MVI generated the remaining 45% of the Company's 2004
revenue, as compared to 2003, when the operations that the Company has now
transferred to MVI comprised 100% of revenue.

COST OF SALES
-------------

Cost of sales for the year ended December 31, 2004 were $2,367,789 as compared
to the $920,410 reported for the year ended December 31, 2003. The increase in
the 2004 period of $1,447,379 resulted from an increase of $37,215 from MVI as
well as the addition of $1,410,164 in costs of sales of TBS. Total cost of sales
during the 2004 period represented 39% of sales. Cost of sales for MVI during
the 2004 period represented 36% of sales as compared with 49% of sales in the
2003 period reflecting reduced telecommunications and other costs associated
with providing electronic document delivery services despite an improvement in
revenues from those services.

GROSS PROFIT
------------

Gross profit for the year ended December 31, 2004 increased 279% to $3,646,480
as compared to $961,617 for the prior year period. Gross profit margin for 2004
was 61% as compared with 51% for 2003. Of the overall increase of $2,684,863,
$766,640 is attributable to improved profits from MVI, and $1,918,223 is
attributable to TBS.


OPERATING EXPENSES (RESTATED)
-----------------------------

Operating expenses for the year ended December 31, 2004 increased by 46% to
$3,444,670 from the $2,365,560 reported in 2003, an increase of $1,079,110.


Product and technology development decreased $69,671 to $418,444 from the
$488,115 reported in 2003. $136,941 of the net decrease is attributable to a
reduction in staff at MVI; however, that decrease was offset by an increase of
$67,270 attributable to TBS.

Sales and marketing decreased by $80,983 to $725,155 from the $806,138 reported
in 2003. Of the net decrease, $164,626 is due to a reduction in sales management
staff and a small decrease in spending on sales lead generation programs at MVI;
however, that decrease was offset by an increase of $83,643, the sales and
marketing costs of TBS.


General and administrative increased by $1,144,412 to $2,066,744 from the
$922,332 reported in 2003. The overall net increase was comprised of a $653,315
decrease at MVI (comprised of a decrease in consulting fees, salaries, legal,
and accounting) which was offset by the addition of $1,162,455 in general and
administrative expenses of TBS and $635,272 in general and administrative
expenses of the holding company (comprised of consulting fees, salaries,
benefits, legal, accounting, and travel expenses).


Depreciation and amortization expense increased $85,352 to $234,327 from the
$148,975 reported in 2003. The overall increase was comprised of a 30% decrease
from electronic document delivery services (due to disposal of certain
capitalized equipment during the fourth quarter of 2003) which was offset by the
addition of $77,617 in depreciation from equipment owned by TBS, and $52,500 in
amortization expense related to intangible assets.

During the year ended December 31, 2004, expenses related to product and
technology development, sales and marketing, general and administrative, and
depreciation and amortization represented 7%, 12%, 33%, and 4% of net sales,
respectively. During the year ended December 31, 2003, expenses related to
product and technology development, sales and marketing, general and
administrative, and depreciation and amortization represented 26%, 43%, 49%, and
8% of net sales, respectively.

                                       12
<PAGE>


OPERATING INCOME (LOSS) (RESTATED)
----------------------------------

Income from operations for the year ended December 31, 2004 was $201,810, an
increase of $1,605,753 (114%) from the loss from operations of $1,403,943
reported in 2003. The overall increase was comprised of (i) an increase of
$1,766,287 in operating income from MVI, which grew to $362,344 in 2004
(compared to an operating loss of $1,403,943 in 2003), (ii) the addition of
$475,538 in operating income from TBS during 2004, and (iii) an operating loss
of $635,272 from the holding company.

CHANGE IN FAIR VALUE OF DERIVATIVE LIABILITY (RESTATED)
-------------------------------------------------------

During the years ended December 31, 2004 and 2003 (restated), we recognized
other expense of $241,336 and $3,695 related to recording derivative liabilities
at fair value.

INTEREST EXPENSE (RESTATED)
---------------------------

Interest expense for the year ended December 31, 2004 increased by $64,328 to
$725,987 from $661,659 reported in 2003. The overall increase was comprised of
$241,737 in interest on borrowings of TBS (substantially all of which is
attributable to the acquisition financing), which was offset by a $177,409 or
27% decrease from MVI that resulted from a decrease in charges related to the
beneficial conversion feature associated with 2004 borrowings as compared to
2003 borrowings because of fluctuations in the market price of the Company's
common stock. Interest expense incurred in connection with capital leases
decreased in the 2004 period as compared with the 2003 period.

NET LOSS (RESTATED)
-------------------

As a result of the foregoing, net loss for the year ended December 31, 2004 was
$767,913, or $0.02 per share, compared to a net loss of $2,110,040, or $0.07 per
share, for the year ended December 31, 2003 on weighted average shares of
35,321,760 and 30,828,738, respectively.


LIQUIDITY
---------

During the year ended December 31, 2004, the Company's net cash position
increased by $393,307 to $458,009. The Company generated $171,572 from operating
activities, and $1,882,105 from financing activities; however, the Company's
investing activities used net cash of $1,660,370.

Net cash provided by operating activities for the year ended December 31, 2004
was $171,572, an increase of $1,171,333 from the $999,761 used in operating
activities in 2003, mainly due to the decrease in net loss for 2004 as well as
an increase in revenues and customer deposits at TBS.

The Company's investing activities consisted of the acquisition of TBS and
purchase of computer equipment. Net cash used for investment activities
increased $1,580,188 to $1,660,370 from the $80,182 reported for 2003.

Net cash provided by financing activities for the year ended December 31, 2004
was $1,882,105, and mainly included proceeds of $2,045,000 from stockholder
loans. Net cash provided by financing activities for the year ended December 31,
2003 was $1,091,318, which included proceeds of $1,132,000 from stockholder
loans.

On February 10, 2005, the Company received notice from C. Alan Williams and Joan
P. Williams of their intent to convert $3,682,609 in convertible secured
promissory notes payable and accrued interest thereon to 40,332,669 shares of
the Company's restricted common stock. As a result of the conversion, the
Williams acquired shared voting and shared dispositive power over seventy-seven
percent (77%), or 59,495,094 shares, of the Company's common stock. After the
conversion, the amount owed by the Company to the Williams pursuant to
convertible promissory notes payable was $1,000,000 in principal and
approximately $44,000 in unpaid interest. As a result of the conversion, the
Company will report a reduction in interest expense in connection with its
borrowings from the Williams. Had the conversion not occurred and assuming all
notes remained outstanding during 2005, management


                                       13
<PAGE>

estimates that interest expense for 2005 would have been approximately $661,000.
As a result of the conversion, management estimates that interest expense for
2005 on borrowings from the Williams will not exceed approximately $511,000.

CAPITAL RESOURCES

The Company does not currently have any material commitments for capital
expenditures other than those expenditures incurred in the ordinary course of
business.

Since our inception, our operating and investing activities have used
substantially more cash than they have generated. We believe that we have made
considerable progress toward achieving profitable operations by increasing
revenues from electronic document delivery services and through our recent
acquisition of TBS. In addition, we are actively seeking opportunities to
acquire or otherwise combine with businesses that are operating profitably and
generating positive cash flows. However, at present and for the foreseeable
future, we believe that we will continue to need working capital to fund the
growth of our businesses and to absorb the increasing costs associated with
operating as a fully reporting company in the prevailing regulatory environment.
Accordingly, we may experience negative operating and investing cash flows
through the remainder of 2005 until the electronic document delivery business
and TBS consistently generate net cash flows sufficient to offset the
anticipated expenses of operating the holding company. While we believe that our
available cash resources combined with our current revenue streams will be
sufficient to meet our anticipated working capital requirements, we will require
addition financing to fund capital expenditure requirements for 2005. Should our
current revenue streams or margins be subjected to even minor decreases, our
funding requirements could be greater.

We believe that sustainable profitability is achievable; however, we have a
history of losses. While both MVI and TBS have alternately reported both monthly
operating incomes and monthly operating losses during 2004, operating incomes
have been insufficient to offset operating losses, interest expense and
corporate overhead. If we are not successful in sustaining and increasing
operating profits from these two reporting segments, or reducing expenses of the
holding company, we may never achieve profitability for the Company as a whole.
Should we achieve overall profitability in any period, we cannot be certain that
we will sustain or increase such profitability on a quarterly or annual basis.

Between November 2000 and November 2004, our operating shortfalls were primarily
funded by one majority shareholder, an affiliate, to whom we owe $1,000,000 in
principal and approximately $50,000 in interest as of February 28, 2005.
Assuming that this shareholder continues to fund any future operating
shortfalls, we believe we will be able to sustain operations at current levels.
However, this shareholder has no obligation to continue to fund any future
operating shortfalls and could stop doing so at any time. We may be required to
alter the terms of the convertible promissory notes held by this shareholder to
induce this shareholder or other such potential lenders to provide additional
loans, which could result in this shareholder or other such potential lenders
obtaining rights, preferences or privileges senior to those of other creditors
or our stockholders.

This estimate is a forward-looking statement that involves risks and
uncertainties. The actual time period may differ materially from that indicated
as a result of a number of factors so that we cannot assure you that our cash
resources will be sufficient for anticipated or unanticipated working capital
and capital expenditure requirements for this period. We will need to raise
additional capital in the future to meet our operating and investing cash
requirements. Such sources of financing could include capital infusions,
additional equity financing, or debt offerings. There can be no assurance that
additional funding will be available on acceptable terms, if at all, or that
such funds if raised, would enable the Company to achieve or maintain profitable
operations. If we raise additional funds through the issuance of securities,
these securities may have rights, preferences or privileges senior to those of
our common stock, and our stockholders may experience additional dilution to
their equity ownership.

The Report of Independent Registered Public Accounting Firms on our December 31,
2004 consolidated financial statements includes an explanatory paragraph stating
that the Company has incurred recurring losses, and has a


                                       14
<PAGE>

working capital deficit of $528,587 at December 31, 2004, and that these factors
raise substantial doubt about our ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.

RECENT DEVELOPMENTS

CONVERSION OF DEBT

On February 10, 2005, the Company received notice from C. Alan Williams and Joan
P. Williams of their intent to convert $3,682,609 in convertible secured
promissory notes payable and accrued interest thereon to 40,332,669 shares of
the Company's restricted common stock. Per the terms of the convertible secured
promissory notes, the conversion price with respect to $1,939,652 in principal
and interest was $0.07 per share. The conversion price with respect to $853,091
in principal and interest was $0.1275 per common share, which was eighty-five
percent of the average of the Company's common stock closing bid price on the
OTCBB for the ten consecutive trading days prior to February 10, 2005. The
conversion price with respect to $889,866 in principal and interest was $0.15
per share, which was the average of the Company's common stock closing bid price
on the OTCBB for the ten consecutive trading days prior to February 10, 2005.

In consideration for the Williams' conversion, the Company granted the Williams
a full-ratchet anti-dilution right to receive additional shares of its common
stock in the event that any shares of common stock or stock purchase rights are
issued by the Company to another noteholder, Mr. James Townsend, in an amount
greater than that which is set forth by the terms of the amended promissory
notes to Mr. Townsend, as of the date of the conversion. The amount of
additional shares issued to the Williams, if any, shall be determined pro rata
based on the ratio of the Williams' conversion amount to Mr. Townsend's
conversion amount.

As a result of the conversion, the Williams acquired shared voting and shared
dispositive power over seventy-seven percent (77%), or 59,495,094 shares, of the
Company's common stock. After the conversion, the amount owed by the Company to
the Williams pursuant to convertible promissory notes payable was $1,000,000 in
principal and approximately $44,000 in unpaid interest.

FACTORS THAT MAY AFFECT FUTURE RESULTS

The risks and uncertainties described below are not the only ones we face.
Additional risks and uncertainties not presently known to us may also adversely
impact our business operations. If any of the following risks actually occur,
our business, financial condition, or operating results could be negatively
affected.

Some of the information in this Annual Report on Form 10-KSB contains
---------------------------------------------------------------------
forward-looking statements
--------------------------

Some of the information in this Annual Report on Form 10-KSB contains
forward-looking statements that involve substantial risks and uncertainties. You
can identify these statements by forward-looking words such as "may", "will",
"expect", "intend", "anticipate", "believe", "estimate" and "continue" or
similar words. You should read statements that contain these words carefully
because they discuss our expectations about our future performance, contain
projections of our future operating results or of our future financial
condition, or state other "forward-looking" information.

We believe it is important to communicate our expectations to our stockholders.
There may be events in the future, however, that we are not able to predict
accurately or over which we have no control. The risk factors listed in this
section, as well as any cautionary language in this prospectus, provide examples
of risks, uncertainties and events that may cause our actual results to differ
materially from the expectations we describe in our forward-looking statements.
Before you invest in our common stock, you should be aware that the occurrence
of any of the events described in these risk factors and elsewhere in this
prospectus could have a material and adverse effect on our


                                       15
<PAGE>

business, results of operations and financial condition and that upon the
occurrence of any of these events, the trading price of our common stock could
decline and you could lose all or part of your investment.

Our limited operating history makes evaluating our business and prospects
-------------------------------------------------------------------------
difficult.
----------

We have a limited operating history on which you can base an evaluation of our
business and future prospects. You should carefully consider our prospects in
light of the risks and difficulties frequently encountered by early stage
companies in new and rapidly evolving markets. Our success will depend in part
upon our ability to implement and execute our business and marketing strategy.
There is a risk that we will not be able to accomplish our objectives. Failure
to achieve any of our objectives could negatively affect our business, financial
condition and results of operations.

The market for both business-to-business electronic commerce solutions and for
------------------------------------------------------------------------------
government accounting products and services is extremely competitive and we may
-------------------------------------------------------------------------------
not be able to compete effectively.
-----------------------------------

Because both the business-to-business market place and the business-to-small
government market place are highly competitive and have low barriers to entry,
we cannot assure you that we will be able to compete effectively. We expect
competition to intensify as current competitors expand their product offerings
and new competitors like us enter the market. We cannot assure you that we will
be able to compete successfully against current or future competitors, or that
competitive pressures we face will not harm our business, operating results, or
financial condition.

Many of our competitors will have, and potential competitors may have, more
experience developing software and matching solutions, larger technical staffs,
larger customer bases, greater brand recognition, and greater financial and
other resources than we have. In addition, competitors may be able to develop
products and services that are superior to our products and services, achieve
greater customer acceptance or have significantly improved functionality as
compared to our existing and future products and services. There is a risk that
the products and services offered by our competitors now or in the future will
be perceived as superior to ours.

Significant Indebtedness
------------------------

Our significant debt could adversely affect our financial resources and prevent
us from satisfying our debt service obligations. We have a significant amount of
indebtedness and are very likely to incur additional indebtedness in the future.
We presently do not generate sufficient cash flow from operations to service
interest payments. In the future, we may not generate sufficient cash flow from
operations, or have future borrowings available to us, sufficient to pay our
debt.

Our acquisition of Tailored Business Systems, Inc. and Potential Future
-----------------------------------------------------------------------
Acquisitions Involve a Number of Risks
--------------------------------------

Our acquisition of Tailored Business Systems, Inc. and potential future
acquisitions involve risks associated with assimilating these operations into
our Company; integrating, retaining and motivating key personnel; and
integrating and managing geographically-dispersed operations, integrating the
infrastructures of disparate entities. Additionally, the acquisition of TBS and
future acquisitions could divert attention from other business concerns and
could expose us to unforeseen liabilities. We relied on debt financing to
purchase TBS and to fund our operating shortfalls. Consequently our
debt-to-equity ratio is high. The interest costs associated with this debt will
increase our operating expenses and negative cash flow.

The Internet could become subject to regulations that affect our business.
--------------------------------------------------------------------------

Our business segments, both directly and indirectly, rely on the Internet and
other electronic communications gateways. We intend to expand our use of these
gateways. To date, the use of the Internet has been relatively free from
regulatory restraints. However, legislation, regulations, or interpretations may
be adopted in the future that

                                       16
<PAGE>

constrain our own and our customers' abilities to transact business through the
Internet or other electronic communications gateways. There is a risk that any
additional regulation of the use of such gateways could have a material adverse
effect on our business, financial condition, and operating results.

We depend on key personnel and will need to recruit new personnel as we grow.
-----------------------------------------------------------------------------

As we attempt to expand our customer base, we will need to add additional key
personnel as we continue to grow. If we cannot attract and retain enough
qualified and skilled staff, the growth of our business may be limited. Our
ability to provide services to clients and expand our business depends, in part,
on our ability to attract and retain staff with professional experiences that
are relevant to technology development and other functions we perform.
Competition for personnel with these skills is intense. Some technical job
categories are under conditions of severe shortage in the United States. In
addition, restrictive immigration quotas could prevent us from recruiting
skilled staff from outside the United States. We may not be able to recruit or
retain the caliber of staff required to carry out essential functions at the
pace necessary to sustain or expand our business.

We believe our future success will depend in part on the continued employment
and performance of our senior management, our ability to retain and motivate our
officers and key employees, and our ability to identify, attract, hire, train,
retain, and motivate other highly skilled technical, managerial, marketing, and
customer service personnel.

If we are not able to protect our proprietary technology, our ability to compete
--------------------------------------------------------------------------------
effectively could be damaged.
-----------------------------

Despite any precautions we may take, a third party may be able to copy or
otherwise obtain and use our software or other proprietary information without
authorization or develop similar software independently. We cannot assure you
that the steps we have taken or will take will prevent misappropriation of our
technology. Litigation may be necessary in the future to determine the validity
and scope of the proprietary rights of others, or defend against claims of
infringement or invalidity. This litigation, whether successful or unsuccessful,
could result in substantial costs and diversions of resources, either of which
could harm our business.

Our business could be adversely affected if we infringe on intellectual property
--------------------------------------------------------------------------------
rights of third parties.
------------------------

Litigation regarding intellectual property rights is common in the software and
technology industries. We have in the past received letters alleging that we are
infringing the intellectual property rights of AudioFax. We do not believe the
proprietary nature of the AudioFax software is critical to our current or future
market competiveness. Several providers of fax service software have patent
license agreements with AudioFax, and it is our understanding that our use of
these other fax software platforms would indemnify us from any infringement of
AudioFax patents. We currently plan to migrate to a fax software platform that
is compatible with current technology, has existing license agreements with
AudioFax, and will indemnify us from infringement of AudioFax patents. This
migration is subject to the Company's ability to obtain the additional capital
needed for the license fees for the other fax software platforms. We may in the
future be the subjects of claims for infringement, invalidity, or
indemnification claims based on such claims of other parties' proprietary
rights. These claims, with or without merit, could be time consuming and costly
to defend or litigate, divert our attention and resources, or require us to
enter into royalty or licensing agreements. There is a risk that such licenses
would not be available on reasonable terms, or at all. Although we believe we
have the ability to use our intellectual property to operate, market, and
license our existing products without incurring liability to third parties,
there is a risk that our products and services infringe the intellectual
property rights of third parties.

Our products and technology depend on the continued availability of licensed
----------------------------------------------------------------------------
technology from third parties. The loss of such products and technology would
-----------------------------------------------------------------------------
significantly and adversely affect our business.
------------------------------------------------

We license and will continue to license certain technology and software from
third parties. These licenses are integral to our business. If any of these
relationships were terminated or if any of these third parties were to cease
doing business, we would be forced to spend significant time and money to
replace the licensed software. We cannot


                                       17
<PAGE>

assure you that we would be able to replace these licenses. This could have a
material adverse effect on our business, financial condition, and operating
results.

Acts of terrorism, responses to acts of terrorism and acts of war may impact our
--------------------------------------------------------------------------------
business and our ability to raise capital.
------------------------------------------

The September 11, 2001 terrorist attacks in the United States are unprecedented
acts of international terrorism. We cannot predict the continued effect of those
acts on the economy of the United States or on the global economy. Future acts
of war or terrorism, national or international responses to such acts, and
measures taken to prevent such acts may harm our ability to raise capital or our
ability to operate. In addition, the threat of future terrorist acts or acts of
war may have effects on the general economy or on our business that are
difficult to predict. We are not insured against damage or interruption of our
business caused by terrorist acts or acts of war.

Our current and future revenues are unpredictable and our quarterly operating
-----------------------------------------------------------------------------
results may fluctuate significantly.
------------------------------------

We have a limited operating history, and have generated only limited revenues to
date. We cannot forecast with any degree of certainty the amount of revenue to
be generated by any of our services. In addition, we cannot predict the
consistency of our quarterly operating results. Factors which may cause our
operating results to fluctuate significantly from quarter to quarter include:

- our ability to attract new and repeat customers;
- our ability to keep current with the evolving requirements of our target
  market;
- our ability to protect our proprietary technology;
- the ability of our competitors to offer new or enhanced products or services;
  and
- unanticipated delays or cost increases with respect to research and
  development.

Because of these and other factors, we believe that quarter-to-quarter
comparisons of our results of operations are not good indicators of our future
performance. If our operating results fall below the expectations of securities
analysts and investors in some future periods, then our stock price may decline.

One shareholder owns a majority of our outstanding common stock and is able to
------------------------------------------------------------------------------
control our actions.
--------------------

One shareholder and his wife own 59,495,094 shares, or approximately 77%, of the
outstanding shares of our common stock as of February 28, 2005. These
individuals have the ability to elect our entire board of directors and to
approve or disapprove all other matters requiring the vote of shareholders.

Our officers and directors may be able to influence stockholder actions.
------------------------------------------------------------------------

Executive officers and directors, in the aggregate, beneficially own
approximately 15% of our outstanding voting stock. These stockholders acting
together may be able to significantly influence matters requiring approval by
our stockholders, including the election of directors, and the approval of
mergers or other business combination transactions in a manner that could
conflict with our other stockholders.

Our Certificate of Incorporation limits director liability, thereby making it
-----------------------------------------------------------------------------
difficult to bring any action against them for breach of fiduciary duty.
------------------------------------------------------------------------

As permitted by California law, the Company's Certificate of Incorporation
limits the liability of directors to the Company or its stockholders for
monetary damages for breach of a director's fiduciary duty except for liability
in certain instances. As a result of the Company's charter provision and
California law, stockholders may have limited rights to recover against
directors for breach of fiduciary duty.

                                       18
<PAGE>

Penny stock regulations may impose certain restrictions on marketability of our
-------------------------------------------------------------------------------
stock.
------

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

We have never paid dividends on our common stock and do not expect to pay any in
--------------------------------------------------------------------------------
the foreseeable future.
-----------------------

The Company has not paid any dividends on its Common Stock since its inception
and does not intend to pay dividends on its Common Stock in the foreseeable
future. Any earnings that the Company may realize in the foreseeable future will
be retained to finance the growth of the Company.

The number of shares eligible for future sale may adversely affect the market
-----------------------------------------------------------------------------
for our common stock.
---------------------

As of February 28, 2005, the Company had 76,369,213 shares of its Common Stock
issued and outstanding, approximately 71,000,000 of which are "restricted
securities." Rule 144 of the Commission provides, in essence, that a person
holding "restricted securities" for a period of one year may sell only an amount
every three months equal to the greater of (a) one percent of the Company's
issued and outstanding shares, or (b) the average weekly volume of sales during
the four calendar weeks preceding the sale. The amount of "restricted
securities" which a person who is not an affiliate of the Company may sell is
not so limited, since non-affiliates may sell without volume limitation their
shares held for two years if there is adequate current public information
available concerning the Company. In such an event, "restricted securities"
would be eligible for sale to the public at an earlier date. The sale in the
public market of such shares of Common Stock may adversely affect prevailing
market prices of the Common Stock.

Outstanding options and warrants could affect the market price of our common
----------------------------------------------------------------------------
stock.
------

As of December 31, 2004, there were outstanding stock options and warrants to
purchase an aggregate of 25,109,670 shares of Common Stock at exercise prices
ranging between of $0.10 per share and $2.50 per share. The exercise of such
outstanding options will dilute the percentage ownership of the Company's
stockholders, and any sales in the public market of shares of Common Stock
underlying such securities may adversely affect prevailing market prices for the
Common Stock. Moreover, the terms upon which the Company will be able to obtain
additional equity capital may be adversely affected since the holders of such
outstanding securities can be expected to exercise their respective rights
therein at a time when the Company would, in all likelihood, be able to obtain
any needed capital on terms more favorable to the Company than those provided in
such securities.

Our stock price will fluctuate which could result in substantial losses for
---------------------------------------------------------------------------
investors
---------

The market price for our common stock may fluctuate significantly in response to
a number of factors, some of which are beyond our control. These factors
include:

                                       19
<PAGE>

        o   Quarterly variations in operating results;
        o   Changes in financial estimates by securities analysts;
        o   Announcements by us or our competitors of new products,
            significant contracts, acquisitions, or strategic relationships;
        o   Disputes concerning our proprietary rights or any future patents,
            trademarks or copyrights;
        o   Publicity about our company, our products, or our competitors;
        o   Publicity regarding actual or potential medical results relating
            to products under development by us or our competitors;
        o   Additions or departures of key personnel;
        o   Any future sales of our common stock or other securities;
        o   Stock market price and volume fluctuations of publicly-traded
            companies; and
        o   Business combination transactions.

These and other external factors have caused and may continue to cause the
market price and demand for our common stock to fluctuate substantially, which
may limit or prevent investors from readily selling their shares of common stock
and may otherwise negatively affect the liquidity of our common stock.

In the past, securities class action litigation has often been brought against
companies following periods of volatility in the market price of their
securities. If securities class action litigation is brought against us it could
result in substantial costs and a diversion of our management's attention and
resources, which could hurt our business.

Trading in our common stock on the OTCBB may be limited thereby making it more
------------------------------------------------------------------------------
difficult for investors to resell their shares of our common stock.
-------------------------------------------------------------------

Our common stock trades on the OTCBB. The OTCBB is not an exchange and, because
trading of securities on the OTCBB is often more sporadic than the trading of
securities listed on an exchange or NASDAQ, you may have difficulty reselling
any of the shares that you purchase from the selling shareholders.

Our common shareholders may experience substantial dilution
-----------------------------------------------------------

The sale of a substantial number of shares of our common stock in the public
market, or the prospect of such sales, could materially and adversely affect the
market price of our common stock. We are authorized to issue up to 175,000,000
shares of common stock. To the extent of such authorization, our Board of
Directors will have the ability, without seeking stockholder approval, to issue
additional shares of common stock in the future for such consideration as our
Board of Directors may consider sufficient. The issuance of additional common
stock in the future will reduce the proportionate ownership and voting power of
our common stock held by existing stockholders. Sales in the public market of
substantial amounts of our common stock, including sales of common stock
issuable upon exercise of options and warrants, could depress prevailing market
prices for our common stock. Even the perception that such sales could occur
might impact market prices for the common stock. The existence of outstanding
options and warrants may prove to hinder our future equity financings.

NEW ACCOUNTING PRONOUNCEMENTS

In December 2004, the FASB issued SFAS No. 123 (revised 2004) ("SFAS 123(R)"),
"SHARE-BASED PAYMENT," to provide investors and other users of financial
statements with more complete and neutral financial information by requiring
that the compensation cost relating to share-based payment transactions be
recognized in financial statements. That cost will be measured based on the fair
value of the equity or liability instruments issued. SFAS 123(R) covers a wide
range of share-based compensation arrangements including share options,
restricted share plans, performance-based awards, share appreciation rights, and
employee share purchase plans. SFAS 123(R) replaces SFAS No. 123, and supersedes
APB 25. SFAS No. 123, as originally issued in 1995, established as preferable a
fair-value-based method of accounting for share-based payment transactions with
employees. However, that Statement permitted entities the option of continuing
to apply the guidance in APB 25, as long as the footnotes

                                       20
<PAGE>

to financial statements disclosed what net income would have been had the
preferable fair-value-based method been used. Small business issuers will be
required to apply SFAS 123(R) as of the first interim or annual reporting period
that begins after December 15, 2005. The Company is in the process of evaluating
whether the adoption of SFAS 123(R) will have a significant impact on the
Company's overall results of operations or financial position.

In December 2004, the FASB issued SFAS No. 153, "EXCHANGES OF NONMONETARY
ASSETS", an amendment of APB Opinion No. 29, "ACCOUNTING FOR NONMONETARY
TRANSACTIONS." APB No. 29 is based on the principle that exchanges of
nonmonetary assets should be measured based on the fair value of the assets
exchanged. The guidance in APB No. 29, however, included certain exceptions to
that principle. SFAS No. 153 amends APB No. 29 to eliminate the exception for
nonmonetary exchanges of similar productive assets and replaces it with a
general exception for exchanges of nonmonetary assets that do not have
commercial substance, that is, if the future cash flows of the entity are not
expected to change significantly as a result of the exchange. The provisions of
SFAS No. 153 are effective for nonmonetary asset exchanges occurring in fiscal
periods beginning after June 15, 2005. We anticipate that SFAS No.153 will not
have an impact on our financial statements.




















                                       21
<PAGE>

ITEM 7.  FINANCIAL STATEMENTS

         Exhibit 99.1, "VILLAGEEDOCS FINANCIAL STATEMENTS" is incorporated
herein by this reference.

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

None.

ITEM 8A - CONTROLS AND PROCEDURES

As of December 31, 2004, an evaluation was carried out under the supervision and
with the participation of the Company's management, including our Chief
Executive Officer and our Chief Financial Officer, of the effectiveness of the
design and operation of our disclosure controls and procedures (as defined in
Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based
upon that evaluation, the Chief Executive Officer and the Chief Financial
Officer concluded that the design and operation of these disclosure controls and
procedures were effective. No significant changes were made in our internal
controls or in other factors that could significantly affect these controls
subsequent to December 31, 2004.

(a) Evaluation of Disclosure Controls and Procedures. The Company carried out an
evaluation under the supervision and with the participation of the Company's
management, including the Company's Chief Executive Officer ("CEO") and Chief
Financial Officer ("CFO"), of the effectiveness of the Company's disclosure
controls and procedures. Based upon that evaluation, the CEO and CFO concluded
that as of December 31, 2004 our disclosure controls and procedures were
effective in timely alerting them to the material information relating to the
Company (or the Company's consolidated subsidiaries) required to be included in
the Company's periodic filings with the SEC, subject to the various limitations
on effectiveness set forth below under the heading, "LIMITATIONS ON THE
EFFECTIVENESS OF INTERNAL CONTROLS," such that the information relating to the
Company, required to be disclosed in SEC reports (i) is recorded, processed,
summarized and reported within the time periods specified in SEC rules and
forms, and (ii) is accumulated and communicated to the Company's management,
including our CEO and CFO, as appropriate to allow timely decisions regarding
required disclosure.


REMEDIATION OF MATERIAL WEAKNESS IN INTERNAL CONTROL

As reported in our 2005 Form 10-KSB, we determined at the end of 2005 that the
Company's policies and procedures did not provide for adequate management,
oversight, and review of the Company's accounting for (i) the identification of
the variable conversion features embedded within its debt instruments, (ii)
stock-based compensation related to bonuses issued to certain executives in
connection with its acquisitions, and (iii) stock-based compensation in
connection with the amendment and subsequent conversion of certain convertible
promissory notes. These deficiencies resulted in the restatement of the
Company's consolidated financial statements for the year ended December 31, 2004
and quarterly reports for the quarters ended March 31, 2005, June 30, 2005 and
September 30, 2005.

The foregoing led our management to conclude that our disclosure controls and
procedures were not effective as of December 31, 2005 and 2004 because of a
material weakness in our internal controls over financial reporting.

In the first quarter of 2006, we implemented additional review procedures to
ensure that a complete review is performed on all terms of our debt instruments
and stock-based compensation arrangements, and that supporting accounting
documentation is available to ensure that our accounting for the previously
noted material weaknesses is in accordance with accounting principles generally
accepted in the United States of America. These review procedures were in place
in connection with the preparation of our consolidated financial statements for
the first quarter of 2006. As such, we believe that the remediation initiative
outlined above was sufficient to eliminate the


                                       22
<PAGE>


material weakness in internal control over financial reporting as discussed
above.

(b) Changes in internal control over financial reporting. Other than as noted
above, there were no changes in the Company's internal control over financial
reporting that occurred during the fiscal quarter ended December 31, 2004 that
has materially affected, or is reasonably likely to materially affect, the
Company's internal control over financial reporting.


LIMITATIONS ON THE EFFECTIVENESS OF INTERNAL CONTROLS

The Company's management, including the CEO and CFO, does not expect that our
disclosure controls and procedures or our internal control over financial
reporting will necessarily prevent all fraud and material error. An internal
control system, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system
are met. Further, the design of the control system must reflect the fact that
there are resource constraints, and the benefits of controls must be considered
relative to their costs. Because of the inherent limitations in all control
systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been
detected. These inherent limitations include the realities that judgments in
decision-making can be faulty, and that breakdowns can occur because of simple
error or mistake. Additionally, controls can be circumvented by the individual
acts of some persons, by collusion of two or more people, or by management
override of the internal control. The design of any system of controls also is
based in part upon certain assumptions about the likelihood of future events,
and there can be no assurance that any design will succeed in achieving its
stated goals under all potential future conditions. Over time, control may
become inadequate because of changes in conditions, and/or the degree of
compliance with the policies or procedures may deteriorate.




















                                       23
<PAGE>

PART III

ITEM 9.  DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS OF THE
COMPANY

DIRECTORS, EXECUTIVE OFFICERS, AND SIGNIFICANT EMPLOYEES OF THE COMPANY

The following table sets forth certain information with respect to each person
who is a director, executive officer, or significant employee of the Company or
its subsidiary as of February 28, 2005.

<TABLE>
<CAPTION>
                   Name                          Age      Position
                   ----------------------------  ------   ---------------------------------------------------------
<S>                                                <C>    <C>
                   J. Thomas Zender                65     Chairman of the Board, Corporate Secretary

                   K. Mason Conner                 48     President, Chief Executive Officer, Director

                   H. Jay Hill                     65     Executive Vice President of Corporate Development, Director

                   Michael A. Richard              36     Chief Financial Officer

                   James L. Kolassa                51     President of Tailored Business Systems, Inc.

                   Stephen A. Garner               50     Co-Chief Information Officer of Tailored Business
                                                          Systems, Inc.

                   James L. Campbell               48     Co-Chief Information Officer of Tailored Business
                                                          Systems, Inc.
</TABLE>


Executive officers are appointed by the Board of Directors and, subject to the
terms of their employment agreements, serve until their successors are duly
elected and qualify, subject to earlier removal by the Board of Directors.
Directors are elected at the annual meeting of shareholders to serve for their
term and until their successors are duly elected and qualify, or until their
earlier resignation, removal from office, or death. The remaining directors may
fill any vacancy in the Board of Directors for an unexpired term. The term of
the current directors continues until the next annual meeting of shareholders to
be held in 2005. Mr. Zender has been a director since August 1997, Mr. Hill
since October 1997, and Mr. Conner since October 1998.













                                       24
<PAGE>

BUSINESS EXPERIENCE OF EXECUTIVE OFFICERS, DIRECTORS AND SIGNIFICANT EMPLOYEES

J. Thomas Zender has been a director since 1997 and has been Chairman of the
Board since January 2001. He is an information technology industry consultant
specializing in strategic business development with 36 years of management and
marketing experience. He has held management positions at General Electric,
Honeywell, ITT and other companies. He has been an officer in three publicly
held corporations, one NYSE listed company and two NASDAQ traded companies. From
1996 through 2001 Mr. Zender served as an interim executive for several
companies in their early stage, including CEO of VillageEDOCS from 1997 to 1999.
He serves on the boards of two companies in the information technology sector,
one publicly traded and the other privately held. Currently, Mr. Zender is
President and CEO of Unity, a global not-for-profit organization, where he also
serves on the board of directors.

K. Mason Conner joined the Company as Vice-President of Sales in 1997 and has
been President and a Board Member since 1998, Acting Vice-President of Sales
between 1998 and 2002, and Chief Executive Officer since 1999. Mr. Conner is
also a Director and the President of Tailored Business Systems, Inc. ("TBS"),
which became a wholly owned subsidiary of the Company on February 17, 2004. He
has 27 years in sales and business management experience, including 19 years of
direct and channel sales experience in the voice and data communications
products and services industry. In the early 1980's he was involved in the
application of Internet Protocol technologies with the military. In the late
1980s and early 1990s he was a principal strategist for an international
initiative to transform K-12 education through the use of the Internet. He was a
lead consultant with LTS for the electronic vulnerability threat assessment of
the Los Angeles Airport Department after the "UnaBomber" threat. He has held
senior sales management positions with Banyan Systems, Doelz Networks, and
Timeplex. During the five years prior to joining the Company, Mr. Conner was
Director of Sales at Telecom Multimedia Systems from 1996 to 1997, Vice
President of Sales at Lo Tiro-Sapere from 1995 to 1996, and Vice President of
Sales at Digital Network Architectures from 1991 to 1995.

H. Jay Hill has been a director since 1997 and became the Executive Vice
President of Corporate Development in May of 2003. Mr Hill is also a Vice
President of TBS. For the last 20 years, he has primarily been a senior
executive in turnaround situations in information technology and
telecommunication companies. From November 2000 to May of 2003, Mr. Hill was
CEO, President and a Director of LightPort Advisors, Inc, a private Internet
service provider for the financial services market. He has held similar
positions with Unitron Medical Communications, Inc. (d/b/a Moon Communications)
(1999-2000) and Amnet Corporation (Netlink) (1989-1994), and has held senior
sales and marketing management positions with SunCoast Environmental Controls
(1996-1999), Technology Research Corporation (1994-1996), Harris Corporation,
Doelz Networks, Paradyne/AT&T, and Inforex. His primary background in sales and
marketing commenced with Philadelphia Electric Company and IBM. During 1999,
Moon Communications, which was then a subsidiary of Sabratek Corp., filed for
protection under Chapter 11 of the U.S. Bankruptcy Code in connection with the
reorganization of Sabratek.

Michael A. Richard joined the Company in February 2001 and is the Chief
Financial Officer and Corporate Secretary. Mr. Richard is also a Director and
the Secretary of TBS. Mr. Richard has over 14 years of diverse management and
public corporate reporting experience for start-up and early stage ventures.
From 1999-2000 he served as V.P. Controller for The BigHub.com, Inc., a public
new media company providing unique content, private label search engine,
e-commerce solutions, and controlling a direct mail operation. From 1995-1999,
Mr. Richard served first as Controller and then as Vice President, Accounting
(principal accounting officer), and finally as a Director of PortaCom Wireless,
Inc., a public developer and operator of companies with contracts to provide
wireless telecommunication services in China and other emerging markets.

James L. Kolassa joined the Company in April 2004 and is the President of TBS.
Mr. Kolassa has over 25 years of experience and success in the computer industry
from direct sales with IBM and Hitachi Data Systems to channel development and
distribution with both SupportNet and KeyLink Systems. Mr. Kolassa also served
as the President of a software firm that he later sold. Mr. Kolassa holds a BBA
in Marketing Management from Western Michigan University and an MBA in MIS from
Indiana University.

                                       25
<PAGE>

Stephen L. Garner is a Vice President and Co-Chief Technology Officer of TBS.
From 1988 through the date of the acquisition, Mr. Garner served as the
President of TBS. Mr. Garner has over 25 years experience in Information
Technology. Mr. Garner obtained a BS in Mathematics from Georgia Southern
University in 1978. Mr. Garner is also a Certified IBM Technical Solutions
Provider.

James M. Campbell is a Vice President and Co-Chief Technology Officer of TBS.
From 1988 through the date of the acquisition, Mr. Campbell served as the
Secretary-Treasurer of TBS. Mr. Campbell has over 25 years of experience in the
design and implementation of system software. Mr. Campbell obtained a BBA in
Accounting from Georgia Southern University in 1978 and is a Certified Public
Accountant.

BOARD OF DIRECTORS

The Company's Bylaws fix the size of the Board of Directors at no fewer than
three and no more than five members, to be elected annually by a plurality of
the votes cast by the holders of Common Stock, and to serve until the next
annual meeting of stockholders and until their successors have been elected or
until their earlier resignation or removal. We currently have three directors,
all of whom were elected to their current terms on June 16, 2004. The Company
currently has no Audit, Compensation or Nominating Committees.

DEPENDENCE ON KEY MANAGEMENT

The Company's performance depends substantially on the continued services and
performance of its senior management and other key personnel. The Company's
performance also depends on its ability to retain and motivate its other
qualified officers and key employees. The loss of services of one or more of
these employees could have a material adverse effect on the business of the
Company. There can be no assurance that the Company will be successful in
attracting and retaining such personnel. Competition for such personnel is
intense.



















                                       26
<PAGE>

ITEM 10.  EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows the compensation paid or accrued by the Company for
the fiscal years ended December 31, 2004 and 2003 to or for the account of the
President and Chief Executive Officer and executive officers and significant
employees of the Company who received benefits or annual salary and bonus of
$100,000 or more during the stated period.

<TABLE>
<CAPTION>

         ------------------------------------------------------------------------------------------------------------
                                          ANNUAL COMPENSATION                     LONG-TERM COMPENSATION
         -----------------------    ---------------------------------     -------------------------------------------
         Name & Principal             Salary       Bonus       Other       Stock options      LTIP Payouts     Other
         Position                      ($)          ($)         ($)             (#)               ($)           ($)
         -----------------------    ----------    -------     -------     ---------------    --------------   -------
<S>                                  <C>          <C>            <C>         <C>                   <C>          <C>
         Fiscal 2004
         -----------------------
         K. Mason Conner
         President, CEO              $138,926       --           --          3,500,000             --           --

         H. Jay Hill
         E.V.P. Corporate
         Development                   93,423     76,000         --            500,000             --           --

         James L. Kolassa
         President, Tailored
         Business Systems              83,044     60,014         --          1,500,000             --           --

         James L. Campbell
         Co-CIO, Tailored
         Business Systems              76,676     27,235         --              --                --           --

         Stephen A. Garner
         Co-CIO, Tailored
         Business Systems              77,269     27,235         --              --                --           --

         -----------------------
         Fiscal 2003
         -----------------------
         K. Mason Conner
         President, CEO              $105,000       --           --          1,719,658             --           --
         ------------------------------------------------------------------------------------------------------------
</TABLE>


EMPLOYMENT AND OTHER AGREEMENTS

We have entered into employment agreements with K. Mason Conner, our President
and Chief Executive Officer, H. Jay Hill, our Executive Vice President -
Corporate Development, and Michael Richard, our Chief Financial Officer. On June
16, 2004, a written consent was filed with the Company to approve each of these
employment agreements. Following is a summary of the significant terms of each
of these agreements:

                                       27
<PAGE>

K. MASON CONNER. Mr. Conner's employment agreement, dated as of June 10, 2004,
provides for Mr. Conner to serve as our President and Chief Executive Officer
for a term of three years from June 15, 2004. The employment agreement provides
that, the term of the agreement shall automatically be extended for successive
one year renewal terms, provided that if either Mr. Conner or the Company gives
the other party at least ninety days advance written notice of his or its
intention to not renew the agreement for an additional term, the agreement will
terminate upon the expiration of the current term.

The employment agreement provides for Mr. Conner to receive a base salary of
$150,000 for the first year. The Company will review Mr. Conner's salary at
annual intervals, and may adjust his annual base salary from time to time as the
Board of Directors or its Compensation Committee deems to be appropriate,
provided, however, that the salary for the second and each succeeding year shall
not be less than 105% of the salary for the prior year. Mr. Conner is entitled
to an incentive bonus based upon the Company's net income. For the 2004 fiscal
year, Mr. Conner will be paid a bonus equal to 10% of the Company's net income.
For fiscal 2005 and 2006, the percentage of net income paid to Mr. Conner will
be determined by the Board of Directors, but may not be less than 4% of net
income for 2005 and 2% for 2006.

Mr. Conner will be paid an incentive bonus for each acquisition closed during
the term of the employment agreement. For each acquisition, Mr. Conner will be
issued shares of the Company's common stock having an aggregate market value on
the date of such closing equal to 2% of the acquisition price.

Pursuant to the employment agreement, we have granted Mr. Conner options for
3,500,000 shares of our common stock (the "Option Shares"). The Option Shares
will vest over a five year period and may be exercised during the seven year
period after vesting. If Mr. Conner voluntarily resigns or is terminated for
cause, all unvested options will be forfeited and cancelled; provided, that Mr.
Conner shall be fully vested in then unvested Option Shares (A) in the event of
his termination by the Company other than for cause, (B) upon the consummation
of a Change in Control, or (C) upon Mr. Conner's death or disability. Mr. Conner
is entitled to full ratchet anti-dilution protection with respect to forty (40%)
percent of vested options. The Company has agreed to use its best efforts to
register, and maintain the effectiveness of a registration statement on Form
S-8, for resale all of the Option Shares granted to Mr. Conner and, at any time
that Form S-8 is not effective, to grant him piggyback registration with respect
to any registration statement filed by the Company.

Mr. Conner also is entitled to participate in any benefits plans maintained by
the Company for its executives or employees and is entitled to four weeks annual
vacation. He is also entitled to be reimbursed for business expenses incurred by
him in promoting the Company's business.

If Mr. Conner's employment is terminated for reasons other than death,
disability, or voluntary termination by Mr. Conner, the Company will be
obligated to make monthly payments to Mr. Conner for each month during the
remaining term of the employment agreement, but not less than twelve (12)
months. Each monthly payment shall be equal to one-twelfth (1/12th) of twice Mr.
Conner's annual base salary, as in effect on the date of termination. In
addition, any restricted stock, stock options or other awards granted to him
will become immediately vested in full and, in the case of stock options,
exercisable in full. Mr. Conner will also be permitted to continue to
participate for a period of one year, at the Company's expense, in all benefit
and insurance plans, coverage and programs in which he was participating as of
the termination date.

The Company may terminate the agreement if it determines that Mr. Conner has
been unable to attend to his duties for at least ninety (90) days because of a
medically diagnosable physical or mental condition, and has received a written
opinion from a physician acceptable to the Board that such condition prevents
him from resuming full performance of his duties and is likely to continue for
an indefinite period. Upon such termination, the Company shall pay Mr. Conner a
monthly disability benefit equal to one-twelfth (1/12th) of his current annual
base salary at the time he became permanently disabled until the earliest of (i)
the month in which the he returns to active employment, either with the Company
or otherwise, (ii) the end of the initial term of the agreement, or the current
renewal term, as the case may be, or (iii) the twenty-fourth month after the
date of the termination. Any such

                                       28
<PAGE>

payments shall be reduced by any amounts paid to Mr. Conner under any long-term
disability plan or other disability program or insurance policies maintained or
provided by the Company.

If Mr. Conner is terminated for Cause, he shall be entitled to receive his base
salary through the date of termination and any non-forfeitable benefits earned
and payable to him under the terms of deferred compensation or incentive plans
maintained by the Company.

In the event of a Change in Corporate Control, any restricted stock, stock
options or other awards granted to Mr. Conner shall become immediately vested in
full and, in the case of stock options, exercisable in full. Additionally, if at
any time during the twelve (12) consecutive months following or six (6) months
prior to the occurrence of a Change in Corporate Control, Mr. Conner is
involuntarily terminated (other than for Cause) by the Company, he shall be
entitled to lump sum severance pay in an amount equal to the sum of (i) 299% of
his annual base salary in effect at the time of the Change in Corporate Control
plus (ii) 299% of the annual bonus paid to him with respect to the last fiscal
year ending prior to the Change in Corporate Control.

H. JAY HILL. Mr. Hill's employment agreement, dated as of June 10, 2004,
provides for Mr. Hill to serve as our Executive Vice President - Corporate
Development for a term of three years from June 16, 2004. The employment
agreement provides that, the term of the agreement shall automatically be
extended for successive one year renewal terms, provided that if either Mr. Hill
or the Company gives the other party at least ninety days advance written notice
of his or its intention to not renew the agreement for an additional term, the
agreement will terminate upon the expiration of the current term.

The employment agreement provides for Mr. Hill to receive a base salary of
$120,000 for the first year. The Company will review Mr. Hill's salary at annual
intervals, and may adjust his annual base salary from time to time as the Board
of Directors or its Compensation Committee deems to be appropriate, provided,
however, that the salary for the second and each succeeding year shall not be
less than 105% of the salary for the prior year.

Mr. Hill will be paid an incentive bonus for each acquisition closed during the
term of the employment agreement. For each acquisition, Mr. Hill will be paid in
kind consideration in an amount equal to 3.5% of the acquisition price.

Pursuant to the employment agreement, we have granted Mr. Hill options for
500,000 shares of our common stock (the "Option Shares"). The Option Shares will
vest over a five year period and may be exercised during the seven year period
after vesting. If Mr. Hill voluntarily resigns or is terminated for cause, all
unvested options will be forfeited and cancelled; provided, that Mr. Hill shall
be fully vested in then unvested Option Shares (A) in the event of his
termination by the Company other than for cause, (B) upon the consummation of a
Change in Control, or (C) upon Mr. Hill's death or disability. Mr. Hill is
entitled to full ratchet anti-dilution protection with respect to forty (40%)
percent of vested options. The Company has agreed to use its best efforts to
register, and maintain the effectiveness of a registration statement on Form
S-8, for resale all of the Option Shares granted to Mr. Hill and, at any time
that Form S-8 is not effective, to grant him piggyback registration with respect
to any registration statement filed by the Company.

Mr. Hill also is entitled to participate in any benefits plans maintained by the
Company for its executives or employees and is entitled to four weeks annual
vacation. He is also entitled to be reimbursed for business expenses incurred by
him in promoting the Company's business.

If Mr. Hill's employment is terminated for reasons other than death, disability,
or voluntary termination by Mr. Hill, the Company will be obligated to make
monthly payments to Mr. Hill for each month during the remaining term of the
employment agreement, but not less than twelve (12) months. Each monthly payment
shall be equal to one-twelfth (1/12th) of twice Mr. Hill's annual base salary,
as in effect on the date of termination. In addition, any restricted stock,
stock options or other awards granted to him will become immediately vested in
full and, in the case of stock options, exercisable in full. Mr. Hill will also
be permitted to continue to participate for a period of one year, at the
Company's expense, in all benefit and insurance plans, coverage and programs in
which he was participating as of the termination date.

                                       29
<PAGE>

The Company may terminate the agreement if it determines that Mr. Hill has been
unable to attend to his duties for at least ninety (90) days because of a
medically diagnosable physical or mental condition, and has received a written
opinion from a physician acceptable to the Board that such condition prevents
him from resuming full performance of his duties and is likely to continue for
an indefinite period. Upon such termination, the Company shall pay Mr. Hill a
monthly disability benefit equal to one-twelfth (1/12th) of his current annual
base salary at the time he became permanently disabled until the earliest of (i)
the month in which the he returns to active employment, either with the Company
or otherwise, (ii) the end of the initial term of the agreement, or the current
renewal term, as the case may be, or (iii) the twenty-fourth month after the
date of the termination. Any such payments shall be reduced by any amounts paid
to Mr. Hill under any long-term disability plan or other disability program or
insurance policies maintained or provided by the Company.

If Mr. Hill is terminated for Cause, he shall be entitled to receive his base
salary through the date of termination and any non-forfeitable benefits earned
and payable to him under the terms of deferred compensation or incentive plans
maintained by the Company.

In the event of a Change in Corporate Control, any restricted stock, stock
options or other awards granted to Mr. Hill shall become immediately vested in
full and, in the case of stock options, exercisable in full. Additionally, if at
any time during the twelve (12) consecutive months following or six (6) months
prior to the occurrence of a Change in Corporate Control, Mr. Hill is
involuntarily terminated (other than for Cause) by the Company, he shall be
entitled to lump sum severance pay in an amount equal to the sum of (i) 200% of
his annual base salary in effect at the time of the Change in Corporate Control
plus (ii) 200% of the annual bonus paid to him with respect to the last fiscal
year ending prior to the Change in Corporate Control.

MICHAEL RICHARD. Mr. Richard's employment agreement, dated as of June 10, 2004,
provides for Mr. Richard to serve as our Chief Financial Officer for a term of
two years from June 15, 2004. The employment agreement provides that, the term
of the agreement shall automatically be extended for successive one year renewal
terms, provided that if either Mr. Richard or the Company gives the other party
at least ninety days advance written notice of his or its intention to not renew
the agreement for an additional term, the agreement will terminate upon the
expiration of the current term.

The employment agreement provides for Mr. Richard to receive a base salary of
$95,000 for the first year. The Company will review Mr. Richard's salary at
annual intervals, and may adjust his annual base salary from time to time as the
Chief Executive Officer deems to be appropriate, provided, however, that the
salary for the second and each succeeding year shall not be less than 105% of
the salary for the prior year.

Pursuant to the employment agreement, we have granted Mr. Richard options for
650,000 shares of our common stock (the "Option Shares"). The Option Shares will
vest over a five year period and may be exercised during the seven year period
after vesting. If Mr. Richard voluntarily resigns or is terminated for cause,
all unvested options will be forfeited and cancelled; provided, that Mr. Richard
shall be fully vested in then unvested Option Shares (A) in the event of his
termination by the Company other than for cause, (B) upon the consummation of a
Change in Control, or (C) upon Mr. Richard's death or disability. Mr. Richard is
entitled to full ratchet anti-dilution protection with respect to forty (40%)
percent of vested options. The Company has agreed to use its best efforts to
register, and maintain the effectiveness of a registration statement on Form
S-8, for resale all of the Option Shares granted to Mr. Richard and, at any time
that Form S-8 is not effective, to grant him piggyback registration with respect
to any registration statement filed by the Company.

Mr. Richard also is entitled to participate in any benefits plans maintained by
the Company for its executives or employees and is entitled to two weeks annual
vacation. He is also entitled to be reimbursed for business expenses incurred by
him in promoting the Company's business.

If Mr. Richard's employment is terminated for reasons other than death,
disability, or voluntary termination by Mr. Richard, the Company will be
obligated to make monthly payments to Mr. Richard for each month during the


                                       30
<PAGE>

remaining term of the employment agreement, but not less than six (6) months.
Each monthly payment shall be equal to one-twelfth (1/12th) of his annual base
salary, as in effect on the date of termination. In addition, any restricted
stock, stock options or other awards granted to him will become immediately
vested in full and, in the case of stock options, exercisable in full. Mr.
Richard will also be permitted to continue to participate for a period of six
(6) months year, at the Company's expense, in all benefit and insurance plans,
coverage and programs in which he was participating as of the termination date.

The Company may terminate the agreement if it determines that Mr. Richard has
been unable to attend to his duties for at least ninety (90) days because of a
medically diagnosable physical or mental condition, and has received a written
opinion from a physician acceptable to the Board that such condition prevents
him from resuming full performance of his duties and is likely to continue for
an indefinite period. Upon such termination, the Company shall pay Mr. Richard a
monthly disability benefit equal to one-twelfth (1/12th) of his current annual
base salary at the time he became permanently disabled until the earliest of (i)
the month in which the he returns to active employment, either with the Company
or otherwise, (ii) the end of the initial term of the agreement, or the current
renewal term, as the case may be, or (iii) the sixth month after the date of the
termination. Any such payments shall be reduced by any amounts paid to Mr.
Richard under any long-term disability plan or other disability program or
insurance policies maintained or provided by the Company.

If Mr. Richard is terminated for Cause, he shall be entitled to receive his base
salary through the date of termination and any non-forfeitable benefits earned
and payable to him under the terms of deferred compensation or incentive plans
maintained by the Company.

In the event of a Change in Corporate Control, any restricted stock, stock
options or other awards granted to Mr. Richard shall become immediately vested
in full and, in the case of stock options, exercisable in full. Additionally, if
at any time during the twelve (12) consecutive months following or six (6)
months prior to the occurrence of a Change in Corporate Control, Mr. Richard is
involuntarily terminated (other than for Cause) by the Company, he shall be
entitled to lump sum severance pay in an amount equal to the sum of (i) 50% of
his annual base salary in effect at the time of the Change in Corporate Control
plus (ii) 50% of the annual bonus paid to him with respect to the last fiscal
year ending prior to the Change in Corporate Control.

JAMES L. KOLASSA. Mr. Kolassa's employment offer letter, dated April 23, 2004,
provides for Mr. Kolassa to serve as President of TBS and to receive a base
salary of $100,000 per year. His employment is at-will. Mr. Kolassa is entitled
to an incentive bonus based upon achieving certain growth targets for TBS' net
revenue and net income.

Pursuant to the employment offer letter, the Company has agreed to grant Mr.
Kolassa options to purchase 1,500,000 shares of our common stock at $0.18 per
share (the "Option Shares"). The Option Shares will vest over a five year period
and may be exercised during the seven year period after vesting. If Mr.
Kolassa's employment is terminated for any reason, all vested and unvested
options will be forfeited and cancelled if unexercised in the ninety day period
following the date of any such termination.

Mr. Kolassa also is entitled to participate in any benefits plans maintained by
the Company for its executives or employees and is entitled to three weeks
annual vacation. He is also entitled to be reimbursed for business expenses
incurred by him in promoting the Company's business.

In the event of a Change in Corporate Control, any stock options granted to Mr.
Kolassa shall become immediately vested in full and, in the case of stock
options, exercisable in full.

JAMES L. CAMPBELL. Mr. Campbell's employment agreement, dated as of February 17,
2004, as modified, provides for Mr. Campbell to serve as the Co-CIO of TBS for a
term of three years from June 15, 2004. The employment agreement provides that,
the term of the agreement shall automatically be extended for successive one
year renewal terms, provided that if either Mr. Campbell or TBS gives the other
party at least thirty days advance written notice of his or its intention to not
renew the agreement for an additional term, the agreement will terminate upon
the expiration of the current term.

                                       31
<PAGE>

The employment agreement provides for Mr. Campbell to receive a base salary of
$100,000 for the first year. The Company will review Mr. Campbell's salary at
annual intervals, and may adjust his annual base salary from time to time as the
Board of Directors or its Compensation Committee deems to be appropriate,
provided, however, that the salary for the second and each succeeding year shall
not be less than 105% of the salary for the prior year. Mr. Campbell is entitled
to an incentive bonus based upon the Company's gross margin.

Mr. Campbell also is entitled to participate in any benefits plans maintained by
the Company for its executives or employees and is entitled to three weeks
annual vacation. He is also entitled to be reimbursed for business expenses
incurred by him in promoting TBS' business and to reimbursement of up to $2,500
per year in expenses for attending continuing education programs.

If Mr. Campbell's employment is terminated for reasons other than death,
disability, "good reason", or voluntary termination by Mr. Campbell, the Company
will be obligated to make monthly payments to Mr. Campbell for each month during
the remaining term of the employment agreement. Each monthly payment shall be
equal to one-twelfth (1/12th) of Mr. Campbell's annual base salary, as in effect
on the date of termination.

STEPHEN A. GARNER. Mr. Garner's employment agreement, dated as of February 17,
2004, as modified, provides for Mr. Garner to serve as the Co-CIO of TBS for a
term of three years from June 15, 2004. The employment agreement provides that,
the term of the agreement shall automatically be extended for successive one
year renewal terms, provided that if either Mr. Garner or TBS gives the other
party at least thirty days advance written notice of his or its intention to not
renew the agreement for an additional term, the agreement will terminate upon
the expiration of the current term.

The employment agreement provides for Mr. Garner to receive a base salary of
$100,000 for the first year. The Company will review Mr. Garner's salary at
annual intervals, and may adjust his annual base salary from time to time as the
Board of Directors or its Compensation Committee deems to be appropriate,
provided, however, that the salary for the second and each succeeding year shall
not be less than 105% of the salary for the prior year. Mr. Garner is entitled
to an incentive bonus based upon the Company's gross margin.

Mr. Garner also is entitled to participate in any benefits plans maintained by
the Company for its executives or employees and is entitled to three weeks
annual vacation. He is also entitled to be reimbursed for business expenses
incurred by him in promoting TBS' business and to reimbursement of up to $2,500
per year in expenses for attending continuing education programs.

If Mr. Garner's employment is terminated for reasons other than death,
disability, "good reason", or voluntary termination by Mr. Garner, the Company
will be obligated to make monthly payments to Mr. Garner for each month during
the remaining term of the employment agreement. Each monthly payment shall be
equal to one-twelfth (1/12th) of Mr. Garner's annual base salary, as in effect
on the date of termination.

OPTION GRANTS IN FISCAL 2004

The following table provides information concerning grants of options to
purchase the Company's common stock that we made to each of the executive
officers and significant employees named in the summary executive





                                       32
<PAGE>

compensation table during the fiscal year ended December 31, 2004. We did not
grant stock appreciation rights to these individuals during 2004.

<TABLE>
<CAPTION>
        ------------------------------------------------------------------------------------------------------
                                      Number of          Percentage of Total      Exercise
                                Securities Underlying     Options Granted to      Price Per      Expiration
        Name                       Options Granted        Employees in 2004         Share           Date
        ------------------------------------------------------------------------------------   -------------
<S>                                   <C>                        <C>                <C>           <C>  <C>
        K. Mason Conner               3,500,000                  42%                $0.15         6/10/12
        H. Jay Hill                     500,000                   6%                $0.15         6/10/12
        James L. Kolassa              1,500,000                  18%                $0.18         4/27/09
        James L. Campbell                --                       --                 --              --
        Stephen A. Garner                --                       --                 --              --
        ------------------------------------------------------------------------------------------------------
</TABLE>


FISCAL YEAR END OPTION VALUES AND EXERCISES

The following table provides information with respect to the year-end value of
unexercised stock options for each of the executive officers and significant
employees named in the summary executive compensation table. The dollar values
of unexercised options are calculated by determining the difference between the
fair market value at fiscal year end of the common stock underlying the options
and the exercise price of the options. The fair value is $0.15 per share, the
per share price of our common stock on the OTCBB on December 31, 2004.

<TABLE>
<CAPTION>
        ------------------------------------------------------------------------------------------------------
                                   Number of Securities Underlying              Value of Unexercised
                                     Unexercised Options at FYE              In-the-Money Options at FYE
        Name                        Exercisable / Un-exercisable            Exercisable / Un-exercisable
        ------------------------------------------------------------------------------------------------------
<S>                                     <C>                                       <C>
        K. Mason Conner                 2,365,290 / 3,520,042                          $0 / $0
        H. Jay Hill                     1,020,162 / 2,931,837                     $10,000 / $40,000
        James L. Kolassa                        0 / 1,500,000                          $0 / $0
        James L. Campbell                       0 / 0                                  $0 / $0
        Stephen A. Garner                       0 / 0                                  $0 / $0
        ------------------------------------------------------------------------------------------------------
</TABLE>


STOCK OPTIONS

The Company has adopted an equity incentive plan (the "2002 Plan") that
authorizes the issuance of options to acquire up to 28,000,000 shares of common
stock, as amended, to employees and certain outside consultants. The 2002 Plan
allows for the issuance of either non-qualified or, subject to stockholder
approval, incentive stock options pursuant to Section 422 of the Internal
Revenue Code. Options vest at the discretion of the Board of Directors as
determined at the grant date, but not longer than a ten-year term. Under the
2002 Plan, the exercise price of each option shall not be less than fair market
value on the date the option is granted. The number of options under the 2002
Plan available for grant at December 31, 2004 was 10,816,532.

During 2004, the Company granted to its employees options to purchase shares of
its common stock under the 2002 Plan as follows: 5,150,000 shares at $0.15 per
share, 150,000 shares at $0.17 per share, 2,990,000 shares at $0.18 per share,
10,000 shares at $0.1875 per share, 25,000 shares at $0.19 per share, 35,000
shares at $0.20 per share. All options were issued above or at the fair market
value on the dates of grant and vest on various dates from the date


                                       33
<PAGE>

of grant through October 2009.

Effective February 10, 2005, the exercise price of options to purchase 1,860,000
shares of the Company's common stock under the 2002 Plan at $0.15 per share that
were issued in 2004 was reduced to $0.07 per share, in accordance with the
related employment agreements, in connection with the conversion of debt to
common stock subsequent to year end. As a result, the Company will account for
such options under variable accounting.

Options to purchase 50,000 shares at $0.10 (the fair market value on the date of
grant) were granted to a non-employee consultant during 2003. These options
vested on February 28, 2004.

Options to purchase 3,710,000 shares of the Company's common stock under the
2002 Plan at per share prices ranging from $0.10 to $0.1875 (above or at the
fair market value on the dates of grant) were issued to employees during the
year ended December 31, 2003, vesting on various dates from the date of grant
through December 2008.

Options to purchase 833,030 shares of the Company's common stock under the 2002
Plan at $0.1875 per share (above or at the fair market value on the dates of
grant) that were issued in 2002 were modified as to vesting and expiration date
during 2003 in connection with the retirement of employees.

During 1997, the Board of Directors of the Company adopted a stock option plan
(the "1997 Plan") that authorizes the issuance of options to acquire up to
5,000,000 shares of common stock to employees and certain outside consultants.
The 1997 Plan allows for the issuance of either non-qualified or incentive stock
options pursuant to Section 422 of the Internal Revenue Code. Options vest at
the discretion of the Board of Directors as determined at the grant date, but
not longer than a ten-year term. Under the 1997 Plan, the exercise price of each
option shall not be less than 85 percent of fair market value on the date the
option is granted. The number of options under the 1997 Plan available for grant
at December 31, 2003 was 2,089,798.

During 2004, 1,362,286 options under the 2002 Plan and 154,635 other options
were cancelled due to their expiration or the termination of employment.

BOARD OF DIRECTOR COMPENSATION

Members of our board of directors receive no cash compensation for services as a
director or for attendance at or participation in meetings. Directors receive
options to purchase common stock as compensation for services as a director. In
past years, directors have received options to purchase the Company's common
stock in consideration for services as a director. There has been no
determination made as to the number and exercise price of options, if any, that
will be issued to either K. Mason Conner or H. Jay Hill for service during terms
following the term that expired on October 5, 2001. During 2004, our Board of
Directors has approved a compensation arrangement with J. Thomas Zender, a
Director. Pursuant to this arrangement, we have agreed to issue options to
purchase 325,000 shares of our common stock at $0.15 per share to Mr. Zender in
consideration for his past services as a Director and options to purchase
175,000 shares of our common stock at $0.15 per share in consideration for his
services as a Director during the current year. Directors are reimbursed for
out-of-pocket expenses incurred by them in connection with attending meetings.
All directors have options to purchase shares of the Company's Common Stock as
set forth in the table in Item 11 of this Annual Report on Form 10-KSB. The
Company has no other arrangements regarding compensation for services as a
director.

AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT

Because our board of directors is comprised of only three members, none of which
are considered to be independent within the meaning of Item 7(d)(3)(iv) of
Schedule 14A of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), we have determined that it is impractical to form an audit committee of
the board of directors. The entire board of directors of the Company acts as the
audit committee as specified in section 3(a)(58)(B) of the Exchange Act. In
addition, we do not have an audit committee financial expert as defined by Item
401(e) of

                                       34
<PAGE>

Regulation S-B of the Exchange Act at this time because we believe that we are
not in a position to attract suitable candidates due to insufficient capital
resources. In addition, we are not required by the OCTBB to have either an audit
committee or an audit committee financial expert.

CODE OF ETHICS

The Company has adopted a written Code of Ethics designed to deter wrongdoing
and promote honest and ethical conduct, full, fair and accurate disclosure,
compliance with laws, prompt internal reporting and accountability to adherence
to the Code of Ethics. This Code of Ethics has been filed with the Securities
and Exchange Commission as Exhibit 14.1 to the Annual Report on Form 10-KSB
filed on March 29, 2004 and is posted on the Company's Internet website
(www.villageedocs.com). Any amendments or waivers to this Code of Ethics with
respect to the Company's principal executive officer, principal financial
officer, principal accounting officer or controller (or persons performing
similar functions) will be posted on our web site. One may also obtain, without
charge, a copy of this Code of Ethics by contacting the Company's Investor
Relations Department at (714) 368-8705.

























                                       35
<PAGE>

ITEM 11.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information with respect to the
beneficial ownership of shares of the Company's Common Stock owned as of
February 28, 2005 beneficially by (i) each person who beneficially owns more
than 5% of the outstanding Common Stock, (ii) each director of the Company,
(iii) the President and Chief Executive Officer of the Company, the executive
officers and significant employees of the Company whose cash and non-cash
compensation for services rendered to the Company for the year ended December
31, 2004 exceeded $100,000), and (iv) directors, executive officers, and
significant employees as a group:

<TABLE>
<CAPTION>
              ------------------------------------------------------------------------------------
                     Name of Beneficial             Amount and Nature of          Percent
                          Owner (1)               Beneficial Ownership (2)    of Class (3) (4)
              ------------------------------------------------------------------------------------
<S>                                                            <C>                  <C>
              James Townsend (5)                               11,097,857           10.3

              C. Alan Williams (6)                             72,662,139           67.7

              K. Mason Conner (7)                               2,399,655           2.2

              J. Thomas Zender (8)                              1,126,927           1.1

              H. Jay Hill (9)                                   1,289,427           1.2

              James L. Kolassa (10)                               300,000           0.3

              James L. Campbell (11)                            5,260,000           4.9

              Stephen A. Garner (12)                            5,260,000           4.9

              All directors, executive officers,
              and significant employees as a
              group (7 persons)                                16,098,311            15
              ----------------------------------------------------------------------------------
</TABLE>


(1) The address of each individual is in care of the Company.

(2) Represents sole voting and investment power unless otherwise indicated.

(3) Based on approximately 76,369,213 shares of the Company's Common Stock
outstanding at February 28, 2005, plus, as to each person listed, that portion
of Company Common Stock subject to outstanding options, warrants, and
convertible debt which may be exercised or converted by such person, and as to
all directors and executive officers as a group, unissued shares of Company
Common Stock as to which the members of such group have the right to acquire
beneficial ownership upon the exercise of stock options or warrants, or
conversion of convertible debt within the next 60 days.

(4) Excludes 19,822,599 shares reserved for issuance under outstanding options
and warrants.

(5) Includes debt convertible to 7,665,746 shares of Common Stock at $0.10 per
share, options to acquire 45,632 shares of Common Stock at $2.50 per share, and
options to purchase 101,795 shares of Common Stock at $0.1875 per share.

(6) Includes $1,055,512 of debt convertible to 9,008,968 shares of Common Stock
at $0.12 per share (85% of estimated


                                       36
<PAGE>

fair market value as of February 28, 2005) and warrants to acquire 5,000,000
shares at $0.10 per share.

(7) Includes options to acquire 600,000 shares of Common Stock at $0.25 per
share, options to acquire 45,632 shares at $2.50 per share, and options to
acquire 1,719,658 shares at $0.1875 per share.

(8) Includes options to acquire 290,000 shares of Common Stock at $0.20 per
share, options to acquire 45,632 shares at $2.50 per share, and options to
acquire 551,295 shares at $0.1875 per share.

(9) Includes options to acquire 200,000 shares of Common Stock at $0.20 per
share, options to acquire 45,632 shares at $2.50 per share, options to acquire
411,795 shares at $0.1875 per share, options to acquire 300,000 shares at $0.18
per share, and options to acquire 200,000 shares at $0.10 per share.

(10) Includes options to acquire 300,000 shares of Common Stock at $0.18 per
share.

(11) Includes debt convertible to 1,960,000 shares of Common Stock at $0.102 per
share

(12) Includes debt convertible to 1,960,000 shares of Common Stock at $0.102 per
share

Securities Authorized for Issuance Under Equity Compensation Plans
------------------------------------------------------------------

The following provides information, as of December 31, 2004, concerning
compensation plans (including individual compensation arrangements) under which
equity securities of the Company are authorized for issuance.

<TABLE>
<CAPTION>
                                                   (a)                    (b)                     (c)
                                         ----------------------    -----------------    ----------------------
                                                                                         Number of securities
                                                                                         remaining available
                                                                                         for future issuances
                                          Number of securities      Weighed-average          under equity
                                            to be issued upon      exercise price of      compensation plans
                                               exercise of            outstanding       (excluding securities
                                          outstanding options,     options, warrants         reflected in
                 Plan Category             warrants and rights         and rights            column (a))
        -------------------------------  ---------------------     -----------------     ---------------------
<S>                                                 <C>            <C>                            <C>
        Equity compensation plans
           approved by security holders             20,093,670     $            0.41              12,906,330

        Equity compensation plans not
           approved by security holders              5,016,000     $            0.10                      --
                                         ---------------------     -----------------      ------------------
              Total                                 25,109,670     $            0.35              12,906,330
</TABLE>


For a complete description of the Company's equity compensation plans, please
refer to Note 8 of our audited financial statements as of December 31, 2004,
which are filed as Exhibit 99.1 hereto.







                                       37
<PAGE>

ITEM 12.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

During the year ended December 31, 2004, the Company borrowed $345,000 from C.
Alan and Joan P. Williams and issued convertible promissory notes bearing
interest at 10 percent per annum (the "Notes"). The Notes are secured by a
security interest in all of the Company's assets. The notes and accrued interest
are due at the earlier of one of three events: 1) October 31, 2005; 2)
acquisition of controlling interest in the Company by a third party; or 3) the
Company achieves equity financing of a minimum of $3,000,000. If the Company is
acquired, the principal and accrued interest on the Notes, as modified, are
convertible into shares of the Company's common stock at the lower of $2.50 per
share or the price paid per share by the acquirer. In addition, the principal
and accrued interest on the Notes, as modified, are convertible into shares of
the Company's common stock at a conversion price equal to the lower of $0.07 per
share or the average of the Company's common stock closing bid price on the
OTCBB, NASDAQ or other established securities exchange or market for the ten
(10) consecutive trading days prior to the date Mr. or Mrs. Williams delivers
written notice of his or her conversion election to the Company.

On February 17, 2004, the Company issued a $1,700,000 secured convertible
promissory note for cash. The note was issued to a related party, C. Alan and
Joan P. Williams, and bears interest at 10 percent per annum. The note and
accrued interest are due at the earlier of one of three events: 1) October 31,
2007; 2) acquisition of controlling interest in the Company by a third party; or
3) the Company achieves equity financing of a minimum of $3,000,000. If the
Company is acquired, the principal and accrued interest on the note are
convertible into shares of the Company's common stock at the lower of $2.50 per
share or the price paid per share by the acquirer. In addition, the principal
and accrued interest on the note are convertible into shares of the Company's
common stock at a conversion price equal to eighty five percent of average of
the Company's common stock closing bid price on the OTCBB, NASDAQ or other
established securities exchange or market for the ten (10) consecutive trading
days prior to the date Mr. and Mrs. Williams deliver written notice of their
conversion election to the Company. As an inducement for Mr. and Mrs. Williams
to provide the loan, the Company agreed to issue them a warrant to purchase
5,000,000 shares of the Company's restricted common stock at $0.10 per share
exercisable until February 17, 2009.

In connection with the acquisition of TBS, the Company issued a $300,000
convertible promissory note to Stephen A. Garner and a $300,000 convertible
promissory note to James L. Campbell (the "TBS Notes"). Each of the TBS Notes
bears interest at 5 percent per annum and is due and payable in three equal
annual installments of $100,000, with the first installment paid in full during
February 2005 and subsequent installments due on February 17, 2006 and February
17, 2007. The TBS Notes are secured by a Stock Pledge Agreement and a Security
Agreement. In addition, Messrs. Garner and Campbell have the right to convert
the balance of unpaid principal and interest of the TBS Notes into shares of the
Company's common stock at the rate of 9.8 shares of Common Stock for each $1.00
of principal and interest to be converted.

During the year ended December 31, 2003, the Company borrowed $1,132,000 from C.
Alan and Joan P. Williams and issued convertible promissory notes bearing
interest at 10 percent per annum. At December 31, 2004, the outstanding
principal balance of convertible secured promissory notes payable (the "Notes")
to Mr. and Mrs. Williams was $3,927,000. The Notes are secured by a security
interest in all of the Company's assets. The notes and accrued interest are due
at the earlier of one of three events: 1) October 31, 2005; 2) acquisition of
controlling interest in the Company by a third party; or 3) the Company achieves
equity financing of a minimum of $3,000,000. If the Company is acquired, the
principal and accrued interest on the Notes, as modified, are convertible into
shares of the Company's common stock at the lower of $2.50 per share or the
price paid per share by the acquirer. The principal and accrued interest on
$530,000 of these convertible promissory notes, as modified, are convertible
into shares of the Company's common stock at a conversion price equal to the
lower of $2.50 per share or the average of the Company's common stock closing
bid price on the OTCBB, NASDAQ or other established securities exchange or
market for the ten (10) consecutive trading days prior to the date Mr. and Mrs.
Williams deliver written notice of their conversion election to the Company. The
principal and accrued interest on $1,352,000 of these convertible promissory
notes issued between October 30, 2002 and December 31, 2003 are convertible into
shares of the Company's common stock at a conversion price equal to the lower of
$0.07 per share (below the fair market value on the date of issuance) or the
average of the Company's common stock closing bid price on the OTCBB, NASDAQ or
other established securities exchange or market for the ten (10) consecutive
trading days prior to the date Mr. and


                                       38
<PAGE>

Mrs. Williams deliver written notice of their conversion election to the
Company.

TBS leases the building that houses substantially all of its operations from
Perimeter Center Partners, which is controlled by James L. Campbell and Stephen
A. Garner. Messrs. Campbell and Garner are the former owners of TBS and are
currently significant employees of the Company. The lease was entered into in
connection with the Company's acquisition of TBS and is a triple-net lease
expiring in January 2009 at a cost of $6,200 per month.












































                                       39
<PAGE>

ITEM 13.  EXHIBITS

   Exhibit No.     Description
   -----------     -----------

       2.1         Agreement and Plan of Merger dated January 31, 2004 by and
                   among VillageEDOCS, VillageEDOCS Merger Sub, Inc., Tailored
                   Business Systems, Inc., Stephen A. Garner, and James L.
                   Campbell previously filed as Exhibit 2.1 to the Company's
                   Current Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
       2.2         Plan of Internal Restructuring previously filed as Exhibit B
                   to the Company's Schedule 14C Information Statement filed on
                   July 23, 2004 and incorporated herein by reference.
       3.1         Articles of Incorporation, as amended. Previously filed with
                   the Company's Form 10-SB filed on August 29, 2000.
       3.2         By-laws. Previously filed with the Company's Form 10-SB filed
                   on August 29, 2000.
       3.3         Article of Amendment to Articles of Incorporation to increase
                   authorized number of common shares. Previously filed with the
                   Company's 14C Information Statement filed on July 23, 2004.
       4.1         Letter Agreement dated July 30, 2002 by and between the
                   Company, C. Alan Williams, and Joan P. Williams previously
                   filed as Exhibit 4.1 to the Company's Quarterly Report on
                   Form 10-QSB for the period ended June 30, 2002 and
                   incorporated herein by reference.
       4.2         Promissory Note Modification Agreement dated July 15, 2002 by
                   and between the Registrant and James W. Townsend previously
                   filed as Exhibit 4.1 to the Company's Current Report on Form
                   8-K filed on July 2, 2002 and incorporated herein by
                   reference.
       4.3         Form of Unsecured Convertible Promissory Note. Previously
                   filed as Exhibit 4.5 to the Registrant's Quarterly Report on
                   Form 10-QSB filed with the Securities and Exchange Commission
                   on May 15, 2002 and incorporated herein by reference.
       4.4         Form of Convertible Secured Promissory Note. Previously filed
                   as Exhibit 4.6 to the Registrant's Quarterly Report on Form
                   10-QSB filed with the Securities and Exchange Commission on
                   May 15, 2002 and incorporated herein by reference.
       4.5         2002 Equity Incentive Plan dated as of January 30, 2002.
                   Previously filed as Exhibit 4.1 to the Registrant's Quarterly
                   Report on Form 10-QSB filed with the Securities and Exchange
                   Commission on May 15, 2002 and incorporated herein by
                   reference.
       4.6         Form of Stock Option Agreement. Previously filed as Exhibit
                   4.2 to the Registrant's Quarterly Report on Form 10-QSB filed
                   with the Securities and Exchange Commission on May 15, 2002
                   and incorporated herein by reference.
       4.7         Promissory Note Modification Agreement dated May 9, 2002 by
                   and among the Company, Joan P. Williams and C. Alan Williams.
                   Previously filed as Exhibit 4.3 to the Registrant's Quarterly
                   Report on Form 10-QSB filed with the Securities and Exchange
                   Commission on May 15, 2002 and incorporated herein by
                   reference.
       4.8         Security Agreement dated May 9, 2002 by and among the
                   Company, Joan P. Williams and C. Alan Williams. Previously
                   filed as Exhibit 4.4 to the Registrant's Quarterly Report on
                   Form 10-QSB filed with the Securities and Exchange Commission
                   on May 15, 2002 and incorporated herein by reference.
       4.9         Promissory Note to Stephen A. Garner dated February 17, 2004
                   previously filed as Exhibit 4.1 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.

                                       40
<PAGE>

      4.10         Promissory Note to James L. Campbell dated February 17, 2004
                   previously filed as Exhibit 4.2 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
      4.11         Guaranty by Tailored Business Systems, Inc. to Stephen A.
                   Garner dated February 17, 2004 previously filed as Exhibit
                   4.3 to the Company's Current Report on Form 8-K filed on
                   February 18, 2004 and incorporated herein by reference.
      4.12         Guaranty by Tailored Business Systems, Inc. to James L.
                   Campbell dated February 17, 2004 previously filed as Exhibit
                   4.4 to the Company's Current Report on Form 8-K filed on
                   February 18, 2004 and incorporated herein by reference.
      4.13         Form of Security Agreement dated February 17, 2004 by and
                   between Tailored Business Systems, Inc. and Stephen A. Garner
                   previously filed as Exhibit 4.5 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
      4.14         Form of Security Agreement dated February 17, 2004 by and
                   between Tailored Business Systems, Inc. and James L. Campbell
                   previously filed as Exhibit 4.6 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
      4.15         Registration Rights Agreement dated February 17, 2004 by and
                   between VillageEDOCS and Stephen A. Garner previously filed
                   as Exhibit 4.7 to the Company's Current Report on Form 8-K
                   filed on February 18, 2004 and incorporated herein by
                   reference.
      4.16         Registration Rights Agreement dated February 17, 2004 by and
                   between VillageEDOCS and James L. Campbell previously filed
                   as Exhibit 4.8 to the Company's Current Report on Form 8-K
                   filed on February 18, 2004 and incorporated herein by
                   reference.
      4.17         Form of Stock Pledge Agreement dated February 17, 2004 by and
                   between Tailored Business Systems, Inc. and Stephen A. Garner
                   previously filed as Exhibit 4.9 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
      4.18         Form of Stock Pledge Agreement dated February 17, 2004 by and
                   between Tailored Business Systems, Inc. and James L. Campbell
                   previously filed as Exhibit 4.10 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.

      4.19         Form of Convertible Secured Promissory Note by and among C.
                   Alan Williams, Joan P. Williams, and the Company previously
                   filed as Exhibit 4.19 to the Company's Annual Report on Form
                   10-KSB filed on April 14, 2006 and incorporated herein by
                   reference.
      4.20         Convertible Secured Promissory Note dated February 16, 2004
                   by and among C. Alan Williams, Joan P. Williams, and the
                   Company previously filed as Exhibit 4.20 to the Company's
                   Annual Report on Form 10-KSB filed on April 14, 2006 and
                   incorporated herein by reference.

      10.1         Consulting and Other Services agreement dated January 28,
                   2003 by and between the Company and Paul Allen. Previously
                   filed as Exhibit 4.8 to the Company's Registration Statement
                   on Form S-8 filed with the Securities and Exchange Commission
                   on January 29, 2003 and incorporated herein by reference.

      10.2         Employment Offer Letter dated April 23, 2004 by and between
                   Tailored Business Systems, Inc. and James L. Kolassa.
                   Previously filed as Exhibit 10.1 to the Company's Annual
                   Report on Form 10-KSB filed on March 31, 2005.

      10.3         Debt settlement agreement dated January 28, 2003 by and
                   between the Company and James R. Spoerl. Previously filed as
                   Exhibit 4.9 to the Company's Registration Statement on Form
                   S-8 filed with the Securities and Exchange Commission on
                   January 29, 2003 and incorporated herein by reference.
      10.4         Employment Agreement dated February 17, 2004 by and between
                   Tailored Business Systems, Inc. and Stephen A. Garner
                   previously filed as Exhibit 10.1 to the


                                       41
<PAGE>


                   Company's Current Report on Form 8-K filed on February 18,
                   2004 and incorporated herein by reference.


      10.5         Employment Agreement dated February 17, 2004 by and between
                   Tailored Business Systems, Inc. and James L. Campbell
                   previously filed as Exhibit 10.2 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.

                   Continued...

      10.6         General Release and Noncompetition Agreement dated February
                   17, 2004 by Stephen A. Garner in favor of Tailored Business
                   Systems, Inc. previously filed as Exhibit 10.3 to the
                   Company's Current Report on Form 8-K filed on February 18,
                   2004 and incorporated herein by reference.
      10.7         General Release and Noncompetition Agreement dated February
                   17, 2004 by James L. Campbell in favor of Tailored Business
                   Systems, Inc. previously filed as Exhibit 10.4 to the
                   Company's Current Report on Form 8-K filed on February 18,
                   2004 and incorporated herein by reference.
      10.8         Lease Agreement dated February 17, 2004 by and between
                   Perimeter Center Partners and Tailored Business Systems, Inc.
                   previously filed as Exhibit 10.5 to the Company's Current
                   Report on Form 8-K filed on February 18, 2004 and
                   incorporated herein by reference.
      10.9         Employment Agreement dated June 10, 2004 by and between the
                   Company and K. Mason Conner previously filed as Exhibit C to
                   the Company's Schedule 14C Information Statement filed on
                   July 23, 2004 and incorporated herein by reference.
      10.10        Employment Agreement dated June 10, 2004 by and between the
                   Company and H. Jay Hill previously filed as Exhibit D to the
                   Company's Schedule 14C Information Statement filed on July
                   23, 2004 and incorporated herein by reference.
      10.11        Employment Agreement dated June 10, 2004 by and between the
                   Company and Michael Richard previously filed as Exhibit E to
                   the Company's Schedule 14C Information Statement filed on
                   July 23, 2004 and incorporated herein by reference.
      14.1         Code of Ethics. Previously filed as Exhibit 14.1 to the
                   Company's Annual Report on Form 10-KSB filed on March 29,
                   2004 and incorporated herein by reference
      21.1         Subsidiaries of the Registrant.*

      31.1         Certification Under Section 302 of The Sarbanes-Oxley Act of
                   2002 signed and dated May 26, 2006 by K. Mason Conner, Chief
                   Executive Officer.*
      31.2         Certification Under Section 302 of The Sarbanes-Oxley Act of
                   2002 signed and dated May 26, 2006 by Michael A. Richard,
                   Chief Financial Officer.*
      32.1         Certification Pursuant To 18 U.S.C. ss.1350, As Adopted
                   Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002
                   signed and dated May 26, 2006 by K. Mason Conner,
                   Chief Executive Officer.**
      32.2         Certification Pursuant To 18 U.S.C. ss.1350, As Adopted
                   Pursuant To Section 906 of the Sarbanes-Oxley Act of 2002
                   signed and dated May 26, 2006 by Michael A. Richard,
                   Chief Financial Officer.**

      99.1         VillageEDOCS Financial Statements For The Fiscal Years Ended
                   December 31, 2004 and 2003 together with Report of
                   Independent Registered Public Accounting Firm.*

*        Filed herewith.
**       Furnished herewith.


                                       42
<PAGE>

ITEM 14.  PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth fees billed to us by our auditors during the
fiscal years ended December 31, 2004 and 2003 for: (i) services rendered for the
audit of our annual financial statements and the review of our quarterly
financial statements, (ii) services by our auditors that are reasonably related
to the performance of the audit or review of our financial statements and that
are not reported as Audit Fees, including procedures related to our acquisition
of TBS (iii) services rendered in connection with tax compliance, tax advice,
and tax planning, and (iv) all other fees for services rendered. "All Other
Fees" consisted of fees related to the issuance of a consent for our S-8
Registration Statement filed on January 29, 2003, proxy, and press releases.

                                                 2004              2003
                                        -------------       -----------
           (i)    Audit Fees                $  76,000           $50,000
           (ii)   Audit Related Fees           16,000             4,000
           (iii)  Tax Fees                      4,000             3,000
           (iv)   All Other Fees                2,000             5,000
                                        -------------       -----------
                       Total                  $98,000           $62,000
                                        =============       ===========





























                                       43
<PAGE>

                                   SIGNATURES


         In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the registrant has caused this Amended Annual Report on Form 10-KSB/A
to be signed on its behalf by the undersigned, thereunto duly authorized.


                  VillageEDOCS
                  (Registrant)

                  VILLAGEEDOCS

                  By: /s/ Michael A. Richard
                      ------------------------------
                  Michael A. Richard
                  Chief Financial Officer and
                  Principal Accounting Officer


                  Date:  May 26, 2006

         Pursuant to the requirements of the Securities Exchange Act of 1934,
this Amended Annual Report on Form 10-KSB/A has been signed by the following
persons below on behalf of the registrant and in the capacities and on the dates
indicated.

<TABLE>
<CAPTION>
                 SIGNATURE                           TITLE                            DATE

<S>                                                  <C>                              <C>
                 /s/ K. Mason Conner                                                  May 26, 2006
                 -------------------------------                                      ------------------------
                 K. Mason Conner                     Director,
                                                     Chief Executive Officer

                 /s/ Michael A. Richard                                               May 26, 2006
                 -------------------------------                                      ------------------------
                 Michael A. Richard                  Chief Financial Officer,
                                                     Principal Accounting Officer

                 /s/ J. Thomas Zender                                                 May 26, 2006
                 -------------------------------                                      ------------------------
                 J. Thomas Zender                    Director,
                                                     Chairman of the Board

                 /s/ Jerry T. Kendall                                                 May 26, 2006
                 -------------------------------                                      ------------------------
                 Jerry T. Kendall                    Director, President, and
                                                     Chief Operating Officer

                 /s/ Ricardo A. Salas                                                 May 26, 2006
                 -------------------------------                                      ------------------------
                 Ricardo A. Salas                    Director

                 /s/ H. Jay Hill                                                      May 26, 2006
                 -------------------------------                                      ------------------------
                 H. Jay Hill                         Executive Vice
                                                     President, Director
</TABLE>



                                       44